1 

" ! HOUSE OF REPRESENTATIVES 115TH CONGRESS

2d Session 

REPORT

115–792 

FINANCIAL SERVICES AND GENERAL 

GOVERNMENT APPROPRIATIONS BILL, 2019 

R E P O R T 

OF THE

COMMITTEE ON APPROPRATIONS 

together with 

DISSENTING VIEWS 

[TO ACCOMPANY H.R. 6258]

JUNE 28, 2018.—Committed to the Committee of the Whole House on 

the State of the Union and ordered to be printed 


E:\Seals\Congress.#13
FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS 

BILL, 2019 

U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

1 

30–568 

" ! HOUSE OF REPRESENTATIVES 115TH CONGRESS

2d Session 

REPORT

2018

115–792 

FINANCIAL SERVICES AND GENERAL 

GOVERNMENT APPROPRIATIONS BILL, 2019 

R E P O R T 

OF THE

COMMITTEE ON APPROPRATIONS 

together with 

DISSENTING VIEWS 

[TO ACCOMPANY H.R. 6258]

JUNE 28, 2018.—Committed to the Committee of the Whole House on 

the State of the Union and ordered to be printed 


E:\Seals\Congress.#13
115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 115–792 

FINANCIAL SERVICES AND GENERAL GOVERNMENT 

APPROPRIATIONS BILL, 2019 

JUNE 28, 2018.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. GRAVES of Georgia, from the Committee on Appropriations, 

submitted the following 

R E P O R T 

together with 

DISSENTING VIEWS 

[To accompany H.R. 6258] 

The Committee on Appropriations submits the following report in 

explanation of the accompanying bill making appropriations for financial services and general government for the fiscal year ending 

September 30, 2019. 

INDEX TO BILL AND REPORT 

Page Number 

Bill Report 

Title I—Department of the Treasury ....................................................... 2 4 

Title II—Executive Office of the President and Funds Appropriated to 

the President ........................................................................................... 33 24 

Title III—The Judiciary ............................................................................. 47 32 

Title IV—District of Columbia .................................................................. 57 37 

Title V—Independent Agencies ................................................................. 68 42 

Administrative Conference of the United States ..................................... 68 42 

Bureau of Consumer Financial Protection ............................................... ........ 42 

Consumer Product Safety Commission .................................................... 68 43 

Election Assistance Commission ............................................................... 70 44 

Federal Communications Commission ..................................................... 70 44 

Federal Deposit Insurance Corporation—Office of Inspector General ... 72 47 

Federal Election Commission .................................................................... 72 48 

Federal Labor Relations Authority ........................................................... 73 48 

Federal Trade Commission ........................................................................ 74 49 

General Services Administration .............................................................. 75 49 

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Page Number 

Bill Report 

Harry S Truman Scholarship Foundation ............................................... 88 59 

Merit Systems Protection Board ............................................................... 88 59 

National Archives and Records Administration ...................................... 89 60 

National Credit Union Administration .................................................... 90 61 

Office of Government Ethics ..................................................................... 91 62 

Office of Personnel Management .............................................................. 91 62 

Office of Special Counsel ........................................................................... 95 65 

Postal Regulatory Commission ................................................................. 96 65 

Privacy and Civil Liberties Oversight Board ........................................... 96 66 

Public Buildings Reform Board ................................................................. 97 66 

Securities and Exchange Commission ...................................................... 97 66 

Selective Service System ........................................................................... 99 68 

Small Business Administration ................................................................ 100 68 

United States Postal Service ..................................................................... 105 73 

United States Tax Court ........................................................................... 106 75 

Title VI—General Provisions—This Act ................................................... 107 75 

Title VII—General Provisions—Government-wide: Departments, 

Agencies, and Corporations ................................................................... 122 78 

Title VIII—General Provisions—District of Columbia ............................ 155 81 

Title IX—Financial Reform ....................................................................... 168 83 

Title X—Email Privacy .............................................................................. 294 83 

Title XI—Amateur Radio Parity Act ........................................................ 305 83 

Title XII—Additional General Provision—Spending Reduction Account ........................................................................................................ 311 83 

House of Representatives Reporting Requirements ................................ ........ 83 

Dissenting Views ........................................................................................ ........ 432 

HIGHLIGHTS OF THE BILL 

The Financial Services and General Government Subcommittee 

has jurisdiction over a diverse group of agencies responsible for 

regulating the financial and telecommunications industries; collecting taxes and providing taxpayer assistance; supporting the operations of the White House, the Federal Judiciary, and the District of Columbia; managing Federal buildings; and overseeing the 

Federal workforce. The activities of these agencies impact nearly 

every American and are integral to the operations of our government. 

The bill provides a total of $23,423,000,000 in discretionary 

budget authority for fiscal year 2019 which is the same as the fiscal year 2018 discretionary allocation. The bill is $3,164,000 or 12 

percent, below the Administration’s request. 

TOTAL BUDGET AUTHORITY 

($ in millions) 

FY 2018 

Enacted 

FY 2019 

Request 

FY 2019 Recommendation 

Discretionary ....................................................................................................... 23,423 26,587 23,423 

Mandatory ........................................................................................................... 22,388 22,406 22,406 

OPERATING PLAN AND REPROGRAMMING PROCEDURES

The Committee will continue to evaluate reprogrammings proposed by agencies. Although reprogrammings may not change either the total amount available in an account or the purposes for 

which the appropriation is legally available, they represent a significant departure from budget plans presented to the Committee 

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in an agency’s budget justification and supporting documents, 

which are the basis of this appropriations Act. The Committee expects agencies’ reprogramming requests to explain thoroughly the 

reasons for the reprogramming and to include an assessment of 

whether the reprogramming will affect budget requirements for the 

subsequent fiscal year. 

Section 608 of this Act requires agencies or entities funded by 

the Act to notify the Committee and obtain prior approval from the 

Committee for any reprogramming of funds that: (1) creates a new 

program; (2) eliminates a program, project, or activity; (3) increases 

funds or personnel for any program, project, or activity for which 

funds have been denied or restricted by the Congress; (4) proposes 

to use funds directed for a specific activity by either the House or 

Senate Committees on Appropriations for a different purpose; (5) 

augments existing programs, projects, or activities in excess of 

$5,000,000 or 10 percent, whichever is less; (6) reduces existing 

programs, projects, or activities by $5,000,000 or 10 percent, whichever is less; or (7) creates or reorganizes offices, programs, or activities. 

Additionally, the Committee expects to be promptly notified of all 

reprogramming actions which involve less than the above mentioned amounts if such actions would have the effect of significantly changing an agency’s funding requirements in future years, 

or if programs or projects specifically cited in the Committee’s reports are affected by the reprogramming. Reprogrammings meeting 

these criteria must be approved by the Committee regardless of the 

amount proposed to be reallocated. 

Section 608 also requires agencies to consult with the Committees on Appropriations prior to any significant reorganization or restructuring of offices, programs, or activities. This provision applies 

regardless of whether the reorganization or restructuring involves 

a reprogramming of funds. Agencies are encouraged to consult with 

the Committees early in the process so that any questions or concerns the Committees may have can be addressed in a timely manner. 

Except in emergency situations, reprogramming requests should 

be submitted no later than June 28, 2019. Further, the Committee 

notes that when a Department or agency submits a reprogramming 

or transfer request to the Committees on Appropriations and does 

not receive identical responses from the House and Senate, it is the 

responsibility of the Department or agency to reconcile the House 

and Senate differences before proceeding and, if reconciliation is 

not possible, to consider the request to reprogram funds unapproved. 

Agencies are directed under section 608 to submit operating 

plans for the Committee’s review within 60 days of the bill’s enactment. Each operating plan should include: (1) a table for each appropriation with a separate column to display the President’s budget request, adjustments made by Congress, adjustments due to enacted rescissions, if appropriate, and the fiscal year enacted level; 

(2) a delineation in the table for each appropriation both by object 

class and program, project, and activity as detailed in the budget 

appendix for the respective appropriation; and (3) an identification 

of items of special congressional interest. 

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CONGRESSIONAL BUDGET JUSTIFICATIONS

Budget justifications are the primary tool used by the House and 

Senate Committees on Appropriations to evaluate the resource requirements and fiscal needs of agencies. The Committee is aware 

that the format and presentation of budget materials is largely left 

to the agency within presentation objectives set forth by the Office 

of Management and Budget (OMB). In fact, OMB Circular A–11, 

part 1 specifically instructs agencies to consult with congressional 

committees beforehand. The Committee expects that all agencies 

funded under this Act will heed this directive. 

The Committee continues the direction that justifications submitted with the fiscal year 2019 budget request by agencies funded 

under this Act contain the customary level of detailed data and explanatory statements to support the appropriations requests at the 

level of detail contained in the funding table included at the end 

of this report. Among other items, agencies shall provide a detailed 

discussion of proposed new initiatives, proposed changes in the 

agency’s financial plan from prior year enactment, detailed data on 

all programs, and comprehensive information on any office or agency restructurings. At a minimum, each agency must also provide 

adequate justification for funding and staffing changes for each individual office and materials that compare programs, projects, and 

activities that are proposed for fiscal year 2020 to the fiscal year 

2019 enacted levels. 

TITLE I—DEPARTMENT OF THE TREASURY 

DEPARTMENTAL OFFICES

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $201,751,000 

Budget request, fiscal year 2019 ....................................................... 201,751,000 

Recommended in the bill ................................................................... 208,751,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +7,000,000 

Budget request, fiscal year 2019 ................................................ +7,000,000 

The Departmental Offices’ function in the Department of the 

Treasury is to support the Secretary of the Treasury in his capacity 

as the chief operating executive of the Department and in his role 

in determining the tax, economic, and financial management policies of the Federal Government. The Secretary’s responsibilities 

funded by the Salaries and Expenses appropriation include: recommending and implementing domestic and international economic 

and tax policy; providing recommendations regarding fiscal policy; 

governing the fiscal operations of the government; managing the 

public debt; managing development of financial policy; representing 

the U.S. on international monetary, trade and investment issues; 

overseeing Treasury Department overseas operations; directing the 

administrative operations of the Treasury Department; and providing executive oversight of the bureaus within the Treasury Department. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $208,751,000 for 

Departmental Offices, Salaries and Expenses. 

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Financial Transactions.—The Committee encourages the Department of the Treasury to work with Federal bank regulators, financial institutions, and money service businesses to ensure that legitimate financial transactions move freely and globally. The Committee is frustrated that the Department has failed to report on its 

efforts to ensure the appropriate flow of legitimate financial transactions and directs the Department to submit a report to the Committees on Appropriations of the House and Senate on this matter 

not later than 90 days after enactment of this Act. 

Insurance.—Under P.L. 111–203, the Federal Reserve Board was 

given authority to oversee certain nonbank holding companies, including a few bank and savings and loan holding companies with 

insurance affiliates, as well as certain SIFIs, which currently includes one insurance company. P.L. 111–203 also gave the Federal 

Insurance Office (FIO), within the Department of the Treasury, the 

authority to consult with the States on international issues and 

represent the U.S., as appropriate, in the International Association 

of Insurance Supervisors (IAIS). 

The Committee notes that the State-based system of insurance 

regulation has served our nation well for more than 150 years. Any 

federal regulation of insurance can take final form only with explicit approval by Congress. 

The Committee is concerned about the ongoing discussions held 

by the IAIS to develop a global Insurance Capital Standard (ICS). 

The Committee believes the U.S. agencies party to those negotiations must appropriately fulfill their duties to advocate for the U.S. 

insurance market and the U.S. system of insurance regulation. The 

Committee also notes the importance of developing a domestic capital standard, pursuant to P.L. 111–203 and P.L. 113–279, that is 

based on the existing domestic regulatory structure. The Committee believes it essential that a domestic standard should be set 

before any U.S. agency accedes to any ICS that will or could ultimately be applied to U.S. insurers. Finally, the Committee reminds 

those Federal agencies party to IAIS or Financial Stability Board 

(FSB) discussions to not support consolidated group-wide insurance 

capital standards for domestically-chartered internationally active 

insurance groups that are inconsistent with current state-based insurance standards, which are designed solely for the protection of 

the policyholder. 

State-based Insurance.—The U.S. has a strong history of promoting State-based regulation of the business of insurance. The 

Committee remains concerned about preemption of these effective 

State-based regulatory models, including those products that helps 

consumers manage the risks associated with owning a motor vehicle. Furthermore, the Committee supports these products being 

regulated by State insurance commissioners and reiterates that 

they are exempt under the Dodd-Frank Act from direct oversight 

by the Consumer Financial Protection Bureau (CFPB). 

Puerto Rico.—Within 90 days of the date of enactment of this 

Act, the Department is directed to provide a report to the Committees on Appropriations of the House and the Senate describing how 

the Department has used its authority to provide technical assistance to Puerto Rico in fiscal year 2018 and how it plans to use it 

in fiscal year 2019. 

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Cybersecurity.—The Committee recognizes the need to protect 

the financial services sector and its customers from the devastating 

effects of cyberattacks. While both industry and government have 

taken significant steps to mitigate this threat, there is more work 

to be done. The Committee encourages continued coordination to 

develop consistent and workable cybersecurity safeguards across 

the financial services sector. Consistent with this goal, the Committee directs the Office of Critical Infrastructure Protection and 

Compliance Policy (OCIP) to report to the Committees on Appropriations of the House and the Senate, the Committee on Financial 

Services of the House, and the Committee on Banking, Housing, 

and Urban Affairs of the Senate within 180 days of enactment of 

this Act on the status of this collaboration and ways to improve cybersecurity controls and safeguards. 

Financial Literacy.—The Committee believes financial literacy is 

important and that the Department can be helpful to entities, like 

universities, state and local educational agencies, qualified nonprofit agencies, and financial institutions who may want to establish centers of excellence to develop and implement effective standards, training and outreach efforts for financial literacy programs. 

The Committee encourages the Department to use the Financial 

Literacy and Education Commission to look into the feasibility of 

a program to make competitive grants to qualified institutions. 

Committee on Foreign Investment in the United States.—The 

Committee expects that CFIUS will enhance its process for monitoring transactions that are not notified to CFIUS to maintain 

CFIUS’s effectiveness in guarding against transactions that pose 

national security risks. Member agencies of the Committee on Foreign Investment in the United States (CFIUS), working with Treasury, as chair of CFIUS, should conduct an assessment to better understand the staffing levels needed by their agencies to address the 

current and projected CFIUS workload. 

OFFICE OF TERRORISM AND FINANCIAL INTELLIGENCE

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $141,778,000 

Budget request, fiscal year 2019 ....................................................... 159,000,000 

Recommended in the bill ................................................................... 161,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +19,222,000 

Budget request, fiscal year 2019 ................................................ +2,000,000 

Economic and trade sanctions issued and enforced by the Office 

of Terrorism and Financial Intelligence’s (TFI) Office of Foreign Assets Control (OFAC) protect the financial system from being polluted with criminal and illicit activities and counteract national security threats from drug lords, terrorists, weapons of mass destruction proliferators, and rogue nations, among others. In addition to 

the enforcement of sanctions, TFI also produces vital analysis with 

regards to foreign intelligence and counterintelligence across all 

elements of the national security community. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $161,000,000 for 

the Office of Terrorism and Financial Intelligence to carry out its 

central role in detecting and defeating security threats. The ComVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00010 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
7 

mittee expects these additional funds to be used to strengthen the 

development and enforcement of sanction programs. 

Iran Sanctions Act.—The Committee directs the Department of 

the Treasury to report to Congress on the status of implementation 

and enforcement of non-nuclear, bilateral and multilateral sanctions against Iran and actions taken by the U.S. and international 

community to enforce such sanctions. 

Sanctions Enforcement in Africa.—Protracted conflicts in nations 

such as Sudan, South Sudan, the Central African Republic, and the 

Democratic Republic of Congo have led to sanctions regimes and 

international arms embargoes to cut off the money flows that are 

fueling wars and contributing to regional destabilization. The Committee is concerned about the escalation of conflict and failure to 

abide by diplomatic agreements in these particular African states, 

even after sanctions have been imposed. The Committee supports 

the use of funds to enhance regional expertise and capacity for 

sanctions investigations, policy development, and enforcement of 

sanctions. 

Human Rights Sanctions Enforcement.—Government-sanctioned 

abuses of human rights around the world have been on the rise as 

authoritarianism increases. Multiple frameworks for human rights 

abuse sanctions enforcement exist, including the Sergei Magnitsky 

Rule of Law Accountability Act, the Global Magnitsky Human 

Rights Accountability Act, Countering America’s Adversaries 

through Sanctions Act, and the Comprehensive Iran Sanctions Accountability and Divestment Act, among others. These Congressionally mandated sanctions, along with sanctions imposed by Executive Order, are an important tool in discouraging human rights 

abuses and targeting those who violate human rights norms. The 

Committee supports robust enforcement of human rights abuse related sanctions and intends for funding to be used to enhance expertise and investigatory capacity for sanctions investigations, policy development, and enforcement of sanctions. 

CYBERSECURITY ENHANCEMENT ACCOUNT

Appropriation, fiscal year 2018 ......................................................... $24,000,000 

Budget request, fiscal year 2019 ....................................................... 25,208,000 

Recommended in the bill ................................................................... 25,208,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +1,208,000 

Budget request, fiscal year 2019 ................................................ – – – 

The Cybersecurity Enhancement Account (CEA) is a dedicated 

account designed to identify and support Department-wide investments for critical IT improvements including the systems identified 

as High Value Assets. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $25,208,000 for 

the Cybersecurity Enhancement Account. 

The Treasury Chief Information Officer (CIO) is directed to review and approve each investment under the CEA and report to 

the Committees on Appropriations of the House and the Senate 

each quarter on the progress of each investment. To ensure the 

Treasury CIO retains control over the execution of these funds, the 

agreement does not permit transfers of funds from the CEA. 

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Spend Plans.—The CIO of each Treasury office and bureau must 

submit a spend plan for each prospective investment under this 

heading to the Treasury Department CIO for review. The Treasury 

CIO is directed to review each investment submitted under the 

CEA heading to improve oversight of these funds across the Department; none of the funds under this heading will be available 

to fund such an investment without the approval of the Treasury 

CIO. The spend plans should include how the investment will: enhance Department-wide coordination of cybersecurity efforts and 

improve the Department’s responsiveness to cybersecurity threats; 

provide bureau and agency leadership with greater visibility into 

cybersecurity efforts and further encourage information sharing 

across bureaus; improve identification of cyber threats and better 

protect information systems from attack; provide a platform to enhance efficient communication, collaboration, and transparency 

around the common goal of improving not only the cybersecurity of 

the Treasury Department, but also the Nation’s financial sector. 

The spend plans should detail the type of cybersecurity enhancement the investment represents, and the cost, scope, schedule of 

the investment, and explain how it complements existing cyber efforts. 

DEPARTMENT-WIDE SYSTEMS AND CAPITAL INVESTMENTS PROGRAMS

(INCLUDING TRANSFER OF FUNDS)

Appropriation, fiscal year 2018 ......................................................... $4,426,000 

Budget request, fiscal year 2019 ....................................................... 4,000,000 

Recommended in the bill ................................................................... 8,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +3,574,000 

Budget request, fiscal year 2019 ................................................ +4,000,000 

The 1997 Treasury and General Government Appropriations Act 

established this account, which is authorized to be used by or on 

behalf of Treasury bureaus at the Secretary’s discretion to modernize business processes and increase efficiency through technology investments, as well as other activities that involve more 

than one Treasury bureau or Treasury’s interface with other Government agencies. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $8,000,000 for 

Department-wide Systems and Capital Investments Programs 

(DSCIP). 

FUND FOR AMERICA’S KIDS AND GRANDKIDS

Appropriation, fiscal year 2018 ......................................................... – – – 

Budget request, fiscal year 2019 ....................................................... – – – 

Recommended in the bill ................................................................... $585,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 ....................................................... +585,000,000 

Budget request, fiscal year 2019 ..................................................... +585,000,000 

The Fund for America’s Kids and Grandkids is established to 

fund activities to further government efficiency, and through those 

efficiencies reduce the overall cost to operate government programs. 

Funds are not available until the Secretary of the Treasury certifies in the annual Report of the United States Government that 

9 

the Federal government is operating either at a surplus or zero deficit. The 2017 Report issued by the Secretary of the Treasury on 

February 15, 2018, reported a deficit of approximately 

$665,700,000,000. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $585,000,000 for 

the Fund for America’s Kids and Grandkids. 

OFFICE OF INSPECTOR GENERAL

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $37,044,000 

Budget request, fiscal year 2019 ....................................................... 36,000,000 

Recommended in the bill ................................................................... 37,044,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ +1,044,000 

The Office of Inspector General (OIG) provides agency-wide audit 

and investigative functions to identify and correct operational and 

administrative deficiencies that create conditions for fraud, waste, 

and mismanagement. The audit function provides contract, program, and financial statement audit services. Contract audits provide professional advice to agency contracting officials on accounting and financial matters relative to negotiation, award, administration, repricing, and settlement of contracts. Program audits review and evaluate all facets of agency operations. Financial statement audits assess whether financial statements fairly present the 

agency’s financial condition and results of operations, the adequacy 

of accounting controls, and compliance with laws and regulations. 

The investigative function provides for the detection and investigation of improper and illegal activities involving programs, personnel, and operations. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $37,044,000 for 

the OIG. The recommendation fully funds the cost of overseeing the 

Department’s Resources and Ecosystems Sustainability, Tourism 

Opportunities, and Revived Economy of the Gulf Coast Act (RESTORE Act) activities. 

TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $169,634,000 

Budget request, fiscal year 2019 ....................................................... 161,113,000 

Recommended in the bill ................................................................... 170,834,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +1,200,000 

Budget request, fiscal year 2019 ................................................ +9,721,000 

The Office of Treasury Inspector General for Tax Administration 

(TIGTA) conducts audits, investigations, and evaluations to assess 

the operations and programs of the IRS and its related entities, the 

IRS Oversight Board, and the Office of Chief Counsel. The purpose 

of those audits and investigations is as follows: (1) To promote the 

economic, efficient, and effective administration of the Nation’s tax 

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laws and to detect and deter fraud and abuse in IRS programs and 

operations; and (2) to recommend actions to resolve fraud and other 

serious problems, abuses, and deficiencies in these programs and 

operations. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $170,834,000 for 

TIGTA. The Committee appreciates the many issues that TIGTA 

has brought to its attention and provides funding above the fiscal 

year request to continue TIGTA’s oversight of IRS activities and 

use of appropriated funds. 

SPECIAL INSPECTOR GENERAL FOR THE TROUBLED ASSET RELIEF

PROGRAM

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $34,000,000 

Budget request, fiscal year 2019 ....................................................... 17,500,000 

Recommended in the bill ................................................................... 28,800,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. ¥5,200,000 

Budget request, fiscal year 2019 ................................................ +11,300,000 

The Office of the Special Inspector General for the Troubled 

Asset Relief Program (SIGTARP) was established in the Emergency Economic Stabilization Act of 2008 (Public Law 110–343). Its 

mission is to conduct, supervise, and coordinate audits and investigations of the purchase, management, and sale of assets by the 

Secretary of the Treasury under programs established pursuant to 

the Troubled Asset Relief Program (TARP). 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $28,800,000 for 

SIGTARP. 

FINANCIAL CRIMES ENFORCEMENT NETWORK

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $115,003,000 

Budget request, fiscal year 2019 ....................................................... 117,800,000 

Recommended in the bill ................................................................... 117,800,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +2,797,000 

Budget request, fiscal year 2019 ................................................ – – – 

The Financial Crimes Enforcement Network (FinCEN) is responsible for implementing Treasury’s anti-money laundering regulations through administration of the Bank Secrecy Act (BSA). It also 

collects and analyzes information to assist in the investigation of 

money laundering and other financial crimes. FinCEN supports 

law enforcement investigative efforts by Federal, State, local and 

international agencies, and fosters interagency and global cooperation against domestic and international financial crimes. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $117,800,000 for 

FinCEN. The recommended amount is intended to ensure 

FinCEN’s information is accessible to the law enforcement and inVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00014 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
11 

telligence communities and to ensure FinCEN can respond to requests for assistance from law enforcement. The data compiled and 

analyzed by FinCEN is a critical tool for investigating, among other 

crimes, money laundering, mortgage fraud, drug cartels, and terrorist financing. 

Human Trafficking.—The Committee appreciates FinCEN’s history of supporting law enforcement cases that combat human trafficking, including its 2014 Guidance on Recognizing Activity that 

May be Associated with Human Smuggling and Human Trafficking 

to financial institutions, and emphasizes the importance of continuing this effort as part of the bureau’s broader mission to detect 

and disrupt all forms of financial crime. Wherever possible, 

FinCEN shall marshal its unique expertise in analyzing financial 

flows for this important effort in the course of ongoing strategic operations, such as the Southwest Border Initiative, and provide the 

appropriate assistance to law enforcement agencies in their human 

trafficking investigations. 

BUREAU OF THE FISCAL SERVICE

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $338,280,000 

Budget request, fiscal year 2019 ....................................................... 330,837,000 

Recommended in the bill ................................................................... 338,280,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ +7,443,000 

The mission of the Bureau of the Fiscal Service is to promote the 

financial integrity and operational efficiency of the U.S. Government through accounting, borrowing, collections, payments, and 

shared services. The Fiscal Service is the Federal Government’s 

central financial agent. The Fiscal Service also develops and implements reliable and efficient financial methods and systems to operate the government’s cash management, credit management, and 

debt collection programs in order to maintain government accounts 

and report on the status of the government’s finances. In addition, 

the Fiscal Service is the primary agency for collecting Federal nontax debt owed to the government, and is responsible for the conduct 

of all public debt operations and the promotion of the sale of U.S. 

securities. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $338,280,000 for 

the Fiscal Service. Of the funds provided, $4,210,000 is available 

until September 30, 2021, for information systems modernization. 

DATA Act.—Within this appropriation, funding is included for 

USAspending.gov. The Committee expects the Fiscal Service to 

meet its transparency goals within USAspending.gov related to the 

DATA Act and will monitor progress in achieving government 

spending transparency. The Committee directs the Fiscal Service to 

meet its transparency goals within USAspending.gov and coordinate with OMB to publish all unclassified vendor contracts and 

grant awards for all federal agencies on USAspending.gov. The 

Committee directs the Fiscal Service to display this information online and report to the Committees on Appropriations of the House 

12 

and the Senate within 90 days of the enactment of this Act on its 

progress in achieving government spending transparency. 

The Committee is committed to transparency and accountability 

in federal spending. As such the Committee directs the Fiscal Service to make basic information about the use of financial agents 

publicly available in a central location, including compensation 

paid to each financial agent and a description of the services provided. 

Do Not Pay Business Center.—Do Not Pay (DNP) was established 

to help federal agencies comply with the Improper Payments Elimination and Recovery Improvement Act of 2012 by supporting efforts 

to prevent and detect improper payments. DNP helps reduce the 

number of improper payments by providing agencies streamlined 

access to relevant data sources when evaluating pre-award, prepayment eligibility verification process as well as anytime during 

the payment lifecycle. OMB approves DNPs access to relevant data 

sources. In order to ensure timely approvals by OMB of new data 

sources for DNP, including commercial data sources, the Committee encourages Treasury and OMB to identify opportunities to 

make the data source review process more efficient, including automatically approving requests for new data sources that are pending 

more than 30 days; creating an approved data source list; identifying publicly available data sources for approval; and creating 

baseline criteria standards for data sources that automatically trigger approval, as well as any other efforts that will help prevent, 

reduce, and stop improper payments, and prevent waste, fraud, 

and abuse. 

ALCOHOL AND TOBACCO TAX AND TRADE BUREAU

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $111,439,000 

Budget request, fiscal year 2019 ....................................................... 114,427,000 

Recommended in the bill ................................................................... 123,527,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +12,088,000 

Budget request, fiscal year 2019 ................................................ +9,100,000 

The Alcohol and Tobacco Tax and Trade Bureau (TTB) is responsible for the enforcement of laws designed to eliminate certain illicit activities and to regulate lawful activities relating to distilled 

spirits, beer, wine, and nonbeverage alcohol products, and tobacco. 

TTB focuses on collecting revenue; reducing taxpayer burden and 

improving service while preventing diversion; and protecting the 

public and preventing consumer deception in certain regulated 

commodities. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $123,527,000 for 

the TTB. Within this amount, $5,000,000 is included for increased 

enforcement of the Federal Alcohol Administration Act (FAA Act). 

Enforcement.—The Committee has included $5,000,000 for TTB 

to increase enforcement efforts for industry trade practice violations. Enforcement of basic trade practice functions, required under 

the FAA Act, is critical to ensuring a competitive, fair, and safe 

marketplace. The Committee directs the TTB to report to the ComVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00016 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
13 

mittees on Appropriations of the House and the Senate, within 60 

days of enactment of this Act, on how the additional funding will 

be used to bolster enforcement, forensic audits, and investigations, 

particularly in known points in the supply chain that are susceptible to illegal activity. 

Processing Time.—The Committee will continue to monitor the 

process for securing basic label and formula approvals required 

under the FAA Act. The Committee continues to support additional 

funding for this and expects the TTB to continue to make efforts 

to shorten processing time for label and formula applications. 

American Viticulture Area.—The Committee recognizes that the 

use of American Viticulture Area (AVA) terms help small farmers 

and wineries grow their businesses by developing regional brands. 

The AVA system stimulates economic growth in the industry and 

also provides consumers with valuable information about where 

their purchases are sourced. The TTB should improve label accuracy to ensure that use of AVA terms are consistent with existing 

federal laws and regulations governing the use of these protected 

terms. 

UNITED STATES MINT

UNITED STATES MINT PUBLIC ENTERPRISE FUND

The United States Mint manufactures coins, receives deposits of 

gold and silver bullion, and safeguards the Federal Government’s 

holdings of monetary metals. In 1997, Congress established the 

United States Mint Public Enterprise Fund (Public Law 104–52), 

which authorized the Mint to use proceeds from the sale of coins 

to finance the costs of its operations and consolidated all existing 

Mint accounts into a single fund. Public Law 104–52 also provided 

that, in certain situations, the levels of capital investments for circulating coins and protective services shall factor into the decisions 

of the Congress. 

COMMITTEE RECOMMENDATION

The Committee recommends a spending level for capital investments by the Mint for circulating coinage and protective services 

of $30,000,000 for fiscal year 2019. 

COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS FUND

PROGRAM ACCOUNT

Appropriation, fiscal year 2018 ......................................................... $250,000,000 

Budget request, fiscal year 2019 ....................................................... 14,000,000 

Recommended in the bill ................................................................... 216,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. ¥34,000,000 

Budget request, fiscal year 2019 ................................................ +202,000,000 

The Community Development Financial Institutions (CDFI) 

Fund provides grants, loans, equity investments, and technical assistance, on a competitive basis, to new and existing CDFIs such 

as community development banks, community development credit 

unions, and housing and microenterprise loan funds. Recipients use 

the funds to support mortgages, small business and economic development lending in underserved and distressed neighborhoods 

14 

and to support the availability of financial services in these neighborhoods. The CDFI Fund is also responsible for implementation of 

the New Markets Tax Credits. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $216,000,000 for 

the CDFI Fund program. Of the amounts provided, $121,000,000 is 

for financial and technical assistance grants, $3,000,000 is for 

CDFIs to provide technical and financial assistance to individuals 

with disabilities, $13,000,000 is for Native Initiatives, $19,000,000 

is for the Bank Enterprise Award Program, $15,000,000 is for the 

Healthy Food Financing Initiative, and $23,000,000 is for the administrative expenses for all. In addition, the Committee recommends a loan level of $500,000,000 for the Bond Guarantee Program. 

CDFIs in U.S. Insular Areas.—The Committee notes the absence 

of CDFIs serving American Samoa, Northern Mariana Islands and 

other U.S. insular areas and recommends that the CDFI Fund use 

its Capacity Building Initiative to expand service, to the extent 

practical, to these areas. 

CDFIs in the Appalachian Region.—The Committee recognizes 

that the Appalachian region continues to face economic hardships 

and high unemployment stemming from the downturn in the coal 

market. The Committee encourages the CDFI Fund to focus on opportunities in the region and expand service for businesses and industries that may lead to improved long-term diversification of the 

economy in Appalachia. 

CDFI Program Integration for Individuals with Disabilities.— 

The Committee is pleased to provide dedicated funds for financial 

and technical assistance grants to position more CDFI’s to respond 

to the housing, transportation, education, and employment needs of 

underserved, low-income, individuals with disabilities. By increasing the visibility of the disability community, the Committee expects CDFI’s to incorporate the needs of the disabled into their 

business plans and practices. 

The Committee directs the CDFI Fund to submit a report every 

six months until all the funds are obligated, not later than six 

months after the enactment of the Act to the Committees on Appropriations of the House and the Senate summarizing the progress 

made toward developing a competitive application pool of CDFIs to 

compete for funds for individuals with disabilities. Additionally, the 

report should include the number of awards, amount of each 

award, types of programs, impact the funding has made on the 

number of CDFIs serving the disability community, and findings 

and recommendations to improve upon the implementation of these 

activities. 

INTERNAL REVENUE SERVICE

The Committee recommends providing $11,616,554,000 for the 

IRS, which is $186,000,000 above the fiscal year 2018 enacted 

level. The fiscal year 2019 funding level includes dedicated funds 

in the amount of $77,000,000 to assist with the implementation of 

tax reform for the 2018 filing season. Additionally, the fiscal year 

15 

2019 amount incorporates increases to modernize IRS’s information 

technology systems. 

In addition, the Committee includes language to: • Prohibit funds for finalizing any regulation related to the 

standards used to determine the tax-exempt status of a 

501(c)(4) organization; • Prohibit funds for IRS employee bonuses and awards that 

do not consider the conduct and tax compliance of such employees; • Prohibit funds for hiring former IRS employees without 

considering the employees past conduct and tax compliance; • Prohibit funds for targeting groups for regulatory scrutiny 

based on their ideological beliefs; • Prohibit funds for targeting citizens for exercising their 

First Amendment rights; • Prohibit funds for conferences that do not comply with the 

Treasury Inspector General for Tax Administration’s (TIGTA) 

recommendations regarding conferences; • Require extensive reporting on IRS spending and information technology; and • Provide TIGTA with $170,834,000 for its audit and investigative oversight of the IRS. 

The Committee remains concerned with the level of service taxpayers are receiving and continued cybersecurity threats. Targeted 

reporting is included to assist the Committee monitor and evaluate 

the IRS’s progress in these areas. 

A description of the Committee’s recommendation by appropriation is provided below. 

TAXPAYER SERVICES

Appropriation, fiscal year 2018 ......................................................... 1 $2,506,554,000

Budget request, fiscal year 2019 ....................................................... 2,241,000,000 

Recommended in the bill ................................................................... 2,491,554,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. ¥15,000,000 

Budget request, fiscal year 2019 ................................................ +250,554,000 1 As directed by Public Law 115–141, Division E, Section 113 of the Administrative Provisions—Internal 

Revenue Service, $19,000,000 was transferred by the Commissioner of the Internal Revenue Service to the 

Taxpayer Services which increased the Taxpayer Services fiscal year 2018 level from $2,506,554 to 

$2,525,554,000. 

The Taxpayer Services appropriation provides for taxpayer services, including forms and publications; processing tax returns and 

related documents; filing and account services; taxpayer advocacy 

services; and assisting taxpayers to understand their tax obligations, correctly file their returns, and pay taxes due in a timely 

manner. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $2,491,554,000 

for Taxpayer Services. Additional funds are provided in provision 

113 of this Bill to assist the IRS with implementing the Tax Cuts 

and Jobs Act. These additional funds will provide a level of funding 

above the fiscal year 2018 enacted level for taxpayer Services. 

Within the amount provided, the Committee expects the IRS to sufficiently fund the Taxpayer Advocate Service and accommodate 

where possible their increased needs associated with the implementation of the Tax Cuts and Jobs Act. 

16 

Synthetic Identity Theft.—The Committee is concerned about the 

rising incidence of synthetic identity fraud. In 2018, losses as a result of this fraud are projected to be about $8,000,000,000. The 

Committee urges the IRS to remain committed to addressing identity theft and fraud and to mitigate emerging threats. 

Prosecutions of Identity Theft.—The Committee remains highly 

concerned about the prosecutions of identity theft. The Committee 

directs the Treasury Inspector General for Tax Administration 

(TIGTA) to submit a report to the Committees on Appropriations 

of the House and the Senate not later than 120 days after the date 

of enactment of this Act, detailing—(1) current efforts by the Internal Revenue Service to assist with the prosecution of violations of 

section 1028(a) or 1028A(a) of title 18, United States Code, wherein 

the defendant misrepresented himself or herself to be engaged in 

lawful activities on behalf of, or carrying out lawful duties as an 

officer or employee of the Internal Revenue Service; (2) overall 

trends in the commission of such offenses; (3) TIGTA’s recommendations regarding what resources are needed to facilitate 

improved review and prosecution of such cases; and (4) information 

on what assistance the Internal Revenue Service may offer victims 

of such offenses. 

Identity Theft Tax Refund Fraud.—The Committee requires a report, reviewed by the National Taxpayer Advocate, from the IRS 

that covers 2010–2018 period on: the number of taxpayers who 

have had their tax return rejected because their Social Security or 

taxpayer identification number was improperly used by another individual to commit tax fraud; the average time to resolve the situation and provide innocent taxpayers with their refund, when a refund is due; and the number of cases involving taxpayer identification numbers of residents of the territories. The report will also include a discussion on IRS’s progress and plans to expedite resolution for these taxpayers, to prevent non-victims from becoming victims, to educate the public on the threat of identity theft, and to 

detect, prevent, and combat identity-based tax fraud and actions. 

The Committee directs the IRS to submit the report to the Committees on Appropriations of the House and the Senate by June 1, 

2019. 

Since 2015, the Government Accounting Office’s High-Risk List 

has included IRS’s efforts to address IDT refund fraud. The IRS 

launched an Identity Theft Tax Refund Fraud Information Sharing 

and Analysis Center (ISAC) pilot for the 2017 filing season. It aims 

to allow the IRS, states, and tax preparation industry partners to 

quickly share information on IDT refund fraud. The Committee 

agrees with GAO’s recommendations to the IRS to ensure that (1) 

the ISAC better aligns with leading practices for effective pilot design, and (2) the ISAC Partnership develops an outreach plan to 

expand membership and improve understanding of the ISAC’s benefits. The Committee looks forward to improved collaboration of the 

IRS and ISAC to reduce refund fraud. 

Pre-Filled or Simple Tax Returns.—The Committee believes that 

converting a voluntary compliance system to a bill presentment 

model would represent a significant change in the relationship between taxpayers and their government. The simple return model 

would also strain IRS resources and the data retrieval systems required would create new burdens on employers, particularly small 

17 

businesses. In addition, a fundamental conflict of interest seems to 

be inherent in the nation’s tax collector and compliance enforcer 

taking on the simultaneous role of tax preparer and financial advisor. The Committee expects that the IRS will not begin work on a 

simple tax return pilot program or associated systems without first 

seeking specific authorization and appropriations from Congress, 

and should instead focus on helping Congress and the Administration achieve real tax simplification and reform. 

Safe Harbor.—The Committee instructs the IRS to follow and 

apply, the 75 percent math safe harbor test. Section 4052(f)(1) provides a safe harbor test that excludes from the tax previously taxed 

tractors that are refurbished as long as the restoration cost does 

not exceed 75-percent of the cost of a comparable new tractor. 

Therefore, the Committee expects that the IRS apply these longstanding statutory provisions as written and without additional interpretation, modification, or added conditions. 

Individual Mandate.— In October 2017, the IRS announced for 

Tax Year 2017, ‘‘the IRS will not consider a return complete and 

accurate if the taxpayer does not report full-year coverage, claim a 

coverage exemption, or report a shared responsibility payment on 

the tax return.’’ The IRS further instructed ‘‘to avoid refund and 

processing delays when filing 2017 tax returns in 2018, taxpayers 

should indicate whether they and everyone on their return had 

health coverage, qualified for an exemption from the coverage requirement or are making an individual shared responsibility payment.’’ The Committee directs the IRS to clarify agency policy regarding ‘‘silent returns’’ before the beginning of the 2018 tax filing 

season. 

State and Local Pension Plans.—The Committee recommends 

that the Secretary of the Treasury and the Commissioner of the 

IRS initiate a review of the existing regulatory guidance in Revenue Ruling 2006–43,and issue a revised revenue ruling that allows state and local pension plan sponsors to give existing plan 

participants the choice to make certain elections between pension 

plans or plan tiers without changing the treatment of employer 

contributions under 26 U.S.C. 414(h). 

2D bar codes.—The Committee encourages the Internal Revenue 

Service (IRS) to require 2D bar codes on 2019 paper tax returns 

and tax preparer software to produce 2D bar codes on 2019 tax return submissions. The 40 million paper tax returns submitted each 

year must be manually processed, this is expensive, time-consuming, and creates errors. 2D bar coding increases the quality of 

the data capture, reduces processing costs and improves fraud and 

identity theft detection. 

Self-Employed Tax Collection.—The Committee is concerned a 

shift towards self-employed and independent contracting within an 

increasingly gig-based economy will correspondingly increase underpayment and underreporting of self-employed taxes. The Committee directs the IRS to submit a letter briefing the Committees 

on Appropriations of the House and Senate within 90 days of enactment of this Act, on the IRS’s strategy to better-identify and collect in underpayments of self-employed taxes each year. 

18 

ENFORCEMENT

Appropriation, fiscal year 2018 ......................................................... 1 $4,860,000,000

Budget request, fiscal year 2019 ....................................................... 4,832,643,000 

Recommended in the bill ................................................................... 4,860,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ +27,357,000 1 As directed by Public Law 115–141, Division E, Section 113 of the Administrative Provisions—Internal Revenue Service, $10,000,000 was transferred by the Commissioner of the Internal Revenue Service to Enforcement which increased the Enforcement Account in fiscal year 2018 from $4,860,000,000 to 

$4,870,000,000. 

The Enforcement appropriation provides for the examination of 

tax returns, both domestic and international; the administrative 

and judicial settlement of taxpayer appeals of examination findings; technical rulings; monitoring employee pension plans; determining qualifications of organizations seeking tax-exempt status; 

examining tax returns of exempt organizations; enforcing statutes 

relating to detection and investigation of criminal violations of the 

internal revenue laws; identifying underreporting of tax obligations; securing unfiled tax returns; and collecting unpaid accounts. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $4,860,000,000 

for Enforcement. Of the funds provided, the Committee recommends not less than $60,257,000 to support IRS activities under 

the Interagency Crime and Drug Enforcement program. 

Printed Forms and Instructions.—The Committee encourages the 

IRS to continue to provide printed forms and instructions to vulnerable populations, especially in rural communities where internet usage rates are below the national average. 

Improper Payments.—The Committee believes that confidence 

and trust within the tax administration system is paramount to a 

strong voluntary tax compliance system. Each year, the Internal 

Revenue Service shall present to the Committees of Appropriations 

of the House and the Senate a report identifying the improper payment rates of refundable credits by tax return preparers and subsequent steps taken by the Internal Revenue Service to correct the 

compliance errors. The Committee also directs the Internal Revenue service to report to the Committees of Appropriations of the 

House and the Senate as to how many tax preparers were referred 

to the Return Preparer Office of the IRS, Criminal Investigations 

or the Department of Justice. 

Debt Collection.—The Committee commends the IRS for implementing the private debt collection program through the Fixing 

America’s Surface Transportation (FAST) Act (Pub. L. No. 114–94). 

The Committee remains concerned, however, that the schedule for 

release of inactive debts going forward contradicts the explicit language of the authorizing statute and will result in far lower receipts and related compliance funding than the Joint Committee on 

Taxation estimated would result from the provision. The law requires all inactive debts to be released, excluding only certain debts 

specified in the law. The Committee reminds the IRS that a substantial amount of revenue for compliance activities can be retained by the IRS through full implementation of the program. 

Tax Gap.—The IRS estimates, that taxpayers collectively pay a 

bit more than 80% of the taxes they owe. This difference between 

19 

the taxes people and businesses owe and what they pay on time is 

known as the tax gap which IRS estimated to be $458 billion, on 

average, for 2008–2010. The Government Accounting Office recommends that IRS re-establish goals for improving voluntary compliance and develop and document a strategy that outlines how it 

will use its data to update compliance strategies to address the tax 

gap. 

OPERATIONS SUPPORT

Appropriation, fiscal year 2018 ......................................................... 1 $3,634,000,000

Budget request, fiscal year 2019 ....................................................... 4,312,724,000 

Recommended in the bill ................................................................... 3,988,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +354,000,000 

Budget request, fiscal year 2019 ................................................ ¥324,724,000 1 As directed by Public Law 115–141, Division E, Section 113 of the Administrative Provisions—Internal 

Revenue Service, $291,000,000 was transferred by the Commissioner of the Internal Revenue Service to Operations Support which increased Operations Support in fiscal year 2018 from $3,638,446,000 to 

$3,925,000,000. 

The Operations Support appropriation provides for overall planning and direction of the IRS, including shared service support related to facilities services, rent payments, printing, postage, and security. Specific activities include headquarters management activities such as strategic planning, communications and liaison, finance, human resources, Equal Employment Opportunity and diversity, research, information technology, and telecommunications. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $3,988,000,000 

for Operations Support. 

Obligations and Employment.—Not later than 45 days after the 

end of each quarter, the IRS shall submit reports on its activities 

to the Committees on Appropriations of the House and the Senate. 

The reports shall include information about the obligations made 

during the previous quarter by appropriation, object class, office, 

and activity; the estimated obligations for the remainder of the fiscal year by appropriation, object class, office, and activity; the number of full-time equivalents within each office during the previous 

quarter; and the estimated number of full-time equivalents within 

each office for the remainder of the fiscal year. 

Information Technology Reports.—The Committee directs the IRS 

to submit quarterly reports on particular major project activities to 

the Committees on Appropriations of the House and the Senate 

and the Government Accounting Office (GAO), no later than 30 

days following the end of each calendar quarter in fiscal year 2019. 

The Committee expects the reports to include detailed, plain 

English explanations of the cumulative expenditures and schedule 

performance to date, specified by fiscal year; the costs and schedules for the previous 3 months; the anticipated costs and schedules 

for the upcoming 3 months; and the total expected costs to complete IRS’s top five major information technology project activities. 

In addition, the quarterly report should clearly explain when the 

project was started; the expected date of completion; the percentage 

of work completed as compared to planned work; the current and 

expected state of functionality; any changes in schedule; and current risks unrelated to funding amounts and mitigation strategies. 

The Committee directs the Department of the Treasury to conduct 

20 

a semi-annual review of IRS’s IT investments to ensure the cost, 

schedule, and scope of the projects’ goals are transparent. The 

Committee further directs GAO to review and provide an annual 

report to the Committees evaluating the cost and schedule of activities of all major IRS information technology projects for the year, 

with particular focus on the projects about which the IRS is submitting quarterly reports to the Committee. 

Digital Workspace.—The Committee recognizes that digital workspaces can increase user productivity, enhance cybersecurity & 

management, while also allowing for workforce flexibility, and 

urges the Internal Revenue Service to leverage the use of digital 

workspaces. 

BUSINESS SYSTEMS MODERNIZATION

Appropriation, fiscal year 2018 ......................................................... $110,000,000 

Budget request, fiscal year 2019 ....................................................... 110,000,000 

Recommended in the bill ................................................................... 200,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +90,000,000 

Budget request, fiscal year 2019 ................................................ +90,000,000 

The Business Systems Modernization (BSM) appropriation provides funding to modernize key business systems of the IRS. Funds 

have been permanently transferred from this account to Operations 

Support to fund operation and maintenance for the existing infrastructure that will help protect the IRS from cyber threats. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $200,000,000 for 

BSM. The Committee continues to support IRS in its efforts to 

modernize its business systems such as CADE 2, the Enterprise 

Case Management System, and the Return Review Program. These 

systems enhance IRS’s capabilities to better assist the taxpayer, to 

detect, address, and prevent tax refund fraud as well as web applications that will help the IRS transition to a more serviceable digital government. 

Information Technology Reports.—The Committee expects the 

IRS to continue to submit quarterly reports to the Committees and 

GAO during fiscal year 2019, no later than 30 days following the 

end of each calendar quarter. The Committee expects the reports 

to include detailed, plain English explanations of the cumulative 

expenditures and schedule performance to date, specified by fiscal 

year; the costs and schedules for the previous 3 months; the anticipated costs and schedules for the upcoming 3 months; and the total 

expected costs to complete CADE 2, Enterprise Case Management 

System, and Return Review Program. In addition, the quarterly report should clearly explain when the project was started; the expected date of completion; the percentage of work completed as 

compared to planned work; the current and expected state of 

functionality; any changes in schedule; and current risks unrelated 

to funding amounts and mitigation strategies. The Committee directs the Department of the Treasury to conduct a semi-annual review of CADE 2, Enterprise Case Management System, and Return 

Review Program to ensure the cost, schedule, and scope goals of 

the projects are transparent. The Committee further directs GAO 

to review and provide an annual report to the Committee evaluVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00024 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
21 

ating the cost and schedule of CADE 2, Enterprise Case Management System, and Return Review Program activities for the year, 

as well as an assessment of the functionality achieved. 

IRS’s IT Investments.—GAO has highlighted in its May 2018 report (GAO–18–298) that IRS needs to make improvements on delivering major tax processing and fraud detection acquisitions, managing key risks associated with aging legacy systems, and addressing IT workforce gaps. These improvements are critical to IRS’s 

management of its annual $2,600,000,000 investment in IT. The 

Committee encourages the IRS to address GAO’s recommendations 

and to prioritize those associated with the Customer Account Data 

Engine 2 and the Individual Master File. 

Identity Theft and Fraud Detection Filters.—In order to combat 

and reduce identity theft and refund fraud, the IRS has implemented a screening process using filters that flag potentially improper tax returns. Although these filters do identify improper returns and prevent improper refunds from being issued, they also 

have a high degree of inaccuracy with false positive rates averaging 

62 percent for its identity theft filters and 66 percent for its refund 

fraud filters during calendar year 2017 (through September 30), according to the National Taxpayer Advocate. The Committee is concerned with these high rates of false positives and directs the IRS 

to submit a report to the Committees on Appropriations of the 

House and the Senate that identifies the number of legitimate filers impacted by the high false positive rates, sets forth a plan to 

reduce the false positive rates (including an assessment of the benefits of adopting predictive modeling to both improve detection of 

improper returns and reduce false positives), and addresses the potential cost savings of a lower false positive rate. This report shall 

be prepared in consultation with the National Taxpayer Advocate 

and shall be due no later than 90 days after enactment of this Act. 

ADMINISTRATIVE PROVISIONS–INTERNAL REVENUE SERVICE

(INCLUDING TRANSFERS OF FUNDS)

Section 101. The Committee continues a provision that allows for 

the transfer of five percent of any appropriation made available to 

the IRS to any other IRS appropriation, upon the advance approval 

of the Committees on Appropriations of the House and the Senate. 

Section 102. The Committee continues a provision that requires 

the IRS to maintain a training program to include taxpayer rights, 

dealing courteously with taxpayers, cross-cultural relations, and 

the impartial application of tax law. 

Section 103. The Committee continues a provision that requires 

the IRS to institute and enforce policies and procedures that will 

safeguard the confidentiality of taxpayer information and protect 

taxpayers against identity theft. 

Section 104. The Committee continues a provision that makes 

funds available for improved facilities and increased staffing to provide efficient and effective 1–800 number help line service for taxpayers. 

Section 105. The Committee continues a provision that requires 

the IRS to notify employers of any address change request and to 

give special consideration to offers in compromise for taxpayers 

who have been victims of payroll tax preparer fraud. 

22 

Section 106. The Committee continues a provision with modifications that prohibits the IRS from targeting U.S. citizens for exercising their First Amendment rights. 

Section 107. The Committee continues a provision with modifications that prohibits the IRS from targeting groups based on their 

ideological beliefs. 

Section 108. The Committee continues a provision with modifications that requires the IRS to comply with procedures and policies 

on conference spending as recommended by the Treasury Inspector 

General for Tax Administration. 

Section 109. The Committee continues a provision with modifications that prohibits funds for giving bonuses to employees or hiring 

former employees without considering conduct and compliance with 

Federal tax law. 

Section 110. The Committee continues a provision with modifications that prohibits funds to violate the confidentiality of tax returns. 

Section 111. The Committee continues a provision with modifications that prohibits funds for pre-populated returns. 

Section 112. The Committee includes a new provision to prohibit 

funds for the IRS to deny tax exemption to a church for participating in, or intervening in, any political campaign on behalf of (or 

in opposition to) any candidates for public office unless the IRS 

Commissioner consents to such determination, the Commissioner 

notifies the tax committees of Congress, and the determination of 

denied tax exemption is effective 90 days after such notification. 

Section 113. Provides $77,000,000 to be used solely for carrying 

out Public Law 115–97. The IRS is directed to provide the Committees on Appropriations of the House and the Senate no later than 

30 days after the enactment of this Act, a detailed spending plan 

by account and object class for the funds provided. Additionally, the 

IRS is directed to submit quarterly spending plans broken out by 

account, and include, minimum, quarterly obligations and total obligations to date;actual and projected staffing levels; and updated 

timetables. 

ADMINISTRATIVE PROVISIONS—DEPARTMENT OF THE TREASURY

(INCLUDING TRANSFERS OF FUNDS)

Section 114. The Committee continues a provision that authorizes the Department to purchase uniforms, insurance for motor vehicles that are overseas, and motor vehicles that are overseas without regard to the general purchase price limitations; to enter into 

contracts with the State Department for health and medical services for Treasury employees who are overseas; and to hire experts 

or consultants. 

Section 115. The Committee continues a provision that authorizes transfers, up to two percent, between ‘‘Departmental OfficesSalaries and Expenses’’, ‘‘Office of Inspector General’’, ‘‘Special Inspector General for the Troubled Asset Relief Program’’, ‘‘Financial 

Crimes Enforcement Network’’, ‘‘Bureau of the Fiscal Service’’, and 

‘‘Alcohol and Tobacco Tax and Trade Bureau’’ appropriations under 

certain circumstances. 

Section 116. The Committee continues a provision that authorizes transfers, up to two percent, between the Internal Revenue 

23 

Service and the Treasury Inspector General for Tax Administration 

under certain circumstances. 

Section 117. The Committee continues a provision that prohibits 

the Department of the Treasury from undertaking a redesign of the 

one dollar Federal Reserve note. 

Section 118. The Committee includes a provision that provides 

for transfers from the Bureau of the Fiscal Service to the Debt Collection Fund as necessary for the purposes of debt collection. 

Section 119. The Committee continues a provision that requires 

congressional approval for the construction and operation of a museum by the United States Mint. 

Section 120. The Committee continues a provision prohibiting 

funds in this or any other Act from being used to merge the United 

States Mint and the Bureau of Engraving and Printing without the 

approval of the House and the Senate committees of jurisdiction. 

Section 121. The Committee continues a provision deeming that 

funds for the Department of the Treasury’s intelligence-related activities are specifically authorized in fiscal year 2019 until enactment of the Intelligence Authorization Act for fiscal year 2019. 

Section 122. The Committee continues a provision permitting the 

Bureau of Engraving and Printing to use $5,000 from the Industrial Revolving Fund for reception and representation expenses. 

Section 123. The Committee continues a provision that requires 

the Department to submit a capital investment plan. 

Section 124. The Committee continues a provision that requires 

a report on the Department’s Franchise Fund. 

Section 125. The Committee continues a provision that prohibits 

the Department from finalizing any regulation related to the standards used to determine the tax-exempt status of a 501(c)(4) organization. 

Section 126. The Committee continues a provision that requires 

quarterly reports of the Office of Financial Research (OFR) and Office of Financial Stability. 

Section 127. The Committee includes a new provision that authorizes the Office of Terrorism and Financial Intelligence to reimburse Treasury Departmental Offices for reception and representation expenses to support activities of the Financial Action Task 

Force. 

Section 128. The Committee includes a new provision to prohibit 

funds to approve, license, facilitate, authorize, or otherwise allow 

the importation of property confiscated by the Cuban Government. 

Section 129. The Committee includes a new provision to prohibit 

funds to approve or otherwise allow the licensing of a mark, trade 

name, or commercial name that is substantially similar to one that 

was used in connection with a business or assets that were confiscated unless expressly consented. 

Section 130. The Committee includes a new provision that prohibits the Department from enforcing guidance for U.S. positions 

on multilateral development banks which engage with developing 

countries on coal-fired power generation. 

Section 131. The Committee continues a provision that requires 

quarterly reports of the Office of Financial Research (OFR) and Office of Financial Stability. 

24 

Section 132. The Committee includes a new provision requiring 

the OFR to provide public notice of not less than 90 days before 

issuing a rule, report, or regulation. 

Section 133. The Committee includes a new provision that limits 

the fees available for obligation by the OFR to the amount provided 

in appropriations acts beginning in fiscal year 2020. The Committee believes that the activities of OFR should be subject to the 

annual review of Congress. 

TITLE II—EXECUTIVE OFFICE OF THE PRESIDENT AND 

FUNDS APPROPRIATED TO THE PRESIDENT 

Funds appropriated in this title provide for the staff and operations of the White House, along with other organizations within 

the Executive Office of the President (EOP), which formulate and 

coordinate policy on behalf of the President, such as the National 

Security Council and the Office of Management and Budget. The 

title also includes funding for the Office of National Drug Control 

Policy and certain expenses of the Vice President. 

THE WHITE HOUSE

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $55,000,000 

Budget request, fiscal year 2019 ....................................................... 55,000,000 

Recommended in the bill ................................................................... 55,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ – – – 

The White House Salaries and Expenses account supports staff 

and administrative services necessary for the direct support of the 

President. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $55,000,000 for 

the White House. 

EXECUTIVE RESIDENCE AT THE WHITE HOUSE

OPERATING EXPENSES

Appropriation, fiscal year 2018 ......................................................... $12,917,000 

Budget request, fiscal year 2019 ....................................................... 13,081,000 

Recommended in the bill ................................................................... 13,081,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +164,000 

Budget request, fiscal year 2019 ................................................ – – – 

These funds provide for the care, maintenance, staffing and operations of the Executive Residence, including official and ceremonial 

functions of the President. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $13,081,000 for 

the Operating Expenses of the Executive Residence. The bill continues the same restrictions on reimbursable expenses for use of 

the Executive Residence as were included in past years. 

25 

WHITE HOUSE REPAIR AND RESTORATION

Appropriation, fiscal year 2018 ......................................................... $750,000 

Budget request, fiscal year 2019 ....................................................... 750,000 

Recommended in the bill ................................................................... 750,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ – – – 

The White House repair and restoration account provides for the 

repair, alteration, and improvement of the Executive Residence at 

the White House. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $750,000 for 

White House Repair and Restoration. 

COUNCIL OF ECONOMIC ADVISERS

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $4,187,000 

Budget request, fiscal year 2019 ....................................................... 4,187,000 

Recommended in the bill ................................................................... 4,187,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ – – – 

The Council of Economic Advisers analyzes the national economy 

and its various segments, advises the President on economic developments, recommends policies for economic growth and stability, 

appraises economic programs and policies of the Federal Government, and assists in preparation of the annual Economic Report of 

the President. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $4,187,000 for 

the Council of Economic Advisers. 

NATIONAL SECURITY COUNCIL AND HOMELAND SECURITY COUNCIL

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $11,800,000 

Budget request, fiscal year 2019 ....................................................... 13,500,000 

Recommended in the bill ................................................................... 13,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +1,200,000 

Budget request, fiscal year 2019 ................................................ ¥500,000 

The National Security Council and the Homeland Security Council have been combined to form the National Security Staff which 

advises and assists the President in the integration of domestic, 

foreign, military, intelligence, and economic aspects of national security policy, and serves as the principal means of coordinating executive departments and agencies in the development and implementation of national security and homeland security policies. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $13,000,000 for 

the National Security Council and Homeland Security Council. The 

26 

Committee’s recommendation does not include a separate representation and reception appropriation. 

OFFICE OF ADMINISTRATION

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $100,000,000 

Budget request, fiscal year 2019 ....................................................... 100,000,000 

Recommended in the bill ................................................................... 100,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ – – – 

The Office of Administration is responsible for providing administrative services to the Executive Office of the President. These 

services include financial, personnel, procurement, information 

technology, records management, and general office services. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $100,000,000 for 

the Office of Administration. Of the recommended amount, not to 

exceed $12,800,000 is available until expended for modernization of 

the information technology infrastructure within the Executive Office of the President. 

OFFICE OF MANAGEMENT AND BUDGET

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $101,000,000 

Budget request, fiscal year 2019 ....................................................... 103,000,000 

Recommended in the bill ................................................................... 103,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +2,000,000 

Budget request, fiscal year 2019 ................................................ – – – 

The Office of Management and Budget (OMB) assists the President in the discharge of budgetary, economic, management, and 

other executive responsibilities. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $103,000,000 for 

OMB. The recommendation also continues several long-standing 

provisos, not requested by the President, limiting certain OMB activities. 

Budget Submission.—The recommendation provides sufficient 

funds for OMB to consult with Congressional Committees and provide an appropriate number of printed copies of the President’s fiscal year 2019 budget request, including documents such as the Appendix, Historical Tables, and Analytical Perspectives. 

Personnel and Obligations Report.—The Committee continues direction to OMB to provide the Committees on Appropriations of the 

House and the Senate with quarterly reports on personnel and obligations consisting of on-board staffing levels, estimated staffing 

levels by office for the remainder of the fiscal year, total obligations 

incurred to date, estimated total obligations for the remainder of 

the fiscal year, and a narrative description of current hiring initiatives. 

27 

Unobligated Balances Report.—OMB is directed to report to the 

Committees on Appropriations of the House and the Senate within 

45 days of the end of each fiscal quarter on available balances at 

the start of the fiscal year, current year obligations, and resulting 

unobligated balances for each discretionary account within the Financial Services and General Government subcommittee’s jurisdiction. 

Social Cost of Carbon.—The Committee continues direction the 

Office of Information and Regulatory Affairs (OIRA) to rely on instruction included in the Executive Order ′′Promoting Energy Independence and Economic Growth,′′ dated March 28, 2018, and ensure that any estimates developed by agencies that include monetizing the value of changes in greenhouse gas emissions resulting 

from regulations are consistent with Executive Order 12866 and 

OMB Circular A-4 of September 17, 2003. OIRA should not permit 

any regulations to be finalized using the Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory 

Impact Analysis Under Executive Order 12866, Interagency Working Group on Social Cost of Carbon, United States Government, 

May 2013, revised August 2016; or the Addendum to Technical 

Support Document on Social Cost of Carbon for Regulatory Impact 

Analysis Under Executive Order 12866: Application of the Methodology to Estimate the Social Cost of Methane and the Social Cost 

of Nitrous Oxide, Interagency Working Group on Social Cost of 

Greenhouse Gases, United States Government, August 2016. 

Intellectual Property.—The Committee continues to strongly support the Office of the Intellectual Property Enforcement Coordinator (IPEC), and efforts to reduce online copyright infringement 

and promote meaningful protection of American intellectual property abroad. The Committee’s recommendation includes no less 

than three FTEs dedicated solely to the Office of IPEC from OMB. 

Improper Payments.—The Committee encourages OMB to continue working with agencies across the Federal government to ensure processes are in place to eliminate payments to deceased persons. OMB is again directed to report to the Committees on Appropriations of the House and the Senate within 120 days of enactment of this Act on how it is reducing improper payments to deceased individuals, and what initiatives have proven to be most effective. 

Customer Service.—The Committee continues to support efforts 

to improve customer service in accordance with Executive Order 

13571—Streamlining Service Delivery and Improving Customer 

Service. The Committee continues direction to OMB to develop 

standards to improve customer service for all agencies, and incorporate the standards into the performance plans required under 31 

U.S.C. 1115. 

Performance Measures.—The Committee continues to urge OMB 

to work with agencies to ensure that agency funding requests in 

fiscal year 2019 are directly linked to agency performance plans, 

and highlight examples of where improved performance links to the 

budget in the fiscal year 2019 budget justifications. 

Online Budget Repository.—The Committee encourages OMB to 

develop a central online repository where all Federal agency budgets and their respective justifications are publicly available in a 

consistent searchable, sortable, and machine readable format. 

28 

Offsetting Collections Report.—The Committee directs OMB to 

submit a report to the House and Senate Committees on Appropriations concurrent with the fiscal year 2019 budget submission 

detailing the offsetting collections derived from non-federal sources 

that are authorized by law and not subject to appropriations. 

USASpending.gov.—The Committee encourages OMB to regularly assess the consistency and more importantly the accuracy of 

the information reported on USASpending.gov by federal agencies. 

OFFICE OF NATIONAL DRUG CONTROL POLICY

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $18,400,000 

Budget request, fiscal year 2019 ....................................................... 17,400,000 

Recommended in the bill ................................................................... 17,400,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. ¥1,000,000 

Budget request, fiscal year 2019 ................................................ – – – 

The Office of National Drug Control Policy (ONDCP) was established by the Anti-Drug Abuse Act of 1988. As the President’s primary source of support for counter-drug policy development and 

program oversight, ONDCP is responsible for developing and updating a National Drug Control Strategy, developing a National 

Drug Control Budget, and coordinating and evaluating the implementation of Federal drug control activities. In addition, ONDCP 

manages several counter-drug programs which are discussed under 

the ‘‘Federal Drug Control Programs’’ heading below. These programs include the High Intensity Drug Trafficking Areas (HIDTA) 

program and Drug-Free Communities grants. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $17,400,000 for 

ONDCP Salaries and Expenses. The Committee expects ONDCP to 

focus resources on the counter-drug policy development, coordination, and evaluation functions which are the primary mission of the 

Office and the origins of its existence. 

The Committee strongly supports the Office of National Drug 

Control Policy programs to reduce drug use and drug trafficking, 

and its unique position as the coordinator of Federal programs. The 

Committee expects ONDCP to focus resources on the counter-drug 

policy development, coordination, and evaluation functions, which 

are the primary mission of the Office and the origins of its existence. To the extent practicable, ONDCP should prioritize discretionary funds to aid States that have identified heroin, cocaine, 

methamphetamine, and opioid addiction as threats, and are developing community responses to combat those drugs that prioritize 

treatment and health services over criminal punishment. ONDCP 

is directed to report to the Committees on Appropriations of the 

House and the Senate within 90 days of enactment on how its programs are addressing these challenges. 

The Committee commends the work that ONDCP has done to aid 

rural communities in combating the opioid epidemic. More work is 

still needed to help some of the hardest hit communities in both 

rural America and Appalachia. The Committee expects ONDCP to 

coordinate with small and rural law enforcement agencies and deVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00032 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
29 

velop strategies to improve the effectiveness of drug eradication efforts through shared intelligence, technology, and manpower despite limited resources. 

The Committee notes the importance of the High Intensity Drug 

Trafficking Areas (HIDTA) and the Drug-Free Communities (DFC) 

grant programs in combating the nation’s opioid epidemic. The 

Committee further notes that the Office of National Drug Control 

Policy (ONDCP) ensures the HIDTA and DFC programs are equitably managed across federal, state, and local agencies and with 

the necessary interagency flexibility to address emerging threats. 

The Committee directs ONDCP to retain operational control over 

the HIDTA and DFC programs to maintain the interagency benefits needed to address the opioid crisis. 

The Committee strongly supports the ONDCP programs to reduce drug use and drug trafficking, and believes it is critical for 

ONDCP to remain a strong voice in the Executive Office and a visible presence nationally. The Committee emphasizes the importance 

of a comprehensive approach to combatting the epidemic and so directs ONDCP, in strategy development and resource allocation, to 

balance public health and public safety. In this balance, the Committee notes the importance of: identifying early intervention opportunities, improving access to preventative and prescriptive 

treatment, strengthening community and school-based education 

programs, and supporting long-term recovery. 

FEDERAL DRUG CONTROL PROGRAMS

HIGH INTENSITY DRUG TRAFFICKING AREAS PROGRAM

(INCLUDING TRANSFERS OF FUNDS)

Appropriation, fiscal year 2018 ......................................................... $280,000,000 

Budget request, fiscal year 2019 ....................................................... – – – 

Recommended in the bill ................................................................... 280,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ +280,000,000 

The High Intensity Drug Trafficking Areas (HIDTA) Program 

provides resources to Federal and State, local, and tribal agencies 

in designated HIDTAs to combat the production, transportation 

and distribution of illegal drugs; to seize assets derived from drug 

trafficking; to address violence in drug-plagued communities; and 

to disrupt the drug marketplace. 

Currently, 28 HIDTAs operate in 49 States plus the District of 

Columbia, Puerto Rico, and the Virgin Islands. Each HIDTA is 

managed by an Executive Board comprised of equal numbers of 

Federal, State, local or tribal officials. Each HIDTA Executive 

Board is responsible for designing and implementing initiatives for 

the specific drug trafficking threats in its region. Intelligence and 

information sharing are key elements of all HIDTA programs. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $280,000,000 for 

the HIDTA Program. The Committee believes that the HIDTA program has demonstrated its effectiveness and can serve as an important tool in combating problems of drug trafficking and drug-related violence. 

30 

The Committee includes language requiring that existing 

HIDTAs receive funding at least equal to the fiscal year 2018 level 

unless the Director submits a justification for doing otherwise to 

the Committees on Appropriations, based on clearly articulated priorities and published performance measures. 

The recommendation includes language directing ONDCP to notify the Committees on Appropriations of the initial allocation of 

HIDTA funds no later than 45 days after enactment, and to notify 

the Committees of the proposed use of funds no later than 90 days 

after enactment. The language directs the ONDCP Director to work 

in consultation with the HIDTA Directors in determining the uses 

of that discretionary funding. 

Finally, the Committee recommendation specifies that up to 

$2,700,000 may be used for auditing services and related activities. 

OTHER FEDERAL DRUG CONTROL PROGRAMS

(INCLUDING TRANSFERS OF FUNDS)

Appropriation, fiscal year 2018 ......................................................... $117,093,000 

Budget request, fiscal year 2019 ....................................................... 11,843,000 

Recommended in the bill ................................................................... 118,327,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +1,234,000 

Budget request, fiscal year 2019 ................................................ +106,484,000 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $118,327,000 for 

Other Federal Drug Control Programs. The recommended level for 

fiscal year 2019 is distributed among specific programs and activities as follows: 

Drug-Free Communities .................................................................... $100,000,000 

Drug court training and technical assistance .................................. 2,000,000 

Model Drug Laws (Section 1105 of P.L. 109–469) ........................... 1,250,000 

CARA Activities (Section 103 of P.L. 114–198) ............................... 3,000,000 

Anti-Doping activities ........................................................................ 9,500,000 

World Anti-Doping Agency dues ....................................................... 2,577,000 

Within the total for the Drug-Free Communities program, 

$2,000,000 is for training authorized by Section 4 of P.L. 107–82. 

UNANTICIPATED NEEDS

Appropriation, fiscal year 2018 ......................................................... $798,000 

Budget request, fiscal year 2019 ....................................................... 1,000,000 

Recommended in the bill ................................................................... 1,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +202,000 

Budget request, fiscal year 2019 ................................................ – – – 

The unanticipated needs account enable the President to meet 

unanticipated exigencies in support of the national interest, security, or defense. 

COMMITTEE RECOMMENDATION

The Committee recommends $1,000,000 for unanticipated needs 

in fiscal year 2019. 

31 

INFORMATION TECHNOLOGY OVERSIGHT AND REFORM

(INCLUDING TRANSFER OF FUNDS)

Appropriation, fiscal year 2018 ......................................................... $19,000,000 

Budget request, fiscal year 2019 ....................................................... 25,000,000 

Recommended in the bill ................................................................... 15,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. ¥4,000,000 

Budget request, fiscal year 2019 ................................................ ¥10,000,000 

These funds support efforts to make the Federal Government’s 

investments in information technology (IT) more efficient, secure 

and effective. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $15,000,000 for 

information technology oversight activities. 

Information Technology Investment: Information Sharing.—The 

Committee has provided funds through the Information Technology 

Oversight and Reform (ITOR) account and the new IT Modernization Fund, plus hundreds of millions of dollars across the many 

subcommittees, agencies, and accounts to improve the government’s 

IT portfolio. Investments are made after numerous hearings, briefings, justifications, and work from auditors like inspector general 

offices and the Government Accountability Office are presented. 

Along with the authorizing committees of jurisdiction, the Committee takes the responsibility for improving IT investments while 

accounting for taxpayer dollars very seriously. It is surprising, 

then, when staff charged with administering the new IT Modernization Fund refuse to share findings and respond to queries 

from the very committees that made the Fund possible. The Committee directs OMB and GSA to work more collaboratively with the 

relevant committees of jurisdiction in order to better evaluate the 

needs of agencies and opportunities for improving IT across government. 

SPECIAL ASSISTANCE TO THE PRESIDENT

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $4,288,000 

Budget request, fiscal year 2019 ....................................................... 4,288,000 

Recommended in the bill ................................................................... 4,288,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ – – – 

These funds support the executive functions of the Office of the 

Vice President. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $4,288,000 for 

the Office of the Vice President. 

32 

OFFICIAL RESIDENCE OF THE VICE PRESIDENT

OPERATING EXPENSES

(INCLUDING TRANSFER OF FUNDS)

Appropriation, fiscal year 2018 ......................................................... $302,000 

Budget request, fiscal year 2019 ....................................................... 302,000 

Recommended in the bill ................................................................... 302,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ – – – 

These funds support the care and operation of the Vice President’s residence and specifically support equipment, furnishings, 

dining facilities, and services required to perform and discharge the 

Vice President’s official duties, functions and obligations. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $302,000 for the 

Operating Expenses of the Vice President’s residence. 

ADMINISTRATIVE PROVISIONS—EXECUTIVE OFFICE OF THE

PRESIDENT AND FUNDS APPROPRIATED TO THE PRESIDENT

(INCLUDING TRANSFER OF FUNDS)

Section 201. The Committee includes language permitting the 

transfer of not to exceed ten percent of funds between various accounts within the Executive Office of the President, with advance 

approval of the Committees on Appropriations. The amount of an 

appropriation shall not be increased by more than 50 percent. 

Section 202. The Committee includes language requiring the Director of the Office of Management and Budget to include a statement of budgetary impact with any Executive Order or Presidential 

Memorandum issued or rescinded during fiscal year 2019 where 

the regulatory cost exceeds $100,000,000. 

TITLE III—THE JUDICIARY 

The funds recommended by the Committee in title III of the accompanying bill are for the operation and maintenance of United 

States Courts and include the salaries of judges, probation and pretrial services officers, public defenders, court clerks, law clerks, and 

other supporting personnel, as well as security costs, information 

technology, and other expenses of the Federal Judiciary. The Committee recommends a total of $7,266,021,000 in discretionary funding for the Judiciary in fiscal year 2019. 

In addition to direct appropriations, the Judiciary collects various 

fees and has certain multiyear funding authorities. The Judiciary 

uses these non-appropriated funds to offset its direct appropriation 

requirements. Consistent with prior year practices and section 608 

of this Act, the Committee expects the Judiciary to submit a financial plan, within 60 days of enactment of this Act, allocating all 

sources of available funds including appropriations, fee collections, 

and carryover balances. This financial plan will be the baseline for 

purposes of reprogramming notification. 

Improving the physical security at buildings occupied by the Judiciary and U.S. Marshals Service (USMS) and ensuring the integVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00036 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
33 

rity of the judicial process by providing secure facilities to conduct 

judicial business is a priority for the Committee. Under the General Services Administration’s (GSA) Federal Buildings Fund appropriation, the Committee recommends $11,500,000 for the Judiciary Capital Security program for alterations to improve physical 

security in buildings occupied by the Judiciary and USMS. 

The Committee notes that a fair and efficient judicial system depends on ensuring citizens have reasonable access to the federal 

courts. The Committee encourages the Judiciary and the General 

Services Administration to collaborate with local stakeholders to facilitate continued community access to court services. The Committee further encourages the Judiciary, when developing its space 

requirements for a particular location, to continue to consider factors including the number of available judges, local facility conditions, security, rental and operating costs, the number and type of 

proceedings handled in that location, the location’s distance to the 

next closest federal court facility, and the population served in that 

location. 

SUPREME COURT OF THE UNITED STATES

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $82,028,000 

Budget request, fiscal year 2019 ....................................................... 84,359,000 

Recommended in the bill ................................................................... 84,703,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +2,675,000 

Budget request, fiscal year 2019 ................................................ +344,000 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $84,703,000 for 

fiscal year 2019 for the salaries and expenses of personnel and the 

cost of operating the Supreme Court, excluding the care of the 

building and grounds. The Committee includes bill language making $1,500,000 available until expended for the purpose of making 

information technology investments. The Committee directs the 

Court to include an annual report with its budget justification materials, showing information technology carryover balances and describing expenditures made in the previous fiscal year and planned 

expenditures in the budget year. 

CARE OF THE BUILDING AND GROUNDS

Appropriation, fiscal year 2018 ......................................................... $16,153,000 

Budget request, fiscal year 2019 ....................................................... 15,999,000 

Recommended in the bill ................................................................... 15,999,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. ¥154,000 

Budget request, fiscal year 2019 ................................................ – – – 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $15,999,000 for 

fiscal year 2019, to remain available until expended. The Architect 

of the Capitol has responsibility for these functions and supervises 

the use of this appropriation. 

34 

UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $31,291,000 

Budget request, fiscal year 2019 ....................................................... 31,274,000 

Recommended in the bill ................................................................... 32,016,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +725,000 

Budget request, fiscal year 2019 ................................................ +742,000 

COMMITTEE RECOMMENDATION

The Court of Appeals for the Federal Circuit has exclusive national jurisdiction over a large number of diverse subject areas, including government contracts, patents, trademarks, Federal personnel, and veterans’ benefits. The Committee recommends an appropriation of $32,016,000 for fiscal year 2019. 

UNITED STATES COURT OF INTERNATIONAL TRADE

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $18,889,000 

Budget request, fiscal year 2019 ....................................................... 19,070,000 

Recommended in the bill ................................................................... 19,450,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +561,000 

Budget request, fiscal year 2019 ................................................ +380,000 

COMMITTEE RECOMMENDATION

The Court of International Trade has exclusive nationwide jurisdiction of civil actions against the United States and certain civil 

actions brought by the United States, arising out of import transactions and administration and enforcement of the Federal customs 

and international trade laws. The Committee recommends an appropriation of $19,450,000 for fiscal year 2019. 

COURTS OF APPEALS, DISTRICT COURTS, AND OTHER JUDICIAL

SERVICES

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $5,099,061,000 

Budget request, fiscal year 2019 ....................................................... 5,132,543,000 

Recommended in the bill ................................................................... 5,167,961,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +68,900,000 

Budget request, fiscal year 2019 ................................................ +35,418,000 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $5,167,961,000 

for the operations of the regional courts of appeals, district courts, 

bankruptcy courts, the Court of Federal Claims, and probation and 

pretrial services offices. 

The Committee recommends a reimbursement of $8,475,000 for 

fiscal year 2019 from the Vaccine Injury Compensation Trust Fund 

to cover expenses of the United States Court of Federal Claims associated with processing cases under the National Childhood Vaccine Injury Act of 1986. 

35 

DEFENDER SERVICES

Appropriation, fiscal year 2018 ......................................................... $1,078,713,000 

Budget request, fiscal year 2019 ....................................................... 1,141,489,000 

Recommended in the bill ................................................................... 1,142,427,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +63,714,000 

Budget request, fiscal year 2019 ................................................ +938,000 

COMMITTEE RECOMMENDATION

This account provides funding for the operation of the Federal 

Public Defender and Community Defender organizations and for 

compensation and reimbursement of expenses of panel attorneys 

appointed pursuant to the Criminal Justice Act for representation 

in criminal cases. The Committee recommends an appropriation of 

$1,142,427,000 for fiscal year 2019. 

FEES OF JURORS AND COMMISSIONERS

Appropriation, fiscal year 2018 ......................................................... $50,944,000 

Budget request, fiscal year 2019 ....................................................... 51,233,000 

Recommended in the bill ................................................................... 49,750,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. ¥1,194,000 

Budget request, fiscal year 2019 ................................................ ¥1,483,000 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $49,750,000 for 

payments to jurors and land commissioners for fiscal year 2019. 

COURT SECURITY

(INCLUDING TRANSFER OF FUNDS)

Appropriation, fiscal year 2018 ......................................................... $586,999,000 

Budget request, fiscal year 2019 ....................................................... 602,309,000 

Recommended in the bill ................................................................... 604,460,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +17,461,000 

Budget request, fiscal year 2019 ................................................ +2,151,000 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $604,460,000 for 

Court Security in fiscal year 2019 to provide for necessary expenses 

of security and protective services in courtrooms and adjacent 

areas. The recommendation will provide for the highest priority security needs identified by the courts and the U.S. Marshals Service. 

ADMINISTRATIVE OFFICE OF THE UNITED STATES COURTS

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $90,423,000 

Budget request, fiscal year 2019 ....................................................... 89,867,000 

Recommended in the bill ................................................................... 92,413,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +1,990,000 

Budget request, fiscal year 2019 ................................................ +2,546,000 

COMMITTEE RECOMMENDATION

The Administrative Office of the United States Courts (AO) provides administrative and management support to the United States 

36 

Courts, including the probation and bankruptcy systems. It also 

supports the Judicial Conference of the United States in determining Federal Judiciary policies, in developing methods to assist 

the courts to conduct business efficiently and economically, and in 

enhancing the use of information technology in the courts. The 

Committee recommends an appropriation of $92,413,000 for the AO 

for fiscal year 2019. 

FEDERAL JUDICIAL CENTER

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $29,265,000 

Budget request, fiscal year 2019 ....................................................... 29,064,000 

Recommended in the bill ................................................................... 29,819,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +554,000 

Budget request, fiscal year 2019 ................................................ +755,000 

COMMITTEE RECOMMENDATION

The Federal Judicial Center (FJC) improves the management of 

Federal Judicial dockets and court administration through education for judges and staff, and research, evaluation, and planning 

assistance for the courts and the Judicial Conference. The Committee recommends an appropriation of $29,819,000 for the FJC for 

fiscal year 2019. 

UNITED STATES SENTENCING COMMISSION

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $18,699,000 

Budget request, fiscal year 2019 ....................................................... 18,548,000 

Recommended in the bill ................................................................... 18,548,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. ¥151,000 

Budget request, fiscal year 2019 ................................................ – – – 

COMMITTEE RECOMMENDATION

The purpose of the U.S. Sentencing Commission is to establish, 

review, and revise sentencing guidelines, policies, and practices for 

the Federal criminal justice system. The Commission is also required to monitor the operation of the guidelines and to identify 

and report necessary changes to the Congress. The Committee recommends $18,548,000 for the Commission for fiscal year 2019. 

ADMINISTRATIVE PROVISIONS—THE JUDICIARY

(INCLUDING TRANSFER OF FUNDS)

Section 301. The Committee continues language to permit funds 

for salaries and expenses to be available for employment of experts 

and consultant services as authorized by 5 U.S.C. 3109. 

Section 302. The Committee continues language that permits up 

to five percent of any appropriation made available for fiscal year 

2019 to be transferred between Judiciary appropriations provided 

that no appropriation shall be decreased by more than five percent 

or increased by more than ten percent by any such transfer except 

in certain circumstances. In addition, the language provides that 

any such transfer shall be treated as a reprogramming of funds 

37 

under sections 604 and 608 of the accompanying bill and shall not 

be available for obligation or expenditure except in compliance with 

the procedures set forth in those sections. 

Section 303. The Committee continues language authorizing not to exceed $11,000 to be used for official reception and representation expenses incurred by the Judicial Conference of the United 

States. 

Section 304. The Committee continues language through fiscal 

year 2019 regarding the delegation of authority to the Judiciary for 

contracts for repairs of less than $100,000. 

Section 305. The Committee continues language to authorize a 

court security pilot program. 

Section 306. The Committee includes language requested by the 

Judicial Conference of the United States to extend temporary 

judgeships in the districts of Arizona, California Central, Florida 

Southern, Kansas, Missouri Eastern, New Mexico, North Carolina 

Western, and Texas Eastern. 

TITLE IV—DISTRICT OF COLUMBIA 

FEDERAL FUNDS

FEDERAL PAYMENT FOR RESIDENT TUITION SUPPORT

Appropriation, fiscal year 2018 ......................................................... $40,000,000 

Budget request, fiscal year 2019 ....................................................... – – – 

Recommended in the bill ................................................................... 30,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. ¥10,000,000 

Budget request, fiscal year 2019 ................................................ +30,000,000 

The Resident Tuition Support program, also known as the D.C. 

Tuition Assistance Grant (DCTAG) program, provides up to 

$10,000 annually for undergraduate District students to attend eligible four-year public universities and colleges nationwide at instate tuition rates. Grants of up to $2,500 per year are available 

for students to attend private universities and colleges in the D.C. 

metropolitan area, private Historically Black Colleges and Universities nationwide, and public two-year community colleges nationwide. 

COMMITTEE RECOMMENDATION

The Committee recommends a Federal payment of $30,000,000 

for the resident tuition support program. The District of Columbia 

can contribute local funds to this program and is authorized to 

prioritize applications based on income and need if there is demand 

for the program beyond the available level of Federal funds. 

FEDERAL PAYMENT FOR EMERGENCY PLANNING AND SECURITY COSTS

IN THE DISTRICT OF COLUMBIA

Appropriation, fiscal year 2018 ......................................................... $13,000,000 

Budget request, fiscal year 2019 ....................................................... 12,000,000 

Recommended in the bill ................................................................... 13,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ +1,000,000 

As the seat of the national government, the District of Columbia 

has a unique and significant responsibility for protecting the propVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00041 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
38 

erty and personnel of the Federal Government. The Federal Payment for Emergency Planning and Security Costs is provided to 

help address the impact of the Federal presence on public safety 

in the District of Columbia. 

COMMITTEE RECOMMENDATION

The Committee recommends a Federal payment of $13,000,000 

for emergency planning and security costs. 

FEDERAL PAYMENT TO THE DISTRICT OF COLUMBIA COURTS

Appropriation, fiscal year 2018 ......................................................... $265,400,000 

Budget request, fiscal year 2019 ....................................................... 244,939,000 

Recommended in the bill ................................................................... 288,280,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +22,880,000 

Budget request, fiscal year 2019 ................................................ +43,341,000 

Under the National Capital Revitalization and Self-Government 

Improvement Act of 1997, the Federal Government is required to 

finance the District of Columbia Courts. This Federal payment to 

the District of Columbia Courts funds the operations of the District 

of Columbia Court of Appeals, Superior Court, the Court System, 

and the Capital Improvement Program. 

COMMITTEE RECOMMENDATION

The Committee recommends a Federal payment of $288,280,000 

for operation of the District of Columbia Courts. The District of Columbia Courts submitted a budget independent of the Administration and requested a total of $349,693,000 for fiscal year 2019. 

The amount recommended by the Committee includes 

$14,670,000 for the Court of Appeals; $122,770,000 for the Superior 

Court; $77,016,000 for the Court System; and $73,824,000 for capital improvements to courthouse facilities. Of the funds for capital 

improvements, the Committee’s recommendation includes funds to 

complete the Moultrie addition and move the various court offices 

into the completed building and out of leased space as proposed in 

the Courts’ budget request. 

FEDERAL PAYMENT FOR DEFENDER SERVICES IN DISTRICT OF

COLUMBIA COURTS

(INCLUDING TRANSFER OF FUNDS)

Appropriation, fiscal year 2018 ......................................................... $49,890,000 

Budget request, fiscal year 2019 ....................................................... 46,005,000 

Recommended in the bill ................................................................... 49,890,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ +3,885,000 

The District of Columbia Courts appoint and compensate attorneys to represent persons who are financially unable to obtain such 

representation. 

COMMITTEE RECOMMENDATION

The Committee recommends $49,890,000 for Defender Services 

in the District of Columbia Courts. 

39 

FEDERAL PAYMENT TO THE COURT SERVICES AND OFFENDER

SUPERVISION AGENCY FOR THE DISTRICT OF COLUMBIA

Appropriation, fiscal year 2018 ......................................................... $244,298,000 

Budget request, fiscal year 2019 ....................................................... 256,724,000 

Recommended in the bill ................................................................... 256,724,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +12,426,000 

Budget request, fiscal year 2019 ................................................ – – – 

The Court Services and Offender Supervision Agency (CSOSA) 

for the District of Columbia is an independent Federal agency created by the National Capital Revitalization and Self-Government 

Improvement Act of 1997. CSOSA acquired the operational responsibilities for the former District agencies in charge of probation and 

parole, and houses the Pretrial Services Agency (PSA) for the District of Columbia within its framework. 

COMMITTEE RECOMMENDATION

The Committee recommends a Federal payment of $256,724,000 

for CSOSA. Of the amounts provided, $183,166,000 is for Community Supervision and Sex Offender Registration and $73,558,000 is 

for pretrial services. In addition to the regular baseline activities, 

the Committee’s recommendation includes a total of $13,223,000 to 

remain available until September 30, 2021, for the costs associated 

with replacement leases and relocation of the CSOSA and pretrial 

services offices. 

FEDERAL PAYMENT TO THE DISTRICT OF COLUMBIA PUBLIC DEFENDER

SERVICE

Appropriation, fiscal year 2018 ......................................................... $41,829,000 

Budget request, fiscal year 2019 ....................................................... 45,858,000 

Recommended in the bill ................................................................... 45,858,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +4,029,000 

Budget request, fiscal year 2019 ................................................ – – – 

The Public Defender Service (PDS) for the District of Columbia 

is an independent organization authorized by the National Capital 

Revitalization and Self-Government Improvement Act of 1997, 

whose purpose is to provide legal representation services within the 

District of Columbia justice system. 

COMMITTEE RECOMMENDATION

The Committee recommends a Federal payment of $45,858,000 

for public defender services for the District of Columbia. In addition to the baseline activities, the Committee’s recommendation includes $4,471,000 to remain available until September 30, 2021, for 

the costs associated with replacement leases and relocation of the 

PDS offices. 

FEDERAL PAYMENT TO THE CRIMINAL JUSTICE COORDINATING

COUNCIL

Appropriation, fiscal year 2018 ......................................................... $2,000,000 

Budget request, fiscal year 2019 ....................................................... 1,900,000 

Recommended in the bill ................................................................... 2,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ +100,000 

40 

The Criminal Justice Coordinating Council (CJCC) provides a 

forum for District of Columbia and Federal law enforcement to 

identify criminal justice issues and solutions, and improve the coordination of their efforts. In addition, the CJCC developed and 

maintains the Justice Integrated Information System which provides for the seamless sharing of information with Federal and 

local law enforcement. 

COMMITTEE RECOMMENDATION

The Committee recommends a Federal payment of $2,000,000 to 

the Criminal Justice Coordinating Council. 

FEDERAL PAYMENT FOR JUDICIAL COMMISSIONS

Appropriation, fiscal year 2018 ......................................................... $565,000 

Budget request, fiscal year 2019 ....................................................... 565,000 

Recommended in the bill ................................................................... 565,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ – – – 

This appropriation provides funding for the two judicial commissions. The first is the Judicial Nomination Commission (JNC), 

which recommends a panel of three candidates to the President for 

each judicial vacancy in the District of Columbia Court of Appeals 

and Superior Court. From the panel selected by the JNC, the President nominates a person for each vacancy and submits his or her 

name for confirmation to the Senate. The second commission is the 

Commission on Judicial Disabilities and Tenure (CJDT), which has 

jurisdiction over all judges of the Court of Appeals and Superior 

Court to determine whether a judge’s conduct warrants disciplinary 

action and whether involuntary retirement of a judge for health 

reasons is warranted. In addition, the CJDT conducts evaluations 

of judges seeking reappointment and judges who retire and wish to 

continue service as a senior judge. 

COMMITTEE RECOMMENDATION

The Committee recommends a Federal payment of $295,000 for 

the Commission on Judicial Disabilities and Tenure, and $270,000 

for the Judicial Nomination Commission. 

FEDERAL PAYMENT FOR SCHOOL IMPROVEMENT

Appropriation, fiscal year 2018 ......................................................... $45,000,000 

Budget request, fiscal year 2019 ....................................................... 45,000,000 

Recommended in the bill ................................................................... 45,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ – – – 

The Scholarships for Opportunity and Results (SOAR) Act, as reauthorized in the Financial Services and General Government Appropriations Act, 2018, authorizes funds to be evenly divided between District of Columbia Public Schools, Public Charter Schools 

and Opportunity Scholarships. 

COMMITTEE RECOMMENDATION

The Committee recommends a Federal payment of $45,000,000 

for school improvement. Based on the statutory funding formula, 

41 

$15,000,000 is provided for District of Columbia Public Schools, 

$15,000,000 is provided for public charter schools, and $15,000,000 

is provided for opportunity scholarships. 

FEDERAL PAYMENT FOR THE DISTRICT OF COLUMBIA NATIONAL GUARD

Appropriation, fiscal year 2018 ......................................................... $435,000 

Budget request, fiscal year 2019 ....................................................... 435,000 

Recommended in the bill ................................................................... 435,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ – – – 

The Major General David F. Wherley, Jr. District of Columbia 

National Guard Retention and College Access Program pays for the 

costs of a tuition assistance program for guard members. 

COMMITTEE RECOMMENDATION

The Committee recommends a Federal payment of $435,000 for 

the Major General David F. Wherley, Jr. District of Columbia National Guard Retention and College Access Program. The Committee acknowledges the unique role of the D.C. National Guard in 

addressing emergencies that may occur as a result of the presence 

of the Federal Government. 

FEDERAL PAYMENT FOR TESTING AND TREATMENT OF HIV/AIDS

Appropriation, fiscal year 2018 ......................................................... $5,000,000 

Budget request, fiscal year 2019 ....................................................... 5,000,000 

Recommended in the bill ................................................................... 5,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ – – – 

Currently, 2 percent of the population of the District of Columbia 

has been diagnosed with HIV/AIDS. This percentage surpasses the 

generally accepted definition of an epidemic, which is 1 percent of 

the population. Between 2007 and 2015, the number of new HIV 

infections has dropped by 72 percent. 

COMMITTEE RECOMMENDATION

The Committee recommendation includes $5,000,000 for a Federal payment for testing, education, and treatment of HIV/AIDS. 

DISTRICT OF COLUMBIA FUNDS

The Committee continues to appropriate local funds to the District of Columbia in accordance with and required by Article I, Section 8, clause 17 and Article I, Section 9, clause 7 of the Constitution. The bill provides local funds for the operation of the District 

of Columbia as approved by the District of Columbia Council and 

the Mayor. 

The Committee includes language that provides the District with 

the authority to spend their local funds in the following fiscal year 

in the event of an absence of Federal appropriations. This authority 

is continued in section 816 of this Act. 

42 

TITLE V—INDEPENDENT AGENCIES 

ADMINISTRATIVE CONFERENCE OF THE UNITED STATES

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $3,100,000 

Budget request, fiscal year 2019 ....................................................... 3,100,000 

Recommended in the bill ................................................................... 3,100,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ – – – 

The Administrative Conference of the United States (ACUS) is 

an independent agency that studies Federal administrative procedures and processes to recommend improvements to the President, 

Congress and other agencies. 

COMMITTEE RECOMMENDATION

The Committee recommends $3,100,000 for ACUS. 

BUREAU OF CONSUMER FINANCIAL PROTECTION

SALARIES AND EXPENSES

The Bureau of Consumer Financial Protection (BCFP) was established under title X of Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act) (P.L. 111–203) as a bureau under 

the Federal Reserve System. The Act consolidated authorities previously shared by seven Federal agencies under Federal consumer 

protection laws in the BCFP and provided the Bureau with additional authorities to conduct rulemaking, supervision, and enforcement with respect to Federal consumer financial laws. Funding required to support the Bureau’s operations are obtained from transfers from the Federal Reserve System. 

COMMITTEE RECOMMENDATION

The Committee’s recommendation limits transfers to the Bureau 

from the Federal Reserve to no more than $485,000,000 in fiscal 

year 2019, an amount consistent with the budget request. Language is included in title IX which amends the Dodd-Frank Wall 

Street Reform and Consumer Protection Act to bring the expenses 

and operations of the Bureau under the jurisdiction of the Committees on Appropriations of the House and the Senate, and also sets 

the limitation for the fiscal year. 

Small Institutions Exemption.—The Committee directs the Bureau to report to the Committees on Appropriations of the House 

and the Senate, the Committee on Financial Services of the House, 

and the Committee on Banking, Housing, and Urban Affairs of the 

Senate, within 120 days of enactment of this Act, on how the Bureau has used its authority under Section 1022 in rulemakings to 

exempt certain classes, any plans to revisit previous rulemakings 

to more carefully tailor or grant exemptions to rule that have been 

especially burdensome, and the process for the Bureau to consider 

exemptions to community institutions in future rulemakings. 

Small Business Data Gathering.—The Committee remains concerned that the Bureau’s data-collection and reporting mandates, 

as described under section 1071, Public Law 11–203, are widely exVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00046 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
43 

pected to compound existing regulatory and paperwork burdens to 

small businesses that are often sole proprietors. The Bureau’s discretionary authority to demand additional data is unlimited. For 

example, the Bureau rule for home mortgage disclosures has expanded data requirement for lenders to provide at least 110 different data points they need to collect on every mortgage loan. The 

Committee encourages the Bureau to utilize cost benefit analysis 

and stakeholder public comment periods in developing additional 

any proposals for extensive data collection and reporting requirements. In addition, any regulations or guidance should include an 

analysis of the impact of any such regulation or guidance particularly on small businesses and other stakeholders including but not 

necessarily limited to (a) the availability of commercial loans; (b) 

the affordability of commercial loans; (c) the estimated costs to 

commercial loan applicants; (d) the estimated compliance costs of 

collection and reporting; and (e) the possibility of exposure of personally identifiable financial information. 

CONSUMER PRODUCT SAFETY COMMISSION

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $126,000,000 

Budget request, fiscal year 2019 ....................................................... 123,450,000 

Recommended in the bill ................................................................... 127,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +1,000,000 

Budget request, fiscal year 2019 ................................................ +3,550,000 

The Consumer Product Safety Act established the Consumer 

Product Safety Commission (CPSC), an independent Federal regulatory agency, to reduce the risk of injury associated with consumer 

products. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $127,000,000 for 

the CPSC for fiscal year 2019. Within the amount provided under this heading, $1,300,000 is 

for the Virginia Graeme Baker Pool and Spa Safety Act grant program. The Committee commends the CPSC for continuing to provide resources for the national and grassroots ‘‘Pool Safely’’ campaign, a safety information and education program designed to reduce child drownings and near drowning injuries and maintain a 

zero fatality rate for drain entrapments. This multifaceted initiative includes consumer and industry education efforts, press 

events, partnerships, outreach, and advertising. The committee expects the CPSC to maintain the fiscal year 2018 levels for the ‘‘Pool 

Safely’’ campaign. 

Voluntary Recall.—The Committee remains concerned about proposed changes to the voluntary recall system that would serve to 

negatively impact small businesses. Despite overwhelming opposition, the Commission has failed to withdraw its proposed rule on 

voluntary recalls. The Committee opposes making unnecessary 

changes to a recall system that has worked well over the past 40 

years, owing to a successful partnership between businesses and 

the Commission. To that end, the Committee strongly encourages 

the Commission to withdraw the proposed rule. 

44 

Public Disclosures of Information.—Section 6(b) of the Consumer 

Product Safety Act (CPSA) requires CPSC to take reasonable steps 

to ensure that any disclosure of information relating to a consumer 

product safety incident is accurate and fair. The Committee remains concerned that the Commission has not withdrawn a proposed rule on section 6(b) that threatens to undermine a successful 

partnership based on openness and trust between industry and the 

Commission. The Committee cautions the Commission about making changes to a process that has succeeded in both protecting the 

consumer against harm and protecting industry against inaccurate 

disclosures of information before an investigation has been completed. Consequently, the Committee strongly encourages the Commission to withdraw the proposed rule. 

ADMINISTRATIVE PROVISION—CONSUMER PRODUCT SAFETY

COMMISSION

Section 501. The Committee continues language prohibiting 

funds to finalize, implement, or enforce the proposed rule on recreational off-highway vehicles until a study is completed by the National Academy of Sciences. 

ELECTION ASSISTANCE COMMISSION

SALARIES AND EXPENSES

(INCLUDING TRANSFER OF FUNDS)

Appropriation, fiscal year 2018 ......................................................... $10,100,000 

Budget request, fiscal year 2019 ....................................................... 9,200,000 

Recommended in the bill ................................................................... 10,100,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ +900,000 

The Election Assistance Commission (EAC) was established by 

the Help America Vote Act of 2002 (HAVA) and is charged with implementing provisions of that Act relating to the reform of Federal 

election administration. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $10,100,000 for the salaries and expenses of the EAC, of which $1,500,000 shall be 

transferred to the National Institute of Standards and Technology 

for election reform activities authorized under the Help America 

Vote Act of 2002. 

FEDERAL COMMUNICATIONS COMMISSION

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $322,035,000 

Budget request, fiscal year 2019 ....................................................... 333,118,000 

Recommended in the bill ................................................................... 335,118,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +13,083,000 

Budget request, fiscal year 2019 ................................................ +2,000,000 

The mission of the Federal Communications Commission (FCC) 

is to implement the Communications Act of 1934 and assure the 

45 

availability of high quality communications services for all Americans. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $335,118,000 for 

the salaries and expenses of the FCC, all of which is to be derived 

from offsetting collections. The Committee also includes a cap of 

$130,284,000 for the administration of spectrum auctions. 

Telephone Consumer Protection Act (TCPA).—Recently, the U.S. 

Court of Appeals for the D.C. Circuit found that aspects of the 

FCC’s most recent interpretation of the Telephone Consumer Protection Act (TCPA) in 2015 were arbitrary and capricious. The 

Committee urges the FCC to clarify the aspects of its 2015 interpretation that were struck down by the court, including reviewing 

the definition of an automatic dialer and how businesses should 

treat reassigned numbers. 

Preventing Waste.—The Committee supports the Lifeline program’s mission of making basic communications services affordable 

to low-income Americans, and shares the Commission’s objective of 

minimizing waste, fraud, and abuse in the program. The Committee urges the Commission to ensure that the measures already 

adopted to combat waste, fraud, and abuse, such as the National 

Verifier, are swiftly and faithfully implemented. 

Unmanned Aircraft Systems (UAS) Spectrum Report.—The Committee is aware that the FCC’s Technological Advisory Council 

(TAC) currently is studying ‘‘drone’’ or UAS issues, including control, monitoring, and payload delivery, and that the National Telecommunications and Information Administration is liaising with 

the FCC on this process. The TAC is actively reviewing the various 

spectrum needs for drones (command and control, payload, identification, collision avoidance), considering both the need to make efficient use of the spectrum and the need to avoid causing harmful 

interference to systems on the ground. As part of this process, the 

Committee urges the TAC to review: (1) whether small unmanned 

aircraft systems operations might be permitted to operate on spectrum designated for aviation use, on an unlicensed, shared, or exclusive basis, for operations within the UTM system or outside of 

such a system; (2) the existence of potential barriers to the use of 

such spectrum; and (3) other potential spectrum options if spectrum currently designated for aviation operations is unusable for 

this purpose. Within 90 days of the TAC’s report or submission to 

FCC’s staff, the Commission shall report to the Committee on the 

results and recommendations of the TAC. 

Broadcaster Relocation.—The fiscal year 2018 Omnibus (P.L. 

115–141) provided $1 billion over two years to the TV Broadcaster 

Relocation Fund to reimburse the service and equipment costs of 

channel relocation incurred by the broadcast industry, as well as 

providing financial assistance to FM stations, TV translators, and 

Low Power stations. The Committee is aware of concerns about the 

length of time and funds available to broadcasters to repack stations and the Committee intends to monitor this issue closely. Both 

broadcasters and entities who purchased spectrum participated in 

good faith to make the incentive auction successful. The Committee 

supported the Commission’s administration of the incentive auction 

46 

and expects the FCC to take into careful consideration any participating entity’s concerns. 

Net Neutrality/Open Internet.—The Committee supports the recent efforts by the FCC to scale back previous actions taken by the 

Commission to regulate the internet. Imposing heavy-handed economic regulation disincentivizes growth, particularly in areas of 

the country that need infrastructure investment the most. Government agencies should not get in the way of U.S. innovation, investment, and expansion and the Committee strongly supports the 

Commission’s efforts to support broadband expansion and consumer choice. 

USF High Cost Program.—The committee appreciates the ongoing commitment of the FCC to its multi-year initiative to modernize and target the focus of the Universal Service Fund (USF), 

and particularly its High Cost program. Nevertheless, the outcome 

of these efforts can be troubling particularly with regard to standalone broadband services and may conflict with the statutory mandate of providing specific, predictable, and sufficient support to ensure universal consumer access to reasonably comparable services 

at reasonably comparable rates. The committee strongly supports 

a comprehensive assessment of what is needed to realistically right 

size the High Cost USF program budget to allow it to fulfill its 

statutory mission of universal service, and encourages the agency 

to consider applying uniform and consistent inflationary growth 

mechanisms to enable each USF program to carry out its respective 

objectives. 

Broadband Access.—The Committee strongly encourages the 

FCC to continue to work with the Universal Service Administrative 

Company (USAC) to allocate Universal Service Funds (USF) for 

broadband expansion in rural and economically disadvantaged 

areas in order to maximize the use of USF funds. The Committee 

believes the deployment of broadband in rural and economically 

disadvantaged areas is a driver of economic development, jobs, and 

new education opportunities and expects the Commission to 

prioritize these efforts. 

Territories and Tribal Lands.—The Committee is concerned 

about the disparity in access to broadband between the territories, 

tribal lands, and the 50 states. The Committee encourages the 

Commission to implement policies that increase broadband access 

and adoption in these areas. 

Transmissions of Local Television Programming.—The bipartisan 

Satellite Television Extension and Localism Reauthorization 

(STELAR) Act of 2014 was enacted to promote consumers’ access 

to television broadcast station signals that originate in their state 

of residence, with an emphasis on localism and the cultural and 

economic importance of local programming. Congress’s intent was 

to ensure Americans have access to local broadcast and media content. The Committee notes that many broadcast stations do not 

neatly conform to Neilsen-measured designated market area 

boundaries, preventing many satellite television viewers from accessing local news, politics, sports, and emergency programming. 

The Committee notes that despite the reforms made in STELAR, 

many communities continue to struggle with market modification 

petitions. The Committee is particularly concerned with the lack of 

clarity regarding the technical and economic feasibility requireVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00050 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
47 

ment. In reviewing this requirement, the FCC should provide a full 

analysis to ensure decisions on market modification are comprehensively reviewed and STELAR’s intent to promote localism is retained. The Committee therefore directs the FCC to adhere to statutory requirements and congressional intent when taking administrative action under STELAR. 

Hurricane Response.—The Committee is aware that the FCC utilized significant agency resources to resolve communications issues 

caused by Hurricanes Irma and Maria in Puerto Rico and the U.S. 

Virgin Islands. The Commission created an intra-agency task force, 

the Chairman of the FCC made two trips to Puerto Rico to survey 

the response, the FCC deployed staff on the ground in stricken 

areas, accelerated USF funding, and expedited approval for experimental licenses.The Committee supports the FCC’s efforts to deploy scarce agency resources and focus on the problems inherent in 

restoring and making more resilient telecommunications services in 

affected areas. The FCC is directed to submit a report to Congress 

not later than 90 days after enactment of this Act providing the 

status of these efforts to re-establish communications capabilities 

in Puerto Rico and the U.S. Virgin Islands in the aftermath of 

these two storms. The report must include the number of FCC resources and staff deployed to the territories immediately after Hurricane Maria; the total amount of agency funds used by month to 

restore telecommunications services in these areas; the level of coordination with other federal agencies and local authorities to restore telecommunications capabilities; the level of outreach to local 

stakeholders and telecommunications providers; impediments that 

prevented a rapid restoration of telecommunications services; and 

lessons learned that will help prepare for another disaster of such 

magnitude. 

ADMINISTRATIVE PROVISION—FEDERAL COMMUNICATIONS

COMMISSION

Section 510. The Committee continues language prohibiting the 

FCC from changing rules governing the Universal Service Fund regarding single connection or primary line restrictions. 

FEDERAL DEPOSIT INSURANCE CORPORATION

OFFICE OF THE INSPECTOR GENERAL

Appropriation, fiscal year 2018 ......................................................... $39,136,000 

Budget request, fiscal year 2019 ....................................................... 42,982,000 

Recommended in the bill ................................................................... 42,982,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +3,846,000 

Budget request, fiscal year 2019 ................................................ – – – 

Funding for the Office of the Inspector General (OIG) at the Federal Deposit Insurance Corporation (FDIC) is provided pursuant to 

31 U.S.C. 1105(a)(25), which requires a separate appropriation for 

each Office of Inspector General established under section 11(2) of 

the Inspector General Act of 1978. 

48 

COMMITTEE RECOMMENDATION

The Committee recommends $42,982,000 from the Deposit Insurance Fund and the Federal Savings and Loan Insurance Corporation (FSLIC) Resolution Fund to finance the OIG. 

FEDERAL ELECTION COMMISSION

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $71,250,000 

Budget request, fiscal year 2019 ....................................................... 71,250,000 

Recommended in the bill ................................................................... 71,250,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ – – – 

The Federal Election Commission (FEC) administers the disclosure of campaign finance information, enforces limitations on contributions and expenditures, and performs other tasks related to 

Federal elections. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $71,250,000 for 

the salaries and expenses of the FEC. 

Engagement in the political process is one of the hallmarks of 

our democracy. Americans are increasingly turning to social media 

platforms, such as Facebook, Instagram, and Twitter to engage in 

the political process. Indeed, spending on digital political advertising reached a record $1.4 billion in the 2016 election cycle. Yet, 

our campaign finance laws do not require any meaningful transparency about who is behind political advertisements run on digital 

platforms. Therefore, the Committee directs the Commission to report, within 90 days, on how the Commission plans to address the 

disparity in disclosure requirements for broadcast advertisements 

and online political advertisements. 

FEDERAL LABOR RELATIONS AUTHORITY

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $26,200,000 

Budget request, fiscal year 2019 ....................................................... 26,200,000 

Recommended in the bill ................................................................... 26,200,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ – – – 

Established by title VII of the Civil Service Reform Act of 1978, 

the Federal Labor Relations Authority (FLRA) serves as a neutral 

arbiter in the labor activities of non-postal Federal employees, Departments and agencies, and Federal unions on matters outlined in 

the Act, including collective bargaining and the settlement of disputes. Establishment of the FLRA gives full recognition to the role 

of the Federal Government as an employer. Under the Foreign 

Service Act of 1980, the FLRA also addresses similar issues affecting Foreign Service personnel by providing staff support for the 

Foreign Service Impasse Disputes Panel and the Foreign Service 

Labor Relations Board. 

49 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $26,200,000 for 

the FLRA for fiscal year 2019. 

FEDERAL TRADE COMMISSION

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $306,317,000 

Budget request, fiscal year 2019 ....................................................... 309,700,000 

Recommended in the bill ................................................................... 311,700,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +5,383,000 

Budget request, fiscal year 2019 ................................................ +2,000,000 

The mission of the Federal Trade Commission (FTC) is to enforce 

a variety of Federal antitrust and consumer protection laws. Appropriations for both the Antitrust Division of the Department of Justice and the Commission are partially financed by Hart-Scott-Rodino Act pre-merger filing fees. The Commission’s appropriation is 

also partially offset by Do-Not-Call registry fees. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $311,700,000 for 

the salaries and expenses of the FTC. The Congressional Budget 

Office estimates $136,000,000 of collections from Hart-Scott-Rodino 

premerger filing fees and $17,000,000 of collections from Do-NotCall list fees which partially offset the appropriation requirement 

for this account. 

Attorney and Aggregator Advertisements.—The FTC is encouraged to collaborate with the U.S. Food and Drug Administration as 

appropriate when assessing whether attorney and aggregator advertisements directly or indirectly misrepresent the safety of prescription drugs or medical devices. 

Content Theft.—The online theft of creative content poses significant threats to both content creators and American consumers. Piracy directly harms not only the 5.5 million American workers employed by the copyright industries, but it also presents a number 

of significant risks to American consumers. A recent report found 

that a full third of the 589 most popular content-theft websites harbored malware, computer viruses, and related cyber-security 

threats. The Committee directs the FTC to conduct consumer education to raise consumer awareness about how content-theft sites 

serve as bait to infect devices with malicious software enabling 

identity theft. 

GENERAL SERVICES ADMINISTRATION

The Committee continues several reporting requirements for the 

General Services Administration (GSA) for fiscal year 2019. 

Takings and Exchanges.—Using existing statutory authorities, 

GSA has been working to dispose of properties that no longer meet 

the needs of Federal agencies in exchange for assets of like value. 

Some of these exchanges are very complex in nature and involve 

multi-year, multi-party, and multi-billion dollar contracts. In addition, GSA also has the statutory authority to take properties. The 

Committee believes in some instances employing such authorities 

50 

can result in savings to the taxpayer when appropriately executed 

and wants to be kept informed of these activities. In order to provide increased transparency for the use and planned use of these 

authorities, the Administrator is directed to report to the Committees on Appropriations of the House and the Senate not later than 

30 days after the end of each quarter on the use of these authorities. The report shall include a description of all takings and exchange actions that occurred or were considered during the most 

recently completed quarter of the fiscal year, including the costs, 

benefits, and risks for each action. The report shall also include the 

planned or considered use of takings and exchange authorities during the remainder of the fiscal year, including the costs, benefits, 

and risks of each action. 

Spending Report.—Within 50 days after the end of each quarter, 

GSA shall submit spending reports to the Committees on Appropriations of the House and the Senate. The reports shall include actual obligations incurred and estimated obligations for the remainder of the fiscal year for each appropriation in the Federal Buildings Fund and regular discretionary appropriations. The reports 

shall include obligations by object class, program, project and activity. 

State of the Portfolio.—Not later than 45 days after the date of 

enactment of this Act, the Administrator shall submit to the Committees on Appropriations of the House and the Senate a report on 

the state of the Public Buildings Service’s real estate portfolio for 

fiscal year 2018. The content included in the report shall be comparable to the tabular information provided in past State of the 

Portfolio reports, including, but not limited to, the number of 

leases; the number of buildings; amount of square feet, revenue, expenses by type, and vacant space; top customers by square feet and 

annual rent; completed new construction, completed major repairs 

and alterations, and disposals, in total and by region where appropriate. 

Land Ports of Entry State of the Portfolio.—Within 90 days of the 

date of enactment of this Act, GSA is directed to provide the Committees on Appropriations of the House and the Senate a report on 

the state of the land ports of entry portfolio. The content of this report shall include, but shall not be limited to, a prioritized list of 

new construction and major repairs and alterations projects. 

Rental Rates.—The Committee expects GSA to provide workspace 

for its customers at commercially-comparable rental rates and at a 

superior value to the taxpayer. The Committee directs GSA to provide the Committees on Appropriations of the House and the Senate a report describing GSA’s methodology for calculating rental 

rates for Congressional offices located in Federal Courthouses within 45 days of the date of enactment of this Act. 

Historic Courthouses.—The Committee is concerned that the designs of federal courthouses in historic districts are not being drafted with the historic architecture and context in mind. Therefore, 

the Committee directs the GSA to update the Committee within 

180 days of enactment on courthouse construction projects currently underway, the status of those designs, and whether or not 

they meet the historical concerns of the surrounding areas. If they 

do not, the report should include the justification for that decision. 

For those courthouses that do not meet those criteria, the GSA 

51 

should immediately begin working with local authorities to remedy 

those concerns. 

Utilization of Previously Closed Military Installations under Base 

Realignment and Closure (BRAC).—The Committee encourages the 

GSA to maximize leasing opportunities at previously closed military installations under Base Realignment and Closure (BRAC). 

The Committee expects an ongoing dialogue with GSA to assess 

steps taken to promote and advance such an effort. 

Cooperative Purchasing and Multiple Award Schedule (MAS) 

Agreements.—The Committee is aware that federal agencies and 

state and local governments are increasingly utilizing cooperative 

purchasing and MAS agreements to procure goods and services, including services rendered for construction and renovation projects 

that involve federal funds. The Committee supports efforts to ensure proper transparency and oversight of such construction 

projects, which are often complex and site-specific. The Committee 

directs GSA to enforce any existing federal regulations that require 

independent design professionals be consulted on new construction 

and renovation projects. The Committee encourages GSA to work 

with state and local governments so that cooperative purchasing 

and MAS agreements that involve federal funding is in the best interest of the government. 

REAL PROPERTY ACTIVITIES

FEDERAL BUILDINGS FUND

LIMITATIONS ON AVAILABILITY OF REVENUE

(INCLUDING TRANSFERS OF FUNDS)

Limitations on Availability of Revenue: 

Limitation on availability, fiscal year 2018 .............................. $9,073,938,000 

Limitation on availability, budget request, fiscal year 2019 ... 10,131,673,000 

Recommended in the bill ............................................................ 8,634,574,000 

Bill compared with: 

Availability limitation, fiscal year 2018 .................................... ¥439,364,000 

Availability limitation, fiscal year 2019 request ...................... ¥1,497,099,000 

The Federal Buildings Fund (FBF) accounts for the activities of 

the Public Buildings Service (PBS), which provides space and services for Federal agencies in a relationship similar to that of landlord and tenant. The FBF, established in 1975, replaces direct appropriations with income derived from rent assessments, which approximate commercial rates for comparable space and services. The 

Committee makes funds available through a process of placing limitations on obligations from the FBF as a way of allocating funds 

for various FBF activities. 

COMMITTEE RECOMMENDATION

The Committee recommends a limitation on the availability of 

funds of $8,634,574,000 for the FBF. 

To carry out the purposes of the FBF, the revenues and collections deposited into the FBF shall be available for necessary expenses in the aggregate amount of $8,634,574,000 of which: 

$275,900,000 is for construction, $679,934,000 is for repairs and alterations, $5,430,345,000 is for rental of space, and $2,253,195,000 

is for building operations. 

52 

Historically, prior to obligating funding for prospectus-level construction, alterations, or leases, the Administration has waited for 

the project to be authorized through a resolution approved by the 

Committee on Transportation and Infrastructure in the House and 

the Committee on Environment and Public Works in the Senate as 

required by title 40 of the United States Code and in accordance 

with the proviso included in the FBF appropriations limiting the 

obligation of funds to prospectus-level projects approved by the authorizing committees. The Committee supports this process and believes that prospectus-level projects warrant a thorough review 

from both the Appropriations Committee and the authorizing committees. The Committee expects the Administration to continue to 

follow this process. 

CONSTRUCTION AND ACQUISITION

Limitations on Availability of Revenue: 

Limitation on availability, fiscal year 2018 .............................. $692,069,000 

Limitation on availability, budget request, fiscal year 2019 ... 1,338,387,000 

Recommended in the bill ............................................................ 275,900,000 

Bill compared with: 

Availability limitation, fiscal year 2018 .................................... ¥416,169,000 

Availability limitation, fiscal year 2019 request ...................... ¥1,062,487,000 

The construction and acquisition fund finances the project cost of 

design, construction, and management and inspection costs of new 

Federal facilities. 

COMMITTEE RECOMMENDATION

The Committee recommends a limitation of $275,900,000 for the 

following specific project, as proposed in the budget request, in the 

amount indicated. 

State Description Amount 

CA ............................ Calexico, United States Land Port of Entry .............................................................. $275,900,000 

REPAIRS AND ALTERATIONS

Limitations on Availability of Revenue: 

Limitation on availability, fiscal year 2018 .............................. $666,335,000 

Limitation on availability, budget request, fiscal year 2019 ... 909,746,000 

Recommended in the bill ............................................................ 679,934,000 

Bill compared with: 

Availability limitation, fiscal year 2018 .................................... +13,599,000 

Availability limitation, fiscal year 2019 request ...................... ¥229,812,000 

The repairs and alterations activity funds the project cost of design, construction, management and inspection for the repair, alteration, and modernization of existing real estate assets in addition 

to various special programs. 

COMMITTEE RECOMMENDATION

The Committee recommends a limitation of $679,934,000 to remain available until expended for repairs and alterations. 

Major Repairs and Alterations.—The Committee recommends 

$286,344,000 for repairs and alterations projects that exceed the 

prospectus threshold. The funds are provided to address GSA’s 

highest priority facility needs. The Committee directs GSA to submit a detailed plan, by project, regarding the use of Major Repairs 

53 

and Alterations funds, not later than 45 days after enactment. GSA 

is directed to provide notification to the Committee within 15 days 

prior to any changes in the use of these funds. 

Basic Repairs and Alterations.—The Committee recommends 

$312,090,000 for non-recurring repairs and alterations projects between $10,000 and the current prospectus threshold of $3,095,000. 

Fire and Life Safety.—The Committee recommends $30,000,000 

to improve building safety, abate hazardous material, and repair 

structural deficiencies. These projects include, but are not limited 

to, fire alarm, sprinkler, electrical, ventilation, heating, and elevator systems. 

Judiciary Court Security Program.—The Committee recommends 

$11,500,000 for the construction, acquisition, repair, alteration, and 

security projects for the Judiciary as prioritized by the Judicial 

Conference of the United States. 

Consolidation Activities.—The Committee recommends 

$40,000,000 for the cost of consolidating space. Given the reduction 

in the Federal workforce and Federal agency budgets, the Committee believes that it is prudent to reduce the GSA building inventory, particularly with regard to the thousands of surplus and underutilized buildings. Projects selected for consolidation should result in reduced annual rent paid by the agency, not exceed 

$10,000,000 in costs, and have an approved prospectus. GSA is required to submit a spend plan and explanation for each project including estimated savings to the Committees on Appropriations of 

the House and the Senate before obligating funds. 

RENTAL OF SPACE

Limitations on Availability of Revenue: 

Limitation on availability, fiscal year 2018 .............................. $5,493,768,000 

Limitation on availability, budget request, fiscal year 2019 ... 5,430,345,000 

Recommended in the bill ............................................................ 5,430,345,000 

Bill compared with: 

Availability limitation, fiscal year 2018 .................................... ¥63,423,000 

Availability limitation, fiscal year 2019 request ...................... – – – 

The rental of space program funds lease payments made to privately-owned buildings, temporary space for Federal employees 

during major repair and alteration projects, and relocations from 

Federal buildings due to forced moves and relocations as a result 

of health and safety conditions. 

COMMITTEE RECOMMENDATION

The Committee recommends a limitation of $5,430,345,000 for 

rental of space. The Committee expects GSA to reduce the amount 

of leased space in its inventory at a faster pace. 

BUILDING OPERATIONS

Limitations on Availability of Revenue: 

Limitation on availability, fiscal year 2018 .............................. $2,221,766,000 

Limitation on availability, budget request, fiscal year 2019 ... 2,253,195,000 

Recommended in the bill ............................................................ 2,248,395,000 

Bill compared with: 

Availability limitation, fiscal year 2018 .................................... +26,629,000 

Availability limitation, fiscal year 2019 request ...................... ¥4,800,000 

The building operations account funds services that Federal 

agencies in GSA-owned buildings and occasionally in GSA-leased 

54 

buildings, when not provided by the lessor, directly benefit from 

such as building security, cleaning, utilities, window washing, snow 

removal, pest control, and maintenance of heating, air conditioning, 

ventilating, plumbing, sewage, electrical, elevator, escalator, and 

fire protection systems. In addition, this account funds all the personnel and administrative expenses for carrying out construction 

and acquisition, repair and alteration, and leasing activities. 

COMMITTEE RECOMMENDATION

The Committee recommends a limitation of $2,248,395,000 for 

Building Operations and Maintenance. Within this amount, 

$1,126,014,000 is for building services and $1,122,381,000 is for 

salaries and expenses. Up to five percent of the funds may be 

transferred between these activities upon the advance notification 

to the Committees on Appropriations of the House and the Senate. 

Not later than 60 days after the date of enactment of this Act, the 

Administrator shall submit a spend plan, by region, regarding the 

use of these funds to the Committees on Appropriations of the 

House and Senate. 

GENERAL ACTIVITIES

GOVERNMENT-WIDE POLICY

Appropriation, fiscal year 2018 ......................................................... $53,499,000 

Budget request, fiscal year 2019 ....................................................... 65,835,000 

Recommended in the bill ................................................................... 60,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +6,501,000 

Budget request, fiscal year 2019 ................................................ ¥5,835,000 

The Office of Government-Wide Policy provides Federal agencies 

with guidelines, best practices, and performance measures for complying with all the laws, regulations, and executive orders related 

to: acquisition and procurement, personal and real property management, travel and transportation management, electronic customer service delivery, and use of Federal advisory committees. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $60,000,000 for 

Government-wide Policy. 

Procurement through Commercial e-Commerce Portals.—The program to procure commercial products through commercial e-commerce portals is a significant undertaking by GSA that has the potential to change how the government procures commercial off-theshelf items. The Committee intends to closely monitor GSA’s implementation of the program with regards to an e-commerce portal 

provider serving as a supplier on an e-commerce portal it administers, to ensure that any such arrangement does not result in curtailing competition or reducing participation by the portal’s other 

participating suppliers. 

Building Design.—The Committee recognizes the importance of 

mitigating bird deaths due to collisions, and encourages the incorporation of materials and design features for each public building 

constructed, acquired, or altered by GSA to have at least 90% of 

the fac ̧ade material from ground level to 40 feet not be composed 

of glass or employ one or more of the following: (a) elements 

55 

mounted outside the glass that eliminate reflectivity; (b) UV patterned glass; (c) patterned glass which restricts horizontal spaces 

to less than 2 high or vertical spaces less than 4 wide; and (d) 

opaque, etched, stained, frosted glass. The Committee recognizes 

that with the increase in local and state bird friendly building ordinances and guidelines in several states that there is an increasing 

need for a uniform minimum federal standard. 

Digital Workspace.—Committee recognizes that digital workspaces can increase user productivity, enhance cybersecurity & 

management, while also allowing for workforce flexibility, and 

urges the General Services Administration to leverage the use of 

digital workspaces as it moves towards shared services and the 

modernization of its information technology. 

OPERATING EXPENSES

Appropriation, fiscal year 2018 ......................................................... $45,645,000 

Budget request, fiscal year 2019 ....................................................... 49,440,000 

Recommended in the bill ................................................................... 49,440,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +3,795,000 

Budget request, fiscal year 2019 ................................................ – – – 

This account provides appropriations for activities that are not 

feasible for a user fee arrangement. Included under this heading 

are personal property utilization and donation activities of the Federal Acquisition Service; real property utilization and disposal activities of the Public Buildings Service; select management and administration activities including support of government-wide emergency management activities; and top-level, agency-wide management communication activities. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $49,440,000 for 

operating expenses. Within the amount provided under this heading, $26,890,000 is for Real and Personal Property Management 

and Disposal, and $22,550,000 is for the Office of the Administrator. 

Federal Real Property Profile.—The Committee understands that 

the GSA Federal Real Property Profile (FRPP) has been making 

progress on the use of geospatial technology and the transparency 

of the data. However, the Committee is aware of the problem in 

gathering Federal real property data created by the exemption language for Federal lands found in Executive Order 13227. This exemption denies GSA the ability of collecting meaningful data from 

large landholding agencies within the Department of the Interior 

and the Department of Agriculture. The Committee is also aware 

that Section 7 of the Executive Order provides flexibility for the Interior and Agriculture Departments to still contribute their data 

into the FRPP. The Committee expects GSA to increase the transparency, accuracy and accountability with both of these Departments given the expansive amount of data which could be added 

to the FRPP. 

56 

CIVILIAN BOARD OF CONTRACT APPEALS

Appropriation, fiscal year 2018 ......................................................... $8,795,000 

Budget request, fiscal year 2019 ....................................................... 9,301,000 

Recommended in the bill ................................................................... 9,301,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +506,000 

Budget request, fiscal year 2019 ................................................ – – – 

This account provides appropriations for the Civilian Board of 

Contract Appeals (CBCA). The CBCA is charged with facilitating 

the prompt, efficient, and inexpensive resolution of disputes 

through the use of alternate dispute resolution. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $9,301,000 for 

the Civilian Board of Contract Appeals. 

OFFICE OF INSPECTOR GENERAL

Appropriation, fiscal year 2018 ......................................................... $65,000,000 

Budget request, fiscal year 2019 ....................................................... 67,000,000 

Recommended in the bill ................................................................... 67,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +2,000,000 

Budget request, fiscal year 2019 ................................................ – – – 

This appropriation provides agency-wide audit and investigative 

functions to identify and correct GSA management and administrative deficiencies that create conditions for existing or potential instances of fraud, waste, and mismanagement. The audit function 

provides internal and contract audits. Internal audits review and 

evaluate all facets of GSA operations and programs, test internal 

control systems, and develop information to improve operating efficiencies and enhance customer services. Contract audits provide 

professional advice to GSA contracting officials on accounting and 

financial matters relative to the negotiation, award, administration, repricing, and settlement of contracts. The investigative function provides for the detection and investigation of improper and illegal activities involving GSA programs, personnel, and operations. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $67,000,000 for 

the Office of Inspector General. 

ALLOWANCES AND OFFICE STAFF FOR FORMER PRESIDENTS

Appropriation, fiscal year 2018 ......................................................... $4,754,000 

Budget request, fiscal year 2019 ....................................................... 4,796,000 

Recommended in the bill ................................................................... 4,796,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +42,000 

Budget request, fiscal year 2019 ................................................ – – – 

This appropriation provides pensions, office staff, and related expenses for former Presidents Jimmy Carter, George H.W. Bush, 

William Clinton, and George W. Bush, and Barack Obama. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $4,796,000 for 

allowances and office staff for former Presidents. 

57 

FEDERAL CITIZEN SERVICES FUND

(INCLUDING TRANSFERS OF FUNDS)

Appropriation, fiscal year 2018 ......................................................... $50,000,000 

Budget request, fiscal year 2019 ....................................................... 58,400,000 

Recommended in the bill ................................................................... 55,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +5,000,000 

Budget request, fiscal year 2019 ................................................ ¥3,400,000 

The Federal Citizen Services Fund (the Fund) appropriation provides for the salaries and expenses of GSA’s Office of Citizen Services and Innovative Technologies (OCSIT). The Fund enables citizen access and engagement with government through an array of 

operational programs and direct citizen facing services. The Fund 

provides electronic or other methods of access to and understanding 

of Federal information, benefits, and services to citizens, businesses, local governments, and the media. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $55,000,000 for 

the Federal Citizen Services Fund. The Committee expects the 

funds provided for these activities, combined with efficiency gains 

and resource prioritization will result in increased delivery of information to the public and in the ease of transaction with the government. 

All the income collected by the Office of Citizen Services and Innovative Technologies (OCSIT) in the form of reimbursements from 

Federal agencies, user fees for publications ordered by the public, 

payments from private entities for services rendered, and gifts from 

the public is available to the OCSIT without regard to fiscal year 

limitations, but is subject to an annual limitation of $100,000,000. 

Any revenues accruing in excess of this amount shall remain in the 

fund and are not available for expenditure except as authorized in 

Appropriation Acts. 

TECHNOLOGY MODERNIZATION FUND

Appropriation, fiscal year 2018 ........................................................ $100,000,000 

Budget request, fiscal year 2019 ....................................................... 210,000,000 

Recommended in the bill ................................................................... 150,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +50,000,000 

Budget request, fiscal year 2019 ................................................ ¥60,000,000 

This account provides appropriations for the purposes of carrying 

out actions pursuant to the recommendations of the Technology 

Modernization Fund Board focusing on legacy information technology systems and infrastructure. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $150,000,000 for 

the Technology Modernization Fund (TMF). The Committee encourages GSA and the TMF Board established by the Modernizing Government Technology Act to prioritize and fund those projects that 

have the most significant impact on mission enhancement and that 

most effectively modernize citizen-facing services, including updating public facing websites, modernizing forms and digitizing government processes. 

58 

ASSET PROCEEDS AND SPACE MANAGEMENT FUND

Appropriation, fiscal year 2018 ......................................................... $5,000,000 

Budget request, fiscal year 2019 ....................................................... 31,000,000 

Recommended in the bill ................................................................... 31,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +26,000,000 

Budget request, fiscal year 2019 ................................................ – – – 

This account provides appropriations for the purposes of carrying 

out actions pursuant to the recommendations of the Public Buildings Reform Board focusing on civilian real property. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $31,000,000 for 

the Asset Proceeds and Space Management Fund. 

ENVIRONMENTAL REVIEW IMPROVEMENT FUND

Appropriation, fiscal year 2018 ......................................................... $1,000,000 

Budget request, fiscal year 2019 ....................................................... 6,070,000 

Recommended in the bill ................................................................... 6,070,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +5,070,000 

Budget request, fiscal year 2019 ................................................ – – – 

This account provides appropriations for the authorized activities 

of the Environmental Review Improvement Fund and the Federal 

Permitting Improvement Steering Council. The Council will lead 

ongoing government-wide efforts to modernize the Federal permitting and review process for major infrastructure projects and work 

with Federal agency partners to implement and oversee adherence 

to the statutory requirements set forth in the Federal Assets Sale 

and Transfer Act of 2016. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $6,070,000 for 

the Environmental Review Improvement Fund. 

ADMINISTRATIVE PROVISIONS—GENERAL SERVICES ADMINISTRATION

(INCLUDING TRANSFER OF FUNDS)

Section 520. The Committee continues the provision providing 

authority for the use of funds for the hire of motor vehicles. 

Section 521. The Committee continues the provision providing 

that funds made available for activities of the Federal Buildings 

Fund may be transferred between appropriations with advance approval of the Committees on Appropriations of the House and the 

Senate. 

Section 522. The Committee continues the provision requiring 

funds proposed for developing courthouse construction requests to 

meet appropriate standards and the priorities of the Judicial Conference. 

Section 523. The Committee continues the provision providing 

that no funds may be used to increase the amount of occupiable 

square feet, provide cleaning services, security enhancements, or 

any other service usually provided, to any agency which does not 

pay the assessed rent. 

59 

Section 524. The Committee continues the provision that permits 

GSA to pay small claims (up to $250,000) made against the Federal 

Government. 

Section 525. The Committee continues the provision requiring 

the Administrator to ensure that the delineated area of procurement for all lease agreements is identical to the delineated area included in the prospectus unless prior notice is given to the committees of jurisdiction. 

Section 526. The Committee continues the provision requiring a 

spend plan for certain accounts and programs. 

Section 527. The Committee includes a new provision directing 

the Administrator of the General Services Administration to submit a report on the implementation of Section 846 of the National 

Defense Authorization Act for fiscal year 2018. 

HARRY S TRUMAN SCHOLARSHIP FOUNDATION

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $1,000,000 

Budget request, fiscal year 2019 ....................................................... – – – 

Recommended in the bill ................................................................... 1,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ +1,000,000 

The Harry S Truman Scholarship Foundation is an independent 

agency established by Congress in 1975 (Public Law 93–642) to encourage exceptional college students to pursue careers in public 

service through the Truman Scholarship program. The Truman 

Scholarship is a merit-based award available to college juniors who 

plan to pursue careers in Government or elsewhere in public service. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $1,000,000 for 

the Harry S Truman Scholarship Foundation. 

MERIT SYSTEMS PROTECTION BOARD

SALARIES AND EXPENSES

(INCLUDING TRANSFER OF FUNDS)

Appropriation, fiscal year 2018 ......................................................... $46,835,000 

Budget request, fiscal year 2019 ....................................................... 44,490,000 

Recommended in the bill ................................................................... 46,835,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ +2,345,000 

The Merit Systems Protection Board (MSPB) is an independent, 

quasi-judicial agency established to protect the civil service merit 

system. The MSPB adjudicates appeals primarily involving personnel actions, certain Federal employee complaints, and retirement benefits issues. The MSPB reports to the President whether 

merit systems are sufficiently free of prohibited employment practices. 

60 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $44,490,000 for 

the MSPB. The recommendation includes a transfer of $2,345,000 

from the Civil Service Retirement and Disability Fund. 

NATIONAL ARCHIVES AND RECORDS ADMINISTRATION

OPERATING EXPENSES

Appropriation, fiscal year 2018 ......................................................... $384,911,000 

Budget request, fiscal year 2019 ....................................................... 365,105,000 

Recommended in the bill ................................................................... 372,400,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. ¥12,511,000 

Budget request, fiscal year 2019 ................................................ +7,295,000 

This appropriation provides National Archives and Records Administration (NARA) with funds for its basic operations for management of the Federal Government’s archives and records, services to the public, operation of Presidential libraries, review for declassification of classified security information, and includes funding for the Electronic Records Archives which preserves, stores, 

and manages digital Federal records for archival purposes, ensuring long-term access. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $372,400,000 for 

the Operating Expenses of NARA. 

Records Management.—The Committee encourages NARA to leverage private sector records management capabilities, where private vendors have invested their own capital to develop facilities 

that are compliant with NARA’s stringent building standards. The 

Committee encourages NARA to identify NARA records management storage facilities that can be cost effectively managed by private records management companies, especially those housing temporary Federal records. 

OFFICE OF INSPECTOR GENERAL

Appropriation, fiscal year 2018 ......................................................... $4,801,000 

Budget request, fiscal year 2019 ....................................................... 4,241,000 

Recommended in the bill ................................................................... 4,823,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +22,000 

Budget request, fiscal year 2019 ................................................ +582,000 

The Office of Inspector General (OIG) provides audits and investigations and serves as an independent, internal advocate to promote economy, efficiency, and effectiveness within NARA. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $4,823,000 for 

the OIG for fiscal year 2019. 

61 

REPAIRS AND RESTORATION

Appropriation, fiscal year 2018 ......................................................... $7,500,000 

Budget request, fiscal year 2019 ....................................................... 7,500,000 

Recommended in the bill ................................................................... 7,500,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ – – – 

This appropriation provides for the repair, alteration, and improvement of Archives facilities and Presidential libraries nationwide. It enables the NARA to maintain its facilities in proper condition for visitors, researchers, and employees, and also maintain 

the structural integrity of the buildings. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $7,500,000 for 

repairs and restoration. 

NATIONAL HISTORICAL PUBLICATIONS AND RECORDS COMMISSION

GRANTS PROGRAM

Appropriation, fiscal year 2018 ......................................................... $6,000,000 

Budget request, fiscal year 2019 ....................................................... – – – 

Recommended in the bill ................................................................... 6,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ +6,000,000 

The National Historical Publications and Records Commission 

(NHPRC) program provides for grants to preserve and publish 

records that document American history. Administered within the 

National Archives and Records Administration, the NHPRC helps 

State, local, and private institutions preserve non-Federal records, 

helps publish the papers of major figures in American history, and 

helps archivists and records managers improve their techniques, 

training, and ability to serve a range of information users. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $6,000,000 for 

the NHPRC. 

NATIONAL CREDIT UNION ADMINISTRATION

COMMUNITY DEVELOPMENT REVOLVING LOAN FUND

Appropriation, fiscal year 2018 ......................................................... $2,000,000 

Budget request, fiscal year 2019 ....................................................... – – – 

Recommended in the bill ................................................................... 2,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ +2,000,000 

The Community Development Revolving Loan Fund Program 

(CDRLF) was established in 1979 to assist officially designated 

‘‘low-income’’ credit unions in providing basic financial services to 

low-income communities. Low-interest loans and deposits are made 

available to assist these credit unions. Loans or deposits are normally repaid in five years, although shorter repayment periods may 

be considered. Technical assistance grants are also available to 

low-income credit unions. Earnings generated from the CDRLF are 

available to fund technical assistance grants in addition to funds 

62 

provided for specifically in appropriations acts. Grants are available for improving operations as well as addressing safety and 

soundness issues. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $2,000,000 for 

the National Credit Union Administration’s CDRLF for technical 

assistance grants. 

Supporting Community Development Credit Unions.—Within 180 

days of enactment, the Committee directs the Administration to 

issue a report on its current efforts to support and advance Community Development Credit Unions (CDCUs) in low income communities. 

OFFICE OF GOVERNMENT ETHICS

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $16,439,000 

Budget request, fiscal year 2019 ....................................................... 16,294,000 

Recommended in the bill ................................................................... 17,019,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +580,000 

Budget request, fiscal year 2019 ................................................ +725,000 

The Office of Government Ethics (OGE) established by the Ethics 

in Government Act of 1978, partners with other executive branch 

Departments and agencies to foster high ethical standards. The 

OGE issues and monitors rules regulations, and memoranda pertaining to the prevention and resolution of conflicts of interest, 

post-employment restrictions, standards of conduct, and financial 

disclosure for executive branch employees. The OGE is also responsible for creating and running an electronic financial disclosure system under the Stop Trading on Congressional Knowledge (STOCK) 

Act. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $17,019,000 for 

the OGE. 

OFFICE OF PERSONNEL MANAGEMENT

SALARIES AND EXPENSES

(INCLUDING TRANSFER OF TRUST FUNDS)

Appropriation, fiscal year 2018 ......................................................... $260,755,000 

Budget request, fiscal year 2019 ....................................................... 265,655,000 

Recommended in the bill ................................................................... 265,655,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +4,900,000 

Budget request, fiscal year 2019 ................................................ – – – 

The Office of Personnel Management (OPM) is the Federal agency responsible for management of Federal human resources policy 

and oversight of the merit civil service system. OPM provides a 

government-wide policy framework for personnel matters, advises 

and assists agencies (often on a reimbursable basis), and ensures 

that agency operations are consistent with requirements of law, 

with emphasis on such issues as veterans preference. OPM overVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00066 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
63 

sees examining of applicants for employment; issues regulations 

and policies on hiring, classification and pay, training, investigations; and many other aspects of personnel management, and operates a reimbursable training program for the Federal Government’s 

managers and executives. OPM is also responsible for administering the retirement, health benefits and life insurance programs 

affecting most Federal employees, retired Federal employees, and 

their survivors. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $132,172,000 for the General Fund. The Committee also recommends $133,483,000 

for administrative expenses, to be transferred from the appropriate 

trust funds. 

OPM has struggled for decades to process Federal retirees’ pension and disability claims quickly and accurately. As a result, tens 

of thousands of new retirees wait months to receive their complete 

annuities-some wait more than a year-and in the meantime they 

may be constrained by reduced interim pensions. The Committee 

expects OPM to continue to make retirement processing and disability processing a priority and move to a fully-automated electronic filing system. The Committee believes that the backlog and 

delays in retirement processing are unacceptable and directs OPM 

to continue to provide the Committees on Appropriations of the 

House and the Senate with monthly reports on its progress in addressing the backlog in claims. 

OPM Organizational Changes.—The Committee would like to remind OPM of their obligation to notify the Committee on Appropriations of the House and the Senate of any reorganizations, 

restructurings, new programs or elimination of programs as described in Title VI and VII of this Act. These include changes that 

could impact the National Bureau of Investigations and the Human 

Solutions program. 

Critical Functions.—The recent security breaches, focus on system upgrades, and efforts to transition work from the National 

Background Investigations Bureau to the Department of Defense 

should not detract OPM from fulfilling its critical functions such as 

recruiting, retaining, and developing a Federal workforce to serve 

the American people. OPM serves the Federal workforce by directing human resources and employee management services, and administering retirement benefits, managing healthcare and insurance programs, overseeing merit-based and inclusive hiring in to 

the civil service, and providing a secure employment process. The 

Committee reminds OPM’s senior management to not lose sight of 

its mission as it responds to critical IT challenges. 

Recruitment.—The Committee is concerned with the length of 

time it often takes the Federal Government to hire qualified employees and directs OPM to continue to find ways to reduce barriers to federal employment and reduce delays in the hiring process. Rigid rules along with long delays in the hiring and interview 

process discourage top candidates from applying for or accepting 

Federal positions. Specifically, the Committee encourages OPM to 

seek input from hiring managers on what challenges they face and 

what improvements could be made to make the federal hiring process more efficient and effective. The Committee directs the OPM to 

64 

report to the Committees on Appropriations of the House and the 

Senate no later than 90 days after the enactment of this Act on a 

plan to reduce barriers to Federal employment, reduce delays in 

the hiring process, and how it intends to improve the overall federal recruitment and hiring process. 

As part of OPM’s mission to recruit and hire the most talented 

and diverse Federal workforce, the Committee encourages Federal 

agencies to increase recruitment efforts within the United States 

and the territories and at Hispanic Serving Institutions and Historically Black Colleges and Universities. 

Federal Pay Opportunities.—The Committee is concerned that 

federal agencies are not taking advantage the special hiring authorities available. The Director of OPM, together with the Chief 

Human Capital Officer Council, should track government-wide data 

to establish a baseline and analyze the extent to which the seven 

Title 5 special payment authorities are effective in improving employee recruitment and retention, and determine what potential 

changes may be needed to improve the seven authorities’ effectiveness. 

Federal Telework Programs.—The Committee supports cost savings and productivity improvements from well-managed telework 

programs in the federal workplace. The Committee therefore urges 

the federal sector to continue to track successes, compile best practices, and expand upon telework programs where appropriate. 

OFFICE OF INSPECTOR GENERAL

SALARIES AND EXPENSES

(INCLUDING TRANSFER OF TRUST FUNDS)

Appropriation, fiscal year 2018 ......................................................... $30,000,000 

Budget request, fiscal year 2019 ....................................................... 30,265,000 

Recommended in the bill ................................................................... 30,265,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +265,000 

Budget request, fiscal year 2019 ................................................ – – – 

This appropriation provides for the Office of Inspector General’s 

(OIG) agency-wide audit, investigative, evaluation, and inspection 

functions, which identify management and administrative deficiencies, fraud, waste and mismanagement. The OIG performs internal agency audits and insurance audits, and offers contract 

audit services. Internal audits review and evaluate all facets of 

agency operations, including financial statements. Evaluation and 

inspection services provide detailed technical evaluations of agency 

operations. Insurance audits review the operations of health and 

life insurance carriers, health care providers, and insurance subscribers. Contract auditors provide professional advice to agency 

contracting officials on accounting and financial matters regarding 

the negotiation, award, administration, repricing, and settlement of 

contracts. The investigative function provides for the detection and 

investigation of improper and illegal activities involving programs, 

personnel, and operations. 

65 

COMMITTEE RECOMMENDATION

The Committee recommends a general fund appropriation of 

$5,000,000 for the OIG. In addition, the recommendation provides 

$25,265,000 from appropriate trust funds. 

OPM Organization.—Of particular interest to the Committee is 

the transfer of background investigations from OPM’s National 

Background Investigations Bureau (NBIB) to the Department of 

Defense. Additionally, the Committee is concerned with the Administration’s consideration to transfer the Human Resources Solutions 

program to the General Services Administration (GSA) as well as 

the Administration’s proposal to administer workforce performance 

budgets through GSA. The Committee encourages the Inspector 

General to keep a pulse on these initiatives and include updates on 

these initiatives in their reports to Congress. 

OFFICE OF SPECIAL COUNSEL

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $26,535,000 

Budget request, fiscal year 2019 ....................................................... 26,252,000 

Recommended in the bill ................................................................... 26,252,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. ¥283,000 

Budget request, fiscal year 2019 ................................................ – – – 

The Office of Special Counsel (OSC): (1) investigates Federal employee allegations of prohibited personnel practices (including reprisal for whistleblowing) and, when appropriate, prosecutes before 

the Merit Systems Protection Board; (2) provides a channel for 

whistleblowing by Federal employees; and (3) enforces the Hatch 

Act. The Office may transmit whistleblower allegations to the agency head concerned and require an agency investigation and a report 

to the Congress and the President when appropriate. Additionally, 

the Office enforces the civilian employment and reemployment 

rights of military service members under the Uniformed Services 

Employment and Re-employment Rights Act. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $26,252,000 for 

the OSC. 

POSTAL REGULATORY COMMISSION

SALARIES AND EXPENSES

(INCLUDING TRANSFER OF FUNDS)

Appropriation, fiscal year 2018 ......................................................... $15,200,000 

Budget request, fiscal year 2019 ....................................................... 15,100,000 

Recommended in the bill ................................................................... 15,200,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ +100,000 

The Commission establishes and maintains the U.S. Postal Service’s ratemaking systems, measures service and performance, ensures accountability, and has enforcement mechanisms, including 

the authority to issue subpoenas. 

66 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation, out of the Postal 

Fund, of $15,200,000 for the Postal Regulatory Commission (Commission). 

PRIVACY AND CIVIL LIBERTIES OVERSIGHT BOARD

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $8,000,000 

Budget request, fiscal year 2019 ....................................................... 5,000,000 

Recommended in the bill ................................................................... 5,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. ¥3,000,000 

Budget request, fiscal year 2019 ................................................ – – – 

The Privacy and Civil Liberties Oversight Board (the Board) is 

an independent agency within the Executive Branch whose purpose 

is to (1) analyze and review actions the Executive Branch takes to 

protect the nation from terrorism, ensuring that the need for such 

actions is balanced with the need to protect privacy and civil liberties; and (2) ensure that liberty concerns are appropriately considered in the development and implementation of laws, regulations, and policies related to efforts to protect the nation against 

terrorism. The Board consists of 4 part-time members and full-time 

chairman. 

COMMITTEE RECOMMENDATION

The Committee recommends $5,000,000 for the Board. 

PUBLIC BUILDINGS REFORM BOARD

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $5,000,000 

Budget request, fiscal year 2019 ....................................................... 2,000,000 

Recommended in the bill ................................................................... 2,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. ¥3,000,000 

Budget request, fiscal year 2019 ................................................ – – – 

The Public Buildings Reform Board was created under the Federal Assets Sale and Transfer Act of 2016 to identify opportunities 

for the Government to significantly reduce its inventory of civilian 

real property and reduce cost to the Government. 

COMMITTEE RECOMMENDATION

The Committee recommends $2,000,000 for the Board. 

SECURITIES AND EXCHANGE COMMISSION

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $1,896,507,000 

Budget request, fiscal year 2019 ....................................................... 1,699,052,000 

Recommended in the bill ................................................................... 1,695,491,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. ¥201,016,000 

Budget request, fiscal year 2019 ................................................ ¥3,561,000 

The primary mission of the Securities and Exchange Commission 

(SEC) is to protect investors, maintain the integrity of the securiVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00070 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
67 

ties markets, and assure adequate information on the capital markets is made available to market participants and policy makers. 

This includes monitoring the rapid evolution of the capital markets, 

ensuring full disclosure of all appropriate financial information, 

regulating the Nation’s securities markets, and preventing fraud 

and malpractice in the securities and financial markets. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $1,695,491,000 

for SEC salaries and expenses. The Committee’s recommendation 

includes $37,189,000 for costs associated with relocation under a 

replacement lease for the Commission’s New York Regional Office. 

The Committee expects the Commission to work closely with the 

General Services Administration (GSA) and to keep the Committee 

informed of progress on the replacement lease. 

Business Development Corporations (BDC) Modernization.— Funding from BDCs has become more important for small businesses as the regulatory overreaction to the financial crisis has restricted bank and other traditional financing options for these companies. The Committee instructs the SEC to modernize the business development company regulatory regime consistent with the 

Small Business Credit Availability Act as enacted in Public Law 

115–141. 

Acquired Fund Fee and Expense Rule.—The Committee recommends the SEC use its existing authorities to make the necessary regulatory or guidance changes to limit the adverse impacts 

of the Acquired Fund Fee and Expense Rule (AFFE) on Business 

Development Corporations (BDC). The SEC issued its acquired 

fund fees and expenses (AFFE) rule in 2006. In the adopting release, the SEC stated that it ‘‘does not believe that the [AFFE] 

amendments will have an adverse impact of capital formation.’’ 

This statement was proven to be inaccurate as a result of actions 

taken in 2014 by index sponsors such as S&P and Russell to exclude BDCs from their indices. Because index funds no longer invest in BDCs, there has been a decline in market depth and liquidity for BDC shares, reduced institutional ownership in BDCs and 

less independent third-party research coverage. Each of these items 

has negatively impacted retail investors owning BDC shares. The 

SEC has had full authority since 2006 to address these unintended, 

harmful consequences. 

Cross-Border Harmonization.—The Committee strongly encourages the SEC to work with the Commodity Futures Trading Commission (CFTC) to harmonize the definition of a ‘‘US person’’ and 

exempt non-US regulated funds from any definition. Currently, the 

definition of a ‘‘US person’’ differs between the two agencies, which 

can result in operational challenges and potentially different regulatory treatment of entities transacting in otherwise similar instruments. Global firms face significant costs and burdens if the SEC’s 

and CFTC’s regulatory approaches produce different outcomes regarding whether an entity or transaction would be subject to the 

Dodd-Frank Act. Derivatives transactions for swaps and securitybased swaps that are traded typically by the same trading desk or 

desks should not be analyzed differently. The Committee urges 

these agencies to work together in an expeditious manner toward 

a consistent definition of ‘‘US person.’’ 

68 

Proxy Advisor Reform.—The Committee is aware of the undue influence of proxy advisory firms—their duopoly status, conflicts of 

interest, opaque procedures and methodologies, and recommendations that may be based on provable, factual inaccuracies. The SEC 

Chairman has spoken publicly about the need to address these 

issues and possibility of revisiting the ‘‘Proxy Plumbing’’ concept release. The Committee strongly encourages the SEC to elevate this 

issue on the Commission’s agenda to ensure the needs of investors 

and the capital markets are being met. 

Searchable Data.—The Committee encourages the SEC to continue its efforts to implement consistent and searchable open data 

standards for information filed and submitted by publicly-traded 

companies and financial firms. The Committee continues to recommend that financial regulatory agencies across the U.S. Government take similar steps to update reporting standards commensurate with currently available technology. 

SELECTIVE SERVICE SYSTEM

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $22,900,000 

Budget request, fiscal year 2019 ....................................................... 26,400,000 

Recommended in the bill ................................................................... 26,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +3,100,000 

Budget request, fiscal year 2019 ................................................ ¥400,000 

The Selective Service System was established by the Selective 

Service Act of 1948. The mission of the System is to be prepared 

to supply manpower to the Armed Forces adequate to ensure the 

security of the United States during a time of national emergency. 

Since 1973, the Armed Forces have relied on volunteers to fill military manpower requirements, but selective service registration was 

reinstituted in July 1980. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $26,000,000 for 

the Selective Service System. 

SMALL BUSINESS ADMINISTRATION

The Small Business Administration (SBA) assists small businesses through programs including loans, grants, and contracting 

preferences. These programs maintain and strengthen an economy 

that depends on small businesses for 60 to 80 percent of job creation. SBA programs also serve disadvantaged populations so that 

these small business enterprises may overcome economic and social 

obstacles to success. 

The recommendation provides a total of $737,078,000 for the 

SBA for fiscal year 2019. Detailed guidance for the SBA appropriations accounts is presented below. 

69 

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $268,500,000 

Budget request, fiscal year 2019 ....................................................... 265,000,000 

Recommended in the bill ................................................................... 268,500,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ +3,500 

COMMITTEE RECOMMENDATION

The Committee recommends $268,500,000 for the salaries and 

expenses of the SBA. 

SBIC Program Licensing.—The Committee is aware of the often 

slow pace of licensing within the Small Business Investment Company (SBIC) program. The Committee would like to see an expedited and streamline licensing process for known, repeat Small 

Business Investment Companies that have the same management 

teams and a proven track record in the SBIC program. A fast track 

process for repeat licenses should be completed no longer than 60– 

90 days after an application is submitted to the SBA, which will 

allow SBA to properly redirect their licensing resources to more 

first time funds. The SBA should improve their ‘‘green light letter’’ 

so that it clearly outlines the needed benchmarks for license approval. The SBA should not reduce the amount or type of SBIC 

program data it has reported for years and should make that data 

available no less than ten business days after the end of the quarter. 

Loan and Lender Monitoring System.—The Committee finds that 

the Loan and Lender Monitoring System (L/LMS) is a vital component of the SBA s technical capability to provide oversight of its 

largest lending programs, the 7(a) and 504 loan programs. The 

Committee is disappointed that SBA allowed this important oversight tool to lapse briefly in February and March 2016. SBA is directed to continue its use of the Loan and Lender Monitoring System to ensure that lenders are employing sound financial risk management techniques to manage and monitor risk within their SBA 

loan portfolios. SBA is directed to continue to maintain the current 

capability and capacity of the L/LMS system, and to strongly consider ways to upgrade the system to improve lender oversight. The 

SBA should look at the impact of consolidating the current exceptions into one with an employee cap of 1,500 and consider revising 

the methodology for determining employee size for NAICS Codes to 

use a 36-month rolling average computation. 

National Environmental Policy Act Guidance.—The Committee 

encourages the SBA to consider revised guidance on the National 

Environmental Policy Act-related provisions for Concentrated Animal Feeding Operations loans which were last updated in SOP 90 

57. This guidance should provide clarity for farmers and small 

businesses around application requirements pertaining to environmental review requirements. 

70 

ENTREPRENEURIAL DEVELOPMENT PROGRAMS

Appropriation, fiscal year 2018 ......................................................... $247,100,000 

Budget request, fiscal year 2019 ....................................................... 192,450,000 

Recommended in the bill ................................................................... 251,900,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +4,800,000 

Budget request, fiscal year 2019 ................................................ +59,450,000 

The SBA’s Entrepreneurial Development Programs support noncredit business assistance to entrepreneurs. The appropriation includes funding for a network of resource partners located throughout the United States that provide training, counseling, and technical assistance to small business entrepreneurs. 

COMMITTEE RECOMMENDATION

The Committee recommendations for Entrepreneurial Development Programs, by program, are displayed in the following table: 

ENTREPRENEURIAL DEVELOPMENT PROGRAMS

[In thousands of dollars] 

7(j) Technical Assistance Program (Contracting Assistance) .......... 2,800 

Entrepreneurship Education ............................................................. 6,000 

Growth Accelerators ........................................................................... 1,000 

HUBZone Program ............................................................................. 3,000 

Microloan Technical Assistance ........................................................ 31,600 

National Women’s Business Council ................................................. 1,500 

Native American Outreach ................................................................ 2,000 

PRIME Technical Assistance ............................................................. 5,000 

Regional Innovation Clusters ............................................................ 5,000 

SCORE ................................................................................................ 11,700 

Small Business Development Centers (SBDC) ................................ 132,600 

State Trade & Export Promotion (STEP) ......................................... 18,000 

Veterans Outreach* ............................................................................ 12,300 

Women’s Business Centers (WBC) .................................................... 18,400 

*Veterans Outreach includes funding for: Boots to Business, Veterans Business Outreach Centers (VBOC), 

Veteran Women Igniting the Spirit of Entrepreneurship (V–Wise), Entrepreneurship Bootcamp for Veterans 

with Disabilities (EBV), and Boots to Business reboot. 

The SBA shall not reduce these non-credit programs from the 

amounts specified above and the SBA shall not merge any of the 

non-credit programs without advance written approval from the 

Committee. The Committee strongly supports the development programs listed in the table above and will carefully monitor SBA support of these programs. 

Women’s Business Centers.—The Committee notes the absence of 

WBCs serving many of the U.S. territories and other U.S. insular 

areas, and recommends that the SBA consider including these 

areas in WBC services. 

Native American Outreach.—The Committee directs that Native 

American Outreach activities be managed by an Assistant Administrator of the Office of Native American Affairs, or through SBA 7(j) 

management and technical assistance, to continue organizing 

multi-agency workshops and Native supplier initiative events 

around the country, and facilitating Native contractors participation in the SBA’s 8(a) Business development program, HUB Zone, 

women business, veteran and service disabled veteran business, 

and other small business contracting program. 

71 

OFFICE OF INSPECTOR GENERAL

Appropriation, fiscal year 2018 ......................................................... $19,900,000 

Budget request, fiscal year 2019 ....................................................... 21,900,000 

Recommended in the bill ................................................................... 21,900,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +2,000 

Budget request, fiscal year 2019 ................................................ – – – 

COMMITTEE RECOMMENDATION

The Committee recommends $21,900,000 for the Office of Inspector General of the SBA. 

Disaster Funding.—In fiscal year 2018, the SBA, Disaster Loan 

Program received supplemental funding in the amount of $1.65 billion to primarily assist with disaster efforts related to hurricanes 

Harvey, Irma, and Maria. The committee is pleased with SBA’s expeditious response to Hurricane Harvey which included having 33 

staff for two Disaster Relief Centers up and running within nine 

days after Hurricane Harvey. The Committee looks forward to the 

SBA IG’s evaluation of SBA’s loan processing and issuance of the 

supplemental funds provided to aid disaster victims. 

Oversight.—The Committee is concerned about the quality of 

lender oversight activities at SBA, particularly considering the 

magnitude of SBA’s loan portfolio, and notes that SBA’s Office of 

Inspector General continues to identify weaknesses in SBAs lender 

oversight process. The Committee agrees with SBA’s Inspector 

General recommendations and supports efforts to strengthen the 

Office of Credit Monitoring’s ability to conduct strong oversight of 

SBA loan portfolios and the lenders that participate in order to reinforce general program soundness and manage overall risk. 

OFFICE OF ADVOCACY

Appropriation, fiscal year 2018 ......................................................... $9,120,000 

Budget request, fiscal year 2019 ....................................................... 9,120,000 

Recommended in the bill ................................................................... 9,120,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ – – – 

COMMITTEE RECOMMENDATION

The Committee recommends $9,120,000 for the Office of Advocacy of the SBA. The Committee supports the Office’s mission to 

reduce regulatory burdens that Federal policies impose on small 

businesses and to maximize the benefits small businesses receive 

from the government. 

BUSINESS LOANS PROGRAM ACCOUNT

(INCLUDING TRANSFER OF FUNDS)

Appropriation, fiscal year 2018 ......................................................... $156,220,000 

Budget request, fiscal year 2019 ....................................................... 4,000,000 

Recommended in the bill ................................................................... 159,150,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +2,930,000 

Budget request, fiscal year 2019 ................................................ +155,150,000 

The SBA Business Loans Program serves as an important source 

of capital for America’s small businesses. The recommendation supports the 7(a) Business Loan Program at a level of $30 billion, the 

72 

504 certified development company program at a level of $7.5 billion, Small Business Investment Company (SBIC) debentures, and 

the Secondary Market Guarantee Program. 

COMMITTEE RECOMMENDATION

The Committee recommends a total of $159,150,000 for the Business Loans Program Account. Of the amount appropriated, 

$155,150,000 is for administrative expenses related to Business 

Loan Programs. The amount provided for administrative expenses 

may be transferred to and merged with the appropriation for SBA 

salaries and expenses to cover the common overhead expenses associated with business loans. Funding is included to fully support the 

Microloan program. 

DISASTER LOANS PROGRAM ACCOUNT

(INCLUDING TRANSFERS OF FUNDS)

Appropriation, fiscal year 2018 ......................................................... – – – 

Budget request, fiscal year 2019 ....................................................... 186,458,000 

Recommended in the bill ................................................................... 31,308,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +31,308,000 

Budget request, fiscal year 2019 ................................................ ¥155,150,000 

COMMITTEE RECOMMENDATION

The Committee recommends a total of $31,308,000 for Disaster 

Loan Program administrative expenses which may be transferred 

and merged with Salaries and Expenses. The Committee provides 

$1,000,000 for the Office of Inspector General for audits and reviews of the disaster loans program. 

The Committee directs the SBA to continue providing updates on 

available resources for the disaster loans program on a monthly 

basis. 

Pre-mitigation activities within the Disaster Loan Program.—The 

Committee recognizes the benefit of limiting the financial exposure 

of the SBA and reducing the claims payments from the National 

Flood Insurance Program. Therefore the Committee urges the SBA 

to coordinate with Federal Emergency Management Agency 

(FEMA) to expand the SBA Disaster Loan Program to allow applicants in areas of high flood or natural disaster risk to utilize loans 

for pre-disaster mitigation projects that adhere to FEMA’s standards of mitigation activities that significantly reduce a structure’s 

long-term flood risk. 

ADMINISTRATIVE PROVISIONS—SMALL BUSINESS ADMINISTRATION

(INCLUDING RESCISSION AND TRANSFER OF FUNDS)

Section 530. The Committee continues a provision for the SBA 

authorizing transfers of up to five percent of any SBA appropriation to other appropriations, provided that transfers do not increase 

an appropriation by more than 10 percent. The provision also requires that transfers be treated as a reprogramming of funds. 

Section 531. The Committee includes a provision rescinding unobligated balances under the Certified Development Company Program. 

73 

Section 532. The Committee includes a provision repealing the 

Expedited Disaster Assistance Loan Program. 

UNITED STATES POSTAL SERVICE

PAYMENT TO THE POSTAL SERVICE FUND

Appropriation, fiscal year 2018 ......................................................... $58,118,000 

Budget request, fiscal year 2019 ....................................................... 55,235,000 

Recommended in the bill ................................................................... 58,118,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. – – – 

Budget request, fiscal year 2019 ................................................ +2,883,000 

The United States Postal Service (USPS) is funded almost entirely by Postal ratepayers rather than taxpayers. Funds provided 

to the Postal Service in the Payment to the Postal Service Fund include appropriations for revenue forgone, including providing free 

mail for the blind, and for overseas absentee voting. 

COMMITTEE RECOMMENDATION

The Committee recommends appropriations totaling $58,118,000 

for Payment to the Postal Service Fund. The recommendation 

funds free mail for the blind and overseas voting and reconciliation 

of prior year cost adjustment. 

Rural Post Offices.—The Committee believes that the United 

States postal facility network is an asset of significant value. The 

closure of post offices in rural communities creates an economic 

burden for people in the United States that depend on the Postal 

Service for communication and package services. In addition to typical postal services, post offices are part of the identity of rural 

communities and provide a significant social value. The closure 

process of post offices does not adequately take into account community input. 

Notification to Congress.—Title 39 of the U.S. Code requires the 

Postal Service to provide the public with notice prior to closing or 

consolidating a post office. The Committee understands that it is 

the Postal Service’s policy to inform Member of Congress’ district 

and Washington, D.C. offices when the public receives notice. The 

Committee directs the Postal Service to keep Members of Congress 

informed of Postal Service activities impacting their constituents 

and expects the Postal Service to ensure that Members of Congress 

are appropriately informed simultaneously or prior to all public notices. 

Accessibility for Disabled Individuals.—The Committee notes 

that under the Architectural Barriers Act, the Postal Service is required to meet accessibility requirements for disabled individuals. 

Multinational Species Conservation Fund Semi-postal Stamp.— 

The Committee strongly supports the Multinational Species Conservation Fund Semi-postal Stamp and is aware that the legislative 

requirement that the stamp be sold by the U.S. Postal Service expires at the end of FY 2018. The Committee understands that more 

than 30 million copies of the original printing of the stamp remain. 

As the law permits the U.S. Postal Service to continue to sell the 

stamp and it can be done at no additional cost to the taxpayer, the 

Committee directs the U.S. Postal Service to continue to offer the 

stamp for sale to the public through FY 2020. 

74 

Delivery Complaints.—The Committee is concerned with the 

prevalence of reports of irregular delivery, mail delivered during 

late hours, and other service complaints. The Committee directs 

the U.S. Postal Service to report to the Committees on Appropriations of the House and the Senate within 180 days of enactment 

of this Act on the adequacy of current personnel levels, the number 

of City Carrier Assistants currently employed compared to previous 

years, and the consolidation of distribution centers. The report 

shall be accompanied by a comprehensive plan to better provide 

timely and consistent mail delivery service. 

Mail Theft.—The Committee is aware that significant mail theft 

from U.S. Postal Service (USPS) cluster box units continues to be 

a problem across the country, notably in the City of Bakersfield 

and in Kern County, CA. The Committee understands USPS has 

taken action to replace or upgrade certain mailbox units, however, 

mail theft continues to occur. Out of existing funds, the Committee 

directs USPS and the United States Postal Inspection Service to 

aggressively investigate issues concerning increased mail theft in 

cluster box units in affected communities and adopt a plan to address these crimes. USPS is encouraged to consider upgrading existing mailbox infrastructure, enhancing security at cluster mailboxes and other USPS delivery sites, and replacing keys. Given the 

importance of protecting U.S. mail, the Committee directs the 

USPS to report to Congress every six months on its plan and related actions to address this issue. 

Zip Code Reassignment.—The Committee understands that in response to increasing requests for zip codes and place name 

changes, the Postal Service has developed a uniform review process. In addition to typical postal purposes, zip codes, city identity 

and boundaries play an integral role in a host of important areas, 

such as tax base, federal and state funding, qualifications for federal programs, election ballots, and school systems. The Committee 

encourages the Postal Service to ensure that decisions regarding 

reassigning of zip codes take into account all available information 

and community input. 

OFFICE OF INSPECTOR GENERAL

SALARIES AND EXPENSES

(INCLUDING TRANSFER OF FUNDS)

Appropriation, fiscal year 2018 ......................................................... $245,000,000 

Budget request, fiscal year 2019 ....................................................... 234,650,000 

Recommended in the bill ................................................................... 250,000,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +5,000,000 

Budget request, fiscal year 2019 ................................................ +15,350,000 

The Office of Inspector General (OIG) conducts audits, reviews 

and investigations, and keeps Congress informed on the efficiency 

and economy of United States Postal Service (USPS) programs and 

operations. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $250,000,000 for 

the OIG. The Committee provides funding above the budget reVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00078 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
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quest in order for the OIG to continue their aggressive drug interdiction efforts. 

UNITED STATES TAX COURT

SALARIES AND EXPENSES

Appropriation, fiscal year 2018 ......................................................... $50,740,000 

Budget request, fiscal year 2019 ....................................................... 55,563,000 

Recommended in the bill ................................................................... 51,515,000 

Bill compared with: 

Appropriation, fiscal year 2018 .................................................. +775,000 

Budget request, fiscal year 2019 ................................................ ¥4,048,000 

The U.S. Tax Court adjudicates controversies involving deficiencies in income, estate, and gift taxes. The Court also has jurisdiction to determine deficiencies in certain excise taxes, to issue declaratory judgments in the areas of qualifications of retirement 

plans and exemptions of charitable organizations, and to decide 

certain cases involving disclosure of tax information by the Commissioner of the Internal Revenue Service. 

COMMITTEE RECOMMENDATION

The Committee recommends an appropriation of $51,515,000 for 

the U.S. Tax Court. 

TITLE VI—GENERAL PROVISIONS—THIS ACT 

Section 601. The Committee continues the provision prohibiting 

pay and other expenses for non-Federal parties in regulatory or adjudicatory proceedings funded in this Act. 

Section 602. The Committee continues the provision prohibiting 

obligations beyond the current fiscal year and prohibits transfers of 

funds unless expressly so provided herein. 

Section 603. The Committee continues the provision limiting procurement contracts for consulting service expenditures to contracts 

that are matters of public record and available for public inspection. 

Section 604. The Committee continues the provision prohibiting 

transfer of funds in this Act without express authority. 

Section 605. The Committee continues the provision prohibiting 

the use of funds to engage in activities that would prohibit the enforcement of section 307 of the 1930 Tariff Act. 

Section 606. The Committee continues the provision concerning 

compliance with the Buy American Act. 

Section 607. The Committee continues the provision prohibiting 

the use of funds by any person or entity convicted of violating the 

Buy American Act. 

Section 608. The Committee continues the provision specifying 

reprogramming procedures. The provision requires that agencies or 

entities funded by the Act notify the Committee and obtain prior 

approval from the Committee for any reprogramming of funds that: 

(1) creates a new program; (2) eliminates a program, project, or activity; (3) increases funds or personnel for any program, project, or 

activity for which funds have been denied or restricted by the Congress; (4) proposes to use funds directed for a specific activity by 

either the House or Senate Committees on Appropriations for a different purpose; (5) augments existing programs, projects, or activiVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00079 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
76 

ties in excess of $5,000,000 or 10 percent, whichever is less; (6) reduces existing programs, projects, or activities by $5,000,000 or 10 

percent, whichever is less; or (7) reorganizes offices, programs, or 

activities. The provision directs agencies funded by this Act to consult with the Committee prior to any significant reorganization. 

The provision also directs the agencies funded by this Act to submit 

operating plans for the Committee’s review within 60 days of the 

bill’s enactment. 

Section 609. The Committee continues the provision providing 

that fifty percent of unobligated balances may remain available 

through September 30, 2020, for certain purposes. 

Section 610. The Committee continues the provision prohibiting 

funding for the Executive Office of the President to request either 

a Federal Bureau of Investigation background investigation or Internal Revenue Service determination with respect to section 

501(a) of the Internal Revenue Code of 1986, except with the express consent of the individual involved in an investigation or in 

extraordinary circumstances involving national security. 

Section 611. The Committee continues the provision regarding 

cost accounting standards for contracts under the Federal Employee Health Benefits Program. 

Section 612. The Committee continues the provision regarding 

non-foreign area cost-of-living allowances. 

Section 613. The Committee continues the provision prohibiting 

the expenditure of funds for abortion under the Federal Employees 

Health Benefits Program. 

Section 614. The Committee continues the provision making exceptions to the preceding provision where the life of the mother is 

in danger or the pregnancy is a result of an act of rape or incest. 

Section 615. The Committee continues the provision carried annually since 2004 waiving restrictions on the purchase of non-domestic articles, materials, and supplies in the case of acquisition of 

information technology by the Federal Government. 

Section 616. The Committee continues the provision prohibiting 

officers or employees of any regulatory agency or commission funded by this Act from accepting travel payments or reimbursements 

from a person or entity regulated by such agency or commission. 

Section 617. The Committee continues the provision permitting 

the Securities and Exchange Commission and Commodities Futures Trading Commission to fund a joint advisory committee to 

advise on emerging regulatory issues, notwithstanding section 708 

of this Act. 

Section 618. The Committee continues the provision requiring 

certain agencies in this Act to consult with the General Services 

Administration before seeking new office space or making alterations to existing office space. 

Section 619. The Committee continues language providing for 

several appropriated mandatory accounts. These are accounts 

where authorizing language requires the payment of funds. The 

Congressional Budget Office estimates the cost for the following 

programs addressed in this provision: $450,000 for Compensation 

of the President including $50,000 for expenses, $190,000,000 for 

the Judicial Retirement Funds (Judicial Officers’ Retirement Fund, 

Judicial Survivors’ Annuities Fund, and the United States Court of 

Federal Claims Judges’ Retirement Fund), $13,519,000,000 for the 

77 

Government Payment for Annuitants, Employee Health Benefits, 

$49,000,000 for the Government Payment for Annuitants, Employee Life Insurance, and $8,060,000,000 for the Payment to the 

Civil Service Retirement and Disability Fund. 

Section 620. The Committee includes language prohibiting funds 

for the Federal Trade Commission to complete or publish the study, 

recommendations, or report prepared by the Interagency Working 

Group on Food Marketed to Children. 

Section 621. The Committee includes language to prevent conflicts of interest by prohibiting contractor security clearance related 

background investigators from undertaking final Federal reviews of 

their own work. 

Section 622. The Committee includes language requiring that the 

head of any executive branch agency ensure that the Chief Information Officer (CIO) has authority to participate in the budget 

planning process and approval of the information technology (IT) 

budget. 

Section 623. The Committee continues the provision prohibiting 

funds in contravention of the Federal Records Act. 

Section 624. The Committee includes language prohibiting agencies from requiring Internet Service Providers (ISPs) to disclose 

electronic communications information in a manner that violates 

the Fourth Amendment. 

Section 625. The Committee continues language relating to Universal Service Fund payments for wireless providers. 

Section 626. The Committee includes language prohibiting funds 

to be used to deny inspectors general access to records. 

Section 627. The Committee continues the provision prohibiting 

any funds made available in this Act from being used to establish 

a computer network unless such network blocks the viewing, 

downloading, and exchanging of pornography. 

Section 628. The Committee includes language prohibiting funds 

for the Securities and Exchange Commission to require the disclosure of political contributions to tax exempt organizations, or dues 

paid to trade associations. 

Section 629. The Committee includes a new provision that provides the Archivist of the United State with the authority to force 

action on records that are past their disposition date or currently 

unscheduled and do not have a disposition date, and to unilaterally 

dispose of archival records in NARA’s legal custody. 

Section 630. The Committee includes new language that prohibits funds for enforcement of the Federal Elections Commission’s 

prior approval requirement for corporate member trade association 

PACs. 

Section 631. The Committee includes language prohibiting funds 

to pay for an abortion or the administrative expenses in connection 

with a multi-State qualified health plan offered under a contract 

under section 1334 of the Patient Protection and Affordable Care 

Act which provides any benefits or coverage for abortions, except 

for endangerment of the life of the mother, rape or incest. 

Section 632. The Committee includes language prohibiting funds 

to the Securities and Exchange Commission for the purpose of requiring single ballot proxies. 

78 

TITLE VII—GENERAL PROVISIONS—GOVERNMENT-WIDE 

DEPARTMENTS, AGENCIES, AND CORPORATIONS

(INCLUDING TRANSFER OF FUNDS)

Section 701. The Committee continues the provision requiring 

agencies to administer a policy designed to ensure that all of its 

workplaces are free from the illegal use of controlled substances. 

Section 702. The Committee continues the provision establishing 

price limitations on vehicles to be purchased by the Federal Government with an exemption for the purchase of electric, plug-in hybrid electric, and hydrogen fuel cell vehicles. 

Section 703. The Committee continues the provision allowing 

funds made available to agencies for travel to also be used for 

quarters allowances and cost-of-living allowances. 

Section 704. The Committee continues the provision prohibiting 

the employment of noncitizens with certain exceptions. 

Section 705. The Committee continues the provision giving agencies the authority to pay General Services Administration bills for 

space renovation and other services. 

Section 706. The Committee continues, with modification, the 

provision allowing agencies to finance the costs of recycling and 

waste prevention programs with proceeds from the sale of materials recovered through such programs. 

Section 707. The Committee continues the provision providing 

that funds made available to corporations and agencies subject to 

31 U.S.C. 91 may pay rent and other service costs in the District 

of Columbia. 

Section 708. The Committee continues the provision prohibiting 

interagency financing of groups absent prior statutory approval. 

Section 709. The Committee continues the provision prohibiting 

the use of funds for enforcing regulations disapproved in accordance with the applicable law of the U.S. 

Section 710. The Committee continues the provision limiting the 

amount of funds that can be used for redecoration of offices under 

certain circumstances. 

Section 711. The Committee continues the provision to allow for 

interagency funding of national security and emergency telecommunications initiatives. 

Section 712. The Committee continues the provision requiring 

agencies to certify that a Schedule C appointment was not created 

solely or primarily to detail the employee to the White House. 

Section 713. The Committee continues the provision prohibiting 

the payment of any employee who prohibits, threatens or prevents 

another employee from communicating with Congress. 

Section 714. The Committee continues the provision prohibiting 

Federal training not directly related to the performance of official 

duties. 

Section 715. The Committee continues the provision prohibiting, 

other than for normal and recognized executive-legislative relationships, propaganda, publicity and lobbying by executive agency personnel in support or defeat of legislative initiatives. 

Section 716. The Committee continues the provision prohibiting 

any Federal agency from disclosing an employee’s home address to 

79 

any labor organization, absent employee authorization or court 

order. 

Section 717. The Committee continues the provision prohibiting 

funds to be used to provide non-public information such as mailing, 

telephone, or electronic mailing lists to any person or organization 

outside the government without the approval of the Committees on 

Appropriations. 

Section 718. The Committee continues the provision prohibiting 

the use of funds for propaganda and publicity purposes not authorized by Congress. 

Section 719. The Committee continues the provision directing 

agency employees to use official time in an honest effort to perform 

official duties. 

Section 720. The Committee continues the provision authorizing 

the use of funds to finance an appropriate share of the Federal Accounting Standards Advisory Board. 

Section 721. The Committee continues the provision authorizing 

the transfer of funds to the General Services Administration to finance an appropriate share of various government-wide boards and 

councils and for Federal Government Priority Goals under certain 

conditions. 

Section 722. The Committee continues the provision that permits 

breastfeeding in a Federal building or on Federal property if the 

woman and child are authorized to be there. 

Section 723. The Committee continues the provision that permits 

interagency funding of the National Science and Technology Council and provides for a report on the budget and resources of the National Science and Technology Council. 

Section 724. The Committee continues the provision requiring 

documents involving the distribution of Federal funds to indicate 

the agency providing the funds and the amount provided. 

Section 725. The Committee continues the provision prohibiting 

the use of funds to monitor personal access or use of Internet sites 

or to collect, review, or obtain any personally identifiable information relating to access to or use of an Internet site. 

Section 726. The Committee continues a provision requiring 

health plans participating in the Federal Employees Health Benefits Program to provide contraceptive coverage and provides exemptions to certain religious plans. 

Section 727. The Committee continues language supporting strict 

adherence to anti-doping activities. 

Section 728. The Committee continues a provision allowing funds 

for official travel to be used by departments and agencies, if consistent with OMB Circular A–126, to participate in the fractional 

aircraft ownership pilot program. 

Section 729. The Committee continues the provision that restricts the use of funds for Federal law enforcement training facilities. 

Section 730. The Committee continues the provision that prohibits Executive Branch agencies from creating prepackaged news 

stories that are broadcast or distributed in the United States unless the story includes a clear notification within the text or audio 

of such news story that the prepackaged news story was prepared 

or funded by that executive branch agency. This provision confirms 

80 

the opinion of the Government Accountability Office dated February 17, 2005 (B–304272). 

Section 731. The Committee continues the provision prohibiting 

use of funds in contravention of section 552a of title 5, United 

States Code (the Privacy Act) and regulations implementing that 

section. 

Section 732. The Committee continues the provision prohibiting 

funds from being used for any Federal Government contract with 

any foreign incorporated entity which is treated as an inverted domestic corporation. 

Section 733. The Committee continues the provision requiring 

agencies to pay a fee to the Office of Personnel Management for 

processing retirement of employees who separate under Voluntary 

Early Retirement Authority or who receive Voluntary Separation 

Incentive payments. 

Section 734. The Committee includes language prohibiting funds 

to require any entity submitting an offer for a Federal contract or 

participating in an acquisition to disclose political contributions. 

Section 735. The Committee continues the provision prohibiting 

funds for the painting of a portrait of an employee of the Federal 

Government, including the President, the Vice President, a Member of Congress, the head of an executive branch agency, or the 

head of an office of the legislative branch. 

Section 736. The Committee continues the provision limiting the 

pay increases of certain prevailing rate employees. 

Section 737. The Committee continues a provision, with modification, requiring agencies to submit reports to Inspectors General 

concerning expenditures for agency conferences. 

Section 738. The Committee continues a provision prohibiting 

funds to be used to increase, eliminate, or reduce funding for a program or project unless such change is made pursuant to reprogramming or transfer provisions. 

Section 739. The Committee continues a provision prohibiting 

agencies from using funds to implement regulations changing the 

competitive areas under reductions-in-force for Federal employees. 

Section 740. The Committee continues the provision ensuring 

contractors are not prevented from reporting waste, fraud, or abuse 

by signing confidentiality agreements that would prohibit such disclosure. 

Section 741. The Committee continues the provision prohibiting 

the expenditure of funds for the implementation of certain nondisclosure agreements unless certain provisions are included in the 

agreements. 

Section 742. The Committee continues the provision prohibiting 

funds to any corporation with certain unpaid Federal tax liabilities 

unless an agency has considered suspension or debarment of the 

corporation and made a determination that further action is not 

necessary to protect the interests of the Government. 

Section 743. The Committee continues the provision prohibiting 

funds to any corporation that was convicted of a felony criminal 

violation within the preceding 24 months unless an agency has considered suspension or debarment of the corporation and made a determination that further action is not necessary to protect the interests of the Government. 

81 

Section 744. The Committee continues a provision requiring the 

Bureau of Consumer Financial Protection to notify the Committees 

on Appropriations of the House and the Senate, the Committee on 

Financial Services of the House, and the Committee on Banking, 

Housing, and Urban Affairs of the Senate of requests for a transfer 

of funds from the Board of Governors of the Federal Reserve System as well as post any such notifications on the Bureau’s website. 

Section 745. The Committee continues a provision addressing 

possible technical scorekeeping differences for fiscal year 2019 between the Office of Management and Budget and the Congressional 

Budget Office. 

Section 746. The Committee modifies a provision on the conditions for implementing Executive Order 13690. 

Section 747. The Committee includes a new provision prohibiting 

funds to implement, administer, or enforce a rule issued pursuant 

to section 13(p) of the Securities Exchange Act of 1934. 

Section 748. The Committee continues the provision that prohibits the use of funds to begin or announce a study or a publicprivate competition regarding the conversion to contractor performance of any function performed by civilian Federal employees pursuant to Office of Management and Budget Circular A–76 or any 

other administrative regulation, directive, or policy. 

Section 749. The Committee continues the provision concerning 

the non-application of these general provisions to title IV and to 

title VIII. 

TITLE VIII—GENERAL PROVISIONS—DISTRICT OF 

COLUMBIA 

(INCLUDING TRANSFERS OF FUNDS)

Section 801. The Committee continues language that appropriates funds to refund overpayments of taxes collected and to pay 

settlements and judgments against the District of Columbia government. 

Section 802. The Committee continues language prohibiting the 

use of Federal funds for publicity or propaganda purposes. 

Section 803. The Committee continues language establishing reprogramming procedures for Federal and local funds. 

Section 804. The Committee continues language prohibiting the 

use of Federal funds to provide salaries or other costs associated 

with the offices of United States Senator or Representative. 

Section 805. The Committee continues language limiting the use 

of official vehicles to official duties. 

Section 806. The Committee continues language prohibiting the 

use of Federal funds for any petition drive or civil action which 

seeks to require Congress to provide for voting representation in 

Congress for the District of Columbia. 

Section 807. The Committee includes language prohibiting the 

use of Federal funds for needle exchange programs, and programs 

that support supervised consumption facilities that allow the use of 

substances on Schedule I of the Controlled Substances Act. 

Section 808. The Committee continues language providing for a 

‘‘conscience clause’’ on legislation that pertains to contraceptive 

coverage by health insurance plans. 

82 

Section 809. The Committee continues language prohibiting the 

use of Federal funds to legalize or reduce penalties associated with 

the possession, use, or distribution of any schedule I substance 

under the Controlled Substances Act or any tetrahydrocannabinols 

derivative. 

Language is also included prohibiting local and Federal funds to 

legalize or reduce penalties associated with the possession, use, or 

distribution of any schedule I substance under the Controlled Substance Act or any tetrahydrocannabinols derivative for recreational 

use. 

Section 810. The Committee continues the provision that prohibits the use of funds for any abortion except in the cases of rape 

or incest or if necessary to save the life of the mother. 

Section 811. The Committee continues language requiring the 

Chief Financial Officer (CFO) to submit a revised operating budget 

for all agencies in the D.C. government, no later than 30 calendar 

days after the enactment of this Act that realigns budgeted data 

with anticipated actual expenditures. 

Section 812. The Committee continues language requiring the 

CFO to submit a revised operating budget for D.C. Public Schools, 

no later than 30 calendar days after the enactment of this Act that 

realigns school budgets to actual school enrollment. 

Section 813. The Committee continues language allowing the 

transfer of local funds and capital and enterprise funds. 

Section 814. The Committee continues language prohibiting the 

obligation of Federal funds beyond the current fiscal year and 

transfers of funds unless expressly provided herein. 

Section 815. The Committee continues language providing that 

not to exceed 50 percent of unobligated balances from Federal appropriations for salaries and expenses may remain available for 

certain purposes. This provision will apply to the District of Columbia Courts, the Court Services and Offender Supervision Agency, 

and the District of Columbia Public Defender Service. 

Section 816. The Committee continues language appropriating 

local funds during fiscal year 2020 if there is an absence of a continuing resolution or regular appropriation for the District of Columbia. Funds are provided under the same authorities and conditions and in the same manner and extent as provided for in fiscal 

year 2019. 

Section 817. The Committee includes a new provision prohibiting 

funds to enact any act, resolution, rule, regulation, guidance, or 

other law to permit any person to carry out any activity to which 

subsection (a) of section 3 of the Assisted Suicide Funding Restriction Act of 1997 applies, and repeals the District of Columbia 

Death With Dignity Act of 2016. 

Section 818. The Committee includes a new provision prohibiting 

funds in this Act from being used to carry out the Reproductive 

Health Non-Discrimination Amendment Act of 2018 (D.C. Law 20– 

261). 

Section 819. The Committee includes a provision to repeal the 

Local Budget Autonomy Amendment Act of 2012. 

Section 820. The Committee continues language limiting references to ‘‘this Act’’ as referring to only this title and title IV. 

83 

TITLE IX—FINANCIAL REFORM 

The bill includes a number of financial services reforms that 

have been passed by the House of Representatives in the 115th 

Congress. 

TITLE X—EMAIL PRIVACY ACT 

VOLUNTARY DISCLOSURE CORRECTIONS 

The bill includes H.R. 387, the Email Privacy Act, which was 

passed by the House of Representatives on February 6, 2017. 

TITLE XI—AMATEUR RADIO PARITY ACT 

The bill includes H.R. 555, the Amateur Radio Parity Act of 

2017, which was passed by the House of Representatives on January 23, 2017. 

TITLE XII—ADDITIONAL GENERAL PROVISIONS 

Section 1201. The Committee includes a provision establishing a 

‘‘Spending Reduction Account’’ in the bill. 

HOUSE OF REPRESENTATIVES REPORT REQUIREMENTS 

The following items are included in accordance with various requirements of the Rules of the House of Representatives: 

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the following is a statement of general performance goals and objectives for which this measure authorizes funding: 

The Committee on Appropriations considers program performance, including a program’s success in developing and attaining 

outcome-related goals and objectives, in developing funding recommendations. 

RESCISSION OF FUNDS

Pursuant to clause 3(f)(2) of rule XIII of the Rules of the House 

of Representatives, the following table is submitted describing the 

rescissions recommended in the accompanying bill: 

Small Business Administration ......................................................... $50,000,000 

TRANSFER OF FUNDS

Pursuant to clause 3(f)(2) of rule XIII of the Rules of the House 

of Representatives, the following is submitted describing the transfer of funds provided in the accompanying bill: 

UNDER TITLE I—DEPARTMENT OF THE TREASURY 

Section 101 allows the transfer of five percent of any appropriation made available to the Internal Revenue Service (IRS) to any 

other IRS appropriation, subject to prior congressional approval. 

84 

Section 113 authorizes the transfers of funds to IRS to the Taxpayer Services, Enforcement, or Operations Support, to assist with 

carrying out Tax Reform initiatives. 

Section 115 authorizes transfers, up to two percent, between Departmental Offices, Office of Inspector General, Special Inspector 

General for Troubled Asset Relief Program, Financial Crimes Enforcement Network, Bureau of the Fiscal Service, and Alcohol and 

Tobacco Tax and Trade Bureau appropriations under certain circumstances. 

Section 116 authorizes transfers, up to two percent, between the 

IRS and the Treasury Inspector General for Tax Administration 

under certain circumstances. 

Section 118 authorizes the transfer of funds from the Bureau of 

the Fiscal Service to the Debt Collection Fund as necessary to cover 

the cost of debt collection. 

UNDER TITLE II—EXECUTIVE OFFICE OF THE PRESIDENT 

Language is included under Federal Drug Control Programs, 

High Intensity Drug Trafficking Areas Program, which allows for 

the transfer of funds to Federal departments or agencies and State 

and local entities. 

Language is included under Other Federal Drug Control Programs, allowing the transfers of funds to other Federal departments and agencies to carry out activities. 

Language is included under Information Technology Oversight 

and Reform, allowing the transfer of funds to other agencies to 

carry out projects. 

Language is included under the Official Residence of the Vice 

President, Operating Expenses, allowing the transfer of funds to 

other Federal departments or agencies. 

Section 201 permits the Executive Office of the President to 

transfer up to 10 percent of any appropriation, subject to approval 

of the Committee. 

UNDER TITLE III—THE JUDICIARY 

Language is included under Court Security, allowing funds to be 

transferred to the United States Marshals Service for courthouse 

security. 

Section 302 permits the Judiciary to transfer up to five percent 

of any appropriation with certain limitations. 

UNDER TITLE V—INDEPENDENT AGENCIES 

Under Title V, Independent Agencies, a number of transfers are 

allowed. 

(1) Under the Election Assistance Commission, amounts may be 

transferred to the National Institute of Standards and Technology. 

(2) Under the General Services Administration, amounts may be 

transferred within the Federal Buildings Fund, under certain circumstances, after approval of the Committee on Appropriations. 

(3) Under the General Services Administration, Federal Citizens 

Services Fund, transfers are allowed from the Federal Citizens 

Services Fund to Federal agencies. 

(4) Under the General Services Administration, Federal Citizens 

Services Fund, transfers are allowed from unobligated funding proVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00088 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
85 

vided to the ‘‘Electronic Government Fund’’ to the Federal Citizens 

Services Fund. 

(5) Section 512 permits the General Services Administration to 

transfer funds in the Federal Buildings Fund after approval of the 

Committee on Appropriations. 

(6) Under Merit Systems Protection Board, an amount is transferred from the Civil Service Retirement and Disability Fund. 

(7) Under Office of Personnel Management, amounts from certain 

trust funds are transferred to the Salaries and Expenses and Office 

of Inspector General accounts for administrative expenses; 

(8) Under the Postal Regulatory Commission, amounts are transferred from the Postal Service Fund; 

(9) Under Small Business Administration, Business Loans Program Account, amounts may be transferred to and merged with 

Salaries and Expenses. 

(10) Under Small Business Administration, Disaster Loans Program Account, amounts may be transferred to and merged with the 

Office of Inspector General, and Salaries and Expenses. 

(11) Section 519 permits the Small Business Administration, to 

transfer funds between appropriations of the Small Business Administration. 

(12) Under United States Postal Service, Office of Inspector General, amounts are transferred from the Postal Service Fund. 

UNDER TITLE VII—GOVERNMENT-WIDE 

Section 721 authorizes departments and agencies to transfer 

funds to the General Services Administration to support certain financial, information technology, procurement, and other management initiatives. 

Section 744 authorizes with notification the transfer of funds 

from the Bureau of Consumer Financial Protection. 

UNDER TITLE VIII—GENERAL PROVISIONS, DISTRICT OF 

COLUMBIA 

Section 803 authorizes the District of Columbia to transfer local 

funds and section 813 allows transfer funds between operations 

and capital accounts. 

DISCLOSURE OF EARMARKS AND CONGRESSIONALLY DIRECTED

SPENDING ITEMS

Neither the bill nor the report contains any Congressional earmarks, limited tax benefits, or limited tariff benefits as defined in 

clause 9 of rule XXI of the Rules of the House of Representatives. 

CHANGES IN THE APPLICATION OF EXISTING LAW

Pursuant to clause 3(f)(1)(A) of rule XIII of the Rules of the 

House of Representatives, the following statements are submitted 

describing the effect of provisions proposed in the accompanying 

bill which may be considered, under certain circumstances, to 

change the application of existing law, either directly or indirectly. 

The bill provides that appropriations shall remain available for 

more than one year for a number of programs for which the basic 

authorizing legislation does not explicitly authorize such extended 

86 

availability. In addition, the bill carries language, in some instances, permitting activities not authorized by law, or exempting 

agencies from certain provisions of law, but which has been carried 

in appropriations acts for many years. 

The bill includes several limitations on official entertainment, reception and representation expenses. Similar provisions have appeared in many previous appropriations Acts. The bill includes a 

number of limitations on the purchase of automobiles or office furnishings that also have appeared in many previous appropriations 

Acts. Language is included in several instances permitting certain 

funds to be credited to the appropriations recommended. Language 

is also included in several instances permitting funding for services 

authorized by 5 U.S.C. 3109 and for the hire of passenger motor 

vehicles. 

TITLE I—DEPARTMENT OF THE TREASURY

Language is included for Departmental Offices, Salaries and Expenses that provides funds for operation and maintenance of the 

Treasury Building Annex; hire of passenger motor vehicles; maintenance, repairs, and improvements of, and purchase of commercial 

insurance policies for real properties leased or owned overseas. 

Language is also included designating funds for official reception 

and representation expenses; unforeseen emergencies of a confidential nature; and extending the period of availability for certain 

funds. 

Language is included for Office of Terrorism and Financial Intelligence, Salaries and Expenses that provides funds combating 

threats to national security. 

Language is included for Cybersecurity Enhancement Account 

that provides funds for enhanced cybersecurity for systems operated by the Department of the Treasury. 

Language is included for Department-wide Systems and Capital 

Investments Programs that provides funds for equipment, software, 

and repairs and renovations to buildings owned by the Department 

of the Treasury. 

Language is included for Fund for America’s Kids and Grandkids 

that provides funds for government efficiencies subject to the absence of a budget deficit. 

Language is included for the Office of Inspector General, Salaries 

and Expenses, that provides funds to carry out the provisions of 

the Inspector General Act of 1978, including official reception and 

representation expenses, the hire of vehicles, and provides funds 

for unforeseen emergencies of a confidential nature. 

Language is included for the Treasury Inspector General for Tax 

Administration, Salaries and Expenses that provides funds to carry 

out the provisions of the Inspector General Act of 1978, including 

consulting services, official reception and representation expenses, 

the purchase and hire of motor vehicles, unforeseen emergencies of 

a confidential nature, and specifies the period of availability for 

certain funds. 

Language is included for the Special Inspector General for the 

Troubled Asset Relief Program, Salaries and Expenses, that provides funds for the necessary expenses of the SIGTARP in carrying 

out the provisions of the Emergency Economic Stabilization Act of 

2008 (P.L. 110–343). 

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Language is included for Financial Crimes Enforcement Network, Salaries and Expenses that provides funds for the hire of 

motor vehicles; travel and training of non-federal and foreign government personnel attending meetings involving domestic or foreign financial law enforcement, intelligence, and regulation; official 

reception and representation expenses; and assistance to Federal 

law enforcement agencies with or without reimbursement. Language is also included that extends the availability of certain 

amounts. 

Language is included for the Bureau of the Fiscal Service, Salaries and Expenses, that provides a certain amount for official reception and representation expenses, and extends the availability 

for systems modernization funds. Language is also included specifying an amount to be derived from the Oil Spill Liability Trust 

Fund. 

Language is included for the Alcohol and Tobacco Tax and Trade 

Bureau, Salaries and Expenses, that provides funds for the hire of 

passenger motor vehicles and laboratory assistance to State and 

local agencies with or without reimbursement. Language is also included that specifies the amounts for official reception and representation expenses and cooperative research and development. 

Language is included for the U.S. Mint, United States Mint Public Enterprise Fund, which identifies the source of funding for the 

operations and activities of the U.S. Mint and specifies the level of 

funding for circulating coinage and protective service capital investments. 

Language is included for the Community Development Financial 

Institutions Fund Program account that provides specific amounts 

for: financial and technical assistance; individuals with disabilities; 

Native American initiatives; Bank Enterprise Awards, Healthy 

Food Financing Initiatives; and administrative expenses for the 

program and cost of direct loans. Language is included for clarifying the amount for the Bond Guarantee Program. 

Language is included under Internal Revenue Service, Taxpayer 

Services, that provides funds for pre-filing assistance and education, filing and account services, and taxpayer advocacy services, 

and dedicating funding for the Tax Counseling for the Elderly Program, low-income taxpayer clinic grants, and Community Volunteer Income Tax Assistance grants. 

Language is included for the Internal Revenue Service, Enforcement, that provides funds to determine and collect owed taxes, provide legal and litigation support, conduct criminal investigations, 

enforce criminal statutes, purchase and hire of vehicles; and designates funding for the Interagency Crime and Drug Enforcement 

program. Language is included specifying the period of availability 

for certain funds. 

Language is included for the Internal Revenue Service, Operations Support, that provides funds for operating and supporting 

taxpayer services and tax law enforcement programs; rent; facilities services; printing; postage; physical security; headquarters and 

other IRS-wide administration activities; research and statistics of 

income; telecommunications; information technology development, 

enhancement, operations, maintenance, and security; hire of passenger motor vehicles; and official reception and representation exVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00091 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
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penses. Language is included specifying the period of availability 

for certain funds and requiring reports on information technology. 

Language is included for the Internal Revenue Service, Business 

Systems Modernization that provides for the business systems 

modernization program, including capital asset acquisition of information technology, including management and related contractual 

costs and IRS labor costs of said acquisitions, contractual costs associated with operations, an extended availability of the funds and 

requires quarterly reports. 

In addition, the bill provides the following administrative provisions: 

Section 101. Language is included that allows for the transfer of 

five percent of any appropriation made available to the IRS to any 

other IRS appropriation, upon the advance approval of the Committees on Appropriations. 

Section 102. Language is included that requires the IRS to maintain a training program in taxpayers’ rights, dealing courteously 

with taxpayers, cross-cultural relations, and the impartial application of tax law. 

Section 103. Language is included that requires the IRS to institute and enforce policies and procedures that will safeguard the 

confidentiality of taxpayer information and protect taxpayers 

against identity theft. 

Section 104. Language is included that makes funds available for 

improved facilities and increased staffing to provide efficient and 

effective 1–800 number help line service for taxpayers. 

Section 105. Language is included to require the IRS to issue notices to employers of any address change request and to give special consideration to offers in compromise for taxpayers who have 

been victims of payroll tax preparer fraud. 

Section 106. Language is included to prohibit the IRS from targeting U.S. citizens for exercising their First Amendment rights. 

Section 107. Language is included to prohibit the use of funds by 

the IRS to target groups based on their ideological beliefs. 

Section 108. Language is included to prohibit the use of funds by 

the IRS on conferences that do not adhere to recommendations 

made by the Treasury Inspector General for Tax Administration. 

Section 109. Language is included prohibiting funds for IRS employee awards or hiring programs that do not consider employee 

conduct and Federal tax compliance. 

Section 110. Language included to prohibit the use of funds in 

contravention of section 6103 of the Internal Revenue Code of 1986 

(relating to confidentiality and disclosure of returns and return information). 

Section 111. Language is included to prohibit funds for pre-populated returns. 

Section 112. New language is included to prohibit funds for the 

IRS to deny tax exemption unless the IRS Commissioner consents 

to such determination. 

Section 113. New language is provided for dedicated funds to assist with the implementation of tax reform. 

Section 114. Language is included that authorizes the Department to purchase uniforms, insurance for motor vehicles that are 

overseas, and motor vehicles that are overseas without regard to 

the general purchase price limitations; to enter into contracts with 

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the State Department for health and medical services for Treasury 

employees that are overseas; and to hire experts or consultants. 

Section 115. Language is included that authorizes transfers, up 

to two percent, between Departmental Offices—Salaries and Expenses, Office of Inspector General, Special Inspector General for 

the Troubled Asset Relief Program, Financial Crimes Enforcement 

Network, Bureau of the Fiscal Service, and Alcohol and Tobacco 

Tax and Trade Bureau, appropriations under certain circumstances. 

Section 116. Language is included that authorizes transfers, up 

to two percent, between the Internal Revenue Service and the 

Treasury Inspector General for Tax Administration under certain 

circumstances. 

Section 117. Language is included prohibiting the Department of 

the Treasury from undertaking a redesign of the one dollar Federal 

Reserve note. 

Section 118. Language is included providing for transfers from 

and reimbursements to Bureau of the Fiscal Service, Salaries and 

Expenses for the purposes of debt collection. 

Section 119. Language is included requiring congressional approval for the construction and operation of a museum by the 

United States Mint. 

Section 120. Language is included prohibiting funds in this or 

any other Act from being used to merge the U.S. Mint and the Bureau of Engraving and Printing without the approval of the House 

and Senate committees of jurisdiction. 

Section 121. Language is included deeming that funds for the Department of the Treasury’s intelligence-related activities are specifically authorized in fiscal year 2019 until enactment of the Intelligence Authorization Act for fiscal year 2019. 

Section 122. Language is included permitting the Bureau of Engraving and Printing to use $5,000 from the Industrial Revolving 

Fund for reception and representation expenses. 

Section 123. Language is included requiring the Department of 

the Treasury to submit a capital investment plan. 

Section 124. Language is included requiring the Department of 

the Treasury to submit a report on its Franchise Fund. 

Section 125. Language is included prohibiting the Department of 

the Treasury from finalizing any regulation related to the standards used to determine the tax-exempt status of a 501(c)(4) organization. 

Section 126. Language is included requiring a quarterly report 

from both the Office of Financial Research and Office of Financial 

Stability Oversight. 

Section 127. Language is included authorizing the Office of Terrorism and Financial Intelligence to reimburse Treasury Departmental Offices for reception and representation expenses to support 

activities of the Financial Action Task Force. 

Section 128. Language is included prohibiting funds to approve, 

license, facilitate, authorize, or otherwise allow the importation of 

property confiscated by the Cuban Government. 

Section 129. Language is included prohibiting funds to approve 

or otherwise allow the licensing of a mark, trade name, or commercial name that is substantially similar to one that was used in conVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00093 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
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nection with a business or assets that were confiscated unless expressly consented. 

Section 130. Language is included prohibit the Department from 

enforcing guidance for U.S. positions on multilateral development 

banks engaging with developing countries on coal-fired power generation. 

Section 131. Language is included that requires quarterly reports 

of the Office of Financial Research (OFR) and Office of Financial 

Stability. 

Section 132. Language is included requiring the OFR to provide 

public notice of not less than 90 days before issuing a rule, report, 

or regulation. 

Section 133. Language is included that limits the fees available 

for obligation by the OFR. 

TITLE II—EXECUTIVE OFFICE OF THE PRESIDENT

Language under The White House, Salaries and Expenses provides funds for services authorized by 5 U.S.C. 3109 and 3 U.S.C. 

103, 105 and 107, hire of vehicles, and official reception and representation expenses; and the Office of Policy Development. 

Language under Executive Residence at the White House, Operating Expenses provides funds for necessary expenses as authorized by 3 U.S.C. 105, 109, 110, and 112–114. 

Language under Executive Residence at The White House, Reimbursable Expenses specifies the authorized use of funds; specifies 

that reimbursable expenses are the exclusive authority of the Executive Residence to incur obligations and receive offsetting collections; requires the sponsors of political events to make advance 

payments; requires the national committee of the political party of 

the President to maintain $25,000 on deposit; requires the Executive Residence to ensure that amounts owed are billed within 60 

days of a reimbursable event and collected within 30 days of the 

bill notice; authorizes the Executive Residence to charge and assess 

interest and penalties on late payments; authorizes all reimbursements to be deposited into the Treasury as a miscellaneous receipt; 

requires a report to the Committee on the reimbursable expenses 

within 90 days of the end of the fiscal year; requires the Executive 

Residence to maintain a system for tracking and classifying reimbursable events; and specifies that the Executive Residence is not 

exempt from the requirements of subchapter I or II of chapter 37 

of title 31, United States Code. 

Language under White House Repair and Restoration provides 

funds for the repair, alteration, and improvement of the Executive 

Residence at the White House; and allows funds to remain available until expended. 

Language under Council of Economic Advisors, Salaries and Expenses, is provided for necessary expenses in carrying out the Employment Act of 1946. 

Language under National Security Council and Homeland Security Council, Salaries and Expenses provides for services authorized by 5 U.S.C. 3109. 

Language under Office of Administration, Salaries and Expenses 

provides funds for continued modernization of the information resources within the Executive Office of the President, to remain 

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available until expended, and provides for services authorized by 5 

U.S.C. 3109 and 3 U.S.C. 107, and for the hire of vehicles. 

Language under Office of Management and Budget, Salaries and 

Expenses provides funds for expenses; services authorized by 5 

U.S.C. 3109; the hire of vehicles; carrying out provisions of chapter 

35 of title 44 United States Code and to prepare the budget request; specifies funds for official representation expenses; prohibits 

the review of agricultural marketing orders; prohibits the use of 

funds for the purpose of altering the transcript of testimony except 

for OMB officials; prohibits the use of funds for evaluating or determining if water resource project or study reports submitted by the 

Chief of Engineers are in compliance with all applicable laws, regulations, and requirements; prohibits the use of funds for altering 

the Corp of Engineers annual work plan; and specifies the amount 

of time to perform budgetary policy reviews of water resource matters on which the Chief of Engineers has reported before the report 

is considered approved, and specifies notification requirements. 

Language under Office of National Drug Control Policy, Salaries 

and Expenses provides for expenses; receptions and representation 

expenses; participation in joint projects; provision of services to 

non-profit, research or public organizations or agencies with or 

without reimbursement; and allows for gifts to be used without fiscal year limitation for the work of the Office. 

Language under High Intensity Drug Trafficking Area Program 

provides funds for expenses, extends the availability of funds, directs the distribution and obligation of funds, allows for the transfer of funds, allows for the reprogramming of unobligated funds, 

and requires notification on the distribution of funds. 

Language under Other Federal Drug Control Programs extends 

the availability of funds, directs the distribution of funds, and allows for the transfer of funds. 

Language under Unanticipated Needs extends the availability of 

funds. 

Language under Information Technology Oversight and Reform 

provides for the use of funds, extends the availability of funds, and 

allows for the transfer of funds. 

Language under Special Assistance to the President, Salaries 

and Expenses enables the Vice President to provide assistance to 

the President, services authorized by 5 U.S.C. 3109 and 3 U.S.C. 

106, and the hire of vehicles. 

Language under Official Residence of the Vice President, Operating Expenses provides funds for operation and maintenance of 

the official residence of the Vice President, the hire of vehicles, expenses authorized by 3 U.S.C. 106(b)(2) and provides for the transfer of funds as necessary. 

In addition, the bill provides the following administrative provisions: 

Section 201. Language is included permitting the transfer of not 

to exceed ten percent of funds between various accounts within the 

Executive Office of the President, with advance approval of the 

Committees on Appropriations. The amount of an appropriation 

shall not be increased by more than 50 percent. 

Section 202. Language is included requiring the Director of the 

Office of Management and Budget to include a statement of budgVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00095 Fmt 6659 Sfmt 6602 E:\HR\OC\HR792.XXX HR792
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etary impact with any Executive Order or Presidential Memorandum issued or rescinded during fiscal year 2019. 

TITLE III—THE JUDICIARY

Language is included under Supreme Court, Salaries and Expenses, providing for certain funds to remain available until expended; the hire of passenger motor vehicles, official reception and 

representation, and miscellaneous expenses. Language is included 

providing funds for salaries of judges as authorized by law. 

Language is included under Supreme Court, Care of the Building 

and Grounds, permitting funds to remain available until expended. 

Language is included under United States Court of Appeals for 

the Federal Circuit, Salaries and Expenses, for necessary expenses 

of the court. Language is included providing funds for salaries of 

judges as authorized by law. 

Language is included under United States Court of International 

Trade, Salaries and Expenses, for necessary expenses of the court. 

Language is included providing funds for salaries of judges as authorized by law. 

Language is included under Courts of Appeals, District Courts, 

and Other Judicial Services, Salaries and Expenses, providing 

funds for the salaries of certain judges, and all other employees not 

otherwise provided for; necessary expenses; the purchase, rental, 

repair and cleaning of uniforms for Probation and Pretrial Services 

Office staff; firearms and ammunition; and specifies certain funds 

remain available for certain periods for specific purposes. Language 

is included providing funds for salaries of judges as authorized by 

law. Language is also included providing funding from the Vaccine 

Injury Compensation Trust Fund for certain purposes. 

Language is included under Defender Services, providing for the 

compensation and reimbursement of expenses for attorneys, investigative, expert and other services, the operation of Federal Defender organizations, travel, training, general administrative expenses and permitting funds to remain available until expended. 

Language is included under Fees of Jurors and Commissioners, 

permitting funds to remain available until expended and specifying 

limitations for the compensation of land commissioners. 

Language is included under Court Security, providing for protective guard services and procurement, installation and maintenance 

of security systems and equipment, building ingress-egress control, 

inspection of mail and packages, directed security patrols, perimeter security and services provided by the Federal Protective Services. Language is included permitting certain funds to remain 

available until expended, which may be transferred to the United 

States Marshals Service. 

Language is included under Administrative Office of the United 

States Courts, Salaries and Expenses, providing for travel, the hire 

of passenger motor vehicles, advertising and rent in the District of 

Columbia. Language is included specifying certain amounts for official reception and representation expenses. 

Language is included under Federal Judicial Center, Salaries 

and Expenses, extending the availability of certain funds for education and training, and specifying certain amounts for official reception and representation expenses. 

93 

Language is included under United States Sentencing Commission, Salaries and Expenses, specifying certain amounts for official 

reception and representation expenses. 

In addition, the bill provides the following administrative provisions: 

Section 301. Language is included permitting funds for salaries 

and expenses to be available for the employment of experts and 

consultant services as authorized by 5 U.S.C. 3109. 

Section 302. Language is included permitting up to five percent 

of any appropriation made available for fiscal year 2019 to be 

transferred between Judiciary appropriations provided that no appropriation shall be decreased by more than five percent or increased by more than ten percent by any such transfer except in 

certain circumstances. In addition, the language provides that any 

such transfer shall be treated as a reprogramming of funds under 

sections 604 and 608 of the accompanying bill and shall not be 

available for obligation or expenditure except in compliance with 

the procedures set forth in those sections. Section 303. Language is included allowing not to exceed $11,000 

to be used for official reception and representation expenses incurred by the Judicial Conference of the United States. 

Section 304. Language is included allowing the delegation of authority to the Judiciary for contracts for repairs of less than 

$100,000 through fiscal year 2019. 

Section 305. Language is included allowing a court security pilot 

program. 

Section 306. Language is included requested by the Judicial Conference of the United States extending temporary judgeships in Arizona, California Central, Florida Southern, Kansas, Missouri Eastern, New Mexico, North Carolina Western, and Texas Eastern. 

TITLE IV—DISTRICT OF COLUMBIA

Language is included under Federal Payment for Resident Tuition Support, permitting the amount appropriated to remain available until expended; specifying conditions for the use, award, and 

financial accounting of funds; and requiring quarterly reports. 

Language is included under Federal Payment for Emergency 

Planning and Security Costs in the District of Columbia, providing 

that the amount appropriated shall remain available until expended for providing public safety at events, including support of 

the United States Secret Service, and to respond to terrorist 

threats or attacks. 

Language is included under Federal Payment to the District of 

Columbia Courts, authorizing official reception and representation 

expenses; specifying certain amounts for specific purposes; providing all amounts under this heading shall be apportioned quarterly by the Office of Management and Budget and obligated and 

expended in the same manner as funds appropriated for salaries 

and expenses of other Federal agencies; allowing funds made available for capital improvements to remain available until September 

30, 2020; providing for the reallocation of funds and providing for 

certain payments. 

Language is included under Federal Payment for Defender Services in the District of Columbia Courts, providing that the amount 

appropriated shall remain available until expended; specifying who 

94 

shall administer these funds; and providing that all amounts under 

this heading shall be apportioned quarterly by the Office of Management and Budget and obligated and expended in the same manner as funds appropriated for salaries and expenses of other Federal agencies; and that not more than $20,000,000 in unobligated 

funds provided in this account may be transferred to and merged 

with funds made available under the heading Federal Payment to 

District of Columbia Courts. 

Language is included under Federal Payment to the Court Services and Offender Supervision Agency for the District of Columbia, 

allowing the transfer and hire of motor vehicles; authorizing official 

reception and representation expenses; specifying certain amounts 

for specific purposes and programs; allowing $13,223,000 to remain 

available until September 30, 2021 for costs associated with replacement leases; providing that all amounts under this heading 

shall be apportioned quarterly by the Office of Management and 

Budget and obligated and expended in the same manner as funds 

appropriated for salaries and expenses of other Federal agencies; 

allowing the use of programmatic incentives for offenders and defendants who successfully meet the terms of their supervision; authorizing the Director to accept, solicit and use on the behalf of the 

Agency any monetary or nonmentary gift to support offenders and 

defendants successfully meeting terms of supervision. 

Language is included under Federal Payment to District of Columbia Public Defender Service, allowing the transfer and hire of 

motor vehicles; providing that all amounts under this heading shall 

be apportioned quarterly by the Office of Management and Budget 

and obligated and expended in the same manner as funds appropriated for salaries and expenses of other Federal agencies; and authorizing the acceptance and use of voluntary and uncompensated 

services to facilitate the work of the District of Columbia Public Defender Service. 

Language is included under Federal Payment to the Criminal 

Justice Coordinating Council, specifying that the amount appropriated shall remain available until expended to support initiatives 

related to the coordination of Federal and local criminal justice resources. 

Language is included under Federal Payment for Judicial Commissions, specifying certain amounts for certain commissions and 

allowing for appropriations to remain available until September 30, 

2020. 

Language is included under Federal Payment for School Improvement, allowing for appropriations to remain available until 

expended for payments authorized under the Scholarship for Opportunity and Results Act. 

Language is included under Federal Payment for the District of 

Columbia National Guard, providing funds for the National Guard 

Retention and College Access Program to remain available until expended. 

Language is included under Federal Payment for Testing and 

Treatment of HIV/AIDS for testing and treatment. 

Language is included under District of Columbia Funds: (1) providing funds as proposed in the fiscal year 2019 Budget Request 

Act of 2018 submitted to Congress by the District of Columbia; (2) 

limits the amount provided in this Act for the District of Columbia 

95 

to the amount of the proposed budget or the sum of total revenues; 

(3) providing conditions for increasing the amount provided; and (4) 

directing the Chief Financial Officer to ensure the District of Columbia meets all requirements, but prohibits the reprogramming of 

capital projects. 

TITLE V—INDEPENDENT AGENCIES

Language is included for the Administrative Conference of the 

United States, Salaries and Expenses, providing for expenses, including official reception and representation and allowing funds to 

be available until September 30, 2019. 

Language is included for the Consumer Product Safety Commission, Salaries and Expenses, that provides funds for expenses, the 

hire of motor vehicles, services as authorized by 5 U.S.C. 3109 

(with a limitation on rates for individuals), and official reception 

and representation expenses. 

The bill includes the following administrative provisions under 

the Consumer Product Safety Commission: 

Section 501. Language is included prohibiting funds to finalize, 

implement, or enforce the proposed rule on recreational off-highway 

vehicles until a study is completed by the National Academy of 

Sciences. 

Language is included for the Election Assistance Commission, 

Salaries and Expenses, that provides necessary funds, including 

transfer of funds, for salaries and expenses and to carry out the 

Help America Vote Act of 2002. 

Language is included under the Federal Communications Commission, Salaries and Expenses, permitting funds for uniforms and 

allowances therefor, official reception and representation expenses, 

purchase and hire of motor vehicles, special counsel fees, and services as authorized by 5 U.S.C. 3109. Language provides for the assessment and collection of offsetting collections, authorizes retention of such collections, and provides that they remain available 

until expended. Language prohibits the availability for obligation of 

excess collections. Language limits the use of proceeds from the use 

of a competitive bidding system. Language provides funding for the 

Office of Inspector General. 

The bill includes the following administrative provisions under 

the Federal Communications Commission: 

Section 510. Language is included prohibiting the FCC from 

changing rules governing the Universal Service Fund regarding 

single connection or primary line restrictions. 

Language is included for the Federal Deposit Insurance Corporation, Office of Inspector General, that provides for the funds to be 

derived from the Deposit Insurance Fund, and the FSLIC Resolution Fund. 

Language is included for the Federal Election Commission, Salaries and Expenses, providing for expenses including official reception and representation. 

Language is included for the Federal Labor Relations Authority, 

Salaries and Expenses, that provides funds for services authorized 

by 5 U.S.C. 3109, the hire of experts and consultants, hire of motor 

vehicles, reception and representation expenses and the rental of 

conference rooms; authorizes travel payments to public members of 

96 

the Federal Service Impasses Panel; and allows for fees collected 

to be transferred to and merged with the appropriation. 

Language is included for the Federal Trade Commission, Salaries 

and Expenses, permitting funds for uniforms and allowances therefor, services authorized by 5 U.S.C. 3109, official reception and representation expenses, hire of motor vehicles, and contract for collection services. Language provides for the crediting and retention of 

certain fees. Language also prohibits funds from being used to implement subsection (e)(2)(B) of section 43 of the Federal Deposit Insurance Act. 

Language is included for the General Services Administration, 

Federal Buildings Fund that allows for revenues and collections to 

be spent from the Fund; specifies the conditions under which funds 

made available can be used; limits the availability of funds for certain purposes; specifies funding for construction and acquisition 

projects; specifies funding for special emphasis programs; provides 

for certain transfers of funds; requires spending plans; and prohibits excess funds from being available. 

Language is included for the General Services Administration, 

Government-wide Policy, that provides funds for policy and evaluation activities associated with the management of real and personal 

property assets and certain administrative services; support responsibilities relating to acquisition, telecommunications, motor vehicles, information technology management, and related technology 

activities; and services authorized by 5 U.S.C. 3109. 

Language is included for the General Services Administration, 

Operating Expenses that provides funds for Government-wide activities associated with personal and real property disposal, and 

services authorized by 5 U.S.C. 3109; for expenses for activities associated with agency-wide policy direction and management. 

Language is included for the General Services Administration, 

Civilian Board of Contract Appeals for activities associated with 

the Civilian Board of Contract Appeals. 

Language is included for the General Services Administration, 

Office of Inspector General that makes certain funds available until 

expended and provides for awards in recognition of efforts that enhance the office. Language is included for services authorized by 5 

U.S.C. 3109 and designates funds for information and detection of 

fraud. 

Language is included for the General Services Administration, 

Allowances and Office Staff for Former Presidents, for carrying out 

the provisions of 3 U.S.C. 102 note and Public Law 95–138. 

Language is included for the General Services Administration, 

Federal Citizen Services Fund, which provides funds for the Office 

of Citizen Services and other information technology costs. Language is included allowing for certain transfers to the Federal Citizen Services Fund. Language is also included for the Federal Citizen Services Fund that authorizes funds to be deposited in the 

Fund and limits the availability of funds in the Fund. 

Language is included for the General Services Administration, 

Technology Modernization Fund, for technology-related modernization activities. 

Language is included for the General Services Administration, 

Asset Proceeds and Space Management Fund for the purposes of 

97 

carrying out actions pursuant to recommendations of the Public 

Buildings Reform Board focusing on civilian real property. 

Language is included for the General Services Administration, 

Environmental Review Improvement Fund for the authorized activities of the Environmental Review Improvement Fund and the 

Federal Permitting Improvement Steering Council. 

In addition, the bill includes the following administrative provisions under the General Services Administration (GSA): 

Section 520. Language is included providing authority for the use 

of funds for the hire of motor vehicles. 

Section 521. Language is included providing that funds made 

available for activities of the Federal Buildings Fund may be transferred between appropriations with advance approval of the Congress to apply to funds provided in prior appropriations Acts. 

Section 522. Language is included requiring funds proposed for 

developing courthouse construction requests to meet appropriate 

standards and the priorities of the Judicial Conference. 

Section 523. Language is included providing that no funds may 

be used to increase the amount of occupiable square feet, provide 

cleaning services, security enhancements, or any other service usually provided, to any agency which does not pay the assessed rent. 

Section 524. Language is included permitting GSA to pay small claims (up to $250,000) made against the Federal Government. 

Section 525. Language is included requiring the Administrator to 

ensure that the delineated area of procurement for all lease agreements is identical to the delineated area included in the prospectus 

unless prior notice is given to the Committees. 

Section 526. Language is included requiring a spend plan for certain accounts and programs. 

Section 527. Language is included directing the Administrator of 

the General Services Administration to submit a report on the implementation of Section 846 of the National Defense Authorization 

Act for fiscal year 2018. 

Language is included for the Harry S Truman Scholarship Foundation as established by section 10 of Public Law 93–642. 

Language is included for the Merit Systems Protection Board, 

Salaries and Expenses, that provides funds for services authorized 

by 5 U.S.C. 3109, rental of conference rooms, hire of passenger 

motor vehicles, direct procurement of survey printing, official reception and representation expenses, specifies the period of availability for certain funds, provides for administration expenses to 

adjudicate retirement appeals, and provides for the transfer of 

some funds. 

Language is included for the National Archives and Records Administration, Operating Expenses, that provides funds for uniforms 

or allowances therefor, as authorized by 5 U.S.C. 5901 et seq., including maintenance, repairs, and cleaning, the hire of passenger 

motor vehicles, activities of the Public Interest Declassification 

Board, the review and declassification of documents, and the operations and maintenance of the electronic records archive. 

Language is included for the National Archives and Records Administration, Office of Inspector General, that provides funds for 

the hire of motor vehicles. 

Language is included for the National Archives and Records Administration, Repairs and Restoration, that provides funds for the 

98 

repair, alteration, improvement, and provision of adequate storage; 

and provides that funds remain available until expended. 

Language is included under the National Archives and Records 

Administration, National Historical Publications and Records Commission Grants Program, that provides funds for allocations and 

grants for historical publications and records; and provides that 

funds remain available until expended. 

Language is included under the National Credit Union Administration, Community Development Credit Union Revolving Loan 

Fund, that provides funds for technical assistance and extends the 

availability of funds. 

Language is included under the Office of Government Ethics, 

Salaries and Expenses, that provides funds for services authorized 

by 5 U.S.C. 3109, rental of conference rooms, hire of passenger 

motor vehicles, and official reception and representation expenses. 

Language is included under the Office of Personnel Management, 

Salaries and Expenses, that provides funds for services authorized 

by 5 U.S.C. 3109, medical examinations for veterans, rental of conference rooms, hire of passenger motor vehicles, official reception 

and representation expenses, advances for reimbursements, payment of per diem or subsistence allowances, and the transfer of administrative expenses; directs that provisions shall not affect other 

authorities; prohibits funds for the Legal Examining Unit; and authorizes the acceptance of donations under certain conditions. Language is also included specifying the period of availability for certain funds and requiring a report on information technology. 

Language is included for the Office of Personnel Management, 

Office of Inspector General, Salaries and Expenses, that provides 

funds for services authorized by 5 U.S.C. 3109, hire of passenger 

motor vehicles, rental of conference rooms, and a transfer for administrative expenses. 

Language is included for the Office of Special Counsel, Salaries 

and Expenses, that provides funds for services authorized by 5 

U.S.C. 3109, payment of fees and expenses for witnesses, rental of 

conference rooms, and the hire of passenger motor vehicles. 

Language is included for the Postal Regulatory Commission, Salaries and Expenses, that provides funds derived from a transfer 

from the Postal Service Fund. 

Language is included for the Privacy and Civil Liberties Oversight Board, Salaries and Expenses, that provides funds authorized 

by section 1061 of 42 U.S.C. 2000ee. 

Language is included for the Public Buildings Reform Board, Salaries and Expenses, that provides funds for carrying out the Federal Assets Sale and Transfer Act of 2016 (P.L. 114–287). 

Language is included for the Securities and Exchange Commission, Salaries and Expenses, that provides for rental of space, services, reception and representation expenses, a permanent secretariat for the International Organization of Securities Commissions, and consultations and meetings hosted by the Commission. 

Language is included designating funds for information technology 

initiatives, the economics division and a replacement lease for the 

NY regional office. Language is included that provides for the crediting of offsetting collections. Language provides for the assessment 

and collection of offsetting collections, authorizes retention of such 

collections, and provides that they remain available until expended. 

99 

Language is included for the Selective Service System, Salaries 

and Expenses, that provides funds for attendance of meetings, 

training, hire of passenger motor vehicles, services authorized by 5 

U.S.C. 3109, and official reception and representation expenses; authorizes certain exemptions under certain conditions; and prohibits 

funds used in connection with the induction of any person into the 

Armed Forces of the United States. 

Language is included for the Small Business Administration, Salaries and Expenses, that provides for hire of motor vehicles and official reception and representation expenses. Language is also included to provide authority to charge fees and credit such fees to 

the account without further appropriation. Language is also included designating funds for lender oversight. Language is also included for the Loan Modernization and Accounting System and cosponsor activities. 

Language is included for the Small Business Administration, Entrepreneurial Development Programs, that provides for supporting 

entrepreneurial and small business development grant programs. 

Language is included extending the availability of funds. 

Language is included for the Small Business Administration, Office of Inspector General, that provides funds to carry out the provisions of the Inspector General Act of 1978. 

Language is included for the Small Business Administration, Office of Advocacy, that provides funds to carry out the provisions of 

the Independent Office of Advocacy Act of 2003 and the Regulatory 

Flexibility Act of 1980 and allows funds to remain available until 

expended. 

Language is included for the Small Business Administration, 

Business Loans Program Account, limiting commitments for certain 

guaranteed loan programs and for providing for the cost of direct 

loans and guaranteed loans. Language is also included authorizing 

the transfer of funds to Salaries and Expenses for administrative 

expenses. 

Language is included for the Small Business Administration Disaster Loan Program Account, that provides for administrative expenses, the transfer of funds to the Office of Inspector General and 

to Salaries and Expenses and allows funds to remain available 

until expended. 

Section 530 allows for the transfer of funds between Small Business Administration appropriations. 

Section 531 rescinds prior year unobligated balances. 

Section 532 amends requirements for the Microloan program. 

Language is included for the United States Postal Service, Payment to the Postal Service Fund, that provides funds for revenue 

foregone; stipulates that mail for overseas voting and mail for the 

blind is free; provides that 6-day delivery shall continue at not less 

than the 1983 level; prohibits funds in this Act from being used to 

charge a fee to a child support enforcement agency seeking the address of a postal customer; prohibits funds from being used to consolidate or close small rural and other small post offices. 

New language is included that requires the United States Postal 

Service to maintain and comply with delivery standards for First 

Class Mail and periodicals effective on July 1, 2012. 

100 

Language is included for the United States Postal Service, Office 

of Inspector General, that provides for transfer from the Postal 

Service Fund. 

Language is included for the United States Tax Court, Salaries 

and Expenses, that provides funds for contract reporting and services authorized by 5 U.S.C. 3109, and that travel expenses of the 

judges shall be paid upon the written certificate of the judge. 

TITLE VI—GENERAL PROVISIONS—THIS ACT

In addition, the bill provides the following provisions under this 

title: 

Section 601. Language is included prohibiting pay and other expenses for non-Federal parties in regulatory or adjudicatory proceedings funded in this Act. 

Section 602. Language is included prohibiting obligations beyond 

the current fiscal year and prohibits transfers of funds unless expressly so provided herein. 

Section 603. Language is included limiting procurement contracts 

for consulting service expenditures to contracts that are matters of 

public record and available for public inspection. 

Section 604. Language is included prohibiting transfer of funds 

in this Act without express authority. 

Section 605. Language is included prohibiting the use of funds to 

engage in activities that would prohibit the enforcement of section 

307 of the 1930 Tariff Act. 

Section 606. Language is included concerning compliance with 

the Buy American Act. 

Section 607. Language is included prohibiting the use of funds by 

any person or entity convicted of violating the Buy American Act. 

Section 608. Language is included specifying reprogramming procedures. The provision requires that agencies or entities funded by 

the Act notify the Committee and obtain prior approval from the 

Committee for any reprogramming of funds that: (1) creates a new 

program; (2) eliminates a program, project, or activity; (3) increases 

funds or personnel for any program, project, or activity for which 

funds have been denied or restricted by the Congress; (4) proposes 

to use funds directed for a specific activity by either the House or 

Senate Committees on Appropriations for a different purpose; (5) 

augments existing programs, projects, or activities in excess of 

$5,000,000 or 10 percent, whichever is less; (6) reduces existing 

programs, projects, or activities by $5,000,000 or 10 percent, whichever is less; or (7) reorganizes offices, programs, or activities. The 

provision also directs the agencies funded by this Act to submit operating plans for the Committee’s review within 60 days of the 

bill’s enactment. 

Section 609. Language is included providing that fifty percent of 

unobligated balances may remain available for certain purposes. 

Section 610. Language is included prohibiting funding for the Executive Office of the President to request either a Federal Bureau 

of Investigation background investigation or Internal Revenue 

Service determination with respect to section 501(a) of the Internal 

Revenue Code of 1986, except with the express consent of the individual involved in an investigation or in extraordinary circumstances involving national security. 

101 

Section 611. Language is included regarding cost accounting 

standards for contracts under the Federal Employee Health Benefits Program. 

Section 612. Language is included regarding non-foreign area 

cost of living allowances. 

Section 613. Language is included prohibiting the expenditure of 

funds for abortion under the Federal Employees Health Benefits 

program. 

Section 614. Language is included making exceptions to the preceding provision where the life of the mother is in danger or the 

pregnancy is a result of an act of rape or incest. 

Section 615. Language is included waiving restrictions on the 

purchase of non-domestic articles, materials, and supplies in the 

case of acquisition of information technology by the Federal government. 

Section 616. Language is included prohibiting officers or employees of any regulatory agency or commission funded by this Act from 

accepting travel payments or reimbursements from a person or entity regulated by such agency or commission. 

Section 617. Language is included permitting the Securities and 

Exchange Commission and Commodities Futures Trading Commission to fund a joint advisory committee to advise on emerging regulatory issues, notwithstanding Section 708 of this Act. 

Section 618. Language is included requiring certain agencies in 

this Act to consult with the General Services Administration before 

seeking new office space or making alterations to existing office 

space. 

Section 619. Language is included providing for several appropriated mandatory accounts. These are accounts where authorizing 

language requires the payment of funds. The Congressional Budget 

Office estimates the cost for the following programs addressed in 

this provision: $450,000 for Compensation of the President including $50,000 for expenses, $190,000,000 for the Judicial Retirement 

Funds (Judicial Officers’ Retirement Fund, Judicial Survivors’ Annuities Fund, and the United States Court of Federal Claims 

Judges’ Retirement Fund), $13,519,000,000 for the Government 

Payment for Annuitants, Employee Health Benefits, $49,000,000 

for the Government Payment for Annuitants, Employee Life Insurance, and $8,060,000,000 for the Payment to the Civil Service Retirement and Disability Fund. 

Section 620. Language is included prohibiting funds for the Federal Trade Commission to complete or publish the study, recommendations, or report prepared by the Interagency Working 

Group on Food Marketed to Children. 

Section 621. Language is included preventing conflicts of interest 

by prohibiting contractor security clearance related background investigators from undertaking final Federal reviews of their own 

work. 

Section 622. Language is included requiring that the head of any 

executive branch agency ensure that the Chief Information Officer 

(CIO) has authority to participate in the budget planning process 

and approval of the information technology (IT) budget. 

Section 623. Language is included prohibiting funds in contravention of the Federal Records Act. 

102 

Section 624. Language is included prohibiting agencies from requiring Internet Service Providers (ISPs) to disclose electronic communications information in a manner that violates the Fourth 

Amendment. 

Section 625. Language is included relating to Universal Service 

Fund payments for wireless providers. 

Section 626. Language is included prohibiting funds to be used 

to deny inspectors general access to records. 

Section 627. Language is included prohibiting any funds made 

available in this Act from being used to establish a computer network unless such network blocks the viewing, downloading, and exchanging of pornography. 

Section 628. Language is included prohibiting funds for the Securities and Exchange Commission to require the disclosure of political contributions to tax exempt organizations, or dues paid to 

trade associations. 

Section 629. New language is included that provides the Archivist of the United States with the authority to force action on 

records that are past their disposition date or currently unscheduled and do not have a disposition date, and to unilaterally dispose 

of archival records in NARA’s legal custody. 

Section 630. Language is included repealing the Federal Election 

Commission’s prior approval requirement for corporate member 

trade association PACs. 

Section 631. Language is included prohibiting funds to pay for an 

abortion or the administrative expenses in connection with a multiState qualified health plan offered under a contract under section 

1334 of the Patient Protection and Affordable Care Act which provides any benefits or coverage for abortions, except for 

endangerment of the life of the mother, rape or incest. 

Section 632. Language is included prohibiting funds to the Securities and Exchange Commission for the purpose of requiring single 

ballot proxies. 

TITLE VII—GENERAL PROVISIONS—GOVERNMENT-WIDE

In addition, the bill provides the following provisions under this 

title: 

Section 701. Language is included requiring agencies to administer a policy designed to ensure that all of its workplaces are free 

from the illegal use of controlled substances. 

Section 702. Language is included establishing price limitations 

on vehicles to be purchased by the Federal Government with certain exceptions. 

Section 703. Language is included allowing funds made available 

to agencies for travel to also be used for quarters allowances and 

cost-of-living allowances. 

Section 704. Language is included prohibiting the employment of 

noncitizens with certain exceptions. 

Section 705. Language is included giving agencies the authority 

to pay General Services Administration bills for space renovation 

and other services. 

Section 706. Language is included allowing agencies to finance 

the costs of recycling and waste prevention programs with proceeds 

from the sale of materials recovered through such programs. 

103 

Section 707. Language is included providing that funds made 

available to corporations and agencies subject to 31 U.S.C. 91 may 

pay rent and other service costs in the District of Columbia. 

Section 708. Language is included prohibiting interagency financing of groups absent prior statutory approval. 

Section 709. Language is included prohibiting the use of funds 

for enforcing regulations disapproved in accordance with the applicable law of the U.S. 

Section 710. Language is included limiting the amount of funds 

that can be used for redecoration of offices under certain circumstances. 

Section 711. Language is included allowing for interagency funding of national security and emergency telecommunications initiatives. 

Section 712. Language is included requiring agencies to certify 

that a Schedule C appointment was not created solely or primarily 

to detail the employee to the White House. 

Section 713. Language is included prohibiting the payment of 

any employee who prohibits, threatens or prevents another employee from communicating with Congress. 

Section 714. Language is included prohibiting Federal training 

not directly related to the performance of official duties. 

Section 715. Language is included prohibiting, other than for 

normal and recognized executive-legislative relationships, propaganda, publicity and lobbying by executive agency personnel in 

support or defeat of legislative initiatives. 

Section 716. Language is included prohibiting any Federal agency from disclosing an employee’s home address to any labor organization, absent employee authorization or court order. 

Section 717. Language is included prohibiting funds to be used 

to provide non-public information such as mailing, telephone, or 

electronic mailing lists to any person or organization outside the 

government without the approval of the Committees on Appropriations. 

Section 718. Language is included prohibiting the use of funds 

for propaganda and publicity purposes not authorized by Congress. 

Section 719. Language is included directing agency employees to 

use official time in an honest effort to perform official duties. 

Section 720. Language is included allowing the use of funds to 

finance an appropriate share of the Federal Accounting Standards 

Advisory Board. 

Section 721. Language is included allowing the transfer of funds 

to the General Services Administration to finance an appropriate 

share of various government-wide boards and councils and for Federal Government Priority Goals under certain conditions. 

Section 722. Language is included permitting breast feeding in a 

Federal building or on Federal property if the woman and child are 

authorized to be there. 

Section 723. Language is included permitting interagency funding of the National Science and Technology Council and provides 

for a report on the budget and resources of the National Science 

and Technology Council. 

Section 724. Language is included requiring documents involving 

the distribution of Federal funds to indicate the agency providing 

the funds and the amount provided. 

104 

Section 725. Language is included prohibiting the use of funds to 

monitor personal access or use of Internet sites or to collect, review, or obtain any personally identifiable information relating to 

access to or use of an Internet site. 

Section 726. Language is included requiring health plans participating in the Federal Employees Health Benefits Program to provide contraceptive coverage and provides exemptions to certain religious plans. 

Section 727. Language is included supporting strict adherence to 

anti-doping activities. 

Section 728. Language is included allowing funds for official travel to be used by departments and agencies, if consistent with OMB 

Circular A–126, to participate in the fractional aircraft ownership 

pilot program. 

Section 729. Language is included restricting the use of funds for 

Federal law enforcement training facilities. 

Section 730. Language is included prohibiting Executive Branch 

agencies from creating prepackaged news stories that are broadcast 

or distributed in the United States unless the story includes a clear 

notification within the text or audio of that news story that the 

prepackaged news story was prepared or funded by that executive 

branch agency. 

Section 731. Language is included prohibiting use of funds in 

contravention of section 552a of title 5, United States Code (the 

Privacy Act) and regulations implementing that section. 

Section 732. Language is included prohibiting funds from being 

used for any Federal Government contract with any foreign incorporated entity which is treated as an inverted domestic corporation. 

Section 733. Language is included requiring agencies to pay a fee 

to the Office of Personnel Management for processing retirement of 

employees who separate under Voluntary Early Retirement Authority or who receive Voluntary Separation Incentive payments. 

Section 734. Language is included prohibiting funds to require 

any entity submitting an offer for a Federal contract or participating in an acquisition to disclose political contributions. 

Section 735. Language is included prohibiting funds for the 

painting of a portrait of an employee of the Federal government including the President, the Vice President, a Member of Congress, 

the head of an executive branch agency, or the head of an office of 

the legislative branch. 

Section 736. Language is included limiting the pay increases of 

certain prevailing rate employees. 

Section 737. Language is included requiring agencies to submit 

reports to Inspectors General concerning expenditures for agency 

conferences. 

Section 738. Language is included prohibiting funds to be used 

to increase, eliminate, or reduce funding for a program or project 

unless such change is made pursuant to reprogramming or transfer 

provisions. 

Section 739. Language is included prohibiting agencies from 

using funds to implement regulations changing the competitive 

areas under reductions-in-force for Federal employees. 

105 

Section 740. Language is included ensuring contractors are not 

prevented from reporting waste, fraud, or abuse by signing confidentiality agreements that would prohibit such disclosure. 

Section 741. Language is included prohibiting the expenditure of 

funds for the implementation of certain nondisclosure agreements 

unless certain provisions are included in the agreements. 

Section 742. Language is included prohibiting funds to any corporation with certain unpaid Federal tax liabilities unless an agency has considered suspension or debarment of the corporation and 

made a determination that further action is not necessary to protect the interests of the Government. 

Section 743. Language is included prohibiting funds to any corporation that was convicted of a felony criminal violation within 

the preceding 24 months unless an agency has considered suspension or debarment of the corporation and made a determination 

that further action is not necessary to protect the interests of the 

Government. 

Section 744. Language is included requiring the Bureau of Consumer Financial Protection to notify certain Committees of requests for a transfer of funds from the Federal Reserve System and 

to post any such notifications on the Bureaus website. 

Section 745. The Committee continues a provision addressing 

possible technical scorekeeping differences for fiscal year 2019 between the Office of Management and Budget and the Congressional 

Budget Office. 

Section 746. Language is included prohibiting funds from implementing, administering, carrying out, modifying, revising, or enforcing Executive Order 13690. 

Section 747. New language is included prohibiting funds to implement, administer, or enforce a rule issued pursuant to section 

13(p) of the Securities Exchange Act of 1934. 

Section 748. Language is included prohibiting the use of funds to 

begin or announce a study or a public-private competition regarding the conversion to contractor performance of any function performed by civilian Federal employees pursuant to Office of Management and Budget Circular A–76 or any other administrative regulation, directive, or policy. 

Section 749. Language is included concerning the non-application 

of these general provisions to title IV and to title VIII. 

TITLE VIII—GENERAL PROVISIONS—DISTRICT OF COLUMBIA

In addition, the bill provides the following provisions under this 

title: 

Section 801. Language is included that appropriates funds for refunding overpayments of taxes collected and for paying settlements 

and judgments against the District of Columbia government. 

Section 802. Language is included prohibiting the use of Federal 

funds for publicity or propaganda purposes. 

Section 803. Language is included establishing reprogramming 

procedures for Federal and local funds. 

Section 804. Language is included prohibiting the use of Federal 

funds to provide salaries or other costs associated with the offices 

of United States Senator or Representative. 

Section 805. Language is included restricting the use of official 

vehicles to official duties. 

106 

Section 806. Language is included prohibiting the use of Federal 

funds for any petition drive or civil action which seeks to require 

Congress to provide for voting representation in Congress for the 

District of Columbia. 

Section 807. Language is included prohibiting the use of Federal 

funds for needle exchange programs and programs that support supervised consumption facilities. 

Section 808. Language is included providing for a ‘‘conscience 

clause’’ on legislation that pertains to contraceptive coverage by 

health insurance plans. 

Section 809. Language is included prohibiting the use of Federal 

funds to legalize or reduce penalties associated with the possession, 

use, or distribution on any schedule I substance under the Controlled Substances Act or any tetrahydrocannabinols derivative. 

Language is also included prohibiting local and Federal funds to 

legalize or reduce penalties associated with the possession, use, or 

distribution of any schedule I substance under the Controlled Substance Act or any tetrahydrocannabinols derivative for recreational 

use. 

Section 810. Language is included prohibiting the use of funds 

for abortion except in the cases of rape or incest or if necessary to 

save the life of the mother. 

Section 811. Language is included requiring the Chief Financial 

Officer (CFO) to submit a revised operating budget for all agencies 

in the D.C. government, no later than 30 calendar days after the 

enactment of this Act that realigns budgeted data with anticipated 

actual expenditures. 

Section 812. Language is included requiring the CFO to submit 

a revised operating budget for D.C. Public Schools, no later than 

30 calendar days after the enactment of this Act, that realigns 

school budgets to actual school enrollment. 

Section 813. Language is included allowing the transfer of local 

funds and capital and enterprise funds. 

Section 814. Language is included prohibiting the obligation of 

Federal funds beyond the current fiscal year and transfers of funds 

unless expressly provided herein. 

Section 815. Language is included providing that not to exceed 

50 percent of unobligated balances from Federal appropriations for 

salaries and expenses may remain available for certain purposes. 

Section 816. Language is included appropriating local funds during fiscal year 2020 if there is an absence of a continuing resolution 

or regular appropriation for the District of Columbia. Funds are 

provided under the same authorities and conditions and in the 

same manner and extent as provided for in fiscal year 2019. 

Section 817. New language is included prohibiting funds to enact 

any act, resolution, rule, regulation, guidance, or other law to permit any person to carry out any activity to which subsection (a) of 

section 3 of the Assisted Suicide Funding Restriction Act of 1997 

applies, and repeals the District of Columbia Death With Dignity 

Act of 2016. 

Section 818. New language is included prohibiting funds in this 

Act from being used to carry out the Reproductive Health Non-Discrimination Amendment Act of 2018 (D.C. Law 20–261). 

Section 819. Language is included repealing the Local Budget 

Autonomy Amendment Act of 2012. 

107 

Section 820. Language is included limiting references to ‘‘this 

Act’’ as referring to only this title and title IV. 

TITLE IX—FINANCIAL REFORMS

The bill includes a number of financial services reforms that 

have been passed by the House of Representatives in the 115th 

Congress. 

TITLE X—EMAIL PRIVACY ACT

The bill includes H.R. 387, the Email Privacy Act, which was 

passed by the House of Representatives on February 6, 2017. 

TITLE XI—AMATEUR RADIO PARITY ACT

The bill includes H.R. 555, the Amateur Radio Parity Act of 

2017, which was passed by the House of Representatives on January 23, 2017. 

TITLE XII—ADDITIONAL GENERAL PROVISIONS

Section 1201. The Committee includes a provision establishing a 

‘‘Spending Reduction Account’’ in the bill. 

APPROPRIATIONS NOT AUTHORIZED BY LAW

Pursuant to clause 3(f)(1)(B) of rule XIII of the Rules of the 

House of Representatives, the following table lists the appropriations in the accompanying bill which are not authorized by law for 

the period concerned: 

[Dollars in thousands] 

Account Last Year of 

Authorization 

Authorization 

Level 

Appropriation 

in Last Year of 

Authorization 

Appropriations 

in this bill 

Title I—Department of the Treasury 

Departmental Offices ............................................ n/a n/a n/a 208,751 

Office of Terrorism and Financial Intelligence ..... n/a n/a n/a 161,000 

Cybersecurity Enhancement Account .................... n/a n/a n/a 25,208 

Department-Wide Systems and Capital Investments Program ................................................. 1997 ........................ ........................ 8,000 

Fund for America’s Kids and Grandkids .............. n/a n/a n/a 585,000 

Office of Inspector General ................................... ........................ ........................ ........................ 37,044 

Treasury Inspector General for Tax Administration n/a n/a n/a 170,834 

Special Inspector General for the Troubles Asset 

Relief Program .................................................. ........................ ........................ ........................ 28,800 

Financial Crimes Enforcement Network ................ 2013 100,419 111,788 117,800 

Bureau of the Fiscal Service ................................ n/a n/a n/a 338,280 

Alcohol and Trade Tax and Trade Bureau ............ n/a n/a n/a 123,527 

Community Development and Financial Institutions Fund ......................................................... 1998 111,000 80,000 216,000 

Internal Revenue Service: 

Taxpayer Services .................................................. n/a n/a n/a 2,491,554 

Enforcement .......................................................... n/a n/a n/a 4,860,000 

Operations Support ............................................... n/a n/a n/a 3,988,000 

Business Systems Modernization .......................... n/a n/a n/a 200,000 

Title II—Executive Office of the President 

Office of Management and Budget ...................... 2003 various 61,988 103,000 

Policy: 

Salaries and Expenses ................................. 2010 n/a 29,575 17,400 

High Intensity Drug Trafficking Areas ......... 2011 280,000 238,522 280,000 

Other Federal Drug Control Programs ......... various various n/a 118,327 

Information Technology Oversight and Reform .... n/a n/a n/a 15,000 

108 

[Dollars in thousands] 

Account Last Year of 

Authorization 

Authorization 

Level 

Appropriation 

in Last Year of 

Authorization 

Appropriations 

in this bill 

Title IV—District of Columbia 

Federal Payment for Resident Tuition Support .... 2012 such sums 40,000 30,000 

Federal Payment for the Judicial Commissions ... n/a n/a n/a 565 

Federal Payment for School Improvement ............ 2016 60,000 45,000 45,000 

Federal Payment for the DC National Guard ....... n/a n/a n/a 435 

Federal Payment for Testing and Treatment of 

HIV/AIDS ............................................................ n/a n/a n/a 5,000 

Title V—Independent Agencies 

Administrative Conference of the United States .. 2011 3,200 2,750 3,100 

Consumer Safety Product Commission ................. 2014 136,409 118,000 127,000 

Election Assistance Commission .......................... 2005 n/a 13,888 10,100 

Federal Communications Commission .................. 1991 such sums 115,794 335,118 

Federal Election Commission ................................ 1981 9,400 9,662 71,250 

Federal Trade Commission ................................... 1998 111,000 106,500 158,700 

General Services Administration: 

Government-wide Policy ............................... n/a n/a n/a 60,000 

Operations Expenses .................................... n/a n/a n/a 49,440 

Federal Citizen Services Fund ..................... n/a n/a n/a 55,000 

Merit Systems Protection Board ........................... 2007 such sums 29,110 46,835 

National Historical Public Records Commission .. 2009 10,000 11,250 6,000 

Office of Government Ethics ................................. 2007 such sums 11,148 17,019 

Securities and Exchange Commission .................. 2015 2,250,000 1,500,000 1,695,491 

COMPARISON WITH THE BUDGET RESOLUTION

Pursuant to clause 3(c)(2) of rule XIII of the Rules of the House 

of Representatives and Section 308(a)(1)(A) of the Congressional 

Budget Act of 1974, the following table compares the levels of new 

budget authority provided in the bill with the appropriate allocations under section 302(b) of the Budget Act: 

BUDGETARY IMPACT OF FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS ACT, 

2019 (AS ORDER REPORTED ON 13 JUNE 2018) PREPARED IN CONSULTATION WITH THE CONGRESSIONAL BUDGET OFFICE PURSUANT TO SEC. 308(a), PUBLIC LAW 93–344, AS AMENDED 

[In millions of dollars] 

302(b) allocation This bill 

Budget 

Authority Outlays Budget Authority Outlays 

Comparison of amounts in the bill with Committee allocations 

to its subcommittees: Subcommittee on Financial Services 

Mandatory ............................................................................. .................... .................... 22,406 1 22,398 

Discretionary ......................................................................... .................... .................... 23,423 1 24,045 

General Purpose ........................................................... 23,423 24,490 .................... ....................

Overseas Contingency .................................................. n.a. n.a. .................... ....................

1 Includes outlays from prior-year budget authority. 

n.a.: not applicable 

FIVE-YEAR OUTLAY PROJECTIONS

Pursuant to section 308(a)(1)(B) of the Congressional Budget Act 

of 1974, the following table contains five-year projections prepared 

by the Congressional Budget Office of outlays associated with the 

budget authority provided in the accompanying bill, as provided to 

the Committee by the Congressional Budget Office: 

109 

[In millions of dollars] 

302(b) allocation This bill 

Budget 

Authority Outlays Budget Authority Outlays 

Projection of outlays associated with the recommendation: 

2019 ...................................................................................... n.a. n.a. n.a. 2 40,141 

2020 ...................................................................................... n.a. n.a. n.a. 2 3,690 

2021 ...................................................................................... n.a. n.a. n.a. 2¥67 

2022 ...................................................................................... n.a. n.a. n.a. 2¥554 

2023 and future years .......................................................... n.a. n.a. n.a. 2¥4,421 

2 Excludes outlays from prior-year budget authority. 

n.a.: not applicable 

ASSISTANCE TO STATE AND LOCAL GOVERNMENTS

Pursuant to section 308(a)(1)(C) of the Congressional Budget Act 

of 1974, the amounts of financial assistance to State and local governments is as follows: 

[In millions of dollars] 

302(b) allocation This bill 

Budget 

Authority Outlays Budget Authority Outlays 

Financial assistance to State and local governments for 2019 .. n.a. n.a. 727 2 166 

2 Excludes outlays from prior-year budget authority. 

n.a.: not applicable 

PROGRAM DUPLICATION

No provision of this bill establishes or reauthorizes a program of 

the Federal Government known to be duplicative of another Federal program, a program that was included in any report from the 

Government Accountability Office to Congress pursuant to section 

21 of Public Law 111–139, or a program related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

DIRECTED RULE MAKING

The bill does not direct any rule making. 

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) 

AUTHORITY

The following table provides a detailed summary, for each Department and agency, comparing the amounts recommended in the 

bill with amounts enacted for fiscal year 2017 and budget estimates presented for fiscal year 2018. 


Insert offset folio 052 here HR792.001

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

TITLE I - DEPARTMENT OF THE TREASURY 

Departmental Offices 

Salaries and Expenses ................................ . 

Office of Terrorism and Financial Intelligence ....... . Cybersecurity Enhancement Account ................... . 

Department-wide Systems and Capital Investments 

Programs ........................................... . 

Fund for America's Kids and Grandkids ................ . 

Office of Inspector General .......................... . 

Treasury Inspector General for Tax Administration .... . 

Special Inspector General for TARP ................... . 

Financial Crimes Enforcement Network ................. . 

FY 2018 

Enacted 

201,751 

141.778 

24,000 

4,426 

37,044 

169,634 

34,000 

115,003 

FY 2019 

Request 

201,751 

159,000 

25,208 

4,000 

36,000 

161,113 

17,500 

117,800 

Bi 11 

208,751 

161,000 

25,208 

8,000 

585,000 

37,044 

170,834 

28,800 

117' 800 

Bill vs. B

Enacted 

+7,000 

+19,222 

+1,208 +3,574 

+585,000 +5

--- 

+1,200 

-5,200 +

+2,797 

-------------- -------------- -------

Subtotal, Departmental Offices ................. . 727,636 722,372 1,342,437 +614,801 +6

Treasury Forfeiture Fund (rescission) ................ . -702,000 +702,000 

Total, Departmental Offices .................... . 25,636 722,372 1,342,437 +1,316,801 +6

Insert offset folio 53 here HR792.002

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

Bureau of the Fiscal Service ......................... . 

Alcohol and Tobacco Tax and Trade Bureau ............. . 

Community Development Financial Institutions Fund 

Program Account .................................... . 

FY 2D18 

Enacted 

338,28D 

111,439 

250,000 

FY 2019 

Request 

330,837 

114,427 

14,000 

Bill 

338,280 

123,527 

216,000 

Bill vs. B

Enacted 

--- 

+12,088 

-34,000 +2

-------------- -------------- -------------- -------------- -------

Total, Department of the Treasury, non-IRS ..... . 

Internal Revenue Service 

Taxpayer Services .................................... . 

Enforcement .......................................... . 

Program lntegri ty .................................. . 

Subtotal ..................................... . 

Operations Support ................................... . 

Program Integrity .................................. . 

Subtotal ..................................... . 

725,355 

2,506,554 

4,860,000 

4,860,000 

3,634,000 

3,634,000 

1 '181 ,636 

2,241,000 

4,628,000 

204,643 

4,832,643 

4,155,796 

156,928 

4,312,724 

2,020,244 +1.294,889 +8

2,491,554 -15,000 +2

4,860,000 --. +2

-2

4,860,000 +

3,988,000 +354,000 -1

-1

3,988,000 +354,000 -3

Insert offset folio 54 here HR792.003

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

Business Systems Modernization ....................... . 

General provision (sec. 113) ......................... . 

FY 2018 

Enacted 

110,000 

320,000 

FY 2019 

Request 

110,000 

Bill 

200,000 

77,000 

Bi 11 VS. B

Enacted 

+90,000 +

-243,000 +

~-------------

------~~·---~M 

-------------- -------

Total, Internal Revenue Service ................ . 

Total, title I, Department of the Treasury ..... . 

Appropriations ............................. . 

Rescissions ................................ . 

(Mandatory) .................................... . 

( Discretionary) ................................ . 

11,430,554 

============== 

12' 155' 909 

(12,857,909) 

(-702,000) 

( 12 ' 155 ' 909) 

11,496,367 11,616,554 +186,000 +1

============== ============== ============== =======

12,678,003 13,636,798 +1 ,480,889 +9

(12,316,432) (13,636,798) (+778,889) (+1 ,3

(+702,000) 

(12,676,003) (13,636,798) (+1,480,889) (+9

Insert offset folio 55 here HR792.004

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

TITLE II - EXECUTIVE OFFICE OF THE PRESIDENT AND FUNDS 

APPROPRIATED TO THE PRESIDENT 

The White House 

Salaries and Expenses ................................ . 

Executive Residence at the White House: 

Operating Expenses ............................... . 

White House Repair and Restoration ............... . 

Subtotal ..................................... . 

Council of Economic Advisers ......................... . 

National Security Council and Homeland Security 

Counci 1 ............................................ . 

Office of Administration ............................. . 

Total, The White· House ......................... . 

FY 2018 

Enacted 

55,000 

12,917 

750 

13,667 

4,187 

11 '800 

100,000 ~~ -~- -----~~ --- -

184,654 

FY 2019 

Request 

55,DOO 

13,081 

750 

13,831 

4,187 

13,500 

100,000 

Bill 

55,000 

13,081 

750 

13,831 

4' 187 

13,000 

100,000 

-----

.............. _ ----~ 186,518 186,018 

Bill vs. B

Enacted 

+164 

+164 

+1 ,200 

+1 ,364 

Insert offset folio 56 here HR792.005

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

Office of Management and Budget ....................... 

Office of National Drug Control Policy 

Salaries and Expenses ................................. 

High Intensity Drug Trafficking Areas Program ......... 

Other Federal Drug Control Programs ................... 

FY 2018 

Enacted 

101,000 

18,400 

280,000 

117,093 

FY 2019 

Request 

103,000 

17' 400 

---

11,843 

Bill 

103,000 

17,400 

280,000 

118. 327 

Bill vs. B

Enacted 

+2,000 

-1,000 

--- +2

+1 ,234 +1

-------------- -------------- -------------- -------------- -------

Total, Office of National Drug Control Policy ... 

Unanticipated Needs .................................. . 

Information Technology Oversight and Reform .......... . 

Special Assistance to the President and Official 

Residence of the Vice President: 

Sa 1 aries and Expenses ............................ . 

Operating Expenses ............................... . 

Subtotal ..................................... . 

Total, title II, Executive Office of the 

President and Funds Appropriated to the 

President .................................... . 

415,493 

798 

19,000 

4,288 

302 

4,590 

29,243 

1,000 

25,000 

4,288 

302 

4,590 

415,727 

1,000 

15,000 

4,288 

302 

4,590 

+234 

+202 

-4,000 

+3

-

============== ============== ============== ============== =======

725,535 349,351 725,335 -200 +3

Insert offset folio 57 here HR792.006

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

TITLE III - THE JUDICIARY 

Supreme Court of the United States 

Salaries and Expenses: 

Salaries of Justices ............................. . 

Other salaries and expenses ...................... . 

FY 2018 

Enacted 

3,000 

82,028 

FY 2019 

Request 

3,000 

84,359 

Bi 11 

3,000 

84,703 

Bill vs. B

Enacted 

+2,675 

~-----~~-~---~ 

--~------~----

---------~----

·-------·----- -------

Subtotal ..................................... . 

Care of the Bui 1 ding and Grounds ..................... . 

Total, Supreme Court of the United States ...... . 

United States Court of Appeals for the Federal Circuit 

Salaries and Expenses: 

Sa 1 aries of judges ............................... . 

Other salaries and expenses ...................... . 

Total, United States Court of Appeals for the 

Federal Circuit ............................ . 

85,028 

16,153 

101 '181 

3,000 

31 '291 

34,291 

87,359 

15,999 

103,358 

4,000 

31,274 

35,274 

87,703 

15,999 

103,702 

4,000 

32,016 

36,016 

+2,675 

-154 

+2,521 

+1 ,000 

+725 

+1.725 

Insert offset folio 58 here HR792.007

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

United States Court of International Trade 

Salaries and Expenses: 

Salaries of judges ............................... . 

Other salaries and expenses ...................... . 

FY 2018 

Enacted 

1,000 

18,889 

FY 2019 

Request 

2,000 

19,070 

Bill 

2,000 

19,450 

Bill vs. B

Enacted 

+1 ,000 

+561 

-------------- -------------- -------------- -------------- -------

Total, U.S. Court of International Trade ..... . 

Courts of Appeals, District Courts, and Other Judicial 

Services 

Salaries and Expenses: 

Salaries of judges and bankruptcy judges ......... . 

Other salaries and expenses ...................... . 

Subtotal ..................................... . 

Vaccine Injury Compensation Trust Fund ............... . 

Defender Services .................................... . 

Fees of Jurors and Commissioners ..................... . 

Court Security ....................................... . 

Total, Courts of Appeals, District Courts, and 

Other Judicial Services ..................... .. 

19,889 

435,000 

5,099,061 

5' 534,061 

8,230 

1,078,713 

50,944 

586,999 

21,070 

429,000 

5,132,543 

5,561,543 

8,475 

1,141,489 

51,233 

602,309 

21,450 

429,000 

5,167,961 

5,596,961 

8,475 

1,142,427 

49,750 

604,460 

+1 ,561 

-6,000 

+68,900 

+62,900 

+245 

+63,714 

-1 '194 

+17 '461 

+

+

-------------- -------------- -------------- -------------- -------

7,258,947 7,365,049 7,402,073 +143,126 +

Insert offset folio 59 here HR792.008

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

Administrative Office of the United States Courts 

Salaries and Expenses ................................ . 

Federal Judicial Center 

Sa 1 aries and Expenses ................................ . 

United States Sentencing Commission 

Sa 1 aries and Expenses ................................ . 

Total, title III, the Judiciary .............. . 

(Mandatory) .............................. . 

(Discretionary) .......................... . 

FY 2018 

Enacted 

90,423 

29,265 

18,699 

7,552,695 

(442,000) 

(7,110,695) 

FY 2019 

Request 

89,867 

29,064 

18,548 

7,662.230 

(438,000) 

(7,224,230) 

Bi 11 

92,413 

29,819 

18,548 

7,704,021 

(438,000) 

(7,266,021) 

Bill vs. 

Enacted 

+1 '990 

+554 

151 

+151 ,326 

(-4,000) 

(+155,326) 

B

+

(+

============== ============== ============== ============== =======

Insert offset folio 60 here HR792.009

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

TITLE IV - DISTRICT OF COLUMBIA 

Federal Payment for Resident Tuition Support ......... . 

Federal Payment for Emergency Planning and Security 

Costs in the District of Columbia .................. . 

Federal Payment to the District of Columbia Courts ... . Federal Payment for Defender Services in District of 

Columbia Courts .................................... . 

Federal Payment to the Court Services and Offender 

Supervision Agency for the District of Columbia ..... 

Federal Payment to the District of Columbia Public 

Defender Service ...................... , ............ . 

Federal Payment to the Criminal Justice Coordinating 

Counci 1 ......................................... , , .. 

Federal Payment for Judicial Commissions ............. . 

Federal Payment for School Improvement ............... . Federal Payment for the D.C. National Guard .......... . Federal Payment for Testing and Treatment of HIV/AIDS. 

Federal Payment to the District of Columbia Water and 

Sewer Authority .................................... . 

FY 2018 

Enacted 

40,000 

13,000 

265,400 

49,890 

244,298 

41,829 

2,000 

565 

45,000 

435 

5,000 

14,000 

FY 2019 

Request 

---

12,000 

244,939 

46,005 

256,724 

45,858 

1 ,900 

565 

45,000 

435 

5,000 

Bill 

30,000 

13,000 

288,280 

49,890 

256,724 

45,858 

2,000 

565 

45,000 

435 

5,000 

Bill vs. 

Enacted 

-10,000 

+22,880 

+12,426 

+4,029 

14,000 

B

+

+

============== ============== ============== ============== =======

Total, Title IV, District of Columbia .......... . 721,417 658,426 736,752 +15,335 +

Insert offset folio 61 here HR792.010

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

TITLE V - OTHER INDEPENDENT AGENCIES 

Administrative Conference of the United States ....... . 

Consumer Product Safety Commission ................... . 

Election Assistance Commission ....................... . 

Election Reform Program .......................... . 

Federal Communications Commission 

Salaries and Expenses ................................ . 

Offsetting fee collections ........................... . 

Direct appropriation ........................... . 

General provision (sec. 511) ......................... . 

FY 2018 

Enacted 

3,100 

126,000 

10,100 

380' 000 

322,035 

-322,035 

600,000 

FY 2019 

Request 

3,100 

123,450 

9,200 

333,118 

-333,118 

Bill 

3' 100 

127,000 

10' 100 

335,118 

-335' 118 

Bill vs. 

Enacted 

+1,000 

-380,000 

+13,083 

-13,083 

-600,000 

B

Insert offset folio 62 here HR792.011

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

Federal Deposit Insurance Corporation 

Office of Inspector General (by transfer) ............ , Deposit Insurance Fund (transfer) .... ,, ...... , ...... . 

Federal Election Commission ..... , ........ , ........... . 

Federal Labor Relations Authority .................... . 

Federal Trade Commission 

Salaries and Expenses ................................ . 

Offsetting fee collections (mergers) ................. . Offsetting fee collections (telephone) ............... . 

Direct appropriation ............................. . 

FY 201B 

Enacted 

{39, 136) 

(-39,136) 

71,250 

26,200 

306' 317 

-126,000 

-16,000 

FY 2019 

Request 

(42,982) 

(-42,982) 

71,250 

26,200 

309,700 

-136,000 

-17,000 

Bill 

(42,982) 

(-42,982) 

71 '250 

26,200 

311,700 

·136,000 

-17,000 

••-•--~--- ... 

-

-~-~~----•-••- ------m•--•- - 164,317 156,700 158,700 

Bill vs. 

Enacted 

(+3,846) 

(-3,846) 

+5,383 

-10,000 

-1,000 

--,., .. -............ -

-5,617 

B

Insert offset folio 63 here HR792.012

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 201B 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

General Services Administration 

Federal Buildings Fund 

Limitations on Availability of Revenue: 

Construction and acquisition of facilities ....... . 

Repairs and alterations .......................... . 

Rent a 1 of space .................................. . 

Bui 1 ding operations .............................. . 

Installment Acquisition Payments ................. . 

FY 2018 

Enacted 

692,069 

666,335 

5,493,768 

2' 221 '766 

FY 2019 

Request 

1,338,387 

909,746 

5,430,345 

2' 253' 195 

200,000 

Bill 

275,900 

679,934 

5,430,345 

2,248,395 

---

Bill vs. B

Enacted 

-416,169 -1,0

+13,599 -2

-63,423 

+26,629 

--- -2

-------------- -------------- -------

Subtotal, Limitations on Availability of 

Revenue .................................... . 9,073,938 10,131,673 8,634,574 -439,364 -1,4

Rental income to fund ................................ . -9,950,519 -10,131,673 -10,131,673 -181,154 

-------------- ------------

........................................ _ 

--

____ .. 

---

.. _

Total, Federal Buildings Fund ................. . -876,581 --- -1,497,099 -620,518 -1,4

Insert offset folio 64 here HR792.013

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

Government-wide Pol icy ............................... . 

Operating Expenses ................................... . 

Civilian Board of Contract Appeals .................. . 

Office of Inspector General .......................... . 

Allowances and Office Staff for Former Presidents .... . 

Federal Citizen Services Fund ........................ . 

Technology Modernization Fund ........................ . 

Asset Proceeds and Space Management Fund ............. . 

Environmental Review Improvement Fund ................ . 

GSA- President's Management Council Workforce Fund .. . 

Total, General Services Administration ......... . 

Harry S Truman Scholarship Foundation ................ . 

Merit Systems Protection Board 

Salaries and Expenses ................................ . 

Limitation on administrative expenses ............... . 

Total, Merit Systems Protection Board .......... . 

Morris K. Udall and Stewart L. Udall Foundation 

Morris K. Udall and Stewart L. Udall Trust Fund ...... . 

Environmental Dispute Resolution Fund ................ . 

Total, Morris K. Udall and Stewart L Udall 

Foundation ................................... . 

FY 2018 

Enacted 

53,499 

45,645 

8,795 

65,000 

4,754 

50,000 

100,000 

5,000 

1,000 

-542,888 

1 ,000 

44,490 

2,345 

46,835 

1,975 

3,366 

5,341 

FY 2019 

Request 

65,835 

49,440 

9,301 

67,000 

4,796 

58,400 

210,000 

31,000 

6,070 

50,000 

551,842 

42' 145 

2,345 

44,490 

1,875 

3,200 

5,075 

Bi 11 

60,000 

49,440 

9,301 

67,000 

4,796 

55,000 

150,000 

31,000 

6,070 

-1,064,492 

1 '000 

44,490 

2,345 

46,835 

Bill vs. 

Enacted 

+6,501 

+3,795 

+506 

+2,000 

+42 

+5,000 

+50,000 

+26,000 

+5,070 

-521 ,604 

-1 '975 

-3,366 

-5 '341 

B

-

-

-1,6

Insert offset folio 65 here HR792.014

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

National Archives and Records Administration 

Operating Expenses ................................... . 

Reduction of debt ................................ . 

Subtotal ..................................... . 

Office of Inspector General .......................... . 

Repairs and Restoration .............................. . 

National Historical Publications and Records 

Commission Grants Program .......................... . 

FY 2018 

Enacted 

384,911 

-25,050 

359,861 

4,801 

7,500 

6' 000 

FY 2019 

Request 

365,105 

-27,224 

337,881 

4,241 

7,500 

---

Bill 

372,400 

-27,224 

345,176 

4,823 

7,500 

6,000 

Bill vs. B

Enacted 

-12,511 

-2,114 

-14,685 

+22 

--- 

·------------- -------------- ·------------- -------------- -------

Total, National Archives and Records 

Administration ............................... . 378' 162 349,622 363,499 -14,663 +

NCUA Community Development Revolving Loan Fund ....... . 2,000 - - 2,000 -- 

Office of Government Ethics .......................... . 16' 439 16,294 17,019 +580 

Insert offset folio 66 here HR792.015

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

Office of Personnel Management 

Salaries and Expenses ............................... . 

Limitation on administrative expenses ............ . 

FY 2018 

Enacted 

129,341 

131,414 

FY 2019 

Request 

132,172 

133,483 

Bill 

132,172 

133,483 

Bill vs. B

Enacted 

+2,831 

+2,069 --~--------·-- -------------- -------------- ·-·----------- -------

Subtotal, Salaries and Expenses ............ . 260,755 265,655 265,655 +4,900 

Office of Inspector General .......................... . 5,000 5,000 5,000 

Limitation on administrative expenses ............ . 25,000 25,265 25,265 +265 

-------------- -------------- -------------- -------------- -------

Subtotal, Office of Inspector General ...... . 30,000 30,265 .30. 265 +265 

.......... 

----- -- -- --- --

...... 

-------- --- - - ---- ........ 

-

.. .. .. .. .. .. .. 

Total, Office of Personnel Management ........ . 290,755 295,920 295,920 +5 ,165 

Office of Special Counsel ............................ . 26,535 26,252 26,252 ·283 

Postal Regulatory Commission ......................... . 15,200 15 ,1 00 15,200 ... 

Privacy and Civil Liberties Oversight Board .......... . 8,000 5,000 5,000 ·3,000 Public Buildings Reform Board ........................ . 5,000 2,000 2,000 -3,000 

Insert offset folio 67 here HR792.016

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

Securities and Exchange Commission 

Salaries and Expenses ................................ . 

SEC NYC Regional Office .......................... . 

Headquarters Lease ................................... . 

FY 2018 

Enacted 

1,652,000 

... 

244,507 

FY 2019 

Request 

1,658,302 

40,75D 

... 

Bill 

1 '658' 302 

37' 189 

. "" 

Bill vs. B

Enacted 

+6,302 

+37' 189 

-244,507 

-·---·~-~-R·--

------- ------ -------- ----- -------------- -------

Subtotal, Securities and Exchange Commission ......... . 1,896,507 1,699,052 1,695,491 -201,016 

SEC fees ......................................... . -1,896,507 -1,699,052 -1 ,695,491 +201,016 

SEC Reserve Fund (rescission) .................... . -- -25,000 --- ... +

Selective Service System ............................. . 22,900 26,400 26,000 +3' 100 

Insert offset folio 68 here HR792.017

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

Small Business Administration 

Sal aries and expenses ................................ . Entrepreneurial Development Programs ................. . Office of Inspector General .......................... . 

Office of Advocacy ................................... . 

Business Loans Program Account: Direct loans subsidy ............................. . 

Guaranteed Loan Subsidy .......................... . 

Administrative expenses .......................... . 

FY 2018 

Enacted 

268,500 

247' 100 

19,900 

9,120 

3,438 

---

152,782 

FY 2019 

Request 

265,000 

192,450 

21 ,900 

9,120 

4,000 

-155' 150 

155' 150 

Bill 

268,500 

251,900 

21 ,900 

9,120 

4,000 

---

155,150 

Bill vs. B

Enacted 

--- 

+4,800 +

+2,000 

+562 

--- +1

+2,368 

-

..... 

-

.. ~ Total, --~--- --~~--~------- ----·--------- -------------- -------

Business loans program account ........ . 

Disaster Loans Program Account: Administrative expenses .......................... . 

Total, Small Business Administration ......... . 

United States Postal Service 

Payment to the Postal Service Fund ................... . 

Office of Inspector General .......................... . 

Total, United States Postal Service ............ . 

156,220 4,000 159,150 +2,930 +1

186,458 31,308 +31,308 -1

-------------- -------------- ----------·-·· - - ---------- -~-- --

700,840 

58' 118 

245,000 

303,118 

678,928 

55,235 

234,650 

289,885 

741,878 

58,118 

250,000 

308,118 

+41 ,038 

+5,000 

+5,000 

+

+

+

Insert offset folio 69 here HR792.018

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

United States Tax Court .............................. . 

Total, title V, Independent Agencies ........... . 

Appropriations ............................. . 

Rescissions ................................ . 

(by transfer) .............................. . 

(Oi scretionary) ................................ . 

TITLE VI - GENERAL PROVISIONS 

Mandatory appropriations (sec. 619) .................. . 

PCA Oversight Board scholarships (sec. 620) ......... . 

SBA 503 Unobligated balances (sec. 620) .............. . 

Government-wide transfers (sec. 737) ................. . 

Total, title VI, General Provisions ............ . 

FY 2018 

Enacted 

50,740 

FY 2019 

Request 

55,563 

Bill 

51,515 

Bill vs. B

Enacted 

+775 

============== ============== ============== ============== =======

2 ,710, 944 

(2,710,944) 

(39,136) 

(2,710,944) 

2,727,271 

(2,752,271) 

(-25,000) 

(42,982) 

(2 ,727' 271) 

1,234,094 

(1,234,094) 

(42,982) 

( 1 '234' 094) 

-1,476,850 

(-1,476,850) 

(+3,846) 

(-1,476,850) 

-1,4

(-1 ,5

(+

( -1 '4

============== ============== ============== ============== =======

21,800,000 

1,000 

-2,600 

21,818,000 

-50,000 

3,000,000 

21,818,000 

-50,000 

+18,000 

-1,000 

-47,400 

-3,0

============== ============== ============== ============== =======

21,798,400 24,768,000 21,768,000 -30,400 -3,0

============== ============== ============== ============== =======

Insert offset folio 70 here HR792.019

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 

AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

TITLE IX · OTHER MATTERS 

Other matters .............................. . 

Total, title IX, Other Matters ................. . 

OTHER APPROPRIATIONS 

SUPPLEMENTAL APPROPRIATIONS FOR DISASTER RELIEF 

REQUIREMENTS (P.L. 115-56) 

SBA, Disaster Loans Progam Account ................... . 

Total, Supplemental Appropriations for Disaster 

Relief Requirements (P.L. 115-56) ............ . 

FY 2018 

Enacted 

FY 2019 

Request Bill 

-126,000 

Bill vs. B

Enacted 

-126,000 -1

============== ============== ============== ============== =======

-126,000 -126,000 -1

============== ============== ============== ============== =======

450,000 -450,000 

====;========= ============== ============== ============== =======

450,000 -450,000 

============== ============== ============== ============== =======

Insert offset folio 71 here HR792.020

COMPARATIVE STATEMENT OF NEW BUDGET (OBLIGATIONAL) AUTHORITY FOR 2018 AND BUDGET REQUESTS AND AMOUNTS RECOMMENDED IN THE BILL FOR 2019 

(Amounts in thousands) 

BIPARTISAN BUDGET ACT OF 2018 (P.L. 115-123) 

GSA, Federal Buildings Fund (emergency) .............. . SBA, Office of Inspector General (emergency) ......... . SBA, Disaster Loans Program Account (emergency) ...... . 

Total, Bipartisan Budget Act of 2018 (P.L. 

115-123) ............ ' ' ' ... ' .. ' .... ' .......... . 

FY 2018 

Enacted 

126,951 

7,000 

1,652,000 

1,785,951 

FY 2019 

Request Bill 

Bill vs. B

Enacted 

-126,951 

-7,000 

-1,652,000 

-1,785,951 

============== ============== ============== ============== =======

Total, Other Appropriations .................... . (emergency) ................................ . 

Grand total .......................................... . 

Appropriations ................................... . 

Rescissions ...................................... . 

Emergency ........................................ . 

(by transfer) .................................... . 

Discretionary total (non-emergency) .................. . 

2,235,951 

2,235,951 

-2,235,951 

-2.235,951 

============== ============== ============== ============== =======

47,900,851 

(46,369,500) 

( -704,600) 

(2,235,951) 

(39,136) 

23,422,900 

48,843,281 

(48,556,710) 

( -75,000) 

(42,982} 

26,587,281 

45,679,000 

(45,729,000) 

(-50. 000) 

(42,982) 

23,423,000 

-2,221,651 

(-640,500) 

(+654,600) 

(·2,235,951) 

(+3,846) 

+100 

·3,16

(-2,8

(+

-3 ,1
130 


Insert offset folio 73 here HR792.021

FULL COMMITTEE VOTES 

Pursuant to the provisions of clause 3(b) of rule XIII of the House of Representatives, the results of 

each roll call vote on an amendment or on the motion to report, together with the names of those voting for and 

those voting against, are printed below: 

ROLL CALL NO. I 

Date: June 13, 2018 

Measure: Financial Services and General Government Appropriations Bill, FY 2019 

Motion by: Mr. Quigley 

Description of Motion: To provide $380 million for election assistance grants offset from the Fund for 

America's Kids and Grandkids. 

Results: Defeated 21 yeas to 30 nays 

Members Voting Yea 

Mr. Aguilar 

Mr. Bishop 

Ms. Clark 

Mr. Cuellar 

Ms. DeLauro 

Ms. Kaptur 

Mr. Kilmer 

Ms. Lee 

Mrs. Lowey 

Ms. McCollum 

Ms.Meng 

Ms. Pingree 

Mr. Pocan 

Mr. Price 

Mr. Quigley 

Ms. Roybal-Allard 

Mr. Ruppersberger 

Mr. Ryan 

Mr. Serrano 

Mr. Visclosky 

Ms. Wasserman Schultz 

Members Voting Nay 

Mr. Aderholt 

Mr.Amodei 

Mr. Calvert 

Mr. Carter 

Mr. Cole 

Mr. Culberson 

Mr. Diaz-Balart 

Mr. Fleischmann 

Mr. Fortenberry 

Mr. Frelinghuysen 

Ms. Granger 

Mr. Graves 

Dr. Harris 

Ms. Herrera Beutler 

Mr. Jenkins 

Mr. Joyce 

Mr. Moolenaar 

Mr. Newhouse 

Mr. Palazzo 

Mrs. Roby 

Mr. Rogers 

Mr. Rooney 

Mr. Rutherford 

Mr. Simpson 

Mr. Stewart 

Mr. Taylor 

Mr. Valadao 

Mr. Womack 

Mr. Yoder 

Mr. Young 
131 


Insert offset folio 74 here HR792.022

FULL COMMITTEE VOTES 

Pursuant to the provisions of clause 3(b) of rule Xlll of the House of Representatives, the results of 

each roll call vote on an amendment or on the motion to report, together with the names of those voting for and 

those voting against, are printed below: 

ROLL CALL NO. 2 

Date: June 13, 2018 

Measure: Financial Services and General Government Appropriations Bill, FY 2019 

Motion by: Mr. Aguilar 

Description of Motion: To make eligible for employment by the Federal Government an alien who is 

authorized to be employed in the United States pursuant to the Deferred Action for Childhood Arrivals 

program. 

Results: Defeated 24 yeas to 28 nays 

Members Voting Yea 

Mr. Aguilar 

Mr. Bishop 

Mr. Cartwright 

Ms. Clark 

Mr. Cuellar 

Ms. DeLauro 

Mr. Diaz-Balart 

Ms.Kaptur 

Mr. Kilmer 

Ms. Lee 

Mrs. Lowey 

Ms. McCollum 

Ms. Meng 

Ms. Pingree 

Mr. Pocan 

Mr. Price 

Mr. Quigley 

Ms. Roybal-Allard 

Mr. Ruppersberger 

Mr. Ryan 

Mr. Serrano 

Mr. Valadao 

Mr. Visclosky 

Ms. Wasserman Schultz 

Members Voting Nay 

Mr. Aderholt 

Mr.Amodei 

Mr. Calvert 

Mr. Carter 

Mr. Cole 

Mr. Culberson 

Mr. Fleischmann 

Mr. Fortenberry 

Mr. Frelinghuysen 

Ms. Granger 

Mr. Graves 

Dr. Harris 

Ms. Herrera Beutler 

Mr. Jenkins 

Mr. Joyce 

Mr. Moolenaar 

Mr. Newhouse 

Mr. Palazzo 

Mrs. Roby 

Mr. Rogers 

Mr. Rooney 

Mr. Rutherford 

Mr. Simpson 

Mr. Stewart 

Mr. Taylor 

Mr. Womack 

Mr. Yoder 

Mr. Young 
132 


Insert offset folio 75 here HR792.023

FULL COMMITTEE VOTES 

Pursuant to the provisions of clause 3(b) of rule Xlll of the House of Representatives, the results of 

each roll call vote on an amendment or on the motion to report, together with the names of those voting for and 

those voting against, are printed below: 

ROLL CALL NO. 3 

Date: June 13, 2018 

Measure: Financial Services and General Government Appropriations Bill, FY 2019 

Motion by: Mrs. Lowey 

Description of Motion: To strike Section 631 prohibiting funds to pay for an abortion or the administrative 

expenses in connection with a multi-State qualified health plan offered under a contract under section 1334 of 

the Patient Protection and Affordable Care Act, which provides any benefits or coverage for abortions, except 

for endangerment of the life of the mother, rape, or incest. 

Results: Defeated 21 yeas to 31 nays 

Members Voting Yea 

Mr. Aguilar 

Mr. Bishop 

Mr. Cartwright 

Ms. Clark 

Ms. DeLauro 

Ms.Kaptur 

Mr. Kilmer 

Ms. Lee 

Mrs. Lowey 

Ms. McCollum 

Ms.Meng 

Ms. Pingree 

Mr. Pocan 

Mr. Price 

Mr. Quigley 

Ms. Roybal-Allard 

Mr. Ruppersberger 

Mr. Ryan 

Mr. Serrano 

Mr. Visclosky 

Ms. Wasserman Schultz 

Members Voting Nay 

Mr. Aderholt 

Mr.Amodei 

Mr. Calvert 

Mr. Carter 

Mr. Cole 

Mr. Cuellar 

Mr. Culberson 

Mr. Diaz-Balart 

Mr. Fleischmann 

Mr. Fortenberry 

Mr. Frelinghuysen 

Ms. Granger 

Mr. Graves 

Dr. Harris 

Ms. Herrera Beutler 

Mr. Jenkins 

Mr. Joyce 

Mr. Moolenaar 

Mr. Newhouse 

Mr. Palazzo 

Mrs. Roby 

Mr. Rogers 

Mr. Rooney 

Mr. Rutherford 

Mr. Simpson 

Mr. Stewart 

Mr. Taylor 

Mr. Valadao 

Mr. Womack 

Mr. Yoder 

Mr. Young 
133 


Insert offset folio 76 here HR792.024

FULL COMMITTEE VOTES 

Pursuant to the provisions of clause 3(b) of rule XIII of the House of Representatives, the results of 

each roll call vote on an amendment or on the motion to report, together with the names of those voting for and 

those voting against, are printed below: 

ROLL CALL NO. 4 

Date: June 13, 2018 

Measure: Financial Services and General Government Appropriations Bill, FY 2019 

Motion by: Mr. Price 

Description of Motion: To revoke the FCC rule relating to "Restoring Internet Freedom", to restore the 

previous rule on net neutrality, and to prohibit the FCC from reissuing the rule. 

Results: Defeated 22 yeas to 29 nays 

Members Voting Yea 

Mr. Aguilar 

Mr. Bishop 

Mr. Cartwright 

Ms. Clark 

Mr. Cuellar 

Ms. DeLauro 

Ms. Kaptur 

Mr. Kilmer 

Ms. Lee 

Mrs. Lowey 

Ms. McCollum 

Ms.Meng 

Ms. Pingree 

Mr.Pocan 

Mr. Price 

Mr. Quigley 

Ms. Roybal-Allard 

Mr. Ruppersberger 

Mr. Ryan 

Mr. Serrano 

Mr. Visclosky 

Ms. Wasserman Schultz 

Members Voting Nay 

Mr. Aderholt 

Mr. Calvert 

Mr. Carter 

Mr. Cole 

Mr. Culberson 

Mr. Diaz-Balart 

Mr. Fleischmann 

Mr. Fortenberry 

Mr. Frelinghuysen 

Ms. Granger 

Mr. Graves 

Dr. Harris 

Ms. Herrera Beutler 

Mr. Jenkins 

Mr. Joyce 

Mr. Moolenaar 

Mr. Newhouse 

Mr. Palazzo 

Mrs. Roby 

Mr. Rogers 

Mr. Rooney 

Mr. Rutherford 

Mr. Simpson 

Mr. Stewart 

Mr. Taylor 

Mr. Valadao 

Mr. Womack 

Mr. Yoder 

Mr. Young 
134 


Insert offset folio 77 here HR792.025

FULL COMMITTEE VOTES 

Pursuant to the provisions of clause 3(b) of rule XIII of the House of Representatives, the results of 

each roll call vote on an amendment or on the motion to report, together with the names of those voting for and 

those voting against, are printed below: 

ROLL CALL NO. 5 

Date: June 13, 2018 

Measure: Financial Services and General Government Appropriations Bill, FY 2019 

Motion by: Ms. Lee 

Description of Motion: To limit the bill's prohibition on the use offund for abortions so that it would not 

apply to local District of Columbia funds. 

Results: Defeated 22 yeas to 29 nays 

Members Voting Yea 

Mr. Aguilar 

Mr. Bishop 

Mr. Cartwright 

Ms. Clark 

Mr. Cuellar 

Ms. DeLauro 

Ms.Kaptur 

Mr. Kilmer 

Ms. Lee 

Mrs. Lowey 

Ms. McCollum 

Ms. Meng 

Ms. Pingree 

Mr. Pocan 

Mr. Price 

Mr. Quigley 

Ms. Roybal-Allard 

Mr. Ruppersberger 

Mr. Ryan 

Mr. Serrano 

Mr. Visclosky 

Ms. Wasserman Schultz 

Members Voting Nay 

Mr. Aderholt 

Mr.Amodei 

Mr. Calvert 

Mr. Carter 

Mr. Cole 

Mr. Culberson 

Mr. Diaz-Balart 

Mr. Fleischmann 

Mr. Fortenberry 

Mr. Frelinghuysen 

Mr. Graves 

Dr. Harris 

Ms. Herrera Beutler 

Mr. Jenkins 

Mr. Joyce 

Mr. Moolenaar 

Mr. Newhouse 

Mr. Palazzo 

Mrs. Roby 

Mr. Rogers 

Mr. Rooney 

Mr. Rutherford 

Mr. Simpson 

Mr. Stewart 

Mr. Taylor 

Mr. Valadao 

Mr. Womack 

Mr. Yoder 

Mr. Young 
135 


Insert offset folio 78 here HR792.026

FULL COMMITTEE VOTES 

Pursuant to the provisions of clause 3(b) of rule X Ill of the House of Representatives, the results of 

each roll call vote on an amendment or on the motion to report, together with the names of those voting for and 

those voting against, are printed below: 

ROLL CALL NO. 6 

Date: June 13, 2018 

Measure: Financial Services and General Government Appropriations Bill, FY 2019 

Motion by: Ms. Wasserman Schultz 

Description of Motion: To strike Section 112 prohibiting funds for the Internal Revenue Service (IRS) to 

determine that a church is not exempt from taxation for participating in, or intervening in, any political 

campaign on behalf of (or in opposition to) any candidates for public office unless the IRS Commissioner 

consents to such determination, the Commissioner notifies the tax committees of Congress, and the 

determination is effective 90 days after such notification. 

Results: Defeated 21 yeas to 28 nays 

Members Voting Yea 

Mr. Aguilar 

Mr. Bishop 

Mr. Cartwright 

Ms. Clark 

Mr. Cuellar 

Ms. DeLauro 

Ms. Kaptur 

Mr. Kilmer 

Ms. Lee 

Mrs. Lowey 

Ms. McCollum 

Ms. Meng 

Ms. Pingree 

Mr. Pocan 

Mr. Price 

Mr. Quigley 

Ms. Roybal-Allard 

Mr. Ryan 

Mr. Serrano 

Mr. Visclosky 

Ms. Wasserman Schultz 

Members Voting Nay 

Mr. Aderholt 

Mr. Calvert 

Mr. Carter 

Mr. Cole 

Mr. Culberson 

Mr. Diaz-Balart 

Mr. Fleischmann 

Mr. Fortenberry 

Mr. Frelinghuysen 

Mr. Graves 

Dr. Harris 

Ms. Herrera Beutler 

Mr. Jenkins 

Mr. Joyce 

Mr. Moolenaar 

Mr. Newhouse 

Mr. Palazzo 

Mrs. Roby 

Mr. Rogers 

Mr. Rooney 

Mr. Rutherford 

Mr. Simpson 

Mr. Stewart 

Mr. Taylor 

Mr. Valadao 

Mr. Womack 

Mr. Yoder 

Mr. Young 
136 


Insert offset folio 79 here HR792.027

FULL COMMITTEE VOTES 

Pursuant to the provisions of clause 3(b) of rule XIII of the House of Representatives, the results of 

each roll call vote on an amendment or on the motion to report, together with the names of those voting for and 

those voting against, are printed below: 

ROLL CALL NO. 7 

Date: June 13,2018 

Measure: Financial Services and General Government Appropriations Bill, FY 2019 

Motion by: Ms. McCollum 

Description of Motion: To prohibit a pay increase for the Vice President, employees receiving pay at an 

Executive Schedule rate and holding a political appointment, and certain other government employees. 

Results: Defeated 21 yeas to 27 nays 

Members Voting Yea 

Mr. Aguilar 

Mr. Bishop 

Mr. Cartwright 

Ms. Clark 

Mr. Cuellar 

Ms. DeLauro 

Ms.Kaptur 

Mr. Kilmer 

Ms. Lee 

Mrs. Lowey 

Ms. McCollum 

Ms.Meng 

Ms. Pingree 

Mr. Pocan 

Mr. Price 

Mr. Quigley 

Ms. Roybal-Allard 

Mr. Ryan 

Mr. Serrano 

Mr. Visclosky 

Ms. Wasserman Schultz 

Members Voting Nay 

Mr. Aderholt 

Mr. Calvert 

Mr. Carter 

Mr. Cole 

Mr. Culberson 

Mr. Diaz-Balart 

Mr. Fleischmann 

Mr. Fortenberry 

Mr. Frelinghuysen 

Mr. Graves 

Dr. Harris 

Ms. Herrera Beutler 

Mr. Jenkins 

Mr. Joyce 

Mr. Moolenaar 

Mr. Newhouse 

Mr. Palazzo 

Mrs. Roby 

Mr. Rogers 

Mr. Rutherford 

Mr. Simpson 

Mr. Stewart 

Mr. Taylor 

Mr. Valadao 

Mr. Womack 

Mr. Yoder 

Mr. Young 
137 


Insert offset folio 80 here HR792.028

FULL COMMITTEE VOTES 

Pursuant to the provisions of clause 3(b) of rule XIII of the House of Representatives, the results of 

each roll call vote on an amendment or on the motion to report, together with the names of those voting for and 

those voting against; are printed below: 

ROLL CALL NO. 8 

Date: June 13,2018 

Measure: Financial Services and General Government Appropriations Bill, FY 2018 

Motion by: Mr. Rogers 

Description of Motion: To report the bill to the House, as amended. 

Results: Adopted 28 yeas to 20 nays 

Members Voting Yea 

Mr. Aderholt 

Mr. Calvert 

Mr. Carter 

Mr. Cole 

Mr. Cuellar 

Mr. Culberson 

Mr. Diaz-Balart 

Mr. Fleischmann 

Mr. Fortenberry 

Mr. Frelingbuysen 

Mr. Graves 

Dr. Harris 

Ms. Herrera Beutler 

Mr. Jenkins 

Mr. Joyce 

Mr. Moolenaar 

Mr. Newhouse 

Mr. Palazzo 

Mrs. Roby 

Mr. Rogers 

Mr. Rutherford 

Mr. Simpson 

Mr. Stewart 

Mr. Taylor 

Mr. Valadao 

Mr. Womack 

Mr. Yoder 

Mr. Young 

Members Voting Nay 

Mr. Aguilar 

Mr. Bishop 

Mr. Cartwright 

Ms. Clark 

Ms. DeLauro 

Ms. Kaptur 

Mr. Kilmer 

Ms. Lee 

Mrs. Lowey 

Ms. McCollum 

Ms. Meng 

Ms. Pingree 

Mr. Pocan 

Mr. Price 

Mr. Quigley 

Ms. Roybal-Allard 

Mr. Ryan 

Mr. Serrano 

Mr. Visclosky 

Ms. Wasserman Schultz 
138 

COMPLIANCE WITH RULE XIII, CL. 3(e) (RAMSEYER RULE) 

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

DODD-FRANK WALL STREET REFORM AND CONSUMER 

PROTECTION ACT 

(Public Law 111-203) 

* * * * * * * 

TITLE I—FINANCIAL STABILITY 

* * * * * * * 

Subtitle B—Office of Financial Research 

* * * * * * * 

SEC. 155. FUNDING. 

(a) FINANCIAL RESEARCH FUND.— (1) FUND ESTABLISHED.—There is established in the Treasury 

of the United States a separate fund to be known as the ‘‘Financial Research Fund’’. 

(2) FUND RECEIPTS.—All amounts provided to the Office 

under subsection (c), and all assessments that the Office receives under subsection (d) shall be deposited into the Financial Research Fund. 

(3) INVESTMENTS AUTHORIZED.— 

(A) AMOUNTS IN FUND MAY BE INVESTED.—The Director 

may request the Secretary to invest the portion of the Financial Research Fund that is not, in the judgment of the 

Director, required to meet the needs of the Office. 

(B) ELIGIBLE INVESTMENTS.—Investments shall be made 

by the Secretary in obligations of the United States or obligations that are guaranteed as to principal and interest by 

the United States, with maturities suitable to the needs of 

the Financial Research Fund, as determined by the Director. 

(4) INTEREST AND PROCEEDS CREDITED.—The interest on, and 

the proceeds from the sale or redemption of, any obligations 

held in the Financial Research Fund shall be credited to and 

form a part of the Financial Research Fund. 

139 

(b) USE OF FUNDS.— (1) IN GENERAL.—Funds obtained by, transferred to, or credited to the Financial Research Fund shall be øimmediately¿ 

available to the Office as provided for in appropriation Acts, and shall remain available until expended, to pay the expenses 

of the Office in carrying out the duties and responsibilities of 

the Office. 

ø(2) FEES, ASSESSMENTS, AND OTHER FUNDS NOT GOVERN- MENT FUNDS.—Funds obtained by, transferred to, or credited to 

the Financial Research Fund shall not be construed to be Government funds or appropriated moneys. 

ø(3)¿ (2) AMOUNTS NOT SUBJECT TO APPORTIONMENT.—Notwithstanding any other provision of law, amounts in the Financial Research Fund shall not be subject to apportionment 

for purposes of chapter 15 of title 31, United States Code, or 

under any other authority, or for any other purpose. 

(c) INTERIM FUNDING.—During the 2-year period following the 

date of enactment of this Act, the Board of Governors shall provide 

to the Office an amount sufficient to cover the expenses of the Office. 

(d) øPERMANENT SELF-FUNDING.—¿ ASSESSMENT SCHEDULE.— Beginning 2 years after the date of enactment of this Act, the Secretary shall establish, by regulation, and with the approval of the 

Council, an assessment schedule, including the assessment base 

and rates, applicable to bank holding companies with total consolidated assets of 50,000,000,000 or greater and nonbank financial 

companies supervised by the Board of Governors, that takes into 

account differences among such companies, based on the considerations for establishing the prudential standards under section 115, 

to collect assessments equal to the total expenses of the Office. 

* * * * * * * 

JUDICIAL IMPROVEMENTS ACT OF 1990 

TITLE II—FEDERAL JUDGESHIPS 

* * * * * * * 

SEC. 203. DISTRICT JUDGES FOR THE DISTRICT COURTS. 

(a) IN GENERAL.—The President shall appoint, by and with the 

advice and consent of the Senate— 

(1) 1 additional district judge for the western district of Arkansas; 

(2) 2 additional district judges for the northern district of 

California; 

(3) 5 additional district judges for the central district of California; 

(4) 1 additional district judge for the southern district of 

California; 

(5) 2 additional district judges for the district of Connecticut; 

(6) 2 additional district judges for the middle district of Florida; 

(7) 1 additional district judge for the northern district of 

Florida; 

140 

(8) 1 additional district judge for the southern district of 

Florida; 

(9) 1 additional district judge for the middle district of Georgia; 

(10) 1 additional district judge for the northern district of Illinois; 

(11) 1 additional district judge for the southern district of 

Iowa; 

(12) 1 additional district judge for the western district of 

Louisiana; 

(13) 1 additional district judge for the district of Maine; 

(14) 1 additional district judge for the district of Massachusetts; 

(15) 1 additional district judge for the southern district of 

Mississippi; 

(16) 1 additional district judge for the eastern district of Missouri; 

(17) 1 additional district judge for the district of New Hampshire; 

(18) 3 additional district judges for the district of New Jersey; 

(19) 1 additional district judge for the district of New Mexico; 

(20) 1 additional district judge for the southern district of 

New York; 

(21) 3 additional district judges for the eastern district of 

New York; 

(22) 1 additional district judge for the middle district of 

North Carolina; 

(23) 1 additional district judge for the southern district of 

Ohio; 

(24) 1 additional district judge for the northern district of 

Oklahoma; 

(25) 1 additional district judge for the western district of 

Oklahoma; 

(26) 1 additional district judge for the district of Oregon; 

(27) 3 additional district judges for the eastern district of 

Pennsylvania; 

(28) 1 additional district judge for the middle district of 

Pennsylvania; 

(29) 1 additional district judge for the district of South Carolina; 

(30) 1 additional district judge for the eastern district of Tennessee; 

(31) 1 additional district judge for the western district of 

Tennessee; 

(32) 1 additional district judge for the middle district of Tennessee; 

(33) 2 additional district judges for the northern district of 

Texas; 

(34) 1 additional district judge for the eastern district of 

Texas; 

(35) 5 additional district judges for the southern district of 

Texas; 

(36) 3 additional district judges for the western district of 

Texas; 

141 

(37) 1 additional district judge for the district of Utah; 

(38) 1 additional district judge for the eastern district of 

Washington; 

(39) 1 additional district judge for the northern district of 

West Virginia; 

(40) 1 additional district judge for the southern district of 

West Virginia; and 

(41) 1 additional district judge for the district of Wyoming. 

(b) EXISTING JUDGESHIPS.—(1) The existing district judgeships 

for the western district of Arkansas, the northern district of Illinois, the northern district of Indiana, the district of Massachusetts, 

the western district of New York, the eastern district of North 

Carolina, the northern district of Ohio, and the western district of 

Washington authorized by section 202(b) of the Bankruptcy 

Amendments and Federal Judgeship Act of 1984 (Public Law 98– 

353, 98 Stat. 347–348) shall, as of the effective date of this title, 

be authorized under section 133 of title 28, United States Code, 

and the incumbents in those offices shall hold the office under section 133 of title 28, United States Code, as amended by this title. 

(2)(A) The existing 2 district judgeships for the eastern and western districts of Arkansas (provided by section 133 of title 28, 

United States Code, as in effect on the day before the effective date 

of this title) shall be district judgeships for the eastern district of 

Arkansas only, and the incumbents of such judgeships shall hold 

the offices under section 133 of title 28, United States Code, as 

amended by this title. 

(B) The existing district judgeship for the northern and southern 

districts of Iowa (provided by section 133 of title 28, United States 

Code, as in effect on the day before the effective date of this title) 

shall be a district judgeship for the northern district of Iowa only, 

and the incumbent of such judgeship shall hold the office under 

section 133 of title 28, United States Code, as amended by this 

title. 

(C) The existing district judgeship for the northern, eastern, and 

western districts of Oklahoma (provided by section 133 of title 28, 

United States Code, as in effect on the day before the effective date 

of this title) and the occupant of which has his or her official duty 

station at Oklahoma City on the date of the enactment of this title, 

shall be a district judgeship for the western district of Oklahoma 

only, and the incumbent of such judgeship shall hold the office 

under section 133 of title 28, United States Code, as amended by 

this title. 

(c) TEMPORARY JUDGESHIPS.—The President shall appoint, by 

and with the advice and consent of the Senate— 

(1) 1 additional district judge for the eastern district of California; 

(2) 1 additional district judge for the district of Hawaii; 

(3) 1 additional district judge for the central district of Illinois; 

(4) 1 additional district judge for the southern district of Illinois; 

(5) 1 additional district judge for the district of Kansas; 

(6) 1 additional district judge for the western district of 

Michigan; 

142 

(7) 1 additional district judge for the eastern district of Missouri; 

(8) 1 additional district judge for the district of Nebraska; 

(9) 1 additional district judge for the northern district of New 

York; 

(10) 1 additional district judge for the northern district of 

Ohio; 

(11) 1 additional district judge for the eastern district of 

Pennsylvania; and 

(12) 1 additional district judge for the eastern district of Virginia. 

Except with respect to the district of Kansas, the western district 

of Michigan, the eastern district of Pennsylvania, the district of 

Hawaii, and the northern district of Ohio, the first vacancy in the 

office of district judge in each of the judicial districts named in this 

subsection, occurring 10 years or more after the confirmation date 

of the judge named to fill the temporary judgeship created by this 

subsection, shall not be filled. The first vacancy in the office of district judge in the district of Kansas occurring ø27 years and 6 

months¿ 28 years and 6 months or more after the confirmation 

date of the judge named to fill the temporary judgeship created for 

such district under this subsection, shall not be filled. The first vacancy in the office of district judge in the western district of Michigan, occurring after December 1, 1995, shall not be filled. The first 

vacancy in the office of district judge in the eastern district of 

Pennsylvania, occurring 5 years or more after the confirmation 

date of the judge named to fill the temporary judgeship created for 

such district under this subsection, shall not be filled. The first vacancy in the office of district judge in the northern district of Ohio 

occurring 19 years or more after the confirmation date of the judge 

named to fill the temporary judgeship created under this subsection shall not be filled. The first vacancy in the office of the district judge in the district of Hawaii occurring 24 years and 6 

months or more after the confirmation date of the judge named to 

fill the temporary judgeship created under this subsection shall not 

be filled. For districts named in this subsection for which multiple 

judgeships are created by this Act, the last of those judgeships 

filled shall be the judgeships created under this section. 

* * * * * * * 

TRANSPORTATION, TREASURY, HOUSING AND URBAN 

DEVELOPMENT, THE JUDICIARY, THE DISTRICT OF 

COLUMBIA, AND INDEPENDENT AGENCIES APPROPRIATIONS ACT, 2006 

DIVISION A—TRANSPORTATION, TREASURY, HOUSING AND 

URBAN DEVELOPMENT, THE JUDICIARY, AND INDEPENDENT AGENCIES APPROPRIATIONS ACT, 2006 

* * * * * * * 

TITLE IV—THE JUDICIARY 

* * * * * * * 

143 

SEC. 406. The existing judgeship for the eastern district of Missouri authorized by section 203(c) of the Judicial Improvements Act 

of 1990 (Public Law 101–650, 104 Stat. 5089) as amended by Public 

Law 105–53, as of the effective date of this Act, shall be extended. 

The first vacancy in the office of district judge in this district occurring ø25 years and 6 months¿ 26 years and 6 months or more after 

the confirmation date of the judge named to fill the temporary 

judgeship created by section 203(c) shall not be filled. 

* * * * * * * 

21ST CENTURY DEPARTMENT OF JUSTICE 

APPROPRIATIONS AUTHORIZATION ACT 

* * * * * * * 

DIVISION A—21ST CENTURY DEPARTMENT OF JUSTICE 

APPROPRIATIONS AUTHORIZATION ACT 

* * * * * * * 

TITLE III—MISCELLANEOUS 

* * * * * * * 

SEC. 312. ADDITIONAL FEDERAL JUDGESHIPS. 

(a) PERMANENT DISTRICT JUDGES FOR THE DISTRICT COURTS.— (1) IN GENERAL.—The President shall appoint, by and with 

the advice and consent of the Senate— 

(A) 5 additional district judges for the southern district 

of California; 

(B) 1 additional district judge for the western district of 

North Carolina; and 

(C) 2 additional district judges for the western district of 

Texas. 

(2) [Omitted—Amendatory] 

(b) DISTRICT JUDGESHIPS FOR THE CENTRAL AND SOUTHERN DISTRICTS OF ILLINOIS, THE NORTHERN DISTRICT OF NEW YORK, AND

THE EASTERN DISTRICT OF VIRGINIA.— 

(1) CONVERSION OF TEMPORARY JUDGESHIPS TO PERMANENT

JUDGESHIPS.—The existing district judgeships for the central 

district and the southern district of Illinois, the northern district of New York, and the eastern district of Virginia authorized by section 203(c) (3), (4), (9), and (12) of the Judicial Improvements Act of 1990 (Public Law 101–650, 28 U.S.C. 133 

note) shall be authorized under section 133 of title 28, United 

States Code, and the incumbents in such offices shall hold the 

offices under section 133 of title 28, United States Code (as 

amended by this section). 

(2) [Omitted—Amendatory] 

(3) EFFECTIVE DATE.—With respect to the central or southern 

district of Illinois, the northern district of New York, or the 

eastern district of Virginia, this subsection shall take effect on 

the earlier of— 

(A) the date on which the first vacancy in the office of 

district judge occurs in such district; or 

(B) July 15, 2003. 

144 

(c) TEMPORARY JUDGESHIPS.— 

(1) IN GENERAL.—The President shall appoint, by and with 

the advice and consent of the Senate— 

(A) 1 additional district judge for the northern district of 

Alabama; 

(B) 1 additional judge for the district of Arizona; 

(C) 1 additional judge for the central district of California; 

(D) 1 additional judge for the southern district of Florida; 

(E) 1 additional district judge for the district of New 

Mexico; 

(F) 1 additional district judge for the western district of 

North Carolina; and 

(G) 1 additional district judge for the eastern district of 

Texas. 

(2) VACANCIES NOT FILLED.—The first vacancy in the office of 

district judge in each of the offices of district judge authorized 

by this subsection, except in the case of the northern district 

of Alabama, the central district of California, and the western 

district of North Carolina, occurring ø16 years¿ 17 years or 

more after the confirmation date of the judge named to fill the 

temporary district judgeship created in the applicable district 

by this subsection, shall not be filled. The first vacancy in the 

office of district judge in the northern district of Alabama occurring 16 years or more after the confirmation date of the 

judge named to fill the temporary district judgeship created in 

that district by this subsection, shall not be filled. The first vacancy in the office of district judge in the central district of 

California occurring ø15 years and 6 months¿ 16 years and 6 

months or more after the confirmation date of the judge named 

to fill the temporary district judgeship created in that district 

by this subsection, shall not be filled. The first vacancy in the 

office of district judge in the western district of North Carolina 

occurring ø14 years¿ 15 years or more after the confirmation 

date of the judge named to fill the temporary district judgeship 

created in that district by this subsection, shall not be filled. 

(3) EFFECTIVE DATE.—This subsection shall take effect on 

July 15, 2003. 

(d) EXTENSION OF TEMPORARY FEDERAL DISTRICT COURT JUDGESHIP FOR THE NORTHERN DISTRICT OF OHIO.— 

(1) IN GENERAL.—[Omitted—Amendatory] 

(2) EFFECTIVE DATE.—The amendments made by this subsection shall take effect on the date of enactment of this Act. 

(e) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 

be appropriated such sums as may be necessary to carry out this 

section, including such sums as may be necessary to provide appropriate space and facilities for the judicial positions created by this 

section. 

* * * * * * * 

145 

PUBLIC LAW 110-246 

AN ACT To provide for the continuation of agricultural and other programs of the 

Department of Agriculture through fiscal year 2012, and for other purposes. 

* * * * * * * 

TITLE XII—CROP INSURANCE AND 

DISASTER ASSISTANCE PROGRAMS 

* * * * * * * 

Subtitle B—Small Business Disaster Loan 

Program 

* * * * * * * 

PART II—DISASTER LENDING 

* * * * * * * 

øSEC. 12085. EXPEDITED DISASTER ASSISTANCE LOAN PROGRAM. 

ø(a) DEFINITION.—In this section, the term ‘‘program’’ means the 

expedited disaster assistance business loan program established 

under subsection (b). 

ø(b) CREATION OF PROGRAM.—The Administrator shall take such 

administrative action as is necessary to establish and implement 

an expedited disaster assistance business loan program under 

which the Administration may, on an expedited basis, guarantee 

timely payment of principal and interest, as scheduled on any loan 

made to an eligible small business concern under paragraph (9) of 

section 7(b) of the Small Business Act (15 U.S.C. 636(b)), as added 

by this Act. 

ø(c) CONSULTATION REQUIRED.—In establishing the program, the 

Administrator shall consult with— 

ø(1) appropriate personnel of the Administration (including 

District Office personnel of the Administration); 

ø(2) appropriate technical assistance providers (including 

small business development centers); 

ø(3) appropriate lenders and credit unions; 

ø(4) the Committee on Small Business and Entrepreneurship 

of the Senate; and 

ø(5) the Committee on Small Business of the House of Representatives. 

ø(d) RULES.— 

ø(1) IN GENERAL.—Not later than 1 year after the date of enactment of this Act, the Administrator shall issue rules in final 

form establishing and implementing the program in accordance 

with this section. Such rules shall apply as provided for in this 

section, beginning 90 days after their issuance in final form. 

ø(2) CONTENTS.—The rules promulgated under paragraph (1) 

shall— 

ø(A) identify whether appropriate uses of funds under 

the program may include— 

146 

ø(i) paying employees; 

ø(ii) paying bills and other financial obligations; 

ø(iii) making repairs; 

ø(iv) purchasing inventory; 

ø(v) restarting or operating a small business concern 

in the community in which it was conducting operations prior to the applicable major disaster, or to a 

neighboring area, county, or parish in the disaster 

area; or 

ø(vi) covering additional costs until the small business concern is able to obtain funding through insurance claims, Federal assistance programs, or other 

sources; and 

ø(B) set the terms and conditions of any loan made 

under the program, subject to paragraph (3). 

ø(3) TERMS AND CONDITIONS.—A loan guaranteed by the Administration under this section— 

ø(A) shall be for not more than $150,000; 

ø(B) shall be a short-term loan, not to exceed 180 days, 

except that the Administrator may extend such term as 

the Administrator determines necessary or appropriate on 

a case-by-case basis; 

ø(C) shall have an interest rate not to exceed 300 basis 

points above the interest rate established by the Board of 

Governors of the Federal Reserve System that 1 bank 

charges another for reserves that are lent on an overnight 

basis on the date the loan is made; 

ø(D) shall have no prepayment penalty; 

ø(E) may only be made to a borrower that meets the requirements for a loan under section 7(b) of the Small Business Act (15 U.S.C. 636(b)), as amended by this Act; 

ø(F) may be refinanced as part of any subsequent disaster assistance provided under section 7(b) of the Small 

Business Act (15 U.S.C. 636(b)), as amended by this Act; 

ø(G) may receive expedited loss verification and loan 

processing, if the applicant is— 

ø(i) a major source of employment in the disaster 

area (which shall be determined in the same manner 

as under section 7(b)(3)(B) of the Small Business Act 

(15 U.S.C. 636(b)(3)(B))); or 

ø(ii) vital to recovery efforts in the region (including 

providing debris removal services, manufactured housing, or building materials); and 

ø(H) shall be subject to such additional terms as the Administrator determines necessary or appropriate. 

ø(e) REPORT TO CONGRESS.—Not later than 5 months after the 

date of enactment of this Act, the Administrator shall report to the 

Committee on Small Business and Entrepreneurship of the Senate 

and the Committee on Small Business of the House of Representatives on the progress of the Administrator in establishing the program. 

147 

ø(f) AUTHORIZATION.—There are authorized to be appropriated to 

the Administrator such sums as are necessary to carry out this section.¿ 

* * * * * * * 

TITLE 44, UNITED STATES CODE 

* * * * * * * 

CHAPTER 21—NATIONAL ARCHIVES AND RECORDS 

ADMINISTRATION 

* * * * * * * 

§ 2107. Acceptance of records for historical preservation 

(a) IN GENERAL.—When it appears to the Archivist to be in the 

public interest, the Archivist may— 

(1) accept for deposit with the National Archives of the 

United States the records of a Federal agency, the Congress, 

the Architect of the Capitol, or the Supreme Court determined 

by the Archivist to have sufficient historical or other value to 

warrant their continued preservation by the United States 

Government; 

(2) direct and effect the transfer of records of a Federal agency determined by the Archivist to have sufficient historical or 

other value to warrant their continued preservation by the 

United States Government to the National Archives of the 

United States, as soon as practicable, and at a time mutually 

agreed upon by the Archivist and the head of that Federal 

agency not later than thirty years after such records were created or received by that agency, unless øthe head of such agency has certified in writing to the Archivist¿ the Archivist determines, after consulting with the head of such agency, that such 

records must be retained in the custody of such agency for use 

in the conduct of the regular business of the agency; 

(3) direct and effect, with the approval of the head of the 

originating Federal agency, or if the existence of the agency 

has been terminated, with the approval of the head of that 

agency’s successor in function, if any, the transfer of records, 

deposited or approved for deposit with the National Archives 

of the United States to public or educational institutions or associations; title to the records to remain vested in the United 

States unless otherwise authorized by Congress; and 

(4) transfer materials from private sources authorized to be 

received by the Archivist by section 2111 of this title. 

(b) EARLY TRANSFER OF RECORDS.—The Archivist— 

(1) in consultation with the head of the originating Federal 

agency, is authorized to accept a copy of the records described 

in subsection (a)(2) that have been in existence for less than 

thirty years; and 

(2) may not disclose any such records until the expiration 

of— 

(A) the thirty-year period described in paragraph (1); 

(B) any longer period established by the Archivist by 

order; or 

148 

(C) any shorter period agreed to by the originating Federal agency. 

* * * * * * * 

CHAPTER 29—RECORDS MANAGEMENT BY THE ARCHIVIST OF THE UNITED STATES AND BY THE ADMINISTRATOR OF GENERAL SERVICES 

* * * * * * * 

§ 2904. General responsibilities for records management 

(a) The Archivist shall provide guidance and assistance to Federal agencies with respect to ensuring— 

(1) economical and effective records management; 

(2) adequate and proper documentation of the policies and 

transactions of the Federal Government; and 

(3) proper records disposition. 

(b) The Administrator shall provide guidance and assistance to 

Federal agencies to ensure economical and effective processing of 

mail by Federal agencies. 

(c) In carrying out the responsibilities under subsection (a), the 

Archivist shall have the responsibility— 

(1) to promulgate standards, procedures, and guidelines with 

respect to records management and the conduct of records 

management studies; 

(2) to conduct research with respect to the improvement of 

records management practices and programs; 

(3) to collect and disseminate information on training programs, technological developments, and other activities relating to records management; 

(4) to establish such interagency committees and boards as 

may be necessary to provide an exchange of information among 

Federal agencies with respect to records management; 

(5) to direct the continuing attention of Federal agencies and 

the Congress on the need for adequate policies governing 

records management; 

(6) to conduct records management studies and, in the Archivist’s discretion, designate the heads of executive agencies to 

conduct records management studies with respect to establishing systems and techniques designed to save time and effort in records management; 

(7) to conduct inspections or surveys of the records and the 

records management programs and practices within and between Federal agencies; 

(8) to report to the appropriate oversight and appropriations 

committees of the Congress and to the Director of the Office of 

Management and Budget in January of each year and at such 

other times as the Archivist deems desirable— 

(A) on the results of activities conducted pursuant to 

paragraphs (1) through (7) of this section, 

(B) on evaluations of responses by Federal agencies to 

any recommendations resulting from inspections or studies 

conducted under paragraphs (6) and (7) of this section, and 

149 

(C) to the extent practicable, estimates of costs to the 

Federal Government resulting from the failure of agencies 

to implement such recommendations. 

(d) The Archivist shall promulgate regulations requiring all Federal agencies to transfer all ødigital or electronic¿ records to the 

National Archives of the United States in digital or electronic form 

to the greatest extent possible. 

(e) The Administrator, in carrying out subsection (b), shall have 

the responsibility to promote economy and efficiency in the selection and utilization of space, staff, equipment, and supplies for 

processing mail at Federal facilities. 

* * * * * * * 

CHAPTER 33—DISPOSAL OF RECORDS 

* * * * * * * 

§ 3303a. Examination by Archivist of lists and schedules of 

records lacking preservation value; disposal of 

records 

(a) The Archivist shall examine the lists and schedules submitted 

to the Archivist under section 3303 of this title. If the Archivist determines that any of the records listed in a list or schedule submitted to the Archivist do not, or will not after the lapse of the period specified, have sufficient administrative, legal, research, or 

other value to warrant their continued preservation by the Government, the Archivist may, after publication of notice in the Federal 

Register and an opportunity for interested persons to submit comment thereon— 

(1) notify the agency to that effect; and 

(2) empower the agency to dispose of those records in accordance with regulations promulgated under section 3302 of this 

title. 

(b) Authorizations granted under lists and schedules submitted 

to the Archivist under section 3303 of this title, and schedules promulgated by the Archivist under subsection (d) of this section, shall 

be mandatory, subject to section 2909 of this title. As between an 

authorization granted under lists and schedules submitted to the 

Archivist under section 3303 of this title and an authorization contained in a schedule promulgated under subsection (d) of this section, application of the authorization providing for the shorter retention period shall be required, subject to section 2909 of this title. 

(c) The Archivist may request advice and counsel from the Committee on Oversight and Government Reform of the House of Representatives and the Committee on Homeland Security and Governmental Affairs of the Senate with respect to the disposal of any 

particular records under this chapter whenever the Archivist considers that— 

(1) those particular records may be of special interest to the 

Congress; or 

(2) consultation with the Congress regarding the disposal of 

those particular records is in the public interest. 

However, this subsection does not require the Archivist to request 

such advice and counsel as a regular procedure in the general disposal of records under this chapter. 

150 

(d) The Archivist shall promulgate schedules authorizing the disposal, after the lapse of specified periods of time, of records of a 

specified form or character common to several or all agencies if 

such records will not, at the end of the periods specified, have sufficient administrative, legal, research, or other value to warrant 

their further preservation by the United States Government. 

(e) The Archivist may approve and effect the disposal of records 

that are in the Archivist’s legal custody, provided that records that 

had been in the custody of another existing agency may not be disposed of without øthe written consent of¿ advance notice to the 

head of the agency. 

(f) The Archivist shall make an annual report to the Congress 

concerning the disposal of records under this chapter, including 

general descriptions of the types of records disposed of and such 

other information as the Archivist considers appropriate to keep 

the Congress fully informed regarding the disposal of records under 

this chapter. 

* * * * * * * 

§ 3308. Disposal of similar records where prior disposal was 

authorized 

When it appears to the Archivist that an agency has in its custody, or is accumulating, records of the same form or character as 

those of the same agency previously authorized to be disposed of, 

he may øempower¿ direct the head of the agency to dispose of the 

records, after they have been in existence a specified period of time, 

in accordance with regulations promulgated under section 3302 of 

this title and without listing or scheduling them. 

* * * * * * * 

DEATH WITH DIGNITY ACT OF 2016 

LOCAL BUDGET AUTONOMY AMENDMENT ACT OF 2012 

DISTRICT OF COLUMBIA HOME RULE ACT 

* * * * * * * 

TITLE IV—THE DISTRICT CHARTER 

* * * * * * * 

PART D—DISTRICT BUDGET AND FINANCIAL MANAGEMENT

Subpart 1—Budget and Financial Management 

* * * * * * * 

GENERAL AND SPECIAL FUNDS

SEC. 450. øThe General Fund¿ (a) IN GENERAL.—The General 

Fund of the District shall be composed of those District revenues 

151 

which on the effective date of this title are paid into the Treasury 

of the United States and credited either to the General Fund of the 

District or its miscellaneous receipts, but shall not include any revenues which are applied by law to any special fund existing on the 

date of enactment of this title. The Council may from time to time 

establish such additional special funds as may be necessary for the 

efficient operation of the government of the District. All money received by any agency, officer, or employee of the District in its or 

his official capacity shall belong to the District government and 

shall be paid promptly to the Mayor for deposit in the appropriate 

fund, except that all money received by the District of Columbia 

Courts shall be deposited in the Treasury of the United States or 

the Crime Victims Fund. 

(b) APPLICATION OF FEDERAL APPROPRIATIONS PROCESS.—Nothing in this Act shall be construed as creating a continuing appropriation of the General Fund described in subsection (a). All funds 

provided for the District of Columbia shall be appropriated on an 

annual fiscal year basis through the Federal appropriations process. 

For each fiscal year, the District shall be subject to all applicable 

requirements of subchapter III of chapter 13 and subchapter II of 

chapter 15 of title 31, United States Code (commonly known as the 

‘‘Anti-Deficiency Act’’), the Budget and Accounting Act of 1921, and 

all other requirements and restrictions applicable to appropriations 

for such fiscal year. 

* * * * * * * 

TITLE VI—RESERVATION OF CONGRESSIONAL AUTHORITY 

* * * * * * * 

BUDGET PROCESS; LIMITATIONS ON BORROWING AND SPENDING

SEC. 603. (a) Nothing in this Act shall be construed as making 

any change in øexisting¿ law, regulation, or basic procedure and 

practice relating to the respective roles of the Congress, the President, the Federal Office of Management and Budget, and the 

Comptroller General of the United States in the preparation, review, submission, examination, authorization, and appropriation of 

the total budget of the District of Columbia governmentø.¿, or as 

authorizing the District of Columbia to make any such change. 

(b)(1) No general obligation bonds (other than bonds to refund 

outstanding indebtedness) or Treasury capital project loans shall 

be issued during any fiscal year in an amount which would cause 

the amount of principal and interest required to be paid both serially and into a sinking fund in any fiscal year on the aggregate 

amounts of all outstanding general obligation bonds and such 

Treasury loans, to exceed 17 percent of the District revenues (less 

any fees or revenues directed to servicing revenue bonds, any revenues, charges, or fees dedicated for the purposes of water and 

sewer facilities described in section 490(a) (including fees or revenues directed to servicing or securing revenue bonds issued for 

such purposes), retirement contributions, revenues from retirement 

systems, and revenues derived from such Treasury loans and the 

sale or general obligation or revenue bonds) which the Mayor estimates, and the District of Columbia Auditor certifies, will be credited to the District during the fiscal year in which the bonds will 

152 

be issued. Treasury capital project loans include all borrowing from 

the United States Treasury, except those funds advanced to the 

District by the Secretary of the Treasury under the provisions of 

title VI of the District of Columbia Revenue Act of 1939. 

(2) Obligations incurred pursuant to the authority contained in 

the District of Columbia Stadium Act of 1957 (71 Stat. 619; D.C. 

Code title 2, chapter 17, subchapter II), obligations incurred by the 

agencies transferred or established by sections 201 and 202, whether incurred before or after such transfer or establishment, and obligations incurred pursuant to general obligation bonds of the District of Columbia issued prior to October 1, 1996, for the financing 

of Department of Public Works, Water and Sewer Utility Administration capital projects, shall not be included in determining the 

aggregate amount of all outstanding obligations subject to the limitation specified in the preceding subsection. 

(3) The 17 percent limitation specified in paragraph (1) shall be 

calculated in the following manner: 

(A) Determine the dollar amount equivalent to 14 percent of 

the District revenues (less any fees or revenues directed to 

servicing revenue bonds, any revenues, charges, or fees dedicated for the purposes of water and sewer facilities described 

in section 490(a) (including fees or revenues directed to servicing or securing revenue bonds issued for such purposes), retirement, contributions, revenues from retirement systems, and 

revenues derived from such Treasury loans and the sale of general obligation or revenue bonds) which the Mayor estimates, 

and the District of Columbia Auditor certifies, will be credited 

to the District during the fiscal year for which the bonds will 

be issued. 

(B) Determine the actual total amount of principal and interest to be paid in each fiscal year for all outstanding general obligation bonds (less the allocable portion of principal and interest to be paid during the year on general obligation bonds of 

the District of Columbia issued prior to October 1, 1996, for the 

financing of Department of Public Works, Water and Sewer 

Utility Administration capital projects) and such Treasury 

loans. 

(C) Determine the amount of principal and interest to be 

paid during each fiscal year over the term of the proposed general obligation bond or such Treasury loan to be issued. 

(D) If in any one fiscal year the sum arrived at by adding 

subparagraphs (B) and (C) exceeds the amount determined 

under subparagraph (A), then the proposed general obligation 

bond or such Treasury loan in subparagraph (C) cannot be 

issued. 

(c) Except as provided in subsection (f), the Council shall not approve any budget which would result in expenditures being made 

by the District Government, during any fiscal year, in excess of all 

resources which the Mayor estimates will be available from all 

funds available to the District for such fiscal year. The budget shall 

identify any tax increases which shall be required in order to balance the budget as submitted. The Council shall be required to 

adopt such tax increases to the extent its budget is approved. 

153 

(d) Except as provided in subsection (f), the Mayor shall not forward to the President for submission to Congress a budget which 

is not balanced according to the provision of subsection 603(c). 

(e) Nothing in this Act shall be construed as affecting the applicability to the District government of the provisions of section 3679 

of the Revised Statutes of the United States (31 U.S.C. 665), the 

so-called Anti-Deficiency Act. 

(f) In the case of a fiscal year which is a control year (as defined 

in section 305(4) of the District of Columbia Financial Responsibility and Management Assistance Act of 1995), the Council may 

not approve, and the Mayor may not forward to the President, any 

budget which is not consistent with the financial plan and budget 

established for the fiscal year under subtitle A of title II of such 

Act. 

* * * * * * * 

FAIR CREDIT REPORTING ACT 

* * * * * * * 

TITLE VI—CONSUMER CREDIT REPORTING 

* * * * * * * 

SEC. 623. RESPONSIBILITIES OF FURNISHERS OF INFORMATION TO 

CONSUMER REPORTING AGENCIES. 

(a) DUTY OF FURNISHERS OF INFORMATION TO PROVIDE ACCURATE

INFORMATION.— (1) PROHIBITION.— (A) REPORTING INFORMATION WITH ACTUAL KNOWLEDGE

OF ERRORS.—A person shall not furnish any information 

relating to a consumer to any consumer reporting agency 

if the person knows or has reasonable cause to believe that 

the information is inaccurate. 

(B) REPORTING INFORMATION AFTER NOTICE AND CON- FIRMATION OF ERRORS.—A person shall not furnish information relating to a consumer to any consumer reporting 

agency if— 

(i) the person has been notified by the consumer, at 

the address specified by the person for such notices, 

that specific information is inaccurate; and 

(ii) the information is, in fact, inaccurate. 

(C) NO ADDRESS REQUIREMENT.—A person who clearly 

and conspicuously specifies to the consumer an address for 

notices referred to in subparagraph (B) shall not be subject 

to subparagraph (A); however, nothing in subparagraph 

(B) shall require a person to specify such an address. 

(D) DEFINITION.—For purposes of subparagraph (A), the 

term ‘‘reasonable cause to believe that the information is 

inaccurate’’ means having specific knowledge, other than 

solely allegations by the consumer, that would cause a reasonable person to have substantial doubts about the accuracy of the information. 

(2) DUTY TO CORRECT AND UPDATE INFORMATION.—A person 

who— 

154 

(A) regularly and in the ordinary course of business furnishes information to one or more consumer reporting 

agencies about the person’s transactions or experiences 

with any consumer; and 

(B) has furnished to a consumer reporting agency information that the person determines is not complete or accurate, 

shall promptly notify the consumer reporting agency of that determination and provide to the agency any corrections to that 

information, or any additional information, that is necessary to 

make the information provided by the person to the agency 

complete and accurate, and shall not thereafter furnish to the 

agency any of the information that remains not complete or accurate. 

(3) DUTY TO PROVIDE NOTICE OF DISPUTE.—If the completeness or accuracy of any information furnished by any person 

to any consumer reporting agency is disputed to such person 

by a consumer, the person may not furnish the information to 

any consumer reporting agency without notice that such information is disputed by the consumer. 

(4) DUTY TO PROVIDE NOTICE OF CLOSED ACCOUNTS.—A person who regularly and in the ordinary course of business furnishes information to a consumer reporting agency regarding 

a consumer who has a credit account with that person shall notify the agency of the voluntary closure of the account by the 

consumer, in information regularly furnished for the period in 

which the account is closed. 

(5) DUTY TO PROVIDE NOTICE OF DELINQUENCY OF ACCOUNTS.—(A) IN GENERAL.—A person who furnishes information to a consumer reporting agency regarding a delinquent account being placed for collection, charged to profit or loss, or 

subjected to any similar action shall, not later than 90 days 

after furnishing the information, notify the agency of the date 

of delinquency on the account, which shall be the month and 

year of the commencement of the delinquency on the account 

that immediately preceded the action. 

(B) RULE OF CONSTRUCTION.—For purposes of this paragraph only, and provided that the consumer does not dispute the information, a person that furnishes information 

on a delinquent account that is placed for collection, 

charged for profit or loss, or subjected to any similar action, complies with this paragraph, if— 

(i) the person reports the same date of delinquency 

as that provided by the creditor to which the account 

was owed at the time at which the commencement of 

the delinquency occurred, if the creditor previously reported that date of delinquency to a consumer reporting agency; 

(ii) the creditor did not previously report the date of 

delinquency to a consumer reporting agency, and the 

person establishes and follows reasonable procedures 

to obtain the date of delinquency from the creditor or 

another reliable source and reports that date to a consumer reporting agency as the date of delinquency; or 

155 

(iii) the creditor did not previously report the date of 

delinquency to a consumer reporting agency and the 

date of delinquency cannot be reasonably obtained as 

provided in clause (ii), the person establishes and follows reasonable procedures to ensure the date reported as the date of delinquency precedes the date on 

which the account is placed for collection, charged to 

profit or loss, or subjected to any similar action, and 

reports such date to the credit reporting agency. 

(6) DUTIES OF FURNISHERS UPON NOTICE OF IDENTITY THEFT- RELATED INFORMATION.— (A) REASONABLE PROCEDURES.—A person that furnishes 

information to any consumer reporting agency shall have 

in place reasonable procedures to respond to any notification that it receives from a consumer reporting agency 

under section 605B relating to information resulting from 

identity theft, to prevent that person from refurnishing 

such blocked information. 

(B) INFORMATION ALLEGED TO RESULT FROM IDENTITY

THEFT.—If a consumer submits an identity theft report to 

a person who furnishes information to a consumer reporting agency at the address specified by that person for receiving such reports stating that information maintained 

by such person that purports to relate to the consumer resulted from identity theft, the person may not furnish such 

information that purports to relate to the consumer to any 

consumer reporting agency, unless the person subsequently knows or is informed by the consumer that the information is correct. 

(7) NEGATIVE INFORMATION.— 

(A) NOTICE TO CONSUMER REQUIRED.— (i) IN GENERAL.—If any financial institution that extends credit and regularly and in the ordinary course 

of business furnishes information to a consumer reporting agency described in section 603(p) furnishes 

negative information to such an agency regarding 

credit extended to a customer, the financial institution 

shall provide a notice of such furnishing of negative 

information, in writing, to the customer. 

(ii) NOTICE EFFECTIVE FOR SUBSEQUENT SUBMISSIONS.—After providing such notice, the financial institution may submit additional negative information 

to a consumer reporting agency described in section 

603(p) with respect to the same transaction, extension 

of credit, account, or customer without providing additional notice to the customer. 

(B) TIME OF NOTICE.— 

(i) IN GENERAL.—The notice required under subparagraph (A) shall be provided to the customer prior to, 

or no later than 30 days after, furnishing the negative 

information to a consumer reporting agency described 

in section 603(p). 

(ii) COORDINATION WITH NEW ACCOUNT DISCLOSURES.—If the notice is provided to the customer prior 

to furnishing the negative information to a consumer 

156 

reporting agency, the notice may not be included in 

the initial disclosures provided under section 127(a) of 

the Truth in Lending Act. 

(C) COORDINATION WITH OTHER DISCLOSURES.—The notice required under subparagraph (A)— 

(i) may be included on or with any notice of default, 

any billing statement, or any other materials provided 

to the customer; and 

(ii) must be clear and conspicuous. 

(D) MODEL DISCLOSURE.— 

(i) DUTY OF BUREAU.—The Bureau shall prescribe a 

brief model disclosure that a financial institution may 

use to comply with subparagraph (A), which shall not 

exceed 30 words. 

(ii) USE OF MODEL NOT REQUIRED.—No provision of 

this paragraph may be construed to require a financial 

institution to use any such model form prescribed by 

the Bureau. 

(iii) COMPLIANCE USING MODEL.—A financial institution shall be deemed to be in compliance with subparagraph (A) if the financial institution uses any 

model form prescribed by the Bureau under this subparagraph, or the financial institution uses any such 

model form and rearranges its format. 

(E) USE OF NOTICE WITHOUT SUBMITTING NEGATIVE INFORMATION.—No provision of this paragraph shall be construed as requiring a financial institution that has provided a customer with a notice described in subparagraph 

(A) to furnish negative information about the customer to 

a consumer reporting agency. 

(F) SAFE HARBOR.—A financial institution shall not be 

liable for failure to perform the duties required by this 

paragraph if, at the time of the failure, the financial institution maintained reasonable policies and procedures to 

comply with this paragraph or the financial institution 

reasonably believed that the institution is prohibited, by 

law, from contacting the consumer. 

(G) DEFINITIONS.—For purposes of this paragraph, the 

following definitions shall apply: 

(i) NEGATIVE INFORMATION.—The term ‘‘negative information’’ means information concerning a customer’s 

delinquencies, late payments, insolvency, or any form 

of default. 

(ii) CUSTOMER; FINANCIAL INSTITUTION.—The terms 

‘‘customer’’and ‘‘financial institution’’ have the same 

meanings as in section 509 Public Law 106–102. 

(8) ABILITY OF CONSUMER TO DISPUTE INFORMATION DIRECTLY

WITH FURNISHER.— 

(A) IN GENERAL.—The Bureau shall, in consultation with 

the Federal Trade Commission, the Federal banking agencies, and the National Credit Union Administration, prescribe regulations that shall identify the circumstances 

under which a furnisher shall be required to reinvestigate 

a dispute concerning the accuracy of information contained 

157 

in a consumer report on the consumer, based on a direct 

request of a consumer. 

(B) CONSIDERATIONS.—In prescribing regulations under 

subparagraph (A), the agencies shall weigh— 

(i) the benefits to consumers with the costs on furnishers and the credit reporting system; 

(ii) the impact on the overall accuracy and integrity 

of consumer reports of any such requirements; 

(iii) whether direct contact by the consumer with the 

furnisher would likely result in the most expeditious 

resolution of any such dispute; and 

(iv) the potential impact on the credit reporting 

process if credit repair organizations, as defined in 

section 403(3), including entities that would be a credit repair organization, but for section 403(3)(B)(i), are 

able to circumvent the prohibition in subparagraph 

(G). 

(C) APPLICABILITY.—Subparagraphs (D) through (G) 

shall apply in any circumstance identified under the regulations promulgated under subparagraph (A). 

(D) SUBMITTING A NOTICE OF DISPUTE.—A consumer who 

seeks to dispute the accuracy of information shall provide 

a dispute notice directly to such person at the address 

specified by the person for such notices that— 

(i) identifies the specific information that is being 

disputed; 

(ii) explains the basis for the dispute; and 

(iii) includes all supporting documentation required 

by the furnisher to substantiate the basis of the dispute. 

(E) DUTY OF PERSON AFTER RECEIVING NOTICE OF DISPUTE.—After receiving a notice of dispute from a consumer 

pursuant to subparagraph (D), the person that provided 

the information in dispute to a consumer reporting agency 

shall— 

(i) conduct an investigation with respect to the disputed information; 

(ii) review all relevant information provided by the 

consumer with the notice; 

(iii) complete such person’s investigation of the dispute and report the results of the investigation to the 

consumer before the expiration of the period under 

section 611(a)(1) within which a consumer reporting 

agency would be required to complete its action if the 

consumer had elected to dispute the information under 

that section; and 

(iv) if the investigation finds that the information 

reported was inaccurate, promptly notify each consumer reporting agency to which the person furnished 

the inaccurate information of that determination and 

provide to the agency any correction to that information that is necessary to make the information provided by the person accurate. 

(F) FRIVOLOUS OR IRRELEVANT DISPUTE.— 

158 

(i) IN GENERAL.—This paragraph shall not apply if 

the person receiving a notice of a dispute from a consumer reasonably determines that the dispute is frivolous or irrelevant, including— 

(I) by reason of the failure of a consumer to provide sufficient information to investigate the disputed information; or 

(II) the submission by a consumer of a dispute 

that is substantially the same as a dispute previously submitted by or for the consumer, either 

directly to the person or through a consumer reporting agency under subsection (b), with respect 

to which the person has already performed the 

person’s duties under this paragraph or subsection 

(b), as applicable. 

(ii) NOTICE OF DETERMINATION.—Upon making any 

determination under clause (i) that a dispute is frivolous or irrelevant, the person shall notify the consumer of such determination not later than 5 business 

days after making such determination, by mail or, if 

authorized by the consumer for that purpose, by any 

other means available to the person. 

(iii) CONTENTS OF NOTICE.—A notice under clause 

(ii) shall include— 

(I) the reasons for the determination under 

clause (i); and 

(II) identification of any information required to 

investigate the disputed information, which may 

consist of a standardized form describing the general nature of such information. 

(G) EXCLUSION OF CREDIT REPAIR ORGANIZATIONS.—This 

paragraph shall not apply if the notice of the dispute is 

submitted by, is prepared on behalf of the consumer by, or 

is submitted on a form supplied to the consumer by, a 

credit repair organization, as defined in section 403(3), or 

an entity that would be a credit repair organization, but 

for section 403(3)(B)(i). 

(9) DUTY TO PROVIDE NOTICE OF STATUS AS MEDICAL INFORMATION FURNISHER.—A person whose primary business is providing medical services, products, or devices, or the person’s 

agent or assignee, who furnishes information to a consumer reporting agency on a consumer shall be considered a medical information furnisher for purposes of this title, and shall notify 

the agency of such status. 

(b) DUTIES OF FURNISHERS OF INFORMATION UPON NOTICE OF

DISPUTE.— 

(1) IN GENERAL.—After receiving notice pursuant to section 

611(a)(2) of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency, the person shall— 

(A) conduct an investigation with respect to the disputed 

information; 

(B) review all relevant information provided by the consumer reporting agency pursuant to section 611(a)(2); 

159 

(C) report the results of the investigation to the consumer reporting agency; 

(D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other 

consumer reporting agencies to which the person furnished 

the information and that compile and maintain files on 

consumers on a nationwide basis; and 

(E) if an item of information disputed by a consumer is 

found to be inaccurate or incomplete or cannot be verified 

after any reinvestigation under paragraph (1), for purposes 

of reporting to a consumer reporting agency only, as appropriate, based on the results of the reinvestigation promptly— 

(i) modify that item of information; 

(ii) delete that item of information; or 

(iii) permanently block the reporting of that item of 

information. 

(2) DEADLINE.—A person shall complete all investigations, 

reviews, and reports required under paragraph (1) regarding 

information provided by the person to a consumer reporting 

agency, before the expiration of the period under section 

611(a)(1) within which the consumer reporting agency is required to complete actions required by that section regarding 

that information. 

(c) LIMITATION ON LIABILITY.—Except as provided in section 

621(c)(1)(B), sections 616 and 617 do not apply to any violation of— 

(1) subsection (a) of this section, including any regulations 

issued thereunder; 

(2) subsection (e) of this section, except that nothing in this 

paragraph shall limit, expand, or otherwise affect liability 

under section 616 or 617, as applicable, for violations of subsection (b) of this section; or 

(3) subsection (e) of section 615. 

(d) LIMITATION ON ENFORCEMENT.—The provisions of law described in paragraphs (1) through (3) of subsection (c) (other than 

with respect to the exception described in paragraph (2) of subsection (c)) shall be enforced exclusively as provided under section 

621 by the Federal agencies and officials and the State officials 

identified in section 621. 

(e) ACCURACY GUIDELINES AND REGULATIONS REQUIRED.— 

(1) GUIDELINES.—The Bureau shall, with respect to persons 

or entities that are subject to the enforcement authority of the 

Bureau under section 621— 

(A) establish and maintain guidelines for use by each 

person that furnishes information to a consumer reporting 

agency regarding the accuracy and integrity of the information relating to consumers that such entities furnish to 

consumer reporting agencies, and update such guidelines 

as often as necessary; and 

(B) prescribe regulations requiring each person that furnishes information to a consumer reporting agency to establish reasonable policies and procedures for implementing the guidelines established pursuant to subparagraph (A). 

160 

(2) CRITERIA.—In developing the guidelines required by paragraph (1)(A), the Bureau shall— 

(A) identify patterns, practices, and specific forms of activity that can compromise the accuracy and integrity of 

information furnished to consumer reporting agencies; 

(B) review the methods (including technological means) 

used to furnish information relating to consumers to consumer reporting agencies; 

(C) determine whether persons that furnish information 

to consumer reporting agencies maintain and enforce policies to ensure the accuracy and integrity of information 

furnished to consumer reporting agencies; and 

(D) examine the policies and processes that persons that 

furnish information to consumer reporting agencies employ 

to conduct reinvestigations and correct inaccurate information relating to consumers that has been furnished to consumer reporting agencies. 

(f) FULL-FILE CREDIT REPORTING.— (1) IN GENERAL.—Subject to the limitation in paragraph (2) 

and notwithstanding any other provision of law, a person or the 

Secretary of Housing and Urban Development may furnish to 

a consumer reporting agency information relating to the performance of a consumer in making payments— 

(A) under a lease agreement with respect to a dwelling, 

including such a lease in which the Department of Housing 

and Urban Development provides subsidized payments for 

occupancy in a dwelling; or 

(B) pursuant to a contract for a utility or telecommunications service. 

(2) LIMITATION.—Information about a consumer’s usage of 

any utility services provided by a utility or telecommunication 

firm may be furnished to a consumer reporting agency only to 

the extent that such information relates to payment by the consumer for the services of such utility or telecommunication service or other terms of the provision of the services to the consumer, including any deposit, discount, or conditions for interruption or termination of the services. 

(3) PAYMENT PLAN.—An energy utility firm may not report 

payment information to a consumer reporting agency with respect to an outstanding balance of a consumer as late if— 

(A) the energy utility firm and the consumer have entered 

into a payment plan (including a deferred payment agreement, an arrearage management program, or a debt forgiveness program) with respect to such outstanding balance; and 

(B) the consumer is meeting the obligations of the payment plan, as determined by the energy utility firm. 

(4) DEFINITIONS.—In this subsection, the following definitions 

shall apply: 

(A) ENERGY UTILITY FIRM.—The term ‘‘energy utility 

firm’’ means an entity that provides gas or electric utility 

services to the public. 

(B) UTILITY OR TELECOMMUNICATION FIRM.—The term 

‘‘utility or telecommunication firm’’ means an entity that 

provides utility services to the public through pipe, wire, 

161 

landline, wireless, cable, or other connected facilities, or 

radio, electronic, or similar transmission (including the extension of such facilities). 

* * * * * * * 

CONSUMER CREDIT PROTECTION ACT 

* * * * * * * 

TITLE VI—CONSUMER CREDIT REPORTING 

* * * * * * * 

SEC. 623. RESPONSIBILITIES OF FURNISHERS OF INFORMATION TO 

CONSUMER REPORTING AGENCIES. 

(a) DUTY OF FURNISHERS OF INFORMATION TO PROVIDE ACCURATE

INFORMATION.— (1) PROHIBITION.— (A) REPORTING INFORMATION WITH ACTUAL KNOWLEDGE

OF ERRORS.—A person shall not furnish any information 

relating to a consumer to any consumer reporting agency 

if the person knows or has reasonable cause to believe that 

the information is inaccurate. 

(B) REPORTING INFORMATION AFTER NOTICE AND CON- FIRMATION OF ERRORS.—A person shall not furnish information relating to a consumer to any consumer reporting 

agency if— 

(i) the person has been notified by the consumer, at 

the address specified by the person for such notices, 

that specific information is inaccurate; and 

(ii) the information is, in fact, inaccurate. 

(C) NO ADDRESS REQUIREMENT.—A person who clearly 

and conspicuously specifies to the consumer an address for 

notices referred to in subparagraph (B) shall not be subject 

to subparagraph (A); however, nothing in subparagraph 

(B) shall require a person to specify such an address. 

(D) DEFINITION.—For purposes of subparagraph (A), the 

term ‘‘reasonable cause to believe that the information is 

inaccurate’’ means having specific knowledge, other than 

solely allegations by the consumer, that would cause a reasonable person to have substantial doubts about the accuracy of the information. 

(2) DUTY TO CORRECT AND UPDATE INFORMATION.—A person 

who— 

(A) regularly and in the ordinary course of business furnishes information to one or more consumer reporting 

agencies about the person’s transactions or experiences 

with any consumer; and 

(B) has furnished to a consumer reporting agency information that the person determines is not complete or accurate, 

shall promptly notify the consumer reporting agency of that determination and provide to the agency any corrections to that 

information, or any additional information, that is necessary to 

make the information provided by the person to the agency 

162 

complete and accurate, and shall not thereafter furnish to the 

agency any of the information that remains not complete or accurate. 

(3) DUTY TO PROVIDE NOTICE OF DISPUTE.—If the completeness or accuracy of any information furnished by any person 

to any consumer reporting agency is disputed to such person 

by a consumer, the person may not furnish the information to 

any consumer reporting agency without notice that such information is disputed by the consumer. 

(4) DUTY TO PROVIDE NOTICE OF CLOSED ACCOUNTS.—A person who regularly and in the ordinary course of business furnishes information to a consumer reporting agency regarding 

a consumer who has a credit account with that person shall notify the agency of the voluntary closure of the account by the 

consumer, in information regularly furnished for the period in 

which the account is closed. 

(5) DUTY TO PROVIDE NOTICE OF DELINQUENCY OF ACCOUNTS.—(A) IN GENERAL.—A person who furnishes information to a consumer reporting agency regarding a delinquent account being placed for collection, charged to profit or loss, or 

subjected to any similar action shall, not later than 90 days 

after furnishing the information, notify the agency of the date 

of delinquency on the account, which shall be the month and 

year of the commencement of the delinquency on the account 

that immediately preceded the action. 

(B) RULE OF CONSTRUCTION.—For purposes of this paragraph only, and provided that the consumer does not dispute the information, a person that furnishes information 

on a delinquent account that is placed for collection, 

charged for profit or loss, or subjected to any similar action, complies with this paragraph, if— 

(i) the person reports the same date of delinquency 

as that provided by the creditor to which the account 

was owed at the time at which the commencement of 

the delinquency occurred, if the creditor previously reported that date of delinquency to a consumer reporting agency; 

(ii) the creditor did not previously report the date of 

delinquency to a consumer reporting agency, and the 

person establishes and follows reasonable procedures 

to obtain the date of delinquency from the creditor or 

another reliable source and reports that date to a consumer reporting agency as the date of delinquency; or 

(iii) the creditor did not previously report the date of 

delinquency to a consumer reporting agency and the 

date of delinquency cannot be reasonably obtained as 

provided in clause (ii), the person establishes and follows reasonable procedures to ensure the date reported as the date of delinquency precedes the date on 

which the account is placed for collection, charged to 

profit or loss, or subjected to any similar action, and 

reports such date to the credit reporting agency. 

(6) DUTIES OF FURNISHERS UPON NOTICE OF IDENTITY THEFTRELATED INFORMATION.— 

163 

(A) REASONABLE PROCEDURES.—A person that furnishes 

information to any consumer reporting agency shall have 

in place reasonable procedures to respond to any notification that it receives from a consumer reporting agency 

under section 605B relating to information resulting from 

identity theft, to prevent that person from refurnishing 

such blocked information. 

(B) INFORMATION ALLEGED TO RESULT FROM IDENTITY

THEFT.—If a consumer submits an identity theft report to 

a person who furnishes information to a consumer reporting agency at the address specified by that person for receiving such reports stating that information maintained 

by such person that purports to relate to the consumer resulted from identity theft, the person may not furnish such 

information that purports to relate to the consumer to any 

consumer reporting agency, unless the person subsequently knows or is informed by the consumer that the information is correct. 

(7) NEGATIVE INFORMATION.— 

(A) NOTICE TO CONSUMER REQUIRED.— 

(i) IN GENERAL.—If any financial institution that extends credit and regularly and in the ordinary course 

of business furnishes information to a consumer reporting agency described in section 603(p) furnishes 

negative information to such an agency regarding 

credit extended to a customer, the financial institution 

shall provide a notice of such furnishing of negative 

information, in writing, to the customer. 

(ii) NOTICE EFFECTIVE FOR SUBSEQUENT SUBMISSIONS.—After providing such notice, the financial institution may submit additional negative information 

to a consumer reporting agency described in section 

603(p) with respect to the same transaction, extension 

of credit, account, or customer without providing additional notice to the customer. 

(B) TIME OF NOTICE.— 

(i) IN GENERAL.—The notice required under subparagraph (A) shall be provided to the customer prior to, 

or no later than 30 days after, furnishing the negative 

information to a consumer reporting agency described 

in section 603(p). 

(ii) COORDINATION WITH NEW ACCOUNT DISCLOSURES.—If the notice is provided to the customer prior 

to furnishing the negative information to a consumer 

reporting agency, the notice may not be included in 

the initial disclosures provided under section 127(a) of 

the Truth in Lending Act. 

(C) COORDINATION WITH OTHER DISCLOSURES.—The notice required under subparagraph (A)— 

(i) may be included on or with any notice of default, 

any billing statement, or any other materials provided 

to the customer; and 

(ii) must be clear and conspicuous. 

(D) MODEL DISCLOSURE.— 

164 

(i) DUTY OF BUREAU.—The Bureau shall prescribe a 

brief model disclosure that a financial institution may 

use to comply with subparagraph (A), which shall not 

exceed 30 words. 

(ii) USE OF MODEL NOT REQUIRED.—No provision of 

this paragraph may be construed to require a financial 

institution to use any such model form prescribed by 

the Bureau. 

(iii) COMPLIANCE USING MODEL.—A financial institution shall be deemed to be in compliance with subparagraph (A) if the financial institution uses any 

model form prescribed by the Bureau under this subparagraph, or the financial institution uses any such 

model form and rearranges its format. 

(E) USE OF NOTICE WITHOUT SUBMITTING NEGATIVE INFORMATION.—No provision of this paragraph shall be construed as requiring a financial institution that has provided a customer with a notice described in subparagraph 

(A) to furnish negative information about the customer to 

a consumer reporting agency. 

(F) SAFE HARBOR.—A financial institution shall not be 

liable for failure to perform the duties required by this 

paragraph if, at the time of the failure, the financial institution maintained reasonable policies and procedures to 

comply with this paragraph or the financial institution 

reasonably believed that the institution is prohibited, by 

law, from contacting the consumer. 

(G) DEFINITIONS.—For purposes of this paragraph, the 

following definitions shall apply: 

(i) NEGATIVE INFORMATION.—The term ‘‘negative information’’ means information concerning a customer’s 

delinquencies, late payments, insolvency, or any form 

of default. 

(ii) CUSTOMER; FINANCIAL INSTITUTION.—The terms 

‘‘customer’’and ‘‘financial institution’’ have the same 

meanings as in section 509 Public Law 106–102. 

(8) ABILITY OF CONSUMER TO DISPUTE INFORMATION DIRECTLY

WITH FURNISHER.— (A) IN GENERAL.—The Bureau shall, in consultation with 

the Federal Trade Commission, the Federal banking agencies, and the National Credit Union Administration, prescribe regulations that shall identify the circumstances 

under which a furnisher shall be required to reinvestigate 

a dispute concerning the accuracy of information contained 

in a consumer report on the consumer, based on a direct 

request of a consumer. 

(B) CONSIDERATIONS.—In prescribing regulations under 

subparagraph (A), the agencies shall weigh— 

(i) the benefits to consumers with the costs on furnishers and the credit reporting system; 

(ii) the impact on the overall accuracy and integrity 

of consumer reports of any such requirements; 

(iii) whether direct contact by the consumer with the 

furnisher would likely result in the most expeditious 

resolution of any such dispute; and 

165 

(iv) the potential impact on the credit reporting 

process if credit repair organizations, as defined in 

section 403(3), including entities that would be a credit repair organization, but for section 403(3)(B)(i), are 

able to circumvent the prohibition in subparagraph 

(G). 

(C) APPLICABILITY.—Subparagraphs (D) through (G) 

shall apply in any circumstance identified under the regulations promulgated under subparagraph (A). 

(D) SUBMITTING A NOTICE OF DISPUTE.—A consumer who 

seeks to dispute the accuracy of information shall provide 

a dispute notice directly to such person at the address 

specified by the person for such notices that— 

(i) identifies the specific information that is being 

disputed; 

(ii) explains the basis for the dispute; and 

(iii) includes all supporting documentation required 

by the furnisher to substantiate the basis of the dispute. 

(E) DUTY OF PERSON AFTER RECEIVING NOTICE OF DIS- PUTE.—After receiving a notice of dispute from a consumer 

pursuant to subparagraph (D), the person that provided 

the information in dispute to a consumer reporting agency 

shall— 

(i) conduct an investigation with respect to the disputed information; 

(ii) review all relevant information provided by the 

consumer with the notice; 

(iii) complete such person’s investigation of the dispute and report the results of the investigation to the 

consumer before the expiration of the period under 

section 611(a)(1) within which a consumer reporting 

agency would be required to complete its action if the 

consumer had elected to dispute the information under 

that section; and 

(iv) if the investigation finds that the information 

reported was inaccurate, promptly notify each consumer reporting agency to which the person furnished 

the inaccurate information of that determination and 

provide to the agency any correction to that information that is necessary to make the information provided by the person accurate. 

(F) FRIVOLOUS OR IRRELEVANT DISPUTE.— 

(i) IN GENERAL.—This paragraph shall not apply if 

the person receiving a notice of a dispute from a consumer reasonably determines that the dispute is frivolous or irrelevant, including— 

(I) by reason of the failure of a consumer to provide sufficient information to investigate the disputed information; or 

(II) the submission by a consumer of a dispute 

that is substantially the same as a dispute previously submitted by or for the consumer, either 

directly to the person or through a consumer reporting agency under subsection (b), with respect 

166 

to which the person has already performed the 

person’s duties under this paragraph or subsection 

(b), as applicable. 

(ii) NOTICE OF DETERMINATION.—Upon making any 

determination under clause (i) that a dispute is frivolous or irrelevant, the person shall notify the consumer of such determination not later than 5 business 

days after making such determination, by mail or, if 

authorized by the consumer for that purpose, by any 

other means available to the person. 

(iii) CONTENTS OF NOTICE.—A notice under clause 

(ii) shall include— 

(I) the reasons for the determination under 

clause (i); and 

(II) identification of any information required to 

investigate the disputed information, which may 

consist of a standardized form describing the general nature of such information. 

(G) EXCLUSION OF CREDIT REPAIR ORGANIZATIONS.—This 

paragraph shall not apply if the notice of the dispute is 

submitted by, is prepared on behalf of the consumer by, or 

is submitted on a form supplied to the consumer by, a 

credit repair organization, as defined in section 403(3), or 

an entity that would be a credit repair organization, but 

for section 403(3)(B)(i). 

(9) DUTY TO PROVIDE NOTICE OF STATUS AS MEDICAL INFOR- MATION FURNISHER.—A person whose primary business is providing medical services, products, or devices, or the person’s 

agent or assignee, who furnishes information to a consumer reporting agency on a consumer shall be considered a medical information furnisher for purposes of this title, and shall notify 

the agency of such status. 

(b) DUTIES OF FURNISHERS OF INFORMATION UPON NOTICE OF

DISPUTE.— 

(1) IN GENERAL.—After receiving notice pursuant to section 

611(a)(2) of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency, the person shall— 

(A) conduct an investigation with respect to the disputed 

information; 

(B) review all relevant information provided by the consumer reporting agency pursuant to section 611(a)(2); 

(C) report the results of the investigation to the consumer reporting agency; 

(D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other 

consumer reporting agencies to which the person furnished 

the information and that compile and maintain files on 

consumers on a nationwide basis; and 

(E) if an item of information disputed by a consumer is 

found to be inaccurate or incomplete or cannot be verified 

after any reinvestigation under paragraph (1), for purposes 

of reporting to a consumer reporting agency only, as appropriate, based on the results of the reinvestigation promptly— 

167 

(i) modify that item of information; 

(ii) delete that item of information; or 

(iii) permanently block the reporting of that item of 

information. 

(2) DEADLINE.—A person shall complete all investigations, 

reviews, and reports required under paragraph (1) regarding 

information provided by the person to a consumer reporting 

agency, before the expiration of the period under section 

611(a)(1) within which the consumer reporting agency is required to complete actions required by that section regarding 

that information. 

(c) LIMITATION ON LIABILITY.—Except as provided in section 

621(c)(1)(B), sections 616 and 617 do not apply to any violation of— 

(1) subsection (a) of this section, including any regulations 

issued thereunder; 

(2) subsection (e) of this section, except that nothing in this 

paragraph shall limit, expand, or otherwise affect liability 

under section 616 or 617, as applicable, for violations of subsection (b) of this section; øor¿ 

(3) subsection (f) of this section, including any regulations 

issued thereunder; or 

ø(3)¿ (4) subsection (e) of section 615. 

(d) LIMITATION ON ENFORCEMENT.—The provisions of law described in paragraphs (1) through (3) of subsection (c) (other than 

with respect to the exception described in paragraph (2) of subsection (c)) shall be enforced exclusively as provided under section 

621 by the Federal agencies and officials and the State officials 

identified in section 621. 

(e) ACCURACY GUIDELINES AND REGULATIONS REQUIRED.— 

(1) GUIDELINES.—The Bureau shall, with respect to persons 

or entities that are subject to the enforcement authority of the 

Bureau under section 621— 

(A) establish and maintain guidelines for use by each 

person that furnishes information to a consumer reporting 

agency regarding the accuracy and integrity of the information relating to consumers that such entities furnish to 

consumer reporting agencies, and update such guidelines 

as often as necessary; and 

(B) prescribe regulations requiring each person that furnishes information to a consumer reporting agency to establish reasonable policies and procedures for implementing the guidelines established pursuant to subparagraph (A). 

(2) CRITERIA.—In developing the guidelines required by paragraph (1)(A), the Bureau shall— 

(A) identify patterns, practices, and specific forms of activity that can compromise the accuracy and integrity of 

information furnished to consumer reporting agencies; 

(B) review the methods (including technological means) 

used to furnish information relating to consumers to consumer reporting agencies; 

(C) determine whether persons that furnish information 

to consumer reporting agencies maintain and enforce policies to ensure the accuracy and integrity of information 

furnished to consumer reporting agencies; and 

168 

(D) examine the policies and processes that persons that 

furnish information to consumer reporting agencies employ 

to conduct reinvestigations and correct inaccurate information relating to consumers that has been furnished to consumer reporting agencies. 

* * * * * * * 

SECURITIES EXCHANGE ACT OF 1934 

TITLE I—REGULATION OF SECURITIES EXCHANGES 

* * * * * * * 

DEFINITIONS AND APPLICATION OF TITLE

SEC. 3. (a) When used in this title, unless the context otherwise 

requires— 

(1) The term ‘‘exchange’’ means any organization, association, or group of persons, whether incorporated or unincorporated, which constitutes, maintains, or provides a market 

place or facilities for bringing together purchasers and sellers 

of securities or for otherwise performing with respect to securities the functions commonly performed by a stock exchange as 

that term is generally understood, and includes the market 

place and the market facilities maintained by such exchange. 

(2) The term ‘‘facility’’ when used with respect to an exchange includes its premises, tangible or intangible property 

whether on the premises or not, any right to the use of such 

premises or property or any service thereof for the purpose of 

effecting or reporting a transaction on an exchange (including, 

among other things, any system of communication to or from 

the exchange, by ticker or otherwise, maintained by or with 

the consent of the exchange), and any right of the exchange to 

the use of any property or service. 

(3)(A) The term ‘‘member’’ when used with respect to a national securities exchange means (i) any natural person permitted to effect transactions on the floor of the exchange without the services of another person acting as broker, (ii) any 

registered broker or dealer with which such a natural person 

is associated, (iii) any registered broker or dealer permitted to 

designate as a representative such a natural person, and (iv) 

any other registered broker or dealer which agrees to be regulated by such exchange and with respect to which the exchange 

undertakes to enforce compliance with the provisions of this 

title, the rules and regulations thereunder, and its own rules. 

For purposes of sections 6(b)(1), 6(b)(4), 6(b)(6), 6(b)(7), 6(d), 

17(d), 19(d), 19(e), 19(g), 19(h), and 21 of this title, the term 

‘‘member’’ when used with respect to a national securities exchange also means, to the extent of the rules of the exchange 

specified by the Commission, any person required by the Commission to comply with such rules pursuant to section 6(f) of 

this title. 

(B) The term ‘‘member’’ when used with respect to a registered securities association means any broker or dealer who 

agrees to be regulated by such association and with respect to 

169 

whom the association undertakes to enforce compliance with 

the provisions of this title, the rules and regulations thereunder, and its own rules. 

(4) BROKER.— 

(A) IN GENERAL.—The term ‘‘broker’’ means any person 

engaged in the business of effecting transactions in securities for the account of others. 

(B) EXCEPTION FOR CERTAIN BANK ACTIVITIES.—A bank 

shall not be considered to be a broker because the bank engages in any one or more of the following activities under 

the conditions described: 

(i) THIRD PARTY BROKERAGE ARRANGEMENTS.—The 

bank enters into a contractual or other written arrangement with a broker or dealer registered under 

this title under which the broker or dealer offers brokerage services on or off the premises of the bank if— 

(I) such broker or dealer is clearly identified as 

the person performing the brokerage services; 

(II) the broker or dealer performs brokerage 

services in an area that is clearly marked and, to 

the extent practicable, physically separate from 

the routine deposit-taking activities of the bank; 

(III) any materials used by the bank to advertise or promote generally the availability of brokerage services under the arrangement clearly indicate that the brokerage services are being provided by the broker or dealer and not by the bank; 

(IV) any materials used by the bank to advertise 

or promote generally the availability of brokerage 

services under the arrangement are in compliance 

with the Federal securities laws before distribution; 

(V) bank employees (other than associated persons of a broker or dealer who are qualified pursuant to the rules of a self-regulatory organization) 

perform only clerical or ministerial functions in 

connection with brokerage transactions including 

scheduling appointments with the associated persons of a broker or dealer, except that bank employees may forward customer funds or securities 

and may describe in general terms the types of investment vehicles available from the bank and the 

broker or dealer under the arrangement; 

(VI) bank employees do not receive incentive 

compensation for any brokerage transaction unless such employees are associated persons of a 

broker or dealer and are qualified pursuant to the 

rules of a self-regulatory organization, except that 

the bank employees may receive compensation for 

the referral of any customer if the compensation is 

a nominal one-time cash fee of a fixed dollar 

amount and the payment of the fee is not contingent on whether the referral results in a transaction; 

170 

(VII) such services are provided by the broker or 

dealer on a basis in which all customers that receive any services are fully disclosed to the broker 

or dealer; 

(VIII) the bank does not carry a securities account of the customer except as permitted under 

clause (ii) or (viii) of this subparagraph; and 

(IX) the bank, broker, or dealer informs each 

customer that the brokerage services are provided 

by the broker or dealer and not by the bank and 

that the securities are not deposits or other obligations of the bank, are not guaranteed by the 

bank, and are not insured by the Federal Deposit 

Insurance Corporation. 

(ii) TRUST ACTIVITIES.—The bank effects transactions in a trustee capacity, or effects transactions in 

a fiduciary capacity in its trust department or other 

department that is regularly examined by bank examiners for compliance with fiduciary principles and 

standards, and— 

(I) is chiefly compensated for such transactions, 

consistent with fiduciary principles and standards, 

on the basis of an administration or annual fee 

(payable on a monthly, quarterly, or other basis), 

a percentage of assets under management, or a 

flat or capped per order processing fee equal to 

not more than the cost incurred by the bank in 

connection with executing securities transactions 

for trustee and fiduciary customers, or any combination of such fees; and 

(II) does not publicly solicit brokerage business, 

other than by advertising that it effects transactions in securities in conjunction with advertising its other trust activities. 

(iii) PERMISSIBLE SECURITIES TRANSACTIONS.—The 

bank effects transactions in— 

(I) commercial paper, bankers acceptances, or 

commercial bills; 

(II) exempted securities; 

(III) qualified Canadian government obligations 

as defined in section 5136 of the Revised Statutes, 

in conformity with section 15C of this title and the 

rules and regulations thereunder, or obligations of 

the North American Development Bank; or 

(IV) any standardized, credit enhanced debt security issued by a foreign government pursuant to 

the March 1989 plan of then Secretary of the 

Treasury Brady, used by such foreign government 

to retire outstanding commercial bank loans. 

(iv) CERTAIN STOCK PURCHASE PLANS.— (I) EMPLOYEE BENEFIT PLANS.—The bank effects 

transactions, as part of its transfer agency activities, in the securities of an issuer as part of any 

pension, retirement, profit-sharing, bonus, thrift, 

savings, incentive, or other similar benefit plan for 

171 

the employees of that issuer or its affiliates (as defined in section 2 of the Bank Holding Company 

Act of 1956), if the bank does not solicit transactions or provide investment advice with respect 

to the purchase or sale of securities in connection 

with the plan. 

(II) DIVIDEND REINVESTMENT PLANS.—The bank 

effects transactions, as part of its transfer agency 

activities, in the securities of an issuer as part of 

that issuer’s dividend reinvestment plan, if— 

(aa) the bank does not solicit transactions 

or provide investment advice with respect to 

the purchase or sale of securities in connection with the plan; and 

(bb) the bank does not net shareholders’ 

buy and sell orders, other than for programs 

for odd-lot holders or plans registered with 

the Commission. 

(III) ISSUER PLANS.—The bank effects transactions, as part of its transfer agency activities, in 

the securities of an issuer as part of a plan or program for the purchase or sale of that issuer’s 

shares, if— 

(aa) the bank does not solicit transactions 

or provide investment advice with respect to 

the purchase or sale of securities in connection with the plan or program; and 

(bb) the bank does not net shareholders’ 

buy and sell orders, other than for programs 

for odd-lot holders or plans registered with 

the Commission. 

(IV) PERMISSIBLE DELIVERY OF MATERIALS.—The 

exception to being considered a broker for a bank 

engaged in activities described in subclauses (I), 

(II), and (III) will not be affected by delivery of 

written or electronic plan materials by a bank to 

employees of the issuer, shareholders of the 

issuer, or members of affinity groups of the issuer, 

so long as such materials are— 

(aa) comparable in scope or nature to that 

permitted by the Commission as of the date of 

the enactment of the Gramm-Leach-Bliley 

Act; or 

(bb) otherwise permitted by the Commission. 

(v) SWEEP ACCOUNTS.—The bank effects transactions 

as part of a program for the investment or reinvestment of deposit funds into any no-load, open-end management investment company registered under the Investment Company Act of 1940 that holds itself out as 

a money market fund. 

(vi) AFFILIATE TRANSACTIONS.—The bank effects 

transactions for the account of any affiliate of the 

bank (as defined in section 2 of the Bank Holding 

Company Act of 1956) other than— 

172 

(I) a registered broker or dealer; or 

(II) an affiliate that is engaged in merchant 

banking, as described in section 4(k)(4)(H) of the 

Bank Holding Company Act of 1956. 

(vii) PRIVATE SECURITIES OFFERINGS.—The bank— 

(I) effects sales as part of a primary offering of 

securities not involving a public offering, pursuant 

to section 3(b), 4(2), or 4(5) of the Securities Act 

of 1933 or the rules and regulations issued thereunder; 

(II) at any time after the date that is 1 year 

after the date of the enactment of the GrammLeach-Bliley Act, is not affiliated with a broker or 

dealer that has been registered for more than 1 

year in accordance with this Act, and engages in 

dealing, market making, or underwriting activities, other than with respect to exempted securities; and 

(III) if the bank is not affiliated with a broker 

or dealer, does not effect any primary offering described in subclause (I) the aggregate amount of 

which exceeds 25 percent of the capital of the 

bank, except that the limitation of this subclause 

shall not apply with respect to any sale of government securities or municipal securities. 

(viii) SAFEKEEPING AND CUSTODY ACTIVITIES.— (I) IN GENERAL.—The bank, as part of customary banking activities— 

(aa) provides safekeeping or custody services with respect to securities, including the 

exercise of warrants and other rights on behalf of customers; 

(bb) facilitates the transfer of funds or securities, as a custodian or a clearing agency, in 

connection with the clearance and settlement 

of its customers’ transactions in securities; 

(cc) effects securities lending or borrowing 

transactions with or on behalf of customers as 

part of services provided to customers pursuant to division (aa) or (bb) or invests cash collateral pledged in connection with such transactions; 

(dd) holds securities pledged by a customer 

to another person or securities subject to purchase or resale agreements involving a customer, or facilitates the pledging or transfer 

of such securities by book entry or as otherwise provided under applicable law, if the 

bank maintains records separately identifying 

the securities and the customer; or 

(ee) serves as a custodian or provider of 

other related administrative services to any 

individual retirement account, pension, retirement, profit sharing, bonus, thrift savings, incentive, or other similar benefit plan. 

173 

(II) EXCEPTION FOR CARRYING BROKER ACTIVITIES.—The exception to being considered a broker 

for a bank engaged in activities described in subclause (I) shall not apply if the bank, in connection with such activities, acts in the United States 

as a carrying broker (as such term, and different 

formulations thereof, are used in section 15(c)(3) 

of this title and the rules and regulations thereunder) for any broker or dealer, unless such carrying broker activities are engaged in with respect 

to government securities (as defined in paragraph 

(42) of this subsection). 

(ix) IDENTIFIED BANKING PRODUCTS.—The bank effects transactions in identified banking products as defined in section 206 of the Gramm-Leach-Bliley Act. 

(x) MUNICIPAL SECURITIES.—The bank effects transactions in municipal securities. 

(xi) DE MINIMIS EXCEPTION.—The bank effects, other 

than in transactions referred to in clauses (i) through 

(x), not more than 500 transactions in securities in 

any calendar year, and such transactions are not effected by an employee of the bank who is also an employee of a broker or dealer. 

(C) EXECUTION BY BROKER OR DEALER.—The exception to 

being considered a broker for a bank engaged in activities 

described in clauses (ii), (iv), and (viii) of subparagraph (B) 

shall not apply if the activities described in such provisions result in the trade in the United States of any security that is a publicly traded security in the United States, 

unless— 

(i) the bank directs such trade to a registered broker 

or dealer for execution; 

(ii) the trade is a cross trade or other substantially 

similar trade of a security that— 

(I) is made by the bank or between the bank 

and an affiliated fiduciary; and 

(II) is not in contravention of fiduciary principles established under applicable Federal or 

State law; or 

(iii) the trade is conducted in some other manner 

permitted under rules, regulations, or orders as the 

Commission may prescribe or issue. 

(D) FIDUCIARY CAPACITY.—For purposes of subparagraph 

(B)(ii), the term ‘‘fiduciary capacity’’ means— 

(i) in the capacity as trustee, executor, administrator, registrar of stocks and bonds, transfer agent, 

guardian, assignee, receiver, or custodian under a uniform gift to minor act, or as an investment adviser if 

the bank receives a fee for its investment advice; 

(ii) in any capacity in which the bank possesses investment discretion on behalf of another; or 

(iii) in any other similar capacity. 

(E) EXCEPTION FOR ENTITIES SUBJECT TO SECTION 15(e).— 

The term ‘‘broker’’ does not include a bank that— 

174 

(i) was, on the day before the date of enactment of 

the Gramm-Leach-Bliley Act, subject to section 15(e); 

and 

(ii) is subject to such restrictions and requirements 

as the Commission considers appropriate. 

(F) JOINT RULEMAKING REQUIRED.—The Commission and 

the Board of Governors of the Federal Reserve System 

shall jointly adopt a single set of rules or regulations to 

implement the exceptions in subparagraph (B). 

(5) DEALER.— (A) IN GENERAL.—The term ‘‘dealer’’ means any person 

engaged in the business of buying and selling securities 

(not including security-based swaps, other than securitybased swaps with or for persons that are not eligible contract participants) for such person’s own account through 

a broker or otherwise. 

(B) EXCEPTION FOR PERSON NOT ENGAGED IN THE BUSI- NESS OF DEALING.—The term ‘‘dealer’’ does not include a 

person that buys or sells securities (not including securitybased swaps, other than security-based swaps with or for 

persons that are not eligible contract participants) for such 

person’s own account, either individually or in a fiduciary 

capacity, but not as a part of a regular business. 

(C) EXCEPTION FOR CERTAIN BANK ACTIVITIES.—A bank 

shall not be considered to be a dealer because the bank engages in any of the following activities under the conditions described: 

(i) PERMISSIBLE SECURITIES TRANSACTIONS.—The 

bank buys or sells— 

(I) commercial paper, bankers acceptances, or 

commercial bills; 

(II) exempted securities; 

(III) qualified Canadian government obligations 

as defined in section 5136 of the Revised Statutes 

of the United States, in conformity with section 

15C of this title and the rules and regulations 

thereunder, or obligations of the North American 

Development Bank; or 

(IV) any standardized, credit enhanced debt security issued by a foreign government pursuant to 

the March 1989 plan of then Secretary of the 

Treasury Brady, used by such foreign government 

to retire outstanding commercial bank loans. 

(ii) INVESTMENT, TRUSTEE, AND FIDUCIARY TRANSACTIONS.—The bank buys or sells securities for investment purposes— 

(I) for the bank; or 

(II) for accounts for which the bank acts as a 

trustee or fiduciary. 

(iii) ASSET-BACKED TRANSACTIONS.—The bank engages in the issuance or sale to qualified investors, 

through a grantor trust or other separate entity, of securities backed by or representing an interest in notes, 

drafts, acceptances, loans, leases, receivables, other 

obligations (other than securities of which the bank is 

175 

not the issuer), or pools of any such obligations predominantly originated by— 

(I) the bank; 

(II) an affiliate of any such bank other than a 

broker or dealer; or 

(III) a syndicate of banks of which the bank is 

a member, if the obligations or pool of obligations 

consists of mortgage obligations or consumer-related receivables. 

(iv) IDENTIFIED BANKING PRODUCTS.—The bank buys 

or sells identified banking products, as defined in section 206 of the Gramm-Leach-Bliley Act. 

(6) The term ‘‘bank’’ means (A) a banking institution organized under the laws of the United States or a Federal savings 

association, as defined in section 2(5) of the Home Owners’ 

Loan Act, (B) a member bank of the Federal Reserve System, 

(C) any other banking institution or savings association, as defined in section 2(4) of the Home Owners’ Loan Act, whether 

incorporated or not, doing business under the laws of any State 

or of the United States, a substantial portion of the business 

of which consists of receiving deposits or exercising fiduciary 

powers similar to those permitted to national banks under the 

authority of the Comptroller of the Currency pursuant to the 

first section of Public Law 87–722 (12 U.S.C. 92a), and which 

is supervised and examined by State or Federal authority having supervision over banks or savings associations, and which 

is not operated for the purpose of evading the provisions of this 

title, and (D) a receiver, conservator, or other liquidating agent 

of any institution or firm included in clauses (A), (B), or (C) of 

this paragraph. 

(7) The term ‘‘director’’ means any director of a corporation 

or any person performing similar functions with respect to any 

organization, whether incorporated or unincorporated. 

(8) The term ‘‘issuer’’ means any person who issues or proposes to issue any security; except that with respect to certificates of deposit for securities, voting-trust certificates, or collateral-trust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having 

a board of directors or of the fixed, restricted management, or 

unit type, the term ‘‘issuer’’ means the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement 

or instrument under which such securities are issued; and except that with respect to equipment-trust certificates or like securities, the term ‘‘issuer’’ means the person by whom the 

equipment or property is, or is to be, used. 

(9) The term ‘‘person’’ means a natural person, company, 

government, or political subdivision, agency, or instrumentality 

of a government. 

(10) The term ‘‘security’’ means any note, stock, treasury 

stock, security future, security-based swap,bond, debenture, 

certificate of interest or participation in any profit-sharing 

agreement or in any oil, gas, or other mineral royalty or lease, 

any collateral-trust certificate, preorganization certificate or 

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176 

trust certificate, certificate of deposit for a security, any put, 

call, straddle, option, or privilege on any security, certificate of 

deposit, or group or index of securities (including any interest 

therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or in general, any instrument commonly known as a ‘‘security’’; or any certificate of interest or participation in, temporary or interim certificate for, 

receipt for, or warrant or right to subscribe to or purchase, any 

of the foregoing; but shall not include currency or any note, 

draft, bill of exchange, or banker’s acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity 

of which is likewise limited. 

(11) The term ‘‘equity security’’ means any stock or similar 

security; or any security future on any such security; or any security convertible, with or without consideration, into such a 

security, or carrying any warrant or right to subscribe to or 

purchase such a security; or any such warrant or right; or any 

other security which the Commission shall deem to be of similar nature and consider necessary or appropriate, by such rules 

and regulations as it may prescribe in the public interest or for 

the protection of investors, to treat as an equity security. 

(12)(A) The term ‘‘exempted security’’ or ‘‘exempted securities’’ includes— 

(i) government securities, as defined in paragraph (42) of 

this subsection; 

(ii) municipal securities, as defined in paragraph (29) of 

this subsection; 

(iii) any interest or participation in any common trust 

fund or similar fund that is excluded from the definition 

of the term ‘‘investment company’’ under section 3(c)(3) of 

the Investment Company Act of 1940; 

(iv) any interest or participation in a single trust fund, 

or a collective trust fund maintained by a bank, or any security arising out of a contract issued by an insurance 

company, which interest, participation, or security is 

issued in connection with a qualified plan as defined in 

subparagraph (C) of this paragraph; 

(v) any security issued by or any interest or participation 

in any pooled income fund, collective trust fund, collective 

investment fund, or similar fund that is excluded from the 

definition of an investment company under section 

3(c)(10)(B) of the Investment Company Act of 1940; 

(vi) solely for purposes of sections 12, 13, 14, and 16 of 

this title, any security issued by or any interest or participation in any church plan, company, or account that is excluded from the definition of an investment company 

under section 3(c)(14) of the Investment Company Act of 

1940; and 

(vii) such other securities (which may include, among 

others, unregistered securities, the market in which is predominantly intrastate) as the Commission may, by such 

rules and regulations as it deems consistent with the public interest and the protection of investors, either uncondiVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00180 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
177 

tionally or upon specified terms and conditions or for stated periods, exempt from the operation of any one or more 

provisions of this title which by their terms do not apply 

to an ‘‘exempted security’’ or to ‘‘exempted securities’’. 

(B)(i) Notwithstanding subparagraph (A)(i) of this paragraph, 

government securities shall not be deemed to be ‘‘exempted securities’’ for the purposes of section 17A of this title. 

(ii) Notwithstanding subparagraph (A)(ii) of this paragraph, 

municipal securities shall not be deemed to be ‘‘exempted securities’’ for the purposes of sections 15 and 17A of this title. 

(C) For purposes of subparagraph (A)(iv) of this paragraph, 

the term ‘‘qualified plan’’ means (i) a stock bonus, pension, or 

profit-sharing plan which meets the requirements for qualification under section 401 of the Internal Revenue Code of 1954, 

(ii) an annuity plan which meets the requirements for the deduction of the employer’s contribution under section 404(a)(2) 

of such Code, (iii) a governmental plan as defined in section 

414(d) of such Code which has been established by an employer 

for the exclusive benefit of its employees or their beneficiaries 

for the purpose of distributing to such employees or their beneficiaries the corpus and income of the funds accumulated under 

such plan, if under such plan it is impossible, prior to the satisfaction of all liabilities with respect to such employees and 

their beneficiaries, for any part of the corpus or income to be 

used for, or diverted to, purposes other than the exclusive benefit of such employees or their beneficiaries, or (iv) a church 

plan, company, or account that is excluded from the definition 

of an investment company under section 3(c)(14) of the Investment Company Act of 1940, other than any plan described in 

clause (i), (ii), or (iii) of this subparagraph which (I) covers employees some or all of whom are employees within the meaning 

of section 401(c) of such Code, or (II) is a plan funded by an 

annuity contract described in section 403(b) of such Code. 

(13) The terms ‘‘buy’’ and ‘‘purchase’’ each include any contract to buy, purchase, or otherwise acquire. For security futures products, such term includes any contract, agreement, or 

transaction for future delivery. For security-based swaps, such 

terms include the execution, termination (prior to its scheduled 

maturity date), assignment, exchange, or similar transfer or 

conveyance of, or extinguishing of rights or obligations under, 

a security-based swap, as the context may require. 

(14) The terms ‘‘sale’’ and ‘‘sell’’ each include any contract to 

sell or otherwise dispose of. For security futures products, such 

term includes any contract, agreement, or transaction for future delivery. For security-based swaps, such terms include the 

execution, termination (prior to its scheduled maturity date), 

assignment, exchange, or similar transfer or conveyance of, or 

extinguishing of rights or obligations under, a security-based 

swap, as the context may require. 

(15) The term ‘‘Commission’’ means the Securities and Exchange Commission established by section 4 of this title. 

(16) The term ‘‘State’’ means any State of the United States, 

the District of Columbia, Puerto Rico, the Virgin Islands, or 

any other possession of the United States. 

178 

(17) The term ‘‘interstate commerce’’ means trade, commerce, 

transportation, or communication among the several States, or 

between any foreign country and any State, or between any 

State and any place or ship outside thereof. The term also includes intrastate use of (A) any facility of a national securities 

exchange or of a telephone or other interstate means of communication, or (B) any other interstate instrumentality. 

(18) The term ‘‘person associated with a broker or dealer’’ or 

‘‘associated person of a broker or dealer’’ means any partner, 

officer, director, or branch manager of such broker or dealer (or 

any person occupying a similar status or performing similar 

functions), any person directly or indirectly controlling, controlled by, or under common control with such broker or dealer, 

or any employee of such broker or dealer, except that any person associated with a broker or dealer whose functions are 

solely clerical or ministerial shall not be included in the meaning of such term for purposes of section 15(b) of this title (other 

than paragraph (6) thereof). 

(19) The terms ‘‘investment company,’’‘‘affiliated person,’’‘‘insurance company,’’‘‘separate account,’’ and ‘‘company’’ 

have the same meanings as in the Investment Company Act of 

1940. 

(20) The terms ‘‘investment adviser’’ and ‘‘underwriter’’ have 

the same meanings as in the Investment Advisers Act of 1940. 

(21) The term ‘‘persons associated with a member’’ or ‘‘associated person of a member’’ when used with respect to a member 

of a national securities exchange or registered securities association means any partner, officer, director, or branch manager 

of such member (or any person occupying a similar status or 

performing similar functions), any person directly or indirectly 

controlling, controlled by, or under common control with such 

member, or any employee of such member. 

(22)(A) The term ‘‘securities information processor’’ means 

any person engaged in the business of (i) collecting, processing, 

or preparing for distribution or publication, or assisting, participating in, or coordinating the distribution or publication of, 

information with respect to transactions in or quotations for 

any security (other than an exempted security) or (ii) distributing or publishing (whether by means of a ticker tape, a communications network, a terminal display device, or otherwise) 

on a current and continuing basis, information with respect to 

such transactions or quotations. The term ‘‘securities information processor’’ does not include any bona fide newspaper, news 

magazine, or business or financial publication of general and 

regular circulation, any self-regulatory organization, any bank, 

broker, dealer, building and loan, savings and loan, or homestead association, or cooperative bank, if such bank, broker, 

dealer, association, or cooperative bank would be deemed to be 

a securities information processor solely by reason of functions 

performed by such institutions as part of customary banking, 

brokerage, dealing, association, or cooperative bank activities, 

or any common carrier, as defined in section 3 of the Communications Act of 1934, subject to the jurisdiction of the Federal 

Communications Commission or a State commission, as defined in section 3 of that Act, unless the Commission deterVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00182 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
179 

mines that such carrier is engaged in the business of collecting, 

processing, or preparing for distribution or publication, information with respect to transactions in or quotations for any security. 

(B) The term ‘‘exclusive processor’’ means any securities information processor or self-regulatory organization which, directly or indirectly, engages on an exclusive basis on behalf of 

any national securities exchange or registered securities association, or any national securities exchange or registered securities association which engages on an exclusive basis on its 

own behalf, in collecting, processing, or preparing for distribution or publication any information with respect to (i) transactions or quotations on or effected or made by means of any 

facility of such exchange or (ii) quotations distributed or published by means of any electronic system operated or controlled 

by such association. 

(23)(A) The term ‘‘clearing agency’’ means any person who 

acts as an intermediary in making payments or deliveries or 

both in connection with transactions in securities or who provides facilities for comparison of data respecting the terms of 

settlement of securities transactions, to reduce the number of 

settlements of securities transactions, or for the allocation of 

securities settlement responsibilities. Such term also means 

any person, such as a securities depository, who (i) acts as a 

custodian of securities in connection with a system for the central handling of securities whereby all securities of a particular 

class or series of any issuer deposited within the system are 

treated as fungible and may be transferred, loaned, or pledged 

by bookkeeping entry without physical delivery of securities 

certificates, or (ii) otherwise permits or facilitates the settlement of securities transactions or the hypothecation or lending 

of securities without physical delivery of securities certificates. 

(B) The term ‘‘clearing agency’’ does not include (i) any Federal Reserve bank, Federal home loan bank, or Federal land 

bank; (ii) any national securities exchange or registered securities association solely by reason of its providing facilities for 

comparison of data respecting the terms of settlement of securities transactions effected on such exchange or by means of 

any electronic system operated or controlled by such association; (iii) any bank, broker, dealer, building and loan, savings 

and loan, or homestead association, or cooperative bank if such 

bank, broker, dealer, association, or cooperative bank would be 

deemed to be a clearing agency solely by reason of functions 

performed by such institution as part of customary banking, 

brokerage, dealing, association, or cooperative banking activities, or solely by reason of acting on behalf of a clearing agency 

or a participant therein in connection with the furnishing by 

the clearing agency of services to its participants or the use of 

services of the clearing agency by its participants, unless the 

Commission, by rule, otherwise provides as necessary or appropriate to assure the prompt and accurate clearance and settlement of securities transactions or to prevent evasion of this 

title; (iv) any life insurance company, its registered separate 

accounts, or a subsidiary of such insurance company solely by 

reason of functions commonly performed by such entities in 

180 

connection with variable annuity contracts or variable life policies issued by such insurance company or its separate accounts; (v) any registered open-end investment company or 

unit investment trust solely by reason of functions commonly 

performed by it in connection with shares in such registered 

open-end investment company or unit investment trust, or (vi) 

any person solely by reason of its performing functions described in paragraph 25(E) of this subsection. 

(24) The term ‘‘participant’’ when used with respect to a 

clearing agency means any person who uses a clearing agency 

to clear or settle securities transactions or to transfer, pledge, 

lend, or hypothecate securities. Such term does not include a 

person whose only use of a clearing agency is (A) through another person who is a participant or (B) as a pledgee of securities. 

(25) The term ‘‘transfer agent’’ means any person who engages on behalf of an issuer of securities or on behalf of itself 

as an issuer of securities in (A) countersigning such securities 

upon issuance; (B) monitoring the issuance of such securities 

with a view to preventing unauthorized issuance, a function 

commonly performed by a person called a registrar; (C) registering the transfer of such securities; (D) exchanging or converting such securities; or (E) transferring record ownership of 

securities by bookkeeping entry without physical issuance of 

securities certificates. The term ‘‘transfer agent’’ does not include any insurance company or separate account which performs such functions solely with respect to variable annuity 

contracts or variable life policies which it issues or any registered clearing agency which performs such functions solely 

with respect to options contracts which it issues. 

(26) The term ‘‘self-regulatory organization’’ means any national securities exchange, registered securities association, or 

registered clearing agency, or (solely for purposes of sections 

19(b), 19(c), and 23(b) of this title) the Municipal Securities 

Rulemaking Board established by section 15B of this title. 

(27) The term ‘‘rules of an exchange’’, ‘‘rules of an association’’, or ‘‘rules of a clearing agency’’ means the constitution, 

articles of incorporation, bylaws, and rules, or instruments corresponding to the foregoing, of an exchange, association of brokers and dealers, or clearing agency, respectively, and such of 

the stated policies, practices, and interpretations of such exchange, association, or clearing agency as the Commission, by 

rule, may determine to be necessary or appropriate in the public interest or for the protection of investors to be deemed to 

be rules of such exchange, association, or clearing agency. 

(28) The term ‘‘rules of a self-regulatory organization’’ means 

the rules of an exchange which is a national securities exchange, the rules of an association of brokers and dealers 

which is a registered securities association, the rules of a clearing agency which is a registered clearing agency, or the rules 

of the Municipal Securities Rulemaking Board. 

(29) The term ‘‘municipal securities’’ means securities which 

are direct obligations of, or obligations guaranteed as to principal or interest by, a State or any political subdivision thereof, 

or any agency or instrumentality of a State or any political 

181 

subdivision thereof, or any municipal corporate instrumentality 

of one or more States, or any security which is an industrial 

development bond (as defined in section 103(c)(2) of the Internal Revenue Code of 1954) the interest on which is excludable 

from gross income under section 103(a)(1) of such Code if, by 

reason of the application of paragraph (4) or (6) of section 

103(c) of such Code (determined as if paragraphs (4)(A), (5), 

and (7) were not included in such section 103(c)), paragraph (1) 

of such section 103(c) does not apply to such security. 

(30) The term ‘‘municipal securities dealer’’ means any person (including a separately identifiable department or division 

of a bank) engaged in the business of buying and selling municipal securities for his own account, through a broker or otherwise, but does not include— 

(A) any person insofar as he buys or sells such securities 

for his own account, either individually or in some fiduciary capacity, but not as a part of a regular business; or 

(B) a bank, unless the bank is engaged in the business 

of buying and selling municipal securities for its own account other than in a fiduciary capacity, through a broker 

or otherwise; Provided, however, That if the bank is engaged in such business through a separately identifiable 

department or division (as defined by the Municipal Securities Rulemaking Board in accordance with section 

15B(b)(2)(H) of this title), the department or division and 

not the bank itself shall be deemed to be the municipal securities dealer. 

(31) The term ‘‘municipal securities broker’’ means a broker 

engaged in the business of effecting transactions in municipal 

securities for the account of others. 

(32) The term ‘‘person associated with a municipal securities 

dealer’’ when used with respect to a municipal securities dealer 

which is a bank or a division or department of a bank means 

any person directly engaged in the management, direction, supervision, or performance of any of the municipal securities 

dealer’s activities with respect to municipal securities, and any 

person directly or indirectly controlling such activities or controlled by the municipal securities dealer in connection with 

such activities. 

(33) The term ‘‘municipal securities investment portfolio’’ 

means all municipal securities held for investment and not for 

sale as part of a regular business by a municipal securities 

dealer or by a person, directly or indirectly, controlling, controlled by, or under common control with a municipal securities dealer. 

(34) The term ‘‘appropriate regulatory agency’’ means— 

(A) When used with respect to a municipal securities 

dealer: 

(i) the Comptroller of the Currency, in the case of a 

national bank, a subsidiary or a department or division of any such bank, a Federal savings association 

(as defined in section 3(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(2))), the deposits of 

which are insured by the Federal Deposit Insurance 

182 

Corporation, or a subsidiary or department or division 

of any such Federal savings association; 

(ii) the Board of Governors of the Federal Reserve 

System, in the case of a State member bank of the 

Federal Reserve System, a subsidiary or a department 

or division thereof, a bank holding company, a subsidiary of a bank holding company which is a bank 

other than a bank specified in clause (i), (iii), or (iv) 

of this subparagraph, a subsidiary or a department or 

division of such subsidiary, or a savings and loan holding company; 

(iii) the Federal Deposit Insurance Corporation, in 

the case of a bank insured by the Federal Deposit Insurance Corporation (other than a member of the Federal Reserve System), a subsidiary or department or 

division of any such bank, a State savings association 

(as defined in section 3(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(3))), the deposits of 

which are insured by the Federal Deposit Insurance 

Corporation, or a subsidiary or a department or division of any such State savings association; and 

(iv) the Commission in the case of all other municipal securities dealers. 

(B) When used with respect to a clearing agency or 

transfer agent: 

(i) the Comptroller of the Currency, in the case of a 

national bank, a subsidiary of any such bank, a Federal savings association (as defined in section 3(b)(2) of 

the Federal Deposit Insurance Act (12 U.S.C. 

1813(b)(2))), the deposits of which are insured by the 

Federal Deposit Insurance Corporation, or a subsidiary of any such Federal savings association; 

(ii) the Board of Governors of the Federal Reserve 

System, in the case of a State member bank of the 

Federal Reserve System, a subsidiary thereof, a bank 

holding company, a subsidiary of a bank holding company that is a bank other than a bank specified in 

clause (i) or (iii) of this subparagraph, or a savings 

and loan holding company; 

(iii) the Federal Deposit Insurance Corporation, in 

the case of a bank insured by the Federal Deposit Insurance Corporation (other than a member of the Federal Reserve System), a subsidiary of any such bank, 

a State savings association (as defined in section 

3(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 

1813(b)(3))), the deposits of which are insured by the 

Federal Deposit Insurance Corporation, or a subsidiary of any such State savings association; and 

(iv) the Commission in the case of all other clearing 

agencies and transfer agents. 

(C) When used with respect to a participant or applicant 

to become a participant in a clearing agency or a person 

requesting or having access to services offered by a clearing agency: 

183 

(i) the Comptroller of the Currency, in the case of a 

national bank or a Federal savings association (as defined in section 3(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(2))), the deposits of which 

are insured by the Federal Deposit Insurance Corporation when the appropriate regulatory agency for such 

clearing agency is not the Commission; 

(ii) the Board of Governors of the Federal Reserve 

System in the case of a State member bank of the Federal Reserve System, a bank holding company, or a 

subsidiary of a bank holding company, a subsidiary of 

a bank holding company that is a bank other than a 

bank specified in clause (i) or (iii) of this subparagraph, or a savings and loan holding company when 

the appropriate regulatory agency for such clearing 

agency is not the Commission; 

(iii) the Federal Deposit Insurance Corporation, in 

the case of a bank insured by the Federal Deposit Insurance Corporation (other than a member of the Federal Reserve System) or a State savings association (as 

defined in section 3(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(3))), the deposits of which 

are insured by the Federal Deposit Insurance Corporation; and when the appropriate regulatory agency for 

such clearing agency is not the Commission; 

(iv) the Commission in all other cases. 

(D) When used with respect to an institutional investment manager which is a bank the deposits of which are 

insured in accordance with the Federal Deposit Insurance 

Act: 

(i) the Comptroller of the Currency, in the case of a 

national bank or a Federal savings association (as defined in section 3(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(2))), the deposits of which 

are insured by the Federal Deposit Insurance Corporation; 

(ii) the Board of Governors of the Federal Reserve 

System, in the case of any other member bank of the 

Federal Reserve System; and 

(iii) the Federal Deposit Insurance Corporation, in 

the case of any other insured bank or a State savings 

association (as defined in section 3(b)(3) of the Federal 

Deposit Insurance Act (12 U.S.C. 1813(b)(3))), the deposits of which are insured by the Federal Deposit Insurance Corporation. 

(E) When used with respect to a national securities exchange or registered securities association, member thereof, person associated with a member thereof, applicant to 

become a member thereof or to become associated with a 

member thereof, or person requesting or having access to 

services offered by such exchange or association or member 

thereof, or the Municipal Securities Rulemaking Board, 

the Commission. 

(F) When used with respect to a person exercising investment discretion with respect to an account: 

184 

(i) the Comptroller of the Currency, in the case of a 

national bank or a Federal savings association (as defined in section 3(b)(2) of the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(2))), the deposits of which 

are insured by the Federal Deposit Insurance Corporation; 

(ii) the Board of Governors of the Federal Reserve 

System in the case of any other member bank of the 

Federal Reserve System; 

(iii) the Federal Deposit Insurance Corporation, in 

the case of any other bank the deposits of which are 

insured in accordance with the Federal Deposit Insurance Act or a State savings association (as defined in 

section 3(b)(3) of the Federal Deposit Insurance Act 

(12 U.S.C. 1813(b)(3))), the deposits of which are insured by the Federal Deposit Insurance Corporation; 

and 

(iv) the Commission in the case of all other such 

persons. 

(G) When used with respect to a government securities 

broker or government securities dealer, or person associated with a government securities broker or government 

securities dealer: 

(i) the Comptroller of the Currency, in the case of a 

national bank, a Federal savings association (as defined in section 3(b)(2) of the Federal Deposit Insurance Act), the deposits of which are insured by the 

Federal Deposit Insurance Corporation, or a Federal 

branch or Federal agency of a foreign bank (as such 

terms are used in the International Banking Act of 

1978); 

(ii) the Board of Governors of the Federal Reserve 

System, in the case of a State member bank of the 

Federal Reserve System, a foreign bank, an uninsured 

State branch or State agency of a foreign bank, a commercial lending company owned or controlled by a foreign bank (as such terms are used in the International 

Banking Act of 1978), or a corporation organized or 

having an agreement with the Board of Governors of 

the Federal Reserve System pursuant to section 25 or 

section 25A of the Federal Reserve Act; 

(iii) the Federal Deposit Insurance Corporation, in 

the case of a bank insured by the Federal Deposit Insurance Corporation (other than a member of the Federal Reserve System or a Federal savings bank), a 

State savings association (as defined in section 3(b)(3) 

of the Federal Deposit Insurance Act), the deposits of 

which are insured by the Federal Deposit Insurance 

Corporation, or an insured State branch of a foreign 

bank (as such terms are used in the International 

Banking Act of 1978); and 

(iv) the Commission, in the case of all other government securities brokers and government securities 

dealers. 

185 

(H) When used with respect to an institution described 

in subparagraph (D), (F), or (G) of section 2(c)(2), or held 

under section 4(f), of the Bank Holding Company Act of 

1956— 

(i) the Comptroller of the Currency, in the case of a 

national bank; 

(ii) the Board of Governors of the Federal Reserve 

System, in the case of a State member bank of the 

Federal Reserve System or any corporation chartered 

under section 25A of the Federal Reserve Act; 

(iii) the Federal Deposit Insurance Corporation, in 

the case of any other bank the deposits of which are 

insured in accordance with the Federal Deposit Insurance Act; or 

(iv) the Commission in the case of all other such institutions. 

As used in this paragraph, the terms ‘‘bank holding company’’ 

and ‘‘subsidiary of a bank holding company’’ have the meanings given them in section 2 of the Bank Holding Company Act 

of 1956. As used in this paragraph, the term ‘‘savings and loan 

holding company’’ has the same meaning as in section 10(a) of 

the Home Owners’ Loan Act (12 U.S.C. 1467a(a)). 

(35) A person exercises ‘‘investment discretion’’ with respect 

to an account if, directly or indirectly, such person (A) is authorized to determine what securities or other property shall 

be purchased or sold by or for the account, (B) makes decisions 

as to what securities or other property shall be purchased or 

sold by or for the account even though some other person may 

have responsibility for such investment decisions, or (C) otherwise exercises such influence with respect to the purchase and 

sale of securities or other property by or for the account as the 

Commission, by rule, determines, in the public interest or for 

the protection of investors, should be subject to the operation 

of the provisions of this title and rules and regulations thereunder. 

(36) A class of persons or markets is subject to ‘‘equal regulation’’ if no member of the class has a competitive advantage 

over any other member thereof resulting from a disparity in 

their regulation under this title which the Commission determines is unfair and not necessary or appropriate in furtherance of the purposes of this title. 

(37) The term ‘‘records’’ means accounts, correspondence, 

memorandums, tapes, discs, papers, books, and other documents or transcribed information of any type, whether expressed in ordinary or machine language. 

(38) The term ‘‘market maker’’ means any specialist permitted to act as a dealer, any dealer acting in the capacity of 

block positioner, and any dealer who, with respect to a security, holds himself out (by entering quotations in an inter-dealer communications system or otherwise) as being willing to buy 

and sell such security for his own account on a regular or continuous basis. 

(39) A person is subject to a ‘‘statutory disqualification’’ with 

respect to membership or participation in, or association with 

a member of, a self-regulatory organization, if such person— 

186 

(A) has been and is expelled or suspended from membership or participation in, or barred or suspended from being 

associated with a member of, any self-regulatory organization, foreign equivalent of a self-regulatory organization, 

foreign or international securities exchange, contract market designated pursuant to section 5 of the Commodity Exchange Act (7 U.S.C. 7), or any substantially equivalent 

foreign statute or regulation, or futures association registered under section 17 of such Act (7 U.S.C. 21), or any 

substantially equivalent foreign statute or regulation, or 

has been and is denied trading privileges on any such contract market or foreign equivalent; 

(B) is subject to— 

(i) an order of the Commission, other appropriate regulatory agency, or foreign financial regulatory authority— 

(I) denying, suspending for a period not exceeding 12 

months, or revoking his registration as a broker, dealer, municipal securities dealer, government securities 

broker, government securities dealer, security-based 

swap dealer, or major security-based swap participant 

or limiting his activities as a foreign person performing a function substantially equivalent to any of 

the above; or 

(II) barring or suspending for a period not exceeding 

12 months his being associated with a broker, dealer, 

municipal securities dealer, government securities 

broker, government securities dealer, security-based 

swap dealer, major security-based swap participant, or 

foreign person performing a function substantially 

equivalent to any of the above; 

(ii) an order of the Commodity Futures Trading Commission denying, suspending, or revoking his registration 

under the Commodity Exchange Act (7 U.S.C. 1 et seq.); 

or 

(iii) an order by a foreign financial regulatory authority 

denying, suspending, or revoking the person’s authority to 

engage in transactions in contracts of sale of a commodity 

for future delivery or other instruments traded on or subject to the rules of a contract market, board of trade, or 

foreign equivalent thereof; 

(C) by his conduct while associated with a broker, dealer, municipal securities dealer, government securities 

broker, government securities dealer, security-based swap 

dealer, or major security-based swap participant, or while 

associated with an entity or person required to be registered under the Commodity Exchange Act, has been 

found to be a cause of any effective suspension, expulsion, 

or order of the character described in subparagraph (A) or 

(B) of this paragraph, and in entering such a suspension, 

expulsion, or order, the Commission, an appropriate regulatory agency, or any such self-regulatory organization 

shall have jurisdiction to find whether or not any person 

was a cause thereof; 

(D) by his conduct while associated with any broker, 

dealer, municipal securities dealer, government securities 

187 

broker, government securities dealer, security-based swap 

dealer, major security-based swap participant, or any other 

entity engaged in transactions in securities, or while associated with an entity engaged in transactions in contracts 

of sale of a commodity for future delivery or other instruments traded on or subject to the rules of a contract market, board of trade, or foreign equivalent thereof, has been 

found to be a cause of any effective suspension, expulsion, 

or order by a foreign or international securities exchange 

or foreign financial regulatory authority empowered by a 

foreign government to administer or enforce its laws relating to financial transactions as described in subparagraph 

(A) or (B) of this paragraph; 

(E) has associated with him any person who is known, 

or in the exercise of reasonable care should be known, to 

him to be a person described by subparagraph (A), (B), (C), 

or (D) of this paragraph; or 

(F) has committed or omitted any act, or is subject to an 

order or finding, enumerated in subparagraph (D), (E), (H), 

or (G) of paragraph (4) of section 15(b) of this title, has 

been convicted of any offense specified in subparagraph (B) 

of such paragraph (4) or any other felony within ten years 

of the date of the filing of an application for membership 

or participation in, or to become associated with a member 

of, such self-regulatory organization, is enjoined from any 

action, conduct, or practice specified in subparagraph (C) 

of such paragraph (4), has willfully made or caused to be 

made in any application for membership or participation 

in, or to become associated with a member of, a self-regulatory organization, report required to be filed with a selfregulatory organization, or proceeding before a self-regulatory organization, any statement which was at the time, 

and in the light of the circumstances under which it was 

made, false or misleading with respect to any material 

fact, or has omitted to state in any such application, report, or proceeding any material fact which is required to 

be stated therein. 

(40) The term ‘‘financial responsibility rules’’ means the rules 

and regulations of the Commission or the rules and regulations 

prescribed by any self-regulatory organization relating to financial responsibility and related practices which are designated by the Commission, by rule or regulation, to be financial responsibility rules. 

(41) The term ‘‘mortgage related security’’ means a security 

that meets standards of credit-worthiness as established by the 

Commission, and either: 

(A) represents ownership of one or more promissory 

notes or certificates of interest or participation in such 

notes (including any rights designed to assure servicing of, 

or the receipt or timeliness of receipt by the holders of 

such notes, certificates, or participations of amounts payable under, such notes, certificates, or participations), 

which notes: 

(i) are directly secured by a first lien on a single 

parcel of real estate, including stock allocated to a 

188 

dwelling unit in a residential cooperative housing corporation, upon which is located a dwelling or mixed 

residential and commercial structure, on a residential 

manufactured home as defined in section 603(6) of the 

National Manufactured Housing Construction and 

Safety Standards Act of 1974, whether such manufactured home is considered real or personal property 

under the laws of the State in which it is to be located, 

or on one or more parcels of real estate upon which is 

located one or more commercial structures; and 

(ii) were originated by a savings and loan association, savings bank, commercial bank, credit union, insurance company, or similar institution which is supervised and examined by a Federal or State authority, or by a mortgage approved by the Secretary of 

Housing and Urban Development pursuant to sections 

203 and 211 of the National Housing Act, or, where 

such notes involve a lien on the manufactured home, 

by any such institution or by any financial institution 

approved for insurance by the Secretary of Housing 

and Urban Development pursuant to section 2 of the 

National Housing Act; or 

(B) is secured by one or more promissory notes or certificates of interest or participations in such notes (with or 

without recourse to the issuer thereof) and, by its terms, 

provides for payments of principal in relation to payments, 

or reasonable projections of payments, on notes meeting 

the requirements of subparagraphs (A) (i) and (ii) or certificates of interest or participations in promissory notes 

meeting such requirements. 

For the purpose of this paragraph, the term ‘‘promissory note’’, 

when used in connection with a manufactured home, shall also 

include a loan, advance, or credit sale as evidence by a retail 

installment sales contract or other instrument. 

(42) The term ‘‘government securities’’ means— 

(A) securities which are direct obligations of, or obligations guaranteed as to principal or interest by, the United 

States; 

(B) securities which are issued or guaranteed by the 

Tennessee Valley Authority or by corporations in which 

the United States has a direct or indirect interest and 

which are designated by the Secretary of the Treasury for 

exemption as necessary or appropriate in the public interest or for the protection of investors; 

(C) securities issued or guaranteed as to principal or interest by any corporation the securities of which are designated, by statute specifically naming such corporation, to 

constitute exempt securities within the meaning of the 

laws administered by the Commission; 

(D) for purposes of sections 15C and 17A, any put, call, 

straddle, option, or privilege on a security described in 

subparagraph (A), (B), or (C) other than a put, call, straddle, option, or privilege— 

(i) that is traded on one or more national securities 

exchanges; or 

189 

(ii) for which quotations are disseminated through 

an automated quotation system operated by a registered securities association; or 

(E) for purposes of sections 15, 15C, and 17A as applied 

to a bank, a qualified Canadian government obligation as 

defined in section 5136 of the Revised Statutes of the 

United States. 

(43) The term ‘‘government securities broker’’ means any 

person regularly engaged in the business of effecting transactions in government securities for the account of others, but 

does not include— 

(A) any corporation the securities of which are government securities under subparagraph (B) or (C) of paragraph (42) of this subsection; or 

(B) any person registered with the Commodity Futures 

Trading Commission, any contract market designated by 

the Commodity Futures Trading Commission, such contract market’s affiliated clearing organization, or any floor 

trader on such contract market, solely because such person 

effects transactions in government securities that the Commission, after consultation with the Commodity Futures 

Trading Commission, has determined by rule or order to 

be incidental to such person’s futures-related business. 

(44) The term ‘‘government securities dealer’’ means any person engaged in the business of buying and selling government 

securities for his own account, through a broker or otherwise, 

but does not include— 

(A) any person insofar as he buys or sells such securities 

for his own account, either individually or in some fiduciary capacity, but not as a part of a regular business; 

(B) any corporation the securities of which are government securities under subparagraph (B) or (C) of paragraph (42) of this subsection; 

(C) any bank, unless the bank is engaged in the business 

of buying and selling government securities for its own account other than in a fiduciary capacity, through a broker 

or otherwise; or 

(D) any person registered with the Commodity Futures 

Trading Commission, any contract market designated by 

the Commodity Futures Trading Commission, such contract market’s affiliated clearing organization, or any floor 

trader on such contract market, solely because such person 

effects transactions in government securities that the Commission, after consultation with the Commodity Futures 

Trading Commission, has determined by rule or order to 

be incidental to such person’s futures-related business. 

(45) The term ‘‘person associated with a government securities broker or government securities dealer’’ means any partner, officer, director, or branch manager of such government 

securities broker or government securities dealer (or any person occupying a similar status or performing similar functions), 

and any other employee of such government securities broker 

or government securities dealer who is engaged in the management, direction, supervision, or performance of any activities 

relating to government securities, and any person directly or 

190 

indirectly controlling, controlled by, or under common control 

with such government securities broker or government securities dealer. 

(46) The term ‘‘financial institution’’ means— 

(A) a bank (as defined in paragraph (6) of this subsection); 

(B) a foreign bank (as such term is used in the International Banking Act of 1978); and 

(C) a savings association (as defined in section 3(b) of 

the Federal Deposit Insurance Act) the deposits of which 

are insured by the Federal Deposit Insurance Corporation. 

(47) The term ‘‘securities laws’’ means the Securities Act of 

1933 (15 U.S.C. 78a et seq.), the Securities Exchange Act of 

1934 (15 U.S.C. 78a et seq.), the Sarbanes-Oxley Act of 2002, 

the Trust Indenture Act of 1939 (15 U.S.C. 77aaa et seq.), the 

Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.), the 

Investment Advisers Act of 1940 (15 U.S.C. 80b et seq.), and 

the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa 

et seq.). 

(48) The term ‘‘registered broker or dealer’’ means a broker 

or dealer registered or required to register pursuant to section 

15 or 15B of this title, except that in paragraph (3) of this subsection and sections 6 and 15A the term means such a broker 

or dealer and a government securities broker or government 

securities dealer registered or required to register pursuant to 

section 15C(a)(1)(A) of this title. 

(49) The terms ‘‘person associated with a transfer agent’’ and 

‘‘associated person of a transfer agent’’ mean any person (except an employee whose functions are solely clerical or ministerial) directly engaged in the management, direction, supervision, or performance of any of the transfer agent’s activities 

with respect to transfer agent functions, and any person directly or indirectly controlling such activities or controlled by 

the transfer agent in connection with such activities. 

(50) The term ‘‘foreign securities authority’’ means any foreign government, or any governmental body or regulatory organization empowered by a foreign government to administer or 

enforce its laws as they relate to securities matters. 

(51)(A) The term ‘‘penny stock’’ means any equity security 

other than a security that is— 

(i) registered or approved for registration and traded on 

a national securities exchange that meets such criteria as 

the Commission shall prescribe by rule or regulation for 

purposes of this paragraph; 

(ii) authorized for quotation on an automated quotation 

system sponsored by a registered securities association, if 

such system (I) was established and in operation before 

January 1, 1990, and (II) meets such criteria as the Commission shall prescribe by rule or regulation for purposes 

of this paragraph; 

(iii) issued by an investment company registered under 

the Investment Company Act of 1940; 

(iv) excluded, on the basis of exceeding a minimum price, 

net tangible assets of the issuer, or other relevant criteria, 

from the definition of such term by rule or regulation 

191 

which the Commission shall prescribe for purposes of this 

paragraph; or 

(v) exempted, in whole or in part, conditionally or unconditionally, from the definition of such term by rule, regulation, or order prescribed by the Commission. 

(B) The Commission may, by rule, regulation, or order, designate any equity security or class of equity securities described in clause (i) or (ii) of subparagraph (A) as within the 

meaning of the term ‘‘penny stock’’ if such security or class of 

securities is traded other than on a national securities exchange or through an automated quotation system described in 

clause (ii) of subparagraph (A). 

(C) In exercising its authority under this paragraph to prescribe rules, regulations, and orders, the Commission shall determine that such rule, regulation, or order is consistent with 

the public interest and the protection of investors. 

(52) The term ‘‘foreign financial regulatory authority’’ means 

any (A) foreign securities authority, (B) other governmental 

body or foreign equivalent of a self-regulatory organization empowered by a foreign government to administer or enforce its 

laws relating to the regulation of fiduciaries, trusts, commercial lending, insurance, trading in contracts of sale of a commodity for future delivery, or other instruments traded on or 

subject to the rules of a contract market, board of trade, or foreign equivalent, or other financial activities, or (C) membership 

organization a function of which is to regulate participation of 

its members in activities listed above. 

(53)(A) The term ‘‘small business related security’’ means a 

security that meets standards of credit-worthiness as established by the Commission, and either— 

(i) represents an interest in 1 or more promissory notes 

or leases of personal property evidencing the obligation of 

a small business concern and originated by an insured depository institution, insured credit union, insurance company, or similar institution which is supervised and examined by a Federal or State authority, or a finance company 

or leasing company; or 

(ii) is secured by an interest in 1 or more promissory 

notes or leases of personal property (with or without recourse to the issuer or lessee) and provides for payments 

of principal in relation to payments, or reasonable projections of payments, on notes or leases described in clause 

(i). 

(B) For purposes of this paragraph— 

(i) an ‘‘interest in a promissory note or a lease of personal property’’ includes ownership rights, certificates of 

interest or participation in such notes or leases, and rights 

designed to assure servicing of such notes or leases, or the 

receipt or timely receipt of amounts payable under such 

notes or leases; 

(ii) the term ‘‘small business concern’’ means a business 

that meets the criteria for a small business concern established by the Small Business Administration under section 

3(a) of the Small Business Act; 

192 

(iii) the term ‘‘insured depository institution’’ has the 

same meaning as in section 3 of the Federal Deposit Insurance Act; and 

(iv) the term ‘‘insured credit union’’ has the same meaning as in section 101 of the Federal Credit Union Act. 

(54) QUALIFIED INVESTOR.— 

(A) DEFINITION.—Except as provided in subparagraph 

(B), for purposes of this title, the term ‘‘qualified investor’’ 

means— 

(i) any investment company registered with the 

Commission under section 8 of the Investment Company Act of 1940; 

(ii) any issuer eligible for an exclusion from the definition of investment company pursuant to section 

3(c)(7) of the Investment Company Act of 1940; 

(iii) any bank (as defined in paragraph (6) of this 

subsection), savings association (as defined in section 

3(b) of the Federal Deposit Insurance Act), broker, 

dealer, insurance company (as defined in section 

2(a)(13) of the Securities Act of 1933), or business development company (as defined in section 2(a)(48) of 

the Investment Company Act of 1940); 

(iv) any small business investment company licensed 

by the United States Small Business Administration 

under section 301 (c) or (d) of the Small Business Investment Act of 1958; 

(v) any State sponsored employee benefit plan, or 

any other employee benefit plan, within the meaning 

of the Employee Retirement Income Security Act of 

1974, other than an individual retirement account, if 

the investment decisions are made by a plan fiduciary, 

as defined in section 3(21) of that Act, which is either 

a bank, savings and loan association, insurance company, or registered investment adviser; 

(vi) any trust whose purchases of securities are directed by a person described in clauses (i) through (v) 

of this subparagraph; 

(vii) any market intermediary exempt under section 

3(c)(2) of the Investment Company Act of 1940; 

(viii) any associated person of a broker or dealer 

other than a natural person; 

(ix) any foreign bank (as defined in section 1(b)(7) of 

the International Banking Act of 1978); 

(x) the government of any foreign country; 

(xi) any corporation, company, or partnership that 

owns and invests on a discretionary basis, not less 

than $25,000,000 in investments; 

(xii) any natural person who owns and invests on a 

discretionary basis, not less than $25,000,000 in investments; 

(xiii) any government or political subdivision, agency, or instrumentality of a government who owns and 

invests on a discretionary basis not less than 

$50,000,000 in investments; or 

193 

(xiv) any multinational or supranational entity or 

any agency or instrumentality thereof. 

(B) ALTERED THRESHOLDS FOR ASSET-BACKED SECURITIES

AND LOAN PARTICIPATIONS.—For purposes of section 

3(a)(5)(C)(iii) of this title and section 206(a)(5) of the 

Gramm-Leach-Bliley Act, the term ‘‘qualified investor’’ has 

the meaning given such term by subparagraph (A) of this 

paragraph except that clauses (xi) and (xii) shall be applied by substituting ‘‘$10,000,000’’ for ‘‘$25,000,000’’. 

(C) ADDITIONAL AUTHORITY.—The Commission may, by 

rule or order, define a ‘‘qualified investor’’ as any other 

person, taking into consideration such factors as the financial sophistication of the person, net worth, and knowledge 

and experience in financial matters. 

(55)(A) The term ‘‘security future’’ means a contract of sale 

for future delivery of a single security or of a narrow-based security index, including any interest therein or based on the 

value thereof, except an exempted security under section 

3(a)(12) of this title as in effect on the date of the enactment 

of the Futures Trading Act of 1982 (other than any municipal 

security as defined in section 3(a)(29) as in effect on the date 

of the enactment of the Futures Trading Act of 1982). The term 

‘‘security future’’ does not include any agreement, contract, or 

transaction excluded from the Commodity Exchange Act under 

section 2(c), 2(d), 2(f), or 2(g) of the Commodity Exchange Act 

(as in effect on the date of the enactment of the Commodity 

Futures Modernization Act of 2000) or title IV of the Commodity Futures Modernization Act of 2000. 

(B) The term ‘‘narrow-based security index’’ means an 

index— 

(i) that has 9 or fewer component securities; 

(ii) in which a component security comprises more than 

30 percent of the index’s weighting; 

(iii) in which the five highest weighted component securities in the aggregate comprise more than 60 percent of 

the index’s weighting; or 

(iv) in which the lowest weighted component securities 

comprising, in the aggregate, 25 percent of the index’s 

weighting have an aggregate dollar value of average daily 

trading volume of less than $50,000,000 (or in the case of 

an index with 15 or more component securities, 

$30,000,000), except that if there are two or more securities with equal weighting that could be included in the calculation of the lowest weighted component securities comprising, in the aggregate, 25 percent of the index’s 

weighting, such securities shall be ranked from lowest to 

highest dollar value of average daily trading volume and 

shall be included in the calculation based on their ranking 

starting with the lowest ranked security. 

(C) Notwithstanding subparagraph (B), an index is not a 

narrow-based security index if— 

(i)(I) it has at least nine component securities; 

(II) no component security comprises more than 30 percent of the index’s weighting; and 

(III) each component security is— 

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(aa) registered pursuant to section 12 of the Securities Exchange Act of 1934; 

(bb) one of 750 securities with the largest market 

capitalization; and 

(cc) one of 675 securities with the largest dollar 

value of average daily trading volume; 

(ii) a board of trade was designated as a contract market 

by the Commodity Futures Trading Commission with respect to a contract of sale for future delivery on the index, 

before the date of the enactment of the Commodity Futures Modernization Act of 2000; 

(iii)(I) a contract of sale for future delivery on the index 

traded on a designated contract market or registered derivatives transaction execution facility for at least 30 days 

as a contract of sale for future delivery on an index that 

was not a narrow-based security index; and 

(II) it has been a narrow-based security index for no 

more than 45 business days over 3 consecutive calendar 

months; 

(iv) a contract of sale for future delivery on the index is 

traded on or subject to the rules of a foreign board of trade 

and meets such requirements as are jointly established by 

rule or regulation by the Commission and the Commodity 

Futures Trading Commission; 

(v) no more than 18 months have passed since the date 

of the enactment of the Commodity Futures Modernization 

Act of 2000 and— 

(I) it is traded on or subject to the rules of a foreign 

board of trade; 

(II) the offer and sale in the United States of a contract of sale for future delivery on the index was authorized before the date of the enactment of the Commodity Futures Modernization Act of 2000; and 

(III) the conditions of such authorization continue to 

be met; or 

(vi) a contract of sale for future delivery on the index is 

traded on or subject to the rules of a board of trade and 

meets such requirements as are jointly established by rule, 

regulation, or order by the Commission and the Commodity Futures Trading Commission. 

(D) Within 1 year after the enactment of the Commodity Futures Modernization Act of 2000, the Commission and the 

Commodity Futures Trading Commission jointly shall adopt 

rules or regulations that set forth the requirements under 

clause (iv) of subparagraph (C). 

(E) An index that is a narrow-based security index solely because it was a narrow-based security index for more than 45 

business days over 3 consecutive calendar months pursuant to 

clause (iii) of subparagraph (C) shall not be a narrow-based security index for the 3 following calendar months. 

(F) For purposes of subparagraphs (B) and (C) of this paragraph— 

(i) the dollar value of average daily trading volume and 

the market capitalization shall be calculated as of the preceding 6 full calendar months; and 

195 

(ii) the Commission and the Commodity Futures Trading 

Commission shall, by rule or regulation, jointly specify the 

method to be used to determine market capitalization and 

dollar value of average daily trading volume. 

(56) The term ‘‘security futures product’’ means a security future or any put, call, straddle, option, or privilege on any security future. 

(57)(A) The term ‘‘margin’’, when used with respect to a security futures product, means the amount, type, and form of collateral required to secure any extension or maintenance of 

credit, or the amount, type, and form of collateral required as 

a performance bond related to the purchase, sale, or carrying 

of a security futures product. 

(B) The terms ‘‘margin level’’ and ‘‘level of margin’’, when 

used with respect to a security futures product, mean the 

amount of margin required to secure any extension or maintenance of credit, or the amount of margin required as a performance bond related to the purchase, sale, or carrying of a 

security futures product. 

(C) The terms ‘‘higher margin level’’ and ‘‘higher level of 

margin’’, when used with respect to a security futures product, 

mean a margin level established by a national securities exchange registered pursuant to section 6(g) that is higher than 

the minimum amount established and in effect pursuant to 

section 7(c)(2)(B). 

(58) AUDIT COMMITTEE.—The term ‘‘audit committee’’ 

means— 

(A) a committee (or equivalent body) established by and 

amongst the board of directors of an issuer for the purpose 

of overseeing the accounting and financial reporting processes of the issuer and audits of the financial statements 

of the issuer; and 

(B) if no such committee exists with respect to an issuer, 

the entire board of directors of the issuer. 

(59) REGISTERED PUBLIC ACCOUNTING FIRM.—The term ‘‘registered public accounting firm’’ has the same meaning as in 

section 2 of the Sarbanes-Oxley Act of 2002. 

(60) CREDIT RATING.—The term ‘‘credit rating’’ means an assessment of the creditworthiness of an obligor as an entity or 

with respect to specific securities or money market instruments. 

(61) CREDIT RATING AGENCY.—The term ‘‘credit rating agency’’ means any person— 

(A) engaged in the business of issuing credit ratings on 

the Internet or through another readily accessible means, 

for free or for a reasonable fee, but does not include a commercial credit reporting company; 

(B) employing either a quantitative or qualitative model, 

or both, to determine credit ratings; and 

(C) receiving fees from either issuers, investors, or other 

market participants, or a combination thereof. 

(62) NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION.—The term ‘‘nationally recognized statistical rating organization’’ means a credit rating agency that— 

196 

(A) issues credit ratings certified by qualified institutional buyers, in accordance with section 15E(a)(1)(B)(ix), 

with respect to— 

(i) financial institutions, brokers, or dealers; 

(ii) insurance companies; 

(iii) corporate issuers; 

(iv) issuers of asset-backed securities (as that term 

is defined in section 1101(c) of part 229 of title 17, 

Code of Federal Regulations, as in effect on the date 

of enactment of this paragraph); 

(v) issuers of government securities, municipal securities, or securities issued by a foreign government; or 

(vi) a combination of one or more categories of obligors described in any of clauses (i) through (v); and 

(B) is registered under section 15E. 

(63) PERSON ASSOCIATED WITH A NATIONALLY RECOGNIZED

STATISTICAL RATING ORGANIZATION.—The term ‘‘person associated with’’ a nationally recognized statistical rating organization means any partner, officer, director, or branch manager of 

a nationally recognized statistical rating organization (or any 

person occupying a similar status or performing similar functions), any person directly or indirectly controlling, controlled 

by, or under common control with a nationally recognized statistical rating organization, or any employee of a nationally 

recognized statistical rating organization. 

(64) QUALIFIED INSTITUTIONAL BUYER.—The term ‘‘qualified 

institutional buyer’’ has the meaning given such term in section 230.144A(a) of title 17, Code of Federal Regulations, or 

any successor thereto. 

(79) ASSET-BACKED SECURITY.—The term ‘‘asset-backed security’’— 

(A) means a fixed-income or other security collateralized 

by any type of self-liquidating financial asset (including a 

loan, a lease, a mortgage, or a secured or unsecured receivable) that allows the holder of the security to receive payments that depend primarily on cash flow from the asset, 

including— 

(i) a collateralized mortgage obligation; 

(ii) a collateralized debt obligation; 

(iii) a collateralized bond obligation; 

(iv) a collateralized debt obligation of asset-backed 

securities; 

(v) a collateralized debt obligation of collateralized 

debt obligations; and 

(vi) a security that the Commission, by rule, determines to be an asset-backed security for purposes of 

this section; and 

(B) does not include a security issued by a finance subsidiary held by the parent company or a company controlled by the parent company, if none of the securities 

issued by the finance subsidiary are held by an entity that 

is not controlled by the parent company. 

(65) ELIGIBLE CONTRACT PARTICIPANT.—The term ‘‘eligible 

contract participant’’ has the same meaning as in section 1a of 

the Commodity Exchange Act (7 U.S.C. 1a). 

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(66) MAJOR SWAP PARTICIPANT.—The term ‘‘major swap participant’’ has the same meaning as in section 1a of the Commodity Exchange Act (7 U.S.C. 1a). 

(67) MAJOR SECURITY-BASED SWAP PARTICIPANT.— 

(A) IN GENERAL.—The term ‘‘major security-based swap 

participant’’ means any person— 

(i) who is not a security-based swap dealer; and 

(ii)(I) who maintains a substantial position in security-based swaps for any of the major security-based 

swap categories, as such categories are determined by 

the Commission, excluding both positions held for 

hedging or mitigating commercial risk and positions 

maintained by any employee benefit plan (or any contract held by such a plan) as defined in paragraphs (3) 

and (32) of section 3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002) for the primary purpose of hedging or mitigating any risk directly associated with the operation of the plan; 

(II) whose outstanding security-based swaps create 

substantial counterparty exposure that could have serious adverse effects on the financial stability of the 

United States banking system or financial markets; or 

(III) that is a financial entity that— 

(aa) is highly leveraged relative to the amount 

of capital such entity holds and that is not subject 

to capital requirements established by an appropriate Federal banking agency; and 

(bb) maintains a substantial position in outstanding security-based swaps in any major security-based swap category, as such categories are 

determined by the Commission. 

(B) DEFINITION OF SUBSTANTIAL POSITION.—For purposes 

of subparagraph (A), the Commission shall define, by rule 

or regulation, the term ‘‘substantial position’’ at the 

threshold that the Commission determines to be prudent 

for the effective monitoring, management, and oversight of 

entities that are systemically important or can significantly impact the financial system of the United States. In 

setting the definition under this subparagraph, the Commission shall consider the person’s relative position in 

uncleared as opposed to cleared security-based swaps and 

may take into consideration the value and quality of collateral held against counterparty exposures. 

(C) SCOPE OF DESIGNATION.—For purposes of subparagraph (A), a person may be designated as a major securitybased swap participant for 1 or more categories of securitybased swaps without being classified as a major securitybased swap participant for all classes of security-based 

swaps. 

(68) SECURITY-BASED SWAP.— 

(A) IN GENERAL.—Except as provided in subparagraph 

(B), the term ‘‘security-based swap’’ means any agreement, 

contract, or transaction that— 

198 

(i) is a swap, as that term is defined under section 

1a of the Commodity Exchange Act (without regard to 

paragraph (47)(B)(x) of such section); and 

(ii) is based on— 

(I) an index that is a narrow-based security 

index, including any interest therein or on the 

value thereof; 

(II) a single security or loan, including any interest therein or on the value thereof; or 

(III) the occurrence, nonoccurrence, or extent of 

the occurrence of an event relating to a single 

issuer of a security or the issuers of securities in 

a narrow-based security index, provided that such 

event directly affects the financial statements, financial condition, or financial obligations of the 

issuer. 

(B) RULE OF CONSTRUCTION REGARDING MASTER AGREE- MENTS.—The term ‘‘security-based swap’’ shall be construed to include a master agreement that provides for an 

agreement, contract, or transaction that is a security-based 

swap pursuant to subparagraph (A), together with all supplements to any such master agreement, without regard to 

whether the master agreement contains an agreement, 

contract, or transaction that is not a security-based swap 

pursuant to subparagraph (A), except that the master 

agreement shall be considered to be a security-based swap 

only with respect to each agreement, contract, or transaction under the master agreement that is a securitybased swap pursuant to subparagraph (A). 

(C) EXCLUSIONS.—The term ‘‘security-based swap’’ does 

not include any agreement, contract, or transaction that 

meets the definition of a security-based swap only because 

such agreement, contract, or transaction references, is 

based upon, or settles through the transfer, delivery, or receipt of an exempted security under paragraph (12), as in 

effect on the date of enactment of the Futures Trading Act 

of 1982 (other than any municipal security as defined in 

paragraph (29) as in effect on the date of enactment of the 

Futures Trading Act of 1982), unless such agreement, contract, or transaction is of the character of, or is commonly 

known in the trade as, a put, call, or other option. 

(D) MIXED SWAP.—The term ‘‘security-based swap’’ includes any agreement, contract, or transaction that is as 

described in subparagraph (A) and also is based on the 

value of 1 or more interest or other rates, currencies, commodities, instruments of indebtedness, indices, quantitative measures, other financial or economic interest or 

property of any kind (other than a single security or a narrow-based security index), or the occurrence, non-occurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or 

commercial consequence (other than an event described in 

subparagraph (A)(ii)(III)). 

(E) RULE OF CONSTRUCTION REGARDING USE OF THE TERM

INDEX.—The term ‘‘index’’ means an index or group of seVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00202 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
199 

curities, including any interest therein or based on the 

value thereof. 

(69) SWAP.—The term ‘‘swap’’ has the same meaning as in 

section 1a of the Commodity Exchange Act (7 U.S.C. 1a). 

(70) PERSON ASSOCIATED WITH A SECURITY-BASED SWAP DEAL- ER OR MAJOR SECURITY-BASED SWAP PARTICIPANT.— (A) IN GENERAL.—The term ‘‘person associated with a security-based swap dealer or major security-based swap 

participant’’ or ‘‘associated person of a security-based swap 

dealer or major security-based swap participant’’ means— 

(i) any partner, officer, director, or branch manager 

of such security-based swap dealer or major securitybased swap participant (or any person occupying a 

similar status or performing similar functions); 

(ii) any person directly or indirectly controlling, controlled by, or under common control with such security-based swap dealer or major security-based swap 

participant; or 

(iii) any employee of such security-based swap dealer or major security-based swap participant. 

(B) EXCLUSION.—Other than for purposes of section 

15F(l)(2), the term ‘‘person associated with a securitybased swap dealer or major security-based swap participant’’ or ‘‘associated person of a security-based swap dealer 

or major security-based swap participant’’ does not include 

any person associated with a security-based swap dealer or 

major security-based swap participant whose functions are 

solely clerical or ministerial. 

(71) SECURITY-BASED SWAP DEALER.— 

(A) IN GENERAL.—The term ‘‘security-based swap dealer’’ 

means any person who— 

(i) holds themself out as a dealer in security-based 

swaps; 

(ii) makes a market in security-based swaps; 

(iii) regularly enters into security-based swaps with 

counterparties as an ordinary course of business for its 

own account; or 

(iv) engages in any activity causing it to be commonly known in the trade as a dealer or market 

maker in security-based swaps. 

(B) DESIGNATION BY TYPE OR CLASS.—A person may be 

designated as a security-based swap dealer for a single 

type or single class or category of security-based swap or 

activities and considered not to be a security-based swap 

dealer for other types, classes, or categories of securitybased swaps or activities. 

(C) EXCEPTION.—The term ‘‘security-based swap dealer’’ 

does not include a person that enters into security-based 

swaps for such person’s own account, either individually or 

in a fiduciary capacity, but not as a part of regular business. 

(D) DE MINIMIS EXCEPTION.—The Commission shall exempt from designation as a security-based swap dealer an 

entity that engages in a de minimis quantity of securitybased swap dealing in connection with transactions with or 

200 

on behalf of its customers. The Commission shall promulgate regulations to establish factors with respect to the 

making of any determination to exempt. 

(72) APPROPRIATE FEDERAL BANKING AGENCY.—The term ‘‘appropriate Federal banking agency’’ has the same meaning as in 

section 3(q) of the Federal Deposit Insurance Act (12 U.S.C. 

1813(q)). 

(73) BOARD.—The term ‘‘Board’’ means the Board of Governors of the Federal Reserve System. 

(74) PRUDENTIAL REGULATOR.—The term ‘‘prudential regulator’’ has the same meaning as in section 1a of the Commodity 

Exchange Act (7 U.S.C. 1a). 

(75) SECURITY-BASED SWAP DATA REPOSITORY.—The term ‘‘security-based swap data repository’’ means any person that collects and maintains information or records with respect to 

transactions or positions in, or the terms and conditions of, security-based swaps entered into by third parties for the purpose of providing a centralized recordkeeping facility for security-based swaps. 

(76) SWAP DEALER.—The term ‘‘swap dealer’’ has the same 

meaning as in section 1a of the Commodity Exchange Act (7 

U.S.C. 1a). 

(77) SECURITY-BASED SWAP EXECUTION FACILITY.—The term 

‘‘security-based swap execution facility’’ means a trading system or platform in which multiple participants have the ability 

to execute or trade security-based swaps by accepting bids and 

offers made by multiple participants in the facility or system, 

through any means of interstate commerce, including any trading facility, that— 

(A) facilitates the execution of security-based swaps between persons; and 

(B) is not a national securities exchange. 

(78) SECURITY-BASED SWAP AGREEMENT.— 

(A) IN GENERAL.—For purposes of sections 9, 10, 16, 20, 

and 21A of this Act, and section 17 of the Securities Act 

of 1933 (15 U.S.C. 77q), the term ‘‘security-based swap 

agreement’’ means a swap agreement as defined in section 

206A of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) 

of which a material term is based on the price, yield, 

value, or volatility of any security or any group or index 

of securities, or any interest therein. 

(B) EXCLUSIONS.—The term ‘‘security-based swap agreement’’ does not include any security-based swap. 

(80) EMERGING GROWTH COMPANY.—The term ‘‘emerging 

growth company’’ means an issuer that had total annual gross 

revenues of less than $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect 

the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the 

threshold to the nearest 1,000,000) during its most recently 

completed fiscal year. An issuer that is an emerging growth 

company as of the first day of that fiscal year shall continue 

to be deemed an emerging growth company until the earliest 

of— 

201 

(A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 

(as such amount is indexed for inflation every 5 years by 

the Commission to reflect the change in the Consumer 

Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; 

(B) the last day of the fiscal year of the issuer following 

the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective 

registration statement under the Securities Act of 1933; 

(C) the date on which such issuer has, during the pre- vious 3-year period, issued more than $1,000,000,000 in 

non-convertible debt; or 

(D) the date on which such issuer is deemed to be a 

‘‘large accelerated filer’’, as defined in section 240.12b–2 of 

title 17, Code of Federal Regulations, or any successor 

thereto. 

ø(80)¿ (81) FUNDING PORTAL.—The term ‘‘funding portal’’ 

means any person acting as an intermediary in a transaction 

involving the offer or sale of securities for the account of others, solely pursuant to section 4(6) of the Securities Act of 1933 

(15 U.S.C. 77d(6)), that does not— 

(A) offer investment advice or recommendations; 

(B) solicit purchases, sales, or offers to buy the securities 

offered or displayed on its website or portal; 

(C) compensate employees, agents, or other persons for 

such solicitation or based on the sale of securities displayed or referenced on its website or portal; 

(D) hold, manage, possess, or otherwise handle investor 

funds or securities; or 

(E) engage in such other activities as the Commission, 

by rule, determines appropriate. 

(82) CHIEF ECONOMIST.—The term ‘‘Chief Economist’’ means 

the Director of the Division of Economic and Risk Analysis, or 

an employee of the Commission with comparable authority, as 

determined by the Commission. 

(b) The Commission and the Board of Governors of the Federal 

Reserve System, as to matters within their respective jurisdictions, 

shall have power by rules and regulations to define technical, 

trade, accounting, and other terms used in this title, consistently 

with the provisions and purposes of this title. 

(c) No provision of this title shall apply to, or be deemed to include, any executive department or independent establishment of 

the United States, or any lending agency which is wholly owned, 

directly or indirectly, by the United States, or any officer, agent, or 

employee of any such department, establishment, or agency, acting 

in the course of his official duty as such, unless such provision 

makes specific reference to such department, establishment, or 

agency. 

(d) No issuer of municipal securities or officer or employee thereof acting in the course of his official duties as such shall be deemed 

to be a ‘‘broker’’, ‘‘dealer’’, or ‘‘municipal securities dealer’’ solely by 

reason of buying, selling, or effecting transactions in the issuer’s 

securities. 

202 

(e) CHARITABLE ORGANIZATIONS.— 

(1) EXEMPTION.—Notwithstanding any other provision of this 

title, but subject to paragraph (2) of this subsection, a charitable organization, as defined in section 3(c)(10)(D) of the Investment Company Act of 1940, or any trustee, director, officer, 

employee, or volunteer of such a charitable organization acting 

within the scope of such person’s employment or duties with 

such organization, shall not be deemed to be a ‘‘broker’’, ‘‘dealer’’, ‘‘municipal securities broker’’, ‘‘municipal securities dealer’’, ‘‘government securities broker’’, or ‘‘government securities 

dealer’’ for purposes of this title solely because such organization or person buys, holds, sells, or trades in securities for its 

own account in its capacity as trustee or administrator of, or 

otherwise on behalf of or for the account of— 

(A) such a charitable organization; 

(B) a fund that is excluded from the definition of an investment company under section 3(c)(10)(B) of the Investment Company Act of 1940; or 

(C) a trust or other donative instrument described in 

section 3(c)(10)(B) of the Investment Company Act of 1940, 

or the settlors (or potential settlors) or beneficiaries of any 

such trust or other instrument. 

(2) LIMITATION ON COMPENSATION.—The exemption provided 

under paragraph (1) shall not be available to any charitable organization, or any trustee, director, officer, employee, or volunteer of such a charitable organization, unless each person who, 

on or after 90 days after the date of enactment of this subsection, solicits donations on behalf of such charitable organization from any donor to a fund that is excluded from the definition of an investment company under section 3(c)(10)(B) of 

the Investment Company Act of 1940, is either a volunteer or 

is engaged in the overall fund raising activities of a charitable 

organization and receives no commission or other special compensation based on the number or the value of donations collected for the fund. 

(f) CONSIDERATION OF PROMOTION OF EFFICIENCY, COMPETITION, 

AND CAPITAL FORMATION.—Whenever pursuant to this title the 

Commission is engaged in rulemaking, or in the review of a rule 

of a self-regulatory organization, and is required to consider or determine whether an action is necessary or appropriate in the public 

interest, the Commission shall also consider, in addition to the protection of investors, whether the action will promote efficiency, 

competition, and capital formation. 

(g) CHURCH PLANS.—No church plan described in section 414(e) 

of the Internal Revenue Code of 1986, no person or entity eligible 

to establish and maintain such a plan under the Internal Revenue 

Code of 1986, no company or account that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940, and no trustee, director, officer or 

employee of or volunteer for such plan, company, account, person, 

or entity, acting within the scope of that person’s employment or 

activities with respect to such plan, shall be deemed to be a 

‘‘broker’’, ‘‘dealer’’, ‘‘municipal securities broker’’, ‘‘municipal securities dealer’’, ‘‘government securities broker’’, ‘‘government securities 

203 

dealer’’, ‘‘clearing agency’’, or ‘‘transfer agent’’ for purposes of this 

title— 

(1) solely because such plan, company, person, or entity buys, 

holds, sells, trades in, or transfers securities or acts as an 

intermediary in making payments in connection with transactions in securities for its own account in its capacity as trustee or administrator of, or otherwise on behalf of, or for the account of, any church plan, company, or account that is excluded from the definition of an investment company under 

section 3(c)(14) of the Investment Company Act of 1940; and 

(2) if no such person or entity receives a commission or other 

transaction-related sales compensation in connection with any 

activities conducted in reliance on the exemption provided by 

this subsection. 

(h) LIMITED EXEMPTION FOR FUNDING PORTALS.— 

(1) IN GENERAL.—The Commission shall, by rule, exempt, 

conditionally or unconditionally, a registered funding portal 

from the requirement to register as a broker or dealer under 

section 15(a)(1), provided that such funding portal— 

(A) remains subject to the examination, enforcement, 

and other rulemaking authority of the Commission; 

(B) is a member of a national securities association registered under section 15A; and 

(C) is subject to such other requirements under this title 

as the Commission determines appropriate under such 

rule. 

(2) NATIONAL SECURITIES ASSOCIATION MEMBERSHIP.—For 

purposes of sections 15(b)(8) and 15A, the term ‘‘broker or dealer’’ includes a funding portal and the term ‘‘registered broker 

or dealer’’ includes a registered funding portal, except to the 

extent that the Commission, by rule, determines otherwise, 

provided that a national securities association shall only examine for and enforce against a registered funding portal rules of 

such national securities association written specifically for registered funding portals. 

* * * * * * * 

SECURITIES AND EXCHANGE COMMISSION

SEC. 4. (a) There is hereby established a Securities and Exchange 

Commission (hereinafter referred to as the ‘‘Commission’’) to be 

composed of five commissioners to be appointed by the President by 

and with the advice and consent of the Senate. Not more than 

three of such commissioners shall be members of the same political 

party, and in making appointments members of different political 

parties shall be appointed alternately as nearly as may be practicable. No commissioner shall engage in any other business, vocation, or employment than that of serving as commissioner, nor 

shall any commissioner participate, directly or indirectly, in any 

stock-market operations or transactions of a character subject to 

regulation by the Commission pursuant to this title. Each commissioner shall hold office for a term of five years and until his successor is appointed and has qualified, except that he shall not so 

continue to serve beyond the expiration of the next session of Congress subsequent to the expiration of said fixed term of office, and 

204 

except (1) any commissioner appointed to fill a vacancy occurring 

prior to the expiration of the term for which his predecessor was 

appointed shall be appointed for the remainder of such term, and 

(2) the terms of office of the commissioners first taking office after 

the enactment of this title shall expire as designated by the President at the time of nomination, one at the end of one year, one at 

the end of two years, one at the end of three years, one at the end 

of four years, and one at the end of five years, after the date of the 

enactment of this title. 

(b) APPOINTMENT AND COMPENSATION OF STAFF AND LEASING AU- THORITY.— 

(1) APPOINTMENT AND COMPENSATION.—The Commission 

shall appoint and compensate officers, attorneys, economists, 

examiners, and other employees in accordance with section 

4802 of title 5, United States Code. 

(2) REPORTING OF INFORMATION.—In establishing and adjusting schedules of compensation and benefits for officers, attorneys, economists, examiners, and other employees of the Commission under applicable provisions of law, the Commission 

shall inform the heads of the agencies referred to under section 

1206 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b) and Congress of such 

compensation and benefits and shall seek to maintain comparability with such agencies regarding compensation and benefits. 

(3) LEASING AUTHORITY.—Nothwithstanding any other provision of law, the Commission is authorized to enter directly into 

leases for real property for office, meeting, storage, and such 

other space as is necessary to carry out its functions, and shall 

be exempt from any General Services Administration space 

management regulations or directives. 

(c) Notwithstanding any other provision of law, in accordance 

with regulations which the Commission shall prescribe to prevent 

conflicts of interest, the Commission may accept payment and reimbursement, in cash or in kind, from non-Federal agencies, organizations, and individuals for travel, subsistence, and other necessary expenses incurred by Commission members and employees 

in attending meetings and conferences concerning the functions or 

activities of the Commission. Any payment or reimbursement accepted shall be credited to the appropriated funds of the Commission. The amount of travel, subsistence, and other necessary expenses for members and employees paid or reimbursed under this 

subsection may exceed per diem amounts established in official 

travel regulations, but the Commission may include in its regulations under this subsection a limitation on such amounts. 

(d) Notwithstanding any other provision of law, former employers 

of participants in the Commission’s professional fellows programs 

may pay such participants their actual expenses for relocation to 

Washington, District of Columbia, to facilitate their participation in 

such programs, and program participants may accept such payments. 

(e) Notwithstanding any other provision of law, whenever any fee 

is required to be paid to the Commission pursuant to any provision 

of the securities laws or any other law, the Commission may provide by rule that such fee shall be paid in a manner other than in 

205 

cash and the Commission may also specify the time that such fee 

shall be determined and paid relative to the filing of any statement 

or document with the Commission. 

(f) REIMBURSEMENT OF EXPENSES FOR ASSISTING FOREIGN SECU- RITIES AUTHORITIES.—Notwithstanding any other provision of law, 

the Commission may accept payment and reimbursement, in cash 

or in kind, from a foreign securities authority, or made on behalf 

of such authority, for necessary expenses incurred by the Commission, its members, and employees in carrying out any investigation 

pursuant to section 21(a)(2) of this title or in providing any other 

assistance to a foreign securities authority. Any payment or reimbursement accepted shall be considered a reimbursement to the appropriated funds of the Commission. 

(g) OFFICE OF THE INVESTOR ADVOCATE.— 

(1) OFFICE ESTABLISHED.—There is established within the 

Commission the Office of the Investor Advocate (in this subsection referred to as the ‘‘Office’’). 

(2) INVESTOR ADVOCATE.— (A) IN GENERAL.—The head of the Office shall be the Investor Advocate, who shall— 

(i) report directly to the Chairman; and 

(ii) be appointed by the Chairman, in consultation 

with the Commission, from among individuals having 

experience in advocating for the interests of investors 

in securities and investor protection issues, from the 

perspective of investors. 

(B) COMPENSATION.—The annual rate of pay for the Investor Advocate shall be equal to the highest rate of annual pay for other senior executives who report to the 

Chairman of the Commission. 

(C) LIMITATION ON SERVICE.—An individual who serves 

as the Investor Advocate may not be employed by the 

Commission— 

(i) during the 2-year period ending on the date of appointment as Investor Advocate; or 

(ii) during the 5-year period beginning on the date 

on which the person ceases to serve as the Investor 

Advocate. 

(3) STAFF OF OFFICE.—The Investor Advocate, after consultation with the Chairman of the Commission, may retain or employ independent counsel, research staff, and service staff, as 

the Investor Advocate deems necessary to carry out the functions, powers, and duties of the Office. 

(4) FUNCTIONS OF THE INVESTOR ADVOCATE.—The Investor 

Advocate shall— 

(A) assist retail investors in resolving significant problems such investors may have with the Commission or 

with self-regulatory organizations; 

(B) identify areas in which investors would benefit from 

changes in the regulations of the Commission or the rules 

of self-regulatory organizations; 

(C) identify problems that investors have with financial 

service providers and investment products; 

(D) analyze the potential impact on investors of— 

(i) proposed regulations of the Commission; and 

206 

(ii) proposed rules of self-regulatory organizations 

registered under this title; and 

(E) to the extent practicable, propose to the Commission 

changes in the regulations or orders of the Commission 

and to Congress any legislative, administrative, or personnel changes that may be appropriate to mitigate problems identified under this paragraph and to promote the 

interests of investors. 

(5) ACCESS TO DOCUMENTS.—The Commission shall ensure 

that the Investor Advocate has full access to the documents of 

the Commission and any self-regulatory organization, as necessary to carry out the functions of the Office. 

(6) ANNUAL REPORTS.— 

(A) REPORT ON OBJECTIVES.— 

(i) IN GENERAL.—Not later than June 30 of each 

year after 2010, the Investor Advocate shall submit to 

the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial 

Services of the House of Representatives a report on 

the objectives of the Investor Advocate for the following fiscal year. 

(ii) CONTENTS.—Each report required under clause 

(i) shall contain full and substantive analysis and explanation. 

(B) REPORT ON ACTIVITIES.— (i) IN GENERAL.—Not later than December 31 of 

each year after 2010, the Investor Advocate shall submit to the Committee on Banking, Housing, and 

Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on the activities of the Investor Advocate during 

the immediately preceding fiscal year. 

(ii) CONTENTS.—Each report required under clause 

(i) shall include— 

(I) appropriate statistical information and full 

and substantive analysis; 

(II) information on steps that the Investor Advocate has taken during the reporting period to improve investor services and the responsiveness of 

the Commission and self-regulatory organizations 

to investor concerns; 

(III) a summary of the most serious problems 

encountered by investors during the reporting period; 

(IV) an inventory of the items described in subclause (III) that includes— 

(aa) identification of any action taken by 

the Commission or the self-regulatory organization and the result of such action; 

(bb) the length of time that each item has 

remained on such inventory; and 

(cc) for items on which no action has been 

taken, the reasons for inaction, and an identification of any official who is responsible for 

such action; 

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(V) recommendations for such administrative 

and legislative actions as may be appropriate to 

resolve problems encountered by investors; and 

(VI) any other information, as determined appropriate by the Investor Advocate. 

(iii) INDEPENDENCE.—Each report required under 

this paragraph shall be provided directly to the Committees listed in clause (i) without any prior review or 

comment from the Commission, any commissioner, 

any other officer or employee of the Commission, or 

the Office of Management and Budget. 

(iv) CONFIDENTIALITY.—No report required under 

clause (i) may contain confidential information. 

(7) REGULATIONS.—The Commission shall, by regulation, establish procedures requiring a formal response to all recommendations submitted to the Commission by the Investor 

Advocate, not later than 3 months after the date of such submission. 

(8) OMBUDSMAN.— 

(A) APPOINTMENT.—Not later than 180 days after the 

date on which the first Investor Advocate is appointed 

under paragraph (2)(A)(i), the Investor Advocate shall appoint an Ombudsman, who shall report directly to the Investor Advocate. 

(B) DUTIES.—The Ombudsman appointed under subparagraph (A) shall— 

(i) act as a liaison between the Commission and any 

retail investor in resolving problems that retail investors may have with the Commission or with self-regulatory organizations; 

(ii) review and make recommendations regarding 

policies and procedures to encourage persons to 

present questions to the Investor Advocate regarding 

compliance with the securities laws; and 

(iii) establish safeguards to maintain the confidentiality of communications between the persons described in clause (ii) and the Ombudsman. 

(C) LIMITATION.—In carrying out the duties of the Ombudsman under subparagraph (B), the Ombudsman shall 

utilize personnel of the Commission to the extent practicable. Nothing in this paragraph shall be construed as 

replacing, altering, or diminishing the activities of any ombudsman or similar office of any other agency. 

(D) REPORT.—The Ombudsman shall submit a semiannual report to the Investor Advocate that describes the 

activities and evaluates the effectiveness of the Ombudsman during the preceding year. The Investor Advocate 

shall include the reports required under this section in the 

reports required to be submitted by the Inspector Advocate 

under paragraph (6). 

(h) EXAMINERS.— 

(1) DIVISION OF TRADING AND MARKETS.—The Division of 

Trading and Markets of the Commission, or any successor organizational unit, shall have a staff of examiners who shall— 

208 

(A) perform compliance inspections and examinations of 

entities under the jurisdiction of that Division; and 

(B) report to the Director of that Division. 

(2) DIVISION OF INVESTMENT MANAGEMENT.—The Division of 

Investment Management of the Commission, or any successor 

organizational unit, shall have a staff of examiners who shall— 

(A) perform compliance inspections and examinations of 

entities under the jurisdiction of that Division; and 

(B) report to the Director of that Division. 

(i) SECURITIES AND EXCHANGE COMMISSION RESERVE FUND.— (1) RESERVE FUND ESTABLISHED.—There is established in the 

Treasury of the United States a separate fund, to be known as 

the ‘‘Securities and Exchange Commission Reserve Fund’’ (referred to in this subsection as the ‘‘Reserve Fund’’). 

(2) RESERVE FUND AMOUNTS.— 

(A) IN GENERAL.—Except as provided in subparagraph 

(B), any registration fees collected by the Commission 

under section 6(b) of the Securities Act of 1933 (15 U.S.C. 

77f(b)) or section 24(f) of the Investment Company Act of 

1940 (15 U.S.C. 80a-24(f)) shall be deposited into the Reserve Fund. 

(B) LIMITATIONS.—For any 1 fiscal year— 

(i) the amount deposited in the Fund may not ex- ceed $50,000,000; and 

(ii) the balance in the Fund may not exceed $100,000,000. 

(C) EXCESS FEES.—Any amounts in excess of the limitations described in subparagraph (B) that the Commission 

collects from registration fees under section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) or section 24(f) of the 

Investment Company Act of 1940 (15 U.S.C. 80a-24(f)) 

shall be deposited in the General Fund of the Treasury of 

the United States and shall not be available for obligation 

by the Commission. 

(3) USE OF AMOUNTS IN RESERVE FUND.—The Commission 

may obligate amounts in the Reserve Fund, not to exceed a 

total of $100,000,000 in any 1 fiscal year, as the Commission 

determines is necessary to carry out the functions of the Commission. Any amounts in the reserve fund shall remain available until expended. Not later than 10 days after the date on 

which the Commission obligates amounts under this paragraph, the Commission shall notify Congress of the date, 

amount, and purpose of the obligation. 

(4) RULE OF CONSTRUCTION.—Amounts collected and deposited in the Reserve Fund shall not be construed to be Government funds or appropriated monies and shall not be subject to 

apportionment for the purpose of chapter 15 of title 31, United 

States Code, or under any other authority. 

(j) OFFICE OF THE ADVOCATE FOR SMALL BUSINESS CAPITAL FOR- MATION.— 

(1) OFFICE ESTABLISHED.—There is established within the 

Commission the Office of the Advocate for Small Business Capital Formation (hereafter in this subsection referred to as the 

‘‘Office’’). 

(2) ADVOCATE FOR SMALL BUSINESS CAPITAL FORMATION.— 

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(A) IN GENERAL.—The head of the Office shall be the Advocate for Small Business Capital Formation, who shall— 

(i) report directly to the Commission; and 

(ii) be appointed by the Commission, from among individuals having experience in advocating for the interests of small businesses and encouraging small 

business capital formation. 

(B) COMPENSATION.—The annual rate of pay for the Advocate for Small Business Capital Formation shall be 

equal to the highest rate of annual pay for other senior executives who report directly to the Commission. 

(C) NO CURRENT EMPLOYEE OF THE COMMISSION.—An individual may not be appointed as the Advocate for Small 

Business Capital Formation if the individual is currently 

employed by the Commission. 

(3) STAFF OF OFFICE.—The Advocate for Small Business Capital Formation, after consultation with the Commission, may 

retain or employ independent counsel, research staff, and service staff, as the Advocate for Small Business Capital Formation 

determines to be necessary to carry out the functions of the Office. 

(4) FUNCTIONS OF THE ADVOCATE FOR SMALL BUSINESS CAP- ITAL FORMATION.—The Advocate for Small Business Capital 

Formation shall— 

(A) assist small businesses and small business investors 

in resolving significant problems such businesses and investors may have with the Commission or with self-regulatory organizations; 

(B) identify areas in which small businesses and small 

business investors would benefit from changes in the regulations of the Commission or the rules of self-regulatory organizations; 

(C) identify problems that small businesses have with 

securing access to capital, including any unique challenges 

to minority-owned small businesses, women-owned small 

businesses, rural-area small businesses, and small businesses affected by hurricanes or other natural disasters; 

(D) analyze the potential impact on small businesses and 

small business investors of— 

(i) proposed regulations of the Commission that are 

likely to have a significant economic impact on small 

businesses and small business capital formation; and 

(ii) proposed rules that are likely to have a significant economic impact on small businesses and small 

business capital formation of self-regulatory organizations registered under this title; 

(E) conduct outreach to small businesses and small business investors, including through regional roundtables, in 

order to solicit views on relevant capital formation issues; 

(F) to the extent practicable, propose to the Commission 

changes in the regulations or orders of the Commission 

and to Congress any legislative, administrative, or personnel changes that may be appropriate to mitigate problems identified under this paragraph and to promote the 

interests of small businesses and small business investors; 

210 

(G) consult with the Investor Advocate on proposed recommendations made under subparagraph (F); and 

(H) advise the Investor Advocate on issues related to 

small businesses and small business investors. 

(5) ACCESS TO DOCUMENTS.—The Commission shall ensure 

that the Advocate for Small Business Capital Formation has 

full access to the documents and information of the Commission and any self-regulatory organization, as necessary to carry 

out the functions of the Office. 

(6) ANNUAL REPORT ON ACTIVITIES.— (A) IN GENERAL.—Not later than December 31 of each 

year after 2015, the Advocate for Small Business Capital 

Formation shall submit to the Committee on Banking, 

Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on the activities of the Advocate for Small 

Business Capital Formation during the immediately preceding fiscal year. 

(B) CONTENTS.—Each report required under subparagraph (A) shall include— 

(i) appropriate statistical information and full and 

substantive analysis; 

(ii) information on steps that the Advocate for Small 

Business Capital Formation has taken during the reporting period to improve small business services and 

the responsiveness of the Commission and self-regulatory organizations to small business and small business investor concerns; 

(iii) a summary of the most serious issues encountered by small businesses and small business investors, including any unique issues encountered by minority-owned small businesses, women-owned small 

businesses, rural-area small businesses, and small 

businesses affected by hurricanes or other natural disasters and their investors, during the reporting period; 

(iv) an inventory of the items summarized under 

clause (iii) (including items summarized under such 

clause for any prior reporting period on which no action has been taken or that have not been resolved to 

the satisfaction of the Advocate for Small Business 

Capital Formation as of the beginning of the reporting 

period covered by the report) that includes— 

(I) identification of any action taken by the 

Commission or the self-regulatory organization 

and the result of such action; 

(II) the length of time that each item has remained on such inventory; and 

(III) for items on which no action has been 

taken, the reasons for inaction, and an identification of any official who is responsible for such action; 

(v) recommendations for such changes to the regulations, guidance and orders of the Commission and 

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211 

latory organizations encountered by small businesses 

and small business investors and to encourage small 

business capital formation; and 

(vi) any other information, as determined appropriate by the Advocate for Small Business Capital Formation. 

(C) CONFIDENTIALITY.—No report required by subparagraph (A) may contain confidential information. 

(D) INDEPENDENCE.—Each report required under subparagraph (A) shall be provided directly to the committees 

of Congress listed in such subparagraph without any prior 

review or comment from the Commission, any commissioner, any other officer or employee of the Commission, or 

the Office of Management and Budget. 

(7) REGULATIONS.—The Commission shall establish procedures requiring a formal response to all recommendations submitted to the Commission by the Advocate for Small Business 

Capital Formation, not later than 3 months after the date of 

such submission. 

(8) GOVERNMENT-BUSINESS FORUM ON SMALL BUSINESS CAP- ITAL FORMATION.—The Advocate for Small Business Capital 

Formation shall be responsible for planning, organizing, and 

executing the annual Government-Business Forum on Small 

Business Capital Formation described in section 503 of the 

Small Business Investment Incentive Act of 1980 (15 U.S.C. 

80c–1). 

(9) RULE OF CONSTRUCTION.—Nothing in this subsection may 

be construed as replacing or reducing the responsibilities of the 

Investor Advocate with respect to small business investors. 

* * * * * * * 

SEC. 4F. INTERNAL RISK CONTROLS. 

(a) IN GENERAL.—Each of the following entities, in consultation 

with the Chief Economist, shall develop comprehensive internal risk 

control mechanisms to safeguard and govern the storage of all market data by such entity, all market data sharing agreements of such 

entity, and all academic research performed at such entity using 

market data: 

(1) The Commission. 

(2) Each national securities association registered pursuant to 

section 15A. 

(3) The operator of the consolidated audit trail created by a 

national market system plan approved pursuant to section 

242.613 of title 17, Code of Federal Regulations (or any successor regulation). 

(b) CONSOLIDATED AUDIT TRAIL PROHIBITED FROM ACCEPTING

MARKET DATA UNTIL MECHANISMS DEVELOPED.—The operator described in paragraph (3) of subsection (a) may not accept market 

data (or shall cease accepting market data) until the operator has 

developed the mechanisms required by such subsection. Any requirement for a person to provide market data to the operator shall not 

apply during any time when the operator is prohibited by this subsection from accepting such data. 

(c) TREATMENT OF PREVIOUSLY DEVELOPED MECHANISMS.—The 

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212 

quired by subsection (a) may occur, in whole or in part, before the 

date of the enactment of this section, if such development and such 

mechanisms meet the requirements of such subsection (including 

consultation with the Chief Economist). 

* * * * * * * 

REGISTRATION AND REGULATION OF BROKERS AND DEALERS

SEC. 15. (a)(1) It shall be unlawful for any broker or dealer which 

is either a person other than a natural person or a natural person 

not associated with a broker or dealer which is a person other than 

a natural person (other than such a broker or dealer whose business is exclusively intrastate and who does not make use of any facility of a national securities exchange) to make use of the mails 

or any means or instrumentality of interstate commerce to effect 

any transactions in, or to induce or attempt to induce the purchase 

or sale of, any security (other than an exempted security or commercial paper, bankers’ acceptances, or commercial bills) unless 

such broker or dealer is registered in accordance with subsection 

(b) of this section. 

(2) The Commission, by rule or order, as it deems consistent with 

the public interest and the protection of investors, may conditionally or unconditionally exempt from paragraph (1) of this subsection any broker or dealer or class of brokers or dealers specified 

in such rule or order. 

(b)(1) A broker or dealer may be registered by filing with the 

Commission an application for registration in such form and containing such information and documents concerning such broker or 

dealer and any persons associated with such broker or dealer as 

the Commission, by rule, may prescribe as necessary or appropriate 

in the public interest or for the protection of investors. Within 

forty-five days of the date of the filing of such application (or within such longer period as to which the applicant consents), the Commission shall— 

(A) by order grant registration, or 

(B) institute proceedings to determine whether registration 

should be denied. Such proceedings shall include notice of the 

grounds for denial under consideration and opportunity for 

hearing and shall be concluded within one hundred twenty 

days of the date of the filing of the application for registration. 

At the conclusion of such proceedings, the Commission, by 

order, shall grant or deny such registration. The Commission 

may extend the time for conclusion of such proceedings for up 

to ninety days if it finds good cause for such extension and 

publishes its reasons for so finding or for such longer period as 

to which the applicant consents. 

The Commission shall grant such registration if the Commission 

finds that the requirements of this section are satisfied. The order 

granting registration shall not be effective until such broker or 

dealer has become a member of a registered securities association, 

or until such broker or dealer has become a member of a national 

securities exchange, if such broker or dealer effects transactions 

solely on that exchange, unless the Commission has exempted such 

broker or dealer, by rule or order, from such membership. The 

Commission shall deny such registration if it does not make such 

213 

a finding or if it finds that if the applicant were so registered, its 

registration would be subject to suspension or revocation under 

paragraph (4) of this subsection. 

(2)(A) An application for registration of a broker or dealer to be 

formed or organized may be made by a broker or dealer to which 

the broker or dealer to be formed or organized is to be the successor. Such application, in such form as the Commission, by rule, 

may prescribe, shall contain such information and documents concerning the applicant, the successor, and any persons associated 

with the applicant or the successor, as the Commission, by rule, 

may prescribe as necessary or appropriate in the public interest or 

for the protection of investors. The grant or denial of registration 

to such an applicant shall be in accordance with the procedures set 

forth in paragraph (1) of this subsection. If the Commission grants 

such registration, the registration shall terminate on the forty-fifth 

day after the effective date thereof, unless prior thereto the successor shall, in accordance with such rules and regulations as the 

Commission may prescribe, adopt the application for registration 

as its own. 

(B) Any person who is a broker or dealer solely by reason of acting as a municipal securities dealer or municipal securities broker, 

who so acts through a separately identifiable department or division, and who so acted in such a manner on the date of enactment 

of the Securities Acts Amendments of 1975, may, in accordance 

with such terms and conditions as the Commission, by rule, prescribes as necessary and appropriate in the public interest and for 

the protection of investors, register such separately identifiable department or division in accordance with this subsection. If any such 

department or division is so registered, the department or division 

and not such person himself shall be the broker or dealer for purposes of this title. 

(C) Within six months of the date of the granting of registration 

to a broker or dealer, the Commission, or upon the authorization 

and direction of the Commission, a registered securities association 

or national securities exchange of which such broker or dealer is 

a member, shall conduct an inspection of the broker or dealer to 

determine whether it is operating in conformity with the provisions 

of this title and the rules and regulations thereunder: Provided, 

however, That the Commission may delay such inspection of any 

class of brokers or dealers for a period not to exceed six months. 

(3) Any provision of this title (other than section 5 and subsection (a) of this section) which prohibits any act, practice, or 

course of business if the mails or any means or instrumentality of 

interstate commerce is used in connection therewith shall also prohibit any such act, practice, or course of business by any registered 

broker or dealer or any person acting on behalf of such a broker 

or dealer, irrespective of any use of the mails or any means or instrumentality of interstate commerce in connection therewith. 

(4) The Commission, by order, shall censure, place limitations on 

the activities, functions, or operations of, suspend for a period not 

exceeding twelve months, or revoke the registration of any broker 

or dealer if it finds, on the record after notice and opportunity for 

hearing, that such censure, placing of limitations, suspension, or 

revocation is in the public interest and that such broker or dealer, 

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214 

ciated with such broker or dealer, whether prior or subsequent to 

becoming so associated— 

(A) has willfully made or caused to be made in any application for registration or report required to be filed with the 

Commission or with any other appropriate regulatory agency 

under this title, or in any proceeding before the Commission 

with respect to registration, any statement which was at the 

time and in the light of the circumstances under which it was 

made false or misleading with respect to any material fact, or 

has omitted to state in any such application or report any material fact which is required to be stated therein. 

(B) has been convicted within ten years preceding the filing 

of any application for registration or at any time thereafter of 

any felony or misdemeanor or of a substantially equivalent 

crime by a foreign court of competent jurisdiction which the 

Commission finds— 

(i) involves the purchase or sale of any security, the taking of a false oath, the making of a false report, bribery, 

perjury, burglary, any substantially equivalent activity 

however denominated by the laws of the relevant foreign 

government, or conspiracy to commit any such offense; 

(ii) arises out of the conduct of the business of a broker, 

dealer, municipal securities dealer municipal advisor,, government securities broker, government securities dealer, 

investment adviser, bank, insurance company, fiduciary, 

transfer agent, nationally recognized statistical rating organization, foreign person performing a function substantially equivalent to any of the above, or entity or person 

required to be registered under the Commodity Exchange 

Act (7 U.S.C. 1 et seq.) or any substantially equivalent foreign statute or regulation; 

(iii) involves the larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds, 

or securities, or substantially equivalent activity however 

denominated by the laws of the relevant foreign government; or 

(iv) involves the violation of section 152, 1341, 1342, or 

1343 or chapter 25 or 47 of title 18, United States Code, 

or a violation of a substantially equivalent foreign statute. 

(C) is permanently or temporarily enjoined by order, judgment, or decree of any court of competent jurisdiction from acting as an investment adviser, underwriter, broker, dealer, municipal securities dealer municipal advisor,, government securities broker, government securities dealer, security-based swap 

dealer, major security-based swap participant, transfer agent, 

nationally recognized statistical rating organization, foreign 

person performing a function substantially equivalent to any of 

the above, or entity or person required to be registered under 

the Commodity Exchange Act or any substantially equivalent 

foreign statute or regulation, or as an affiliated person or employee of any investment company, bank, insurance company, 

foreign entity substantially equivalent to any of the above, or 

entity or person required to be registered under the Commodity Exchange Act or any substantially equivalent foreign 

215 

statute or regulation, or from engaging in or continuing any 

conduct or practice in connection with any such activity, or in 

connection with the purchase or sale of any security. 

(D) has willfully violated any provision of the Securities Act 

of 1933, the Investment Advisers Act of 1940, the Investment 

Company Act of 1940, the Commodity Exchange Act, this title, 

the rules or regulations under any of such statutes, or the 

rules of the Municipal Securities Rulemaking Board, or is unable to comply with any such provision. 

(E) has willfully aided, abetted, counseled, commanded, induced, or procured the violation by any other person of any 

provision of the Securities Act of 1933, the Investment Advisers Act of 1940, the Investment Company Act of 1940, the 

Commodity Exchange Act, this title, the rules or regulations 

under any of such statutes, or the rules of the Municipal Securities Rulemaking Board, or has failed reasonably to supervise, 

with a view to preventing violations of the provisions of such 

statutes, rules, and regulations, another person who commits 

such a violation, if such other person is subject to his supervision. For the purposes of this subparagraph (E) no person 

shall be deemed to have failed reasonably to supervise any 

other person, if— 

(i) there have been established procedures, and a system 

for applying such procedures, which would reasonably be 

expected to prevent and detect, insofar as practicable, any 

such violation by such other person, and 

(ii) such person has reasonably discharged the duties 

and obligations incumbent upon him by reason of such procedures and system without reasonable cause to believe 

that such procedures and system were not being complied 

with. 

(F) is subject to any order of the Commission barring or suspending the right of the person to be associated with a broker, 

dealer, security-based swap dealer, or a major security-based 

swap participant; 

(G) has been found by a foreign financial regulatory authority to have— 

(i) made or caused to be made in any application for registration or report required to be filed with a foreign financial regulatory authority, or in any proceeding before a foreign financial regulatory authority with respect to registration, any statement that was at the time and in the light 

of the circumstances under which it was made false or 

misleading with respect to any material fact, or has omitted to state in any application or report to the foreign financial regulatory authority any material fact that is required to be stated therein; 

(ii) violated any foreign statute or regulation regarding 

transactions in securities, or contracts of sale of a commodity for future delivery, traded on or subject to the rules 

of a contract market or any board of trade; 

(iii) aided, abetted, counseled, commanded, induced, or 

procured the violation by any person of any provision of 

any statutory provisions enacted by a foreign government, 

or rules or regulations thereunder, empowering a foreign 

216 

financial regulatory authority regarding transactions in securities, or contracts of sale of a commodity for future delivery, traded on or subject to the rules of a contract market or any board of trade, or has been found, by a foreign 

financial regulatory authority, to have failed reasonably to 

supervise, with a view to preventing violations of such 

statutory provisions, rules, and regulations, another person who commits such a violation, if such other person is 

subject to his supervision; or 

(H) is subject to any final order of a State securities commission (or any agency or officer performing like functions), State 

authority that supervises or examines banks, savings associations, or credit unions, State insurance commission (or any 

agency or office performing like functions), an appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))), or the National Credit 

Union Administration, that— 

(i) bars such person from association with an entity regulated by such commission, authority, agency, or officer, or 

from engaging in the business of securities, insurance, 

banking, savings association activities, or credit union activities; or 

(ii) constitutes a final order based on violations of any 

laws or regulations that prohibit fraudulent, manipulative, 

or deceptive conduct. 

(5) Pending final determination whether any registration under 

this subsection shall be revoked, the Commission, by order, may 

suspend such registration, if such suspension appears to the Commission, after notice and opportunity for hearing, to be necessary 

or appropriate in the public interest or for the protection of investors. Any registered broker or dealer may, upon such terms and 

conditions as the Commission deems necessary or appropriate in 

the public interest or for the protection of investors, withdraw from 

registration by filing a written notice of withdrawal with the Commission. If the Commission finds that any registered broker or 

dealer is no longer in existence or has ceased to do business as a 

broker or dealer, the Commission, by order, shall cancel the registration of such broker or dealer. 

(6)(A) With respect to any person who is associated, who is seeking to become associated, or, at the time of the alleged misconduct, 

who was associated or was seeking to become associated with a 

broker or dealer, or any person participating, or, at the time of the 

alleged misconduct, who was participating, in an offering of any 

penny stock, the Commission, by order, shall censure, place limitations on the activities or functions of such person, or suspend for 

a period not exceeding 12 months, or bar any such person from 

being associated with a broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, or from participating 

in an offering of penny stock, if the Commission finds, on the 

record after notice and opportunity for a hearing, that such censure, placing of limitations, suspension, or bar is in the public interest and that such person— 

217 

(i) has committed or omitted any act, or is subject to an 

order or finding, enumerated in subparagraph (A), (D), (E), (H), 

or (G) of paragraph (4) of this subsection; 

(ii) has been convicted of any offense specified in subparagraph (B) of such paragraph (4) within 10 years of the commencement of the proceedings under this paragraph; or 

(iii) is enjoined from any action, conduct, or practice specified 

in subparagraph (C) of such paragraph (4). 

(B) It shall be unlawful— 

(i) for any person as to whom an order under subparagraph 

(A) is in effect, without the consent of the Commission, willfully to become, or to be, associated with a broker or dealer in 

contravention of such order, or to participate in an offering of 

penny stock in contravention of such order; 

(ii) for any broker or dealer to permit such a person, without 

the consent of the Commission, to become or remain, a person 

associated with the broker or dealer in contravention of such 

order, if such broker or dealer knew, or in the exercise of reasonable care should have known, of such order; or 

(iii) for any broker or dealer to permit such a person, without 

the consent of the Commission, to participate in an offering of 

penny stock in contravention of such order, if such broker or 

dealer knew, or in the exercise of reasonable care should have 

known, of such order and of such participation. 

(C) For purposes of this paragraph, the term ‘‘person participating in an offering of penny stock’’ includes any person acting as 

any promoter, finder, consultant, agent, or other person who engages in activities with a broker, dealer, or issuer for purposes of 

the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock. The Commission may, by rule or regulation, define such term to include other 

activities, and may, by rule, regulation, or order, exempt any person or class of persons, in whole or in part, conditionally or unconditionally, from such term. 

(7) No registered broker or dealer or government securities 

broker or government securities dealer registered (or required to 

register) under section 15C(a)(1)(A) shall effect any transaction in, 

or induce the purchase or sale of, any security unless such broker 

or dealer meets such standards of operational capability and such 

broker or dealer and all natural persons associated with such 

broker or dealer meet such standards of training, experience, competence, and such other qualifications as the Commission finds necessary or appropriate in the public interest or for the protection of 

investors. The Commission shall establish such standards by rules 

and regulations, which may— 

(A) specify that all or any portion of such standards shall be 

applicable to any class of brokers and dealers and persons associated with brokers and dealers; 

(B) require persons in any such class to pass tests prescribed 

in accordance with such rules and regulations, which tests 

shall, with respect to any class of partners, officers, or supervisory employees (which latter term may be defined by the 

Commission’s rules and regulations and as so defined shall include branch managers of brokers or dealers) engaged in the 

management of the broker or dealer, include questions relating 

218 

to bookkeeping, accounting, internal control over cash and securities, supervision of employees, maintenance of records, and 

other appropriate matters; and 

(C) provide that persons in any such class other than brokers 

and dealers and partners, officers, and supervisory employees 

of brokers or dealers, may be qualified solely on the basis of 

compliance with such standards of training and such other 

qualifications as the Commission finds appropriate. 

The Commission, by rule, may prescribe reasonable fees and 

charges to defray its costs in carrying out this paragraph, including, but not limited to, fees for any test administered by it or under 

its direction. The Commission may cooperate with registered securities associations and national securities exchanges in devising 

and administering tests and may require registered brokers and 

dealers and persons associated with such brokers and dealers to 

pass tests administered by or on behalf of any such association or 

exchange and to pay such association or exchange reasonable fees 

or charges to defray the costs incurred by such association or exchange in administering such tests. 

(8) It shall be unlawful for any registered broker or dealer to effect any transaction in, or induce or attempt to induce the purchase 

or sale of, any security (other than or commercial paper, bankers’ 

acceptances, or commercial bills), unless such broker or dealer is a 

member of a securities association registered pursuant to section 

15A of this title or effects transactions in securities solely on a national securities exchange of which it is a member. 

(9) The Commission by rule or order, as it deems consistent with 

the public interest and the protection of investors, may conditionally or unconditionally exempt from paragraph (8) of this subsection any broker or dealer or class of brokers or dealers specified 

in such rule or order. 

(10) For the purposes of determining whether a person is subject 

to a statutory disqualification under section 6(c)(2), 15A(g)(2), or 

17A(b)(4)(A) of this title, the term ‘‘Commission’’ in paragraph 

(4)(B) of this subsection shall mean ‘‘exchange’’, ‘‘association’’, or 

‘‘clearing agency’’, respectively. 

(11) BROKER/DEALER REGISTRATION WITH RESPECT TO TRANS- ACTIONS IN SECURITY FUTURES PRODUCTS.— (A) NOTICE REGISTRATION.— (i) CONTENTS OF NOTICE.—Notwithstanding paragraphs (1) and (2), a broker or dealer required to register only because it effects transactions in security futures products on an exchange registered pursuant to 

section 6(g) may register for purposes of this section 

by filing with the Commission a written notice in such 

form and containing such information concerning such 

broker or dealer and any persons associated with such 

broker or dealer as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors. A broker or dealer may not register under this paragraph unless that 

broker or dealer is a member of a national securities 

association registered under section 15A(k). 

(ii) IMMEDIATE EFFECTIVENESS.—Such registration 

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219 

sion of notice, in written or electronic form, to the 

Commission, except that such registration shall not be 

effective if the registration would be subject to suspension or revocation under paragraph (4). 

(iii) SUSPENSION.—Such registration shall be suspended immediately if a national securities association 

registered pursuant to section 15A(k) of this title suspends the membership of that broker or dealer. 

(iv) TERMINATION.—Such registration shall be terminated immediately if any of the above stated conditions for registration set forth in this paragraph are no 

longer satisfied. 

(B) EXEMPTIONS FOR REGISTERED BROKERS AND DEALERS.—A broker or dealer registered pursuant to the requirements of subparagraph (A) shall be exempt from the 

following provisions of this title and the rules thereunder 

with respect to transactions in security futures products: 

(i) Section 8. 

(ii) Section 11. 

(iii) Subsections (c)(3) and (c)(5) of this section. 

(iv) Section 15B. 

(v) Section 15C. 

(vi) Subsections (d), (e), (f), (g), (h), and (i) of section 

17. 

(12) EXEMPTION FOR SECURITY FUTURES PRODUCT EXCHANGE

MEMBERS.— 

(A) REGISTRATION EXEMPTION.—A natural person shall 

be exempt from the registration requirements of this section if such person— 

(i) is a member of a designated contract market registered with the Commission as an exchange pursuant 

to section 6(g); 

(ii) effects transactions only in securities on the exchange of which such person is a member; and 

(iii) does not directly accept or solicit orders from 

public customers or provide advice to public customers 

in connection with the trading of security futures 

products. 

(B) OTHER EXEMPTIONS.—A natural person exempt from 

registration pursuant to subparagraph (A) shall also be exempt from the following provisions of this title and the 

rules thereunder: 

(i) Section 8. 

(ii) Section 11. 

(iii) Subsections (c)(3), (c)(5), and (e) of this section. 

(iv) Section 15B. 

(v) Section 15C. 

(vi) Subsections (d), (e), (f), (g), (h), and (i) of section 

17. 

(13) REGISTRATION EXEMPTION FOR MERGER AND ACQUISITION

BROKERS.— 

(A) IN GENERAL.—Except as provided in subparagraph 

(B), an M&A broker shall be exempt from registration 

under this section. 

220 

(B) EXCLUDED ACTIVITIES.—An M&A broker is not exempt from registration under this paragraph if such broker 

does any of the following: 

(i) Directly or indirectly, in connection with the 

transfer of ownership of an eligible privately held company, receives, holds, transmits, or has custody of the 

funds or securities to be exchanged by the parties to the 

transaction. 

(ii) Engages on behalf of an issuer in a public offering of any class of securities that is registered, or is required to be registered, with the Commission under section 12 or with respect to which the issuer files, or is 

required to file, periodic information, documents, and 

reports under subsection (d). 

(iii) Engages on behalf of any party in a transaction 

involving a shell company, other than a business combination related shell company. 

(iv) Directly, or indirectly through any of its affiliates, provides financing related to the transfer of ownership of an eligible privately held company. 

(v) Assists any party to obtain financing from an unaffiliated third party without— 

(I) complying with all other applicable laws in 

connection with such assistance, including, if applicable, Regulation T (12 C.F.R. 220 et seq.); and 

(II) disclosing any compensation in writing to 

the party. 

(vi) Represents both the buyer and the seller in the 

same transaction without providing clear written disclosure as to the parties the broker represents and obtaining written consent from both parties to the joint 

representation. 

(vii) Facilitates a transaction with a group of buyers 

formed with the assistance of the M&A broker to acquire the eligible privately held company. 

(viii) Engages in a transaction involving the transfer 

of ownership of an eligible privately held company to 

a passive buyer or group of passive buyers. For purposes of the preceding sentence, a buyer that is actively 

involved in managing the acquired company is not a 

passive buyer, regardless of whether such buyer is itself 

owned by passive beneficial owners. 

(ix) Binds a party to a transfer of ownership of an 

eligible privately held company. 

(C) DISQUALIFICATIONS.—An M&A broker is not exempt 

from registration under this paragraph if such broker is 

subject to— 

(i) suspension or revocation of registration under 

paragraph (4); 

(ii) a statutory disqualification described in section 

3(a)(39); 

(iii) a disqualification under the rules adopted by the 

Commission under section 926 of the Investor Protection and Securities Reform Act of 2010 (15 U.S.C. 77d 

note); or 

221 

(iv) a final order described in paragraph (4)(H). 

(D) RULE OF CONSTRUCTION.—Nothing in this paragraph 

shall be construed to limit any other authority of the Commission to exempt any person, or any class of persons, from 

any provision of this title, or from any provision of any rule 

or regulation thereunder. 

(E) DEFINITIONS.—In this paragraph: 

(i) BUSINESS COMBINATION RELATED SHELL COMPANY.—The term ‘‘business combination related shell 

company’’ means a shell company that is formed by an 

entity that is not a shell company— 

(I) solely for the purpose of changing the corporate domicile of that entity solely within the 

United States; or 

(II) solely for the purpose of completing a business combination transaction (as defined under 

section 230.165(f) of title 17, Code of Federal Regulations) among one or more entities other than the 

company itself, none of which is a shell company. 

(ii) CONTROL.—The term ‘‘control’’ means the power, 

directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise. There is a presumption 

of control for any person who— 

(I) is a director, general partner, member or 

manager of a limited liability company, or corporate officer of a corporation or limited liability 

company, and exercises executive responsibility (or 

has similar status or functions); 

(II) has the right to vote 25 percent or more of 

a class of voting securities or the power to sell or 

direct the sale of 25 percent or more of a class of 

voting securities; or 

(III) in the case of a partnership or limited liability company, has the right to receive upon dissolution, or has contributed, 25 percent or more of 

the capital. 

(iii) ELIGIBLE PRIVATELY HELD COMPANY.—The term 

‘‘eligible privately held company’’ means a privately 

held company that meets both of the following conditions: 

(I) The company does not have any class of securities registered, or required to be registered, with 

the Commission under section 12 or with respect to 

which the company files, or is required to file, periodic information, documents, and reports under 

subsection (d). 

(II) In the fiscal year ending immediately before 

the fiscal year in which the services of the M&A 

broker are initially engaged with respect to the securities transaction, the company meets either or 

both of the following conditions (determined in accordance with the historical financial accounting 

records of the company): 

222 

(aa) The earnings of the company before interest, taxes, depreciation, and amortization 

are less than $25,000,000. 

(bb) The gross revenues of the company are 

less than $250,000,000. 

For purposes of this subclause, the Commission 

may by rule modify the dollar figures if the Commission determines that such a modification is 

necessary or appropriate in the public interest or 

for the protection of investors. 

(iv) M&A BROKER.—The term ‘‘M&A broker’’ means 

a broker, and any person associated with a broker, engaged in the business of effecting securities transactions solely in connection with the transfer of ownership of an eligible privately held company, regardless 

of whether the broker acts on behalf of a seller or 

buyer, through the purchase, sale, exchange, issuance, 

repurchase, or redemption of, or a business combination involving, securities or assets of the eligible privately held company, if the broker reasonably believes 

that— 

(I) upon consummation of the transaction, any 

person acquiring securities or assets of the eligible 

privately held company, acting alone or in concert, 

will control and, directly or indirectly, will be active in the management of the eligible privately 

held company or the business conducted with the 

assets of the eligible privately held company; and 

(II) if any person is offered securities in exchange 

for securities or assets of the eligible privately held 

company, such person will, prior to becoming legally bound to consummate the transaction, receive 

or have reasonable access to the most recent fiscal 

year-end financial statements of the issuer of the 

securities as customarily prepared by the management of the issuer in the normal course of operations and, if the financial statements of the issuer 

are audited, reviewed, or compiled, any related 

statement by the independent accountant, a balance sheet dated not more than 120 days before the 

date of the offer, and information pertaining to the 

management, business, results of operations for the 

period covered by the foregoing financial statements, and material loss contingencies of the 

issuer. 

(v) SHELL COMPANY.—The term ‘‘shell company’’ 

means a company that at the time of a transaction 

with an eligible privately held company— 

(I) has no or nominal operations; and 

(II) has— 

(aa) no or nominal assets; 

(bb) assets consisting solely of cash and cash 

equivalents; or 

223 

(cc) assets consisting of any amount of cash 

and cash equivalents and nominal other assets. 

(F) INFLATION ADJUSTMENT.— (i) IN GENERAL.—On the date that is 5 years after the 

date of the enactment of the Small Business Mergers, 

Acquisitions, Sales, and Brokerage Simplification Act 

of 2018, and every 5 years thereafter, each dollar 

amount in subparagraph (E)(ii)(II) shall be adjusted 

by— 

(I) dividing the annual value of the Employment 

Cost Index For Wages and Salaries, Private Industry Workers (or any successor index), as published 

by the Bureau of Labor Statistics, for the calendar 

year preceding the calendar year in which the adjustment is being made by the annual value of 

such index (or successor) for the calendar year ending December 31, 2012; and 

(II) multiplying such dollar amount by the 

quotient obtained under subclause (I). 

(ii) ROUNDING.—Each dollar amount determined 

under clause (i) shall be rounded to the nearest multiple of $100,000. 

(c)(1)(A) No broker or dealer shall make use of the mails or any 

means or instrumentality of interstate commerce to effect any 

transaction in, or to induce or attempt to induce the purchase or 

sale of, any security (other than commercial paper, bankers’ acceptances, or commercial bills), or any security-based swap agreement 

by means of any manipulative, deceptive, or other fraudulent device or contrivance. 

(B) No broker, dealer, or municipal securities dealer shall make 

use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce or attempt to induce 

the purchase or sale of, any municipal security or any securitybased swap agreement involving a municipal security by means of 

any manipulative, deceptive, or other fraudulent device or contrivance. 

(C) No government securities broker or government securities 

dealer shall make use of the mails or any means or instrumentality 

of interstate commerce to effect any transaction in, or to induce or 

to attempt to induce the purchase or sale of, any government security or any security-based swap agreement involving a government 

security by means of any manipulative, deceptive, or other fraudulent device or contrivance. 

(2)(A) No broker or dealer shall make use of the mails or any 

means or instrumentality of interstate commerce to effect any 

transaction in, or to induce or attempt to induce the purchase or 

sale of, any security (other than an exempted security or commercial paper, bankers’ acceptances, or commercial bills) otherwise 

than on a national securities exchange of which it is a member, in 

connection with which such broker or dealer engages in any fraudulent, deceptive, or manipulative act or practice, or makes any fictitious quotation. 

(B) No broker, dealer, or municipal securities dealer shall make 

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merce to effect any transaction in, or to induce or attempt to induce 

the purchase or sale of, any municipal security in connection with 

which such broker, dealer, or municipal securities dealer engages 

in any fraudulent, deceptive, or manipulative act or practice, or 

makes any fictitious quotation. 

(C) No government securities broker or government securities 

dealer shall make use of the mails or any means or instrumentality 

of interstate commerce to effect any transaction in, or induce or attempt to induce the purchase or sale of, any government security 

in connection with which such government securities broker or government securities dealer engages in any fraudulent, deceptive, or 

manipulative act or practice, or makes any fictitious quotation. 

(D) The Commission shall, for the purposes of this paragraph, by 

rules and regulations define, and prescribe means reasonably designed to prevent, such acts and practices as are fraudulent, deceptive, or manipulative and such quotations as are fictitious. 

(E) The Commission shall, prior to adopting any rule or regulation under subparagraph (C), consult with and consider the views 

of the Secretary of the Treasury and each appropriate regulatory 

agency. If the Secretary of the Treasury or any appropriate regulatory agency comments in writing on a proposed rule or regulation 

of the Commission under such subparagraph (C) that has been 

published for comment, the Commission shall respond in writing to 

such written comment before adopting the proposed rule. If the 

Secretary of the Treasury determines, and notifies the Commission, 

that such rule or regulation, if implemented, would, or as applied 

does (i) adversely affect the liquidity or efficiency of the market for 

government securities; or (ii) impose any burden on competition not 

necessary or appropriate in furtherance of the purposes of this section, the Commission shall, prior to adopting the proposed rule or 

regulation, find that such rule or regulation is necessary and appropriate in furtherance of the purposes of this section notwithstanding the Secretary’s determination. 

(3)(A) No broker or dealer (other than a government securities 

broker or government securities dealer, except a registered broker 

or dealer) shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce or attempt to induce the purchase or sale of, any security 

(other than an exempted security (except a government security) or 

commercial paper, bankers’ acceptances, or commercial bills) in 

contravention of such rules and regulations as the Commission 

shall prescribe as necessary or appropriate in the public interest or 

for the protection of investors to provide safeguards with respect to 

the financial responsibility and related practices of brokers and 

dealers including, but not limited to, the acceptance of custody and 

use of customers’ securities and the carrying and use of customers’ 

deposits or credit balances. Such rules and regulations shall (A) require the maintenance of reserves with respect to customers’ deposits or credit balances, and (B) no later than September 1, 1975, establish minimum financial responsibility requirements for all brokers and dealers. 

(B) Consistent with this title, the Commission, in consultation 

with the Commodity Futures Trading Commission, shall issue such 

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225 

istered with the Commission pursuant to section 15(b) (except 

paragraph (11) thereof), that is also registered with the Commodity 

Futures Trading Commission pursuant to section 4f(a) of the Commodity Exchange Act (except paragraph (2) thereof), with respect 

to the application of: (i) the provisions of section 8, section 15(c)(3), 

and section 17 of this title and the rules and regulations thereunder related to the treatment of customer funds, securities, or 

property, maintenance of books and records, financial reporting, or 

other financial responsibility rules, involving security futures products; and (ii) similar provisions of the Commodity Exchange Act 

and rules and regulations thereunder involving security futures 

products. 

(C) Notwithstanding any provision of sections 2(a)(1)(C)(i) or 

4d(a)(2) of the Commodity Exchange Act and the rules and regulations thereunder, and pursuant to an exemption granted by 

the Commission under section 36 of this title or pursuant to a 

rule or regulation, cash and securities may be held by a broker 

or dealer registered pursuant to subsection (b)(1) and also registered as a futures commission merchant pursuant to section 

4f(a)(1) of the Commodity Exchange Act, in a portfolio margining account carried as a futures account subject to section 

4d of the Commodity Exchange Act and the rules and regulations thereunder, pursuant to a portfolio margining program 

approved by the Commodity Futures Trading Commission, and 

subject to subchapter IV of chapter 7 of title 11 of the United 

States Code and the rules and regulations thereunder. The 

Commission shall consult with the Commodity Futures Trading Commission to adopt rules to ensure that such transactions 

and accounts are subject to comparable requirements to the extent practicable for similar products. 

(4) If the Commission finds, after notice and opportunity for a 

hearing, that any person subject to the provisions of section 12, 13, 

14, or subsection (d) of section 15 of this title or any rule or regulation thereunder has failed to comply with any such provision, rule, 

or regulation in any material respect, the Commission may publish 

its findings and issue an order requiring such person, and any person who was a cause of the failure to comply due to an act or omission the person knew or should have known would contribute to 

the failure to comply, to comply, or to take steps to effect compliance, with such provision or such rule or regulation thereunder 

upon such terms and conditions and within such time as the Commission may specify in such order. 

(5) No dealer (other than a specialist registered on a national securities exchange) acting in the capacity of market maker or otherwise shall make use of the mails or any means or instrumentality 

of interstate commerce to effect any transaction in, or to induce or 

attempt to induce the purchase or sale of, any security (other than 

an exempted security or a municipal security) in contravention of 

such specified and appropriate standards with respect to dealing as 

the Commission, by rule, shall prescribe as necessary or appropriate in the public interest and for the protection of investors, to 

maintain fair and orderly markets, or to remove impediments to 

and perfect the mechanism of a national market system. Under the 

rules of the Commission a dealer in a security may be prohibited 

from acting as broker in that security. 

226 

(6) No broker or dealer shall make use of the mails or any means 

or instrumentality of interstate commerce to effect any transaction 

in, or to induce or attempt to induce the purchase or sale of, any 

security (other than an exempted security, municipal security, commercial paper, bankers’ acceptances, or commercial bills) in contravention of such rules and regulations as the Commission shall 

prescribe as necessary or appropriate in the public interest and for 

the protection of investors or to perfect or remove impediments to 

a national system for the prompt and accurate clearance and settlement of securities transactions, with respect to the time and method of, and the form and format of documents used in connection 

with, making settlements of and payments for transactions in securities, making transfers and deliveries of securities, and closing accounts. Nothing in this paragraph shall be construed (A) to affect 

the authority of the Board of Governors of the Federal Reserve System, pursuant to section 7 of this title, to prescribe rules and regulations for the purpose of preventing the excessive use of credit for 

the purchase or carrying of securities, or (B) to authorize the Commission to prescribe rules or regulations for such purpose. 

(7) In connection with any bid for or purchase of a government 

security related to an offering of government securities by or on behalf of an issuer, no government securities broker, government securities dealer, or bidder for or purchaser of securities in such offering shall knowingly or willfully make any false or misleading 

written statement or omit any fact necessary to make any written 

statement made not misleading. 

(8) PROHIBITION OF REFERRAL FEES.—No broker or dealer, or person associated with a broker or dealer, may solicit or accept, directly or indirectly, remuneration for assisting an attorney in obtaining the representation of any person in any private action arising under this title or under the Securities Act of 1933. 

(d) SUPPLEMENTARY AND PERIODIC INFORMATION.— 

(1) IN GENERAL.—Each issuer which has filed a registration 

statement containing an undertaking which is or becomes operative under this subsection as in effect prior to the date of 

enactment of the Securities Acts Amendments of 1964, and 

each issuer which shall after such date file a registration statement which has become effective pursuant to the Securities Act 

of 1933, as amended, shall file with the Commission, in accordance with such rules and regulations as the Commission may 

prescribe as necessary or appropriate in the public interest or 

for the protection of investors, such supplementary and periodic information, documents, and reports as may be required 

pursuant to section 13 of this title in respect of a security registered pursuant to section 12 of this title. The duty to file 

under this subsection shall be automatically suspended if and 

so long as any issue of securities of such issuer is registered 

pursuant to section 12 of this title. The duty to file under this 

subsection shall also be automatically suspended as to any fiscal year, other than the fiscal year within which such registration statement became effective, if, at the beginning of such fiscal year, the securities of each class, other than any class of 

asset-backed securities, to which the registration statement relates are held of record by less than 300 persons, or, in the 

case of a bank, a savings and loan holding company (as defined 

227 

in section 10 of the Home Owners’ Loan Act), or a bank holding company, as such term is defined in section 2 of the Bank 

Holding Company Act of 1956 (12 U.S.C. 1841), 1,200 persons 

persons. For the purposes of this subsection, the term ‘‘class’’ 

shall be construed to include all securities of an issuer which 

are of substantially similar character and the holders of which 

enjoy substantially similar rights and privileges. The Commission may, for the purpose of this subsection, define by rules 

and regulations the term ‘‘held of record’’ as it deems necessary 

or appropriate in the public interest or for the protection of investors in order to prevent circumvention of the provisions of 

this subsection. Nothing in this subsection shall apply to securities issued by a foreign government or political subdivision 

thereof. 

(2) ASSET-BACKED SECURITIES.— 

(A) SUSPENSION OF DUTY TO FILE.—The Commission 

may, by rule or regulation, provide for the suspension or 

termination of the duty to file under this subsection for 

any class of asset-backed security, on such terms and conditions and for such period or periods as the Commission 

deems necessary or appropriate in the public interest or 

for the protection of investors. 

(B) CLASSIFICATION OF ISSUERS.—The Commission may, 

for purposes of this subsection, classify issuers and prescribe requirements appropriate for each class of issuers of 

asset-backed securities. 

(e) NOTICES TO CUSTOMERS REGARDING SECURITIES LENDING.— Every registered broker or dealer shall provide notice to its customers that they may elect not to allow their fully paid securities 

to be used in connection with short sales. If a broker or dealer uses 

a customer’s securities in connection with short sales, the broker 

or dealer shall provide notice to its customer that the broker or 

dealer may receive compensation in connection with lending the 

customer’s securities. The Commission, by rule, as it deems necessary or appropriate in the public interest and for the protection 

of investors, may prescribe the form, content, time, and manner of 

delivery of any notice required under this paragraph. 

(f) The Commission, by rule, as it deems necessary or appropriate 

in the public interest and for the protection of investors or to assure equal regulation, may require any member of a national securities exchange not required to register under section 15 of this 

title and any person associated with any such member to comply 

with any provision of this title (other than section 15(a)) or the 

rules or regulations thereunder which by its terms regulates or 

prohibits any act, practice, or course of business by a ‘‘broker or 

dealer’’ or ‘‘registered broker or dealer’’ or a ‘‘person associated with 

a broker or dealer,’’ respectively. 

(g) Every registered broker or dealer shall establish, maintain, 

and enforce written policies and procedures reasonably designed, 

taking into consideration the nature of such broker’s or dealer’s 

business, to prevent the misuse in violation of this title, or the 

rules or regulations thereunder, of material, nonpublic information 

by such broker or dealer or any person associated with such broker 

or dealer. The Commission, as it deems necessary or appropriate 

in the public interest or for the protection of investors, shall adopt 

228 

rules or regulations to require specific policies or procedures reasonably designed to prevent misuse in violation of this title (or the 

rules or regulations thereunder) of material, nonpublic information. 

(h) REQUIREMENTS FOR TRANSACTIONS IN PENNY STOCKS.— (1) IN GENERAL.—No broker or dealer shall make use of the 

mails or any means or instrumentality of interstate commerce 

to effect any transaction in, or to induce or attempt to induce 

the purchase or sale of, any penny stock by any customer except in accordance with the requirements of this subsection 

and the rules and regulations prescribed under this subsection. 

(2) RISK DISCLOSURE WITH RESPECT TO PENNY STOCKS.—Prior 

to effecting any transaction in any penny stock, a broker or 

dealer shall give the customer a risk disclosure document 

that— 

(A) contains a description of the nature and level of risk 

in the market for penny stocks in both public offerings and 

secondary trading; 

(B) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to violations of such duties or other requirements of Federal securities laws; 

(C) contains a brief, clear, narrative description of a 

dealer market, including ‘‘bid’’ and ‘‘ask’’ prices for penny 

stocks and the significance of the spread between the bid 

and ask prices; 

(D) contains the toll free telephone number for inquiries 

on disciplinary actions established pursuant to section 

15A(i) of this title; 

(E) defines significant terms used in the disclosure document or in the conduct of trading in penny stocks; and 

(F) contains such other information, and is in such form 

(including language, type size, and format), as the Commission shall require by rule or regulation. 

(3) COMMISSION RULES RELATING TO DISCLOSURE.—The Commission shall adopt rules setting forth additional standards for 

the disclosure by brokers and dealers to customers of information concerning transactions in penny stocks. Such rules— 

(A) shall require brokers and dealers to disclose to each 

customer, prior to effecting any transaction in, and at the 

time of confirming any transaction with respect to any 

penny stock, in accordance with such procedures and 

methods as the Commission may require consistent with 

the public interest and the protection of investors— 

(i) the bid and ask prices for penny stock, or such 

other information as the Commission may, by rule, require to provide customers with more useful and reliable information relating to the price of such stock; 

(ii) the number of shares to which such bid and ask 

prices apply, or other comparable information relating 

to the depth and liquidity of the market for such stock; 

and 

(iii) the amount and a description of any compensation that the broker or dealer and the associated person thereof will receive or has received in connection 

with such transaction; 

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(B) shall require brokers and dealers to provide, to each 

customer whose account with the broker or dealer contains 

penny stocks, a monthly statement indicating the market 

value of the penny stocks in that account or indicating 

that the market value of such stock cannot be determined 

because of the unavailability of firm quotes; and 

(C) may, as the Commission finds necessary or appropriate in the public interest or for the protection of investors, require brokers and dealers to disclose to customers 

additional information concerning transactions in penny 

stocks. 

(4) EXEMPTIONS.—The Commission, as it determines consistent with the public interest and the protection of investors, 

may by rule, regulation, or order exempt in whole or in part, 

conditionally or unconditionally, any person or class of persons, 

or any transaction or class of transactions, from the requirements of this subsection. Such exemptions shall include an exemption for brokers and dealers based on the minimal percentage of the broker’s or dealer’s commissions, commission-equivalents, and markups received from transactions in penny stocks. 

(5) REGULATIONS.—It shall be unlawful for any person to violate such rules and regulations as the Commission shall prescribe in the public interest or for the protection of investors 

or to maintain fair and orderly markets— 

(A) as necessary or appropriate to carry out this subsection; or 

(B) as reasonably designed to prevent fraudulent, deceptive, or manipulative acts and practices with respect to 

penny stocks. 

(i) LIMITATIONS ON STATE LAW.— 

(1) CAPITAL, MARGIN, BOOKS AND RECORDS, BONDING, AND REPORTS.—No law, rule, regulation, or order, or other administrative action of any State or political subdivision thereof shall establish capital, custody, margin, financial responsibility, making and keeping records, bonding, or financial or operational 

reporting requirements for brokers, dealers, municipal securities dealers, government securities brokers, or government securities dealers that differ from, or are in addition to, the requirements in those areas established under this title. The 

Commission shall consult periodically the securities commissions (or any agency or office performing like functions) of the 

States concerning the adequacy of such requirements as established under this title. 

(2) FUNDING PORTALS.— 

(A) LIMITATION ON STATE LAWS.—Except as provided in 

subparagraph (B), no State or political subdivision thereof 

may enforce any law, rule, regulation, or other administrative action against a registered funding portal with respect 

to its business as such. 

(B) EXAMINATION AND ENFORCEMENT AUTHORITY.—Subparagraph (A) does not apply with respect to the examination and enforcement of any law, rule, regulation, or administrative action of a State or political subdivision thereof in which the principal place of business of a registered 

funding portal is located, provided that such law, rule, regVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00233 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
230 

ulation, or administrative action is not in addition to or 

different from the requirements for registered funding portals established by the Commission. 

(C) DEFINITION.—For purposes of this paragraph, the 

term ‘‘State’’ includes the District of Columbia and the territories of the United States. 

(3) DE MINIMIS TRANSACTIONS BY ASSOCIATED PERSONS.—No 

law, rule, regulation, or order, or other administrative action 

of any State or political subdivision thereof may prohibit an associated person of a broker or dealer from effecting a transaction described in paragraph (3) for a customer in such State 

if— 

(A) such associated person is not ineligible to register 

with such State for any reason other than such a transaction; 

(B) such associated person is registered with a registered 

securities association and at least one State; and 

(C) the broker or dealer with which such person is associated is registered with such State. 

(4) DESCRIBED TRANSACTIONS.— 

(A) IN GENERAL.—A transaction is described in this paragraph if— 

(i) such transaction is effected— 

(I) on behalf of a customer that, for 30 days 

prior to the day of the transaction, maintained an 

account with the broker or dealer; and 

(II) by an associated person of the broker or 

dealer— 

(aa) to which the customer was assigned for 

14 days prior to the day of the transaction; 

and 

(bb) who is registered with a State in which 

the customer was a resident or was present 

for at least 30 consecutive days during the 1- 

year period prior to the day of the transaction; 

or 

(ii) the transaction is effected— 

(I) on behalf of a customer that, for 30 days 

prior to the day of the transaction, maintained an 

account with the broker or dealer; and 

(II) during the period beginning on the date on 

which such associated person files an application 

for registration with the State in which the transaction is effected and ending on the earlier of— 

(aa) 60 days after the date on which the application is filed; or 

(bb) the date on which such State notifies 

the associated person that it has denied the 

application for registration or has stayed the 

pendency of the application for cause. 

(B) RULES OF CONSTRUCTION.—For purposes of subparagraph (A)(i)(II)— 

(i) each of up to 3 associated persons of a broker or 

dealer who are designated to effect transactions during the absence or unavailability of the principal assoVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00234 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
231 

ciated person for a customer may be treated as an associated person to which such customer is assigned; 

and 

(ii) if the customer is present in another State for 30 

or more consecutive days or has permanently changed 

his or her residence to another State, a transaction is 

not described in this paragraph, unless the associated 

person of the broker or dealer files an application for 

registration with such State not later than 10 business 

days after the later of the date of the transaction, or 

the date of the discovery of the presence of the customer in the other State for 30 or more consecutive 

days or the change in the customer’s residence. 

(j) RULEMAKING TO EXTEND REQUIREMENTS TO NEW HYBRID

PRODUCTS.— 

(1) CONSULTATION.—Prior to commencing a rulemaking 

under this subsection, the Commission shall consult with and 

seek the concurrence of the Board concerning the imposition of 

broker or dealer registration requirements with respect to any 

new hybrid product. In developing and promulgating rules 

under this subsection, the Commission shall consider the views 

of the Board, including views with respect to the nature of the 

new hybrid product; the history, purpose, extent, and appropriateness of the regulation of the new product under the Federal banking laws; and the impact of the proposed rule on the 

banking industry. 

(2) LIMITATION.—The Commission shall not— 

(A) require a bank to register as a broker or dealer 

under this section because the bank engages in any transaction in, or buys or sells, a new hybrid product; or 

(B) bring an action against a bank for a failure to comply with a requirement described in subparagraph (A), 

unless the Commission has imposed such requirement by rule 

or regulation issued in accordance with this section. 

(3) CRITERIA FOR RULEMAKING.—The Commission shall not 

impose a requirement under paragraph (2) of this subsection 

with respect to any new hybrid product unless the Commission 

determines that— 

(A) the new hybrid product is a security; and 

(B) imposing such requirement is necessary and appropriate in the public interest and for the protection of investors. 

(4) CONSIDERATIONS.—In making a determination under 

paragraph (3), the Commission shall consider— 

(A) the nature of the new hybrid product; and 

(B) the history, purpose, extent, and appropriateness of 

the regulation of the new hybrid product under the Federal securities laws and under the Federal banking laws. 

(5) OBJECTION TO COMMISSION REGULATION.— (A) FILING OF PETITION FOR REVIEW.—The Board may obtain review of any final regulation described in paragraph 

(2) in the United States Court of Appeals for the District 

of Columbia Circuit by filing in such court, not later than 

60 days after the date of publication of the final regulation, a written petition requesting that the regulation be 

232 

set aside. Any proceeding to challenge any such rule shall 

be expedited by the Court of Appeals. 

(B) TRANSMITTAL OF PETITION AND RECORD.—A copy of a 

petition described in subparagraph (A) shall be transmitted as soon as possible by the Clerk of the Court to an 

officer or employee of the Commission designated for that 

purpose. Upon receipt of the petition, the Commission 

shall file with the court the regulation under review and 

any documents referred to therein, and any other relevant 

materials prescribed by the court. 

(C) EXCLUSIVE JURISDICTION.—On the date of the filing 

of the petition under subparagraph (A), the court has jurisdiction, which becomes exclusive on the filing of the materials set forth in subparagraph (B), to affirm and enforce 

or to set aside the regulation at issue. 

(D) STANDARD OF REVIEW.—The court shall determine to 

affirm and enforce or set aside a regulation of the Commission under this subsection, based on the determination of 

the court as to whether— 

(i) the subject product is a new hybrid product, as 

defined in this subsection; 

(ii) the subject product is a security; and 

(iii) imposing a requirement to register as a broker 

or dealer for banks engaging in transactions in such 

product is appropriate in light of the history, purpose, 

and extent of regulation under the Federal securities 

laws and under the Federal banking laws, giving deference neither to the views of the Commission nor the 

Board. 

(E) JUDICIAL STAY.—The filing of a petition by the Board 

pursuant to subparagraph (A) shall operate as a judicial 

stay, until the date on which the determination of the 

court is final (including any appeal of such determination). 

(F) OTHER AUTHORITY TO CHALLENGE.—Any aggrieved 

party may seek judicial review of the Commission’s rulemaking under this subsection pursuant to section 25 of 

this title. 

(6) DEFINITIONS.—For purposes of this subsection: 

(A) NEW HYBRID PRODUCT.—The term ‘‘new hybrid product’’ means a product that— 

(i) was not subjected to regulation by the Commission as a security prior to the date of the enactment 

of the Gramm-Leach-Bliley Act; 

(ii) is not an identified banking product as such 

term is defined in section 206 of such Act; and 

(iii) is not an equity swap within the meaning of section 206(a)(6) of such Act. 

(B) BOARD.—The term ‘‘Board’’ means the Board of Governors of the Federal Reserve System. 

(j) The authority of the Commission under this section with respect to security-based swap agreements shall be subject to the restrictions and limitations of section 3A(b) of this title. 

(k) REGISTRATION OR SUCCESSION TO A UNITED STATES BROKER

OR DEALER.—In determining whether to permit a foreign person or 

an affiliate of a foreign person to register as a United States broker 

233 

or dealer, or succeed to the registration of a United States broker 

or dealer, the Commission may consider whether, for a foreign person, or an affiliate of a foreign person that presents a risk to the 

stability of the United States financial system, the home country 

of the foreign person has adopted, or made demonstrable progress 

toward adopting, an appropriate system of financial regulation to 

mitigate such risk. 

(l) TERMINATION OF A UNITED STATES BROKER OR DEALER.—For 

a foreign person or an affiliate of a foreign person that presents 

such a risk to the stability of the United States financial system, 

the Commission may determine to terminate the registration of 

such foreign person or an affiliate of such foreign person as a 

broker or dealer in the United States, if the Commission determines that the home country of the foreign person has not adopted, 

or made demonstrable progress toward adopting, an appropriate 

system of financial regulation to mitigate such risk. 

(k) STANDARD OF CONDUCT.— 

(1) IN GENERAL.—Notwithstanding any other provision of 

this Act or the Investment Advisers Act of 1940, the Commission may promulgate rules to provide that, with respect to a 

broker or dealer, when providing personalized investment advice about securities to a retail customer (and such other customers as the Commission may by rule provide), the standard 

of conduct for such broker or dealer with respect to such customer shall be the same as the standard of conduct applicable 

to an investment adviser under section 211 of the Investment 

Advisers Act of 1940. The receipt of compensation based on 

commission or other standard compensation for the sale of securities shall not, in and of itself, be considered a violation of 

such standard applied to a broker or dealer. Nothing in this 

section shall require a broker or dealer or registered representative to have a continuing duty of care or loyalty to the customer after providing personalized investment advice about securities. 

(2) DISCLOSURE OF RANGE OF PRODUCTS OFFERED.—Where a 

broker or dealer sells only proprietary or other limited range 

of products, as determined by the Commission, the Commission 

may by rule require that such broker or dealer provide notice 

to each retail customer and obtain the consent or acknowledgment of the customer. The sale of only proprietary or other limited range of products by a broker or dealer shall not, in and 

of itself, be considered a violation of the standard set forth in 

paragraph (1). 

(l) OTHER MATTERS.—The Commission shall— 

(1) facilitate the provision of simple and clear disclosures to 

investors regarding the terms of their relationships with brokers, dealers, and investment advisers, including any material 

conflicts of interest; and 

(2) examine and, where appropriate, promulgate rules prohibiting or restricting certain sales practices, conflicts of interest, and compensation schemes for brokers, dealers, and investment advisers that the Commission deems contrary to the 

public interest and the protection of investors. 

(m) HARMONIZATION OF ENFORCEMENT.—The enforcement authority of the Commission with respect to violations of the standard 

234 

of conduct applicable to a broker or dealer providing personalized 

investment advice about securities to a retail customer shall include— 

(1) the enforcement authority of the Commission with respect to such violations provided under this Act; and 

(2) the enforcement authority of the Commission with respect to violations of the standard of conduct applicable to an 

investment adviser under the Investment Advisers Act of 1940, 

including the authority to impose sanctions for such violations, 

and 

the Commission shall seek to prosecute and sanction violators of 

the standard of conduct applicable to a broker or dealer providing 

personalized investment advice about securities to a retail customer under this Act to same extent as the Commission prosecutes 

and sanctions violators of the standard of conduct applicable to an 

investment advisor under the Investment Advisers Act of 1940. 

(n) DISCLOSURES TO RETAIL INVESTORS.— 

(1) IN GENERAL.—Notwithstanding any other provision of the 

securities laws, the Commission may issue rules designating 

documents or information that shall be provided by a broker or 

dealer to a retail investor before the purchase of an investment 

product or service by the retail investor. 

(2) CONSIDERATIONS.—In developing any rules under paragraph (1), the Commission shall consider whether the rules 

will promote investor protection, efficiency, competition, and 

capital formation. 

(3) FORM AND CONTENTS OF DOCUMENTS AND INFORMATION.— Any documents or information designated under a rule promulgated under paragraph (1) shall— 

(A) be in a summary format; and 

(B) contain clear and concise information about— 

(i) investment objectives, strategies, costs, and risks; 

and 

(ii) any compensation or other financial incentive received by a broker, dealer, or other intermediary in 

connection with the purchase of retail investment 

products. 

(o) AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRA- TION.—The Commission, by rule, may prohibit, or impose conditions or limitations on the use of, agreements that require customers or clients of any broker, dealer, or municipal securities dealer to arbitrate any future dispute between them arising under the 

Federal securities laws, the rules and regulations thereunder, or 

the rules of a self-regulatory organization if it finds that such prohibition, imposition of conditions, or limitations are in the public 

interest and for the protection of investors. 

* * * * * * * 

SEC. 15E. REGISTRATION OF NATIONALLY RECOGNIZED STATISTICAL 

RATING ORGANIZATIONS. 

(a) REGISTRATION PROCEDURES.— (1) APPLICATION FOR REGISTRATION.— (A) IN GENERAL.—A credit rating agency that elects to be 

treated as a nationally recognized statistical rating organization for purposes of this title (in this section referred to 

235 

as the ‘‘applicant’’), shall furnish to the Commission an application for registration, in such form as the Commission 

shall require, by rule or regulation issued in accordance 

with subsection (n), and containing the information described in subparagraph (B). 

(B) REQUIRED INFORMATION.—An application for registration under this section shall contain information regarding— 

(i) credit ratings performance measurement statistics over short-term, mid-term, and long-term periods 

(as applicable) of the applicant; 

(ii) the procedures and methodologies that the applicant uses in determining credit ratings; 

(iii) policies or procedures adopted and implemented 

by the applicant to prevent the misuse, in violation of 

this title (or the rules and regulations hereunder), of 

material, nonpublic information; 

(iv) the organizational structure of the applicant; 

(v) whether or not the applicant has in effect a code 

of ethics, and if not, the reasons therefor; 

(vi) any conflict of interest relating to the issuance 

of credit ratings by the applicant; 

(vii) the categories described in any of clauses (i) 

through (v) of section 3(a)(62)(B) with respect to which 

the applicant intends to apply for registration under 

this section; 

(viii) on a confidential basis, a list of the 20 largest 

issuers and subscribers that use the credit rating services of the applicant, by amount of net revenues received therefrom in the fiscal year immediately preceding the date of submission of the application; 

(ix) on a confidential basis, as to each applicable category of obligor described in any of clauses (i) through 

(v) of section 3(a)(62)(B), written certifications described in subparagraph (C), except as provided in 

subparagraph (D); and 

(x) any other information and documents concerning 

the applicant and any person associated with such applicant as the Commission, by rule, may prescribe as 

necessary or appropriate in the public interest or for 

the protection of investors. 

(C) WRITTEN CERTIFICATIONS.—Written certifications required by subparagraph (B)(ix)— 

(i) shall be provided from not fewer than 10 qualified institutional buyers, none of which is affiliated 

with the applicant; 

(ii) may address more than one category of obligors 

described in any of clauses (i) through (v) of section 

3(a)(62)(B); 

(iii) shall include not fewer than 2 certifications for 

each such category of obligor; and 

(iv) shall state that the qualified institutional 

buyer— 

(I) meets the definition of a qualified institutional buyer under section 3(a)(64); and 

236 

(II) has used the credit ratings of the applicant 

for at least the 3 years immediately preceding the 

date of the certification in the subject category or 

categories of obligors. 

(D) EXEMPTION FROM CERTIFICATION REQUIREMENT.—A 

written certification under subparagraph (B)(ix) is not required with respect to any credit rating agency which has 

received, or been the subject of, a no-action letter from the 

staff of the Commission prior to August 2, 2006, stating 

that such staff would not recommend enforcement action 

against any broker or dealer that considers credit ratings 

issued by such credit rating agency to be ratings from a 

nationally recognized statistical rating organization. 

(E) LIMITATION ON LIABILITY OF QUALIFIED INSTITUTIONAL BUYERS.—No qualified institutional buyer shall be 

liable in any private right of action for any opinion or 

statement expressed in a certification made pursuant to 

subparagraph (B)(ix). 

(2) REVIEW OF APPLICATION.— 

(A) INITIAL DETERMINATION.—Not later than 90 days 

after the date on which the application for registration is 

furnished to the Commission under paragraph (1) (or within such longer period as to which the applicant consents) 

the Commission shall— 

(i) by order, grant such registration for ratings in 

the subject category or categories of obligors, as described in clauses (i) through (v) of section 3(a)(62)(B); 

or 

(ii) institute proceedings to determine whether registration should be denied. 

(B) CONDUCT OF PROCEEDINGS.— 

(i) CONTENT.—Proceedings referred to in subparagraph (A)(ii) shall— 

(I) include notice of the grounds for denial under 

consideration and an opportunity for hearing; and 

(II) be concluded not later than 120 days after 

the date on which the application for registration 

is furnished to the Commission under paragraph 

(1). 

(ii) DETERMINATION.—At the conclusion of such proceedings, the Commission, by order, shall grant or 

deny such application for registration. 

(iii) EXTENSION AUTHORIZED.—The Commission may 

extend the time for conclusion of such proceedings for 

not longer than 90 days, if it finds good cause for such 

extension and publishes its reasons for so finding, or 

for such longer period as to which the applicant consents. 

(C) GROUNDS FOR DECISION.—The Commission shall 

grant registration under this subsection— 

(i) if the Commission finds that the requirements of 

this section are satisfied; and 

(ii) unless the Commission finds (in which case the 

Commission shall deny such registration) that— 

237 

(I) the applicant does not have adequate financial and managerial resources to consistently 

produce credit ratings with integrity and to materially comply with the procedures and methodologies disclosed under paragraph (1)(B) and with 

subsections (g), (h), (i), and (j); or 

(II) if the applicant were so registered, its registration would be subject to suspension or revocation under subsection (d). 

(3) PUBLIC AVAILABILITY OF INFORMATION.—Subject to section 

24, the Commission shall, by rule, require a nationally recognized statistical rating organization, upon the granting of registration under this section, to make the information and documents submitted to the Commission in its completed application for registration, or in any amendment submitted under 

paragraph (1) or (2) of subsection (b), publicly available on its 

website, or through another comparable, readily accessible 

means, except as provided in clauses (viii) and (ix) of paragraph (1)(B). 

(b) UPDATE OF REGISTRATION.— 

(1) UPDATE.—Each nationally recognized statistical rating 

organization shall promptly amend its application for registration under this section if any information or document provided therein becomes materially inaccurate, except that a nationally recognized statistical rating organization is not required to amend— 

(A) the information required to be filed under subsection 

(a)(1)(B)(i) by filing information under this paragraph, but 

shall amend such information in the annual submission of 

the organization under paragraph (2) of this subsection; or 

(B) the certifications required to be provided under subsection (a)(1)(B)(ix) by filing information under this paragraph. 

(2) CERTIFICATION.—Not later than 90 days after the end of 

each calendar year, each nationally recognized statistical rating organization shall file with the Commission an amendment 

to its registration, in such form as the Commission, by rule, 

may prescribe as necessary or appropriate in the public interest or for the protection of investors— 

(A) certifying that the information and documents in the 

application for registration of such nationally recognized 

statistical rating organization (other than the certifications 

required under subsection (a)(1)(B)(ix)) continue to be accurate; and 

(B) listing any material change that occurred to such information or documents during the previous calendar year. 

(c) ACCOUNTABILITY FOR RATINGS PROCEDURES.— 

(1) AUTHORITY.—The Commission shall have exclusive authority to enforce the provisions of this section in accordance 

with this title with respect to any nationally recognized statistical rating organization, if such nationally recognized statistical rating organization issues credit ratings in material contravention of those procedures relating to such nationally recognized statistical rating organization, including procedures relating to the prevention of misuse of nonpublic information and 

238 

conflicts of interest, that such nationally recognized statistical 

rating organization— 

(A) includes in its application for registration under subsection (a)(1)(B)(ii); or 

(B) makes and disseminates in reports pursuant to section 17(a) or the rules and regulations thereunder. 

(2) LIMITATION.—The rules and regulations that the Commission may prescribe pursuant to this title, as they apply to nationally recognized statistical rating organizations, shall be 

narrowly tailored to meet the requirements of this title applicable to nationally recognized statistical rating organizations. 

Notwithstanding any other provision of this section, or any 

other provision of law, neither the Commission nor any State 

(or political subdivision thereof) may regulate the substance of 

credit ratings or the procedures and methodologies by which 

any nationally recognized statistical rating organization determines credit ratings. Nothing in this paragraph may be construed to afford a defense against any action or proceeding 

brought by the Commission to enforce the antifraud provisions 

of the securities laws. 

(3) INTERNAL CONTROLS OVER PROCESSES FOR DETERMINING

CREDIT RATINGS.— (A) IN GENERAL.—Each nationally recognized statistical 

rating organization shall establish, maintain, enforce, and 

document an effective internal control structure governing 

the implementation of and adherence to policies, procedures, and methodologies for determining credit ratings, 

taking into consideration such factors as the Commission 

may prescribe, by rule. 

(B) ATTESTATION REQUIREMENT.—The Commission shall 

prescribe rules requiring each nationally recognized statistical rating organization to submit to the Commission an 

annual internal controls report, which shall contain— 

(i) a description of the responsibility of the management of the nationally recognized statistical rating organization in establishing and maintaining an effective internal control structure under subparagraph 

(A); 

(ii) an assessment of the effectiveness of the internal 

control structure of the nationally recognized statistical rating organization; and 

(iii) the attestation of the chief executive officer, or 

equivalent individual, of the nationally recognized statistical rating organization. 

(d) CENSURE, DENIAL, OR SUSPENSION OF REGISTRATION; NOTICE

AND HEARING.— 

(1) IN GENERAL.—The Commission, by order, shall censure, 

place limitations on the activities, functions, or operations of, 

suspend for a period not exceeding 12 months, or revoke the 

registration of any nationally recognized statistical rating organization, or with respect to any person who is associated with, 

who is seeking to become associated with, or, at the time of the 

alleged misconduct, who was associated or was seeking to become associated with a nationally recognized statistical rating 

organization, the Commission, by order, shall censure, place 

239 

limitations on the activities or functions of such person, suspend for a period not exceeding 1 year, or bar such person from 

being associated with a nationally recognized statistical rating 

organization, if the Commission finds, on the record after notice and opportunity for hearing, that such censure, placing of 

limitations, suspension, bar or revocation is necessary for the 

protection of investors and in the public interest and that such 

nationally recognized statistical rating organization, or any 

person associated with such an organization, whether prior to 

or subsequent to becoming so associated— 

(A) has committed or omitted any act, or is subject to an 

order or finding, enumerated in subparagraph (A), (D), (E), 

(H), or (G) of section 15(b)(4), has been convicted of any offense specified in section 15(b)(4)(B), or is enjoined from 

any action, conduct, or practice specified in subparagraph 

(C) of section 15(b)(4), during the 10-year period preceding 

the date of commencement of the proceedings under this 

subsection, or at any time thereafter; 

(B) has been convicted during the 10-year period preceding the date on which an application for registration is 

filed with the Commission under this section, or at any 

time thereafter, of— 

(i) any crime that is punishable by imprisonment for 

1 or more years, and that is not described in section 

15(b)(4)(B); or 

(ii) a substantially equivalent crime by a foreign 

court of competent jurisdiction; 

(C) is subject to any order of the Commission barring or 

suspending the right of the person to be associated with a 

nationally recognized statistical rating organization; 

(D) fails to file the certifications required under subsection (b)(2); 

(E) fails to maintain adequate financial and managerial 

resources to consistently produce credit ratings with integrity; 

(F) has failed reasonably to supervise, with a view to 

preventing a violation of the securities laws, an individual 

who commits such a violation, if the individual is subject 

to the supervision of that person. 

(2) SUSPENSION OR REVOCATION FOR PARTICULAR CLASS OF

SECURITIES.— 

(A) IN GENERAL.—The Commission may temporarily suspend or permanently revoke the registration of a nationally recognized statistical rating organization with respect 

to a particular class or subclass of securities, if the Commission finds, on the record after notice and opportunity 

for hearing, that the nationally recognized statistical rating organization does not have adequate financial and 

managerial resources to consistently produce credit ratings 

with integrity. 

(B) CONSIDERATIONS.—In making any determination 

under subparagraph (A), the Commission shall consider— 

(i) whether the nationally recognized statistical rating organization has failed over a sustained period of 

time, as determined by the Commission, to produce 

240 

ratings that are accurate for that class or subclass of 

securities; and 

(ii) such other factors as the Commission may determine. 

(e) TERMINATION OF REGISTRATION.— 

(1) VOLUNTARY WITHDRAWAL.—A nationally recognized statistical rating organization may, upon such terms and conditions as the Commission may establish as necessary in the 

public interest or for the protection of investors, withdraw from 

registration by furnishing a written notice of withdrawal to the 

Commission. 

(2) COMMISSION AUTHORITY.—In addition to any other authority of the Commission under this title, if the Commission 

finds that a nationally recognized statistical rating organization is no longer in existence or has ceased to do business as 

a credit rating agency, the Commission, by order, shall cancel 

the registration under this section of such nationally recognized statistical rating organization. 

(f) REPRESENTATIONS.— 

(1) BAN ON REPRESENTATIONS OF SPONSORSHIP BY UNITED

STATES OR AGENCY THEREOF.—It shall be unlawful for any nationally recognized statistical rating organization to represent 

or imply in any manner whatsoever that such nationally recognized statistical rating organization has been designated, sponsored, recommended, or approved, or that the abilities or qualifications thereof have in any respect been passed upon, by the 

United States or any agency, officer, or employee thereof. 

(2) BAN ON REPRESENTATION AS NRSRO OF UNREGISTERED

CREDIT RATING AGENCIES.—It shall be unlawful for any credit 

rating agency that is not registered under this section as a nationally recognized statistical rating organization to state that 

such credit rating agency is a nationally recognized statistical 

rating organization registered under this title. 

(3) STATEMENT OF REGISTRATION UNDER SECURITIES EXCHANGE ACT OF 1934 PROVISIONS.—No provision of paragraph 

(1) shall be construed to prohibit a statement that a nationally 

recognized statistical rating organization is a nationally recognized statistical rating organization under this title, if such 

statement is true in fact and if the effect of such registration 

is not misrepresented. 

(g) PREVENTION OF MISUSE OF NONPUBLIC INFORMATION.— 

(1) ORGANIZATION POLICIES AND PROCEDURES.—Each nationally recognized statistical rating organization shall establish, 

maintain, and enforce written policies and procedures reasonably designed, taking into consideration the nature of the business of such nationally recognized statistical rating organization, to prevent the misuse in violation of this title, or the rules 

or regulations hereunder, of material, nonpublic information by 

such nationally recognized statistical rating organization or 

any person associated with such nationally recognized statistical rating organization. 

(2) COMMISSION AUTHORITY.—The Commission shall issue 

final rules in accordance with subsection (n) to require specific 

policies or procedures that are reasonably designed to prevent 

241 

misuse in violation of this title (or the rules or regulations 

hereunder) of material, nonpublic information. 

(h) MANAGEMENT OF CONFLICTS OF INTEREST.— (1) ORGANIZATION POLICIES AND PROCEDURES.—Each nationally recognized statistical rating organization shall establish, 

maintain, and enforce written policies and procedures reasonably designed, taking into consideration the nature of the business of such nationally recognized statistical rating organization and affiliated persons and affiliated companies thereof, to 

address and manage any conflicts of interest that can arise 

from such business. 

(2) COMMISSION AUTHORITY.—The Commission shall issue 

final rules in accordance with subsection (n) to prohibit, or require the management and disclosure of, any conflicts of interest relating to the issuance of credit ratings by a nationally 

recognized statistical rating organization, including, without 

limitation, conflicts of interest relating to— 

(A) the manner in which a nationally recognized statistical rating organization is compensated by the obligor, or 

any affiliate of the obligor, for issuing credit ratings or providing related services; 

(B) the provision of consulting, advisory, or other services by a nationally recognized statistical rating organization, or any person associated with such nationally recognized statistical rating organization, to the obligor, or any 

affiliate of the obligor; 

(C) business relationships, ownership interests, or any 

other financial or personal interests between a nationally 

recognized statistical rating organization, or any person 

associated with such nationally recognized statistical rating organization, and the obligor, or any affiliate of the obligor; 

(D) any affiliation of a nationally recognized statistical 

rating organization, or any person associated with such 

nationally recognized statistical rating organization, with 

any person that underwrites the securities or money market instruments that are the subject of a credit rating; and 

(E) any other potential conflict of interest, as the Commission deems necessary or appropriate in the public interest or for the protection of investors. 

(3) SEPARATION OF RATINGS FROM SALES AND MARKETING.— 

(A) RULES REQUIRED.—The Commission shall issue rules 

to prevent the sales and marketing considerations of a nationally recognized statistical rating organization from influencing the production of ratings by the nationally recognized statistical rating organization. 

(B) CONTENTS OF RULES.—The rules issued under subparagraph (A) shall provide for— 

(i) exceptions for small nationally recognized statistical rating organizations with respect to which the 

Commission determines that the separation of the production of ratings and sales and marketing activities 

is not appropriate; and 

(ii) suspension or revocation of the registration of a 

nationally recognized statistical rating organization, if 

242 

the Commission finds, on the record, after notice and 

opportunity for a hearing, that— 

(I) the nationally recognized statistical rating 

organization has committed a violation of a rule 

issued under this subsection; and 

(II) the violation of a rule issued under this subsection affected a rating. 

(4) LOOK-BACK REQUIREMENT.— 

(A) REVIEW BY THE NATIONALLY RECOGNIZED STATISTICAL

RATING ORGANIZATION.—Each nationally recognized statistical rating organization shall establish, maintain, and enforce policies and procedures reasonably designed to ensure that, in any case in which an employee of a person 

subject to a credit rating of the nationally recognized statistical rating organization or the issuer, underwriter, or 

sponsor of a security or money market instrument subject 

to a credit rating of the nationally recognized statistical 

rating organization was employed by the nationally recognized statistical rating organization and participated in 

any capacity in determining credit ratings for the person 

or the securities or money market instruments during the 

1-year period preceding the date an action was taken with 

respect to the credit rating, the nationally recognized statistical rating organization shall— 

(i) conduct a review to determine whether any conflicts of interest of the employee influenced the credit 

rating; and 

(ii) take action to revise the rating if appropriate, in 

accordance with such rules as the Commission shall 

prescribe. 

(B) REVIEW BY COMMISSION.— 

(i) IN GENERAL.—The Commission shall conduct 

periodic reviews of the policies described in subparagraph (A) and the implementation of the policies at 

each nationally recognized statistical rating organization to ensure they are reasonably designed and implemented to most effectively eliminate conflicts of interest. 

(ii) TIMING OF REVIEWS.—The Commission shall review the code of ethics and conflict of interest policy 

of each nationally recognized statistical rating organization— 

(I) not less frequently than annually; and 

(II) whenever such policies are materially modified or amended. 

(5) REPORT TO COMMISSION ON CERTAIN EMPLOYMENT TRANSITIONS.— 

(A) REPORT REQUIRED.—Each nationally recognized statistical rating organization shall report to the Commission 

any case such organization knows or can reasonably be expected to know where a person associated with such organization within the previous 5 years obtains employment 

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tion issued a credit rating during the 12-month period 

prior to such employment, if such employee— 

(i) was a senior officer of such organization; 

(ii) participated in any capacity in determining credit ratings for such obligor, issuer, underwriter, or 

sponsor; or 

(iii) supervised an employee described in clause (ii). 

(B) PUBLIC DISCLOSURE.—Upon receiving such a report, 

the Commission shall make such information publicly 

available. 

(i) PROHIBITED CONDUCT.— (1) PROHIBITED ACTS AND PRACTICES.—The Commission shall 

issue final rules in accordance with subsection (n) to prohibit 

any act or practice relating to the issuance of credit ratings by 

a nationally recognized statistical rating organization that the 

Commission determines to be unfair, coercive, or abusive, including any act or practice relating to— 

(A) conditioning or threatening to condition the issuance 

of a credit rating on the purchase by the obligor or an affiliate thereof of other services or products, including precredit rating assessment products, of the nationally recognized statistical rating organization or any person associated with such nationally recognized statistical rating organization; 

(B) lowering or threatening to lower a credit rating on, 

or refusing to rate, securities or money market instruments issued by an asset pool or as part of any assetbacked or mortgage-backed securities transaction, unless a 

portion of the assets within such pool or part of such 

transaction, as applicable, also is rated by the nationally 

recognized statistical rating organization; or 

(C) modifying or threatening to modify a credit rating or 

otherwise departing from its adopted systematic procedures and methodologies in determining credit ratings, 

based on whether the obligor, or an affiliate of the obligor, 

purchases or will purchase the credit rating or any other 

service or product of the nationally recognized statistical 

rating organization or any person associated with such organization. 

(2) RULE OF CONSTRUCTION.—Nothing in paragraph (1), or in 

any rules or regulations adopted thereunder, may be construed 

to modify, impair, or supersede the operation of any of the 

antitrust laws (as defined in the first section of the Clayton 

Act, except that such term includes section 5 of the Federal 

Trade Commission Act, to the extent that such section 5 applies to unfair methods of competition). 

(j) DESIGNATION OF COMPLIANCE OFFICER.— 

(1) IN GENERAL.—Each nationally recognized statistical rating organization shall designate an individual responsible for 

administering the policies and procedures that are required to 

be established pursuant to subsections (g) and (h), and for ensuring compliance with the securities laws and the rules and 

regulations thereunder, including those promulgated by the 

Commission pursuant to this section. 

(2) LIMITATIONS.— 

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(A) IN GENERAL.—Except as provided in subparagraph 

(B), an individual designated under paragraph (1) may not, 

while serving in the designated capacity— 

(i) perform credit ratings; 

(ii) participate in the development of ratings methodologies or models; 

(iii) perform marketing or sales functions; or 

(iv) participate in establishing compensation levels, 

other than for employees working for that individual. 

(B) EXCEPTION.—The Commission may exempt a small 

nationally recognized statistical rating organization from 

the limitations under this paragraph, if the Commission 

finds that compliance with such limitations would impose 

an unreasonable burden on the nationally recognized statistical rating organization. 

(3) OTHER DUTIES.—Each individual designated under paragraph (1) shall establish procedures for the receipt, retention, 

and treatment of— 

(A) complaints regarding credit ratings, models, methodologies, and compliance with the securities laws and the 

policies and procedures developed under this section; and 

(B) confidential, anonymous complaints by employees or 

users of credit ratings. 

(4) COMPENSATION.—The compensation of each compliance 

officer appointed under paragraph (1) shall not be linked to the 

financial performance of the nationally recognized statistical 

rating organization and shall be arranged so as to ensure the 

independence of the officer’s judgment. 

(5) ANNUAL REPORTS REQUIRED.— 

(A) ANNUAL REPORTS REQUIRED.—Each individual designated under paragraph (1) shall submit to the nationally 

recognized statistical rating organization an annual report 

on the compliance of the nationally recognized statistical 

rating organization with the securities laws and the policies and procedures of the nationally recognized statistical 

rating organization that includes— 

(i) a description of any material changes to the code 

of ethics and conflict of interest policies of the nationally recognized statistical rating organization; and 

(ii) a certification that the report is accurate and 

complete. 

(B) SUBMISSION OF REPORTS TO THE COMMISSION.—Each 

nationally recognized statistical rating organization shall 

file the reports required under subparagraph (A) together 

with the financial report that is required to be submitted 

to the Commission under this section. 

(k) STATEMENTS OF FINANCIAL CONDITION.—Each nationally recognized statistical rating organization shall, on a confidential basis, 

file with the Commission, at intervals determined by the Commission, such financial statements, certified (if required by the rules 

or regulations of the Commission) by an independent public accountant, and information concerning its financial condition, as the 

Commission, by rule, may prescribe as necessary or appropriate in 

the public interest or for the protection of investors. 

(l) SOLE METHOD OF REGISTRATION.— 

245 

(1) IN GENERAL.—On and after the effective date of this section, a credit rating agency may only be registered as a nationally recognized statistical rating organization for any purpose 

in accordance with this section. 

(2) PROHIBITION ON RELIANCE ON NO-ACTION RELIEF.—On 

and after the effective date of this section— 

(A) an entity that, before that date, received advice, approval, or a no-action letter from the Commission or staff 

thereof to be treated as a nationally recognized statistical 

rating organization pursuant to the Commission rule at 

section 240.15c3–1 of title 17, Code of Federal Regulations, 

may represent itself or act as a nationally recognized statistical rating organization only— 

(i) during Commission consideration of the application, if such entity has filed an application for registration under this section; and 

(ii) on and after the date of approval of its application for registration under this section; and 

(B) the advice, approval, or no-action letter described in 

subparagraph (A) shall be void. 

(3) NOTICE TO OTHER AGENCIES.—Not later than 30 days 

after the date of enactment of this section, the Commission 

shall give notice of the actions undertaken pursuant to this 

section to each Federal agency which employs in its rules and 

regulations the term ‘‘nationally recognized statistical rating 

organization’’ (as that term is used under Commission rule 

15c3–1 (17 C.F.R. 240.15c3–1), as in effect on the date of enactment of this section). 

(m) ACCOUNTABILITY.— 

(1) IN GENERAL.—The enforcement and penalty provisions of 

this title shall apply to statements made by a credit rating 

agency in the same manner and to the same extent as such 

provisions apply to statements made by a registered public accounting firm or a securities analyst under the securities laws, 

and such statements shall not be deemed forward-looking 

statements for the purposes of section 21E. 

(2) RULEMAKING.—The Commission shall issue such rules as 

may be necessary to carry out this subsection. 

(n) REGULATIONS.— 

(1) NEW PROVISIONS.—Such rules and regulations as are required by this section or are otherwise necessary to carry out 

this section, including the application form required under subsection (a)— 

(A) shall be issued by the Commission in final form, not 

later than 270 days after the date of enactment of this section; and 

(B) shall become effective not later than 270 days after 

the date of enactment of this section. 

(2) REVIEW OF EXISTING REGULATIONS.—Not later than 270 

days after the date of enactment of this section, the Commission shall— 

(A) review its existing rules and regulations which employ the term ‘‘nationally recognized statistical rating organization’’ or ‘‘NRSRO’’; and 

246 

(B) amend or revise such rules and regulations in accordance with the purposes of this section, as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. 

(o) NRSROS SUBJECT TO COMMISSION AUTHORITY.— 

(1) IN GENERAL.—No provision of the laws of any State or political subdivision thereof requiring the registration, licensing, 

or qualification as a credit rating agency or a nationally recognized statistical rating organization shall apply to any nationally recognized statistical rating organization or person employed by or working under the control of a nationally recognized statistical rating organization. 

(2) LIMITATION.—Nothing in this subsection prohibits the securities commission (or any agency or office performing like 

functions) of any State from investigating and bringing an enforcement action with respect to fraud or deceit against any 

nationally recognized statistical rating organization or person 

associated with a nationally recognized statistical rating organization. 

(p) REGULATION OF NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS.— 

(1) ESTABLISHMENT OF OFFICE OF CREDIT RATINGS.— 

(A) OFFICE ESTABLISHED.—The Commission shall establish within the Commission an Office of Credit Ratings (referred to in this subsection as the ‘‘Office’’) to administer 

the rules of the Commission— 

(i) with respect to the practices of nationally recognized statistical rating organizations in determining 

ratings, for the protection of users of credit ratings 

and in the public interest; 

(ii) to promote accuracy in credit ratings issued by 

nationally recognized statistical rating organizations; 

and 

(iii) to ensure that such ratings are not unduly influenced by conflicts of interest. 

(B) DIRECTOR OF THE OFFICE.—The head of the Office 

shall be the Director, who shall report to the Chairman. 

(2) STAFFING.—The Office established under this subsection 

shall be staffed sufficiently to carry out fully the requirements 

of this section. The staff shall include persons with knowledge 

of and expertise in corporate, municipal, and structured debt 

finance. 

(3) COMMISSION EXAMINATIONS.— 

(A) ANNUAL EXAMINATIONS REQUIRED.—The Office shall 

conduct an examination of each nationally recognized statistical rating organization at least annually. 

(B) CONDUCT OF EXAMINATIONS.—Each examination 

under subparagraph (A) shall include, as appropriate, a review of— 

(i) whether the nationally recognized statistical rating organization conducts business in accordance with 

the policies, procedures, and rating methodologies of 

the nationally recognized statistical rating organization; 

247 

(ii) the management of conflicts of interest by the 

nationally recognized statistical rating organization; 

(iii) implementation of ethics policies by the nationally recognized statistical rating organization; 

(iv) the internal supervisory controls of the nationally recognized statistical rating organization; 

(v) the governance of the nationally recognized statistical rating organization; 

(vi) the activities of the individual designated by the 

nationally recognized statistical rating organization 

under subsection (j)(1); 

(vii) the processing of complaints by the nationally 

recognized statistical rating organization; and 

(viii) the policies of the nationally recognized statistical rating organization governing the post-employment activities of former staff of the nationally recognized statistical rating organization. 

(C) INSPECTION REPORTS.—The Commission shall make 

available to the public, in an easily understandable format, 

an annual report summarizing— 

(i) the essential findings of all examinations conducted under subparagraph (A), as deemed appropriate by the Commission; 

(ii) the responses by the nationally recognized statistical rating organizations to any material regulatory 

deficiencies identified by the Commission under clause 

(i); and 

(iii) whether the nationally recognized statistical 

rating organizations have appropriately addressed the 

recommendations of the Commission contained in previous reports under this subparagraph. 

(4) RULEMAKING AUTHORITY.—The Commission shall— 

(A) establish, by rule, fines, and other penalties applicable to any nationally recognized statistical rating organization that violates the requirements of this section and the 

rules thereunder; and 

(B) issue such rules as may be necessary to carry out 

this section. 

(q) TRANSPARENCY OF RATINGS PERFORMANCE.— (1) RULEMAKING REQUIRED.—The Commission shall, by rule, 

require that each nationally recognized statistical rating organization publicly disclose information on the initial credit ratings determined by the nationally recognized statistical rating 

organization for each type of obligor, security, and money market instrument, and any subsequent changes to such credit ratings, for the purpose of allowing users of credit ratings to 

evaluate the accuracy of ratings and compare the performance 

of ratings by different nationally recognized statistical rating 

organizations. 

(2) CONTENT.—The rules of the Commission under this subsection shall require, at a minimum, disclosures that— 

(A) are comparable among nationally recognized statistical rating organizations, to allow users of credit ratings 

to compare the performance of credit ratings across nationally recognized statistical rating organizations; 

248 

(B) are clear and informative for investors having a wide 

range of sophistication who use or might use credit ratings; 

(C) include performance information over a range of 

years and for a variety of types of credit ratings, including 

for credit ratings withdrawn by the nationally recognized 

statistical rating organization; 

(D) are published and made freely available by the nationally recognized statistical rating organization, on an 

easily accessible portion of its website, and in writing, 

when requested; 

(E) are appropriate to the business model of a nationally 

recognized statistical rating organization; and 

(F) each nationally recognized statistical rating organization include an attestation with any credit rating it 

issues affirming that no part of the rating was influenced 

by any other business activities, that the rating was based 

solely on the merits of the instruments being rated, and 

that such rating was an independent evaluation of the 

risks and merits of the instrument. 

(r) CREDIT RATINGS METHODOLOGIES.—The Commission shall 

prescribe rules, for the protection of investors and in the public interest, with respect to the procedures and methodologies, including 

qualitative and quantitative data and models, used by nationally 

recognized statistical rating organizations that require each nationally recognized statistical rating organization— 

(1) to ensure that credit ratings are determined using procedures and methodologies, including qualitative and quantitative data and models, that are— 

(A) approved by the board of the nationally recognized 

statistical rating organization, a body performing a function similar to that of a board; and 

(B) in accordance with the policies and procedures of the 

nationally recognized statistical rating organization for the 

development and modification of credit rating procedures 

and methodologies; 

(2) to ensure that when material changes to credit rating 

procedures and methodologies (including changes to qualitative 

and quantitative data and models) are made, that— 

(A) the changes are applied consistently to all credit ratings to which the changed procedures and methodologies 

apply; 

(B) to the extent that changes are made to credit rating 

surveillance procedures and methodologies, the changes 

are applied to then-current credit ratings by the nationally 

recognized statistical rating organization within a reasonable time period determined by the Commission, by rule; 

and 

(C) the nationally recognized statistical rating organization publicly discloses the reason for the change; and 

(3) to notify users of credit ratings— 

(A) of the version of a procedure or methodology, including the qualitative methodology or quantitative inputs, 

used with respect to a particular credit rating; 

249 

(B) when a material change is made to a procedure or 

methodology, including to a qualitative model or quantitative inputs; 

(C) when a significant error is identified in a procedure 

or methodology, including a qualitative or quantitative 

model, that may result in credit rating actions; and 

(D) of the likelihood of a material change described in 

subparagraph (B) resulting in a change in current credit 

ratings. 

(s) TRANSPARENCY OF CREDIT RATING METHODOLOGIES AND IN- FORMATION REVIEWED.— (1) FORM FOR DISCLOSURES.—The Commission shall require, 

by rule, each nationally recognized statistical rating organization to prescribe a form to accompany the publication of each 

credit rating that discloses— 

(A) information relating to— 

(i) the assumptions underlying the credit rating procedures and methodologies; 

(ii) the data that was relied on to determine the 

credit rating; and 

(iii) if applicable, how the nationally recognized statistical rating organization used servicer or remittance 

reports, and with what frequency, to conduct surveillance of the credit rating; and 

(B) information that can be used by investors and other 

users of credit ratings to better understand credit ratings 

in each class of credit rating issued by the nationally recognized statistical rating organization. 

(2) FORMAT.—The form developed under paragraph (1) 

shall— 

(A) be easy to use and helpful for users of credit ratings 

to understand the information contained in the report; 

(B) require the nationally recognized statistical rating 

organization to provide the content described in paragraph 

(3)(B) in a manner that is directly comparable across types 

of securities; and 

(C) be made readily available to users of credit ratings, 

in electronic or paper form, as the Commission may, by 

rule, determine. 

(3) CONTENT OF FORM.— 

(A) QUALITATIVE CONTENT.—Each nationally recognized 

statistical rating organization shall disclose on the form 

developed under paragraph (1)— 

(i) the credit ratings produced by the nationally recognized statistical rating organization; 

(ii) the main assumptions and principles used in 

constructing procedures and methodologies, including 

qualitative methodologies and quantitative inputs and 

assumptions about the correlation of defaults across 

underlying assets used in rating structured products; 

(iii) the potential limitations of the credit ratings, 

and the types of risks excluded from the credit ratings 

that the nationally recognized statistical rating organization does not comment on, including liquidity, market, and other risks; 

250 

(iv) information on the uncertainty of the credit rating, including— 

(I) information on the reliability, accuracy, and 

quality of the data relied on in determining the 

credit rating; and 

(II) a statement relating to the extent to which 

data essential to the determination of the credit 

rating were reliable or limited, including— 

(aa) any limits on the scope of historical 

data; and 

(bb) any limits in accessibility to certain 

documents or other types of information that 

would have better informed the credit rating; 

(v) whether and to what extent third party due diligence services have been used by the nationally recognized statistical rating organization, a description of 

the information that such third party reviewed in conducting due diligence services, and a description of the 

findings or conclusions of such third party; 

(vi) a description of the data about any obligor, 

issuer, security, or money market instrument that 

were relied upon for the purpose of determining the 

credit rating; 

(vii) a statement containing an overall assessment of 

the quality of information available and considered in 

producing a rating for an obligor, security, or money 

market instrument, in relation to the quality of information available to the nationally recognized statistical rating organization in rating similar issuances; 

(viii) information relating to conflicts of interest of 

the nationally recognized statistical rating organization; and 

(ix) such additional information as the Commission 

may require. 

(B) QUANTITATIVE CONTENT.—Each nationally recognized 

statistical rating organization shall disclose on the form 

developed under this subsection— 

(i) an explanation or measure of the potential volatility of the credit rating, including— 

(I) any factors that might lead to a change in 

the credit ratings; and 

(II) the magnitude of the change that a user can 

expect under different market conditions; 

(ii) information on the content of the rating, including— 

(I) the historical performance of the rating; and 

(II) the expected probability of default and the 

expected loss in the event of default; 

(iii) information on the sensitivity of the rating to 

assumptions made by the nationally recognized statistical rating organization, including— 

(I) 5 assumptions made in the ratings process 

that, without accounting for any other factor, 

would have the greatest impact on a rating if the 

assumptions were proven false or inaccurate; and 

251 

(II) an analysis, using specific examples, of how 

each of the 5 assumptions identified under subclause (I) impacts a rating; 

(iv) such additional information as may be required 

by the Commission. 

(4) DUE DILIGENCE SERVICES FOR ASSET-BACKED SECURITIES.— 

(A) FINDINGS.—The issuer or underwriter of any assetbacked security shall make publicly available the findings 

and conclusions of any third-party due diligence report obtained by the issuer or underwriter. 

(B) CERTIFICATION REQUIRED.—In any case in which 

third-party due diligence services are employed by a nationally recognized statistical rating organization, an 

issuer, or an underwriter, the person providing the due 

diligence services shall provide to any nationally recognized statistical rating organization that produces a rating 

to which such services relate, written certification, as provided in subparagraph (C). 

(C) FORMAT AND CONTENT.—The Commission shall establish the appropriate format and content for the written 

certifications required under subparagraph (B), to ensure 

that providers of due diligence services have conducted a 

thorough review of data, documentation, and other relevant information necessary for a nationally recognized 

statistical rating organization to provide an accurate rating. 

(D) DISCLOSURE OF CERTIFICATION.—The Commission 

shall adopt rules requiring a nationally recognized statistical rating organization, at the time at which the nationally recognized statistical rating organization produces a 

rating, to disclose the certification described in subparagraph (B) to the public in a manner that allows the public 

to determine the adequacy and level of due diligence services provided by a third party. 

(t) CORPORATE GOVERNANCE, ORGANIZATION, AND MANAGEMENT

OF CONFLICTS OF INTEREST.— 

(1) BOARD OF DIRECTORS.—Each nationally recognized statistical rating organization shall have a board of directors. 

(2) INDEPENDENT DIRECTORS.— 

(A) IN GENERAL.—At least 1⁄2 of the board of directors, 

but not fewer than 2 of the members thereof, shall be independent of the nationally recognized statistical rating 

agency. A portion of the independent directors shall include users of ratings from a nationally recognized statistical rating organization. 

(B) INDEPENDENCE DETERMINATION.—In order to be considered independent for purposes of this subsection, a 

member of the board of directors of a nationally recognized 

statistical rating organization— 

(i) may not, other than in his or her capacity as a 

member of the board of directors or any committee 

thereof— 

252 

(I) accept any consulting, advisory, or other 

compensatory fee from the nationally recognized 

statistical rating organization; or 

(II) be a person associated with the nationally 

recognized statistical rating organization or with 

any affiliated company thereof; and 

(ii) shall be disqualified from any deliberation involving a specific rating in which the independent 

board member has a financial interest in the outcome 

of the rating. 

(C) COMPENSATION AND TERM.—The compensation of the 

independent members of the board of directors of a nationally recognized statistical rating organization shall not be 

linked to the business performance of the nationally recognized statistical rating organization, and shall be arranged 

so as to ensure the independence of their judgment. The 

term of office of the independent directors shall be for a 

pre-agreed fixed period, not to exceed 5 years, and shall 

not be renewable. 

(3) DUTIES OF BOARD OF DIRECTORS.—In addition to the overall responsibilities of the board of directors, the board shall 

oversee— 

(A) the establishment, maintenance, and enforcement of 

policies and procedures for determining credit ratings; 

(B) the establishment, maintenance, and enforcement of 

policies and procedures to address, manage, and disclose 

any conflicts of interest; 

(C) the effectiveness of the internal control system with 

respect to policies and procedures for determining credit 

ratings; and 

(D) the compensation and promotion policies and practices of the nationally recognized statistical rating organization. 

(4) TREATMENT OF NRSRO SUBSIDIARIES.—If a nationally recognized statistical rating organization is a subsidiary of a parent entity, the board of the directors of the parent entity may 

satisfy the requirements of this subsection by assigning to a 

committee of such board of directors the duties under paragraph (3), if— 

(A) at least 1⁄2 of the members of the committee (including the chairperson of the committee) are independent, as 

defined in this section; and 

(B) at least 1 member of the committee is a user of ratings from a nationally recognized statistical rating organization. 

(5) EXCEPTION AUTHORITY.—If the Commission finds that 

compliance with the provisions of this subsection present an 

unreasonable burden on a small nationally recognized statistical rating organization, the Commission may permit the nationally recognized statistical rating organization to delegate 

such responsibilities to a committee that includes at least one 

individual who is a user of ratings of a nationally recognized 

statistical rating organization. 

(u) DUTY TO REPORT TIPS ALLEGING MATERIAL VIOLATIONS OF

LAW.— 

253 

(1) DUTY TO REPORT.—Each nationally recognized statistical 

rating organization shall refer to the appropriate law enforcement or regulatory authorities any information that the nationally recognized statistical rating organization receives from 

a third party and finds credible that alleges that an issuer of 

securities rated by the nationally recognized statistical rating 

organization has committed or is committing a material violation of law that has not been adjudicated by a Federal or State 

court. 

(2) RULE OF CONSTRUCTION.—Nothing in paragraph (1) may 

be construed to require a nationally recognized statistical rating organization to verify the accuracy of the information described in paragraph (1). 

(v) INFORMATION FROM SOURCES OTHER THAN THE ISSUER.—In 

producing a credit rating, a nationally recognized statistical rating 

organization shall consider information about an issuer that the 

nationally recognized statistical rating organization has, or receives 

from a source other than the issuer or underwriter, that the nationally recognized statistical rating organization finds credible and 

potentially significant to a rating decision. 

SEC. 15F. REGISTRATION AND REGULATION OF SECURITY-BASED 

SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS. 

(a) REGISTRATION.— 

(1) SECURITY-BASED SWAP DEALERS.—It shall be unlawful for 

any person to act as a security-based swap dealer unless the 

person is registered as a security-based swap dealer with the 

Commission. 

(2) MAJOR SECURITY-BASED SWAP PARTICIPANTS.—It shall be 

unlawful for any person to act as a major security-based swap 

participant unless the person is registered as a major securitybased swap participant with the Commission. 

(b) REQUIREMENTS.— 

(1) IN GENERAL.—A person shall register as a security-based 

swap dealer or major security-based swap participant by filing 

a registration application with the Commission. 

(2) CONTENTS.— 

(A) IN GENERAL.—The application shall be made in such 

form and manner as prescribed by the Commission, and 

shall contain such information, as the Commission considers necessary concerning the business in which the applicant is or will be engaged. 

(B) CONTINUAL REPORTING.—A person that is registered 

as a security-based swap dealer or major security-based 

swap participant shall continue to submit to the Commission reports that contain such information pertaining to 

the business of the person as the Commission may require. 

(3) EXPIRATION.—Each registration under this section shall 

expire at such time as the Commission may prescribe by rule 

or regulation. 

(4) RULES.—Except as provided in subsections (d) and (e), 

the Commission may prescribe rules applicable to securitybased swap dealers and major security-based swap participants, including rules that limit the activities of non-bank seVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00257 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
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curity-based swap dealers and major security-based swap participants. 

(5) TRANSITION.—Not later than 1 year after the date of enactment of the Wall Street Transparency and Accountability 

Act of 2010, the Commission shall issue rules under this section to provide for the registration of security-based swap dealers and major security-based swap participants. 

(6) STATUTORY DISQUALIFICATION.—Except to the extent otherwise specifically provided by rule, regulation, or order of the 

Commission, it shall be unlawful for a security-based swap 

dealer or a major security-based swap participant to permit 

any person associated with a security-based swap dealer or a 

major security-based swap participant who is subject to a statutory disqualification to effect or be involved in effecting security-based swaps on behalf of the security-based swap dealer or 

major security-based swap participant, if the security-based 

swap dealer or major security-based swap participant knew, or 

in the exercise of reasonable care should have known, of the 

statutory disqualification. 

(c) DUAL REGISTRATION.— 

(1) SECURITY-BASED SWAP DEALER.—Any person that is required to be registered as a security-based swap dealer under 

this section shall register with the Commission, regardless of 

whether the person also is registered with the Commodity Futures Trading Commission as a swap dealer. 

(2) MAJOR SECURITY-BASED SWAP PARTICIPANT.—Any person 

that is required to be registered as a major security-based 

swap participant under this section shall register with the 

Commission, regardless of whether the person also is registered with the Commodity Futures Trading Commission as a 

major swap participant. 

(d) RULEMAKING.— 

(1) IN GENERAL.—The Commission shall adopt rules for persons that are registered as security-based swap dealers or 

major security-based swap participants under this section. 

(2) EXCEPTION FOR PRUDENTIAL REQUIREMENTS.— (A) IN GENERAL.—The Commission may not prescribe 

rules imposing prudential requirements on security-based 

swap dealers or major security-based swap participants for 

which there is a prudential regulator. 

(B) APPLICABILITY.—Subparagraph (A) does not limit the 

authority of the Commission to prescribe rules as directed 

under this section. 

(e) CAPITAL AND MARGIN REQUIREMENTS.— 

(1) IN GENERAL.— 

(A) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE BANKS.—Each 

registered security-based swap dealer and major securitybased swap participant for which there is not a prudential 

regulator shall meet such minimum capital requirements 

and minimum initial and variation margin requirements 

as the prudential regulator shall by rule or regulation prescribe under paragraph (2)(A). 

(B) SECURITY-BASED SWAP DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS THAT ARE NOT BANKS.— 

255 

Each registered security-based swap dealer and major security-based swap participant for which there is not a prudential regulator shall meet such minimum capital requirements and minimum initial and variation margin requirements as the Commission shall by rule or regulation 

prescribe under paragraph (2)(B). 

(2) RULES.— (A) SECURITY-BASED SWAP DEALERS AND MAJOR SECU- RITY-BASED SWAP PARTICIPANTS THAT ARE BANKS.—The 

prudential regulators, in consultation with the Commission 

and the Commodity Futures Trading Commission, shall 

adopt rules for security-based swap dealers and major security-based swap participants, with respect to their activities as a swap dealer or major swap participant, for which 

there is a prudential regulator imposing— 

(i) capital requirements; and 

(ii) both initial and variation margin requirements 

on all security-based swaps that are not cleared by a 

registered clearing agency. 

(B) SECURITY-BASED SWAP DEALERS AND MAJOR SECU- RITY-BASED SWAP PARTICIPANTS THAT ARE NOT BANKS.—The 

Commission shall adopt rules for security-based swap dealers and major security-based swap participants, with respect to their activities as a swap dealer or major swap 

participant, for which there is not a prudential regulator 

imposing— 

(i) capital requirements; and 

(ii) both initial and variation margin requirements 

on all swaps that are not cleared by a registered clearing agency. 

(C) CAPITAL.—In setting capital requirements for a person that is designated as a security-based swap dealer or 

a major security-based swap participant for a single type 

or single class or category of security-based swap or activities, the prudential regulator and the Commission shall 

take into account the risks associated with other types of 

security-based swaps or classes of security-based swaps or 

categories of security-based swaps engaged in and the 

other activities conducted by that person that are not otherwise subject to regulation applicable to that person by 

virtue of the status of the person. 

(3) STANDARDS FOR CAPITAL AND MARGIN.— 

(A) IN GENERAL.—To offset the greater risk to the security-based swap dealer or major security-based swap participant and the financial system arising from the use of 

security-based swaps that are not cleared, the requirements imposed under paragraph (2) shall — 

(i) help ensure the safety and soundness of the security-based swap dealer or major security-based swap 

participant; and 

(ii) be appropriate for the risk associated with the 

non-cleared security-based swaps held as a securitybased swap dealer or major security-based swap participant. 

(B) RULE OF CONSTRUCTION.— 

256 

(i) IN GENERAL.—Nothing in this section shall limit, 

or be construed to limit, the authority— 

(I) of the Commission to set financial responsibility rules for a broker or dealer registered pursuant to section 15(b) (except for section 15(b)(11) 

thereof) in accordance with section 15(c)(3); or 

(II) of the Commodity Futures Trading Commission to set financial responsibility rules for a futures commission merchant or introducing broker 

registered pursuant to section 4f(a) of the Commodity Exchange Act (except for section 4f(a)(3) 

thereof) in accordance with section 4f(b) of the 

Commodity Exchange Act. 

(ii) FUTURES COMMISSION MERCHANTS AND OTHER

DEALERS.—A futures commission merchant, introducing broker, broker, or dealer shall maintain sufficient capital to comply with the stricter of any applicable capital requirements to which such futures commission merchant, introducing broker, broker, or dealer is subject to under this title or the Commodity Exchange Act. 

(C) MARGIN REQUIREMENTS.—In prescribing margin requirements under this subsection, the prudential regulator 

with respect to security-based swap dealers and major security-based swap participants that are depository institutions, and the Commission with respect to security-based 

swap dealers and major security-based swap participants 

that are not depository institutions shall permit the use of 

noncash collateral, as the regulator or the Commission determines to be consistent with— 

(i) preserving the financial integrity of markets trading security-based swaps; and 

(ii) preserving the stability of the United States financial system. 

(D) COMPARABILITY OF CAPITAL AND MARGIN REQUIRE- MENTS.— 

(i) IN GENERAL.—The prudential regulators, the 

Commission, and the Securities and Exchange Commission shall periodically (but not less frequently than 

annually) consult on minimum capital requirements 

and minimum initial and variation margin requirements. 

(ii) COMPARABILITY.—The entities described in 

clause (i) shall, to the maximum extent practicable, establish and maintain comparable minimum capital requirements and minimum initial and variation margin 

requirements, including the use of noncash collateral, 

for— 

(I) security-based swap dealers; and 

(II) major security-based swap participants. 

(4) APPLICABILITY WITH RESPECT TO COUNTERPARTIES.—øThe 

requirements¿ 

(A) IN GENERAL.—The requirements of paragraphs 

(2)(A)(ii) and (2)(B)(ii) shall not apply to a security-based 

swap in which a counterparty qualifies for an exception 

257 

under section 3C(g)(1) or satisfies the criteria in section 

3C(g)(4). 

(B) INITIAL MARGIN REQUIREMENT.—The initial margin 

requirements imposed by rules adopted pursuant to paragraphs (2)(A)(ii) and (2)(B)(ii) shall not apply to any security-based swap in which— 

(i) one counterparty is a person in which the other 

counterparty, directly or indirectly, holds a majority 

ownership interest; or 

(ii) a third party, directly or indirectly, holds a majority ownership interest in both counterparties. 

(f) REPORTING AND RECORDKEEPING.— 

(1) IN GENERAL.—Each registered security-based swap dealer 

and major security-based swap participant— 

(A) shall make such reports as are required by the Commission, by rule or regulation, regarding the transactions 

and positions and financial condition of the registered security-based swap dealer or major security-based swap 

participant; 

(B)(i) for which there is a prudential regulator, shall 

keep books and records of all activities related to the business as a security-based swap dealer or major securitybased swap participant in such form and manner and for 

such period as may be prescribed by the Commission by 

rule or regulation; and 

(ii) for which there is no prudential regulator, shall keep 

books and records in such form and manner and for such 

period as may be prescribed by the Commission by rule or 

regulation; and 

(C) shall keep books and records described in subparagraph (B) open to inspection and examination by any representative of the Commission. 

(2) RULES.—The Commission shall adopt rules governing reporting and recordkeeping for security-based swap dealers and 

major security-based swap participants. 

(g) DAILY TRADING RECORDS.— (1) IN GENERAL.—Each registered security-based swap dealer 

and major security-based swap participant shall maintain daily 

trading records of the security-based swaps of the registered 

security-based swap dealer and major security-based swap participant and all related records (including related cash or forward transactions) and recorded communications, including 

electronic mail, instant messages, and recordings of telephone 

calls, for such period as may be required by the Commission 

by rule or regulation. 

(2) INFORMATION REQUIREMENTS.—The daily trading records 

shall include such information as the Commission shall require 

by rule or regulation. 

(3) COUNTERPARTY RECORDS.—Each registered security-based 

swap dealer and major security-based swap participant shall 

maintain daily trading records for each counterparty in a manner and form that is identifiable with each security-based swap 

transaction. 

(4) AUDIT TRAIL.—Each registered security-based swap dealer and major security-based swap participant shall maintain a 

258 

complete audit trail for conducting comprehensive and accurate 

trade reconstructions. 

(5) RULES.—The Commission shall adopt rules governing 

daily trading records for security-based swap dealers and 

major security-based swap participants. 

(h) BUSINESS CONDUCT STANDARDS.— (1) IN GENERAL.—Each registered security-based swap dealer 

and major security-based swap participant shall conform with 

such business conduct standards as prescribed in paragraph (3) 

and as may be prescribed by the Commission by rule or regulation that relate to— 

(A) fraud, manipulation, and other abusive practices involving security-based swaps (including security-based 

swaps that are offered but not entered into); 

(B) diligent supervision of the business of the registered 

security-based swap dealer and major security-based swap 

participant; 

(C) adherence to all applicable position limits; and 

(D) such other matters as the Commission determines to 

be appropriate. 

(2) RESPONSIBILITIES WITH RESPECT TO SPECIAL ENTITIES.— (A) ADVISING SPECIAL ENTITIES.—A security-based swap 

dealer or major security-based swap participant that acts 

as an advisor to special entity regarding a security-based 

swap shall comply with the requirements of paragraph (4) 

with respect to such special entity. 

(B) ENTERING OF SECURITY-BASED SWAPS WITH RESPECT

TO SPECIAL ENTITIES.—A security-based swap dealer that 

enters into or offers to enter into security-based swap with 

a special entity shall comply with the requirements of 

paragraph (5) with respect to such special entity. 

(C) SPECIAL ENTITY DEFINED.—For purposes of this subsection, the term ‘‘special entity’’ means— 

(i) a Federal agency; 

(ii) a State, State agency, city, county, municipality, 

or other political subdivision of a State or; 

(iii) any employee benefit plan, as defined in section 

3 of the Employee Retirement Income Security Act of 

1974 (29 U.S.C. 1002); 

(iv) any governmental plan, as defined in section 3 

of the Employee Retirement Income Security Act of 

1974 (29 U.S.C. 1002); or 

(v) any endowment, including an endowment that is 

an organization described in section 501(c)(3) of the 

Internal Revenue Code of 1986. 

(3) BUSINESS CONDUCT REQUIREMENTS.—Business conduct requirements adopted by the Commission shall— 

(A) establish a duty for a security-based swap dealer or 

major security-based swap participant to verify that any 

counterparty meets the eligibility standards for an eligible 

contract participant; 

(B) require disclosure by the security-based swap dealer 

or major security-based swap participant to any 

counterparty to the transaction (other than a securitybased swap dealer, major security-based swap participant, 

259 

security-based swap dealer, or major security-based swap 

participant) of— 

(i) information about the material risks and characteristics of the security-based swap; 

(ii) any material incentives or conflicts of interest 

that the security-based swap dealer or major securitybased swap participant may have in connection with 

the security-based swap; and 

(iii)(I) for cleared security-based swaps, upon the request of the counterparty, receipt of the daily mark of 

the transaction from the appropriate derivatives clearing organization; and 

(II) for uncleared security-based swaps, receipt of 

the daily mark of the transaction from the securitybased swap dealer or the major security-based swap 

participant; 

(C) establish a duty for a security-based swap dealer or 

major security-based swap participant to communicate in 

a fair and balanced manner based on principles of fair 

dealing and good faith; and 

(D) establish such other standards and requirements as 

the Commission may determine are appropriate in the 

public interest, for the protection of investors, or otherwise 

in furtherance of the purposes of this Act. 

(4) SPECIAL REQUIREMENTS FOR SECURITY-BASED SWAP DEALERS ACTING AS ADVISORS.— 

(A) IN GENERAL.—It shall be unlawful for a securitybased swap dealer or major security-based swap participant— 

(i) to employ any device, scheme, or artifice to defraud any special entity or prospective customer who 

is a special entity; 

(ii) to engage in any transaction, practice, or course 

of business that operates as a fraud or deceit on any 

special entity or prospective customer who is a special 

entity; or 

(iii) to engage in any act, practice, or course of business that is fraudulent, deceptive, or manipulative. 

(B) DUTY.—Any security-based swap dealer that acts as 

an advisor to a special entity shall have a duty to act in 

the best interests of the special entity. 

(C) REASONABLE EFFORTS.—Any security-based swap 

dealer that acts as an advisor to a special entity shall 

make reasonable efforts to obtain such information as is 

necessary to make a reasonable determination that any security-based swap recommended by the security-based 

swap dealer is in the best interests of the special entity, 

including information relating to— 

(i) the financial status of the special entity; 

(ii) the tax status of the special entity; 

(iii) the investment or financing objectives of the 

special entity; and 

(iv) any other information that the Commission may 

prescribe by rule or regulation. 

260 

(5) SPECIAL REQUIREMENTS FOR SECURITY-BASED SWAP DEAL- ERS AS COUNTERPARTIES TO SPECIAL ENTITIES.— (A) IN GENERAL.—Any security-based swap dealer or 

major security-based swap participant that offers to or enters into a security-based swap with a special entity 

shall— 

(i) comply with any duty established by the Commission for a security-based swap dealer or major security-based swap participant, with respect to a 

counterparty that is an eligible contract participant 

within the meaning of subclause (I) or (II) of clause 

(vii) of section 1a(18) of the Commodity Exchange Act, 

that requires the security-based swap dealer or major 

security-based swap participant to have a reasonable 

basis to believe that the counterparty that is a special 

entity has an independent representative that— 

(I) has sufficient knowledge to evaluate the 

transaction and risks; 

(II) is not subject to a statutory disqualification; 

(III) is independent of the security-based swap 

dealer or major security-based swap participant; 

(IV) undertakes a duty to act in the best interests of the counterparty it represents; 

(V) makes appropriate disclosures; 

(VI) will provide written representations to the 

special entity regarding fair pricing and the appropriateness of the transaction; and 

(VII) in the case of employee benefit plans subject to the Employee Retirement Income Security 

act of 1974, is a fiduciary as defined in section 3 

of that Act (29 U.S.C. 1002); and 

(ii) before the initiation of the transaction, disclose 

to the special entity in writing the capacity in which 

the security-based swap dealer is acting. 

(B) COMMISSION AUTHORITY.—The Commission may establish such other standards and requirements under this 

paragraph as the Commission may determine are appropriate in the public interest, for the protection of investors, 

or otherwise in furtherance of the purposes of this Act. 

(6) RULES.—The Commission shall prescribe rules under this 

subsection governing business conduct standards for securitybased swap dealers and major security-based swap participants. 

(7) APPLICABILITY.—This subsection shall not apply with respect to a transaction that is— 

(A) initiated by a special entity on an exchange or security-based swaps execution facility; and 

(B) the security-based swap dealer or major securitybased swap participant does not know the identity of the 

counterparty to the transaction.’’ 

(i) DOCUMENTATION STANDARDS.— (1) IN GENERAL.—Each registered security-based swap dealer 

and major security-based swap participant shall conform with 

such standards as may be prescribed by the Commission, by 

rule or regulation, that relate to timely and accurate confirmaVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00264 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
261 

tion, processing, netting, documentation, and valuation of all 

security-based swaps. 

(2) RULES.—The Commission shall adopt rules governing 

documentation standards for security-based swap dealers and 

major security-based swap participants. 

(j) DUTIES.—Each registered security-based swap dealer and 

major security-based swap participant shall, at all times, comply 

with the following requirements: 

(1) MONITORING OF TRADING.—The security-based swap dealer or major security-based swap participant shall monitor its 

trading in security-based swaps to prevent violations of applicable position limits. 

(2) RISK MANAGEMENT PROCEDURES.—The security-based 

swap dealer or major security-based swap participant shall establish robust and professional risk management systems adequate for managing the day-to-day business of the securitybased swap dealer or major security-based swap participant. 

(3) DISCLOSURE OF GENERAL INFORMATION.—The securitybased swap dealer or major security-based swap participant 

shall disclose to the Commission and to the prudential regulator for the security-based swap dealer or major securitybased swap participant, as applicable, information concerning— 

(A) terms and conditions of its security-based swaps; 

(B) security-based swap trading operations, mechanisms, 

and practices; 

(C) financial integrity protections relating to securitybased swaps; and 

(D) other information relevant to its trading in securitybased swaps. 

(4) ABILITY TO OBTAIN INFORMATION.—The security-based 

swap dealer or major security-based swap participant shall— 

(A) establish and enforce internal systems and procedures to obtain any necessary information to perform any 

of the functions described in this section; and 

(B) provide the information to the Commission and to 

the prudential regulator for the security-based swap dealer 

or major security-based swap participant, as applicable, on 

request. 

(5) CONFLICTS OF INTEREST.—The security-based swap dealer 

and major security-based swap participant shall implement 

conflict-of-interest systems and procedures that— 

(A) establish structural and institutional safeguards to 

ensure that the activities of any person within the firm relating to research or analysis of the price or market for 

any security-based swap or acting in a role of providing 

clearing activities or making determinations as to accepting clearing customers are separated by appropriate informational partitions within the firm from the review, pressure, or oversight of persons whose involvement in pricing, 

trading, or clearing activities might potentially bias their 

judgment or supervision and contravene the core principles 

of open access and the business conduct standards described in this title; and 

262 

(B) address such other issues as the Commission determines to be appropriate. 

(6) ANTITRUST CONSIDERATIONS.—Unless necessary or appropriate to achieve the purposes of this title, the security-based 

swap dealer or major security-based swap participant shall 

not— 

(A) adopt any process or take any action that results in 

any unreasonable restraint of trade; or 

(B) impose any material anticompetitive burden on trading or clearing. 

(7) RULES.—The Commission shall prescribe rules under this 

subsection governing duties of security-based swap dealers and 

major security-based swap participants. 

(k) DESIGNATION OF CHIEF COMPLIANCE OFFICER.— 

(1) IN GENERAL.—Each security-based swap dealer and major 

security-based swap participant shall designate an individual 

to serve as a chief compliance officer. 

(2) DUTIES.—The chief compliance officer shall— 

(A) report directly to the board or to the senior officer of 

the security-based swap dealer or major security-based 

swap participant; 

(B) review the compliance of the security-based swap 

dealer or major security-based swap participant with respect to the security-based swap dealer and major securitybased swap participant requirements described in this section; 

(C) in consultation with the board of directors, a body 

performing a function similar to the board, or the senior 

officer of the organization, resolve any conflicts of interest 

that may arise; 

(D) be responsible for administering each policy and procedure that is required to be established pursuant to this 

section; 

(E) ensure compliance with this title (including regulations) relating to security-based swaps, including each rule 

prescribed by the Commission under this section; 

(F) establish procedures for the remediation of noncompliance issues identified by the chief compliance officer 

through any— 

(i) compliance office review; 

(ii) look-back; 

(iii) internal or external audit finding; 

(iv) self-reported error; or 

(v) validated complaint; and 

(G) establish and follow appropriate procedures for the 

handling, management response, remediation, retesting, 

and closing of noncompliance issues. 

(3) ANNUAL REPORTS.— 

(A) IN GENERAL.—In accordance with rules prescribed by 

the Commission, the chief compliance officer shall annually prepare and sign a report that contains a description 

of— 

(i) the compliance of the security-based swap dealer 

or major swap participant with respect to this title (including regulations); and 

263 

(ii) each policy and procedure of the security-based 

swap dealer or major security-based swap participant 

of the chief compliance officer (including the code of 

ethics and conflict of interest policies). 

(B) REQUIREMENTS.—A compliance report under subparagraph (A) shall— 

(i) accompany each appropriate financial report of 

the security-based swap dealer or major security-based 

swap participant that is required to be furnished to 

the Commission pursuant to this section; and 

(ii) include a certification that, under penalty of law, 

the compliance report is accurate and complete. 

(l) ENFORCEMENT AND ADMINISTRATIVE PROCEEDING AUTHORITY.— 

(1) PRIMARY ENFORCEMENT AUTHORITY.— 

(A) SECURITIES AND EXCHANGE COMMISSION.—Except as 

provided in subparagraph (B), (C), or (D), the Commission 

shall have primary authority to enforce subtitle B, and the 

amendments made by subtitle B of the Wall Street Transparency and Accountability Act of 2010, with respect to 

any person. 

(B) PRUDENTIAL REGULATORS.—The prudential regulators shall have exclusive authority to enforce the provisions of subsection (e) and other prudential requirements 

of this title (including risk management standards), with 

respect to security-based swap dealers or major securitybased swap participants for which they are the prudential 

regulator. 

(C) REFERRAL.— 

(i) VIOLATIONS OF NONPRUDENTIAL REQUIREMENTS.— 

If the appropriate Federal banking agency for security-based swap dealers or major security-based swap 

participants that are depository institutions has cause 

to believe that such security-based swap dealer or 

major security-based swap participant may have engaged in conduct that constitutes a violation of the 

nonprudential requirements of this section or rules 

adopted by the Commission thereunder, the agency 

may recommend in writing to the Commission that the 

Commission initiate an enforcement proceeding as authorized under this title. The recommendation shall be 

accompanied by a written explanation of the concerns 

giving rise to the recommendation. 

(ii) VIOLATIONS OF PRUDENTIAL REQUIREMENTS.—If 

the Commission has cause to believe that a securitiesbased swap dealer or major securities-based swap participant that has a prudential regulator may have engaged in conduct that constitute a violation of the prudential requirements of subsection (e) or rules adopted 

thereunder, the Commission may recommend in writing to the prudential regulator that the prudential 

regulator initiate an enforcement proceeding as authorized under this title. The recommendation shall be 

accompanied by a written explanation of the concerns 

giving rise to the recommendation. 

264 

(D) BACKSTOP ENFORCEMENT AUTHORITY.— (i) INITIATION OF ENFORCEMENT PROCEEDING BY PRU- DENTIAL REGULATOR.—If the Commission does not initiate an enforcement proceeding before the end of the 

90-day period beginning on the date on which the 

Commission receives a written report under subsection 

(C)(i), the prudential regulator may initiate an enforcement proceeding. 

(ii) INITIATION OF ENFORCEMENT PROCEEDING BY

COMMISSION.—If the prudential regulator does not initiate an enforcement proceeding before the end of the 

90-day period beginning on the date on which the prudential regulator receives a written report under subsection (C)(ii), the Commission may initiate an enforcement proceeding. 

(2) CENSURE, DENIAL, SUSPENSION; NOTICE AND HEARING.— 

The Commission, by order, shall censure, place limitations on 

the activities, functions, or operations of, or revoke the registration of any security-based swap dealer or major securitybased swap participant that has registered with the Commission pursuant to subsection (b) if the Commission finds, on the 

record after notice and opportunity for hearing, that such censure, placing of limitations, or revocation is in the public interest and that such security-based swap dealer or major securitybased swap participant, or any person associated with such security-based swap dealer or major security-based swap participant effecting or involved in effecting transactions in securitybased swaps on behalf of such security-based swap dealer or 

major security-based swap participant, whether prior or subsequent to becoming so associated— 

(A) has committed or omitted any act, or is subject to an 

order or finding, enumerated in subparagraph (A), (D), or 

(E) of paragraph (4) of section 15(b); 

(B) has been convicted of any offense specified in subparagraph (B) of such paragraph (4) within 10 years of the 

commencement of the proceedings under this subsection; 

(C) is enjoined from any action, conduct, or practice specified in subparagraph (C) of such paragraph (4); 

(D) is subject to an order or a final order specified in 

subparagraph (F) or (H), respectively, of such paragraph 

(4); or 

(E) has been found by a foreign financial regulatory authority to have committed or omitted any act, or violated 

any foreign statute or regulation, enumerated in subparagraph (G) of such paragraph (4). 

(3) ASSOCIATED PERSONS.—With respect to any person who is 

associated, who is seeking to become associated, or, at the time 

of the alleged misconduct, who was associated or was seeking 

to become associated with a security-based swap dealer or 

major security-based swap participant for the purpose of effecting or being involved in effecting security-based swaps on behalf of such security-based swap dealer or major security-based 

swap participant, the Commission, by order, shall censure, 

place limitations on the activities or functions of such person, 

or suspend for a period not exceeding 12 months, or bar such 

265 

person from being associated with a security-based swap dealer 

or major security-based swap participant, if the Commission 

finds, on the record after notice and opportunity for a hearing, 

that such censure, placing of limitations, suspension, or bar is 

in the public interest and that such person— 

(A) has committed or omitted any act, or is subject to an 

order or finding, enumerated in subparagraph (A), (D), or 

(E) of paragraph (4) of section 15(b); 

(B) has been convicted of any offense specified in subparagraph (B) of such paragraph (4) within 10 years of the 

commencement of the proceedings under this subsection; 

(C) is enjoined from any action, conduct, or practice specified in subparagraph (C) of such paragraph (4); 

(D) is subject to an order or a final order specified in 

subparagraph (F) or (H), respectively, of such paragraph 

(4); or 

(E) has been found by a foreign financial regulatory authority to have committed or omitted any act, or violated 

any foreign statute or regulation, enumerated in subparagraph (G) of such paragraph (4). 

(4) UNLAWFUL CONDUCT.—It shall be unlawful— 

(A) for any person as to whom an order under paragraph 

(3) is in effect, without the consent of the Commission, 

willfully to become, or to be, associated with a securitybased swap dealer or major security-based swap participant in contravention of such order; or 

(B) for any security-based swap dealer or major securitybased swap participant to permit such a person, without 

the consent of the Commission, to become or remain a person associated with the security-based swap dealer or 

major security-based swap participant in contravention of 

such order, if such security-based swap dealer or major security-based swap participant knew, or in the exercise of 

reasonable care should have known, of such order. 

* * * * * * * 

RULES, REGULATIONS, AND ORDERS; ANNUAL REPORTS

SEC. 23. (a)(1) The Commission, the Board of Governors of the 

Federal Reserve System, and the other agencies enumerated in section 3(a)(34) of this title shall each have power to make such rules 

and regulations as may be necessary or appropriate to implement 

the provisions of this title for which they are responsible or for the 

execution of the functions vested in them by this title, and may for 

such purposes classify persons, securities, transactions, statements, 

applications, reports, and other matters within their respective jurisdictions, and prescribe greater, lesser, or different requirements 

for different classes thereof. No provision of this title imposing any 

liability shall apply to any act done or omitted in good faith in conformity with a rule, regulation, or order of the Commission, the 

Board of Governors of the Federal Reserve System, other agency 

enumerated in section 3(a)(34) of this title, or any self-regulatory 

organization, notwithstanding that such rule, regulation, or order 

may thereafter be amended or rescinded or determined by judicial 

or other authority to be invalid for any reason. 

266 

(2) The Commission and the Secretary of the Treasury, in making rules and regulations pursuant to any provisions of this title, 

shall consider among other matters the impact any such rule or 

regulation would have on competition. The Commission and the 

Secretary of the Treasury shall not adopt any such rule or regulation which would impose a burden on competition not necessary or 

appropriate in furtherance of the purposes of this title. The Commission and the Secretary of the Treasury shall include in the 

statement of basis and purpose incorporated in any rule or regulation adopted under this title, the reasons for the Commission’s or 

the Secretary’s determination that any burden on competition imposed by such rule or regulation is necessary or appropriate in furtherance of the purposes of this title. 

(3) The Commission and the Secretary, in making rules and regulations pursuant to any provision of this title, considering any application for registration in accordance with section 19(a) of this 

title, or reviewing any proposed rule change of a self-regulatory organization in accordance with section 19(b) of this title, shall keep 

in a public file and make available for copying all written statements filed with the Commission and the Secretary and all written 

communications between the Commission or the Secretary and any 

person relating to the proposed rule, regulation, application, or proposed rule change: Provided, however, That the Commission and 

the Secretary shall not be required to keep in a public file or make 

available for copying any such statement or communication which 

it may withhold from the public in accordance with the provisions 

of section 552 of title 5, United States Code. 

(b)(1) The Commission, the Board of Governors of the Federal 

Reserve System, and the other agencies enumerated in section 

3(a)(34) of this title shall each make an annual report to the Congress on its work for the preceding year, and shall include in each 

such report whatever information, data, and recommendations for 

further legislation it considers advisable with regard to matters 

within its respective jurisdiction under this title. 

(2) The appropriate regulatory agency for a self-regulatory organization shall include in its annual report to the Congress for each 

fiscal year, a summary of its oversight activities under this title 

with respect to such self-regulatory organization, including a description of any examination conducted as part of such activities of 

any organization, any material recommendation presented as part 

of such activities to such organization for changes in its organization or rules, and any such action by such organization in response 

to any such recommendation. 

(3) The appropriate regulatory agency for any class of municipal 

securities dealers shall include in its annual report to the Congress 

for each fiscal year a summary of its regulatory activities pursuant 

to this title with respect to such municipal securities dealers, including the nature of and reason for any sanction imposed pursuant to this title against any such municipal securities dealer. 

(4) The Commission shall also include in its annual report to the 

Congress for each fiscal year— 

(A) a summary of the Commission’s oversight activities with 

respect to self-regulatory organizations for which it is not the 

appropriate regulatory agency, including a description of any 

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267 

ommendation presented to any such organization for changes 

in its organization or rules, and any action by any such organization in response to any such recommendations; 

(B) a statement and analysis of the expenses and operations 

of each self-regulatory organization in connection with the performance of its responsibilities under this title, for which purpose data pertaining to such expenses and operations shall be 

made available by such organization to the Commission at its 

request; 

(C) the steps the Commission has taken and the progress it 

has made toward ending the physical movement of the securities certificate in connection with the settlement of securities 

transactions, and its recommendations, if any, for legislation to 

eliminate the securities certificate; 

(D) the number of requests for exemptions from provisions of 

this title received, the number granted, and the basis upon 

which any such exemption was granted; 

(E) a summary of the Commission’s regulatory activities with 

respect to municipal securities dealers for which it is not the 

appropriate regulatory agency, including the nature of, and 

reason for, any sanction imposed in proceedings against such 

municipal securities dealers; 

(F) a statement of the time elapsed between the filing of reports pursuant to section 13(f) of this title and the public availability of the information contained therein, the costs involved 

in the Commission’s processing of such reports and tabulating 

such information, the manner in which the Commission uses 

such information, and the steps the Commission has taken and 

the progress it has made toward requiring such reports to be 

filed and such information to be made available to the public 

in machine language; 

(G) information concerning (i) the effects its rules and regulations are having on the viability of small brokers and dealers; 

(ii) its attempts to reduce any unnecessary reporting burden on 

such brokers and dealers; and (iii) its efforts to help to assure 

the continued participation of small brokers and dealers in the 

United States securities markets; 

(H) a statement detailing its administration of the Freedom 

of Information Act, section 552 of title 5, United States Code, 

including a copy of the report filed pursuant to subsection (d) 

of such section; and 

(I) the steps that have been taken and the progress that has 

been made in promoting the timely public dissemination and 

availability for analytical purposes (on a fair, reasonable, and 

nondiscriminatory basis) of information concerning government 

securities transactions and quotations, and its recommendations, if any, for legislation to assure timely dissemination of 

(i) information on transactions in regularly traded government 

securities sufficient to permit the determination of the prevailing market price for such securities, and (ii) reports of the 

highest published bids and lowest published offers for government securities (including the size at which persons are willing 

to trade with respect to such bids and offers). 

(c) The Commission, by rule, shall prescribe the procedure applicable to every case pursuant to this title of adjudication (as defined 

268 

in section 551 of title 5, United States Code) not required to be determined on the record after notice and opportunity for hearing. 

Such rules shall, as a minimum, provide that prompt notice shall 

be given of any adverse action or final disposition and that such 

notice and the entry of any order shall be accompanied by a statement of written reasons. 

(d) CEASE-AND-DESIST PROCEDURES.—Within 1 year after the 

date of enactment of this subsection, the Commission shall establish regulations providing for the expeditious conduct of hearings 

and rendering of decisions under section 21C of this title, section 

8A of the Securities Act of 1933, section 9(f) of the Investment 

Company Act of 1940, and section 203(k) of the Investment Advisers Act of 1940. 

(e) PROCEDURE FOR OBTAINING CERTAIN INTELLECTUAL PROPERTY.—The Commission is not authorized to compel under this title 

a person to produce or furnish source code, including algorithmic 

trading source code or similar intellectual property that forms the 

basis for design of the source code, to the Commission unless the 

Commission first issues a subpoena. 

* * * * * * * 

TRUTH IN LENDING ACT 

* * * * * * * 

TITLE I—CONSUMER CREDIT COST 

DISCLOSURE 

* * * * * * * 

CHAPTER 1—GENERAL PROVISIONS 

* * * * * * * 

§ 103. Definitions and rules of construction 

(a) The definitions and rules of construction set forth in this section are applicable for the purposes of this title. 

(b) BUREAU.—The term ‘‘Bureau’’ means the Bureau of Consumer 

Financial Protection. 

(c) The term ‘‘Bureau’’ refers to the Bureau of Governors of the 

Federal Reserve System. 

(d) The term ‘‘organization’’ means a corporation, government or 

governmental subdivision or agency, trust, estate, partnership, cooperative, or association. 

(e) The term ‘‘person’’ means a natural person or an organization. 

(f) The term ‘‘credit’’ means the right granted by a creditor to a 

debtor to defer payment of debt or to incur debt and defer its payment. 

(g) The term ‘‘creditor’’ refers only to a person who both (1) regularly extends, whether in connection with loans, sales of property 

or services, or otherwise, consumer credit which is payable by 

agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction 

269 

is initially payable on the face of the evidence of indebtedness or, 

if there is no such evidence of indebtedness, by agreement. Notwithstanding the preceding sentence, in the case of an open-end 

credit plan involving a credit card, the card issuer and any person 

who honors the credit card and offers a discount which is a finance 

charge are creditors. For the purpose of the requirements imposed 

under chapter 4 and sections 127(a)(5), 127(a)(6), 127(a)(7), 

127(b)(1), 127(b)(2), 127(b)(3), 127(b)(8), and 127(b)(10) of chapter 2 

of this title, the term ‘‘creditor’’ shall also include card issuers 

whether or not the amount due is payable by agreement in more 

than four installments or the payment of a finance charge is or 

may be required, and the Bureau shall, by regulation, apply these 

requirements to such card issuers, to the extent appropriate, even 

though the requirements are by their terms applicable only to 

creditors offering open-end credit plans. Any person who originates 

2 or more mortgages referred to in subsection (aa) in any 12-month 

period or any person who originates 1 or more such mortgages 

through a mortgage broker shall be considered to be a creditor for 

purposes of this title. The term ‘‘creditor’’ includes a private educational lender (as that term is defined in section 140) for purposes 

of this title. 

(h) The term ‘‘credit sale’’ refers to any sale in which the seller 

is a creditor. The term includes any contract in the form of a bailment or lease if the bailee or lessee contracts to pay as compensation for use a sum substantially equivalent to or in excess of the 

aggregate value of the property and services involved and it is 

agreed that the bailee or lessee will become, or for no other or a 

nominal consideration has the option to become, the owner of the 

property upon full compliance with his obligations under the contract. 

(i) The adjective ‘‘consumer’’, used with reference to a credit 

transaction, characterizes the transaction as one in which the party 

to whom credit is offered or extended is a natural person, and the 

money, property, or services which are the subject of the transaction are primarily for personal, family, or household purposes. 

(j) The terms ‘‘open end credit plan’’ and ‘‘open end consumer 

credit plan’’ mean a plan under which the creditor reasonably contemplates repeated transactions, which prescribes the terms of 

such transactions, and which provides for a finance charge which 

may be computed from time to time on the outstanding unpaid balance. A credit plan or open end consumer credit plan which is an 

open end credit plan or open end consumer credit plan within the 

meaning of the preceding sentence is an open end credit plan or 

open end consumer credit plan even if credit information is verified 

from time to time. 

(k) The term ‘‘adequate notice’’, as used in section 133, means a 

printed notice to a cardholder which sets forth the pertinent facts 

clearly and conspicuously so that a person against whom it is to 

operate could reasonably be expected to have noticed it and understood its meaning. Such notice may be given to a cardholder by 

printing the notice on any credit card, or on each periodic statement of account, issued to the cardholder, or by any other means 

reasonably assuring the receipt thereof by the cardholder. 

270 

(l) The term ‘‘credit card’’ means any card, plate, coupon book or 

other credit device existing for the purpose of obtaining money, 

property, labor, or services on credit. 

(m) The term ‘‘accepted credit card’’ means any credit card which 

the cardholder has requested and received or has signed or has 

used, or authorized another to use, for the purpose of obtaining 

money, property, labor, or services on credit. 

(n) The term ‘‘cardholder’’ means any person to whom a credit 

card is issued or any person who has agreed with the card issuer 

to pay obligations arising from the issuance of a credit card to another person. 

(o) The term ‘‘card issuer’’ means any person who issues a credit 

card, or the agent of such person with respect to such card. 

(p) The term ‘‘unauthorized use’’, as used in section 133, means 

a use of a credit card by a person other than the cardholder who 

does not have actual, implied, or apparent authority for such use 

and from which the cardholder receives no benefit. 

(q) The term ‘‘discount’’ as used in section 167 means a reduction 

made from the regular price. The term ‘‘discount’’ as used in section 167 shall not mean a surcharge. 

(r) The term ‘‘surcharge’’ as used in section 103 and section 167 

means any means of increasing the regular price to a cardholder 

which is not imposed upon customers paying by cash, check, or 

similar means. 

(s) The term ‘‘State’’ refers to any State, the Commonwealth of 

Puerto Rico, the District of Columbia, and any territory or possession of the United States. 

(t) The term ‘‘agricultural purposes’’ includes the production, harvest, exhibition, marketing, transportation, processing, or manufacture of agricultural products by a natural person who cultivates, 

plants, propagates, or nurtures those agricultural products, including but not limited to the acquisition of farmland, real property 

with a farm residence, and personal property and services used primarily in farming. 

(u) The term ‘‘agricultural products’’ includes agricultural, horticultural, viticultural, and dairy products, livestock, wildlife, poultry, bees, forest products, fish and shellfish, and any products 

thereof, including processed and manufactured products, and any 

and all products raised or produced on farms and any processed or 

manufactured products thereof. 

(v) The term ‘‘material disclosures’’ means the disclosure, as required by this title, of the annual percentage rate, the method of 

determining the finance charge and the balance upon which a finance charge will be imposed, the amount of the finance charge, 

the amount to be financed, the total of payments, the number and 

amount of payments, the due dates or periods of payments scheduled to repay the indebtedness, and the disclosures required by section 129(a). 

(w) The term ‘‘dwelling’’ means a residential structure or mobile 

home which contains one to four family housing units, or individual 

units of condominiums or cooperatives. 

(x) The term ‘‘residential mortgage transaction’’ means a transaction in which a mortgage, deed of trust, purchase money security 

interest arising under an installment sales contract, or equivalent 

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271 

sumer’s dwelling to finance the acquisition or initial construction of 

such dwelling. 

(y) As used in this section and section 167, the term ‘‘regular 

price’’ means the tag or posted price charged for the property or 

service if a single price is tagged or posted, or the price charged 

for the property or service when payment is made by use of an 

open-end credit plan or a credit card if either (1) no price is tagged 

or posted, or (2) two prices are tagged or posted, one of which is 

charged when payment is made by use of an open-end credit plan 

or a credit card and the other when payment is made by use of 

cash, check, or similar means. For purposes of this definition, payment by check, draft, or other negotiable instrument which may result in the debiting of an open-end credit plan or a credit cardholder’s open-end account shall not be considered payment made by 

use of the plan or the account. 

(z) Any reference to any requirement imposed under this title or 

any provision thereof includes reference to the regulations of the 

Bureau under this title or the provision thereof in question. 

(aa) The disclosure of an amount or percentage which is greater 

than the amount or percentage required to be disclosed under this 

title does not in itself constitute a violation of this title. 

(bb) HIGH-COST MORTGAGE.— 

(1) DEFINITION.— 

(A) IN GENERAL.—The term ‘‘high-cost mortgage’’, and a 

mortgage referred to in this subsection, means a consumer 

credit transaction that is secured by the consumer’s principal dwelling, other than a reverse mortgage transaction, 

if— 

(i) in the case of a credit transaction secured— 

(I) by a first mortgage on the consumer’s principal dwelling, the annual percentage rate at consummation of the transaction will exceed by more 

than 6.5 percentage points (8.5 percentage points, 

if the dwelling is personal property and the transaction is for less than $50,000) the average prime 

offer rate, as defined in section 129C(b)(2)(B), for 

a comparable transaction; or 

(II) by a subordinate or junior mortgage on the 

consumer’s principal dwelling, the annual percentage rate at consummation of the transaction will 

exceed by more than 8.5 percentage points the average prime offer rate, as defined in section 

129C(b)(2)(B), for a comparable transaction; 

(ii) the total points and fees payable in connection 

with the transaction, other than bona fide third party 

charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator, exceed— 

(I) in the case of a transaction for $20,000 or 

more, 5 percent of the total transaction amount; 

or 

(II) in the case of a transaction for less than 

$20,000, the lesser of 8 percent of the total transaction amount or $1,000 (or such other dollar 

272 

amount as the Bureau shall prescribe by regulation); or 

(iii) the credit transaction documents permit the 

creditor to charge or collect prepayment fees or penalties more than 36 months after the transaction closing or such fees or penalties exceed, in the aggregate, 

more than 2 percent of the amount prepaid. 

(B) INTRODUCTORY RATES TAKEN INTO ACCOUNT.—For 

purposes of subparagraph (A)(i), the annual percentage 

rate of interest shall be determined based on the following 

interest rate: 

(i) In the case of a fixed-rate transaction in which 

the annual percentage rate will not vary during the 

term of the loan, the interest rate in effect on the date 

of consummation of the transaction. 

(ii) In the case of a transaction in which the rate of 

interest varies solely in accordance with an index, the 

interest rate determined by adding the index rate in 

effect on the date of consummation of the transaction 

to the maximum margin permitted at any time during 

the loan agreement. 

(iii) In the case of any other transaction in which 

the rate may vary at any time during the term of the 

loan for any reason, the interest charged on the transaction at the maximum rate that may be charged during the term of the loan. 

(C) MORTGAGE INSURANCE.—For the purposes of computing the total points and fees under paragraph (4), the 

total points and fees shall exclude— 

(i) any premium provided by an agency of the Federal Government or an agency of a State; 

(ii) any amount that is not in excess of the amount 

payable under policies in effect at the time of origination under section 203(c)(2)(A) of the National Housing 

Act (12 U.S.C. 1709(c)(2)(A)), provided that the premium, charge, or fee is required to be refundable on 

a pro-rated basis and the refund is automatically 

issued upon notification of the satisfaction of the underlying mortgage loan; and 

(iii) any premium paid by the consumer after closing. 

(2)(A) After the 2-year period beginning on the effective date of 

the regulations promulgated under section 155 of the Riegle Community Development and Regulatory Improvement Act of 1994, 

and no more frequently than biennially after the first increase or 

decrease under this subparagraph, the Bureau may by regulation 

increase or decrease the number of percentage points specified in 

paragraph (1)(A), if the Bureau determines that the increase or decrease is— 

(i) consistent with the consumer protections against abusive 

lending provided by the amendments made by subtitle B of 

title I of the Riegle Community Development and Regulatory 

Improvement Act of 1994; and 

(ii) warranted by the need for credit. 

(B) An increase or decrease under subparagraph (A)— 

273 

(i) may not result in the number of percentage points referred to in paragraph (1)(A)(i)(I) being less than 6 percentage points or greater than 10 percentage points; and 

(ii) may not result in the number of percentage points 

referred to in paragraph (1)(A)(i)(II) being less than 8 percentage points or greater than 12 percentage points. 

(C) In determining whether to increase or decrease the number 

of percentage points referred to in subparagraph (A), the Bureau 

shall consult with representatives of consumers, including low-income consumers, and lenders. 

(3) The amount specified in paragraph (1)(B)(ii) shall be adjusted 

annually on January 1 by the annual percentage change in the 

Consumer Price Index, as reported on June 1 of the year preceding 

such adjustment. 

(4) For purposes of øparagraph (1)(B)¿ paragraph (1)(A) and section 129C, points and fees shall include— 

(A) all items included in the finance charge, except interest 

or the time-price differential; 

(B) all compensation paid directly or indirectly by a consumer or creditor to a mortgage originator from any source, including a mortgage originator that is also the creditor in a 

table-funded transaction; 

(C) each of the charges listed in section 106(e) (except an escrow for future payment of taxes and insurance), unless— 

(i) the charge is reasonable; 

(ii) the creditor receives no direct or indirect compensation, except as retained by a creditor or its affiliate as a result of their participation in an affiliated business arrangement (as defined in section 2(7) of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602(7)); and 

ø(iii) the charge is paid to a third party unaffiliated with 

the creditor; and¿ 

(iii) the charge is— 

(I) a bona fide third-party charge not retained by the 

mortgage originator, creditor, or an affiliate of the 

creditor or mortgage originator; or 

(II) a charge set forth in section 106(e)(1); 

(D) premiums or other charges payable at or before closing 

for any credit life, credit disability, credit unemployment, or 

credit property insurance, or any other øaccident,¿ loss-of-income, life or health insurance, øor any payments¿ and any 

payments directly or indirectly for any debt cancellation or suspension agreement or contract, except that insurance premiums or debt cancellation or suspension fees calculated and 

paid in full on a monthly basis shall not be considered financed 

by the creditor; 

(E) the maximum prepayment fees and penalties which may 

be charged or collected under the terms of the credit transaction; 

(F) all prepayment fees or penalties that are incurred by the 

consumer if the loan refinances a previous loan made or currently held by the same creditor or an affiliate of the creditor; 

and 

(G) such other charges as the Bureau determines to be appropriate. 

274 

(5) CALCULATION OF POINTS AND FEES FOR OPEN-END CON- SUMER CREDIT PLANS.—In the case of open-end consumer credit 

plans, points and fees shall be calculated, for purposes of this 

section and section 129, by adding the total points and fees 

known at or before closing, including the maximum prepayment penalties which may be charged or collected under the 

terms of the credit transaction, plus the minimum additional 

fees the consumer would be required to pay to draw down an 

amount equal to the total credit line. 

(6) This subsection shall not be construed to limit the rate of interest or the finance charge that a person may charge a consumer 

for any extension of credit. 

(cc) The term ‘‘reverse mortgage transaction’’ means a nonrecourse transaction in which a mortgage, deed of trust, or equivalent consensual security interest is created against the consumer’s 

principal dwelling— 

(1) securing one or more advances; and 

(2) with respect to which the payment of any principal, interest, and shared appreciation or equity is due and payable 

(other than in the case of default) only after— 

(A) the transfer of the dwelling; 

(B) the consumer ceases to occupy the dwelling as a 

principal dwelling; or 

(C) the death of the consumer. 

(cc) DEFINITIONS RELATING TO MORTGAGE ORIGINATION AND RESI- DENTIAL MORTGAGE LOANS.— (1) COMMISSION.—Unless otherwise specified, the term 

‘‘Commission’’ means the Federal Trade Commission. 

(2) MORTGAGE ORIGINATOR.—The term ‘‘mortgage originator’’— 

(A) means any person who, for direct or indirect compensation or gain, or in the expectation of direct or indirect 

compensation or gain— 

(i) takes a residential mortgage loan application; 

(ii) assists a consumer in obtaining or applying to 

obtain a residential mortgage loan; or 

(iii) offers or negotiates terms of a residential mortgage loan; 

(B) includes any person who represents to the public, 

through advertising or other means of communicating or 

providing information (including the use of business cards, 

stationery, brochures, signs, rate lists, or other promotional items), that such person can or will provide any 

of the services or perform any of the activities described in 

subparagraph (A); 

(C) does not include any person who is (i) not otherwise 

described in subparagraph (A) or (B) and who performs 

purely administrative or clerical tasks on behalf of a person who is described in any such subparagraph, or (ii) an 

employee of a retailer of manufactured homes who is not 

described in clause (i) or (iii) of subparagraph (A) and who 

does not advise a consumer on loan terms (including rates, 

fees, and other costs); 

(D) does not include a person or entity that only performs real estate brokerage activities and is licensed or 

275 

registered in accordance with applicable State law, unless 

such person or entity is compensated by a lender, a mortgage broker, or other mortgage originator or by any agent 

of such lender, mortgage broker, or other mortgage originator; 

(E) does not include, with respect to a residential mortgage loan, a person, estate, or trust that provides mortgage financing for the sale of 3 properties in any 12-month 

period to purchasers of such properties, each of which is 

owned by such person, estate, or trust and serves as security for the loan, provided that such loan— 

(i) is not made by a person, estate, or trust that has 

constructed, or acted as a contractor for the construction of, a residence on the property in the ordinary 

course of business of such person, estate, or trust; 

(ii) is fully amortizing; 

(iii) is with respect to a sale for which the seller determines in good faith and documents that the buyer 

has a reasonable ability to repay the loan; 

(iv) has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable 

annual and lifetime limitations on interest rate increases; and 

(v) meets any other criteria the Bureau may prescribe; 

(F) does not include the creditor (except the creditor in 

a table-funded transaction) under paragraph (1), (2), or (4) 

of section 129B(c); and 

(G) does not include a servicer or servicer employees, 

agents and contractors, including but not limited to those 

who offer or negotiate terms of a residential mortgage loan 

for purposes of renegotiating, modifying, replacing and 

subordinating principal of existing mortgages where borrowers are behind in their payments, in default or have a 

reasonable likelihood of being in default or falling behind. 

(3) NATIONWIDE MORTGAGE LICENSING SYSTEM AND REG- ISTRY.—The term ‘‘Nationwide Mortgage Licensing System and 

Registry’’ has the same meaning as in the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. 

(4) OTHER DEFINITIONS RELATING TO MORTGAGE ORIGINATOR.—For purposes of this subsection, a person ‘‘assists a 

consumer in obtaining or applying to obtain a residential mortgage loan’’ by, among other things, advising on residential 

mortgage loan terms (including rates, fees, and other costs), 

preparing residential mortgage loan packages, or collecting information on behalf of the consumer with regard to a residential mortgage loan. 

(5) RESIDENTIAL MORTGAGE LOAN.—The term ‘‘residential 

mortgage loan’’ means any consumer credit transaction that is 

secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or on residential real 

property that includes a dwelling, other than a consumer credit 

transaction under an open end credit plan or, for purposes of 

sections 129B and 129C and section 128(a) (16), (17), (18), and 

(19), and sections 128(f) and 130(k), and any regulations proVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00279 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
276 

mulgated thereunder, an extension of credit relating to a plan 

described in section 101(53D) of title 11, United States Code. 

(6) SECRETARY.—The term ‘‘Secretary’’, when used in connection with any transaction or person involved with a residential 

mortgage loan, means the Secretary of Housing and Urban Development. 

(7) SERVICER.—The term ‘‘servicer’’ has the same meaning as 

in section 6(i)(2) of the Real Estate Settlement Procedures Act 

of 1974 (12 U.S.C. 2605(i)(2)). 

(dd) BONA FIDE DISCOUNT POINTS AND PREPAYMENT PEN- ALTIES.—For the purposes of determining the amount of points and 

fees for purposes of subsection (aa), either the amounts described 

in paragraph (1) or (2) of the following paragraphs, but not both, 

shall be excluded: 

(1) Up to and including 2 bona fide discount points payable 

by the consumer in connection with the mortgage, but only if 

the interest rate from which the mortgage’s interest rate will 

be discounted does not exceed by more than 1 percentage 

point— 

(A) the average prime offer rate, as defined in section 

129C; or 

(B) if secured by a personal property loan, the average 

rate on a loan in connection with which insurance is provided under title I of the National Housing Act (12 U.S.C. 

1702 et seq.). 

(2) Unless 2 bona fide discount points have been excluded 

under paragraph (1), up to and including 1 bona fide discount 

point payable by the consumer in connection with the mortgage, but only if the interest rate from which the mortgage’s 

interest rate will be discounted does not exceed by more than 

2 percentage points— 

(A) the average prime offer rate, as defined in section 

129C; or 

(B) if secured by a personal property loan, the average 

rate on a loan in connection with which insurance is provided under title I of the National Housing Act (12 U.S.C. 

1702 et seq.). 

(3) For purposes of paragraph (1), the term ‘‘bona fide discount points’’ means loan discount points which are knowingly 

paid by the consumer for the purpose of reducing, and which 

in fact result in a bona fide reduction of, the interest rate or 

time-price differential applicable to the mortgage. 

(4) Paragraphs (1) and (2) shall not apply to discount points 

used to purchase an interest rate reduction unless the amount 

of the interest rate reduction purchased is reasonably consistent with established industry norms and practices for secondary mortgage market transactions. 

* * * * * * * 

CHAPTER 2—CREDIT TRANSACTIONS 

* * * * * * * 

§ 129C. Minimum standards for residential mortgage loans 

(a) ABILITY TO REPAY.— 

277 

(1) IN GENERAL.—In accordance with regulations prescribed 

by the Board, no creditor may make a residential mortgage 

loan unless the creditor makes a reasonable and good faith determination based on verified and documented information 

that, at the time the loan is consummated, the consumer has 

a reasonable ability to repay the loan, according to its terms, 

and all applicable taxes, insurance (including mortgage guarantee insurance), and assessments. 

(2) MULTIPLE LOANS.—If the creditor knows, or has reason to 

know, that 1 or more residential mortgage loans secured by the 

same dwelling will be made to the same consumer, the creditor 

shall make a reasonable and good faith determination, based 

on verified and documented information, that the consumer 

has a reasonable ability to repay the combined payments of all 

loans on the same dwelling according to the terms of those 

loans and all applicable taxes, insurance (including mortgage 

guarantee insurance), and assessments. 

(3) BASIS FOR DETERMINATION.—A determination under this 

subsection of a consumer’s ability to repay a residential mortgage loan shall include consideration of the consumer’s credit 

history, current income, expected income the consumer is reasonably assured of receiving, current obligations, debt-to-income ratio or the residual income the consumer will have after 

paying non-mortgage debt and mortgage-related obligations, 

employment status, and other financial resources other than 

the consumer’s equity in the dwelling or real property that secures repayment of the loan. A creditor shall determine the 

ability of the consumer to repay using a payment schedule that 

fully amortizes the loan over the term of the loan. 

(4) INCOME VERIFICATION.—A creditor making a residential 

mortgage loan shall verify amounts of income or assets that 

such creditor relies on to determine repayment ability, including expected income or assets, by reviewing the consumer’s Internal Revenue Service Form W–2, tax returns, payroll receipts, financial institution records, or other third-party documents that provide reasonably reliable evidence of the consumer’s income or assets. In order to safeguard against fraudulent reporting, any consideration of a consumer’s income history in making a determination under this subsection shall include the verification of such income by the use of— 

(A) Internal Revenue Service transcripts of tax returns; 

or 

(B) a method that quickly and effectively verifies income 

documentation by a third party subject to rules prescribed 

by the Board. 

(5) EXEMPTION.—With respect to loans made, guaranteed, or 

insured by Federal departments or agencies identified in subsection (b)(3)(B)(ii), such departments or agencies may exempt 

refinancings under a streamlined refinancing from this income 

verification requirement as long as the following conditions are 

met: 

(A) The consumer is not 30 days or more past due on the 

prior existing residential mortgage loan. 

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278 

gage loan, except to the extent of fees and charges allowed 

by the department or agency making, guaranteeing, or insuring the refinancing. 

(C) Total points and fees (as defined in section 

ø103(aa)(4), other than bona fide third party charges not 

retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator¿ 103(bb)(4)) payable in connection with the refinancing do not exceed 3 

percent of the total new loan amount. 

(D) The interest rate on the refinanced loan is lower 

than the interest rate of the original loan, unless the borrower is refinancing from an adjustable rate to a fixed-rate 

loan, under guidelines that the department or agency shall 

establish for loans they make, guarantee, or issue. 

(E) The refinancing is subject to a payment schedule 

that will fully amortize the refinancing in accordance with 

the regulations prescribed by the department or agency 

making, guaranteeing, or insuring the refinancing. 

(F) The terms of the refinancing do not result in a balloon payment, as defined in subsection (b)(2)(A)(ii). 

(G) Both the residential mortgage loan being refinanced 

and the refinancing satisfy all requirements of the department or agency making, guaranteeing, or insuring the refinancing. 

(6) NONSTANDARD LOANS.— (A) VARIABLE RATE LOANS THAT DEFER REPAYMENT OF

ANY PRINCIPAL OR INTEREST.—For purposes of determining, 

under this subsection, a consumer’s ability to repay a variable rate residential mortgage loan that allows or requires 

the consumer to defer the repayment of any principal or 

interest, the creditor shall use a fully amortizing repayment schedule. 

(B) INTEREST-ONLY LOANS.—For purposes of determining, under this subsection, a consumer’s ability to 

repay a residential mortgage loan that permits or requires 

the payment of interest only, the creditor shall use the 

payment amount required to amortize the loan by its final 

maturity. 

(C) CALCULATION FOR NEGATIVE AMORTIZATION.—In making any determination under this subsection, a creditor 

shall also take into consideration any balance increase 

that may accrue from any negative amortization provision. 

(D) CALCULATION PROCESS.—For purposes of making any 

determination under this subsection, a creditor shall calculate the monthly payment amount for principal and interest on any residential mortgage loan by assuming— 

(i) the loan proceeds are fully disbursed on the date 

of the consummation of the loan; 

(ii) the loan is to be repaid in substantially equal 

monthly amortizing payments for principal and interest over the entire term of the loan with no balloon 

payment, unless the loan contract requires more rapid 

repayment (including balloon payment), in which case 

the calculation shall be made (I) in accordance with 

regulations prescribed by the Board, with respect to 

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any loan which has an annual percentage rate that 

does not exceed the average prime offer rate for a comparable transaction, as of the date the interest rate is 

set, by 1.5 or more percentage points for a first lien 

residential mortgage loan; and by 3.5 or more percentage points for a subordinate lien residential mortgage 

loan; or (II) using the contract’s repayment schedule, 

with respect to a loan which has an annual percentage 

rate, as of the date the interest rate is set, that is at 

least 1.5 percentage points above the average prime 

offer rate for a first lien residential mortgage loan; 

and 3.5 percentage points above the average prime 

offer rate for a subordinate lien residential mortgage 

loan; and 

(iii) the interest rate over the entire term of the loan 

is a fixed rate equal to the fully indexed rate at the 

time of the loan closing, without considering the introductory rate. 

(E) REFINANCE OF HYBRID LOANS WITH CURRENT LENDER.—In considering any application for refinancing an existing hybrid loan by the creditor into a standard loan to 

be made by the same creditor in any case in which there 

would be a reduction in monthly payment and the mortgagor has not been delinquent on any payment on the existing hybrid loan, the creditor may— 

(i) consider the mortgagor’s good standing on the existing mortgage; 

(ii) consider if the extension of new credit would prevent a likely default should the original mortgage 

reset and give such concerns a higher priority as an 

acceptable underwriting practice; and 

(iii) offer rate discounts and other favorable terms to 

such mortgagor that would be available to new customers with high credit ratings based on such underwriting practice. 

(7) FULLY-INDEXED RATE DEFINED.—For purposes of this subsection, the term ‘‘fully indexed rate’’ means the index rate prevailing on a residential mortgage loan at the time the loan is 

made plus the margin that will apply after the expiration of 

any introductory interest rates. 

(8) REVERSE MORTGAGES AND BRIDGE LOANS.—This subsection shall not apply with respect to any reverse mortgage or 

temporary or bridge loan with a term of 12 months or less, including to any loan to purchase a new dwelling where the consumer plans to sell a different dwelling within 12 months. 

(9) SEASONAL INCOME.—If documented income, including income from a small business, is a repayment source for a residential mortgage loan, a creditor may consider the seasonality 

and irregularity of such income in the underwriting of and 

scheduling of payments for such credit. 

(b) PRESUMPTION OF ABILITY TO REPAY.— 

(1) IN GENERAL.—Any creditor with respect to any residential 

mortgage loan, and any assignee of such loan subject to liability under this title, may presume that the loan has met the reVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00283 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
280 

quirements of subsection (a), if the loan is a qualified mortgage. 

(2) DEFINITIONS.—For purposes of this subsection, the following definitions shall apply: 

(A) QUALIFIED MORTGAGE.—The term ‘‘qualified mortgage’’ means any residential mortgage loan— 

(i) for which the regular periodic payments for the 

loan may not— 

(I) result in an increase of the principal balance; 

or 

(II) except as provided in subparagraph (E), 

allow the consumer to defer repayment of principal; 

(ii) except as provided in subparagraph (E), the 

terms of which do not result in a balloon payment, 

where a ‘‘balloon payment’’ is a scheduled payment 

that is more than twice as large as the average of earlier scheduled payments; 

(iii) for which the income and financial resources relied upon to qualify the obligors on the loan are 

verified and documented; 

(iv) in the case of a fixed rate loan, for which the underwriting process is based on a payment schedule 

that fully amortizes the loan over the loan term and 

takes into account all applicable taxes, insurance, and 

assessments; 

(v) in the case of an adjustable rate loan, for which 

the underwriting is based on the maximum rate permitted under the loan during the first 5 years, and a 

payment schedule that fully amortizes the loan over 

the loan term and takes into account all applicable 

taxes, insurance, and assessments; 

(vi) that complies with any guidelines or regulations 

established by the Board relating to ratios of total 

monthly debt to monthly income or alternative measures of ability to pay regular expenses after payment 

of total monthly debt, taking into account the income 

levels of the borrower and such other factors as the 

Board may determine relevant and consistent with the 

purposes described in paragraph (3)(B)(i); 

(vii) for which the total points and fees (as defined 

in subparagraph (C)) payable in connection with the 

loan do not exceed 3 percent of the total loan amount; 

(viii) for which the term of the loan does not exceed 

30 years, except as such term may be extended under 

paragraph (3), such as in high-cost areas; and 

(ix) in the case of a reverse mortgage (except for the 

purposes of subsection (a) of section 129C, to the extent that such mortgages are exempt altogether from 

those requirements), a reverse mortgage which meets 

the standards for a qualified mortgage, as set by the 

Board in rules that are consistent with the purposes 

of this subsection. 

(B) AVERAGE PRIME OFFER RATE.—The term ‘‘average 

prime offer rate’’ means the average prime offer rate for a 

281 

comparable transaction as of the date on which the interest rate for the transaction is set, as published by the 

Board.. 

(C) POINTS AND FEES.— 

(i) IN GENERAL.—For purposes of subparagraph (A), 

the term ‘‘points and fees’’ means points and fees as 

defined by section ø103(aa)(4) (other than bona fide 

third party charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator)¿ 103(bb)(4). 

(ii) COMPUTATION.—For purposes of computing the 

total points and fees under this subparagraph, the 

total points and fees shall exclude either of the 

amounts described in the following subclauses, but not 

both: 

(I) Up to and including 2 bona fide discount 

points payable by the consumer in connection with 

the mortgage, but only if the interest rate from 

which the mortgage’s interest rate will be discounted does not exceed by more than 1 percentage point the average prime offer rate. 

(II) Unless 2 bona fide discount points have 

been excluded under subclause (I), up to and including 1 bona fide discount point payable by the 

consumer in connection with the mortgage, but 

only if the interest rate from which the mortgage’s 

interest rate will be discounted does not exceed by 

more than 2 percentage points the average prime 

offer rate. 

(iii) BONA FIDE DISCOUNT POINTS DEFINED.—For purposes of clause (ii), the term ‘‘bona fide discount 

points’’ means loan discount points which are knowingly paid by the consumer for the purpose of reducing, and which in fact result in a bona fide reduction 

of, the interest rate or time-price differential applicable to the mortgage. 

(iv) INTEREST RATE REDUCTION.—Subclauses (I) and 

(II) of clause (ii) shall not apply to discount points 

used to purchase an interest rate reduction unless the 

amount of the interest rate reduction purchased is reasonably consistent with established industry norms 

and practices for secondary mortgage market transactions. 

(D) SMALLER LOANS.—The Board shall prescribe rules 

adjusting the criteria under subparagraph (A)(vii) in order 

to permit lenders that extend smaller loans to meet the requirements of the presumption of compliance under paragraph (1). In prescribing such rules, the Board shall consider the potential impact of such rules on rural areas and 

other areas where home values are lower. 

(E) BALLOON LOANS.—The Board may, by regulation, 

provide that the term ‘‘qualified mortgage’’ includes a balloon loan— 

282 

(i) that meets all of the criteria for a qualified mortgage under subparagraph (A) (except clauses (i)(II), 

(ii), (iv), and (v) of such subparagraph); 

(ii) for which the creditor makes a determination 

that the consumer is able to make all scheduled payments, except the balloon payment, out of income or 

assets other than the collateral; 

(iii) for which the underwriting is based on a payment schedule that fully amortizes the loan over a period of not more than 30 years and takes into account 

all applicable taxes, insurance, and assessments; and 

(iv) that is extended by a creditor that— 

(I) operates in rural or underserved areas; 

(II) together with all affiliates, has total annual 

residential mortgage loan originations that do not 

exceed a limit set by the Board; 

(III) retains the balloon loans in portfolio; and 

(IV) meets any asset size threshold and any 

other criteria as the Board may establish, consistent with the purposes of this subtitle. 

(3) REGULATIONS.— (A) IN GENERAL.—The Board shall prescribe regulations 

to carry out the purposes of this subsection. 

(B) REVISION OF SAFE HARBOR CRITERIA.— (i) IN GENERAL.—The Board may prescribe regulations that revise, add to, or subtract from the criteria 

that define a qualified mortgage upon a finding that 

such regulations are necessary or proper to ensure 

that responsible, affordable mortgage credit remains 

available to consumers in a manner consistent with 

the purposes of this section, necessary and appropriate 

to effectuate the purposes of this section and section 

129B, to prevent circumvention or evasion thereof, or 

to facilitate compliance with such sections. 

(ii) LOAN DEFINITION.—The following agencies shall, 

in consultation with the Board, prescribe rules defining the types of loans they insure, guarantee, or administer, as the case may be, that are qualified mortgages for purposes of paragraph (2)(A), and such rules 

may revise, add to, or subtract from the criteria used 

to define a qualified mortgage under paragraph (2)(A), 

upon a finding that such rules are consistent with the 

purposes of this section and section 129B, to prevent 

circumvention or evasion thereof, or to facilitate compliance with such sections: 

(I) The Department of Housing and Urban Development, with regard to mortgages insured 

under the National Housing Act (12 U.S.C. 1707 

et seq.). 

(II) The Department of Veterans Affairs, with 

regard to a loan made or guaranteed by the Secretary of Veterans Affairs. 

(III) The Department of Agriculture, with regard loans guaranteed by the Secretary of Agriculture pursuant to 42 U.S.C. 1472(h). 

283 

(IV) The Rural Housing Service, with regard to 

loans insured by the Rural Housing Service. 

(c) PROHIBITION ON CERTAIN PREPAYMENT PENALTIES.— (1) PROHIBITED ON CERTAIN LOANS.— (A) IN GENERAL.—A residential mortgage loan that is not 

a ‘‘qualified mortgage’’, as defined under subsection (b)(2), 

may not contain terms under which a consumer must pay 

a prepayment penalty for paying all or part of the principal after the loan is consummated. 

(B) EXCLUSIONS.—For purposes of this subsection, a 

‘‘qualified mortgage’’ may not include a residential mortgage loan that— 

(i) has an adjustable rate; or 

(ii) has an annual percentage rate that exceeds the 

average prime offer rate for a comparable transaction, 

as of the date the interest rate is set— 

(I) by 1.5 or more percentage points, in the case 

of a first lien residential mortgage loan having a 

original principal obligation amount that is equal 

to or less than the amount of the maximum limitation on the original principal obligation of mortgage in effect for a residence of the applicable size, 

as of the date of such interest rate set, pursuant 

to the 6th sentence of section 305(a)(2) the Federal Home Loan Mortgage Corporation Act (12 

U.S.C. 1454(a)(2)); 

(II) by 2.5 or more percentage points, in the case 

of a first lien residential mortgage loan having a 

original principal obligation amount that is more 

than the amount of the maximum limitation on 

the original principal obligation of mortgage in effect for a residence of the applicable size, as of the 

date of such interest rate set, pursuant to the 6th 

sentence of section 305(a)(2) the Federal Home 

Loan Mortgage Corporation Act (12 U.S.C. 

1454(a)(2)); and 

(III) by 3.5 or more percentage points, in the 

case of a subordinate lien residential mortgage 

loan. 

(2) PUBLICATION OF AVERAGE PRIME OFFER RATE AND APR

THRESHOLDS.—The Board— 

(A) shall publish, and update at least weekly, average 

prime offer rates; 

(B) may publish multiple rates based on varying types of 

mortgage transactions; and 

(C) shall adjust the thresholds established under subclause (I), (II), and (III) of paragraph (1)(B)(ii) as necessary 

to reflect significant changes in market conditions and to 

effectuate the purposes of the Mortgage Reform and AntiPredatory Lending Act. 

(3) PHASED-OUT PENALTIES ON QUALIFIED MORTGAGES.—A 

qualified mortgage (as defined in subsection (b)(2)) may not 

contain terms under which a consumer must pay a prepayment 

penalty for paying all or part of the principal after the loan is 

consummated in excess of the following limitations: 

284 

(A) During the 1-year period beginning on the date the 

loan is consummated, the prepayment penalty shall not exceed an amount equal to 3 percent of the outstanding balance on the loan. 

(B) During the 1-year period beginning after the period 

described in subparagraph (A), the prepayment penalty 

shall not exceed an amount equal to 2 percent of the outstanding balance on the loan. 

(C) During the 1-year period beginning after the 1-year 

period described in subparagraph (B), the prepayment penalty shall not exceed an amount equal to 1 percent of the 

outstanding balance on the loan. 

(D) After the end of the 3-year period beginning on the 

date the loan is consummated, no prepayment penalty may 

be imposed on a qualified mortgage. 

(4) OPTION FOR NO PREPAYMENT PENALTY REQUIRED.—A creditor may not offer a consumer a residential mortgage loan 

product that has a prepayment penalty for paying all or part 

of the principal after the loan is consummated as a term of the 

loan without offering the consumer a residential mortgage loan 

product that does not have a prepayment penalty as a term of 

the loan. 

(d) SINGLE PREMIUM CREDIT INSURANCE PROHIBITED.—No creditor may finance, directly or indirectly, in connection with any residential mortgage loan or with any extension of credit under an 

open end consumer credit plan secured by the principal dwelling of 

the consumer, any credit life, credit disability, credit unemployment, or credit property insurance, or any other accident, loss-ofincome, life, or health insurance, or any payments directly or indirectly for any debt cancellation or suspension agreement or contract, except that— 

(1) insurance premiums or debt cancellation or suspension 

fees calculated and paid in full on a monthly basis shall not 

be considered financed by the creditor; and 

(2) this subsection shall not apply to credit unemployment 

insurance for which the unemployment insurance premiums 

are reasonable, the creditor receives no direct or indirect compensation in connection with the unemployment insurance premiums, and the unemployment insurance premiums are paid 

pursuant to another insurance contract and not paid to an affiliate of the creditor. 

(e) ARBITRATION.— 

(1) IN GENERAL.—No residential mortgage loan and no extension of credit under an open end consumer credit plan secured 

by the principal dwelling of the consumer may include terms 

which require arbitration or any other nonjudicial procedure as 

the method for resolving any controversy or settling any claims 

arising out of the transaction. 

(2) POST-CONTROVERSY AGREEMENTS.—Subject to paragraph 

(3), paragraph (1) shall not be construed as limiting the right 

of the consumer and the creditor or any assignee to agree to 

arbitration or any other nonjudicial procedure as the method 

for resolving any controversy at any time after a dispute or 

claim under the transaction arises. 

285 

(3) NO WAIVER OF STATUTORY CAUSE OF ACTION.—No provision of any residential mortgage loan or of any extension of 

credit under an open end consumer credit plan secured by the 

principal dwelling of the consumer, and no other agreement between the consumer and the creditor relating to the residential 

mortgage loan or extension of credit referred to in paragraph 

(1), shall be applied or interpreted so as to bar a consumer 

from bringing an action in an appropriate district court of the 

United States, or any other court of competent jurisdiction, 

pursuant to section 130 or any other provision of law, for damages or other relief in connection with any alleged violation of 

this section, any other provision of this title, or any other Federal law. 

(f) MORTGAGES WITH NEGATIVE AMORTIZATION.—No creditor may 

extend credit to a borrower in connection with a consumer credit 

transaction under an open or closed end consumer credit plan secured by a dwelling or residential real property that includes a 

dwelling, other than a reverse mortgage, that provides or permits 

a payment plan that may, at any time over the term of the extension of credit, result in negative amortization unless, before such 

transaction is consummated— 

(1) the creditor provides the consumer with a statement 

that— 

(A) the pending transaction will or may, as the case may 

be, result in negative amortization; 

(B) describes negative amortization in such manner as 

the Board shall prescribe; 

(C) negative amortization increases the outstanding 

principal balance of the account; and 

(D) negative amortization reduces the consumer’s equity 

in the dwelling or real property; and 

(2) in the case of a first-time borrower with respect to a residential mortgage loan that is not a qualified mortgage, the 

first-time borrower provides the creditor with sufficient documentation to demonstrate that the consumer received homeownership counseling from organizations or counselors certified 

by the Secretary of Housing and Urban Development as competent to provide such counseling. 

(g) PROTECTION AGAINST LOSS OF ANTI-DEFICIENCY PROTEC- TION.— 

(1) DEFINITION.—For purposes of this subsection, the term 

‘‘anti-deficiency law’’ means the law of any State which provides that, in the event of foreclosure on the residential property of a consumer securing a mortgage, the consumer is not 

liable, in accordance with the terms and limitations of such 

State law, for any deficiency between the sale price obtained 

on such property through foreclosure and the outstanding balance of the mortgage. 

(2) NOTICE AT TIME OF CONSUMMATION.—In the case of any 

residential mortgage loan that is, or upon consummation will 

be, subject to protection under an anti-deficiency law, the creditor or mortgage originator shall provide a written notice to the 

consumer describing the protection provided by the anti-deficiency law and the significance for the consumer of the loss of 

such protection before such loan is consummated. 

286 

(3) NOTICE BEFORE REFINANCING THAT WOULD CAUSE LOSS OF

PROTECTION.—In the case of any residential mortgage loan that 

is subject to protection under an anti-deficiency law, if a creditor or mortgage originator provides an application to a consumer, or receives an application from a consumer, for any 

type of refinancing for such loan that would cause the loan to 

lose the protection of such anti-deficiency law, the creditor or 

mortgage originator shall provide a written notice to the consumer describing the protection provided by the anti-deficiency 

law and the significance for the consumer of the loss of such 

protection before any agreement for any such refinancing is 

consummated. 

(h) POLICY REGARDING ACCEPTANCE OF PARTIAL PAYMENT.—In 

the case of any residential mortgage loan, a creditor shall disclose 

prior to settlement or, in the case of a person becoming a creditor 

with respect to an existing residential mortgage loan, at the time 

such person becomes a creditor— 

(1) the creditor’s policy regarding the acceptance of partial 

payments; and 

(2) if partial payments are accepted, how such payments will 

be applied to such mortgage and if such payments will be 

placed in escrow. 

(i) TIMESHARE PLANS.—This section and any regulations promulgated under this section do not apply to an extension of credit relating to a plan described in section 101(53D) of title 11, United 

States Code. 

* * * * * * * 

SECURITIES ACT OF 1933 

TITLE I— 

* * * * * * * 

DEFINITIONS

SEC. 2. (a) DEFINITIONS.—When used in this title, unless the context otherwise requires— 

(1) The term ‘‘security’’ means any note, stock, treasury 

stock, security future, security-based swap, bond, debenture, 

evidence of indebtedness, certificate of interest or participation 

in any profit-sharing agreement, collateral-trust certificate, 

preorganization certificate or subscription, transferable share, 

investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or 

other mineral rights, any put, call, straddle, option, or privilege 

on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value 

thereof), or any put, call, straddle, option, or privilege entered 

into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly 

known as a ‘‘security’’, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any 

of the foregoing. 

287 

(2) The term ‘‘person’’ means an individual, a corporation, a 

partnership, an association, a joint-stock company, a trust, any 

unincorporated organization, or a government or political subdivision thereof. As used in this paragraph the term ‘‘trust’’ 

shall include only a trust where the interest or interests of the 

beneficiary or beneficiaries are evidenced by a security. 

(3) The term ‘‘sale’’ or ‘‘sell’’ shall include every contract of 

sale or disposition of a security or interest in a security, for 

value. The term ‘‘offer to sell’’, ‘‘offer for sale’’, or ‘‘offer’’ shall 

include every attempt or offer to dispose of, or solicitation of 

an offer to buy, a security or interest in a security, for value. 

The terms defined in this paragraph and the term ‘‘offer to 

buy’’ as used in subsection (c) of section 5 shall not include preliminary negotiations or agreements between an issuer (or any 

person directly or indirectly controlling or controlled by an 

issuer, or under direct or indirect common control with an 

issuer) and any underwriter or among underwriters who are or 

are to be in privity of contract with an issuer (or any person 

directly or indirectly controlling or controlled by an issuer, or 

under direct or indirect common control with an issuer). Any 

security given or delivered with, or as a bonus on account of, 

any purchase of securities or any other thing, shall be conclusively presumed to constitute a part of the subject of such purchase and to have been offered and sold for value. The issue 

or transfer of a right or privilege, when originally issued or 

transferred with a security, giving the holder of such security 

the right to convert such security into another security of the 

same issuer or of another person, or giving a right to subscribe 

to another security of the same issuer or of another person, 

which right cannot be exercised until some future date, shall 

not be deemed to be an offer or sale of such other security; but 

the issue or transfer of such other security upon the exercise 

of such right of conversion or subscription shall be deemed a 

sale of such other security. Any offer or sale of a security futures product by or on behalf of the issuer of the securities underlying the security futures product, an affiliate of the issuer, 

or an underwriter, shall constitute a contract for sale of, sale 

of, offer for sale, or offer to sell the underlying securities. Any 

offer or sale of a security-based swap by or on behalf of the 

issuer of the securities upon which such security-based swap is 

based or is referenced, an affiliate of the issuer, or an underwriter, shall constitute a contract for sale of, sale of, offer for 

sale, or offer to sell such securities. The publication or distribution by a broker or dealer of a research report about an emerging growth company that is the subject of a proposed public offering of the common equity securities of such emerging growth 

company pursuant to a registration statement that the issuer 

proposes to file, or has filed, or that is effective shall be 

deemed for purposes of paragraph (10) of this subsection and 

section 5(c) not to constitute an offer for sale or offer to sell a 

security, even if the broker or dealer is participating or will 

participate in the registered offering of the securities of the 

issuer. As used in this paragraph, the term ‘‘research report’’ 

means a written, electronic, or oral communication that includes information, opinions, or recommendations with respect 

288 

to securities of an issuer or an analysis of a security or an 

issuer, whether or not it provides information reasonably sufficient upon which to base an investment decision. 

(4) The term ‘‘issuer’’ means every person who issues or proposes to issue any security; except that with respect to certificates of deposit, voting-trust certificates, or collateral-trust certificates, or with respect to certificates of interest or shares in 

an unincorporated investment trust not having a board of directors (or persons performing similar functions) or of the 

fixed, restricted management, or unit type, the term ‘‘issuer’’ 

means the person or persons performing the acts and assuming 

the duties of depositor or manager pursuant to the provisions 

of the trust or other agreement or instrument under which 

such securities are issued; except that in the case of an unincorporated association which provides by its articles for limited 

liability of any or all of its members, or in the case of a trust, 

committee, or other legal entity, the trustees or members 

thereof shall not be individually liable as issuers of any security issued by the association, trust, committee, or other legal 

entity; except that with respect to equipment-trust certificates 

or like securities, the term ‘‘issuer’’ means the person by whom 

the equipment or property is or is to be used; and except that 

with respect to fractional undivided interests in oil, gas, or 

other mineral rights, the term ‘‘issuer’’ means the owner of any 

such right or of any interest in such right (whether whole or 

fractional) who creates fractional interests therein for the purpose of public offering. 

(5) The term ‘‘Commission’’ means the Securities and Exchange Commission. 

(6) The term ‘‘Territory’’ means Puerto Rico, the Virgin Islands, and the insular possessions of the United States. 

(7) The term ‘‘interstate commerce’’ means trade or commerce in securities or any transportation or communication relating thereto among the several States or between the District 

of Columbia or any Territory of the United States and any 

State or other Territory, or between any foreign country and 

any State, Territory, or the District of Columbia, or within the 

District of Columbia. 

(8) The term ‘‘registration statement’’ means the statement 

provided for in section 6, and includes any amendment thereto 

and any report, document, or memorandum filed as part of 

such statement or incorporated therein by reference. 

(9) The term ‘‘write’’ or ‘‘written’’ shall include printed, 

lithographed, or any means of graphic communication. 

(10) The term ‘‘prospectus’’ means any prospectus, notice, circular, advertisement, letter, or communication, written or by 

radio or television, which offers any security for sale or confirms the sale of any security; except that (a) a communication 

sent or given after the effective date of the registration statement (other than a prospectus permitted under subsection (b) 

of section 10) shall not be deemed a prospectus if it is proved 

that prior to or at the same time with such communication a 

written prospectus meeting the requirements of subsection (a) 

of section 10 at the time of such communication was sent or 

given to the person to whom the communication was made, 

289 

and (b) a notice, circular, advertisement, letter, or communication in respect of a security shall not be deemed to be a prospectus if it states from whom a written prospectus meeting 

the requirements of section 10 may be obtained and, in addition, does no more than identify the security, state the price 

thereof, state by whom orders will be executed, and contain 

such other information as the Commission, by rules or regulations deemed necessary or appropriate in the public interest 

and for the protection of investors, and subject to such terms 

and conditions as may be prescribed therein, may permit. 

(11) The term ‘‘underwriter’’ means any person who has purchased from an issuer with a view to, or offers or sells for an 

issuer in connection with, the distribution of any security, or 

participates or has a direct or indirect participation in any 

such undertaking, or participates or has a participation in the 

direct or indirect underwriting of any such undertaking; but 

such term shall not include a person whose interest is limited 

to a commission from an underwriter or dealer not in excess 

of the usual and customary distributors’ or sellers’ commission. 

As used in this paragraph the term ‘‘issuer’’ shall include, in 

addition to an issuer, any person directly or indirectly controlling or controlled by the issuer, or any person under direct or 

indirect common control with the issuer. 

(12) The term ‘‘dealer’’ means any person who engages either 

for all or part of his time, directly or indirectly, as agent, 

broker, or principal, in the business of offering, buying, selling, 

or otherwise dealing or trading in securities issued by another 

person. 

(13) The term ‘‘insurance company’’ means a company which 

is organized as an insurance company, whose primary and predominant business activity is the writing of insurance or the 

reinsuring of risks underwritten by insurance companies, and 

which is subject to supervision by the insurance commissioner, 

or a similar official or agency, of a State or territory or the District of Columbia; or any receiver or similar official or any liquidating agent for such company, in his capacity as such. 

(14) The term ‘‘separate account’’ means an account established and maintained by an insurance company pursuant to 

the laws of any State or territory of the United States, the District of Columbia, or of Canada or any province thereof, under 

which income, gains and losses, whether or not realized, from 

assets allocated to such account, are, in accordance with the 

applicable contract, credited to or charged against such account 

without regard to other income, gains, or losses of the insurance company. 

(15) The term ‘‘accredited investor’’ shall mean— 

ø(i)¿ (A) a bank as defined in section 3(a)(2) whether acting in its individual or fiduciary capacity; an insurance 

company as defined in paragraph (13) of this subsection; 

an investment company registered under the Investment 

Company Act of 1940 or a business development company 

as defined in section 2(a)(48) of that Act; a Small Business 

Investment Company licensed by the Small Business Administration; or an employee benefit plan, including an inVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00293 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
290 

dividual retirement account, which is subject to the provisions of the Employee Retirement Income Security Act of 

1974, if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Act, which is either a bank, insurance company, or registered investment 

adviserø; or¿ ; 

(B) any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000 (which 

amount, along with the amounts set forth in subparagraph (C), 

shall be adjusted for inflation by the Commission every 5 years 

to the nearest $10,000 to reflect the change in the Consumer 

Price Index for All Urban Consumers published by the Bureau 

of Labor Statistics) where, for purposes of calculating net worth 

under this subparagraph— 

(i) the person’s primary residence shall not be included as 

an asset; 

(ii) indebtedness that is secured by the person’s primary 

residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not 

be included as a liability (except that if the amount of such 

indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, 

other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and 

(iii) indebtedness that is secured by the person’s primary 

residence in excess of the estimated fair market value of the 

primary residence at the time of the sale of securities shall 

be included as a liability; 

(C) any natural person who had an individual income in ex- cess of $200,000 in each of the 2 most recent years or joint income with that person’s spouse in excess of $300,000 in each of 

those years and has a reasonable expectation of reaching the 

same income level in the current year; 

(D) any natural person who is currently licensed or registered 

as a broker or investment adviser by the Commission, the Financial Industry Regulatory Authority, or an equivalent selfregulatory organization (as defined in section 3(a)(26) of the Securities Exchange Act of 1934), or the securities division of a 

State or the equivalent State division responsible for licensing 

or registration of individuals in connection with securities activities; 

(E) any natural person the Commission determines, by regulation, to have demonstrable education or job experience to 

qualify such person as having professional knowledge of a subject related to a particular investment, and whose education or 

job experience is verified by the Financial Industry Regulatory 

Authority or an equivalent self-regulatory organization (as defined in section 3(a)(26) of the Securities Exchange Act of 1934); 

or 

ø(ii)¿ (F) any person who, on the basis of such factors as 

financial sophistication, net worth, knowledge, and experience in financial matters, or amount of assets under management qualifies as an accredited investor under rules 

and regulations which the Commission shall prescribe. 

291 

(16) The terms ‘‘security future’’, ‘‘narrow-based security 

index’’, and ‘‘security futures product’’ have the same meanings 

as provided in section 3(a)(55) of the Securities Exchange Act 

of 1934. 

(17) The terms ‘‘swap’’ and ‘‘security-based swap’’ have the 

same meanings as in section 1a of the Commodity Exchange 

Act (7 U.S.C. 1a). 

(18) The terms ‘‘purchase’’ or ‘‘sale’’ of a security-based swap 

shall be deemed to mean the execution, termination (prior to 

its scheduled maturity date), assignment, exchange, or similar 

transfer or conveyance of, or extinguishing of rights or obligations under, a security-based swap, as the context may require. 

(19) The term ‘‘emerging growth company’’ means an issuer 

that had total annual gross revenues of less than 

$1,000,000,000 (as such amount is indexed for inflation every 

5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the 

Bureau of Labor Statistics, setting the threshold to the nearest 

1,000,000) during its most recently completed fiscal year. An 

issuer that is an emerging growth company as of the first day 

of that fiscal year shall continue to be deemed an emerging 

growth company until the earliest of— 

(A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 

(as such amount is indexed for inflation every 5 years by 

the Commission to reflect the change in the Consumer 

Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more; 

(B) the last day of the fiscal year of the issuer following 

the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective 

registration statement under this title; 

(C) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in 

non-convertible debt; or 

(D) the date on which such issuer is deemed to be a 

‘‘large accelerated filer’’, as defined in section 240.12b–2 of 

title 17, Code of Federal Regulations, or any successor 

thereto. 

(b) CONSIDERATION OF PROMOTION OF EFFICIENCY, COMPETITION, 

AND CAPITAL FORMATION.—Whenever pursuant to this title the 

Commission is engaged in rulemaking and is required to 

consider or determine whether an action is necessary or appropriate in the public interest, the Commission shall also consider, in 

addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation. 

* * * * * * * 

PROHIBITIONS RELATING TO INTERSTATE COMMERCE AND THE MAILS

SEC. 5. (a) Unless a registration statement is in effect as to a security, it shall be unlawful for any person, directly or indirectly— 

(1) to make use of any means or instruments of transportation or communication in interstate commerce or of the mails 

292 

to sell such security through the use or medium of any prospectus or otherwise; or 

(2) to carry or cause to be carried through the mails or in 

interstate commerce, by any means or instruments of transportation, any such security for the purpose of sale or for delivery 

after sale. 

(b) It shall be unlawful for any person, directly or indirectly— 

(1) to make use of any means or instruments of transportation or communication in interstate commerce or of the mails 

to carry or transmit any prospectus relating to any security 

with respect to which a registration statement has been filed 

under this title, unless such prospectus meets the requirements of section 10; or 

(2) to carry or cause to be carried through the mails or in 

interstate commerce any such security for the purpose of sale 

or for delivery after sale, unless accompanied or preceded by a 

prospectus that meets the requirements of subsection (a) of 

section 10. 

(c) It shall be unlawful for any person, directly or indirectly, to 

make use of any means or instruments of transportation or communication in interstate commerce or of the mails to offer to sell or 

offer to buy through the use or medium of any prospectus or otherwise any security, unless a registration statement has been filed as 

to such security, or while the registration statement is the subject 

of a refusal order or stop order or (prior to the effective date of the 

registration statement) any public proceeding or examination under 

section 8. 

(d) LIMITATION.—øNotwithstanding¿ 

(1) IN GENERAL.—Notwithstanding any other provision of 

this section, øan emerging growth company or any person authorized to act on behalf of an emerging growth company¿ an 

issuer or any person authorized to act on behalf of an issuer 

may engage in oral or written communications with potential 

investors that are qualified institutional buyers or institutions 

that are accredited investors, as such terms are respectively 

defined in section 230.144A and section 230.501(a) of title 17, 

Code of Federal Regulations, or any successor thereto, to determine whether such investors might have an interest in a contemplated securities offering, either prior to or following the 

date of filing of a registration statement with respect to such 

securities with the Commission, subject to the requirement of 

subsection (b)(2). 

(2) ADDITIONAL REQUIREMENTS.— 

(A) IN GENERAL.—The Commission may issue regulations, subject to public notice and comment, to impose such 

other terms, conditions, or requirements on the engaging in 

oral or written communications described under paragraph 

(1) by an issuer other than an emerging growth company 

as the Commission determines appropriate. 

(B) REPORT TO CONGRESS.—Prior to any rulemaking described under subparagraph (A), the Commission shall 

issue a report to the Congress containing a list of the findings supporting the basis of such rulemaking. 

(e) Notwithstanding the provisions of section 3 or 4, unless a registration statement meeting the requirements of section 10(a) is in 

293 

effect as to a security-based swap, it shall be unlawful for any person, directly or indirectly, to make use of any means or instruments of transportation or communication in interstate commerce 

or of the mails to offer to sell, offer to buy or purchase or sell a 

security-based swap to any person who is not an eligible contract 

participant as defined in section 1a(18) of the Commodity Exchange 

Act (7 U.S.C. 1a(18)). 

REGISTRATION OF SECURITIES AND SIGNING OF REGISTRATION

STATEMENT

SEC. 6. (a) Any security may be registered with the Commission 

under the terms and conditions hereinafter provided, by filing a 

registration statement in triplicate, at least one of which shall be 

signed by each issuer, its principal executive officer or officers, its 

principal financial officer, its comptroller or principal accounting officer, and the majority of its board of directors or persons performing similar functions (or, if there is no board of directors or 

persons performing similar functions, by the majority of the persons or board having the power of management of the issuer), and 

in case the issuer is a foreign or Territorial person by its duly authorized representative in the United States; except that when 

such registration statement relates to a security issued by a foreign 

government, or political subdivision thereof, it need be signed only 

by the underwriter of such security. Signatures of all such persons 

when written on the said registration statements shall be presumed to have been so written by authority of the person whose 

signature is so affixed and the burden of proof, in the event such 

authority shall be denied, shall be upon the party denying the 

same. The affixing of any signature without the authority of the 

purported signer shall constitute a violation of this title. A registration statement shall be deemed effective only as to the securities 

specified therein as proposed to be offered. 

(b) REGISTRATION FEE.— (1) FEE PAYMENT REQUIRED.—At the time of filing a registration statement, the applicant shall pay to the Commission a fee 

at a rate that shall be equal to $92 per $1,000,000 of the maximum aggregate price at which such securities are proposed to 

be offered, except that during fiscal year 2003 and any succeeding fiscal year such fee shall be adjusted pursuant to paragraph (2). 

(2) ANNUAL ADJUSTMENT.—For each fiscal year, the Commission shall by order adjust the rate required by paragraph (1) 

for such fiscal year to a rate that, when applied to the baseline 

estimate of the aggregate maximum offering prices for such fiscal year, is reasonably likely to produce aggregate fee collections under this subsection that are equal to the target fee collection amount for such fiscal year. 

(3) PRO RATA APPLICATION.—The rates per $1,000,000 required by this subsection shall be applied pro rata to amounts 

and balances of less than $1,000,000. 

(4) REVIEW AND EFFECTIVE DATE.—In exercising its authority 

under this subsection, the Commission shall not be required to 

comply with the provisions of section 553 of title 5, United 

States Code. An adjusted rate prescribed under paragraph (2) 

and published under paragraph (5) shall not be subject to judiVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00297 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
294 

cial review. An adjusted rate prescribed under paragraph (2) 

shall take effect on the first day of the fiscal year to which 

such rate applies. 

(5) PUBLICATION.—The Commission shall publish in the Federal Register notices of the rate applicable under this subsection and under sections 13(e) and 14(g) for each fiscal year 

not later than August 31 of the fiscal year preceding the fiscal 

year to which such rate applies, together with any estimates 

or projections on which such rate is based. 

(6) DEFINITIONS.—For purposes of this subsection: 

(A) TARGET OFFSETTING COLLECTION AMOUNT.—The target fee collection amount for each fiscal year is determined 

according to the following table: 

Target fee 

Fiscal year: collection amount 

2002 ......................................................................................................... $377,000,000

2003 ......................................................................................................... $435,000,000

2004 ......................................................................................................... $467,000,000

2005 ......................................................................................................... $570,000,000

2006 ......................................................................................................... $689,000,000

2007 ......................................................................................................... $214,000,000

2008 ......................................................................................................... $234,000,000

2009 ......................................................................................................... $284,000,000

2010 ......................................................................................................... $334,000,000

2011 ......................................................................................................... $394,000,000

2012 ......................................................................................................... $425,000,000

2013 ......................................................................................................... $455,000,000

2014 ......................................................................................................... $485,000,000

2015 ......................................................................................................... $515,000,000

2016 ......................................................................................................... $550,000,000

2017 ......................................................................................................... $585,000,000

2018 ......................................................................................................... $620,000,000

2019 ......................................................................................................... $660,000,000

2020 ......................................................................................................... $705,000,000

2021 and each fiscal year thereafter .. An amount that is equal to the target 

fee collection amount for the prior 

fiscal year, adjusted by the rate of 

inflation. 

(B) BASELINE ESTIMATE OF THE AGGREGATE MAXIMUM OFFERING PRICES.—The baseline estimate of the aggregate 

maximum offering prices for any fiscal year is the baseline 

estimate of the aggregate maximum offering price at which 

securities are proposed to be offered pursuant to registration statements filed with the Commission during such fiscal year as determined by the Commission, after consultation with the Congressional Budget Office and the Office 

of Management and Budget, using the methodology required for projections pursuant to section 257 of the Balanced Budget and Emergency Deficit Control Act of 1985. 

(c) The filing with the Commission of a registration statement, 

or of an amendment to a registration statement, shall be deemed 

to have taken place upon the receipt thereof, but the filing of a registration statement shall not be deemed to have taken place unless 

it is accompanied by a United States postal money order or a certified bank check or cash for the amount of the fee required under 

subsection (b). 

(d) The information contained in or filed with any registration 

statement shall be made available to the public under such regulations as the Commission may prescribe, and copies thereof, photoVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00298 Fmt 6659 Sfmt 9001 E:\HR\OC\HR792.XXX HR792
295 

static or otherwise, shall be furnished to every applicant at such 

reasonable charge as the Commission may prescribe. 

(e) øEMERGING GROWTH COMPANIES¿ DRAFT REGISTRATION

STATEMENTS.— 

ø(1) IN GENERAL.—Any emerging growth company, prior to 

its initial public offering date, may confidentially submit to the 

Commission a draft registration statement, for confidential 

nonpublic review by the staff of the Commission prior to public 

filing, provided that the initial confidential submission and all 

amendments thereto shall be publicly filed with the Commission not later than 15 days before the date on which the issuer 

conducts a road show, as such term is defined in section 

230.433(h)(4) of title 17, Code of Federal Regulations, or any 

successor thereto. An issuer that was an emerging growth company at the time it submitted a confidential registration statement or, in lieu thereof, a publicly filed registration statement 

for review under this subsection but ceases to be an emerging 

growth company thereafter shall continue to be treated as an 

emerging market growth company for the purposes of this subsection through the earlier of the date on which the issuer consummates its initial public offering pursuant to such registrations statement or the end of the 1-year period beginning on 

the date the company ceases to be an emerging growth company.¿ 

(1) PRIOR TO INITIAL PUBLIC OFFERING.—Any issuer, prior to 

its initial public offering date, may confidentially submit to the 

Commission a draft registration statement, for confidential nonpublic review by the staff of the Commission prior to public filing, provided that the initial confidential submission and all 

amendments thereto shall be publicly filed with the Commission not later than 15 days before the date on which the issuer 

conducts a road show (as defined under section 230.433(h)(4) of 

title 17, Code of Federal Regulations) or, in the absence of a 

road show, at least 15 days prior to the requested effective date 

of the registration statement. 

(2) WITHIN 1 YEAR AFTER INITIAL PUBLIC OFFERING OR EXCHANGE REGISTRATION.—Any issuer, within the 1-year period 

following its initial public offering or its registration of a security under section 12(b) of the Securities Exchange Act of 1934, 

may confidentially submit to the Commission a draft registration statement, for confidential nonpublic review by the staff of 

the Commission prior to public filing, provided that the initial 

confidential submission and all amendments thereto shall be 

publicly filed with the Commission not later than 15 days before the date on which the issuer conducts a road show (as defined under section 230.433(h)(4) of title 17, Code of Federal 

Regulations) or, in the absence of a road show, at least 15 days 

prior to the requested effective date of the registration statement. 

(3) ADDITIONAL REQUIREMENTS.— 

(A) IN GENERAL.—The Commission may issue regulations, subject to public notice and comment, to impose such 

other terms, conditions, or requirements on the submission 

of draft registration statements described under this subVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00299 Fmt 6659 Sfmt 6603 E:\HR\OC\HR792.XXX HR792
296 

section by an issuer other than an emerging growth company as the Commission determines appropriate. 

(B) REPORT TO CONGRESS.—Prior to any rulemaking described under subparagraph (A), the Commission shall 

issue a report to the Congress containing a list of the findings supporting the basis of such rulemaking. 

ø(2)¿ (4) CONFIDENTIALITY.—Notwithstanding any other provision of this title, the Commission shall not be compelled to 

disclose any information provided to or obtained by the Commission pursuant to this subsection. For purposes of section 

552 of title 5, United States Code, this subsection shall be considered a statute described in subsection (b)(3)(B) of such section 552. Information described in or obtained pursuant to this 

subsection shall be deemed to constitute confidential information for purposes of section 24(b)(2) of the Securities Exchange 

Act of 1934. 

* * * * * * * 

TAKING EFFECT OF REGISTRATION STATEMENTS AND AMENDMENTS

THERETO

SEC. 8. (a) Except as hereinafter provided, the effective date of 

a registration statement shall be the twentieth day after the filing 

thereof or such earlier date as the Commission may determine, 

having due regard to the adequacy of the information respecting 

the issuer theretofore available to the public, to the facility with 

which the nature of the securities to be registered, their relationship to the capital structure of the issuer and the rights of holders 

thereof can be understood, and to the public interest and the protection of investors. If any amendment to any such statement is 

filed prior to the effective date of such statement, the registration 

statement shall be deemed to have been filed when such amendment was filed; except that an amendment filed with the consent 

of the Commission, prior to the effective date of the registration 

statement, or filed pursuant to an order of the Commission, shall 

be treated as a part of the registration statement. 

(b) If it appears to the Commission that a registration statement 

is on its face incomplete or inaccurate in any material respect, the 

Commission may, after notice by personal service or the sending of 

confirmed telegraphic notice not later than ten days after the filing 

of the registration statement, and opportunity for hearing (at a 

time fixed by the Commission) within ten days after such notice by 

personal service or the sending of such telegraphic notice, issue an 

order prior to the effective date of registration refusing to permit 

such statement to become effective until it has been amended in accordance with such order. When such statement has been amended 

in accordance with such order the Commission shall so declare and 

the registration shall become effective at the time provided in subsection (a) or upon the date of such declaration, whichever date is 

the later. 

(c) An amendment filed after the effective date of the registration 

statement, if such amendment, upon its face, appears to the Commission not to be incomplete or inaccurate in any material respect, 

shall become effective on such date as the Commission may deterVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00300 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
297 

mine, having due regard to the public interest and the protection 

of investors. 

(d) If it appears to the Commission at any time that the registration statement includes any untrue statement of a material fact or 

omits to state any material fact required to be stated therein or 

necessary to make the statements therein not misleading, the Commission may, after notice by personal service or the sending of confirmed telegraphic notice, and after opportunity for hearing (at a 

time fixed by the Commission) within fifteen days after such notice 

by personal service or the sending of such telegraphic notice, issue 

a stop order suspending the effectiveness of the registration statement. When such statement has been amended in accordance with 

such stop order the Commission shall so declare and thereupon the 

stop order shall cease to be effective. 

(e) The Commission is hereby empowered to make an examination in any case in order to determine whether a stop order should 

issue under subsection (d). In making such examination the Commission or any officer or officers designated by it shall have access 

to and may demand the production of any books and papers of, and 

may administer oaths and affirmations to and examine, the issuer, 

underwriter, or any other person, in respect of any matter relevant 

to the examination, and may, in its discretion, require the production of a balance sheet exhibiting the assets and liabilities of the 

issuer, or its income statement, or both, to be certified to by a public or certified accountant approved by the Commission. If the 

issuer or underwriter shall fail to cooperate, or shall obstruct or 

refuse to permit the making of an examination, such conduct shall 

be proper ground for the issuance of a stop order. 

(f) Any notice required under this section shall be sent to or 

served on the issuer, or, in case of a foreign government or political 

subdivision thereof, to or on the underwriter, or, in the case of a 

foreign or Territorial person, to or on its duly authorized representative in the United States named in the registration statement, 

properly directed in each case of telegraphic notice to the address 

given in such statement. 

(g) PROCEDURE FOR OBTAINING CERTAIN INTELLECTUAL PROPERTY.—The Commission is not authorized to compel under this title 

a person to produce or furnish source code, including algorithmic 

trading source code or similar intellectual property that forms the 

basis for design of the source code, to the Commission unless the 

Commission first issues a subpoena. 

* * * * * * * 

SARBANES-OXLEY ACT OF 2002 

* * * * * * * 

TITLE IV—ENHANCED FINANCIAL 

DISCLOSURES 

* * * * * * * 

298 

SEC. 404. MANAGEMENT ASSESSMENT OF INTERNAL CONTROLS. 

(a) RULES REQUIRED.—The Commission shall prescribe rules requiring each annual report required by section 13(a) or 15(d) of the 

Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) to contain an internal control report, which shall— 

(1) state the responsibility of management for establishing 

and maintaining an adequate internal control structure and 

procedures for financial reporting; and 

(2) contain an assessment, as of the end of the most recent 

fiscal year of the issuer, of the effectiveness of the internal control structure and procedures of the issuer for financial reporting. 

(b) INTERNAL CONTROL EVALUATION AND REPORTING.—With respect to the internal control assessment required by subsection (a), 

each registered public accounting firm that prepares or issues the 

audit report for the issuer, other than an issuer that is an emerging growth company (as defined in section 3 of the Securities Exchange Act of 1934), shall attest to, and report on, the assessment 

made by the management of the issuer. An attestation made under 

this subsection shall be made in accordance with standards for attestation engagements issued or adopted by the Board. Any such 

attestation shall not be the subject of a separate engagement. 

(c) EXEMPTION FOR SMALLER ISSUERS.—Subsection (b) shall not 

apply with respect to any audit report prepared for an issuer that 

is neither a ‘‘large accelerated filer’’ nor an ‘‘accelerated filer’’ as 

those terms are defined in Rule 12b–2 of the Commission (17 

C.F.R. 240.12b–2). 

(d) TEMPORARY EXEMPTION FOR LOW-REVENUE ISSUERS.— 

(1) LOW-REVENUE EXEMPTION.—Subsection (b) shall not apply 

with respect to an audit report prepared for an issuer that— 

(A) ceased to be an emerging growth company on the last 

day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under the Securities Act of 1933; 

(B) had average annual gross revenues of less than 

$50,000,000 as of its most recently completed fiscal year; 

and 

(C) is not a large accelerated filer. 

(2) EXPIRATION OF TEMPORARY EXEMPTION.—An issuer ceases 

to be eligible for the exemption described under paragraph (1) 

at the earliest of— 

(A) the last day of the fiscal year of the issuer following 

the tenth anniversary of the date of the first sale of common 

equity securities of the issuer pursuant to an effective registration statement under the Securities Act of 1933; 

(B) the last day of the fiscal year of the issuer during 

which the average annual gross revenues of the issuer exceed $50,000,000; or 

(C) the date on which the issuer becomes a large accelerated filer. 

(3) DEFINITIONS.—For purposes of this subsection: 

(A) AVERAGE ANNUAL GROSS REVENUES.—The term ‘‘average annual gross revenues’’ means the total gross revenues 

299 

of an issuer over its most recently completed three fiscal 

years divided by three. 

(B) EMERGING GROWTH COMPANY.—The term ‘‘emerging 

growth company’’ has the meaning given such term under 

section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 

78c). 

(C) LARGE ACCELERATED FILER.—The term ‘‘large accelerated filer’’ has the meaning given that term under section 

240.12b–2 of title 17, Code of Federal Regulations, or any 

successor thereto. 

* * * * * * * 

VICTIMS OF TRAFFICKING AND VIOLENCE PROTECTION 

ACT OF 2000 

* * * * * * * 

DIVISION A—TRAFFICKING VICTIMS PROTECTION ACT 

OF 2000 

* * * * * * * 

SEC. 105. INTERAGENCY TASK FORCE TO MONITOR AND COMBAT 

TRAFFICKING. 

(a) ESTABLISHMENT.—The President shall establish an Interagency Task Force to Monitor and Combat Trafficking. 

(b) APPOINTMENT.—The President shall appoint the members of 

the Task Force, which shall include the Secretary of State, the Administrator of the United States Agency for International Development, the Attorney General, the Secretary of Labor, the Secretary 

of Health and Human Services, the Director of National Intelligence, the Secretary of Defense, the Secretary of Homeland Security, the Secretary of Education, the Secretary of the Treasury, and 

such other officials as may be designated by the President. 

(c) CHAIRMAN.—The Task Force shall be chaired by the Secretary 

of State. 

(d) ACTIVITIES OF THE TASK FORCE.—The Task Force shall carry 

out the following activities: 

(1) Coordinate the implementation of this division. 

(2) Measure and evaluate progress of the United States and 

other countries in the areas of trafficking prevention, protection, and assistance to victims of trafficking, and prosecution 

and enforcement against traffickers, including the role of public corruption in facilitating trafficking. The Task Force shall 

have primary responsibility for assisting the Secretary of State 

in the preparation of the reports described in section 110. 

(3) Expand interagency procedures to collect and organize 

data, including significant research and resource information 

on domestic and international trafficking. Any data collection 

procedures established under this subsection shall respect the 

confidentiality of victims of trafficking. 

(4) Engage in efforts to facilitate cooperation among countries of origin, transit, and destination. Such efforts shall aim 

to strengthen local and regional capacities to prevent trafficking, prosecute traffickers and assist trafficking victims, and 

300 

shall include initiatives to enhance cooperative efforts between 

destination countries and countries of origin and assist in the 

appropriate reintegration of stateless victims of trafficking. 

(5) Examine the role of the international ‘‘sex tourism’’ industry in the trafficking of persons and in the sexual exploitation of women and children around the world. 

(6) Engage in consultation and advocacy with governmental 

and nongovernmental organizations, among other entities, to 

advance the purposes of this division, and make reasonable efforts to distribute information to enable all relevant Federal 

Government agencies to publicize the National Human Trafficking Resource Center Hotline on their websites, in all headquarters offices, and in all field offices throughout the United 

States. 

(7) Not later than May 1, 2004, and annually thereafter, the 

Attorney General shall submit to the Committee on Ways and 

Means, the Committee on Foreign Affairs, and the Committee 

on the Judiciary of the House of Representatives and the Committee on Finance, the Committee on Foreign Relations, and 

the Committee on the Judiciary of the Senate, a report on Federal agencies that are implementing any provision of this division, or any amendment made by this division, which shall include, at a minimum, information on— 

(A) the number of persons who received benefits or other 

services under subsections (b) and (f) of section 107 in connection with programs or activities funded or administered 

by the Secretary of Health and Human Services, the Secretary of Labor, the Attorney General, the Board of Directors of the Legal Services Corporation, and other appropriate Federal agencies during the preceding fiscal year; 

(B) the number of persons who have been granted continued presence in the United States under section 

107(c)(3) during the preceding fiscal year and the mean 

and median time taken to adjudicate applications submitted under such section, including the time from the receipt of an application by law enforcement to the issuance 

of continued presence, and a description of any efforts 

being taken to reduce the adjudication and processing time 

while ensuring the safe and competent processing of the 

applications; 

(C) the number of persons who have applied for, been 

granted, or been denied a visa or otherwise provided status 

under subparagraph (T)(i) or (U)(i) of section 101(a)(15) of 

the Immigration and Nationality Act (8 U.S.C. 1101(a)(15)) 

during the preceding fiscal year; 

(D) the number of persons who have applied for, been 

granted, or been denied a visa or status under clause (ii) 

of section 101(a)(15)(T) of the Immigration and Nationality 

Act (8 U.S.C. 1101(a)(15)(T)) during the preceding fiscal 

year, broken down by the number of such persons described in subclauses (I), (II), and (III) of such clause (ii); 

(E) the amount of Federal funds expended in direct benefits paid to individuals described in subparagraph (D) in 

conjunction with T visa status; 

301 

(F) the number of persons who have applied for, been 

granted, or been denied a visa or status under section 

101(a)(15)(U)(i) of the Immigration and Nationality Act (8 

U.S.C. 1101(a)(15)(U)(i)) during the preceding fiscal year; 

(G) the mean and median time in which it takes to adjudicate applications submitted under the provisions of law 

set forth in subparagraph (C), including the time between 

the receipt of an application and the issuance of a visa and 

work authorization; 

(H) any efforts being taken to reduce the adjudication 

and processing time, while ensuring the safe and competent processing of the applications; 

(I) the number of persons who have been charged or convicted under one or more of sections 1581, 1583, 1584, 

1589, 1590, 1591, 1592, or 1594 of title 18, United States 

Code, during the preceding fiscal year and the sentences 

imposed against each such person; 

(J) the amount, recipient, and purpose of each grant 

issued by any Federal agency to carry out the purposes of 

sections 106 and 107 of this Act, or section 134 of the Foreign Assistance Act of 1961, during the preceding fiscal 

year; 

(K) the nature of training conducted pursuant to section 

107(c)(4) during the preceding fiscal year; 

(L) the amount, recipient, and purpose of each grant 

under section 202 and 204 of the Trafficking Victims Protection Act of 2005; 

(M) activities by the Department of Defense to combat 

trafficking in persons, including— 

(i) educational efforts for, and disciplinary actions 

taken against, members of the United States Armed 

Forces; 

(ii) the development of materials used to train the 

armed forces of foreign countries; 

(iii) all known trafficking in persons cases reported 

to the Under Secretary of Defense for Personnel and 

Readiness; 

(iv) efforts to ensure that United States Government 

contractors and their employees or United States Government subcontractors and their employees do not 

engage in trafficking in persons; and 

(v) all trafficking in persons activities of contractors 

reported to the Under Secretary of Defense for Acquisition, Technology, and Logistics; 

(N) activities or actions by Federal departments and 

agencies to enforce— 

(i) section 106(g) and any similar law, regulation, or 

policy relating to United States Government contractors and their employees or United States Government 

subcontractors and their employees that engage in severe forms of trafficking in persons, the procurement 

of commercial sex acts, or the use of forced labor, including debt bondage; 

(ii) section 307 of the Tariff Act of 1930 (19 U.S.C. 

1307; relating to prohibition on importation of convictVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00305 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
302 

made goods), including any determinations by the Secretary of Homeland Security to waive the restrictions 

of such section; and 

(iii) prohibitions on the procurement by the United 

States Government of items or services produced by 

slave labor, consistent with Executive Order 13107 

(December 10, 1998); 

(O) the activities undertaken by the Senior Policy Operating Group to carry out its responsibilities under subsection (g); and 

(P) the activities undertaken by Federal agencies to 

train appropriate State, tribal, and local government and 

law enforcement officials to identify victims of severe forms 

of trafficking, including both sex and labor trafficking; 

(Q) the activities undertaken by Federal agencies in cooperation with State, tribal, and local law enforcement officials to identify, investigate, and prosecute offenses under 

sections 1581, 1583, 1584, 1589, 1590, 1591, 1592, 1594, 

2251, 2251A, 2421, 2422, and 2423 of title 18, United 

States Code, or equivalent State offenses, including, in 

each fiscal year— 

(i) the number, age, gender, country of origin, and 

citizenship status of victims identified for each offense; 

(ii) the number of individuals charged, and the number of individuals convicted, under each offense; 

(iii) the number of individuals referred for prosecution for State offenses, including offenses relating to 

the purchasing of commercial sex acts; 

(iv) the number of victims granted continued presence in the United States under section 107(c)(3); 

(v) the number of victims granted a visa or otherwise provided status under subparagraph (T)(i) or 

(U)(i) of section 101(a)(15) of the Immigration and Nationality Act (8 U.S.C. 1101(a)(15)); 

(vi) the number of individuals required by a court 

order to pay restitution in connection with a violation 

of each offense under title 18, United States Code, the 

amount of restitution required to be paid under each 

such order, and the amount of restitution actually 

paid pursuant to each such order; and 

(vii) the age, gender, race, country of origin, country 

of citizenship, and description of the role in the offense 

of individuals convicted under each offense; and 

(R) the activities undertaken by the Department of Justice and the Department of Health and Human Services to 

meet the specific needs of minor victims of domestic trafficking, including actions taken pursuant to subsection (f) 

and section 202(a) of the Trafficking Victims Protection 

Reauthorization Act of 2005 (42 U.S.C. 14044(a)), and the 

steps taken to increase cooperation among Federal agencies to ensure the effective and efficient use of programs 

for which the victims are eligible. 

(e) OFFICE TO MONITOR AND COMBAT TRAFFICKING.— 

(1) IN GENERAL.—The Secretary of State shall establish within the Department of State an Office to Monitor and Combat 

303 

Trafficking, which shall provide assistance to the Task Force. 

Any such Office shall be headed by a Director, who shall be appointed by the President, by and with the advice and consent 

of the Senate, with the rank of Ambassador-at-Large. The Director shall have the primary responsibility for assisting the 

Secretary of State in carrying out the purposes of this division 

and may have additional responsibilities as determined by the 

Secretary. The Director shall consult with nongovernmental organizations and multilateral organizations, and with trafficking victims or other affected persons. The Director shall 

have the authority to take evidence in public hearings or by 

other means. The agencies represented on the Task Force are 

authorized to provide staff to the Office on a nonreimbursable 

basis. 

(2) UNITED STATES ASSISTANCE.—The Director shall be responsible for— 

(A) all policy, funding, and programming decisions regarding funds made available for trafficking in persons 

programs that are centrally controlled by the Office to 

Monitor and Combat Trafficking; and 

(B) coordinating any trafficking in persons programs of 

the Department of State or the United States Agency for 

International Development that are not centrally controlled by the Director. 

(f) REGIONAL STRATEGIES FOR COMBATING TRAFFICKING IN PER- SONS.—Each regional bureau in the Department of State shall contribute to the realization of the anti-trafficking goals and objectives 

of the Secretary of State. Each year, in cooperation with the Office 

to Monitor and Combat Trafficking in Persons, each regional bureau shall submit a list of anti-trafficking goals and objectives to 

the Secretary of State for each country in the geographic area of 

responsibilities of the regional bureau. Host governments shall be 

informed of the goals and objectives for their particular country 

and, to the extent possible, host government officials should be consulted regarding the goals and objectives. 

(g) SENIOR POLICY OPERATING GROUP.— (1) ESTABLISHMENT.—There shall be established within the 

executive branch a Senior Policy Operating Group. 

(2) MEMBERSHIP; RELATED MATTERS.— (A) IN GENERAL.—The Operating Group shall consist of 

the senior officials designated as representatives of the appointed members of the Task Force (pursuant to Executive 

Order No. 13257 of February 13, 2002). 

(B) CHAIRPERSON.—The Operating Group shall be 

chaired by the Director of the Office to Monitor and Combat Trafficking of the Department of State. 

(C) MEETINGS.—The Operating Group shall meet on a 

regular basis at the call of the Chairperson. 

(3) DUTIES.—The Operating Group shall coordinate activities 

of Federal departments and agencies regarding policies (including grants and grant policies) involving the international trafficking in persons and the implementation of this division. 

(4) AVAILABILITY OF INFORMATION.—Each Federal department or agency represented on the Operating Group shall fully 

share all information with such Group regarding the departVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00307 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
304 

ment or agency’s plans, before and after final agency decisions 

are made, on all matters relating to grants, grant policies, and 

other significant actions regarding the international trafficking 

in persons and the implementation of this division. 

(5) REGULATIONS.—Not later than 90 days after the date of 

the enactment of the Trafficking Victims Protection Reauthorization Act of 2003, the President shall promulgate regulations 

to implement this section, including regulations to carry out 

paragraph (4). 

* * * * * * * 

TITLE 31, UNITED STATES CODE 

SUBTITLE I—GENERAL 

* * * * * * * 

CHAPTER 3—DEPARTMENT OF THE TREASURY 

* * * * * * * 

SUBCHAPTER I—ORGANIZATION 

* * * * * * * 

§ 312. Terrorism and Financial Intelligence 

(a) OFFICE OF TERRORISM AND FINANCIAL INTELLIGENCE.— (1) ESTABLISHMENT.—There is established within the Department of the Treasury the Office of Terrorism and Financial Intelligence (in this section referred to as ‘‘OTFI’’), which shall be 

the successor to any such office in existence on the date of enactment of this section. 

(2) LEADERSHIP.— (A) UNDERSECRETARY.—There is established within the 

Department of the Treasury, the Office of the Undersecretary for Terrorism and Financial Crimes, who shall serve 

as the head of the OTFI, and shall report to the Secretary 

of the Treasury through the Deputy Secretary of the 

Treasury. The Office of the Undersecretary for Terrorism 

and Financial Crimes shall be the successor to the Office 

of the Undersecretary for Enforcement. 

(B) APPOINTMENT.—The Undersecretary for Terrorism 

and Financial Crimes shall be appointed by the President, 

by and with the advice and consent of the Senate. 

(3) ASSISTANT SECRETARY FOR TERRORIST FINANCING.— 

(A) ESTABLISHMENT.—There is established within the 

OTFI the position of Assistant Secretary for Terrorist Financing. 

(B) APPOINTMENT.—The Assistant Secretary for Terrorist 

Financing shall be appointed by the President, by and with 

the advice and consent of the Senate. 

(C) DUTIES.—The Assistant Secretary for Terrorist Financing shall be responsible for formulating and coordinating the counter terrorist financing and anti-money 

laundering efforts of the Department of the Treasury, and 

305 

shall report directly to the Undersecretary for Terrorism 

and Financial Crimes. 

(4) FUNCTIONS.—The functions of the OTFI include providing 

policy, strategic, and operational direction to the Department 

on issues relating to— 

(A) implementation of titles I and II of the Bank Secrecy 

Act; 

(B) United States economic sanctions programs; 

(C) combating terrorist financing; 

(D) combating financial crimes, including money laundering, counterfeiting, and other offenses threatening the 

integrity of the banking and financial systems; 

(E) combating illicit financing relating to severe forms of 

trafficking in persons; 

ø(E)¿ (F) other enforcement matters; 

ø(F)¿ (G) those intelligence analysis and coordination 

functions described in subsection (b); and 

ø(G)¿ (H) the security functions and programs of the Department of the Treasury. 

(5) REPORTS TO CONGRESS ON PROPOSED MEASURES.—The 

Undersecretary for Terrorism and Financial Crimes and the 

Assistant Secretary for Terrorist Financing shall report to the 

Committee on Banking, Housing, and Urban Affairs of the 

Senate and the Committee on Financial Services of the House 

of Representatives not later than 72 hours after proposing by 

rule, regulation, order, or otherwise, any measure to reorganize 

the structure of the Department for combatting money laundering and terrorist financing, before any such proposal becomes effective. 

(6) OTHER OFFICES WITHIN OTFI.—Notwithstanding any 

other provision of law, the following offices of the Department 

of the Treasury shall be within the OTFI: 

(A) The Office of the Assistant Secretary for Intelligence 

and Analysis, which shall report directly to the Undersecretary for Terrorism and Financial Crimes. 

(B) The Office of the Assistant Secretary for Terrorist Financing, which shall report directly to the Undersecretary 

for Terrorism and Financial Crimes. 

(C) The Office of Foreign Assets Control (in this section 

referred to as the ‘‘OFAC’’), which shall report directly to 

the Undersecretary for Terrorism and Financial Crimes. 

(D) The Executive Office for Asset Forfeiture, which 

shall report to the Undersecretary for Terrorism and Financial Crimes. 

(E) The Office of Intelligence and Analysis (in this section referred to as the ‘‘OIA’’), which shall report to the Assistant Secretary for Intelligence and Analysis. 

(F) The Office of Terrorist Financing, which shall report 

to the Assistant Secretary for Terrorist Financing. 

(7) FINCEN.— 

(A) REPORTING TO UNDERSECRETARY.—The Financial 

Crimes Enforcement Network (in this section referred to 

as ‘‘FinCEN’’), a bureau of the Department of the Treasury, shall report to the Undersecretary for Terrorism and 

Financial Crimes. The Undersecretary for Terrorism and 

306 

Financial Crimes may not redelegate its reporting authority over FinCEN. 

(B) OFFICE OF COMPLIANCE.—There is established within 

FinCEN, an Office of Compliance. 

(8) INTERAGENCY COORDINATION.—The Secretary of the Treasury, after consultation with the Undersecretary for Terrorism 

and Financial Crimes, shall designate an office within the 

OTFI that shall coordinate efforts to combat the illicit financing 

of severe forms of trafficking in persons with— 

(A) other offices of the Department of the Treasury; 

(B) other Federal agencies, including— 

(i) the Office to Monitor and Combat Trafficking in 

Persons of the Department of State; and 

(ii) the Interagency Task Force to Monitor and Combat Trafficking; 

(C) State and local law enforcement agencies; and 

(D) foreign governments. 

(9) DEFINITION.—In this subsection, the term ‘‘severe forms of 

trafficking in persons’’ has the meaning given such term in section 103 of the Trafficking Victims Protection Act of 2000 (22 

U.S.C. 7102). 

(b) OFFICE OF INTELLIGENCE AND ANALYSIS.— 

(1) ASSISTANT SECRETARY FOR INTELLIGENCE AND ANALYSIS.—The Assistant Secretary for Intelligence and Analysis 

shall head the OIA. 

(2) RESPONSIBILITIES.—The OIA shall be responsible for the 

receipt, analysis, collation, and dissemination of intelligence 

and counterintelligence information related to the operations 

and responsibilities of the entire Department of the Treasury, 

including all components and bureaus of the Department. 

(3) PRIMARY FUNCTIONS.—The primary functions of the OIA 

are— 

(A) to build a robust analytical capability on terrorist finance by coordinating and overseeing work involving intelligence analysts in all components of the Department of 

the Treasury, focusing on the highest priorities of the Department, as well as ensuring that the existing intelligence 

needs of the OFAC and FinCEN are met; and 

(B) to provide intelligence support to senior officials of 

the Department on a wide range of international economic 

and other relevant issues. 

(4) OTHER FUNCTIONS AND DUTIES.—The OIA shall— 

(A) carry out the intelligence support functions that are 

assigned, to the Office of Intelligence Support under section 311 (pursuant to section 105 of the Intelligence Authorization Act for Fiscal Year 2004); 

(B) serve in a liaison capacity with the intelligence community; and 

(C) represent the Department in various intelligence related activities. 

(5) DUTIES OF THE ASSISTANT SECRETARY.—The Assistant 

Secretary for Intelligence and Analysis shall serve as the Senior Officer Intelligence Community, and shall represent the Department in intelligence community fora, including the NaVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00310 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
307 

tional Foreign Intelligence Board committees and the Intelligence Community Management Staff. 

(c) DELEGATION.—To the extent that any authorities, powers, and 

responsibilities over enforcement matters delegated to the Undersecretary for Terrorism and Financial Crimes, or the positions of 

Assistant Secretary for Terrorism and Financial Crimes, Assistant 

Secretary for Enforcement and Operations, or Deputy Assistant 

Secretary for Terrorist Financing and Financial Crimes, have not 

been transferred to the Department of Homeland Security, the Department of Justice, or the Assistant Secretary for Tax Policy (related to the customs revenue functions of the Bureau of Alcohol 

and Tobacco Tax and Trade), those remaining authorities, powers, 

and responsibilities are delegated to the Undersecretary for Terrorism and Financial Crimes. 

(d) DESIGNATION AS ENFORCEMENT ORGANIZATION.—The Office of 

Terrorism and Financial Intelligence (including any components 

thereof) is designated as a law enforcement organization of the Department of the Treasury for purposes of section 9705 of title 31, 

United States Code, and other relevant authorities. 

(e) USE OF EXISTING RESOURCES.—The Secretary may employ 

personnel, facilities, and other Department of the Treasury resources available to the Secretary on the date of enactment of this 

section in carrying out this section, except as otherwise prohibited 

by law. 

(f) REFERENCES.—References in this section to the ‘‘Secretary’’, 

‘‘Undersecretary’’, ‘‘Deputy Secretary’’, ‘‘Deputy Assistant Secretary’’, ‘‘Office’’, ‘‘Assistant Secretary’’, and ‘‘Department’’ are references to positions and offices of the Department of the Treasury, 

unless otherwise specified. 

* * * * * * * 

TRAFFICKING VICTIMS PROTECTION ACT OF 2000 

* * * * * * * 

DIVISION A—TRAFFICKING VICTIMS PROTECTION ACT 

OF 2000 

* * * * * * * 

SEC. 105. INTERAGENCY TASK FORCE TO MONITOR AND COMBAT 

TRAFFICKING. 

(a) ESTABLISHMENT.—The President shall establish an Interagency Task Force to Monitor and Combat Trafficking. 

(b) APPOINTMENT.—The President shall appoint the members of 

the Task Force, which shall include the Secretary of State, the Administrator of the United States Agency for International Development, the Attorney General, the Secretary of Labor, the Secretary 

of Health and Human Services, the Director of National Intelligence, the Secretary of Defense, the Secretary of Homeland Security, the Secretary of Education, and such other officials as may be 

designated by the President. 

(c) CHAIRMAN.—The Task Force shall be chaired by the Secretary 

of State. 

308 

(d) ACTIVITIES OF THE TASK FORCE.—The Task Force shall carry 

out the following activities: 

(1) Coordinate the implementation of this division. 

(2) Measure and evaluate progress of the United States and 

other countries in the areas of trafficking prevention, protection, and assistance to victims of trafficking, and prosecution 

and enforcement against traffickers, including the role of public corruption in facilitating trafficking. The Task Force shall 

have primary responsibility for assisting the Secretary of State 

in the preparation of the reports described in section 110. 

(3) Expand interagency procedures to collect and organize 

data, including significant research and resource information 

on domestic and international trafficking. Any data collection 

procedures established under this subsection shall respect the 

confidentiality of victims of trafficking. 

(4) Engage in efforts to facilitate cooperation among countries of origin, transit, and destination. Such efforts shall aim 

to strengthen local and regional capacities to prevent trafficking, prosecute traffickers and assist trafficking victims, and 

shall include initiatives to enhance cooperative efforts between 

destination countries and countries of origin and assist in the 

appropriate reintegration of stateless victims of trafficking. 

(5) Examine the role of the international ‘‘sex tourism’’ industry in the trafficking of persons and in the sexual exploitation of women and children around the world. 

(6) Engage in consultation and advocacy with governmental 

and nongovernmental organizations, among other entities, to 

advance the purposes of this division, and make reasonable efforts to distribute information to enable all relevant Federal 

Government agencies to publicize the National Human Trafficking Resource Center Hotline on their websites, in all headquarters offices, and in all field offices throughout the United 

States. 

(7) Not later than May 1, 2004, and annually thereafter, the 

Attorney General shall submit to the Committee on Ways and 

Means, the Committee on Foreign Affairs, the Committee on 

Financial Services, and the Committee on the Judiciary of the 

House of Representatives and the Committee on Finance, the 

Committee on Foreign Relations, the Committee on Banking, 

Housing, and Urban Affairs, and the Committee on the Judiciary of the Senate, a report on Federal agencies that are implementing any provision of this division, or any amendment 

made by this division, which shall include, at a minimum, information on— 

(A) the number of persons who received benefits or other 

services under subsections (b) and (f) of section 107 in connection with programs or activities funded or administered 

by the Secretary of Health and Human Services, the Secretary of Labor, the Attorney General, the Board of Directors of the Legal Services Corporation, and other appropriate Federal agencies during the preceding fiscal year; 

(B) the number of persons who have been granted continued presence in the United States under section 

107(c)(3) during the preceding fiscal year and the mean 

and median time taken to adjudicate applications subVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00312 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
309 

mitted under such section, including the time from the receipt of an application by law enforcement to the issuance 

of continued presence, and a description of any efforts 

being taken to reduce the adjudication and processing time 

while ensuring the safe and competent processing of the 

applications; 

(C) the number of persons who have applied for, been 

granted, or been denied a visa or otherwise provided status 

under subparagraph (T)(i) or (U)(i) of section 101(a)(15) of 

the Immigration and Nationality Act (8 U.S.C. 1101(a)(15)) 

during the preceding fiscal year; 

(D) the number of persons who have applied for, been 

granted, or been denied a visa or status under clause (ii) 

of section 101(a)(15)(T) of the Immigration and Nationality 

Act (8 U.S.C. 1101(a)(15)(T)) during the preceding fiscal 

year, broken down by the number of such persons described in subclauses (I), (II), and (III) of such clause (ii); 

(E) the amount of Federal funds expended in direct benefits paid to individuals described in subparagraph (D) in 

conjunction with T visa status; 

(F) the number of persons who have applied for, been 

granted, or been denied a visa or status under section 

101(a)(15)(U)(i) of the Immigration and Nationality Act (8 

U.S.C. 1101(a)(15)(U)(i)) during the preceding fiscal year; 

(G) the mean and median time in which it takes to adjudicate applications submitted under the provisions of law 

set forth in subparagraph (C), including the time between 

the receipt of an application and the issuance of a visa and 

work authorization; 

(H) any efforts being taken to reduce the adjudication 

and processing time, while ensuring the safe and competent processing of the applications; 

(I) the number of persons who have been charged or convicted under one or more of sections 1581, 1583, 1584, 

1589, 1590, 1591, 1592, or 1594 of title 18, United States 

Code, during the preceding fiscal year and the sentences 

imposed against each such person; 

(J) the amount, recipient, and purpose of each grant 

issued by any Federal agency to carry out the purposes of 

sections 106 and 107 of this Act, or section 134 of the Foreign Assistance Act of 1961, during the preceding fiscal 

year; 

(K) the nature of training conducted pursuant to section 

107(c)(4) during the preceding fiscal year; 

(L) the amount, recipient, and purpose of each grant 

under section 202 and 204 of the Trafficking Victims Protection Act of 2005; 

(M) activities by the Department of Defense to combat 

trafficking in persons, including— 

(i) educational efforts for, and disciplinary actions 

taken against, members of the United States Armed 

Forces; 

(ii) the development of materials used to train the 

armed forces of foreign countries; 

310 

(iii) all known trafficking in persons cases reported 

to the Under Secretary of Defense for Personnel and 

Readiness; 

(iv) efforts to ensure that United States Government 

contractors and their employees or United States Government subcontractors and their employees do not 

engage in trafficking in persons; and 

(v) all trafficking in persons activities of contractors 

reported to the Under Secretary of Defense for Acquisition, Technology, and Logistics; 

(N) activities or actions by Federal departments and 

agencies to enforce— 

(i) section 106(g) and any similar law, regulation, or 

policy relating to United States Government contractors and their employees or United States Government 

subcontractors and their employees that engage in severe forms of trafficking in persons, the procurement 

of commercial sex acts, or the use of forced labor, including debt bondage; 

(ii) section 307 of the Tariff Act of 1930 (19 U.S.C. 

1307; relating to prohibition on importation of convictmade goods), including any determinations by the Secretary of Homeland Security to waive the restrictions 

of such section; and 

(iii) prohibitions on the procurement by the United 

States Government of items or services produced by 

slave labor, consistent with Executive Order 13107 

(December 10, 1998); 

(O) the activities undertaken by the Senior Policy Operating Group to carry out its responsibilities under subsection (g); and 

(P) the activities undertaken by Federal agencies to 

train appropriate State, tribal, and local government and 

law enforcement officials to identify victims of severe forms 

of trafficking, including both sex and labor trafficking; 

(Q) the activities undertaken by Federal agencies in cooperation with State, tribal, and local law enforcement officials to identify, investigate, and prosecute offenses under 

sections 1581, 1583, 1584, 1589, 1590, 1591, 1592, 1594, 

2251, 2251A, 2421, 2422, and 2423 of title 18, United 

States Code, or equivalent State offenses, including, in 

each fiscal year— 

(i) the number, age, gender, country of origin, and 

citizenship status of victims identified for each offense; 

(ii) the number of individuals charged, and the number of individuals convicted, under each offense; 

(iii) the number of individuals referred for prosecution for State offenses, including offenses relating to 

the purchasing of commercial sex acts; 

(iv) the number of victims granted continued presence in the United States under section 107(c)(3); 

(v) the number of victims granted a visa or otherwise provided status under subparagraph (T)(i) or 

(U)(i) of section 101(a)(15) of the Immigration and Nationality Act (8 U.S.C. 1101(a)(15)); 

311 

(vi) the number of individuals required by a court 

order to pay restitution in connection with a violation 

of each offense under title 18, United States Code, the 

amount of restitution required to be paid under each 

such order, and the amount of restitution actually 

paid pursuant to each such order; and 

(vii) the age, gender, race, country of origin, country 

of citizenship, and description of the role in the offense 

of individuals convicted under each offenseø; and¿; 

(R) the activities undertaken by the Department of Justice and the Department of Health and Human Services to 

meet the specific needs of minor victims of domestic trafficking, including actions taken pursuant to subsection (f) 

and section 202(a) of the Trafficking Victims Protection 

Reauthorization Act of 2005 (42 U.S.C. 14044(a)), and the 

steps taken to increase cooperation among Federal agencies to ensure the effective and efficient use of programs 

for which the victims are eligibleø.¿; and 

(S) the efforts of the United States to eliminate money 

laundering relating to severe forms of trafficking in persons 

and the number of investigations, arrests, indictments, and 

convictions in money laundering cases with a nexus to severe forms of trafficking in persons. 

(e) OFFICE TO MONITOR AND COMBAT TRAFFICKING.— (1) IN GENERAL.—The Secretary of State shall establish within the Department of State an Office to Monitor and Combat 

Trafficking, which shall provide assistance to the Task Force. 

Any such Office shall be headed by a Director, who shall be appointed by the President, by and with the advice and consent 

of the Senate, with the rank of Ambassador-at-Large. The Director shall have the primary responsibility for assisting the 

Secretary of State in carrying out the purposes of this division 

and may have additional responsibilities as determined by the 

Secretary. The Director shall consult with nongovernmental organizations and multilateral organizations, and with trafficking victims or other affected persons. The Director shall 

have the authority to take evidence in public hearings or by 

other means. The agencies represented on the Task Force are 

authorized to provide staff to the Office on a nonreimbursable 

basis. 

(2) UNITED STATES ASSISTANCE.—The Director shall be responsible for— 

(A) all policy, funding, and programming decisions regarding funds made available for trafficking in persons 

programs that are centrally controlled by the Office to 

Monitor and Combat Trafficking; and 

(B) coordinating any trafficking in persons programs of 

the Department of State or the United States Agency for 

International Development that are not centrally controlled by the Director. 

(f) REGIONAL STRATEGIES FOR COMBATING TRAFFICKING IN PER- SONS.—Each regional bureau in the Department of State shall contribute to the realization of the anti-trafficking goals and objectives 

of the Secretary of State. Each year, in cooperation with the Office 

to Monitor and Combat Trafficking in Persons, each regional buVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00315 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
312 

reau shall submit a list of anti-trafficking goals and objectives to 

the Secretary of State for each country in the geographic area of 

responsibilities of the regional bureau. Host governments shall be 

informed of the goals and objectives for their particular country 

and, to the extent possible, host government officials should be consulted regarding the goals and objectives. 

(g) SENIOR POLICY OPERATING GROUP.— (1) ESTABLISHMENT.—There shall be established within the 

executive branch a Senior Policy Operating Group. 

(2) MEMBERSHIP; RELATED MATTERS.— (A) IN GENERAL.—The Operating Group shall consist of 

the senior officials designated as representatives of the appointed members of the Task Force (pursuant to Executive 

Order No. 13257 of February 13, 2002). 

(B) CHAIRPERSON.—The Operating Group shall be 

chaired by the Director of the Office to Monitor and Combat Trafficking of the Department of State. 

(C) MEETINGS.—The Operating Group shall meet on a 

regular basis at the call of the Chairperson. 

(3) DUTIES.—The Operating Group shall coordinate activities 

of Federal departments and agencies regarding policies (including grants and grant policies) involving the international trafficking in persons and the implementation of this division. 

(4) AVAILABILITY OF INFORMATION.—Each Federal department or agency represented on the Operating Group shall fully 

share all information with such Group regarding the department or agency’s plans, before and after final agency decisions 

are made, on all matters relating to grants, grant policies, and 

other significant actions regarding the international trafficking 

in persons and the implementation of this division. 

(5) REGULATIONS.—Not later than 90 days after the date of 

the enactment of the Trafficking Victims Protection Reauthorization Act of 2003, the President shall promulgate regulations 

to implement this section, including regulations to carry out 

paragraph (4). 

* * * * * * * 

SEC. 108. MINIMUM STANDARDS FOR THE ELIMINATION OF TRAFFICKING. 

(a) MINIMUM STANDARDS.—For purposes of this division, the minimum standards for the elimination of trafficking applicable to the 

government of a country of origin, transit, or destination for victims of severe forms of trafficking are the following: 

(1) The government of the country should prohibit severe 

forms of trafficking in persons and punish acts of such trafficking. 

(2) For the knowing commission of any act of sex trafficking 

involving force, fraud, coercion, or in which the victim of sex 

trafficking is a child incapable of giving meaningful consent, or 

of trafficking which includes rape or kidnapping or which 

causes a death, the government of the country should prescribe 

punishment commensurate with that for grave crimes, such as 

forcible sexual assault. 

(3) For the knowing commission of any act of a severe form 

of trafficking in persons, the government of the country should 

313 

prescribe punishment that is sufficiently stringent to deter and 

that adequately reflects the heinous nature of the offense. 

(4) The government of the country should make serious and 

sustained efforts to eliminate severe forms of trafficking in persons. 

(b) CRITERIA.—In determinations under subsection (a)(4), the following factors should be considered as indicia of serious and sustained efforts to eliminate severe forms of trafficking in persons: 

(1) Whether the government of the country vigorously investigates and prosecutes acts of severe forms of trafficking in 

persons, and convicts and sentences persons responsible for 

such acts, that take place wholly or partly within the territory 

of the country, including, as appropriate, requiring incarceration of individuals convicted of such acts. For purposes of the 

preceding sentence, suspended or significantly-reduced sentences for convictions of principal actors in cases of severe 

forms of trafficking in persons shall be considered, on a caseby-case basis, whether to be considered an indicator of serious 

and sustained efforts to eliminate severe forms of trafficking in 

persons. After reasonable requests from the Department of 

State for data regarding investigations, prosecutions, convictions, and sentences, a government which does not provide 

such data, consistent with the capacity of such government to 

obtain such data, shall be presumed not to have vigorously investigated, prosecuted, convicted or sentenced such acts. During the periods prior to the annual report submitted on June 

1, 2004, and on June 1, 2005, and the periods afterwards until 

September 30 of each such year, the Secretary of State may 

disregard the presumption contained in the preceding sentence 

if the government has provided some data to the Department 

of State regarding such acts and the Secretary has determined 

that the government is making a good faith effort to collect 

such data. 

(2) Whether the government of the country protects victims 

of severe forms of trafficking in persons and encourages their 

assistance in the investigation and prosecution of such trafficking, including provisions for legal alternatives to their removal to countries in which they would face retribution or 

hardship, and ensures that victims are not inappropriately incarcerated, fined, or otherwise penalized solely for unlawful 

acts as a direct result of being trafficked, including by providing training to law enforcement and immigration officials 

regarding the identification and treatment of trafficking victims using approaches that focus on the needs of the victims. 

(3) Whether the government of the country has adopted 

measures to prevent severe forms of trafficking in persons, 

such as measures to inform and educate the public, including 

potential victims, about the causes and consequences of severe 

forms of trafficking in persons, measures to establish the identity of local populations, including birth registration, citizenship, and nationality, measures to ensure that its nationals 

who are deployed abroad as part of a diplomatic, peacekeeping, 

or other similar mission do not engage in or facilitate severe 

forms of trafficking in persons or exploit victims of such trafficking, a transparent system for remediating or punishing 

314 

such public officials as a deterrent, measures to prevent the 

use of forced labor or child labor in violation of international 

standards, effective bilateral, multilateral, or regional information sharing and cooperation arrangements with other countries, and effective policies or laws regulating foreign labor recruiters and holding them civilly and criminally liable for 

fraudulent recruiting. 

(4) Whether the government of the country cooperates with 

other governments in the investigation and prosecution of severe forms of trafficking in persons and has entered into bilateral, multilateral, or regional law enforcement cooperation and 

coordination arrangements with other countries. 

(5) Whether the government of the country extradites persons charged with acts of severe forms of trafficking in persons 

on substantially the same terms and to substantially the same 

extent as persons charged with other serious crimes (or, to the 

extent such extradition would be inconsistent with the laws of 

such country or with international agreements to which the 

country is a party, whether the government is taking all appropriate measures to modify or replace such laws and treaties so 

as to permit such extradition). 

(6) Whether the government of the country monitors immigration and emigration patterns for evidence of severe forms of 

trafficking in persons and whether law enforcement agencies of 

the country respond to any such evidence in a manner that is 

consistent with the vigorous investigation and prosecution of 

acts of such trafficking, as well as with the protection of 

human rights of victims and the internationally recognized 

human right to leave any country, including one’s own, and to 

return to one’s own country. 

(7) Whether the government of the country vigorously investigates, prosecutes, convicts, and sentences public officials, including diplomats and soldiers, who participate in or facilitate 

severe forms of trafficking in persons, including nationals of 

the country who are deployed abroad as part of a diplomatic, 

peacekeeping, or other similar mission who engage in or facilitate severe forms of trafficking in persons or exploit victims of 

such trafficking, and takes all appropriate measures against officials who condone such trafficking. A government’s failure to 

appropriately address public allegations against such public officials, especially once such officials have returned to their 

home countries, shall be considered inaction under these criteria. After reasonable requests from the Department of State 

for data regarding such investigations, prosecutions, convictions, and sentences, a government which does not provide 

such data consistent with its resources shall be presumed not 

to have vigorously investigated, prosecuted, convicted, or sentenced such acts. During the periods prior to the annual report 

submitted on June 1, 2004, and on June 1, 2005, and the periods afterwards until September 30 of each such year, the Secretary of State may disregard the presumption contained in 

the preceding sentence if the government has provided some 

data to the Department of State regarding such acts and the 

Secretary has determined that the government is making a 

good faith effort to collect such data. 

315 

(8) Whether the percentage of victims of severe forms of trafficking in the country that are non-citizens of such countries 

is insignificant. 

(9) Whether the government has entered into effective, transparent partnerships, cooperative arrangements, or agreements 

that have resulted in concrete and measurable outcomes 

with— 

(A) domestic civil society organizations, private sector 

entities, or international nongovernmental organizations, 

or into multilateral or regional arrangements or agreements, to assist the government’s efforts to prevent trafficking, protect victims, and punish traffickers; or 

(B) the United States toward agreed goals and objectives 

in the collective fight against trafficking. 

(10) Whether the government of the country, consistent with 

the capacity of such government, systematically monitors its 

efforts to satisfy the criteria described in paragraphs (1) 

through (8) and makes available publicly a periodic assessment 

of such efforts. 

(11) Whether the government of the country achieves appreciable progress in eliminating severe forms of trafficking when 

compared to the assessment in the previous year. 

(12) Whether the government of the country has made serious and sustained efforts to reduce the demand for— 

(A) commercial sex acts; and 

(B) participation in international sex tourism by nationals of the country. 

(13) Whether the government of the country, consistent with 

the capacity of the country, has in effect a framework to prevent 

financial transactions involving the proceeds of severe forms of 

trafficking in persons, and is taking steps to implement such a 

framework, including by investigating, prosecuting, convicting, 

and sentencing individuals who attempt or conduct such transactions. 

* * * * * * * 

SMALL BUSINESS INVESTMENT ACT OF 1958 

* * * * * * * 

TITLE III—INVESTMENT DIVISION PROGRAMS 

PART A—SMALL BUSINESS INVESTMENT COMPANIES

* * * * * * * 

CAPITAL REQUIREMENTS

SEC. 302. 

(a) AMOUNT.— (1) IN GENERAL.—Except as provided in paragraph (2), the 

private capital of each licensee shall be not less than— (A) $5,000,000; or 

(B) $10,000,000, with respect to each licensee authorized 

or seeking authority to issue participating securities to be 

316 

purchased or guaranteed by the Administration under this 

Act. 

(2) EXCEPTION.—The Administrator may, in the discretion of 

the Administrator and based on a showing of special circumstances and good cause, permit the private capital of a licensee authorized or seeking authorization to issue participating securities to be purchased or guaranteed by the Administration to be less than $10,000,000, but not less than 

$5,000,000, if the Administrator determines that such action 

would not create or otherwise contribute to an unreasonable 

risk of default or loss to the Federal Government. 

(3) ADEQUACY.—In addition to the requirements of paragraph (1), the Administrator shall— 

(A) determine whether the private capital of each licensee is adequate to assure a reasonable prospect that 

the licensee will be operated soundly and profitably, and 

managed actively and prudently in accordance with its articles; and 

(B) determine that the licensee will be able both prior to 

licensing and prior to approving any request for financing, 

to make periodic payments on any debt of the company 

which is interest bearing and shall take into consideration 

the income which the company anticipates on its contemplated investments, the experience of the company’s 

owners and managers, the history of the company as an 

entity, if any, and the company’s financial resources. 

(4) EXEMPTION FROM CAPITAL REQUIREMENTS.—The Administrator may, in the discretion of the Administrator, approve leverage for any licensee licensed under subsection (c) or (d) of 

section 301 before the date of enactment of the Small Business 

Program Improvement Act of 1996 that does not meet the capital requirements of paragraph (1), if— 

(A) the licensee certifies in writing that not less 50 percent of the aggregate dollar amount of its financings after 

the date of enactment of the Small Business Program Improvement Act of 1996 will be provided to smaller enterprises; and 

(B) the Administrator determines that such action would 

not create or otherwise contribute to an unreasonable risk 

of default or loss to the United States Government. 

(b) FINANCIAL INSTITUTION INVESTMENTS.— 

(1) CERTAIN BANKS.—Notwithstanding the provisions of section 6(a)(1) of the Bank Holding Company Act of 1956, any national bank, or any member bank of the Federal Reserve System or nonmember insured bank to the extent permitted under 

applicable State law, may invest in any 1 or more small business investment companies, or in any entity established to invest solely in small business investment companies, except 

that in no event shall the total amount of such investments of 

any such bank exceed 5 percent of the capital and surplus of 

the bank or, subject to the approval of the appropriate Federal 

banking agency, 15 percent of such capital and surplus. (2) CERTAIN SAVINGS ASSOCIATIONS.—Notwithstanding any 

other provision of law, any Federal savings association may invest in any one or more small business investment companies, 

317 

or in any entity established to invest solely in small business 

investment companies, except that in no event may the total 

amount of such investments by any such Federal savings association exceed 5 percent of the capital and surplus of the Federal savings association or, subject to the approval of the appropriate Federal banking agency, 15 percent of such capital and 

surplus. (3) APPROPRIATE FEDERAL BANKING AGENCY DEFINED.—For 

purposes of this subsection, the term ‘‘appropriate Federal banking agency’’ has the meaning given that term under section 3 

of the Federal Deposit Insurance Act. 

(c) DIVERSIFICATION OF OWNERSHIP.—The Administrator shall 

ensure that the management of each licensee licensed after the 

date of enactment of the Small Business Program Improvement Act 

of 1996 is sufficiently diversified from and unaffiliated with the 

ownership of the licensee in a manner that ensures independence 

and objectivity in the financial management and oversight of the 

investments and operations of the licensee. 

* * * * * * * 

GRAMM-LEACH-BLILEY ACT 

* * * * * * * 

TITLE V—PRIVACY 

Subtitle A—Disclosure of Nonpublic 

Personal Information 

* * * * * * * 

SEC. 503. DISCLOSURE OF INSTITUTION PRIVACY POLICY. 

(a) DISCLOSURE REQUIRED.—At the time of establishing a customer relationship with a consumer and not less than annually 

during the continuation of such relationship, a financial institution 

shall provide a clear and conspicuous disclosure to such consumer, 

in writing or in electronic form or other form permitted by the regulations prescribed under section 504, of such financial institution’s 

policies and practices with respect to— 

(1) disclosing nonpublic personal information to affiliates and 

nonaffiliated third parties, consistent with section 502, including the categories of information that may be disclosed; 

(2) disclosing nonpublic personal information of persons who 

have ceased to be customers of the financial institution; and 

(3) protecting the nonpublic personal information of consumers. 

(b) REGULATIONS.—Disclosures required by subsection (a) shall 

be made in accordance with the regulations prescribed under section 504. 

(c) INFORMATION TO BE INCLUDED.—The disclosure required by 

subsection (a) shall include— 

(1) the policies and practices of the institution with respect 

to disclosing nonpublic personal information to nonaffiliated 

318 

third parties, other than agents of the institution, consistent 

with section 502 of this subtitle, and including— 

(A) the categories of persons to whom the information is 

or may be disclosed, other than the persons to whom the 

information may be provided pursuant to section 502(e); 

and 

(B) the policies and practices of the institution with respect to disclosing of nonpublic personal information of 

persons who have ceased to be customers of the financial 

institution; 

(2) the categories of nonpublic personal information that are 

collected by the financial institution; 

(3) the policies that the institution maintains to protect the 

confidentiality and security of nonpublic personal information 

in accordance with section 501; and 

(4) the disclosures required, if any, under section 

603(d)(2)(A)(iii) of the Fair Credit Reporting Act. 

(d) EXEMPTION FOR CERTIFIED PUBLIC ACCOUNTANTS.— 

(1) IN GENERAL.—The disclosure requirements of subsection 

(a) do not apply to any person, to the extent that the person 

is— 

(A) a certified public accountant; 

(B) certified or licensed for such purpose by a State; and 

(C) subject to any provision of law, rule, or regulation 

issued by a legislative or regulatory body of the State, including rules of professional conduct or ethics, that prohibits disclosure of nonpublic personal information without 

the knowing and expressed consent of the consumer. 

(2) LIMITATION.—Nothing in this subsection shall be construed to exempt or otherwise exclude any financial institution 

that is affiliated or becomes affiliated with a certified public accountant described in paragraph (1) from any provision of this 

section. 

(3) DEFINITIONS.—For purposes of this subsection, the term 

‘‘State’’ means any State or territory of the United States, the 

District of Columbia, Puerto Rico, Guam, American Samoa, the 

Trust Territory of the Pacific Islands, the Virgin Islands, or the 

Northern Mariana Islands. 

(e) MODEL FORMS.— 

(1) IN GENERAL.—The agencies referred to in section 

504(a)(1) shall jointly develop a model form which may be 

used, at the option of the financial institution, for the provision 

of disclosures under this section. 

(2) FORMAT.—A model form developed under paragraph (1) 

shall— 

(A) be comprehensible to consumers, with a clear format 

and design; 

(B) provide for clear and conspicuous disclosures; 

(C) enable consumers easily to identify the sharing practices of a financial institution and to compare privacy practices among financial institutions; and 

(D) be succinct, and use an easily readable type font. 

(3) TIMING.—A model form required to be developed by this 

subsection shall be issued in proposed form for public comment 

319 

not later than 180 days after the date of enactment of this subsection. 

(4) SAFE HARBOR.—Any financial institution that elects to 

provide the model form developed by the agencies under this 

subsection shall be deemed to be in compliance with the disclosures required under this section. 

(f) EXCEPTION TO ANNUAL NOTICE REQUIREMENT.—A financial institution that— 

(1) provides nonpublic personal information only in accordance with the provisions of subsection (b)(2) or (e) of section 

502 or regulations prescribed under section 504(b), and 

(2) has not changed its policies and practices with regard to 

disclosing nonpublic personal information from the policies and 

practices that were disclosed in the most recent disclosure sent 

to consumers in accordance with this section, 

shall not be required to provide an annual disclosure under this 

section until such time as the financial institution fails to comply 

with any criteria described in paragraph (1) or (2). 

(g) ADDITIONAL EXCEPTION TO ANNUAL NOTICE REQUIREMENT.— 

(1) IN GENERAL.—A vehicle financial company that has not 

changed its policies and practices with regard to disclosing 

nonpublic personal information from the policies and practices 

that were disclosed in the most recent disclosure sent to consumers in accordance with this section shall not be required to 

provide an annual disclosure under this section if— 

(A) the vehicle financial company makes its current policy available to consumers on its website and via mail upon 

written request sent to a designated address identified for 

the purpose of requesting the policy or upon telephone request made using a toll free consumer service telephone 

number; 

(B) the vehicle financial company conspicuously notifies 

consumers of the availability of the current policy, including— 

(i) with respect to consumers who are entitled to a 

periodic billing statement, a message on the front page 

of each periodic billing statement; and 

(ii) with respect to consumers who are not entitled to 

a periodic billing statement, through other reasonable 

means such as through a link on the landing page of 

the company’s website or with other written communication, including electronic communication, sent to 

the consumer; and 

(C) the vehicle financial company— 

(i) provides consumers with the ability to opt out, 

subject to any exemption or exception provided under 

subsection (b)(2) or (e) of section 502 or under regulations prescribed under section 504(b), of having the 

consumer’s nonpublic personal information disclosed to 

a nonaffiliated third party; and 

(ii) includes a description about where to locate the 

procedures for a consumer to select such opt out in 

each periodic billing statement sent to the consumer. 

(2) TREATMENT OF MULTIPLE POLICIES.—If a vehicle financial 

company maintains more than one set of policies described 

320 

under paragraph (1) that vary depending on the consumer’s account status or State of residence, the vehicle financial company 

may comply with the website posting requirement in paragraph 

(1)(A) by posting all of such policies to the public section of the 

vehicle financial company’s website, with instructions for choosing the applicable policy. 

(3) VEHICLE FINANCIAL COMPANY DEFINED.—For purposes of 

this subsection, the term ‘‘vehicle financial company’’ means— 

(A) a financial institution that— 

(i) is regularly engaged in the business of extending 

credit for the purchase of vehicles; 

(ii) is affiliated with a vehicle manufacturer; and 

(iii) only shares nonpublic personal information of 

consumers with nonaffiliated third parties that are vehicle dealers; or 

(B) a financial institution that— 

(i) regularly engages in the business of extending 

credit for the purchase or lease of vehicles from vehicle 

dealers; or 

(ii) purchases vehicle installment sales contracts or 

leases from vehicle dealers. 

* * * * * * * 

INVESTMENT COMPANY ACT OF 1940 

TITLE I—INVESTMENT COMPANIES 

* * * * * * * 

ACCOUNTS AND RECORDS

SEC. 31. (a) MAINTENANCE OF RECORDS.— (1) IN GENERAL.—Each registered investment company, and 

each underwriter, broker, dealer, or investment adviser that is 

a majority-owned subsidiary of such a company, shall maintain 

and preserve such records (as defined in section 3(a)(37) of the 

Securities Exchange Act of 1934) for such period or periods as 

the Commission, by rules and regulations, may prescribe as 

necessary or appropriate in the public interest or for the protection of investors. Each investment adviser that is not a majority-owned subsidiary of, and each depositor of any registered 

investment company, and each principal underwriter for any 

registered investment company other than a closed-end company, shall maintain and preserve for such period or periods 

as the Commission shall prescribe by rules and regulations, 

such records as are necessary or appropriate to record such 

person’s transactions with such registered company. Each person having custody or use of the securities, deposits, or credits 

of a registered investment company shall maintain and preserve all records that relate to the custody or use by such person of the securities, deposits, or credits of the registered investment company for such period or periods as the Commission, by rule or regulation, may prescribe, as necessary or appropriate in the public interest or for the protection of investors. 

321 

(2) MINIMIZING COMPLIANCE BURDEN.—In exercising its authority under this subsection, the Commission shall take such 

steps as it deems necessary or appropriate, consistent with the 

public interest and for the protection of investors, to avoid unnecessary recordkeeping by, and minimize the compliance burden on, persons required to maintain records under this subsection (hereafter in this section referred to as ‘‘subject persons’’). Such steps shall include considering, and requesting 

public comment on— 

(A) feasible alternatives that minimize the recordkeeping 

burdens on subject persons; 

(B) the necessity of such records in view of the public 

benefits derived from the independent scrutiny of such 

records through Commission examination; 

(C) the costs associated with maintaining the information that would be required to be reflected in such records; 

and 

(D) the effects that a proposed recordkeeping requirement would have on internal compliance policies and procedures. 

(b) EXAMINATIONS OF RECORDS.— (1) IN GENERAL.—All records required to be maintained and 

preserved in accordance with subsection (a) shall be subject at 

any time and from time to time to such reasonable periodic, 

special, and other examinations by the Commission, or any 

member or representative thereof, as the Commission may prescribe. 

(2) AVAILABILITY.—For purposes of examinations referred to 

in paragraph (1), any subject person shall make available to 

the Commission or its representatives any copies or extracts 

from such records as may be prepared without undue effort, 

expense, or delay as the Commission or its representatives 

may reasonably request. 

(3) COMMISSION ACTION.—The Commission shall exercise its 

authority under this subsection with due regard for the benefits of internal compliance policies and procedures and the effective implementation and operation thereof. 

(4) RECORDS OF PERSONS WITH CUSTODY OR USE.— (A) IN GENERAL.—Records of persons having custody or 

use of the securities, deposits, or credits of a registered investment company that relate to such custody or use, are 

subject at any time, or from time to time, to such reasonable periodic, special, or other examinations and other information and document requests by representatives of the 

Commission, as the Commission deems necessary or appropriate in the public interest or for the protection of investors. 

(B) CERTAIN PERSONS SUBJECT TO OTHER REGULATION.— 

Any person that is subject to regulation and examination 

by a Federal financial institution regulatory agency (as 

such term is defined under section 212(c)(2) of title 18, 

United States Code) may satisfy any examination request, 

information request, or document request described under 

subparagraph (A), by providing to the Commission a detailed listing, in writing, of the securities, deposits, or credVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00325 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
322 

its of the registered investment company within the custody or use of such person. 

(c) REGULATORY AUTHORITY.—The Commission may, in the public interest or for the protection of investors, issue rules and regulations providing for a reasonable degree of uniformity in the accounting policies and principles to be followed by registered investment companies in maintaining their accounting records and in 

preparing financial statements required pursuant to this title. 

(d) EXEMPTION AUTHORITY.—The Commission, upon application 

made by any registered investment company, may by order exempt 

a specific transaction or transactions from the provisions of any 

rule or regulation made pursuant to subsection (e), if the Commission finds that such rule or regulation should not reasonably be applied to such transaction. 

(e) PROCEDURE FOR OBTAINING CERTAIN INTELLECTUAL PROPERTY.—The Commission is not authorized to compel under this title 

an investment company to produce or furnish source code, including 

algorithmic trading source code or similar intellectual property that 

forms the basis for design of the source code, to the Commission unless the Commission first issues a subpoena. 

* * * * * * * 

INVESTMENT ADVISERS ACT OF 1940 

* * * * * * * 

TITLE II—INVESTMENT ADVISERS 

* * * * * * * 

ANNUAL AND OTHER REPORTS

SEC. 204. (a) IN GENERAL.—Every investment adviser who makes 

use of the mails or of any means or instrumentality of interstate 

commerce in connection with his or its business as an investment 

adviser (other than one specifically exempted from registration pursuant to section 203(b) of this title), shall make and keep for prescribed periods such records (as defined in section 3(a)(37) of the 

Securities Exchange Act of 1934), furnish such copies thereof, and 

make and disseminate such reports as the Commission, by rule, 

may prescribe as necessary or appropriate in the public interest or 

for the protection of investors. All records (as so defined) of such 

investment advisers are subject at any time, or from time to time, 

to such reasonable periodic, special, or other examinations by representatives of the Commission as the Commission deems necessary or appropriate in the public interest or for the protection of 

investors. 

(b) RECORDS AND REPORTS OF PRIVATE FUNDS.— 

(1) IN GENERAL.—The Commission may require any investment adviser registered under this title— 

(A) to maintain such records of, and file with the Commission such reports regarding, private funds advised by 

the investment adviser, as necessary and appropriate in 

the public interest and for the protection of investors, or 

for the assessment of systemic risk by the Financial StaVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00326 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
323 

bility Oversight Council (in this subsection referred to as 

the ‘‘Council’’); and 

(B) to provide or make available to the Council those reports or records or the information contained therein. 

(2) TREATMENT OF RECORDS.—The records and reports of any 

private fund to which an investment adviser registered under 

this title provides investment advice shall be deemed to be the 

records and reports of the investment adviser. 

(3) REQUIRED INFORMATION.—The records and reports required to be maintained by an investment adviser and subject 

to inspection by the Commission under this subsection shall include, for each private fund advised by the investment adviser, 

a description of— 

(A) the amount of assets under management and use of 

leverage, including off-balance-sheet leverage; 

(B) counterparty credit risk exposure; 

(C) trading and investment positions; 

(D) valuation policies and practices of the fund; 

(E) types of assets held; 

(F) side arrangements or side letters, whereby certain 

investors in a fund obtain more favorable rights or entitlements than other investors; 

(G) trading practices; and 

(H) such other information as the Commission, in consultation with the Council, determines is necessary and 

appropriate in the public interest and for the protection of 

investors or for the assessment of systemic risk, which 

may include the establishment of different reporting requirements for different classes of fund advisers, based on 

the type or size of private fund being advised. 

(4) MAINTENANCE OF RECORDS.—An investment adviser registered under this title shall maintain such records of private 

funds advised by the investment adviser for such period or periods as the Commission, by rule, may prescribe as necessary 

and appropriate in the public interest and for the protection of 

investors, or for the assessment of systemic risk. 

(5) FILING OF RECORDS.—The Commission shall issue rules 

requiring each investment adviser to a private fund to file reports containing such information as the Commission deems 

necessary and appropriate in the public interest and for the 

protection of investors or for the assessment of systemic risk. 

(6) EXAMINATION OF RECORDS.— 

(A) PERIODIC AND SPECIAL EXAMINATIONS.—The Commission— 

(i) shall conduct periodic inspections of the records 

of private funds maintained by an investment adviser 

registered under this title in accordance with a schedule established by the Commission; and 

(ii) may conduct at any time and from time to time 

such additional, special, and other examinations as 

the Commission may prescribe as necessary and appropriate in the public interest and for the protection 

of investors, or for the assessment of systemic risk. 

(B) AVAILABILITY OF RECORDS.—An investment adviser 

registered under this title shall make available to the 

324 

Commission any copies or extracts from such records as 

may be prepared without undue effort, expense, or delay, 

as the Commission or its representatives may reasonably 

request. 

(7) INFORMATION SHARING.— 

(A) IN GENERAL.—The Commission shall make available 

to the Council copies of all reports, documents, records, 

and information filed with or provided to the Commission 

by an investment adviser under this subsection as the 

Council may consider necessary for the purpose of assessing the systemic risk posed by a private fund. 

(B) CONFIDENTIALITY.—The Council shall maintain the 

confidentiality of information received under this paragraph in all such reports, documents, records, and information, in a manner consistent with the level of confidentiality established for the Commission pursuant to paragraph (8). The Council shall be exempt from section 552 of 

title 5, United States Code, with respect to any information in any report, document, record, or information made 

available, to the Council under this subsection. 

(8) COMMISSION CONFIDENTIALITY OF REPORTS.—Notwithstanding any other provision of law, the Commission may not 

be compelled to disclose any report or information contained 

therein required to be filed with the Commission under this 

subsection, except that nothing in this subsection authorizes 

the Commission— 

(A) to withhold information from Congress, upon an 

agreement of confidentiality; or 

(B) prevent the Commission from complying with— 

(i) a request for information from any other Federal 

department or agency or any self-regulatory organization requesting the report or information for purposes 

within the scope of its jurisdiction; or 

(ii) an order of a court of the United States in an action brought by the United States or the Commission. 

(9) OTHER RECIPIENTS CONFIDENTIALITY.—Any department, 

agency, or self-regulatory organization that receives reports or 

information from the Commission under this subsection shall 

maintain the confidentiality of such reports, documents, 

records, and information in a manner consistent with the level 

of confidentiality established for the Commission under paragraph (8). 

(10) PUBLIC INFORMATION EXCEPTION.— 

(A) IN GENERAL.—The Commission, the Council, and any 

other department, agency, or self-regulatory organization 

that receives information, reports, documents, records, or 

information from the Commission under this subsection, 

shall be exempt from the provisions of section 552 of title 

5, United States Code, with respect to any such report, 

document, record, or information. Any proprietary information of an investment adviser ascertained by the Commission from any report required to be filed with the Commission pursuant to this subsection shall be subject to the 

same limitations on public disclosure as any facts 

325 

ascertained during an examination, as provided by section 

210(b) of this title. 

(B) PROPRIETARY INFORMATION.—For purposes of this 

paragraph, proprietary information includes sensitive, nonpublic information regarding— 

(i) the investment or trading strategies of the investment adviser; 

(ii) analytical or research methodologies; 

(iii) trading data; 

(iv) computer hardware or software containing intellectual property; and 

(v) any additional information that the Commission 

determines to be proprietary. 

(11) ANNUAL REPORT TO CONGRESS.—The Commission shall 

report annually to Congress on how the Commission has used 

the data collected pursuant to this subsection to monitor the 

markets for the protection of investors and the integrity of the 

markets. 

(c) FILING DEPOSITORIES.—The Commission may, by rule, require 

an investment adviser— 

(1) to file with the Commission any fee, application, report, 

or notice required to be filed by this title or the rules issued 

under this title through any entity designated by the Commission for that purpose; and 

(2) to pay the reasonable costs associated with such filing 

and the establishment and maintenance of the systems required by subsection (c). 

(d) ACCESS TO DISCIPLINARY AND OTHER INFORMATION.— (1) MAINTENANCE OF SYSTEM TO RESPOND TO INQUIRIES.— 

(A) IN GENERAL.—The Commission shall require the entity designated by the Commission under subsection (b)(1) 

to establish and maintain a toll-free telephone listing, or 

a readily accessible electronic or other process, to receive 

and promptly respond to inquiries regarding registration 

information (including disciplinary actions, regulatory, judicial, and arbitration proceedings, and other information 

required by law or rule to be reported) involving investment advisers and persons associated with investment advisers. 

(B) APPLICABILITY.—This subsection shall apply to any 

investment adviser (and the persons associated with that 

adviser), whether the investment adviser is registered with 

the Commission under section 203 or regulated solely by 

a State, as described in section 203A. 

(2) RECOVERY OF COSTS.—An entity designated by the Commission under subsection (b)(1) may charge persons making inquiries, other than individual investors, reasonable fees for responses to inquiries described in paragraph (1). 

(3) LIMITATION ON LIABILITY.—An entity designated by the 

Commission under subsection (b)(1) shall not have any liability 

to any person for any actions taken or omitted in good faith 

under this subsection. 

ø(d)¿ (e) RECORDS OF PERSONS WITH CUSTODY OR USE.— 

(1) IN GENERAL.—Records of persons having custody or use 

of the securities, deposits, or credits of a client, that relate to 

326 

such custody or use, are subject at any time, or from time to 

time, to such reasonable periodic, special, or other examinations and other information and document requests by representatives of the Commission, as the Commission deems necessary or appropriate in the public interest or for the protection of investors. 

(2) CERTAIN PERSONS SUBJECT TO OTHER REGULATION.—Any 

person that is subject to regulation and examination by a Federal financial institution regulatory agency (as such term is defined under section 212(c)(2) of title 18, United States Code) 

may satisfy any examination request, information request, or 

document request described under paragraph (1), by providing 

the Commission with a detailed listing, in writing, of the securities, deposits, or credits of the client within the custody or 

use of such person. 

(f) PROCEDURE FOR OBTAINING CERTAIN INTELLECTUAL PROPERTY.—The Commission is not authorized to compel under this title 

an investment adviser to produce or furnish source code, including 

algorithmic trading source code or similar intellectual property that 

forms the basis for design of the source code, to the Commission unless the Commission first issues a subpoena. 

* * * * * * * 

FINANCIAL STABILITY ACT OF 2010 

* * * * * * * 

TITLE I—FINANCIAL STABILITY 

* * * * * * * 

Subtitle A—Financial Stability Oversight 

Council 

* * * * * * * 

SEC. 113. AUTHORITY TO REQUIRE SUPERVISION AND REGULATION 

OF CERTAIN NONBANK FINANCIAL COMPANIES. 

(a) U.S. NONBANK FINANCIAL COMPANIES SUPERVISED BY THE

BOARD OF GOVERNORS.— 

(1) DETERMINATION.—The Council, on a nondelegable basis 

and by a vote of not fewer than 2⁄3 of the voting members then 

serving, including an affirmative vote by the Chairperson, may 

determine that a U.S. nonbank financial company shall be supervised by the Board of Governors and shall be subject to prudential standards, in accordance with this title, if the Council 

determines that material financial distress at the U.S. 

nonbank financial company, or the nature, scope, size, scale, 

concentration, interconnectedness, or mix of the activities of 

the U.S. nonbank financial company, could pose a threat to the 

financial stability of the United States. 

(2) CONSIDERATIONS.—In making a determination under 

paragraph (1), the Council shall consider— 

327 

(A) the extent of the leverage of the company; 

(B) the extent and nature of the off-balance-sheet exposures of the company; 

(C) the extent and nature of the transactions and relationships of the company with other significant nonbank financial companies and significant bank holding companies; 

(D) the importance of the company as a source of credit 

for households, businesses, and State and local governments and as a source of liquidity for the United States financial system; 

(E) the importance of the company as a source of credit 

for low-income, minority, or underserved communities, and 

the impact that the failure of such company would have on 

the availability of credit in such communities; 

(F) the extent to which assets are managed rather than 

owned by the company, and the extent to which ownership 

of assets under management is diffuse; 

(G) the nature, scope, size, scale, concentration, interconnectedness, and mix of the activities of the company; 

(H) the degree to which the company is already regulated by 1 or more primary financial regulatory agencies; 

(I) the amount and nature of the financial assets of the 

company; 

(J) the amount and types of the liabilities of the company, including the degree of reliance on short-term funding; øand¿ 

(K) the appropriateness of the imposition of prudential 

standards as opposed to other forms of regulation to mitigate the identified risks; and 

ø(K)¿ (L) any other risk-related factors that the Council 

deems appropriate. 

(b) FOREIGN NONBANK FINANCIAL COMPANIES SUPERVISED BY THE

BOARD OF GOVERNORS.— 

(1) DETERMINATION.—The Council, on a nondelegable basis 

and by a vote of not fewer than 2⁄3 of the voting members then 

serving, including an affirmative vote by the Chairperson, may 

determine that a foreign nonbank financial company shall be 

supervised by the Board of Governors and shall be subject to 

prudential standards, in accordance with this title, if the Council determines that material financial distress at the foreign 

nonbank financial company, or the nature, scope, size, scale, 

concentration, interconnectedness, or mix of the activities of 

the foreign nonbank financial company, could pose a threat to 

the financial stability of the United States. 

(2) CONSIDERATIONS.—In making a determination under 

paragraph (1), the Council shall consider— 

(A) the extent of the leverage of the company; 

(B) the extent and nature of the United States related 

off-balance-sheet exposures of the company; 

(C) the extent and nature of the transactions and relationships of the company with other significant nonbank financial companies and significant bank holding companies; 

(D) the importance of the company as a source of credit 

for United States households, businesses, and State and 

328 

local governments and as a source of liquidity for the 

United States financial system; 

(E) the importance of the company as a source of credit 

for low-income, minority, or underserved communities in 

the United States, and the impact that the failure of such 

company would have on the availability of credit in such 

communities; 

(F) the extent to which assets are managed rather than 

owned by the company and the extent to which ownership 

of assets under management is diffuse; 

(G) the nature, scope, size, scale, concentration, interconnectedness, and mix of the activities of the company; 

(H) the extent to which the company is subject to prudential standards on a consolidated basis in its home country that are administered and enforced by a comparable 

foreign supervisory authority; 

(I) the amount and nature of the United States financial 

assets of the company; 

(J) the amount and nature of the liabilities of the company used to fund activities and operations in the United 

States, including the degree of reliance on short-term funding; øand¿ 

(K) the appropriateness of the imposition of prudential 

standards as opposed to other forms of regulation to mitigate the identified risks; and 

ø(K)¿ (L) any other risk-related factors that the Council 

deems appropriate. 

(c) ANTIEVASION.— 

(1) DETERMINATIONS.—In order to avoid evasion of this title, 

the Council, on its own initiative or at the request of the Board 

of Governors, may determine, on a nondelegable basis and by 

a vote of not fewer than 2⁄3 of the voting members then serving, 

including an affirmative vote by the Chairperson, that— 

(A) material financial distress related to, or the nature, 

scope, size, scale, concentration, interconnectedness, or mix 

of, the financial activities conducted directly or indirectly 

by a company incorporated or organized under the laws of 

the United States or any State or the financial activities 

in the United States of a company incorporated or organized in a country other than the United States would 

pose a threat to the financial stability of the United States, 

based on consideration of the factors in subsection (a)(2) or 

(b)(2), as applicable; 

(B) the company is organized or operates in such a manner as to evade the application of this title; and 

(C) such financial activities of the company shall be supervised by the Board of Governors and subject to prudential standards in accordance with this title, consistent with 

paragraph (3). 

(2) REPORT.—Upon making a determination under paragraph 

(1), the Council shall submit a report to the appropriate committees of Congress detailing the reasons for making such determination. 

329 

(3) CONSOLIDATED SUPERVISION OF ONLY FINANCIAL ACTIVI- TIES; ESTABLISHMENT OF AN INTERMEDIATE HOLDING COM- PANY.— 

(A) ESTABLISHMENT OF AN INTERMEDIATE HOLDING COM- PANY.—Upon a determination under paragraph (1), the 

company that is the subject of the determination may establish an intermediate holding company in which the financial activities of such company and its subsidiaries 

shall be conducted (other than the activities described in 

section 167(b)(2)) in compliance with any regulations or 

guidance provided by the Board of Governors. Such intermediate holding company shall be subject to the supervision of the Board of Governors and to prudential standards under this title as if the intermediate holding company were a nonbank financial company supervised by the 

Board of Governors. 

(B) ACTION OF THE BOARD OF GOVERNORS.—To facilitate 

the supervision of the financial activities subject to the determination in paragraph (1), the Board of Governors may 

require a company to establish an intermediate holding 

company, as provided for in section 167, which would be 

subject to the supervision of the Board of Governors and 

to prudential standards under this title, as if the intermediate holding company were a nonbank financial company supervised by the Board of Governors. 

(4) NOTICE AND OPPORTUNITY FOR HEARING AND FINAL DETER- MINATION; JUDICIAL REVIEW.—Subsections (d) through (h) shall 

apply to determinations made by the Council pursuant to paragraph (1) in the same manner as such subsections apply to 

nonbank financial companies. 

(5) COVERED FINANCIAL ACTIVITIES.—For purposes of this 

subsection, the term ‘‘financial activities’’— 

(A) means activities that are financial in nature (as defined in section 4(k) of the Bank Holding Company Act of 

1956); 

(B) includes the ownership or control of one or more insured depository institutions; and 

(C) does not include internal financial activities conducted for the company or any affiliate thereof, including 

internal treasury, investment, and employee benefit functions. 

(6) ONLY FINANCIAL ACTIVITIES SUBJECT TO PRUDENTIAL SUPERVISION.—Nonfinancial activities of the company shall not be 

subject to supervision by the Board of Governors and prudential standards of the Board. For purposes of this Act, the financial activities that are the subject of the determination in paragraph (1) shall be subject to the same requirements as a 

nonbank financial company supervised by the Board of Governors. Nothing in this paragraph shall prohibit or limit the 

authority of the Board of Governors to apply prudential standards under this title to the financial activities that are subject 

to the determination in paragraph (1). 

ø(d) REEVALUATION AND RESCISSION.—The Council shall— 

ø(1) not less frequently than annually, reevaluate each determination made under subsections (a) and (b) with respect to 

330 

such nonbank financial company supervised by the Board of 

Governors; and 

ø(2) rescind any such determination, if the Council, by a vote 

of not fewer than 2⁄3 of the voting members then serving, including an affirmative vote by the Chairperson, determines 

that the nonbank financial company no longer meets the standards under subsection (a) or (b), as applicable. 

ø(e) NOTICE AND OPPORTUNITY FOR HEARING AND FINAL DETERMINATION.— 

ø(1) IN GENERAL.—The Council shall provide to a nonbank financial company written notice of a proposed determination of 

the Council, including an explanation of the basis of the proposed determination of the Council, that a nonbank financial 

company shall be supervised by the Board of Governors and 

shall be subject to prudential standards in accordance with 

this title. 

ø(2) HEARING.—Not later than 30 days after the date of receipt of any notice of a proposed determination under paragraph (1), the nonbank financial company may request, in 

writing, an opportunity for a written or oral hearing before the 

Council to contest the proposed determination. Upon receipt of 

a timely request, the Council shall fix a time (not later than 

30 days after the date of receipt of the request) and place at 

which such company may appear, personally or through counsel, to submit written materials (or, at the sole discretion of 

the Council, oral testimony and oral argument). 

ø(3) FINAL DETERMINATION.—Not later than 60 days after 

the date of a hearing under paragraph (2), the Council shall 

notify the nonbank financial company of the final determination of the Council, which shall contain a statement of the 

basis for the decision of the Council. 

ø(4) NO HEARING REQUESTED.—If a nonbank financial company does not make a timely request for a hearing, the Council 

shall notify the nonbank financial company, in writing, of the 

final determination of the Council under subsection (a) or (b), 

as applicable, not later than 10 days after the date by which 

the company may request a hearing under paragraph (2).¿ 

(d) REEVALUATION AND RESCISSION.— 

(1) ANNUAL REEVALUATION.—Not less frequently than annually, the Council shall reevaluate each determination made 

under subsections (a) and (b) with respect to a nonbank financial company supervised by the Board of Governors and shall— 

(A) provide written notice to the nonbank financial company being reevaluated and afford such company an opportunity to submit written materials, within such time as the 

Council determines to be appropriate (but which shall be 

not less than 30 days after the date of receipt by the company of such notice), to contest the determination, including 

materials concerning whether, in the company’s view, material financial distress at the company, or the nature, scope, 

size, scale, concentration, interconnectedness, or mix of the 

activities of the company could pose a threat to the financial stability of the United States; 

331 

(B) provide an opportunity for the nonbank financial 

company to meet with the Council to present the information described in subparagraph (A); and 

(C) if the Council does not rescind the determination, 

provide notice to the nonbank financial company, its primary financial regulatory agency and the primary financial regulatory agency of any of the company’s significant 

subsidiaries of the reasons for the Council’s decision, which 

notice shall address with specificity how the Council assessed the material factors presented by the company under 

subparagraphs (A) and (B). 

(2) PERIODIC REEVALUATION.— 

(A) REVIEW.—Every 5 years after the date of a final determination with respect to a nonbank financial company 

under subsection (a) or (b), as applicable, the nonbank financial company may submit a written request to the 

Council for a reevaluation of such determination. Upon receipt of such a request, the Council shall conduct a reevaluation of such determination and hold a vote on whether to 

rescind such determination. 

(B) PROCEDURES.—Upon receipt of a written request 

under paragraph (A), the Council shall fix a time (not earlier than 30 days after the date of receipt of the request) 

and place at which such company may appear, personally 

or through counsel, to— 

(i) submit written materials (which may include a 

plan to modify the company’s business, structure, or 

operations, which shall specify the length of the implementation period); and 

(ii) provide oral testimony and oral argument before 

the members of the Council. 

(C) TREATMENT OF PLAN.—If the company submits a plan 

in accordance with subparagraph (B)(i), the Council shall 

consider whether the plan, if implemented, would cause the 

company to no longer meet the standards for a final determination under subsection (a) or (b), as applicable. The 

Council shall provide the nonbank financial company an 

opportunity to revise the plan after consultation with the 

Council. 

(D) EXPLANATION FOR CERTAIN COMPANIES.—With respect 

to a reevaluation under this paragraph where the determination being reevaluated was made before the date of enactment of this paragraph, the nonbank financial company 

may require the Council, as part of such reevaluation, to 

explain with specificity the basis for such determination. 

(3) RESCISSION OF DETERMINATION.— 

(A) IN GENERAL.—If the Council, by a vote of not fewer 

than 2⁄3 of the voting members then serving, including an 

affirmative vote by the Chairperson, determines under this 

subsection that a nonbank financial company no longer 

meets the standards for a final determination under subsection (a) or (b), as applicable, the Council shall rescind 

such determination. 

(B) APPROVAL OF COMPANY PLAN.—Approval by the Council of a plan submitted or revised in accordance with paraVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00335 Fmt 6659 Sfmt 6603 E:\HR\OC\HR792.XXX HR792
332 

graph (2) shall require a vote of not fewer than 2⁄3 of the 

voting members then serving, including an affirmative vote 

by the Chairperson. If such plan is approved by the Council, the company shall implement the plan during the period identified in the plan, except that the Council, in its 

sole discretion and upon request from the company, may 

grant one or more extensions of the implementation period. 

After the end of the implementation period, including any 

extensions granted by the Council, the Council shall proceed to a vote as described under subparagraph (A). 

(e) REQUIREMENTS FOR PROPOSED DETERMINATION, NOTICE AND

OPPORTUNITY FOR HEARING, AND FINAL DETERMINATION.— 

(1) NOTICE OF IDENTIFICATION FOR INITIAL EVALUATION AND

OPPORTUNITY FOR VOLUNTARY SUBMISSION.—Upon identifying a 

nonbank financial company for comprehensive analysis of the 

potential for the nonbank company to pose a threat to the financial stability of the United States, the Council shall provide the 

nonbank financial company with— 

(A) written notice that explains with specificity the basis 

for so identifying the company, a copy of which shall be 

provided to the company’s primary financial regulatory 

agency; 

(B) an opportunity to submit written materials for consideration by the Council as part of the Council’s initial 

evaluation of the risk profile and characteristics of the company; 

(C) an opportunity to meet with the Council to discuss 

the Council’s analysis; and 

(D) a list of the public sources of information being considered by the Council as part of such analysis. 

(2) REQUIREMENTS BEFORE MAKING A PROPOSED DETERMINATION.—Before making a proposed determination with respect to 

a nonbank financial company under paragraph (3), the Council 

shall— 

(A) by a vote of not fewer than 2⁄3 of the voting members 

then serving, including an affirmative vote by the Chairperson, approve a resolution that identifies with specificity 

any risks to the financial stability of the United States the 

Council has identified relating to the nonbank financial 

company; 

(B) with respect to nonbank financial company with a 

primary financial regulatory agency, provide a copy of the 

resolution described under subparagraph (A) to the primary financial regulatory agency and provide such agency 

with at least 180 days from the receipt of the resolution 

to— 

(i) consider the risks identified in the resolution; and 

(ii) provide a written response to the Council that includes its assessment of the risks identified and the degree to which they are or could be addressed by existing regulation and, as appropriate, issue proposed regulations or undertake other regulatory action to mitigate the identified risks; 

(C) provide the nonbank financial company with written 

notice that the Council— 

333 

(i) is considering whether to make a proposed determination with respect to the nonbank financial company under subsection (a) or (b), as applicable, which 

notice explains with specificity the basis for the Council’s consideration, including any aspects of the company’s operations or activities that are a primary focus 

for the Council; or 

(ii) has determined not to subject the company to further review, which action shall not preclude the Council from issuing a notice to the company under subparagraph (1)(A) at a future time; and 

(D) in the case of a notice to the nonbank financial company under subparagraph (C)(i), provide the company 

with— 

(i) an opportunity to meet with the Council to discuss 

the Council’s analysis; 

(ii) an opportunity to submit written materials, within such time as the Council deems appropriate (but not 

less than 30 days after the date of receipt by the company of the notice described under clause (i)), to the 

Council to inform the Council’s consideration of the 

nonbank financial company for a proposed determination, including materials concerning the company’s 

views as to whether it satisfies the standard for determination set forth in subsection (a) or (b), as applicable; 

(iii) an explanation of how any request by the Council for information from the nonbank financial company relates to potential risks to the financial stability 

of the United States and the Council’s analysis of the 

company; 

(iv) written notice when the Council deems its evidentiary record regarding such nonbank financial company to be complete; and 

(v) an opportunity to meet with the members of the 

Council. 

(3) PROPOSED DETERMINATION.— 

(A) VOTING.—The Council may, by a vote of not fewer 

than 2⁄3 of the voting members then serving, including an 

affirmative vote by the Chairperson, propose to make a determination in accordance with the provisions of subsection 

(a) or (b), as applicable, with respect to a nonbank financial company. 

(B) DEADLINE FOR MAKING A PROPOSED DETERMINATION.—With respect to a nonbank financial company provided with a written notice under paragraph (2)(C)(i), if the 

Council does not provide the company with the written notice of a proposed determination described under paragraph (4) within the 180-day period following the date on 

which the Council notifies the company under paragraph 

(2)(C) that the evidentiary record is complete, the Council 

may not make such a proposed determination with respect 

to such company unless the Council repeats the procedures 

described under paragraph (2). 

334 

(C) REVIEW OF ACTIONS OF PRIMARY FINANCIAL REGU- LATORY AGENCY.—With respect to a nonbank financial company with a primary financial regulatory agency, the Council may not vote under subparagraph (A) to make a proposed determination unless— 

(i) the Council first determines that any proposed 

regulations or other regulatory actions taken by the primary financial regulatory agency after receipt of the 

resolution described under paragraph (2)(A) are insufficient to mitigate the risks identified in the resolution; 

(ii) the primary financial regulatory agency has notified the Council that the agency has no proposed regulations or other regulatory actions to mitigate the risks 

identified in the resolution; or 

(iii) the period allowed by the Council under paragraph (2)(B) has elapsed and the primary financial 

regulatory agency has taken no action in response to 

the resolution. 

(4) NOTICE OF PROPOSED DETERMINATION.—The Council 

shall— 

(A) provide to a nonbank financial company written notice of a proposed determination of the Council, including 

an explanation of the basis of the proposed determination 

of the Council, that a nonbank financial company shall be 

supervised by the Board of Governors and shall be subject 

to prudential standards in accordance with this title, an explanation of the specific risks to the financial stability of 

the United States presented by the nonbank financial company, and a detailed explanation of why existing regulations or other regulatory action by the company’s primary 

financial regulatory agency, if any, is insufficient to mitigate such risk; and 

(B) provide the primary financial regulatory agency of 

the nonbank financial company a copy of the nonpublic 

written explanation of the Council’s proposed determination. 

(5) HEARING.— (A) IN GENERAL.—Not later than 30 days after the date 

of receipt of any notice of a proposed determination under 

paragraph (4), the nonbank financial company may request, in writing, an opportunity for a written or oral hearing before the Council to contest the proposed determination, including the opportunity to present a plan to modify 

the company’s business, structure, or operations in order to 

mitigate the risks identified in the notice, and which plan 

shall also include any steps the company expects to take 

during the implementation period to mitigate such risks. 

(B) GRANT OF HEARING.—Upon receipt of a timely request, the Council shall fix a time (not earlier than 30 days 

after the date of receipt of the request) and place at which 

such company may appear, personally or through counsel, 

to— 

(i) submit written materials (which may include a 

plan to modify the company’s business, structure, or 

operations); or 

335 

(ii) provide oral testimony and oral argument to the 

members of the Council. 

(6) COUNCIL CONSIDERATION OF COMPANY PLAN.— (A) IN GENERAL.—If a nonbank financial company submits a plan in accordance with paragraph (5), the Council 

shall, prior to making a final determination— 

(i) consider whether the plan, if implemented, would 

mitigate the risks identified in the notice under paragraph (4); and 

(ii) provide the nonbank financial company an opportunity to revise the plan after consultation with the 

Council. 

(B) VOTING.—Approval by the Council of a plan submitted under paragraph (5) or revised under subparagraph 

(A)(ii) shall require a vote of not fewer than 2⁄3 of the voting 

members then serving, including an affirmative vote by the 

Chairperson. 

(C) IMPLEMENTATION OF APPROVED PLAN.—With respect 

to a nonbank financial company’s plan approved by the 

Council under subparagraph (B), the company shall have 

one year to implement the plan, except that the Council, in 

its sole discretion and upon request from the nonbank financial company, may grant one or more extensions of the 

implementation period. 

(D) OVERSIGHT OF IMPLEMENTATION.— (i) PERIODIC REPORTS.—The Council, acting through 

the Office of Financial Research, may require the submission of periodic reports from a nonbank financial 

company for the purpose of evaluating the company’s 

progress in implementing a plan approved by the 

Council under subparagraph (B). 

(ii) INSPECTIONS.—The Council may direct the primary financial regulatory agency of a nonbank financial company or its subsidiaries (or, if none, the Board 

of Governors) to inspect the company or its subsidiaries 

for the purpose of evaluating the implementation of the 

company’s plan. 

(E) AUTHORITY TO RESCIND APPROVAL.— (i) IN GENERAL.—During the implementation period 

described under subparagraph (C), including any extensions granted by the Council, the Council shall retain the authority to rescind its approval of the plan if 

the Council finds, by a vote of not fewer than 2⁄3 of the 

voting members then serving, including an affirmative 

vote by the Chairperson, that the company’s implementation of the plan is no longer sufficient to mitigate or 

prevent the risks identified in the resolution described 

under paragraph (2)(A). 

(ii) FINAL DETERMINATION VOTE.—The Council may 

proceed to a vote on final determination under subsection (a) or (b), as applicable, not earlier than 10 

days after providing the nonbank financial company 

with written notice that the Council has rescinded the 

approval of the company’s plan pursuant to clause (i). 

(F) ACTIONS AFTER IMPLEMENTATION.— 

336 

(i) EVALUATION OF IMPLEMENTATION.—After the end 

of the implementation period described under subparagraph (C), including any extensions granted by the 

Council, the Council shall consider whether the plan, 

as implemented by the nonbank financial company, 

adequately mitigates or prevents the risks identified in 

the resolution described under paragraph (2)(A). 

(ii) VOTING.—If, after performing an evaluation 

under clause (i), not fewer than 2⁄3 of the voting members of the Council then serving, including an affirmative vote by the Chairperson, determine that the plan, 

as implemented, adequately mitigates or prevents the 

identified risks, the Council shall not make a final determination under subsection (a) or (b), as applicable, 

with respect to the nonbank financial company and 

shall notify the company of the Council’s decision to 

take no further action. 

(7) FINAL COUNCIL DECISIONS.— (A) IN GENERAL.—Not later than 90 days after the date 

of a hearing under paragraph (5), the Council shall notify 

the nonbank financial company of— 

(i) a final determination under subsection (a) or (b), 

as applicable; 

(ii) the Council’s approval of a plan submitted by the 

nonbank financial company under paragraph (5) or revised under paragraph (6); or 

(iii) the Council’s decision to take no further action 

with respect to the nonbank financial company. 

(B) EXPLANATORY STATEMENT.—A final determination of 

the Council, under subsection (a) or (b), shall contain a 

statement of the basis for the decision of the Council, including the reasons why the Council rejected any plan by 

the nonbank financial company submitted under paragraph (5) or revised under paragraph (6). 

(C) NOTICE TO PRIMARY FINANCIAL REGULATORY AGEN- CY.—In the case of a final determination under subsection 

(a) or (b), the Council shall provide the primary financial 

regulatory agency of the nonbank financial company a copy 

of the nonpublic written explanation of the Council’s final 

determination. 

(f) EMERGENCY EXCEPTION.— 

(1) IN GENERAL.—The Council may waive or modify the requirements of subsection (e) with respect to a nonbank financial company, if the Council determines, by a vote of not fewer 

than 2⁄3 of the voting members then serving, including an affirmative vote by the Chairperson, that such waiver or modification is necessary or appropriate to prevent or mitigate 

threats posed by the nonbank financial company to the financial stability of the United States. 

(2) NOTICE.—The Council shall provide notice of a waiver or 

modification under this subsection to the nonbank financial 

company concerned as soon as practicable, but not later than 

24 hours after the waiver or modification is granted. 

(3) INTERNATIONAL COORDINATION.—In making a determination under paragraph (1), the Council shall consult with the 

337 

appropriate home country supervisor, if any, of the foreign 

nonbank financial company that is being considered for such a 

determination. 

(4) OPPORTUNITY FOR HEARING.—The Council shall allow a 

nonbank financial company to request, in writing, an opportunity for a written or oral hearing before the Council to contest a waiver or modification under this subsection, not later 

than 10 days after the date of receipt of notice of the waiver 

or modification by the company. Upon receipt of a timely request, the Council shall fix a time (not later than 15 days after 

the date of receipt of the request) and place at which the 

nonbank financial company may appear, personally or through 

counsel, to submit written materials (or, at the sole discretion 

of the Council, oral testimony and oral argument). 

(5) NOTICE OF FINAL DETERMINATION.—Not later than 30 

days after the date of any hearing under paragraph (4), the 

Council shall notify the subject nonbank financial company of 

the final determination of the Council under this subsection, 

which shall contain a statement of the basis for the decision 

of the Council. 

(g) CONSULTATION.—The Council shall consult with the primary 

financial regulatory agency, if any, for each nonbank financial company or subsidiary of a nonbank financial company that is being 

considered for supervision by the Board of Governors under this 

section øbefore the Council makes any final determination¿ from 

the outset of the Council’s consideration of the company, including 

before the Council makes any proposed or final determination with 

respect to such nonbank financial company under subsection (a), 

(b), or (c). 

(h) JUDICIAL REVIEW.—If the Council makes a final determination under this section with respect to a nonbank financial company, such nonbank financial company may, not later than 30 days 

after the date of receipt of the notice of final determination under 

subsection (d)(2), (e)(3), or (f)(5), bring an action in the United 

States district court for the judicial district in which the home office of such nonbank financial company is located, or in the United 

States District Court for the District of Columbia, for an order requiring that the final determination be rescinded, and the court 

shall, upon review, dismiss such action or direct the final determination to be rescinded. Review of such an action shall be limited 

to whether the final determination made under this section was arbitrary and capricious. 

(i) INTERNATIONAL COORDINATION.—In exercising its duties under 

this title with respect to foreign nonbank financial companies, foreign-based bank holding companies, and cross-border activities and 

markets, the Council shall consult with appropriate foreign regulatory authorities, to the extent appropriate. 

(j) PUBLIC DISCLOSURE REQUIREMENT.—The Council shall— 

(1) in each case where a nonbank financial company has been 

notified that it is subject to the Council’s review and the company has publicly disclosed such fact, confirm that the nonbank 

financial company is subject to the Council’s review, in response 

to a request from a third party; 

(2) upon making a final determination, publicly provide a 

written explanation of the basis for its decision with sufficient 

338 

detail to provide the public with an understanding of the specific bases of the Council’s determination, including any assumptions related thereof, subject to the requirements of section 

112(d)(5); 

(3) include, in the annual report required by section 112, the 

number of nonbank financial companies from the previous year 

subject to preliminary analysis, further review, and subject to 

a proposed or final determination; and 

(4) within 90 days after the enactment of this subsection, publish information regarding its methodology for calculating any 

quantitative thresholds or other metrics used to identify 

nonbank financial companies for analysis by the Council. 

(k) PERIODIC ASSESSMENT OF THE IMPACT OF DESIGNATIONS.— 

(1) ASSESSMENT.—Every five years after the date of enactment of this section, the Council shall— 

(A) conduct a study of the Council’s determinations that 

nonbank financial companies shall be supervised by the 

Board of Governors and shall be subject to prudential 

standards; and 

(B) comprehensively assess the impact of such determinations on the companies for which such determinations were 

made and the wider economy, including whether such determinations are having the intended result of improving 

the financial stability of the United States. 

(2) REPORT.—Not later than 90 days after completing a study 

required under paragraph (1), the Council shall issue a report 

to the Congress that— 

(A) describes all findings and conclusions made by the 

Council in carrying out such study; and 

(B) identifies whether any of the Council’s determinations 

should be rescinded or whether related regulations or regulatory guidance should be modified, streamlined, expanded, 

or repealed. 

* * * * * * * 

Subtitle C—Additional Board of Governors 

Authority for Certain Nonbank Financial 

Companies and Bank Holding Companies 

* * * * * * * 

SEC. 165. ENHANCED SUPERVISION AND PRUDENTIAL STANDARDS 

FOR NONBANK FINANCIAL COMPANIES SUPERVISED BY 

THE BOARD OF GOVERNORS AND CERTAIN BANK HOLDING COMPANIES. 

(a) IN GENERAL.— 

(1) PURPOSE.—In order to prevent or mitigate risks to the financial stability of the United States that could arise from the 

material financial distress or failure, or ongoing activities, of 

large, interconnected financial institutions, the Board of Governors shall, on its own or pursuant to recommendations by 

the Council under section 115, establish prudential standards 

for nonbank financial companies supervised by the Board of 

339 

Governors and bank holding companies with total consolidated 

assets equal to or greater than $50,000,000,000 that— 

(A) are more stringent than the standards and requirements applicable to nonbank financial companies and bank 

holding companies that do not present similar risks to the 

financial stability of the United States; and 

(B) increase in stringency, based on the considerations 

identified in subsection (b)(3). 

(2) TAILORED APPLICATION.— (A) IN GENERAL.—In prescribing more stringent prudential standards under this section, the Board of Governors 

may, on its own or pursuant to a recommendation by the 

Council in accordance with section 115, differentiate 

among companies on an individual basis or by category, 

taking into consideration their capital structure, riskiness, 

complexity, financial activities (including the financial activities of their subsidiaries), size, and any other risk-related factors that the Board of Governors deems appropriate to ensure that companies with comparable risk profiles and business models are operating under a similar set 

of requirements. (B) ADJUSTMENT OF THRESHOLD FOR APPLICATION OF

CERTAIN STANDARDS.—The Board of Governors may, pursuant to a recommendation by the Council in accordance 

with section 115, establish an asset threshold above 

$50,000,000,000 for the application of any standard established under subsections (c) through (g). 

(b) DEVELOPMENT OF PRUDENTIAL STANDARDS.— (1) IN GENERAL.— 

(A) REQUIRED STANDARDS.—The Board of Governors 

shall establish prudential standards for nonbank financial 

companies supervised by the Board of Governors and bank 

holding companies described in subsection (a), that shall 

include— 

(i) risk-based capital requirements and leverage limits, unless the Board of Governors, in consultation 

with the Council, determines that such requirements 

are not appropriate for a company subject to more 

stringent prudential standards because of the activities of such company (such as investment company activities or assets under management) or structure, in 

which case, the Board of Governors shall apply other 

standards that result in similarly stringent risk controls; 

(ii) liquidity requirements; 

(iii) overall risk management requirements; 

(iv) resolution plan and credit exposure report requirements; and 

(v) concentration limits. 

(B) ADDITIONAL STANDARDS AUTHORIZED.—The Board of 

Governors may establish additional prudential standards 

for nonbank financial companies supervised by the Board 

of Governors and bank holding companies described in 

subsection (a), that include— 

(i) a contingent capital requirement; 

340 

(ii) enhanced public disclosures; 

(iii) short-term debt limits; and 

(iv) such other prudential standards as the Board or 

Governors, on its own or pursuant to a recommendation made by the Council in accordance with section 

115, determines are appropriate. 

(2) STANDARDS FOR FOREIGN FINANCIAL COMPANIES.—In applying the standards set forth in paragraph (1) to any foreign 

nonbank financial company supervised by the Board of Governors or foreign-based bank holding company, the Board of 

Governors shall— 

(A) give due regard to the principle of national treatment and equality of competitive opportunity; and 

(B) take into account the extent to which the foreign financial company is subject on a consolidated basis to home 

country standards that are comparable to those applied to 

financial companies in the United States. 

(3) CONSIDERATIONS.—In prescribing prudential standards 

under paragraph (1), the Board of Governors shall— 

(A) take into account differences among nonbank financial companies supervised by the Board of Governors and 

bank holding companies described in subsection (a), based 

on— 

(i) the factors described in subsections (a) and (b) of 

section 113; 

(ii) whether the company owns an insured depository institution; 

(iii) nonfinancial activities and affiliations of the 

company; and 

(iv) any other risk-related factors that the Board of 

Governors determines appropriate; 

(B) to the extent possible, ensure that small changes in 

the factors listed in subsections (a) and (b) of section 113 

would not result in sharp, discontinuous changes in the 

prudential standards established under paragraph (1) of 

this subsection; 

(C) take into account any recommendations of the Council under section 115; and 

(D) adapt the required standards as appropriate in light 

of any predominant line of business of such company, including assets under management or other activities for 

which particular standards may not be appropriate. 

(4) CONSULTATION.—Before imposing prudential standards or 

any other requirements pursuant to this section, including notices of deficiencies in resolution plans and more stringent requirements or divestiture orders resulting from such notices, 

that are likely to have a significant impact on a functionally 

regulated subsidiary or depository institution subsidiary of a 

nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a), 

the Board of Governors shall consult with each Council member that primarily supervises any such subsidiary with respect 

to any such standard or requirement. 

(5) REPORT.—The Board of Governors shall submit an annual 

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341 

dential standards required pursuant to paragraph (1), including the use of such standards to mitigate risks to the financial 

stability of the United States. 

(c) CONTINGENT CAPITAL.— 

(1) IN GENERAL.—Subsequent to submission by the Council of 

a report to Congress under section 115(c), the Board of Governors may issue regulations that require each nonbank financial company supervised by the Board of Governors and bank 

holding companies described in subsection (a) to maintain a 

minimum amount of contingent capital that is convertible to 

equity in times of financial stress. 

(2) FACTORS TO CONSIDER.—In issuing regulations under this 

subsection, the Board of Governors shall consider— 

(A) the results of the study undertaken by the Council, 

and any recommendations of the Council, under section 

115(c); 

(B) an appropriate transition period for implementation 

of contingent capital under this subsection; 

(C) the factors described in subsection (b)(3)(A); 

(D) capital requirements applicable to the nonbank financial company supervised by the Board of Governors or 

a bank holding company described in subsection (a), and 

subsidiaries thereof; and 

(E) any other factor that the Board of Governors deems 

appropriate. 

(d) RESOLUTION PLAN AND CREDIT EXPOSURE REPORTS.— 

(1) RESOLUTION PLAN.—The Board of Governors shall require 

each nonbank financial company supervised by the Board of 

Governors and bank holding companies described in subsection 

(a) to report periodically to the Board of Governors, the Council, and the Corporation the plan of such company for rapid 

and orderly resolution in the event of material financial distress or failure, which shall include— 

(A) information regarding the manner and extent to 

which any insured depository institution affiliated with the 

company is adequately protected from risks arising from 

the activities of any nonbank subsidiaries of the company; 

(B) full descriptions of the ownership structure, assets, 

liabilities, and contractual obligations of the company; 

(C) identification of the cross-guarantees tied to different 

securities, identification of major counterparties, and a 

process for determining to whom the collateral of the company is pledged; and 

(D) any other information that the Board of Governors 

and the Corporation jointly require by rule or order. 

(2) CREDIT EXPOSURE REPORT.—The Board of Governors shall 

require each nonbank financial company supervised by the 

Board of Governors and bank holding companies described in 

subsection (a) to report periodically to the Board of Governors, 

the Council, and the Corporation on— 

(A) the nature and extent to which the company has 

credit exposure to other significant nonbank financial companies and significant bank holding companies; and 

342 

(B) the nature and extent to which other significant 

nonbank financial companies and significant bank holding 

companies have credit exposure to that company. 

(3) REVIEW.—The Board of Governors and the Corporation 

shall review the information provided in accordance with this 

subsection by each nonbank financial company supervised by 

the Board of Governors and bank holding company described 

in subsection (a). 

(4) NOTICE OF DEFICIENCIES.—If the Board of Governors and 

the Corporation jointly determine, based on their review under 

paragraph (3), that the resolution plan of a nonbank financial 

company supervised by the Board of Governors or a bank holding company described in subsection (a) is not credible or 

would not facilitate an orderly resolution of the company under 

title 11, United States Code— 

(A) the Board of Governors and the Corporation shall notify the company of the deficiencies in the resolution plan; 

and 

(B) the company shall resubmit the resolution plan within a timeframe determined by the Board of Governors and 

the Corporation, with revisions demonstrating that the 

plan is credible and would result in an orderly resolution 

under title 11, United States Code, including any proposed 

changes in business operations and corporate structure to 

facilitate implementation of the plan. 

(5) FAILURE TO RESUBMIT CREDIBLE PLAN.— 

(A) IN GENERAL.—If a nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a) fails to timely resubmit 

the resolution plan as required under paragraph (4), with 

such revisions as are required under subparagraph (B), the 

Board of Governors and the Corporation may jointly impose more stringent capital, leverage, or liquidity requirements, or restrictions on the growth, activities, or operations of the company, or any subsidiary thereof, until 

such time as the company resubmits a plan that remedies 

the deficiencies. 

(B) DIVESTITURE.—The Board of Governors and the Corporation, in consultation with the Council, may jointly direct a nonbank financial company supervised by the Board 

of Governors or a bank holding company described in subsection (a), by order, to divest certain assets or operations 

identified by the Board of Governors and the Corporation, 

to facilitate an orderly resolution of such company under 

title 11, United States Code, in the event of the failure of 

such company, in any case in which— 

(i) the Board of Governors and the Corporation have 

jointly imposed more stringent requirements on the 

company pursuant to subparagraph (A); and 

(ii) the company has failed, within the 2-year period 

beginning on the date of the imposition of such requirements under subparagraph (A), to resubmit the 

resolution plan with such revisions as were required 

under paragraph (4)(B). 

343 

(6) NO LIMITING EFFECT.—A resolution plan submitted in accordance with this subsection shall not be binding on a bankruptcy court, a receiver appointed under title II, or any other 

authority that is authorized or required to resolve the nonbank 

financial company supervised by the Board, any bank holding 

company, or any subsidiary or affiliate of the foregoing. 

(7) NO PRIVATE RIGHT OF ACTION.—No private right of action 

may be based on any resolution plan submitted in accordance 

with this subsection. 

(8) RULES.—Not later than 18 months after the date of enactment of this Act, the Board of Governors and the Corporation shall jointly issue final rules implementing this subsection. 

(e) CONCENTRATION LIMITS.— 

(1) STANDARDS.—In order to limit the risks that the failure 

of any individual company could pose to a nonbank financial 

company supervised by the Board of Governors or a bank holding company described in subsection (a), the Board of Governors, by regulation, shall prescribe standards that limit such 

risks. 

(2) LIMITATION ON CREDIT EXPOSURE.—The regulations prescribed by the Board of Governors under paragraph (1) shall 

prohibit each nonbank financial company supervised by the 

Board of Governors and bank holding company described in 

subsection (a) from having credit exposure to any unaffiliated 

company that exceeds 25 percent of the capital stock and surplus (or such lower amount as the Board of Governors may determine by regulation to be necessary to mitigate risks to the 

financial stability of the United States) of the company. 

(3) CREDIT EXPOSURE.—For purposes of paragraph (2), ‘‘credit 

exposure’’ to a company means— 

(A) all extensions of credit to the company, including 

loans, deposits, and lines of credit; 

(B) all repurchase agreements and reverse repurchase 

agreements with the company, and all securities borrowing 

and lending transactions with the company, to the extent 

that such transactions create credit exposure for the 

nonbank financial company supervised by the Board of 

Governors or a bank holding company described in subsection (a); 

(C) all guarantees, acceptances, or letters of credit (including endorsement or standby letters of credit) issued on 

behalf of the company; 

(D) all purchases of or investment in securities issued by 

the company; 

(E) counterparty credit exposure to the company in connection with a derivative transaction between the nonbank 

financial company supervised by the Board of Governors or 

a bank holding company described in subsection (a) and 

the company; and 

(F) any other similar transactions that the Board of Governors, by regulation, determines to be a credit exposure 

for purposes of this section. 

(4) ATTRIBUTION RULE.—For purposes of this subsection, any 

transaction by a nonbank financial company supervised by the 

344 

Board of Governors or a bank holding company described in 

subsection (a) with any person is a transaction with a company, to the extent that the proceeds of the transaction are 

used for the benefit of, or transferred to, that company. 

(5) RULEMAKING.—The Board of Governors may issue such 

regulations and orders, including definitions consistent with 

this section, as may be necessary to administer and carry out 

this subsection. 

(6) EXEMPTIONS.—This subsection shall not apply to any 

Federal home loan bank. The Board of Governors may, by regulation or order, exempt transactions, in whole or in part, from 

the definition of the term ‘‘credit exposure’’ for purposes of this 

subsection, if the Board of Governors finds that the exemption 

is in the public interest and is consistent with the purpose of 

this subsection. 

(7) TRANSITION PERIOD.— 

(A) IN GENERAL.—This subsection and any regulations 

and orders of the Board of Governors under this subsection 

shall not be effective until 3 years after the date of enactment of this Act. 

(B) EXTENSION AUTHORIZED.—The Board of Governors 

may extend the period specified in subparagraph (A) for 

not longer than an additional 2 years. 

(f) ENHANCED PUBLIC DISCLOSURES.—The Board of Governors 

may prescribe, by regulation, periodic public disclosures by 

nonbank financial companies supervised by the Board of Governors 

and bank holding companies described in subsection (a) in order to 

support market evaluation of the risk profile, capital adequacy, and 

risk management capabilities thereof. 

(g) SHORT-TERM DEBT LIMITS.— 

(1) IN GENERAL.—In order to mitigate the risks that an overaccumulation of short-term debt could pose to financial companies and to the stability of the United States financial system, 

the Board of Governors may, by regulation, prescribe a limit on 

the amount of short-term debt, including off-balance sheet exposures, that may be accumulated by any bank holding company described in subsection (a) and any nonbank financial 

company supervised by the Board of Governors. 

(2) BASIS OF LIMIT.—Any limit prescribed under paragraph 

(1) shall be based on the short-term debt of the company described in paragraph (1) as a percentage of capital stock and 

surplus of the company or on such other measure as the Board 

of Governors considers appropriate. 

(3) SHORT-TERM DEBT DEFINED.—For purposes of this subsection, the term ‘‘short-term debt’’ means such liabilities with 

short-dated maturity that the Board of Governors identifies, by 

regulation, except that such term does not include insured deposits. 

(4) RULEMAKING AUTHORITY.—In addition to prescribing regulations under paragraphs (1) and (3), the Board of Governors 

may prescribe such regulations, including definitions consistent 

with this subsection, and issue such orders, as may be necessary to carry out this subsection. 

(5) AUTHORITY TO ISSUE EXEMPTIONS AND ADJUSTMENTS.— 

Notwithstanding the Bank Holding Company Act of 1956 (12 

345 

U.S.C. 1841 et seq.), the Board of Governors may, if it determines such action is necessary to ensure appropriate heightened prudential supervision, with respect to a company described in paragraph (1) that does not control an insured depository institution, issue to such company an exemption from 

or adjustment to the limit prescribed under paragraph (1). 

(h) RISK COMMITTEE.— (1) NONBANK FINANCIAL COMPANIES SUPERVISED BY THE

BOARD OF GOVERNORS.—The Board of Governors shall require 

each nonbank financial company supervised by the Board of 

Governors that is a publicly traded company to establish a risk 

committee, as set forth in paragraph (3), not later than 1 year 

after the date of receipt of a notice of final determination 

under section 113(e)(3) with respect to such nonbank financial 

company supervised by the Board of Governors. 

(2) CERTAIN BANK HOLDING COMPANIES.— 

(A) MANDATORY REGULATIONS.—The Board of Governors 

shall issue regulations requiring each bank holding company that is a publicly traded company and that has total 

consolidated assets of not less than $10,000,000,000 to establish a risk committee, as set forth in paragraph (3). 

(B) PERMISSIVE REGULATIONS.—The Board of Governors 

may require each bank holding company that is a publicly 

traded company and that has total consolidated assets of 

less than $10,000,000,000 to establish a risk committee, as 

set forth in paragraph (3), as determined necessary or appropriate by the Board of Governors to promote sound risk 

management practices. 

(3) RISK COMMITTEE.—A risk committee required by this subsection shall— 

(A) be responsible for the oversight of the enterprisewide risk management practices of the nonbank financial 

company supervised by the Board of Governors or bank 

holding company described in subsection (a), as applicable; 

(B) include such number of independent directors as the 

Board of Governors may determine appropriate, based on 

the nature of operations, size of assets, and other appropriate criteria related to the nonbank financial company 

supervised by the Board of Governors or a bank holding 

company described in subsection (a), as applicable; and 

(C) include at least 1 risk management expert having experience in identifying, assessing, and managing risk exposures of large, complex firms. 

(4) RULEMAKING.—The Board of Governors shall issue final 

rules to carry out this subsection, not later than 1 year after 

the transfer date, to take effect not later than 15 months after 

the transfer date. 

(i) STRESS TESTS.— 

(1) BY THE BOARD OF GOVERNORS.— (A) ANNUAL TESTS REQUIRED.—The Board of Governors, 

in coordination with the appropriate primary financial regulatory agencies and the Federal Insurance Office, shall 

conduct annual analyses in which nonbank financial companies supervised by the Board of Governors and bank 

holding companies described in subsection (a) are subject 

346 

to evaluation of whether such companies have the capital, 

on a total consolidated basis, necessary to absorb losses as 

a result of adverse economic conditions. 

(B) TEST PARAMETERS AND CONSEQUENCES.—The Board 

of Governors— 

(i) shall provide for at least 3 different sets of conditions under which the evaluation required by this subsection shall be conducted, including baseline, adverse, 

and severely adverse; 

(ii) may require the tests described in subparagraph 

(A) at bank holding companies and nonbank financial 

companies, in addition to those for which annual tests 

are required under subparagraph (A); 

(iii) may develop and apply such other analytic techniques as are necessary to identify, measure, and monitor risks to the financial stability of the United 

States; 

(iv) shall require the companies described in subparagraph (A) to update their resolution plans required under subsection (d)(1), as the Board of Governors determines appropriate, based on the results of 

the analyses; and 

(v) shall publish a summary of the results of the 

tests required under subparagraph (A) or clause (ii) of 

this subparagraph. 

(2) BY THE COMPANY.— 

(A) REQUIREMENT.—A nonbank financial company supervised by the Board of Governors and a bank holding company described in subsection (a) shall conduct semiannual 

stress tests. All other financial companies that have total 

consolidated assets of more than $10,000,000,000 and are 

regulated by a primary Federal financial regulatory agency 

shall conduct annual stress tests. The tests required under 

this subparagraph shall be conducted in accordance with 

the regulations prescribed under subparagraph (C). 

(B) REPORT.—A company required to conduct stress tests 

under subparagraph (A) shall submit a report to the Board 

of Governors and to its primary financial regulatory agency at such time, in such form, and containing such information as the primary financial regulatory agency shall require. 

(C) REGULATIONS.—Each Federal primary financial regulatory agency, in coordination with the Board of Governors 

and the Federal Insurance Office, shall issue consistent 

and comparable regulations to implement this paragraph 

that shall— 

(i) define the term ‘‘stress test’’ for purposes of this 

paragraph; 

(ii) establish methodologies for the conduct of stress 

tests required by this paragraph that shall provide for 

at least 3 different sets of conditions, including baseline, adverse, and severely adverse; 

(iii) establish the form and content of the report required by subparagraph (B); and 

347 

(iv) require companies subject to this paragraph to 

publish a summary of the results of the required 

stress tests. 

(j) LEVERAGE LIMITATION.— 

(1) REQUIREMENT.—The Board of Governors shall require a 

bank holding company with total consolidated assets equal to 

or greater than $50,000,000,000 or a nonbank financial company supervised by the Board of Governors to maintain a debt 

to equity ratio of no more than 15 to 1, upon a determination 

by the Council that such company poses a grave threat to the 

financial stability of the United States and that the imposition 

of such requirement is necessary to mitigate the risk that such 

company poses to the financial stability of the United States. 

Nothing in this paragraph shall apply to a Federal home loan 

bank. 

(2) CONSIDERATIONS.—In making a determination under this 

subsection, the Council shall consider the factors described in 

subsections (a) and (b) of section 113 and any other risk-related factors that the Council deems appropriate. 

(3) REGULATIONS.—The Board of Governors shall promulgate 

regulations to establish procedures and timelines for complying 

with the requirements of this subsection. 

(k) INCLUSION OF OFF-BALANCE-SHEET ACTIVITIES IN COMPUTING

CAPITAL REQUIREMENTS.— 

(1) IN GENERAL.—In the case of any bank holding company 

described in subsection (a) or nonbank financial company supervised by the Board of Governors, the computation of capital 

for purposes of meeting capital requirements shall take into account any off-balance-sheet activities of the company. 

(2) EXEMPTIONS.—If the Board of Governors determines that 

an exemption from the requirement under paragraph (1) is appropriate, the Board of Governors may exempt a company, or 

any transaction or transactions engaged in by such company, 

from the requirements of paragraph (1). 

(3) OFF-BALANCE-SHEET ACTIVITIES DEFINED.—For purposes 

of this subsection, the term ‘‘off-balance-sheet activities’’ means 

an existing liability of a company that is not currently a balance sheet liability, but may become one upon the happening 

of some future event, including the following transactions, to 

the extent that they may create a liability: 

(A) Direct credit substitutes in which a bank substitutes 

its own credit for a third party, including standby letters 

of credit. 

(B) Irrevocable letters of credit that guarantee repayment of commercial paper or tax-exempt securities. 

(C) Risk participations in bankers’ acceptances. 

(D) Sale and repurchase agreements. 

(E) Asset sales with recourse against the seller. 

(F) Interest rate swaps. 

(G) Credit swaps. 

(H) Commodities contracts. 

(I) Forward contracts. 

(J) Securities contracts. 

348 

(K) Such other activities or transactions as the Board of 

Governors may, by rule, define. 

* * * * * * * 

BANK HOLDING COMPANY ACT OF 1956 

* * * * * * * 

SEC. 13. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE EQUITY 

FUNDS. 

(a) IN GENERAL.— (1) PROHIBITION.—Unless otherwise provided in this section, 

a banking entity shall not— 

(A) engage in proprietary trading; or 

(B) acquire or retain any equity, partnership, or other 

ownership interest in or sponsor a hedge fund or a private 

equity fund. 

(2) NONBANK FINANCIAL COMPANIES SUPERVISED BY THE

BOARD.—Any nonbank financial company supervised by the 

Board that engages in proprietary trading or takes or retains 

any equity, partnership, or other ownership interest in or sponsors a hedge fund or a private equity fund shall be subject, by 

rule, as provided in subsection (b)(2), to additional capital requirements for and additional quantitative limits with regards 

to such proprietary trading and taking or retaining any equity, 

partnership, or other ownership interest in or sponsorship of a 

hedge fund or a private equity fund, except that permitted activities as described in subsection (d) shall not be subject to the 

additional capital and additional quantitative limits except as 

provided in subsection (d)(3), as if the nonbank financial company supervised by the Board were a banking entity. 

(b) STUDY AND RULEMAKING.— 

(1) STUDY.—Not later than 6 months after the date of enactment of this section, the Financial Stability Oversight Council 

shall study and make recommendations on implementing the 

provisions of this section so as to— 

(A) promote and enhance the safety and soundness of 

banking entities; 

(B) protect taxpayers and consumers and enhance financial stability by minimizing the risk that insured depository institutions and the affiliates of insured depository institutions will engage in unsafe and unsound activities; 

(C) limit the inappropriate transfer of Federal subsidies 

from institutions that benefit from deposit insurance and 

liquidity facilities of the Federal Government to unregulated entities; 

(D) reduce conflicts of interest between the self-interest 

of banking entities and nonbank financial companies supervised by the Board, and the interests of the customers 

of such entities and companies; 

(E) limit activities that have caused undue risk or loss 

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pected to create undue risk or loss in such banking entities 

and nonbank financial companies supervised by the Board; 

(F) appropriately accommodate the business of insurance 

within an insurance company, subject to regulation in accordance with the relevant insurance company investment 

laws, while protecting the safety and soundness of any 

banking entity with which such insurance company is affiliated and of the United States financial system; and 

(G) appropriately time the divestiture of illiquid assets 

that are affected by the implementation of the prohibitions 

under subsection (a). 

ø(2) RULEMAKING.— 

ø(A) IN GENERAL.—Unless otherwise provided in this 

section, not later than 9 months after the completion of the 

study under paragraph (1), the appropriate Federal banking agencies, the Securities and Exchange Commission, 

and the Commodity Futures Trading Commission, shall 

consider the findings of the study under paragraph (1) and 

adopt rules to carry out this section, as provided in subparagraph (B). 

ø(B) COORDINATED RULEMAKING.— ø(i) REGULATORY AUTHORITY.—The regulations 

issued under this paragraph shall be issued by— 

ø(I) the appropriate Federal banking agencies, 

jointly, with respect to insured depository institutions; 

ø(II) the Board, with respect to any company 

that controls an insured depository institution, or 

that is treated as a bank holding company for purposes of section 8 of the International Banking 

Act, any nonbank financial company supervised by 

the Board, and any subsidiary of any of the foregoing (other than a subsidiary for which an agency described in subclause (I), (III), or (IV) is the 

primary financial regulatory agency); 

ø(III) the Commodity Futures Trading Commission, with respect to any entity for which the 

Commodity Futures Trading Commission is the 

primary financial regulatory agency, as defined in 

section 2 of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act; and 

ø(IV) the Securities and Exchange Commission, 

with respect to any entity for which the Securities 

and Exchange Commission is the primary financial regulatory agency, as defined in section 2 of 

the Dodd-Frank Wall Street Reform and Consumer Protection Act. 

ø(ii) COORDINATION, CONSISTENCY, AND COMPARABILITY.—In developing and issuing regulations 

pursuant to this section, the appropriate Federal 

banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission shall consult and coordinate with each other, 

as appropriate, for the purposes of assuring, to the extent possible, that such regulations are comparable 

350 

and provide for consistent application and implementation of the applicable provisions of this section to 

avoid providing advantages or imposing disadvantages 

to the companies affected by this subsection and to 

protect the safety and soundness of banking entities 

and nonbank financial companies supervised by the 

Board. 

ø(iii) COUNCIL ROLE.—The Chairperson of the Financial Stability Oversight Council shall be responsible 

for coordination of the regulations issued under this 

section.¿ 

(2) RULEMAKING.— 

(A) IN GENERAL.—The Board may, as appropriate, consult with the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange 

Commission, or the Commodity Futures Trading Commission to adopt rules or guidance to carry out this section, as 

provided in subparagraph (B). 

(B) RULEMAKING REQUIREMENTS.—In adopting a rule or 

guidance under subparagraph (A), the Board— 

(i) shall consider the findings of the report required 

in paragraph (1) and, as appropriate, subsequent reports; 

(ii) shall assure, to the extent possible, that such rule 

or guidance provide for consistent application and implementation of the applicable provisions of this section 

to avoid providing advantages or imposing disadvantages to the companies affected by this subsection and 

to protect the safety and soundness of banking entities 

and nonbank financial companies supervised by the 

Board; and 

(iii) shall include requirements to ensure compliance 

with this section, such as requirements regarding internal controls and recordkeeping. 

(C) AUTHORITY.—The Board shall have sole authority to 

issue and amend rules under this section after the date of 

the enactment of this paragraph. 

(D) CONFORMING AUTHORITY.— 

(i) CONTINUITY OF REGULATIONS.—Any rules or guidance issued under this section prior to the date of enactment of this paragraph shall continue in effect until 

the Board issues a successor rule or guidance, or 

amends such rule or guidance, pursuant to subparagraph (C). 

(ii) APPLICABLE GUIDANCE.—In performing examinations or other supervisory duties, the appropriate Federal banking agencies, the Securities and Exchange 

Commission, and the Commodity Futures Trading 

Commission, as appropriate, shall update any applicable policies and procedures to ensure that such policies 

and procedures are consistent (to the extent practicable) 

with any rules or guidance issued pursuant to subparagraph (C). 

(c) EFFECTIVE DATE.— 

351 

(1) IN GENERAL.—Except as provided in paragraphs (2) and 

(3), this section shall take effect on the earlier of— 

(A) 12 months after the date of the issuance of final 

rules under subsection (b); or 

(B) 2 years after the date of enactment of this section. 

(2) CONFORMANCE PERIOD FOR DIVESTITURE.—A banking entity or nonbank financial company supervised by the Board shall 

bring its activities and investments into compliance with the 

requirements of this section not later than 2 years after the 

date on which the requirements become effective pursuant to 

this section or 2 years after the date on which the entity or 

company becomes a nonbank financial company supervised by 

the Board. The Board may, by rule or order, extend this twoyear period for not more than one year at a time, if, in the 

judgment of the Board, such an extension is consistent with 

the purposes of this section and would not be detrimental to 

the public interest. The extensions made by the Board under 

the preceding sentence may not exceed an aggregate of 3 years. 

(3) EXTENDED TRANSITION FOR ILLIQUID FUNDS.— 

(A) APPLICATION.—The Board may, upon the application 

of a banking entity, extend the period during which the 

banking entity, to the extent necessary to fulfill a contractual obligation that was in effect on May 1, 2010, may take 

or retain its equity, partnership, or other ownership interest in, or otherwise provide additional capital to, an illiquid fund. 

(B) TIME LIMIT ON APPROVAL.—The Board may grant 1 

extension under subparagraph (A), which may not exceed 

5 years. 

(4) DIVESTITURE REQUIRED.—Except as otherwise provided in 

subsection (d)(1)(G), a banking entity may not engage in any 

activity prohibited under subsection (a)(1)(B) after the earlier 

of— 

(A) the date on which the contractual obligation to invest 

in the illiquid fund terminates; and 

(B) the date on which any extensions granted by the 

Board under paragraph (3) expire. 

(5) ADDITIONAL CAPITAL DURING TRANSITION PERIOD.—øNotwithstanding paragraph (2), on the date on which the rules are 

issued under subsection (b)(2), the appropriate Federal banking agencies, the Securities and Exchange Commission, and 

the Commodity Futures Trading Commission shall issue rules, 

as provided in subsection (b)(2),¿ The Board shall have the authority to impose additional capital requirements, and any 

other restrictions, as appropriate, on any equity, partnership, 

or ownership interest in or sponsorship of a hedge fund or private equity fund by a banking entity. 

(6) SPECIAL RULEMAKING.—Not later than 6 months after the 

date of enactment of this section, the Board shall issues rules 

to implement paragraphs (2) and (3). 

(d) PERMITTED ACTIVITIES.— (1) IN GENERAL.—Notwithstanding the restrictions under 

subsection (a), to the extent permitted by any other provision 

of Federal or State law, and subject to the limitations under 

paragraph (2) and any restrictions or limitations that øthe apVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00355 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
352 

propriate Federal banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading 

Commission,¿ the Board may determine, the following activities (in this section referred to as ‘‘permitted activities’’) are 

permitted: 

(A) The purchase, sale, acquisition, or disposition of obligations of the United States or any agency thereof, obligations, participations, or other instruments of or issued by 

the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Home 

Loan Mortgage Corporation, a Federal Home Loan Bank, 

the Federal Agricultural Mortgage Corporation, or a Farm 

Credit System institution chartered under and subject to 

the provisions of the Farm Credit Act of 1971 (12 U.S.C. 

2001 et seq.), and obligations of any State or of any political subdivision thereof. 

(B) The purchase, sale, acquisition, or disposition of securities and other instruments described in subsection 

(h)(4) in connection with underwriting or market-makingrelated activities, to the extent that any such activities 

permitted by this subparagraph are designed not to exceed 

the reasonably expected near term demands of clients, customers, or counterparties. 

(C) Risk-mitigating hedging activities in connection with 

and related to individual or aggregated positions, contracts, or other holdings of a banking entity that are designed to reduce the specific risks to the banking entity in 

connection with and related to such positions, contracts, or 

other holdings. 

(D) The purchase, sale, acquisition, or disposition of securities and other instruments described in subsection 

(h)(4) on behalf of customers. 

(E) Investments in one or more small business investment companies, as defined in section 102 of the Small 

Business Investment Act of 1958 (15 U.S.C. 662), investments designed primarily to promote the public welfare, of 

the type permitted under paragraph (11) of section 5136 of 

the Revised Statutes of the United States (12 U.S.C. 24), 

or investments that are qualified rehabilitation expenditures with respect to a qualified rehabilitated building or 

certified historic structure, as such terms are defined in 

section 47 of the Internal Revenue Code of 1986 or a similar State historic tax credit program. 

(F) The purchase, sale, acquisition, or disposition of securities and other instruments described in subsection 

(h)(4) by a regulated insurance company directly engaged 

in the business of insurance for the general account of the 

company and by any affiliate of such regulated insurance 

company, provided that such activities by any affiliate are 

solely for the general account of the regulated insurance 

company, if— 

(i) the purchase, sale, acquisition, or disposition is 

conducted in compliance with, and subject to, the insurance company investment laws, regulations, and 

353 

written guidance of the State or jurisdiction in which 

each such insurance company is domiciled; and 

(ii) øthe appropriate Federal banking agencies¿ the 

Board, after consultation with the Financial Stability 

Oversight Council and the relevant insurance commissioners of the States and territories of the United 

States, øhave not jointly¿ has not determined, after 

notice and comment, that a particular law, regulation, 

or written guidance described in clause (i) is insufficient to protect the safety and soundness of the banking entity, or of the financial stability of the United 

States. 

(G) Organizing and offering a private equity or hedge 

fund, including serving as a general partner, managing 

member, or trustee of the fund and in any manner selecting or controlling (or having employees, officers, directors, 

or agents who constitute) a majority of the directors, trustees, or management of the fund, including any necessary 

expenses for the foregoing, only if— 

(i) the banking entity provides bona fide trust, fiduciary, or investment advisory services; 

(ii) the fund is organized and offered only in connection with the provision of bona fide trust, fiduciary, or 

investment advisory services and only to persons that 

are customers of such services of the banking entity; 

(iii) the banking entity does not acquire or retain an 

equity interest, partnership interest, or other ownership interest in the funds except for a de minimis investment subject to and in compliance with paragraph 

(4); 

(iv) the banking entity complies with the restrictions 

under paragraphs (1) and (2) of subparagraph (f); 

(v) the banking entity does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the hedge fund or private 

equity fund or of any hedge fund or private equity 

fund in which such hedge fund or private equity fund 

invests; 

(vi) the banking entity does not share with the 

hedge fund or private equity fund, for corporate, marketing, promotional, or other purposes, the same name 

or a variation of the same name, except that the hedge 

fund or private equity fund may share the same name 

or a variation of the same name as a banking entity 

that is an investment adviser to the hedge fund or private equity fund, if— 

(I) such investment adviser is not an insured depository institution, a company that controls an 

insured depository institution, or a company that 

is treated as a bank holding company for purposes 

of section 8 of the International Banking Act of 

1978 (12 U.S.C. 3106); 

(II) such investment adviser does not share the 

same name or a variation of the same name as an 

insured depository institution, any company that 

354 

controls an insured depository institution, or any 

company that is treated as a bank holding company for purposes of section 8 of the International 

Banking Act of 1978 (12 U.S.C. 3106); and 

(III) such name does not contain the word 

‘‘bank’’; 

(vii) no director or employee of the banking entity 

takes or retains an equity interest, partnership interest, or other ownership interest in the hedge fund or 

private equity fund, except for any director or employee of the banking entity who is directly engaged in 

providing investment advisory or other services to the 

hedge fund or private equity fund; and 

(viii) the banking entity discloses to prospective and 

actual investors in the fund, in writing, that any 

losses in such hedge fund or private equity fund are 

borne solely by investors in the fund and not by the 

banking entity, and otherwise complies with any additional rules of the øappropriate Federal banking agencies, the Securities and Exchange Commission, or the 

Commodity Futures Trading Commission,¿ Board, as 

provided in subsection (b)(2), designed to ensure that 

losses in such hedge fund or private equity fund are 

borne solely by investors in the fund and not by the 

banking entity. 

(H) Proprietary trading conducted by a banking entity 

pursuant to paragraph (9) or (13) of section 4(c), provided 

that the trading occurs solely outside of the United States 

and that the banking entity is not directly or indirectly 

controlled by a banking entity that is organized under the 

laws of the United States or of one or more States. 

(I) The acquisition or retention of any equity, partnership, or other ownership interest in, or the sponsorship of, 

a hedge fund or a private equity fund by a banking entity 

pursuant to paragraph (9) or (13) of section 4(c) solely outside of the United States, provided that no ownership interest in such hedge fund or private equity fund is offered 

for sale or sold to a resident of the United States and that 

the banking entity is not directly or indirectly controlled 

by a banking entity that is organized under the laws of the 

United States or of one or more States. 

(J) Such other activity as the øappropriate Federal banking agencies, the Securities and Exchange Commission, 

and the Commodity Futures Trading Commission¿ Board 

determine, by rule, as provided in subsection (b)(2), would 

promote and protect the safety and soundness of the banking entity and the financial stability of the United States. 

(2) LIMITATION ON PERMITTED ACTIVITIES.— 

(A) IN GENERAL.—No transaction, class of transactions, 

or activity may be deemed a permitted activity under paragraph (1) if the transaction, class of transactions, or activity— 

(i) would involve or result in a material conflict of 

interest (as such term shall be defined by rule as proVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00358 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
355 

vided in subsection (b)(2)) between the banking entity 

and its clients, customers, or counterparties; 

(ii) would result, directly or indirectly, in a material 

exposure by the banking entity to high-risk assets or 

high-risk trading strategies (as such terms shall be defined by rule as provided in subsection (b)(2)); 

(iii) would pose a threat to the safety and soundness 

of such banking entity; or 

(iv) would pose a threat to the financial stability of 

the United States. 

(B) RULEMAKING.—The øappropriate Federal banking 

agencies, the Securities and Exchange Commission, and 

the Commodity Futures Trading Commission¿ Board shall 

issue regulations to implement subparagraph (A), as part 

of the regulations issued under subsection (b)(2). 

(3) CAPITAL AND QUANTITATIVE LIMITATIONS.—The øappropriate Federal banking agencies, the Securities and Exchange 

Commission, and the Commodity Futures Trading Commission¿ Board shall, as provided in subsection (b)(2), adopt rules 

imposing additional capital requirements and quantitative limitations, including diversification requirements, regarding the 

activities permitted under this section if the øappropriate Federal banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission¿ Board 

determine that additional capital and quantitative limitations 

are appropriate to protect the safety and soundness of banking 

entities engaged in such activities. 

(4) DE MINIMIS INVESTMENT.— 

(A) IN GENERAL.—A banking entity may make and retain 

an investment in a hedge fund or private equity fund that 

the banking entity organizes and offers, subject to the limitations and restrictions in subparagraph (B) for the purposes of— 

(i) establishing the fund and providing the fund with 

sufficient initial equity for investment to permit the 

fund to attract unaffiliated investors; or 

(ii) making a de minimis investment. 

(B) LIMITATIONS AND RESTRICTIONS ON INVESTMENTS.— 

(i) REQUIREMENT TO SEEK OTHER INVESTORS.—A 

banking entity shall actively seek unaffiliated investors to reduce or dilute the investment of the banking 

entity to the amount permitted under clause (ii). 

(ii) LIMITATIONS ON SIZE OF INVESTMENTS.—Notwithstanding any other provision of law, investments by a 

banking entity in a hedge fund or private equity fund 

shall— 

(I) not later than 1 year after the date of establishment of the fund, be reduced through redemption, sale, or dilution to an amount that is not 

more than 3 percent of the total ownership interests of the fund; 

(II) be immaterial to the banking entity, as defined, by rule, pursuant to subsection (b)(2), but in 

no case may the aggregate of all of the interests 

356 

of the banking entity in all such funds exceed 3 

percent of the Tier 1 capital of the banking entity. 

(iii) CAPITAL.—For purposes of determining compliance with applicable capital standards under paragraph (3), the aggregate amount of the outstanding investments by a banking entity under this paragraph, 

including retained earnings, shall be deducted from 

the assets and tangible equity of the banking entity, 

and the amount of the deduction shall increase commensurate with the leverage of the hedge fund or private equity fund. 

(C) EXTENSION.—Upon an application by a banking entity, the Board may extend the period of time to meet the 

requirements under subparagraph (B)(ii)(I) for 2 additional 

years, if the Board finds that an extension would be consistent with safety and soundness and in the public interest. 

ø(e) ANTI-EVASION.— ø(1) RULEMAKING.—The appropriate Federal banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission shall issue regulations, as 

part of the rulemaking provided for in subsection (b)(2), regarding internal controls and recordkeeping, in order to insure 

compliance with this section. 

ø(2) TERMINATION OF ACTIVITIES OR INVESTMENT.—Notwithstanding any other provision of law, whenever an appropriate 

Federal banking agency, the Securities and Exchange Commission, or the Commodity Futures Trading Commission, as appropriate, has reasonable cause to believe that a banking entity or nonbank financial company supervised by the Board 

under the respective agency’s jurisdiction has made an investment or engaged in an activity in a manner that functions as 

an evasion of the requirements of this section (including 

through an abuse of any permitted activity) or otherwise violates the restrictions under this section, the appropriate Federal banking agency, the Securities and Exchange Commission, 

or the Commodity Futures Trading Commission, as appropriate, shall order, after due notice and opportunity for hearing, the banking entity or nonbank financial company supervised by the Board to terminate the activity and, as relevant, 

dispose of the investment. Nothing in this paragraph shall be 

construed to limit the inherent authority of any Federal agency 

or State regulatory authority to further restrict any investments or activities under otherwise applicable provisions of 

law.¿ 

(e) ENFORCEMENT; ANTI-EVASION.— 

(1) APPROPRIATE FEDERAL BANKING AGENCY.—Notwithstanding any other provision of law except for any rules or 

guidance issued under subsection (b)(2), whenever the appropriate Federal banking agency has reasonable cause to believe 

that a banking entity or nonbank financial company supervised 

by the Board has made an investment or engaged in an activity 

in a manner that either violates the restrictions under this section, or that functions as an evasion of the requirements of this 

section (including through an abuse of any permitted activity), 

357 

such appropriate Federal banking agency shall order, after due 

notice and opportunity for hearing, the banking entity or 

nonbank financial company supervised by the Board to terminate the activity and, as relevant, dispose of the investment. 

(2) SECURITIES AND EXCHANGE COMMISSION AND COMMODITY

FUTURES TRADING COMMISSION.— (A) IN GENERAL.—Notwithstanding any other provision of 

law except for any rules or guidance issued under subsection (b)(2), whenever the Securities and Exchange Commission or the Commodity Futures Trading Commission, 

as appropriate, has reasonable cause to believe that a covered nonbank financial company for which the respective 

agency is the primary Federal regulator has made an investment or engaged in an activity in a manner that either 

violates the restrictions under this section, or that functions 

as an evasion of the requirements of this section (including 

through an abuse of any permitted activity), the Securities 

and Exchange Commission or the Commodity Futures 

Trading Commission, as appropriate, shall order, after due 

notice and opportunity for hearing, the covered nonbank financial company to terminate the activity and, as relevant, 

dispose of the investment. 

(B) COVERED NONBANK FINANCIAL COMPANY DEFINED.— In this paragraph, the term ‘‘covered nonbank financial 

company’’ means a nonbank financial company (as defined 

in section 102 of the Financial Stability Act of 2010) supervised by the Securities and Exchange Commission or the 

Commodity Futures Trading Commission, as appropriate. 

(f) LIMITATIONS ON RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE EQUITY FUNDS.— 

(1) IN GENERAL.—No banking entity that serves, directly or 

indirectly, as the investment manager, investment adviser, or 

sponsor to a hedge fund or private equity fund, or that organizes and offers a hedge fund or private equity fund pursuant 

to paragraph (d)(1)(G), and no affiliate of such entity, may 

enter into a transaction with the fund, or with any other hedge 

fund or private equity fund that is controlled by such fund, 

that would be a covered transaction, as defined in section 23A 

of the Federal Reserve Act (12 U.S.C. 371c), with the hedge 

fund or private equity fund, as if such banking entity and the 

affiliate thereof were a member bank and the hedge fund or 

private equity fund were an affiliate thereof. 

(2) TREATMENT AS MEMBER BANK.—A banking entity that 

serves, directly or indirectly, as the investment manager, investment adviser, or sponsor to a hedge fund or private equity 

fund, or that organizes and offers a hedge fund or private equity fund pursuant to paragraph (d)(1)(G), shall be subject to 

section 23B of the Federal Reserve Act (12 U.S.C. 371c–1), as 

if such banking entity were a member bank and such hedge 

fund or private equity fund were an affiliate thereof. 

(3) PERMITTED SERVICES.— (A) IN GENERAL.—Notwithstanding paragraph (1), the 

Board may permit a banking entity to enter into any 

prime brokerage transaction with any hedge fund or private equity fund in which a hedge fund or private equity 

358 

fund managed, sponsored, or advised by such banking entity has taken an equity, partnership, or other ownership interest, if— 

(i) the banking entity is in compliance with each of 

the limitations set forth in subsection (d)(1)(G) with 

regard to a hedge fund or private equity fund organized and offered by such banking entity; 

(ii) the chief executive officer (or equivalent officer) 

of the banking entity certifies in writing annually 

(with a duty to update the certification if the information in the certification materially changes) that the 

conditions specified in subsection (d)(1)(g)(v) are satisfied; and 

(iii) the Board has determined that such transaction 

is consistent with the safe and sound operation and 

condition of the banking entity. 

(B) TREATMENT OF PRIME BROKERAGE TRANSACTIONS.— 

For purposes of subparagraph (A), a prime brokerage 

transaction described in subparagraph (A) shall be subject 

to section 23B of the Federal Reserve Act (12 U.S.C. 371c1) as if the counterparty were an affiliate of the banking 

entity. 

(4) APPLICATION TO NONBANK FINANCIAL COMPANIES SUPER- VISED BY THE BOARD.—The øappropriate Federal banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission¿ Board shall adopt rules, 

as provided in subsection (b)(2), imposing additional capital 

charges or other restrictions for nonbank financial companies 

supervised by the Board to address the risks to and conflicts 

of interest of banking entities described in paragraphs (1), (2), 

and (3) of this subsection. 

(g) RULES OF CONSTRUCTION.— 

(1) LIMITATION ON CONTRARY AUTHORITY.—Except as provided in this section, notwithstanding any other provision of 

law, the prohibitions and restrictions under this section shall 

apply to activities of a banking entity or nonbank financial 

company supervised by the Board, even if such activities are 

authorized for a banking entity or nonbank financial company 

supervised by the Board. 

(2) SALE OR SECURITIZATION OF LOANS.—Nothing in this section shall be construed to limit or restrict the ability of a banking entity or nonbank financial company supervised by the 

Board to sell or securitize loans in a manner otherwise permitted by law. 

(3) AUTHORITY OF FEDERAL AGENCIES AND STATE REGULATORY

AUTHORITIES.—Nothing in this section shall be construed to 

limit the inherent authority of any Federal agency or State 

regulatory authority under otherwise applicable provisions of 

law. 

(h) DEFINITIONS.—In this section, the following definitions shall 

apply: 

(1) BANKING ENTITY.—The term ‘‘banking entity’’ means any 

insured depository institution (as defined in section 3 of the 

Federal Deposit Insurance Act (12 U.S.C. 1813)), any company 

that controls an insured depository institution, or that is treatVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00362 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
359 

ed as a bank holding company for purposes of section 8 of the 

International Banking Act of 1978, and any affiliate or subsidiary of any such entity. For purposes of this paragraph, the 

term ‘‘insured depository institution’’ does not include an institution— 

(A) that functions solely in a trust or fiduciary capacity, 

if— 

(i) all or substantially all of the deposits of such institution are in trust funds and are received in a bona 

fide fiduciary capacity; 

(ii) no deposits of such institution which are insured 

by the Federal Deposit Insurance Corporation are offered or marketed by or through an affiliate of such institution; 

(iii) such institution does not accept demand deposits or deposits that the depositor may withdraw by 

check or similar means for payment to third parties or 

others or make commercial loans; and 

(iv) such institution does not— 

(I) obtain payment or payment related services 

from any Federal Reserve bank, including any 

service referred to in section 11A of the Federal 

Reserve Act (12 U.S.C. 248a); or 

(II) exercise discount or borrowing privileges 

pursuant to section 19(b)(7) of the Federal Reserve 

Act (12 U.S.C. 461(b)(7)); or 

(B) that does not have and is not controlled by a company that has— (i) more than $10,000,000,000 in total consolidated 

assets; and 

(ii) total trading assets and trading liabilities, as reported on the most recent applicable regulatory filing 

filed by the institution, that are more than 5 percent 

of total consolidated assets. 

(2) HEDGE FUND; PRIVATE EQUITY FUND.—The terms ‘‘hedge 

fund’’ and ‘‘private equity fund’’ mean an issuer that would be 

an investment company, as defined in the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), but for section 

3(c)(1) or 3(c)(7) of that Act, or such similar funds as the øappropriate Federal banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading 

Commission¿ Board may, by rule, as provided in subsection 

(b)(2), determine. 

(3) NONBANK FINANCIAL COMPANY SUPERVISED BY THE

BOARD.—The term ‘‘nonbank financial company supervised by 

the Board’’ means a nonbank financial company supervised by 

the Board of Governors, as defined in section 102 of the Financial Stability Act of 2010. 

(4) PROPRIETARY TRADING.—The term ‘‘proprietary trading’’, 

when used with respect to a banking entity or nonbank financial company supervised by the Board, means engaging as a 

principal for the trading account of the banking entity or 

nonbank financial company supervised by the Board in any 

transaction to purchase or sell, or otherwise acquire or dispose 

of, any security, any derivative, any contract of sale of a comVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00363 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
360 

modity for future delivery, any option on any such security, derivative, or contract, or any other security or financial instrument that the øappropriate Federal banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission¿ Board may, by rule as provided in 

subsection (b)(2), determine. 

(5) SPONSOR.—The term to ‘‘sponsor’’ a fund means— 

(A) to serve as a general partner, managing member, or 

trustee of a fund; 

(B) in any manner to select or to control (or to have employees, officers, or directors, or agents who constitute) a 

majority of the directors, trustees, or management of a 

fund; or 

(C) to share with a fund, for corporate, marketing, promotional, or other purposes, the same name or a variation 

of the same name. 

(6) TRADING ACCOUNT.—The term ‘‘trading account’’ means 

any account used for acquiring or taking positions in the securities and instruments described in paragraph (4) principally 

for the purpose of selling in the near term (or otherwise with 

the intent to resell in order to profit from short-term price 

movements), and any such other accounts as the øappropriate 

Federal banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission¿ 

Board may, by rule as provided in subsection (b)(2), determine. 

(7) ILLIQUID FUND.— (A) IN GENERAL.—The term ‘‘illiquid fund’’ means a 

hedge fund or private equity fund that— 

(i) as of May 1, 2010, was principally invested in, or 

was invested and contractually committed to principally invest in, illiquid assets, such as portfolio companies, real estate investments, and venture capital 

investments; and 

(ii) makes all investments pursuant to, and consistent with, an investment strategy to principally invest in illiquid assets. In issuing rules regarding this 

subparagraph, the Board shall take into consideration 

the terms of investment for the hedge fund or private 

equity fund, including contractual obligations, the ability of the fund to divest of assets held by the fund, and 

any other factors that the Board determines are appropriate. 

(B) HEDGE FUND.—For the purposes of this paragraph, 

the term ‘‘hedge fund’’ means any fund identified under 

subsection (h)(2), and does not include a private equity 

fund, as such term is used in section 203(m) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(m)). 

* * * * * * * 

DODD-FRANK WALL STREET REFORM AND CONSUMER 

PROTECTION ACT 

* * * * * * * 

361 

TITLE I—FINANCIAL STABILITY 

* * * * * * * 

Subtitle C—Additional Board of Governors 

Authority for Certain Nonbank Financial 

Companies and Bank Holding Companies 

* * * * * * * 

SEC. 165. ENHANCED SUPERVISION AND PRUDENTIAL STANDARDS 

FOR NONBANK FINANCIAL COMPANIES SUPERVISED BY 

THE BOARD OF GOVERNORS AND CERTAIN BANK HOLDING COMPANIES. 

(a) IN GENERAL.— (1) PURPOSE.—In order to prevent or mitigate risks to the financial stability of the United States that could arise from the 

material financial distress or failure, or ongoing activities, of 

large, interconnected financial institutions, the Board of Governors shall, on its own or pursuant to recommendations by 

the Council under section 115, establish prudential standards 

for nonbank financial companies supervised by the Board of 

Governors and bank holding companies with total consolidated 

assets equal to or greater than $50,000,000,000 that— 

(A) are more stringent than the standards and requirements applicable to nonbank financial companies and bank 

holding companies that do not present similar risks to the 

financial stability of the United States; and 

(B) increase in stringency, based on the considerations 

identified in subsection (b)(3). 

(2) TAILORED APPLICATION.— (A) IN GENERAL.—In prescribing more stringent prudential standards under this section, the Board of Governors 

may, on its own or pursuant to a recommendation by the 

Council in accordance with section 115, differentiate 

among companies on an individual basis or by category, 

taking into consideration their capital structure, riskiness, 

complexity, financial activities (including the financial activities of their subsidiaries), size, and any other risk-related factors that the Board of Governors deems appropriate. 

(B) ADJUSTMENT OF THRESHOLD FOR APPLICATION OF

CERTAIN STANDARDS.—The Board of Governors may, pursuant to a recommendation by the Council in accordance 

with section 115, establish an asset threshold above 

$50,000,000,000 for the application of any standard established under subsections (c) through (g). 

(b) DEVELOPMENT OF PRUDENTIAL STANDARDS.— 

(1) IN GENERAL.— 

(A) REQUIRED STANDARDS.—The Board of Governors 

shall establish prudential standards for nonbank financial 

companies supervised by the Board of Governors and bank 

holding companies described in subsection (a), that shall 

include— 

362 

(i) risk-based capital requirements and leverage limits, unless the Board of Governors, in consultation 

with the Council, determines that such requirements 

are not appropriate for a company subject to more 

stringent prudential standards because of the activities of such company (such as investment company activities or assets under management) or structure, in 

which case, the Board of Governors shall apply other 

standards that result in similarly stringent risk controls; 

(ii) liquidity requirements; 

(iii) overall risk management requirements; 

(iv) resolution plan and credit exposure report requirements; and 

(v) concentration limits. 

(B) ADDITIONAL STANDARDS AUTHORIZED.—The Board of 

Governors may establish additional prudential standards 

for nonbank financial companies supervised by the Board 

of Governors and bank holding companies described in 

subsection (a), that include— 

(i) a contingent capital requirement; 

(ii) enhanced public disclosures; 

(iii) short-term debt limits; and 

(iv) such other prudential standards as the Board or 

Governors, on its own or pursuant to a recommendation made by the Council in accordance with section 

115, determines are appropriate. 

(2) STANDARDS FOR FOREIGN FINANCIAL COMPANIES.—In applying the standards set forth in paragraph (1) to any foreign 

nonbank financial company supervised by the Board of Governors or foreign-based bank holding company, the Board of 

Governors shall— 

(A) give due regard to the principle of national treatment and equality of competitive opportunity; and 

(B) take into account the extent to which the foreign financial company is subject on a consolidated basis to home 

country standards that are comparable to those applied to 

financial companies in the United States. 

(3) CONSIDERATIONS.—In prescribing prudential standards 

under paragraph (1), the Board of Governors shall— 

(A) take into account differences among nonbank financial companies supervised by the Board of Governors and 

bank holding companies described in subsection (a), based 

on— 

(i) the factors described in subsections (a) and (b) of 

section 113; 

(ii) whether the company owns an insured depository institution; 

(iii) nonfinancial activities and affiliations of the 

company; and 

(iv) any other risk-related factors that the Board of 

Governors determines appropriate; 

(B) to the extent possible, ensure that small changes in 

the factors listed in subsections (a) and (b) of section 113 

would not result in sharp, discontinuous changes in the 

363 

prudential standards established under paragraph (1) of 

this subsection; 

(C) take into account any recommendations of the Council under section 115; and 

(D) adapt the required standards as appropriate in light 

of any predominant line of business of such company, including assets under management or other activities for 

which particular standards may not be appropriate. 

(4) CONSULTATION.—Before imposing prudential standards or 

any other requirements pursuant to this section, including notices of deficiencies in resolution plans and more stringent requirements or divestiture orders resulting from such notices, 

that are likely to have a significant impact on a functionally 

regulated subsidiary or depository institution subsidiary of a 

nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a), 

the Board of Governors shall consult with each Council member that primarily supervises any such subsidiary with respect 

to any such standard or requirement. 

(5) REPORT.—The Board of Governors shall submit an annual 

report to Congress regarding the implementation of the prudential standards required pursuant to paragraph (1), including the use of such standards to mitigate risks to the financial 

stability of the United States. 

(c) CONTINGENT CAPITAL.— 

(1) IN GENERAL.—Subsequent to submission by the Council of 

a report to Congress under section 115(c), the Board of Governors may issue regulations that require each nonbank financial company supervised by the Board of Governors and bank 

holding companies described in subsection (a) to maintain a 

minimum amount of contingent capital that is convertible to 

equity in times of financial stress. 

(2) FACTORS TO CONSIDER.—In issuing regulations under this 

subsection, the Board of Governors shall consider— 

(A) the results of the study undertaken by the Council, 

and any recommendations of the Council, under section 

115(c); 

(B) an appropriate transition period for implementation 

of contingent capital under this subsection; 

(C) the factors described in subsection (b)(3)(A); 

(D) capital requirements applicable to the nonbank financial company supervised by the Board of Governors or 

a bank holding company described in subsection (a), and 

subsidiaries thereof; and 

(E) any other factor that the Board of Governors deems 

appropriate. 

(d) RESOLUTION PLAN AND CREDIT EXPOSURE REPORTS.— 

(1) RESOLUTION PLAN.—The Board of Governors shall require 

each nonbank financial company supervised by the Board of 

Governors and bank holding companies described in subsection 

(a) to report øperiodically¿ every 2 years to the Board of Governors, the Council, and the Corporation the plan of such company for rapid and orderly resolution in the event of material 

financial distress or failure, which shall include— 

364 

(A) information regarding the manner and extent to 

which any insured depository institution affiliated with the 

company is adequately protected from risks arising from 

the activities of any nonbank subsidiaries of the company; 

(B) full descriptions of the ownership structure, assets, 

liabilities, and contractual obligations of the company; 

(C) identification of the cross-guarantees tied to different 

securities, identification of major counterparties, and a 

process for determining to whom the collateral of the company is pledged; and 

(D) any other information that the Board of Governors 

and the Corporation jointly require by rule or order. 

(2) CREDIT EXPOSURE REPORT.—The Board of Governors shall 

require each nonbank financial company supervised by the 

Board of Governors and bank holding companies described in 

subsection (a) to report periodically to the Board of Governors, 

the Council, and the Corporation on— 

(A) the nature and extent to which the company has 

credit exposure to other significant nonbank financial companies and significant bank holding companies; and 

(B) the nature and extent to which other significant 

nonbank financial companies and significant bank holding 

companies have credit exposure to that company. 

(3) REVIEW.—øThe Board¿ 

(A) IN GENERAL.—The Board of Governors and the Corporation øshall review¿ shall— 

(i) review the information provided in accordance 

with this subsection by each nonbank financial company supervised by the Board of Governors and bank 

holding company described in subsection (a)ø.¿; and 

(ii) not later than the end of the 6-month period beginning on the date the company submits the resolution plan, provide feedback to the company on such 

plan. 

(B) DISCLOSURE OF ASSESSMENT FRAMEWORK.—The 

Board of Governors and the Corporation shall publicly disclose the assessment framework that is used to review information under this paragraph. 

(4) NOTICE OF DEFICIENCIES.—If the Board of Governors and 

the Corporation jointly determine, based on their review under 

paragraph (3), that the resolution plan of a nonbank financial 

company supervised by the Board of Governors or a bank holding company described in subsection (a) is not credible or 

would not facilitate an orderly resolution of the company under 

title 11, United States Code— 

(A) the Board of Governors and the Corporation shall notify the company of the deficiencies in the resolution plan; 

and 

(B) the company shall resubmit the resolution plan within a timeframe determined by the Board of Governors and 

the Corporation, with revisions demonstrating that the 

plan is credible and would result in an orderly resolution 

under title 11, United States Code, including any proposed 

changes in business operations and corporate structure to 

facilitate implementation of the plan. 

365 

(5) FAILURE TO RESUBMIT CREDIBLE PLAN.— (A) IN GENERAL.—If a nonbank financial company supervised by the Board of Governors or a bank holding company described in subsection (a) fails to timely resubmit 

the resolution plan as required under paragraph (4), with 

such revisions as are required under subparagraph (B), the 

Board of Governors and the Corporation may jointly impose more stringent capital, leverage, or liquidity requirements, or restrictions on the growth, activities, or operations of the company, or any subsidiary thereof, until 

such time as the company resubmits a plan that remedies 

the deficiencies. 

(B) DIVESTITURE.—The Board of Governors and the Corporation, in consultation with the Council, may jointly direct a nonbank financial company supervised by the Board 

of Governors or a bank holding company described in subsection (a), by order, to divest certain assets or operations 

identified by the Board of Governors and the Corporation, 

to facilitate an orderly resolution of such company under 

title 11, United States Code, in the event of the failure of 

such company, in any case in which— 

(i) the Board of Governors and the Corporation have 

jointly imposed more stringent requirements on the 

company pursuant to subparagraph (A); and 

(ii) the company has failed, within the 2-year period 

beginning on the date of the imposition of such requirements under subparagraph (A), to resubmit the 

resolution plan with such revisions as were required 

under paragraph (4)(B). 

(6) NO LIMITING EFFECT.—A resolution plan submitted in accordance with this subsection shall not be binding on a bankruptcy court, a receiver appointed under title II, or any other 

authority that is authorized or required to resolve the nonbank 

financial company supervised by the Board, any bank holding 

company, or any subsidiary or affiliate of the foregoing. 

(7) NO PRIVATE RIGHT OF ACTION.—No private right of action 

may be based on any resolution plan submitted in accordance 

with this subsection. 

(8) RULES.—Not later than 18 months after the date of enactment of this Act, the Board of Governors and the Corporation shall jointly issue final rules implementing this subsection. 

(e) CONCENTRATION LIMITS.— 

(1) STANDARDS.—In order to limit the risks that the failure 

of any individual company could pose to a nonbank financial 

company supervised by the Board of Governors or a bank holding company described in subsection (a), the Board of Governors, by regulation, shall prescribe standards that limit such 

risks. 

(2) LIMITATION ON CREDIT EXPOSURE.—The regulations prescribed by the Board of Governors under paragraph (1) shall 

prohibit each nonbank financial company supervised by the 

Board of Governors and bank holding company described in 

subsection (a) from having credit exposure to any unaffiliated 

company that exceeds 25 percent of the capital stock and surVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00369 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
366 

plus (or such lower amount as the Board of Governors may determine by regulation to be necessary to mitigate risks to the 

financial stability of the United States) of the company. 

(3) CREDIT EXPOSURE.—For purposes of paragraph (2), ‘‘credit 

exposure’’ to a company means— 

(A) all extensions of credit to the company, including 

loans, deposits, and lines of credit; 

(B) all repurchase agreements and reverse repurchase 

agreements with the company, and all securities borrowing 

and lending transactions with the company, to the extent 

that such transactions create credit exposure for the 

nonbank financial company supervised by the Board of 

Governors or a bank holding company described in subsection (a); 

(C) all guarantees, acceptances, or letters of credit (including endorsement or standby letters of credit) issued on 

behalf of the company; 

(D) all purchases of or investment in securities issued by 

the company; 

(E) counterparty credit exposure to the company in connection with a derivative transaction between the nonbank 

financial company supervised by the Board of Governors or 

a bank holding company described in subsection (a) and 

the company; and 

(F) any other similar transactions that the Board of Governors, by regulation, determines to be a credit exposure 

for purposes of this section. 

(4) ATTRIBUTION RULE.—For purposes of this subsection, any 

transaction by a nonbank financial company supervised by the 

Board of Governors or a bank holding company described in 

subsection (a) with any person is a transaction with a company, to the extent that the proceeds of the transaction are 

used for the benefit of, or transferred to, that company. 

(5) RULEMAKING.—The Board of Governors may issue such 

regulations and orders, including definitions consistent with 

this section, as may be necessary to administer and carry out 

this subsection. 

(6) EXEMPTIONS.—This subsection shall not apply to any 

Federal home loan bank. The Board of Governors may, by regulation or order, exempt transactions, in whole or in part, from 

the definition of the term ‘‘credit exposure’’ for purposes of this 

subsection, if the Board of Governors finds that the exemption 

is in the public interest and is consistent with the purpose of 

this subsection. 

(7) TRANSITION PERIOD.— 

(A) IN GENERAL.—This subsection and any regulations 

and orders of the Board of Governors under this subsection 

shall not be effective until 3 years after the date of enactment of this Act. 

(B) EXTENSION AUTHORIZED.—The Board of Governors 

may extend the period specified in subparagraph (A) for 

not longer than an additional 2 years. 

(f) ENHANCED PUBLIC DISCLOSURES.—The Board of Governors 

may prescribe, by regulation, periodic public disclosures by 

nonbank financial companies supervised by the Board of Governors 

367 

and bank holding companies described in subsection (a) in order to 

support market evaluation of the risk profile, capital adequacy, and 

risk management capabilities thereof. 

(g) SHORT-TERM DEBT LIMITS.— (1) IN GENERAL.—In order to mitigate the risks that an overaccumulation of short-term debt could pose to financial companies and to the stability of the United States financial system, 

the Board of Governors may, by regulation, prescribe a limit on 

the amount of short-term debt, including off-balance sheet exposures, that may be accumulated by any bank holding company described in subsection (a) and any nonbank financial 

company supervised by the Board of Governors. 

(2) BASIS OF LIMIT.—Any limit prescribed under paragraph 

(1) shall be based on the short-term debt of the company described in paragraph (1) as a percentage of capital stock and 

surplus of the company or on such other measure as the Board 

of Governors considers appropriate. 

(3) SHORT-TERM DEBT DEFINED.—For purposes of this subsection, the term ‘‘short-term debt’’ means such liabilities with 

short-dated maturity that the Board of Governors identifies, by 

regulation, except that such term does not include insured deposits. 

(4) RULEMAKING AUTHORITY.—In addition to prescribing regulations under paragraphs (1) and (3), the Board of Governors 

may prescribe such regulations, including definitions consistent 

with this subsection, and issue such orders, as may be necessary to carry out this subsection. 

(5) AUTHORITY TO ISSUE EXEMPTIONS AND ADJUSTMENTS.— Notwithstanding the Bank Holding Company Act of 1956 (12 

U.S.C. 1841 et seq.), the Board of Governors may, if it determines such action is necessary to ensure appropriate heightened prudential supervision, with respect to a company described in paragraph (1) that does not control an insured depository institution, issue to such company an exemption from 

or adjustment to the limit prescribed under paragraph (1). 

(h) RISK COMMITTEE.— (1) NONBANK FINANCIAL COMPANIES SUPERVISED BY THE

BOARD OF GOVERNORS.—The Board of Governors shall require 

each nonbank financial company supervised by the Board of 

Governors that is a publicly traded company to establish a risk 

committee, as set forth in paragraph (3), not later than 1 year 

after the date of receipt of a notice of final determination 

under section 113(e)(3) with respect to such nonbank financial 

company supervised by the Board of Governors. 

(2) CERTAIN BANK HOLDING COMPANIES.— 

(A) MANDATORY REGULATIONS.—The Board of Governors 

shall issue regulations requiring each bank holding company that is a publicly traded company and that has total 

consolidated assets of not less than $10,000,000,000 to establish a risk committee, as set forth in paragraph (3). 

(B) PERMISSIVE REGULATIONS.—The Board of Governors 

may require each bank holding company that is a publicly 

traded company and that has total consolidated assets of 

less than $10,000,000,000 to establish a risk committee, as 

set forth in paragraph (3), as determined necessary or apVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00371 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
368 

propriate by the Board of Governors to promote sound risk 

management practices. 

(3) RISK COMMITTEE.—A risk committee required by this subsection shall— 

(A) be responsible for the oversight of the enterprisewide risk management practices of the nonbank financial 

company supervised by the Board of Governors or bank 

holding company described in subsection (a), as applicable; 

(B) include such number of independent directors as the 

Board of Governors may determine appropriate, based on 

the nature of operations, size of assets, and other appropriate criteria related to the nonbank financial company 

supervised by the Board of Governors or a bank holding 

company described in subsection (a), as applicable; and 

(C) include at least 1 risk management expert having experience in identifying, assessing, and managing risk exposures of large, complex firms. 

(4) RULEMAKING.—The Board of Governors shall issue final 

rules to carry out this subsection, not later than 1 year after 

the transfer date, to take effect not later than 15 months after 

the transfer date. 

(i) STRESS TESTS.— (1) BY THE BOARD OF GOVERNORS.— (A) ANNUAL TESTS REQUIRED.—The Board of Governors, 

in coordination with the appropriate primary financial regulatory agencies and the Federal Insurance Office, shall 

conduct annual analyses in which nonbank financial companies supervised by the Board of Governors and bank 

holding companies described in subsection (a) are subject 

to evaluation of whether such companies have the capital, 

on a total consolidated basis, necessary to absorb losses as 

a result of adverse economic conditions. 

(B) TEST PARAMETERS AND CONSEQUENCES.—The Board 

of Governors— 

(i) shall provide for at least 3 different sets of conditions under which the evaluation required by this subsection shall be conducted, including baseline, adverse, 

and severely adverse; 

(ii) may require the tests described in subparagraph 

(A) at bank holding companies and nonbank financial 

companies, in addition to those for which annual tests 

are required under subparagraph (A); 

(iii) may develop and apply such other analytic techniques as are necessary to identify, measure, and monitor risks to the financial stability of the United 

States; 

(iv) shall require the companies described in subparagraph (A) to update their resolution plans required under subsection (d)(1), as the Board of Governors determines appropriate, based on the results of 

the analyses; and 

(v) shall publish a summary of the results of the 

tests required under subparagraph (A) or clause (ii) of 

this subparagraph. 

(2) BY THE COMPANY.— 

369 

(A) REQUIREMENT.—A nonbank financial company supervised by the Board of Governors and a bank holding company described in subsection (a) shall conduct semiannual 

stress tests. All other financial companies that have total 

consolidated assets of more than $10,000,000,000 and øare 

regulated by a primary Federal financial regulatory agency¿ whose primary financial regulatory agency is a Federal 

banking agency or the Federal Housing Finance Agency 

shall conduct annual stress tests. The tests required under 

this subparagraph shall be conducted in accordance with 

the regulations prescribed under subparagraph (C). 

(B) REPORT.—A company required to conduct stress tests 

under subparagraph (A) shall submit a report to the Board 

of Governors and to its primary financial regulatory agency at such time, in such form, and containing such information as the primary financial regulatory agency shall require. 

(C) REGULATIONS.—Each Federal primary financial regulatory agency, in coordination with the Board of Governors 

and the Federal Insurance Office, shall issue consistent 

and comparable regulations to implement this paragraph 

that shall— 

(i) define the term ‘‘stress test’’ for purposes of this 

paragraph; 

(ii) establish methodologies for the conduct of stress 

tests required by this paragraph that shall provide for 

at least 3 different sets of conditions, including baseline, adverse, and severely adverse; 

(iii) establish the form and content of the report required by subparagraph (B); and 

(iv) require companies subject to this paragraph to 

publish a summary of the results of the required 

stress tests. 

(D) SEC AND CFTC.—The Securities and Exchange Commission and the Commodity Futures Trading Commission 

may each issue regulations requiring financial companies 

with respect to which they are the primary financial regulatory agency to conduct periodic analyses of the financial 

condition, including available liquidity, of such companies 

under adverse economic conditions. 

(j) LEVERAGE LIMITATION.— 

(1) REQUIREMENT.—The Board of Governors shall require a 

bank holding company with total consolidated assets equal to 

or greater than $50,000,000,000 or a nonbank financial company supervised by the Board of Governors to maintain a debt 

to equity ratio of no more than 15 to 1, upon a determination 

by the Council that such company poses a grave threat to the 

financial stability of the United States and that the imposition 

of such requirement is necessary to mitigate the risk that such 

company poses to the financial stability of the United States. 

Nothing in this paragraph shall apply to a Federal home loan 

bank. 

(2) CONSIDERATIONS.—In making a determination under this 

subsection, the Council shall consider the factors described in 

370 

subsections (a) and (b) of section 113 and any other risk-related factors that the Council deems appropriate. 

(3) REGULATIONS.—The Board of Governors shall promulgate 

regulations to establish procedures and timelines for complying 

with the requirements of this subsection. 

(k) INCLUSION OF OFF-BALANCE-SHEET ACTIVITIES IN COMPUTING

CAPITAL REQUIREMENTS.— (1) IN GENERAL.—In the case of any bank holding company 

described in subsection (a) or nonbank financial company supervised by the Board of Governors, the computation of capital 

for purposes of meeting capital requirements shall take into account any off-balance-sheet activities of the company. 

(2) EXEMPTIONS.—If the Board of Governors determines that 

an exemption from the requirement under paragraph (1) is appropriate, the Board of Governors may exempt a company, or 

any transaction or transactions engaged in by such company, 

from the requirements of paragraph (1). 

(3) OFF-BALANCE-SHEET ACTIVITIES DEFINED.—For purposes 

of this subsection, the term ‘‘off-balance-sheet activities’’ means 

an existing liability of a company that is not currently a balance sheet liability, but may become one upon the happening 

of some future event, including the following transactions, to 

the extent that they may create a liability: 

(A) Direct credit substitutes in which a bank substitutes 

its own credit for a third party, including standby letters 

of credit. 

(B) Irrevocable letters of credit that guarantee repayment of commercial paper or tax-exempt securities. 

(C) Risk participations in bankers’ acceptances. 

(D) Sale and repurchase agreements. 

(E) Asset sales with recourse against the seller. 

(F) Interest rate swaps. 

(G) Credit swaps. 

(H) Commodities contracts. 

(I) Forward contracts. 

(J) Securities contracts. 

(K) Such other activities or transactions as the Board of 

Governors may, by rule, define. 

* * * * * * * 

TITLE IX—INVESTOR PROTECTIONS 

AND IMPROVEMENTS TO THE REGULATION OF SECURITIES 

* * * * * * * 

Subtitle I—Public Company Accounting 

Oversight Board, Portfolio Margining, 

and Other Matters 

* * * * * * * 

371 

SEC. 989E. ADDITIONAL OVERSIGHT OF FINANCIAL REGULATORY SYSTEM. 

(a) COUNCIL OF INSPECTORS GENERAL ON FINANCIAL OVERSIGHT.— 

(1) ESTABLISHMENT AND MEMBERSHIP.—There is established 

a Council of Inspectors General on Financial Oversight (in this 

section referred to as the ‘‘Council of Inspectors General’’) 

chaired by the Inspector General of the Department of the 

Treasury and composed of the inspectors general of the following: 

(A) The Board of Governors of the Federal Reserve System. 

(B) The Commodity Futures Trading Commission. 

(C) The Department of Housing and Urban Development. 

(D) The Department of the Treasury. 

(E) The Federal Deposit Insurance Corporation. 

(F) The Federal Housing Finance Agency. 

(G) The National Credit Union Administration. 

(H) The Securities and Exchange Commission. 

(I) The Troubled Asset Relief Program (until the termination of the authority of the Special Inspector General for 

such program under section 121(k) of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5231(k))). 

(J) The Bureau of Consumer Financial Protection. 

(2) DUTIES.— 

(A) MEETINGS.—The Council of Inspectors General shall 

meet not less than once each quarter, or more frequently 

if the chair considers it appropriate, to facilitate the sharing of information among inspectors general and to discuss 

the ongoing work of each inspector general who is a member of the Council of Inspectors General, with a focus on 

concerns that may apply to the broader financial sector 

and ways to improve financial oversight. 

(B) ANNUAL REPORT.—Each year the Council of Inspectors General shall submit to the Council and to Congress 

a report including— 

(i) for each inspector general who is a member of the 

Council of Inspectors General, a section within the exclusive editorial control of such inspector general that 

highlights the concerns and recommendations of such 

inspector general in such inspector general’s ongoing 

and completed work, with a focus on issues that may 

apply to the broader financial sector; and 

(ii) a summary of the general observations of the 

Council of Inspectors General based on the views expressed by each inspector general as required by 

clause (i), with a focus on measures that should be 

taken to improve financial oversight. 

(3) WORKING GROUPS TO EVALUATE COUNCIL.— 

(A) CONVENING A WORKING GROUP.—The Council of Inspectors General may, by majority vote, convene a Council 

of Inspectors General Working Group to evaluate the effectiveness and internal operations of the Council. 

372 

(B) PERSONNEL AND RESOURCES.—The inspectors general 

who are members of the Council of Inspectors General may 

detail staff and resources to a Council of Inspectors General Working Group established under this paragraph to 

enable it to carry out its duties. 

(C) REPORTS.—A Council of Inspectors General Working 

Group established under this paragraph shall submit regular reports to the Council and to Congress on its evaluations pursuant to this paragraph. 

(b) RESPONSE TO REPORT BY COUNCIL.—The Council shall respond to the concerns raised in the report of the Council of Inspectors General under subsection (a)(2)(B) for such year. 

* * * * * * * 

TITLE X—BUREAU OF CONSUMER 

FINANCIAL PROTECTION 

* * * * * * * 

Subtitle A—Bureau of Consumer Financial 

Protection 

SEC. 1011. ESTABLISHMENT OF THE BUREAU OF CONSUMER FINANCIAL PROTECTION. 

(a) BUREAU ESTABLISHED.—There is established in the Federal 

Reserve System, an independent bureau to be known as the ‘‘Bureau of Consumer Financial Protection’’, which shall regulate the 

offering and provision of consumer financial products or services 

under the Federal consumer financial laws. The Bureau shall be 

considered an Executive agency, as defined in section 105 of title 

5, United States Code. Except as otherwise provided expressly by 

law, all Federal laws dealing with public or Federal contracts, 

property, works, officers, employees, budgets, or funds, including 

the provisions of chapters 5 and 7 of title 5, shall apply to the exercise of the powers of the Bureau. 

(b) DIRECTOR øAND DEPUTY DIRECTOR¿, DEPUTY DIRECTOR, AND

INSPECTOR GENERAL.— (1) IN GENERAL.—There is established the position of the Director, who shall serve as the head of the Bureau. 

(2) APPOINTMENT.—Subject to paragraph (3), the Director 

shall be appointed by the President, by and with the advice 

and consent of the Senate. 

(3) QUALIFICATION.—The President shall nominate the Director from among individuals who are citizens of the United 

States. 

(4) COMPENSATION.—The Director shall be compensated at 

the rate prescribed for level II of the Executive Schedule under 

section 5313 of title 5, United States Code. 

(5) DEPUTY DIRECTOR.—There is established the position of 

Deputy Director, who shall— 

(A) be appointed by the Director; and 

(B) serve as acting Director in the absence or unavailability of the Director. 

373 

(6) INSPECTOR GENERAL.—There is established the position of 

the Inspector General. 

(c) TERM.— 

(1) IN GENERAL.—The Director shall serve for a term of 5 

years. 

(2) EXPIRATION OF TERM.—An individual may serve as Director after the expiration of the term for which appointed, until 

a successor has been appointed and qualified. 

(3) REMOVAL FOR CAUSE.—The President may remove the Director for inefficiency, neglect of duty, or malfeasance in office. 

(d) SERVICE RESTRICTION.—No Director øor Deputy Director¿, 

Deputy Director, or Inspector General may hold any office, position, 

or employment in any Federal reserve bank, Federal home loan 

bank, covered person, or service provider during the period of service of such person as Director øor Deputy Director¿, Deputy Director, or Inspector General. 

(e) OFFICES.—The principal office of the Bureau shall be in the 

District of Columbia. The Director may establish regional offices of 

the Bureau, including in cities in which the Federal reserve banks, 

or branches of such banks, are located, in order to carry out the 

responsibilities assigned to the Bureau under the Federal consumer 

financial laws. 

* * * * * * * 

SEC. 1016. APPEARANCES BEFORE AND REPORTS TO CONGRESS. 

(a) APPEARANCES BEFORE CONGRESS.—The Director of the Bureau shall appear before the Committee on Banking, Housing, and 

Urban Affairs of the Senate and the Committee on Financial Services and the Committee on Energy and Commerce of the House of 

Representatives at semi-annual hearings regarding the reports required under subsection (b). 

(b) REPORTS REQUIRED.—The Bureau shall, concurrent with each 

semi-annual hearing referred to in subsection (a), prepare and submit to the President and to the Committee on Banking, Housing, 

and Urban Affairs of the Senate and the Committee on Financial 

Services and the Committee on Energy and Commerce of the House 

of Representatives, a report, beginning with the session following 

the designated transfer date. The Bureau may also submit such report to the Committee on Commerce, Science, and Transportation 

of the Senate. 

(c) CONTENTS.—The reports required by subsection (b) shall include— 

(1) a discussion of the significant problems faced by consumers in shopping for or obtaining consumer financial products or services; 

(2) a justification of the budget request of the previous year; 

(3) a list of the significant rules and orders adopted by the 

Bureau, as well as other significant initiatives conducted by 

the Bureau, during the preceding year and the plan of the Bureau for rules, orders, or other initiatives to be undertaken 

during the upcoming period; 

(4) an analysis of complaints about consumer financial products or services that the Bureau has received and collected in 

its central database on complaints during the preceding year; 

374 

(5) a list, with a brief statement of the issues, of the public 

supervisory and enforcement actions to which the Bureau was 

a party during the preceding year; 

(6) the actions taken regarding rules, orders, and supervisory 

actions with respect to covered persons which are not credit 

unions or depository institutions; 

(7) an assessment of significant actions by State attorneys 

general or State regulators relating to Federal consumer financial law; 

(8) an analysis of the efforts of the Bureau to fulfill the fair 

lending mission of the Bureau; and 

(9) an analysis of the efforts of the Bureau to increase workforce and contracting diversity consistent with the procedures 

established by the Office of Minority and Women Inclusion. 

(d) ADDITIONAL REQUIREMENT FOR INSPECTOR GENERAL.—On a 

separate occasion from that described in subsection (a), the Inspector General of the Bureau shall appear, upon invitation, before the 

Committee on Banking, Housing, and Urban Affairs of the Senate 

and the Committee on Financial Services of the House of Representatives at hearings no less frequently than twice annually, at a date 

determined by the chairman of the respective committee, regarding 

the reports required under subsection (b) and the reports required 

under section 5 of the Inspector General Act of 1978 (5 U.S.C. App.). 

* * * * * * * 

SEC. 1017. FUNDING; PENALTIES AND FINES. 

(a) TRANSFER OF FUNDS FROM BOARD OF GOVERNORS.— (1) IN GENERAL.—Each year (or quarter of such year), beginning on the designated transfer date, and each quarter thereafter, the Board of Governors shall transfer to the Bureau from 

the combined earnings of the Federal Reserve System, the 

amount determined by the Director to be reasonably necessary 

to carry out the authorities of the Bureau under Federal consumer financial law, taking into account such other sums made 

available to the Bureau from the preceding year (or quarter of 

such year). 

(2) FUNDING CAP.— (A) IN GENERAL.—Notwithstanding paragraph (1), and in 

accordance with this paragraph, the amount that shall be 

transferred to the Bureau in each fiscal year shall not exceed a fixed percentage of the total operating expenses of 

the Federal Reserve System, as reported in the Annual Report, 2009, of the Board of Governors, equal to— 

(i) 10 percent of such expenses in fiscal year 2011; 

(ii) 11 percent of such expenses in fiscal year 2012; 

and 

(iii) 12 percent of such expenses in fiscal year 2013, 

and in each year thereafter. 

(B) ADJUSTMENT OF AMOUNT.—The dollar amount referred to in subparagraph (A)(iii) shall be adjusted annually, using the percent increase, if any, in the employment 

cost index for total compensation for State and local government workers published by the Federal Government, or 

the successor index thereto, for the 12-month period ending on September 30 of the year preceding the transfer. 

375 

(C) FUNDING FOR OFFICE OF INSPECTOR GENERAL.—Each 

fiscal year, the Bureau shall dedicate 2 percent of the funds 

transferred pursuant to paragraph (1) to the Office of the 

Inspector General. 

ø(C)¿ (D) REVIEWABILITY.—Notwithstanding any other 

provision in this title, the funds derived from the Federal 

Reserve System pursuant to this subsection shall not be 

subject to review by the Committees on Appropriations of 

the House of Representatives and the Senate. 

(3) TRANSITION PERIOD.—Beginning on the date of enactment 

of this Act and until the designated transfer date, the Board 

of Governors shall transfer to the Bureau the amount estimated by the Secretary needed to carry out the authorities 

granted to the Bureau under Federal consumer financial law, 

from the date of enactment of this Act until the designated 

transfer date. 

(4) BUDGET AND FINANCIAL MANAGEMENT.— 

(A) FINANCIAL OPERATING PLANS AND FORECASTS.—The 

Director shall provide to the Director of the Office of Management and Budget copies of the financial operating 

plans and forecasts of the Director, as prepared by the Director in the ordinary course of the operations of the Bureau, and copies of the quarterly reports of the financial 

condition and results of operations of the Bureau, as prepared by the Director in the ordinary course of the operations of the Bureau. 

(B) FINANCIAL STATEMENTS.—The Bureau shall prepare 

annually a statement of— 

(i) assets and liabilities and surplus or deficit; 

(ii) income and expenses; and 

(iii) sources and application of funds. 

(C) FINANCIAL MANAGEMENT SYSTEMS.—The Bureau 

shall implement and maintain financial management systems that comply substantially with Federal financial 

management systems requirements and applicable Federal 

accounting standards. 

(D) ASSERTION OF INTERNAL CONTROLS.—The Director 

shall provide to the Comptroller General of the United 

States an assertion as to the effectiveness of the internal 

controls that apply to financial reporting by the Bureau, 

using the standards established in section 3512(c) of title 

31, United States Code. 

(E) RULE OF CONSTRUCTION.—This subsection may not 

be construed as implying any obligation on the part of the 

Director to consult with or obtain the consent or approval 

of the Director of the Office of Management and Budget 

with respect to any report, plan, forecast, or other information referred to in subparagraph (A) or any jurisdiction or 

oversight over the affairs or operations of the Bureau. 

(F) FINANCIAL STATEMENTS.—The financial statements of 

the Bureau shall not be consolidated with the financial 

statements of either the Board of Governors or the Federal 

Reserve System. 

(5) AUDIT OF THE BUREAU.— 

376 

(A) IN GENERAL.—The Comptroller General shall annually audit the financial transactions of the Bureau in accordance with the United States generally accepted government auditing standards, as may be prescribed by the 

Comptroller General of the United States. The audit shall 

be conducted at the place or places where accounts of the 

Bureau are normally kept. The representatives of the Government Accountability Office shall have access to the personnel and to all books, accounts, documents, papers, 

records (including electronic records), reports, files, and all 

other papers, automated data, things, or property belonging to or under the control of or used or employed by the 

Bureau pertaining to its financial transactions and necessary to facilitate the audit, and such representatives 

shall be afforded full facilities for verifying transactions 

with the balances or securities held by depositories, fiscal 

agents, and custodians. All such books, accounts, documents, records, reports, files, papers, and property of the 

Bureau shall remain in possession and custody of the Bureau. The Comptroller General may obtain and duplicate 

any such books, accounts, documents, records, working papers, automated data and files, or other information relevant to such audit without cost to the Comptroller General, and the right of access of the Comptroller General to 

such information shall be enforceable pursuant to section 

716(c) of title 31, United States Code. 

(B) REPORT.—The Comptroller General shall submit to 

the Congress a report of each annual audit conducted 

under this subsection. The report to the Congress shall set 

forth the scope of the audit and shall include the statement of assets and liabilities and surplus or deficit, the 

statement of income and expenses, the statement of 

sources and application of funds, and such comments and 

information as may be deemed necessary to inform Congress of the financial operations and condition of the Bureau, together with such recommendations with respect 

thereto as the Comptroller General may deem advisable. A 

copy of each report shall be furnished to the President and 

to the Bureau at the time submitted to the Congress. 

(C) ASSISTANCE AND COSTS.—For the purpose of conducting an audit under this subsection, the Comptroller 

General may, in the discretion of the Comptroller General, 

employ by contract, without regard to section 3709 of the 

Revised Statutes of the United States (41 U.S.C. 5), professional services of firms and organizations of certified public accountants for temporary periods or for special purposes. Upon the request of the Comptroller General, the 

Director of the Bureau shall transfer to the Government 

Accountability Office from funds available, the amount requested by the Comptroller General to cover the full costs 

of any audit and report conducted by the Comptroller General. The Comptroller General shall credit funds transferred to the account established for salaries and expenses 

of the Government Accountability Office, and such amount 

377 

shall be available upon receipt and without fiscal year limitation to cover the full costs of the audit and report. 

(b) CONSUMER FINANCIAL PROTECTION FUND.— (1) SEPARATE FUND IN FEDERAL RESERVE ESTABLISHED.— There is established in the Federal Reserve a separate fund, to 

be known as the ‘‘Bureau of Consumer Financial Protection 

Fund’’ (referred to in this section as the ‘‘Bureau Fund’’). The 

Bureau Fund shall be maintained and established at a Federal 

reserve bank, in accordance with such requirements as the 

Board of Governors may impose. 

(2) FUND RECEIPTS.—All amounts transferred to the Bureau 

under subsection (a) shall be deposited into the Bureau Fund. 

(3) INVESTMENT AUTHORITY.— 

(A) AMOUNTS IN BUREAU FUND MAY BE INVESTED.—The 

Bureau may request the Board of Governors to direct the 

investment of the portion of the Bureau Fund that is not, 

in the judgment of the Bureau, required to meet the current needs of the Bureau. 

(B) ELIGIBLE INVESTMENTS.—Investments authorized by 

this paragraph shall be made in obligations of the United 

States or obligations that are guaranteed as to principal 

and interest by the United States, with maturities suitable 

to the needs of the Bureau Fund, as determined by the Bureau. 

(C) INTEREST AND PROCEEDS CREDITED.—The interest on, 

and the proceeds from the sale or redemption of, any obligations held in the Bureau Fund shall be credited to the 

Bureau Fund. 

(c) USE OF FUNDS.— 

(1) IN GENERAL.—Funds obtained by, transferred to, or credited to the Bureau Fund shall be immediately available to the 

Bureau and under the control of the Director, and shall remain 

available until expended, to pay the expenses of the Bureau in 

carrying out its duties and responsibilities. The compensation 

of the Director and other employees of the Bureau and all 

other expenses thereof may be paid from, obtained by, transferred to, or credited to the Bureau Fund under this section. 

(2) FUNDS THAT ARE NOT GOVERNMENT FUNDS.—Funds obtained by or transferred to the Bureau Fund shall not be construed to be Government funds or appropriated monies. 

(3) AMOUNTS NOT SUBJECT TO APPORTIONMENT.—Notwithstanding any other provision of law, amounts in the Bureau 

Fund and in the Civil Penalty Fund established under subsection (d) shall not be subject to apportionment for purposes 

of chapter 15 of title 31, United States Code, or under any 

other authority. 

(d) PENALTIES AND FINES.— 

(1) ESTABLISHMENT OF VICTIMS RELIEF FUND.—There is established in the Federal Reserve a separate fund, to be known 

as the ‘‘Consumer Financial Civil Penalty Fund’’ (referred to in 

this section as the ‘‘Civil Penalty Fund’’). The Civil Penalty 

Fund shall be maintained and established at a Federal reserve 

bank, in accordance with such requirements as the Board of 

Governors may impose. If the Bureau obtains a civil penalty 

against any person in any judicial or administrative action 

378 

under Federal consumer financial laws, the Bureau shall deposit into the Civil Penalty Fund, the amount of the penalty 

collected. 

(2) PAYMENT TO VICTIMS.—Amounts in the Civil Penalty 

Fund shall be available to the Bureau, without fiscal year limitation, for payments to the victims of activities for which civil 

penalties have been imposed under the Federal consumer financial laws. To the extent that such victims cannot be located 

or such payments are otherwise not practicable, the Bureau 

may use such funds for the purpose of consumer education and 

financial literacy programs. 

(e) AUTHORIZATION OF APPROPRIATIONS; ANNUAL REPORT.— 

(1) DETERMINATION REGARDING NEED FOR APPROPRIATED

FUNDS.— 

(A) IN GENERAL.—The Director is authorized to determine that sums available to the Bureau under this section 

will not be sufficient to carry out the authorities of the Bureau under Federal consumer financial law for the upcoming year. 

(B) REPORT REQUIRED.—When making a determination 

under subparagraph (A), the Director shall prepare a report regarding the funding of the Bureau, including the assets and liabilities of the Bureau, and the extent to which 

the funding needs of the Bureau are anticipated to exceed 

the level of the amount set forth in subsection (a)(2). The 

Director shall submit the report to the President and to 

the Committee on Appropriations of the Senate and the 

Committee on Appropriations of the House of Representatives. 

(2) AUTHORIZATION OF APPROPRIATIONS.—If the Director 

makes the determination and submits the report pursuant to 

paragraph (1), there are hereby authorized to be appropriated 

to the Bureau, for the purposes of carrying out the authorities 

granted in Federal consumer financial law, $200,000,000 for 

each of fiscal years 2010, 2011, 2012, 2013, and 2014. 

(3) APPORTIONMENT.—Notwithstanding any other provision 

of law, the amounts in paragraph (2) shall be subject to apportionment under section 1517 of title 31, United States Code, 

and restrictions that generally apply to the use of appropriated 

funds in title 31, United States Code, and other laws. 

(4) ANNUAL REPORT.—The Director shall prepare and submit 

a report, on an annual basis, to the Committee on Appropriations of the Senate and the Committee on Appropriations of 

the House of Representatives regarding the financial operating 

plans and forecasts of the Director, the financial condition and 

results of operations of the Bureau, and the sources and application of funds of the Bureau, including any funds appropriated in accordance with this subsection. 

* * * * * * * 

FEDERAL FINANCIAL INSTITUTIONS EXAMINATION 

COUNCIL ACT OF 1978 

* * * * * * * 

379 

TITLE X—FEDERAL FINANCIAL INSTITUTIONS 

EXAMINATION COUNCIL 

* * * * * * * 

DEFINITIONS

SEC. 1003. As used in this title— 

ø(1) the term ‘‘Federal financial institutions regulatory agencies’’ means the Office of the Comptroller of the Currency, the 

Board of Governors of the Federal Reserve System, the Federal 

Deposit Insurance Corporation, the Office of Thrift Supervision, and the National Credit Union Administration;¿ 

(1) the term ‘‘Federal financial institutions regulatory agencies’’— 

(A) means the Office of the Comptroller of the Currency, 

the Board of Governors of the Federal Reserve System, the 

Federal Deposit Insurance Corporation, and the National 

Credit Union Administration; and 

(B) for purposes of sections 1012, 1013, and 1014, includes the Bureau of Consumer Financial Protection; 

(2) the term ‘‘Council’’ means the Financial Institutions Examination Council; and 

ø(3) the term ‘‘financial institution’’ means a commercial 

bank, a savings bank, a trust company, a savings association, 

a building and loan association, a homestead association, a cooperative bank, or a credit union;¿ 

(3) the term ‘‘financial institution’’— 

(A) means a commercial bank, a savings bank, a trust 

company, a savings association, a building and loan association, a homestead association, a cooperative bank, or a 

credit union; and 

(B) for purposes of sections 1012, 1013, and 1014, includes a nondepository covered person subject to supervision by the Bureau of Consumer Financial Protection 

under section 1024 of the Consumer Financial Protection 

Act of 2010 (12 U.S.C. 5514). 

* * * * * * * 

EXPENSES OF THE COUNCIL

SEC. 1005. øOne-fifth¿ One-fourth of the costs and expenses of 

the Council, including the salaries of its employees, shall be paid 

by each of the Federal financial institutions regulatory agencies. 

Annual assessments for such share shall be levied by the Council 

based upon its projected budget for the year, and additional assessments may be made during the year if necessary. 

* * * * * * * 

SEC. 1012. TIMELINESS OF EXAMINATION REPORTS. 

(a) IN GENERAL.— (1) FINAL EXAMINATION REPORT.—A Federal financial institutions regulatory agency shall provide a final examination report 

to a financial institution not later than 60 days after the later 

of— 

380 

(A) the exit interview for an examination of the institution; or 

(B) the provision of additional information by the institution relating to the examination. 

(2) EXIT INTERVIEW.—If a financial institution is not subject 

to a resident examiner program, the exit interview shall occur 

not later than the end of the 9-month period beginning on the 

commencement of the examination, except that such period may 

be extended by the Federal financial institutions regulatory 

agency by providing written notice to the institution and the 

Independent Examination Review Director describing with particularity the reasons that a longer period is needed to complete 

the examination. 

(b) EXAMINATION MATERIALS.—Upon the request of a financial institution, the Federal financial institutions regulatory agency shall 

include with the final report an appendix listing all examination or 

other factual information relied upon by the agency in support of a 

material supervisory determination. 

SEC. 1013. OFFICE OF INDEPENDENT EXAMINATION REVIEW. 

(a) ESTABLISHMENT.—There is established in the Council an Office of Independent Examination Review (the ‘‘Office’’). 

(b) HEAD OF OFFICE.—There is established the position of the 

Independent Examination Review Director (the ‘‘Director’’), as the 

head of the Office. The Director shall be appointed by the Council 

and shall be independent from any member agency of the Council. 

(c) TERM.—The Director shall serve for a term of 5 years, and 

may be appointed to serve a subsequent 5-year term. 

(d) STAFFING.—The Director is authorized to hire staff to support 

the activities of the Office. 

(e) DUTIES.—The Director shall— 

(1) receive and, at the Director’s discretion, investigate complaints from financial institutions, their representatives, or another entity acting on behalf of such institutions, concerning examinations, examination practices, or examination reports; 

(2) hold meetings, at least once every three months and in locations designed to encourage participation from all sections of 

the United States, with financial institutions, their representatives, or another entity acting on behalf of such institutions, to 

discuss examination procedures, examination practices, or examination policies; 

(3) in accordance with subsection (f), review examination procedures of the Federal financial institutions regulatory agencies 

to ensure that the written examination policies of those agencies 

are being followed in practice and adhere to the standards for 

consistency established by the Council; 

(4) conduct a continuing and regular review of examination 

quality assurance for all examination types conducted by the 

Federal financial institutions regulatory agencies; 

(5) adjudicate any supervisory appeal initiated under section 

1014; and 

(6) report annually to the Committee on Financial Services of 

the House of Representatives, the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Council, on the 

reviews carried out pursuant to paragraphs (3) and (4), including compliance with the requirements set forth in section 1012 

381 

regarding timeliness of examination reports, and the Council’s 

recommendations for improvements in examination procedures, 

practices, and policies. 

(f) STANDARD FOR REVIEWING EXAMINATION PROCEDURES.—In 

conducting reviews pursuant to subsection (e)(4), the Director shall 

prioritize factors relating to the safety and soundness of the financial system of the United States. 

(g) REMOVAL.—If the Director is removed from office, the Council 

shall communicate in writing the reasons for any such removal to 

the Committee on Financial Services of the House of Representatives 

and the Committee on Banking, Housing, and Urban Affairs of the 

Senate not later than 30 days before the removal. 

(h) CONFIDENTIALITY.—The Director shall keep confidential all 

meetings with, discussions with, and information provided by financial institutions. 

SEC. 1014. RIGHT TO INDEPENDENT REVIEW OF MATERIAL SUPERVISORY DETERMINATIONS. 

(a) IN GENERAL.—A financial institution shall have the right to 

obtain an independent review of a material supervisory determination contained in a final report of examination. 

(b) NOTICE.— 

(1) TIMING.—A financial institution seeking review of a material supervisory determination under this section shall file a 

written notice with the Independent Examination Review Director (the ‘‘Director’’) within 60 days after receiving the final report of examination that is the subject of such review. 

(2) IDENTIFICATION OF DETERMINATION.—The written notice 

shall identify the material supervisory determination that is the 

subject of the independent examination review, and a statement 

of the reasons why the institution believes that the determination is incorrect or should otherwise be modified. 

(3) INFORMATION TO BE PROVIDED TO INSTITUTION.—Any information relied upon by the agency in the final report that is 

not in the possession of the financial institution may be requested by the financial institution and shall be delivered 

promptly by the agency to the financial institution. 

(c) RIGHT TO HEARING.— 

(1) IN GENERAL.—The Director shall determine the merits of 

the appeal on the record or, at the financial institution’s election, shall refer the appeal to an Administrative Law Judge to 

conduct a confidential hearing pursuant to the procedures set 

forth under sections 556 and 557 of title 5, United States Code, 

which hearing shall take place not later than 60 days after the 

petition for review was received by the Director, and to issue a 

proposed decision to the Director based upon the record established at such hearing. 

(2) STANDARD OF REVIEW.—In rendering a determination or 

recommendation under this subsection, neither the Administrative Law Judge nor the Director shall defer to the opinions of 

the examiner or agency, but shall conduct a de novo review to 

independently determine the appropriateness of the agency’s decision based upon the relevant statutes, regulations, and other 

appropriate guidance, as well as evidence adduced at any hearing. 

382 

(d) FINAL DECISION.—A decision by the Director on an independent review under this section shall— 

(1) be made not later than 60 days after the record has been 

closed; and 

(2) subject to subsection (e), be deemed a final agency action 

and shall bind the agency whose supervisory determination was 

the subject of the review and the financial institution requesting 

the review. 

(e) LIMITED REVIEW BY FFIEC.— 

(1) IN GENERAL.—If the agency whose supervisory determination was the subject of the review believes that the Director’s decision under subsection (d) would pose an imminent threat to 

the safety and soundness of the financial institution, such agency may file a written notice seeking review of the Director’s decision with the Council within 10 days of receiving the Director’s 

decision. 

(2) STANDARD OF REVIEW.—In making a determination under 

this subsection, the Council shall conduct a review to determine 

whether there is substantial evidence that the Director’s decision would pose an imminent threat to the safety and soundness of the financial institution. 

(3) FINAL DETERMINATION.—A determination by the Council 

shall— 

(A) be made not later than 30 days after the filing of the 

notice pursuant to paragraph (1); and 

(B) be deemed a final agency action and shall bind the 

agency whose supervisory determination was the subject of 

the review and the financial institution requesting the review. 

(f) RIGHT TO JUDICIAL REVIEW.—A financial institution shall 

have the right to petition for review of final agency action under this 

section by filing a Petition for Review within 60 days of the Director’s decision or the Council’s decision in the United States Court 

of Appeals for the District of Columbia Circuit or the Circuit in 

which the financial institution is located. 

(g) REPORT.—The Director shall report annually to the Committee 

on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate on actions taken under this section, including the types of issues that the 

Director has reviewed and the results of those reviews. In no case 

shall such a report contain information about individual financial 

institutions or any confidential or privileged information shared by 

financial institutions. 

(h) RETALIATION PROHIBITED.—A Federal financial institutions 

regulatory agency may not— 

(1) retaliate against a financial institution, including service 

providers, or any institution-affiliated party (as defined under 

section 3 of the Federal Deposit Insurance Act), for exercising 

appellate rights under this section; or 

(2) delay or deny any agency action that would benefit a financial institution or any institution-affiliated party on the 

basis that an appeal under this section is pending under this 

section. 

(i) RULE OF CONSTRUCTION.—Nothing in this section may be construed— 

383 

(1) to affect the right of a Federal financial institutions regulatory agency to take enforcement or other supervisory actions 

related to a material supervisory determination under review 

under this section; or 

(2) to prohibit the review under this section of a material supervisory determination with respect to which there is an ongoing enforcement or other supervisory action. 

* * * * * * * 

RIEGLE COMMUNITY DEVELOPMENT AND REGULATORY 

IMPROVEMENT ACT OF 1994 

* * * * * * * 

TITLE III—PAPERWORK REDUCTION 

AND REGULATORY IMPROVEMENT 

* * * * * * * 

SEC. 309. REGULATORY APPEALS PROCESS, OMBUDSMAN, AND ALTERNATIVE DISPUTE RESOLUTION. 

(a) IN GENERAL.—Not later than 180 days after the date of enactment of this Act, each appropriate Federal banking agency, the Bureau of Consumer Financial Protection, and the National Credit 

Union Administration Board shall establish an independent intraagency appellate process. The process shall be available to review 

material supervisory determinations made at insured depository institutions or at insured credit unions that the agency supervises. 

(b) REVIEW PROCESS.—In establishing the independent appellate 

process under subsection (a), each agency shall ensure that— 

(1) any appeal of a material supervisory determination by an 

insured depository institution or insured credit union is heard 

and decided expeditiously; and 

(2) appropriate safeguards exist for protecting øthe appellant 

from retaliation by agency examiners¿ the insured depository 

institution or insured credit union from retaliation by the agencies referred to in subsection (a). 

For purposes of this subsection and subsection (e), retaliation includes delaying consideration of, or withholding approval of, any request, notice, or application that otherwise would have been approved, but for the exercise of the institution’s or credit union’s 

rights under this section. 

(c) COMMENT PERIOD.—Not later than 90 days after the date of 

enactment of this Act, each appropriate Federal banking agency 

and the National Credit Union Administration Board shall provide 

public notice and opportunity for comment on proposed guidelines 

for the establishment of an appellate process under this section. 

(d) AGENCY OMBUDSMAN.— 

(1) ESTABLISHMENT REQUIRED.—Not later than 180 days 

after the date of enactment of this Act, each Federal banking 

agency and the National Credit Union Administration Board 

shall appoint an ombudsman. 

(2) DUTIES OF OMBUDSMAN.—The ombudsman appointed in 

accordance with paragraph (1) for any agency shall— 

384 

(A) act as a liaison between the agency and any affected 

person with respect to any problem such party may have 

in dealing with the agency resulting from the regulatory 

activities of the agency; and 

(B) assure that safeguards exist to encourage complainants to come forward and preserve confidentiality. 

(e) ALTERNATIVE DISPUTE RESOLUTION PILOT PROGRAM.— (1) IN GENERAL.—Not later than 18 months after the date of 

enactment of this Act, each Federal banking agency and the 

National Credit Union Administration Board shall develop and 

implement a pilot program for using alternative means of dispute resolution of issues in controversy (hereafter in this section referred to as the ‘‘alternative dispute resolution program’’) that is consistent with the requirements of subchapter 

IV of chapter 5 of title 5, United States Code, if the parties to 

the dispute, including the agency, agree to such proceeding. 

(2) STANDARDS.—An alternative dispute resolution pilot program developed under paragraph (1) shall— 

(A) be fair to all interested parties to a dispute; 

(B) resolve disputes expeditiously; øand¿ 

(C) be less costly than traditional means of dispute resolution, including litigationø.¿; and 

(D) ensure that appropriate safeguards exist for protecting the insured depository institution or insured credit 

union from retaliation by any agency referred to in subsection (a) for exercising its rights under this subsection. 

(3) INDEPENDENT EVALUATION.—Not later than 18 months 

after the date on which a pilot program is implemented under 

paragraph (1), the Administrative Conference of the United 

States shall submit to the Congress a report containing— 

(A) an evaluation of that pilot program; 

(B) the extent to which the pilot programs meet the 

standards established under paragraph (2); 

(C) the extent to which parties to disputes were offered 

alternative means of dispute resolution and the frequency 

with which the parties, including the agencies, accepted or 

declined to use such means; and 

(D) any recommendations of the Conference to improve 

the alternative dispute resolution procedures of the Federal banking agencies and the National Credit Union Administration Board. 

(4) IMPLEMENTATION OF PROGRAM.—At any time after completion of the evaluation under paragraph (3)(A), any Federal 

banking agency and the National Credit Union Administration 

Board may implement an alternative dispute resolution program throughout the agency, taking into account the results of 

that evaluation. 

(5) COORDINATION WITH EXISTING AGENCY ADR PROGRAMS.— 

(A) EVALUATION REQUIRED.—If any Federal banking 

agency or the National Credit Union Administration maintains an alternative dispute resolution program as of the 

date of enactment of this Act under any other provision of 

law, the Administrative Conference of the United States 

shall include such program in the evaluation conducted 

under paragraph (3)(A). 

385 

(B) MULTIPLE ADR PROGRAMS.—No provision of this section shall be construed as precluding any Federal banking 

agency or the National Credit Union Administration Board 

from establishing more than 1 alternative means of dispute resolution. 

(f) DEFINITIONS.—For purposes of this section, the following definitions shall apply: 

(1) MATERIAL SUPERVISORY DETERMINATIONS.—The term 

‘‘material supervisory determinations’’— 

(A) includes determinations relating to— 

(i) examination ratings; 

(ii) the adequacy of loan loss reserve provisions; 

øand¿ 

(iii) loan classifications on loans that are significant 

to an institution; øand¿ 

(iv) any issue specifically listed in an exam report as 

a matter requiring attention by the institution’s management or board of directors; and 

(v) any suspension or removal of an institution’s status as eligible for expedited processing of applications, 

requests, notices, or filings on the grounds of a supervisory or compliance concern, regardless of whether 

that concern has been cited as a basis for another material supervisory determination or matter requiring attention in an examination report, provided that the 

conduct at issue did not involve violation of any criminal law; and 

(B) does not include a determination by a Federal banking agency or the National Credit Union Administration 

Board to appoint a conservator or receiver for an insured 

depository institution or a liquidating agent for an insured 

credit union, as the case may be, or a decision to take action pursuant to section 38 of the Federal Deposit Insurance Act or section 212 of the Federal Credit Union Act, 

as appropriate. 

(2) INDEPENDENT APPELLATE PROCESS.—The term ‘‘independent appellate process’’ means a review by an agency official who does not directly or indirectly report to the agency official who made the material supervisory determination under 

review. 

(3) ALTERNATIVE MEANS OF DISPUTE RESOLUTION.—The term 

‘‘alternative means of dispute resolution’’ has the meaning 

given to such term in section 571 of title 5, United States Code. 

(4) ISSUES IN CONTROVERSY.—The term ‘‘issues in controversy’’ means— 

(A) any final agency decision involving any claim against 

an insured depository institution or insured credit union 

for which the agency has been appointed conservator or receiver or for which a liquidating agent has been appointed, 

as the case may be; 

(B) any final action taken by an agency in the agency’s 

capacity as conservator or receiver for an insured depository institution or by the liquidating agent appointed for 

an insured credit union; and 

386 

(C) any other issue for which the appropriate Federal 

banking agency or the National Credit Union Administration Board determines that alternative means of dispute 

resolution would be appropriate. 

(g) EFFECT ON OTHER AUTHORITY.—Nothing in this section shall 

affect the authority of an appropriate Federal banking agency or 

the National Credit Union Administration Board to take enforcement or supervisory action. 

* * * * * * * 

FEDERAL CREDIT UNION ACT 

* * * * * * * 

TITLE II—SHARE INSURANCE 

* * * * * * * 

REQUIREMENTS GOVERNING INSURED CREDIT UNIONS

SEC. 205. (a) INSURANCE LOGO.— (1) INSURED CREDIT UNIONS.— (A) IN GENERAL.—Each insured credit union shall display at each place of business maintained by that credit 

union a sign or signs relating to the insurance of the share 

accounts of the institution, in accordance with regulations 

to be prescribed by the Board. 

(B) STATEMENT TO BE INCLUDED.—Each sign required 

under subparagraph (A) shall include a statement that insured share accounts are backed by the full faith and credit of the United States Government. 

(2) REGULATIONS.—The Board shall prescribe regulations to 

carry out this subsection, including regulations governing the 

substance of signs required by paragraph (1) and the manner 

of display or use of such signs. 

(3) PENALTIES.—For each day that an insured credit union 

continues to violate this subsection or any regulation issued 

under this subsection, it shall be subject to a penalty of not 

more than $100, which the Board may recover for its use. 

(b)(1) Except as provided in paragraph (2), no insured credit 

union shall, without the prior approval of the Board— 

(A) merge or consolidate with any noninsured credit union or 

institution; 

(B) assume liability to pay any member accounts in, or similar liabilities of, any noninsured credit union or institution; 

(C) transfer assets to any noninsured credit union or institution in consideration of the assumption of liabilities for any 

portion of the member accounts in such insured credit union; 

or 

(D) convert into a noninsured credit union or institution. 

(2) CONVERSION OF INSURED CREDIT UNIONS TO MUTUAL SAVINGS BANKS.— 

(A) IN GENERAL.—Notwithstanding paragraph (1), an insured credit union may convert to a mutual savings bank 

or savings association (if the savings association is in muVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00390 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
387 

tual form), as those terms are defined in section 3 of the 

Federal Deposit Insurance Act, without the prior approval 

of the Board, subject to the requirements and procedures 

set forth in the laws and regulations governing mutual 

savings banks and savings associations. 

(B) CONVERSION PROPOSAL.—A proposal for a conversion 

described in subparagraph (A) shall first be approved, and 

a date set for a vote thereon by the members (either at a 

meeting to be held on that date or by written ballot to be 

filed on or before that date), by a majority of the directors 

of the insured credit union. Approval of the proposal for 

conversion shall be by the affirmative vote of a majority of 

the members of the insured credit union who vote on the 

proposal. 

(C) NOTICE OF PROPOSAL TO MEMBERS.—An insured credit union that proposes to convert to a mutual savings bank 

or savings association under subparagraph (A) shall submit notice to each of its members who is eligible to vote 

on the matter of its intent to convert— 

(i) 90 days before the date of the member vote on 

the conversion; 

(ii) 60 days before the date of the member vote on 

the conversion; and 

(iii) 30 days before the date of the member vote on 

the conversion. 

(D) NOTICE OF PROPOSAL TO BOARD.—The Board may require an insured credit union that proposes to convert to 

a mutual savings bank or savings association under subparagraph (A) to submit a notice to the Board of its intent 

to convert during the 90-day period preceding the date of 

the completion of the conversion. 

(E) INAPPLICABILITY OF ACT UPON CONVERSION.—Upon 

completion of a conversion described in subparagraph (A), 

the credit union shall no longer be subject to any of the 

provisions of this Act. 

(F) LIMIT ON COMPENSATION OF OFFICIALS.— 

(i) IN GENERAL.—No director or senior management 

official of an insured credit union may receive any economic benefit in connection with a conversion of the 

credit union as described in subparagraph (A), other 

than— 

(I) director fees; and 

(II) compensation and other benefits paid to directors or senior management officials of the converted institution in the ordinary course of business. 

(ii) SENIOR MANAGEMENT OFFICIAL.—For purposes of 

this subparagraph, the term ‘‘senior management official’’ means a chief executive officer, an assistant chief 

executive officer, a chief financial officer, and any 

other senior executive officer (as defined by the appropriate Federal banking agency pursuant to section 32 

(f) of the Federal Deposit Insurance Act). 

(G) CONSISTENT RULES.— 

388 

(i) IN GENERAL.—Not later than 6 months after the 

date of enactment of the Credit Union Membership Access Act, the Administration shall promulgate final 

rules applicable to charter conversions described in 

this paragraph that are consistent with rules promulgated by other financial regulators, including the Office of the Comptroller of the Currency. The rules required by this clause shall provide that charter conversion by an insured credit union shall be subject to 

regulation that is no more or less restrictive than that 

applicable to charter conversions by other financial institutions. 

(ii) OVERSIGHT OF MEMBER VOTE.—The member vote 

concerning charter conversion under this paragraph 

shall be administered by the Administration, and shall 

be verified by the Federal or State regulatory agency 

that would have jurisdiction over the institution after 

the conversion. If either the Administration or that 

regulatory agency disapproves of the methods by 

which the member vote was taken or procedures applicable to the member vote, the member vote shall be 

taken again, as directed by the Administration or the 

agency. 

(3) Except with the prior written approval of the Board, no insured credit union shall merge or consolidate with any other insured credit union or, either directly or indirectly, acquire the assets of, or assume liability to pay any member accounts in, any 

other insured credit union. 

(c) In granting or withholding approval or consent under subsection (b) of this section, the Board shall consider— 

(1) the history, financial condition, and management policies 

of the credit union; 

(2) the adequacy of the credit union’s reserves; 

(3) the economic advisability of the transaction; 

(4) the general character and fitness of the credit union’s 

management; 

(5) the convenience and needs of the members to be served 

by the credit union; and 

(6) whether the credit union is a cooperative association organized for the purpose of promoting thrift among its members 

and creating a source of credit for provident or productive purposes. 

(d) PROHIBITION.— 

(1) IN GENERAL.—Except with prior written consent of the 

Board— 

(A) any person who has been convicted of any criminal 

offense involving dishonesty or a breach of trust, or has 

agreed to enter into a pretrial diversion or similar program 

in connection with a prosecution for such offense, may 

not— 

(i) become, or continue as, an institution-affiliated 

party with respect to any insured credit union; or 

(ii) otherwise participate, directly or indirectly, in 

the conduct of the affairs of any insured credit union; 

and 

389 

(B) any insured credit union may not permit any person 

referred to in subparagraph (A) to engage in any conduct 

or continue any relationship prohibited under such subparagraph. 

(2) MINIMUM 10-YEAR PROHIBITION PERIOD FOR CERTAIN OF- FENSES.— 

(A) IN GENERAL.—If the offense referred to in paragraph 

(1)(A) in connection with any person referred to in such 

paragraph is— 

(i) an offense under— 

(I) section 215, 656, 657, 1005, 1006, 1007, 1008, 

1014, 1032, 1344, 1517, 1956, or 1957 of title 18, 

United States Code; or 

(II) section 1341 or 1343 of such title which affects any financial institution (as defined in section 20 of such title); or 

(ii) the offense of conspiring to commit any such offense, 

the Board may not consent to any exception to the application of paragraph (1) to such person during the 10-year period beginning on the date the conviction or the agreement 

of the person becomes final. 

(B) EXCEPTION BY ORDER OF SENTENCING COURT.— (i) IN GENERAL.—On motion of the Board, the court 

in which the conviction or the agreement of a person 

referred to in subparagraph (A) has been entered may 

grant an exception to the application of paragraph (1) 

to such person if granting the exception is in the interest of justice. 

(ii) PERIOD FOR FILING.—A motion may be filed 

under clause (i) at any time during the 10-year period 

described in subparagraph (A) with regard to the person on whose behalf such motion is made. 

(3) PENALTY.—Whoever knowingly violates paragraph (1) or 

(2) shall be fined not more than $1,000,000 for each day such 

prohibition is violated or imprisoned for not more than 5 years, 

or both. 

(e)(1) The Board shall promulgate rules establishing minimum 

standards with which each insured credit union must comply with 

respect to the installation, maintenance, and operation of security 

devices and procedures, reasonable in cost, to discourage robberies, 

burglaries, and larcenies and to assist in the identification and apprehension of persons who commit such acts. 

(2) The rules shall establish the time limits within which insured 

credit unions shall comply with the standards and shall require the 

submission of periodic reports with respect to the installation, 

maintenance, and operation of security devices and procedures. 

(3) An insured credit union which violates a rule promulgated 

pursuant to this subsection shall be subject to a civil penalty which 

shall not exceed $100 for each day of the violation. 

(f)(1) Every insured credit union is authorized to maintain, and 

make loans with respect to, share draft accounts in accordance 

with rules and regulations prescribed by the Board. Except as provided in paragraph (2), an insured credit union may pay dividends 

on share draft accounts and may permit the owners of such share 

390 

draft accounts to make withdrawals by negotiable or transferable 

instruments or other orders for the purpose of making transfers to 

third parties. 

(2) Paragraph (1) shall apply only with respect to share draft accounts in which the entire beneficial interest is held by one or more 

individuals or members or by an organization which is operated 

primarily for religious, philanthropic, charitable, educational, or 

other similar purposes and which is not operated for profit, and 

with respect to deposits of public funds by an officer, employee, or 

agent of the United States, any State, county, municipality, or political subdivision thereof, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, any territory or 

possession of the United States, or any political subdivision thereof. 

(g)(1) If the applicable rate prescribed in this subsection exceeds 

the rate an insured credit union would be permitted to charge in 

the absence of this subsection, such credit union may, notwithstanding any State constitution or statute which is hereby preempted for the purposes of this subsection, take, receive, reserve, 

and charge on any loan, interest at a rate of not more than 1 per 

centum in excess of the discount rate on ninety-day commercial 

paper in effect at the Federal Reserve bank in the Federal Reserve 

district where such insured credit union is located or at the rate 

allowed by the laws of the State, territory, or district where such 

credit union is located, whichever may be greater. 

(2) If the rate prescribed in paragraph (1) exceeds the rate such 

credit union would be permitted to charge in the absence of this 

subsection, and such State fixed rate is thereby preempted by the 

rate described in paragraph (1), the taking, receiving, reserving, or 

charging a greater rate than is allowed by paragraph (1), when 

knowingly done, shall be deemed a forfeiture of the entire interest 

which the loan carries with it, or which has been agreed to be paid 

thereon. If such greater rate of interest has been paid, the person 

who paid it may recover, in a civil action commenced in a court of 

appropriate jurisdiction not later than two years after the date of 

such payment, an amount equal to twice the amount of interest 

paid from the credit union taking or receiving such interest. 

(h) Notwithstanding any other provision of law, the Board may 

authorize a merger or consolidation of an insured credit union 

which is insolvent or is in danger of insolvency with any other insured credit union or may authorize an insured credit union to purchase any of the assets of, or assume any of the liabilities of, any 

other insured credit union which is insolvent or in danger of insolvency if the Board is satisfied that— 

(1) an emergency requiring expeditious action exists with respect to such other insured credit union; 

(2) other alternatives are not reasonably available; and 

(3) the public interest would best be served by approval of 

such merger, consolidation, purchase, or assumption. 

(i)(1) Notwithstanding any other provision of this Act or of State 

law, the Board may authorize an institution whose deposits or accounts are insured by the Federal Deposit Insurance Corporation 

to purchase any of the assets of or assume any of the liabilities of 

an insured credit union which is insolvent or in danger of insolvency, except that prior to exercising this authority the Board must 

attempt to effect the merger or consolidation of an insured credit 

391 

union which is insolvent or in danger of insolvency with another 

insured credit union, as provided in subsection (h). 

(2) For purposes of the authority contained in paragraph (1), insured accounts of the credit union may upon consummation of the 

purchase and assumption be converted to insured deposits or other 

comparable accounts in the acquiring institution, and the Board 

and the National Credit Union Share Insurance Fund shall be absolved of any liability to the credit union’s members with respect 

to those accounts. 

(j) PRIVILEGES NOT AFFECTED BY DISCLOSURE TO BANKING AGEN- CY OR SUPERVISOR.— (1) IN GENERAL.—The submission by any person of any information to the Bureau of Consumer Financial Protection, the 

Administration, any State credit union supervisor, or foreign 

banking authority for any purpose in the course of any supervisory or regulatory process of such Board, supervisor, or authority shall not be construed as waiving, destroying, or otherwise affecting any privilege such person may claim with respect to such information under Federal or State law as to any 

person or entity other than such Board, supervisor, or authority. 

(2) RULE OF CONSTRUCTION.—No provision of paragraph (1) 

may be construed as implying or establishing that— 

(A) any person waives any privilege applicable to information that is submitted or transferred under any circumstance to which paragraph (1) does not apply; or 

(B) any person would waive any privilege applicable to 

any information by submitting the information to the Bureau of Consumer Financial Protection, the Administration, any State credit union supervisor, or foreign banking 

authority, but for this subsection. 

* * * * * * * 

REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 

* * * * * * * 

UNIFORM SETTLEMENT STATEMENT

SEC. 4. (a) The Bureau shall publish a single, integrated disclosure for mortgage loan transactions (including real estate settlement cost statements) which includes the disclosure requirements 

of this section and section 5, in conjunction with the disclosure requirements of the Truth in Lending Act that, taken together, may 

apply to a transaction that is subject to both or either provisions 

of law. The purpose of such model disclosure shall be to facilitate 

compliance with the disclosure requirements of this title and the 

Truth in Lending Act, and to aid the borrower or lessee in understanding the transaction by utilizing readily understandable language to simplify the technical nature of the disclosures. Such 

forms shall conspicuously and clearly øitemize all charges¿ itemize 

all actual charges imposed upon the borrower øand all charges imposed upon the seller in connection with the settlement and¿ and 

the seller in connection with the settlement. Such forms shall indicate whether any title insurance premium included in such charges 

392 

covers or insures the lender’s interest in the property, the borrower’s interest, or both. Charges for any title insurance premium 

disclosed on such forms shall be equal to the amount charged for 

each individual title insurance policy, subject to any discounts as 

required by State regulation or the title company rate filings. The 

Bureau may, by regulation, permit the deletion from the forms prescribed under this section of items which are not, under local laws 

or customs, applicable in any locality, except that such regulation 

shall require that the numerical code prescribed by the Bureau be 

retained in forms to be used in all localities. Nothing in this section 

may be construed to require that that part of the standard forms 

which relates to the borrower’s transaction to be furnished to the 

seller, or to require that that part of the standard forms which relates to the seller be furnished to the borrower. 

(b) The forms prescribed under this section shall be completed 

and made available for inspection by the borrower at or before settlement by the person conducting the settlement, except that (1) 

the Bureau may exempt from the requirements of this section settlements occurring in localities where the final settlement statement is not customarily provided at or before the date of settlement, or settlements where such requirements are impractical and 

(2) the borrower may, in accordance with regulations of the Bureau, waive his right to have the forms made available at such 

time. Upon the request of the borrower to inspect the forms prescribed under this section during the business day immediately 

preceding the day of settlement, the person who will conduct the 

settlement shall permit the borrower to inspect those items which 

are known to such person during such preceding day. 

(c) The standard form described in subsection (a) may include, in 

the case of an appraisal coordinated by an appraisal management 

company (as such term is defined in section 1121(11) of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 

(12 U.S.C. 3350(11))), a clear disclosure of— 

(1) the fee paid directly to the appraiser by such company; 

and 

(2) the administration fee charged by such company. 

* * * * * * * 

INSPECTOR GENERAL ACT OF 1978 

* * * * * * * 

REQUIREMENTS FOR FEDERAL ENTITIES AND DESIGNATED FEDERAL

ENTITIES

SEC. 8G. (a) Notwithstanding section 12 of this Act, as used in 

this section— 

(1) the term ‘‘Federal entity’’ means any Government corporation (within the meaning of section 103(1) of title 5, United 

States Code), any Government controlled corporation (within 

the meaning of section 103(2) of such title), or any other entity 

in the Executive branch of the Government, or any independent regulatory agency, but does not include— 

(A) an establishment (as defined under section 12(2) of 

this Act) or part of an establishment; 

393 

(B) a designated Federal entity (as defined under paragraph (2) of this subsection) or part of a designated Federal entity; 

(C) the Executive Office of the President; 

(D) the Central Intelligence Agency; 

(E) the General Accounting Office; or 

(F) any entity in the judicial or legislative branches of 

the Government, including the Administrative Office of the 

United States Courts and the Architect of the Capitol and 

any activities under the direction of the Architect of the 

Capitol; 

(2) the term ‘‘designated Federal entity’’ means Amtrak, the 

Appalachian Regional Commission, the Board of Governors of 

the Federal Reserve System øand the Bureau of Consumer Financial Protection¿, the Board for International Broadcasting, 

the Committee for Purchase From People Who Are Blind or Severely Disabled, the Commodity Futures Trading Commission, 

the Consumer Product Safety Commission, the Corporation for 

Public Broadcasting, the Defense Intelligence Agency, the 

Equal Employment Opportunity Commission, the Farm Credit 

Administration, the Federal Deposit Insurance Corporation, 

the Federal Election Commission, the Election Assistance Commission, the Federal Housing Finance Board, the Federal 

Labor Relations Authority, the Federal Maritime Commission, 

the Federal Trade Commission, the Legal Services Corporation, 

the National Archives and Records Administration, the National Credit Union Administration, the National Endowment 

for the Arts, the National Endowment for the Humanities, the 

National Geospatial-Intelligence Agency, the National Labor 

Relations Board, the National Science Foundation, the Panama 

Canal Commission, the Peace Corps, the Pension Benefit Guaranty Corporation, the Securities and Exchange Commission, 

the Smithsonian Institution, the United States International 

Trade Commission, the Postal Regulatory Commission, and the 

United States Postal Service; 

(3) the term ‘‘head of the Federal entity’’ means any person 

or persons designated by statute as the head of a Federal entity, and if no such designation exists, the chief policymaking officer or board of a Federal entity as identified in the list published pursuant to subsection (h)(1) of this section; 

(4) the term ‘‘head of the designated Federal entity’’ means 

the board or commission of the designated Federal entity, or in 

the event the designated Federal entity does not have a board 

or commission, any person or persons designated by statute as 

the head of a designated Federal entity and if no such designation exists, the chief policymaking officer or board of a designated Federal entity as identified in the list published pursuant to subsection (h)(1) of this section, except that— 

(A) with respect to the National Science Foundation, 

such term means the National Science Board; 

(B) with respect to the United States Postal Service, 

such term means the Governors (within the meaning of 

section 102(3) of title 39, United States Code); 

394 

(C) with respect to the Federal Labor Relations Authority, such term means the members of the Authority (described under section 7104 of title 5, United States Code); 

(D) with respect to the Committee for Purchase From 

People Who Are Blind or Severely Disabled, such term 

means the Chairman of the Committee for Purchase From 

People Who Are Blind or Severely Disabled; 

(E) with respect to the National Archives and Records 

Administration, such term means the Archivist of the 

United States; 

(F) with respect to the National Credit Union Administration, such term means the National Credit Union Administration Board (described under section 102 of the 

Federal Credit Union Act (12 U.S.C. 1752a); 

(G) with respect to the National Endowment of the Arts, 

such term means the National Council on the Arts; 

(H) with respect to the National Endowment for the Humanities, such term means the National Council on the 

Humanities; and 

(I) with respect to the Peace Corps, such term means the 

Director of the Peace Corps; 

(5) the term ‘‘Office of Inspector General’’ means an Office of 

Inspector General of a designated Federal entity; and 

(6) the term ‘‘Inspector General’’ means an Inspector General 

of a designated Federal entity. 

(b) No later than 180 days after the date of the enactment of this 

section, there shall be established and maintained in each designated Federal entity an Office of Inspector General. The head of 

the designated Federal entity shall transfer to such office the offices, units, or other components, and the functions, powers, or duties thereof, that such head determines are properly related to the 

functions of the Office of Inspector General and would, if so transferred, further the purposes of this section. There shall not be 

transferred to such office any program operating responsibilities. 

(c) Except as provided under subsection (f) of this section, the Inspector General shall be appointed by the head of the designated 

Federal entity in accordance with the applicable laws and regulations governing appointments within the designated Federal entity. 

Each Inspector General shall be appointed without regard to political affiliation and solely on the basis of integrity and demonstrated 

ability in accounting, auditing, financial analysis, law, management analysis, public administration, or investigations. øFor purposes of implementing this section, the Chairman of the Board of 

Governors of the Federal Reserve System shall appoint the Inspector General of the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection. The Inspector General of the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection shall have 

all of the authorities and responsibilities provided by this Act with 

respect to the Bureau of Consumer Financial Protection, as if the 

Bureau were part of the Board of Governors of the Federal Reserve 

System.¿ 

(d)(1) Each Inspector General shall report to and be under the 

general supervision of the head of the designated Federal entity, 

but shall not report to, or be subject to supervision by, any other 

395 

officer or employee of such designated Federal entity. Except as 

provided in paragraph (2), the head of the designated Federal entity shall not prevent or prohibit the Inspector General from initiating, carrying out, or completing any audit or investigation, or 

from issuing any subpoena during the course of any audit or investigation. 

(2)(A) The Secretary of Defense, in consultation with the Director 

of National Intelligence, may prohibit the inspector general of an 

element of the intelligence community specified in subparagraph 

(D) from initiating, carrying out, or completing any audit or investigation, or from accessing information available to an element of 

the intelligence community specified in subparagraph (D),, or from 

accessing information available to an element of the intelligence 

community specified in subparagraph (D), if the Secretary determines that the prohibition is necessary to protect vital national security interests of the United States. 

(B) If the Secretary exercises the authority under subparagraph 

(A), the Secretary shall submit to the committees of Congress specified in subparagraph (E) an appropriately classified statement of 

the reasons for the exercise of such authority not later than 7 days 

after the exercise of such authority. 

(C) At the same time the Secretary submits under subparagraph 

(B) a statement on the exercise of the authority in subparagraph 

(A) to the committees of Congress specified in subparagraph (E), 

the Secretary shall notify the inspector general of such element of 

the submittal of such statement and, to the extent consistent with 

the protection of intelligence sources and methods, provide such inspector general with a copy of such statement. Such inspector general may submit to such committees of Congress any comments on 

a notice or statement received by the inspector general under this 

subparagraph that the inspector general considers appropriate. 

(D) The elements of the intelligence community specified in this 

subparagraph are as follows: 

(i) The Defense Intelligence Agency. 

(ii) The National Geospatial-Intelligence Agency. 

(iii) The National Reconnaissance Office. 

(iv) The National Security Agency. 

(E) The committees of Congress specified in this subparagraph 

are— 

(i) the Committee on Armed Services and the Select Committee on Intelligence of the Senate; and 

(ii) the Committee on Armed Services and the Permanent Select Committee on Intelligence of the House of Representatives. 

(e)(1) In the case of a designated Federal entity for which a 

board, chairman of a committee, or commission is the head of the 

designated Federal entity, a removal under this subsection may 

only be made upon the written concurrence of a 2⁄3 majority of the 

board, committee, or commission.’’. 

(2) If an Inspector General is removed from office or is transferred to another position or location within a designated Federal 

entity, the head of the designated Federal entity shall communicate 

in writing the reasons for any such removal or transfer to both 

Houses of Congress, not later than 30 days before the removal or 

transfer. Nothing in this subsection shall prohibit a personnel action otherwise authorized by law, other than transfer or removal. 

396 

(f)(1) For purposes of carrying out subsection (c) with respect to 

the United States Postal Service, the appointment provisions of 

section 202(e) of title 39, United States Code, shall be applied. 

(2) In carrying out the duties and responsibilities specified in this 

Act, the Inspector General of the United States Postal Service 

(hereinafter in this subsection referred to as the ‘‘Inspector General’’) shall have oversight responsibility for all activities of the 

Postal Inspection Service, including any internal investigation performed by the Postal Inspection Service. The Chief Postal Inspector 

shall promptly report the significant activities being carried out by 

the Postal Inspection Service to such Inspector General. 

(3)(A)(i) Notwithstanding subsection (d), the Inspector General 

shall be under the authority, direction, and control of the Governors with respect to audits or investigations, or the issuance of 

subpoenas, which require access to sensitive information concerning— 

(I) ongoing civil or criminal investigations or proceedings; 

(II) undercover operations; 

(III) the identity of confidential sources, including protected 

witnesses; 

(IV) intelligence or counterintelligence matters; or 

(V) other matters the disclosure of which would constitute a 

serious threat to national security. 

(ii) With respect to the information described under clause (i), 

the Governors may prohibit the Inspector General from carrying 

out or completing any audit or investigation, or from issuing any 

subpoena, after such Inspector General has decided to initiate, 

carry out, or complete such audit or investigation or to issue such 

subpoena, if the Governors determine that such prohibition is necessary to prevent the disclosure of any information described under 

clause (i) or to prevent the significant impairment to the national 

interests of the United States. 

(iii) If the Governors exercise any power under clause (i) or (ii), 

the Governors shall notify the Inspector General in writing stating 

the reasons for such exercise. Within 30 days after receipt of any 

such notice, the Inspector General shall transmit a copy of such notice to the Committee on Governmental Affairs of the Senate and 

the Committee on Government Reform and Oversight of the House 

of Representatives, and to other appropriate committees or subcommittees of the Congress. 

(B) In carrying out the duties and responsibilities specified in 

this Act, the Inspector General— 

(i) may initiate, conduct and supervise such audits and investigations in the United States Postal Service as the Inspector General considers appropriate; and 

(ii) shall give particular regard to the activities of the Postal 

Inspection Service with a view toward avoiding duplication and 

insuring effective coordination and cooperation. 

(C) Any report required to be transmitted by the Governors to 

the appropriate committees or subcommittees of the Congress 

under section 5(d) shall also be transmitted, within the seven-day 

period specified under such section, to the Committee on Governmental Affairs of the Senate and the Committee on Government 

Reform and Oversight of the House of Representatives. 

397 

(4) Nothing in this Act shall restrict, eliminate, or otherwise adversely affect any of the rights, privileges, or benefits of either employees of the United States Postal Service, or labor organizations 

representing employees of the United States Postal Service, under 

chapter 12 of title 39, United States Code, the National Labor Relations Act, any handbook or manual affecting employee labor relations with the United States Postal Service, or any collective bargaining agreement. 

(5) As used in this subsection, the term ‘‘Governors’’ has the 

meaning given such term by section 102(3) of title 39, United 

States Code. 

(6) There are authorized to be appropriated, out of the Postal 

Service Fund, such sums as may be necessary for the Office of 

Inspector General of the United States Postal Service. 

(g)(1) Sections 4, 5, 6 (other than subsections (a)(7) and (a)(8) 

thereof), and 7 of this Act shall apply to each Inspector General 

and Office of Inspector General of a designated Federal entity and 

such sections shall be applied to each designated Federal entity 

and head of the designated Federal entity (as defined under subsection (a)) by substituting— 

(A) ‘‘designated Federal entity’’ for ‘‘establishment’’; and 

(B) ‘‘head of the designated Federal entity’’ for ‘‘head of the 

establishment’’. 

(2) In addition to the other authorities specified in this Act, an 

Inspector General is authorized to select, appoint, and employ such 

officers and employees as may be necessary for carrying out the 

functions, powers, and duties of the Office of Inspector General and 

to obtain the temporary or intermittent services of experts or consultants or an organization thereof, subject to the applicable laws 

and regulations that govern such selections, appointments, and employment, and the obtaining of such services, within the designated 

Federal entity. 

(3) Notwithstanding the last sentence of subsection (d) of this 

section, the provisions of subsection (a) of section 8D (other than 

the provisions of subparagraphs (A), (B), (C), and (E) of subsection 

(a)(1)) shall apply to the Inspector General of the Board of Governors of the Federal Reserve System øand the Bureau of Consumer Financial Protection¿ and the Chairman of the Board of 

Governors of the Federal Reserve System in the same manner as 

such provisions apply to the Inspector General of the Department 

of the Treasury and the Secretary of the Treasury, respectively. 

(4) Each Inspector General shall— 

(A) in accordance with applicable laws and regulations governing 

appointments within the designated Federal entity, appoint a 

Counsel to the Inspector General who shall report to the Inspector 

General; 

(B) obtain the services of a counsel appointed by and directly reporting to another Inspector General on a reimbursable basis; or 

(C) obtain the services of appropriate staff of the Council of the 

Inspectors General on Integrity and Efficiency on a reimbursable 

basis. 

(h)(1) No later than April 30, 1989, and annually thereafter, the 

Director of the Office of Management and Budget, after consultation with the Comptroller General of the United States, shall publish in the Federal Register a list of the Federal entities and desVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00401 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
398 

ignated Federal entities and if the designated Federal entity is not 

a board or commission, include the head of each such entity (as defined under subsection (a) of this section). 

(2) Beginning on October 31, 1989, and on October 31 of each 

succeeding calendar year, the head of each Federal entity (as defined under subsection (a) of this section) shall prepare and transmit to the Director of the Office of Management and Budget and 

to each House of the Congress a report which— 

(A) states whether there has been established in the Federal 

entity an office that meets the requirements of this section; 

(B) specifies the actions taken by the Federal entity otherwise to ensure that audits are conducted of its programs and 

operations in accordance with the standards for audit of governmental organizations, programs, activities, and functions 

issued by the Comptroller General of the United States, and 

includes a list of each audit report completed by a Federal or 

non-Federal auditor during the reporting period and a summary of any particularly significant findings; and 

(C) summarizes any matters relating to the personnel, programs, and operations of the Federal entity referred to prosecutive authorities, including a summary description of any preliminary investigation conducted by or at the request of the 

Federal entity concerning these matters, and the prosecutions 

and convictions which have resulted. 

* * * * * * * 

DEFINITIONS

SEC. 12. As used in this Act— 

(1) the term ‘‘head of the establishment’’ means the Secretary of Agriculture, Commerce, Defense, Education, Energy, 

Health and Human Services, Housing and Urban Development, the Interior, Labor, State, Transportation, Homeland Security, or the Treasury; the Attorney General; the Administrator of the Agency for International Development, Environmental Protection, General Services, National Aeronautics and 

Space, or Small Business, or Veterans’ Affairs; the Director of 

the Federal Emergency Management Agency, or the Office of 

Personnel Management; the Chairman of the Nuclear Regulatory Commission, the Federal Communications Commission, 

or the Railroad Retirement Board; the Chairperson of the 

Thrift Depositor Protection Oversight Board; the Chief Executive Officer of the Corporation for National and Community 

Service; the Administrator of the Community Development Financial Institutions Fund; the chief executive officer of the 

Resolution Trust Corporation; the Chairperson of the Federal 

Deposit Insurance Corporation; the Commissioner of Social Security, Social Security Administration; the Director of the Federal Housing Finance Agency; the Board of Directors of the 

Tennessee Valley Authority; the President of the Export-Import Bank; the Director of the Bureau of Consumer Financial 

Protection; the Federal Cochairpersons of the Commissions established under section 15301 of title 40, United States Code; 

the Director of the National Security Agency;or the Director of 

the National Reconnaissance Office; as the case may be; 

399 

(2) the term ‘‘establishment’’ means the Department of Agriculture, Commerce, Defense, Education, Energy, Health and 

Human Services, Housing and Urban Development, the Interior, Justice, Labor, State, Transportation, Homeland Security, 

or the Treasury; the Agency for International Development, the 

Community Development Financial Institutions Fund, the Environmental Protection Agency, the Federal Communications 

Commission, the Federal Emergency Management Agency, the 

General Services Administration, the National Aeronautics and 

Space Administration, the Nuclear Regulatory Commission, the 

Office of Personnel Management, the Railroad Retirement 

Board, the Resolution Trust Corporation, the Federal Deposit 

Insurance Corporation, the Small Business Administration, the 

Corporation for National and Community Service, or the Veterans’ Administration, the Social Security Administration, the 

Federal Housing Finance Agency, the Tennessee Valley Authority, the Export-Import Bank, the Bureau of Consumer Financial Protection, the Commissions established under section 

15301 of title 40, United States Code, the National Security 

Agency,or the National Reconnaissance Office, as the case may 

be; 

(3) the term ‘‘Inspector General’’ means the Inspector General of an establishment; 

(4) the term ‘‘Office’’ means the Office of Inspector General 

of an establishment; and 

(5) the term ‘‘Federal agency’’ means an agency as defined in 

section 552(f) of title 5 (including an establishment as defined 

in paragraph (2)), United States Code, but shall not be construed to include the General Accounting Office. 

* * * * * * * 

CONSUMER FINANCIAL PROTECTION ACT OF 2010 

* * * * * * * 

TITLE X—BUREAU OF CONSUMER 

FINANCIAL PROTECTION 

* * * * * * * 

Subtitle A—Bureau of Consumer Financial 

Protection 

SEC. 1011. ESTABLISHMENT OF THE BUREAU OF CONSUMER FINANCIAL PROTECTION. 

(a) BUREAU ESTABLISHED.—There is established in the Federal 

Reserve System, an independent bureau to be known as the ‘‘Bureau of Consumer Financial Protection’’, which shall regulate the 

offering and provision of consumer financial products or services 

under the Federal consumer financial laws. The Bureau shall be 

considered an Executive agency, as defined in section 105 of title 

5, United States Code. Except as otherwise provided expressly by 

400 

law, all Federal laws dealing with public or Federal contracts, 

property, works, officers, employees, budgets, or funds, including 

the provisions of chapters 5 and 7 of title 5, shall apply to the exercise of the powers of the Bureau. 

(b) DIRECTOR AND DEPUTY DIRECTOR.— (1) IN GENERAL.—There is established the position of the Director, who shall serve as the head of the Bureau. 

(2) APPOINTMENT.—Subject to paragraph (3), the Director 

shall be appointed by the President, by and with the advice 

and consent of the Senate. 

(3) QUALIFICATION.—The President shall nominate the Director from among individuals who are citizens of the United 

States. 

(4) COMPENSATION.—The Director shall be compensated at 

the rate prescribed for level II of the Executive Schedule under 

section 5313 of title 5, United States Code. 

(5) DEPUTY DIRECTOR.—There is established the position of 

Deputy Director, who shall— 

(A) be appointed by the Director; and 

(B) serve as acting Director in the absence or unavailability of the Director. 

(c) TERM.— (1) IN GENERAL.—The Director shall serve for a term of 5 

years. 

(2) EXPIRATION OF TERM.—An individual may serve as Director after the expiration of the term for which appointed, until 

a successor has been appointed and qualified. 

ø(3) REMOVAL FOR CAUSE.—The President may remove the 

Director for inefficiency, neglect of duty, or malfeasance in office.¿ 

(d) SERVICE RESTRICTION.—No Director or Deputy Director may 

hold any office, position, or employment in any Federal reserve 

bank, Federal home loan bank, covered person, or service provider 

during the period of service of such person as Director or Deputy 

Director. 

(e) OFFICES.—The principal office of the Bureau shall be in the 

District of Columbia. The Director may establish regional offices of 

the Bureau, including in cities in which the Federal reserve banks, 

or branches of such banks, are located, in order to carry out the 

responsibilities assigned to the Bureau under the Federal consumer 

financial laws. 

* * * * * * * 

SEC. 1017. FUNDING; PENALTIES AND FINES. 

(a) øTRANSFER OF FUNDS FROM BOARD OF GOVERNORS.—¿ BUDGET, FINANCIAL MANAGEMENT, AND AUDIT.— 

ø(1) IN GENERAL.—Each year (or quarter of such year), beginning on the designated transfer date, and each quarter thereafter, the Board of Governors shall transfer to the Bureau from 

the combined earnings of the Federal Reserve System, the 

amount determined by the Director to be reasonably necessary 

to carry out the authorities of the Bureau under Federal consumer financial law, taking into account such other sums made 

available to the Bureau from the preceding year (or quarter of 

such year). 

401 

ø(2) FUNDING CAP.— ø(A) IN GENERAL.—Notwithstanding paragraph (1), and 

in accordance with this paragraph, the amount that shall 

be transferred to the Bureau in each fiscal year shall not 

exceed a fixed percentage of the total operating expenses 

of the Federal Reserve System, as reported in the Annual 

Report, 2009, of the Board of Governors, equal to— 

ø(i) 10 percent of such expenses in fiscal year 2011; 

ø(ii) 11 percent of such expenses in fiscal year 2012; 

and 

ø(iii) 12 percent of such expenses in fiscal year 2013, 

and in each year thereafter. 

ø(B) ADJUSTMENT OF AMOUNT.—The dollar amount referred to in subparagraph (A)(iii) shall be adjusted annually, using the percent increase, if any, in the employment 

cost index for total compensation for State and local government workers published by the Federal Government, or 

the successor index thereto, for the 12-month period ending on September 30 of the year preceding the transfer. 

ø(C) REVIEWABILITY.—Notwithstanding any other provision in this title, the funds derived from the Federal Reserve System pursuant to this subsection shall not be subject to review by the Committees on Appropriations of the 

House of Representatives and the Senate. 

ø(3) TRANSITION PERIOD.—Beginning on the date of enactment of this Act and until the designated transfer date, the 

Board of Governors shall transfer to the Bureau the amount 

estimated by the Secretary needed to carry out the authorities 

granted to the Bureau under Federal consumer financial law, 

from the date of enactment of this Act until the designated 

transfer date. 

ø(4)¿ (1) BUDGET AND FINANCIAL MANAGEMENT.— 

(A) FINANCIAL OPERATING PLANS AND FORECASTS.—The 

Director shall provide to the Director of the Office of Management and Budget copies of the financial operating 

plans and forecasts of the Director, as prepared by the Director in the ordinary course of the operations of the Bureau, and copies of the quarterly reports of the financial 

condition and results of operations of the Bureau, as prepared by the Director in the ordinary course of the operations of the Bureau. 

(B) FINANCIAL STATEMENTS.—The Bureau shall prepare 

annually a statement of— 

(i) assets and liabilities and surplus or deficit; 

(ii) income and expenses; and 

(iii) sources and application of funds. 

(C) FINANCIAL MANAGEMENT SYSTEMS.—The Bureau 

shall implement and maintain financial management systems that comply substantially with Federal financial 

management systems requirements and applicable Federal 

accounting standards. 

(D) ASSERTION OF INTERNAL CONTROLS.—The Director 

shall provide to the Comptroller General of the United 

States an assertion as to the effectiveness of the internal 

controls that apply to financial reporting by the Bureau, 

402 

using the standards established in section 3512(c) of title 

31, United States Code. 

ø(E) RULE OF CONSTRUCTION.—This subsection may not 

be construed as implying any obligation on the part of the 

Director to consult with or obtain the consent or approval 

of the Director of the Office of Management and Budget 

with respect to any report, plan, forecast, or other information referred to in subparagraph (A) or any jurisdiction or 

oversight over the affairs or operations of the Bureau. 

ø(F) FINANCIAL STATEMENTS.—The financial statements 

of the Bureau shall not be consolidated with the financial 

statements of either the Board of Governors or the Federal 

Reserve System.¿ 

ø(5)¿ (2) AUDIT OF THE BUREAU.— 

(A) IN GENERAL.—The Comptroller General shall annually audit the financial transactions of the Bureau in accordance with the United States generally accepted government auditing standards, as may be prescribed by the 

Comptroller General of the United States. The audit shall 

be conducted at the place or places where accounts of the 

Bureau are normally kept. The representatives of the Government Accountability Office shall have access to the personnel and to all books, accounts, documents, papers, 

records (including electronic records), reports, files, and all 

other papers, automated data, things, or property belonging to or under the control of or used or employed by the 

Bureau pertaining to its financial transactions and necessary to facilitate the audit, and such representatives 

shall be afforded full facilities for verifying transactions 

with the balances or securities held by depositories, fiscal 

agents, and custodians. All such books, accounts, documents, records, reports, files, papers, and property of the 

Bureau shall remain in possession and custody of the Bureau. The Comptroller General may obtain and duplicate 

any such books, accounts, documents, records, working papers, automated data and files, or other information relevant to such audit without cost to the Comptroller General, and the right of access of the Comptroller General to 

such information shall be enforceable pursuant to section 

716(c) of title 31, United States Code. 

(B) REPORT.—The Comptroller General shall submit to 

the Congress a report of each annual audit conducted 

under this subsection. The report to the Congress shall set 

forth the scope of the audit and shall include the statement of assets and liabilities and surplus or deficit, the 

statement of income and expenses, the statement of 

sources and application of funds, and such comments and 

information as may be deemed necessary to inform Congress of the financial operations and condition of the Bureau, together with such recommendations with respect 

thereto as the Comptroller General may deem advisable. A 

copy of each report shall be furnished to the President and 

to the Bureau at the time submitted to the Congress. 

(C) ASSISTANCE AND COSTS.—For the purpose of conducting an audit under this subsection, the Comptroller 

403 

General may, in the discretion of the Comptroller General, 

employ by contract, without regard to section 3709 of the 

Revised Statutes of the United States (41 U.S.C. 5), professional services of firms and organizations of certified public accountants for temporary periods or for special purposes. Upon the request of the Comptroller General, the 

Director of the Bureau shall transfer to the Government 

Accountability Office from funds available, the amount requested by the Comptroller General to cover the full costs 

of any audit and report conducted by the Comptroller General. The Comptroller General shall credit funds transferred to the account established for salaries and expenses 

of the Government Accountability Office, and such amount 

shall be available upon receipt and without fiscal year limitation to cover the full costs of the audit and report. 

ø(b) CONSUMER FINANCIAL PROTECTION FUND.— 

ø(1) SEPARATE FUND IN FEDERAL RESERVE ESTABLISHED.— 

There is established in the Federal Reserve a separate fund, to 

be known as the ‘‘Bureau of Consumer Financial Protection 

Fund’’ (referred to in this section as the ‘‘Bureau Fund’’). The 

Bureau Fund shall be maintained and established at a Federal 

reserve bank, in accordance with such requirements as the 

Board of Governors may impose. 

ø(2) FUND RECEIPTS.—All amounts transferred to the Bureau 

under subsection (a) shall be deposited into the Bureau Fund. 

ø(3) INVESTMENT AUTHORITY.— 

ø(A) AMOUNTS IN BUREAU FUND MAY BE INVESTED.—The 

Bureau may request the Board of Governors to direct the 

investment of the portion of the Bureau Fund that is not, 

in the judgment of the Bureau, required to meet the current needs of the Bureau. 

ø(B) ELIGIBLE INVESTMENTS.—Investments authorized by 

this paragraph shall be made in obligations of the United 

States or obligations that are guaranteed as to principal 

and interest by the United States, with maturities suitable 

to the needs of the Bureau Fund, as determined by the Bureau. 

ø(C) INTEREST AND PROCEEDS CREDITED.—The interest 

on, and the proceeds from the sale or redemption of, any 

obligations held in the Bureau Fund shall be credited to 

the Bureau Fund. 

ø(c) USE OF FUNDS.— 

ø(1) IN GENERAL.—Funds obtained by, transferred to, or 

credited to the Bureau Fund shall be immediately available to 

the Bureau and under the control of the Director, and shall remain available until expended, to pay the expenses of the Bureau in carrying out its duties and responsibilities. The compensation of the Director and other employees of the Bureau 

and all other expenses thereof may be paid from, obtained by, 

transferred to, or credited to the Bureau Fund under this section. 

ø(2) FUNDS THAT ARE NOT GOVERNMENT FUNDS.—Funds obtained by or transferred to the Bureau Fund shall not be construed to be Government funds or appropriated monies. 

404 

ø(3) AMOUNTS NOT SUBJECT TO APPORTIONMENT.—Notwithstanding any other provision of law, amounts in the Bureau 

Fund and in the Civil Penalty Fund established under subsection (d) shall not be subject to apportionment for purposes 

of chapter 15 of title 31, United States Code, or under any 

other authority. 

ø(d)¿ (b) PENALTIES AND FINES.— (1) ESTABLISHMENT OF VICTIMS RELIEF FUND.—There is established in the Federal Reserve a separate fund, to be known 

as the ‘‘Consumer Financial Civil Penalty Fund’’ (referred to in 

this section as the ‘‘Civil Penalty Fund’’). The Civil Penalty 

Fund shall be maintained and established at a Federal reserve 

bank, in accordance with such requirements as the Board of 

Governors may impose. If the Bureau obtains a civil penalty 

against any person in any judicial or administrative action 

under Federal consumer financial laws, the Bureau shall deposit into the Civil Penalty Fund, the amount of the penalty 

collected. 

(2) PAYMENT TO VICTIMS.—Amounts in the Civil Penalty 

Fund shall be available to the Bureau, without fiscal year limitation, for payments to the victims of activities for which civil 

penalties have been imposed under the Federal consumer financial laws. To the extent that such victims cannot be located 

or such payments are otherwise not practicable, the Bureau 

may use such funds for the purpose of consumer education and 

financial literacy programs. 

ø(e)¿ (c) AUTHORIZATION OF APPROPRIATIONS; ANNUAL REPORT.— ø(1) DETERMINATION REGARDING NEED FOR APPROPRIATED

FUNDS.— 

ø(A) IN GENERAL.—The Director is authorized to determine that sums available to the Bureau under this section 

will not be sufficient to carry out the authorities of the Bureau under Federal consumer financial law for the upcoming year. 

ø(B) REPORT REQUIRED.—When making a determination 

under subparagraph (A), the Director shall prepare a report regarding the funding of the Bureau, including the assets and liabilities of the Bureau, and the extent to which 

the funding needs of the Bureau are anticipated to exceed 

the level of the amount set forth in subsection (a)(2). The 

Director shall submit the report to the President and to 

the Committee on Appropriations of the Senate and the 

Committee on Appropriations of the House of Representatives. 

ø(2) AUTHORIZATION OF APPROPRIATIONS.—If the Director 

makes the determination and submits the report pursuant to 

paragraph (1), there are hereby authorized to be appropriated 

to the Bureau, for the purposes of carrying out the authorities 

granted in Federal consumer financial law, $200,000,000 for 

each of fiscal years 2010, 2011, 2012, 2013, and 2014. 

ø(3) APPORTIONMENT.—Notwithstanding any other provision 

of law, the amounts in paragraph (2) shall be subject to apportionment under section 1517 of title 31, United States Code, 

and restrictions that generally apply to the use of appropriated 

funds in title 31, United States Code, and other laws.¿ 

405 

(1) AUTHORIZATION OF APPROPRIATION.—There authorized to 

be appropriated for fiscal year 2020 to the Bureau from the 

combined earnings of the Federal Reserve System $485,000,000. 

ø(4)¿ (2) ANNUAL REPORT.—The Director shall prepare and 

submit a report, on an annual basis, to the Committee on Appropriations of the Senate and the Committee on Appropriations of the House of Representatives regarding the financial 

operating plans and forecasts of the Director, the financial condition and results of operations of the Bureau, and the sources 

and application of funds of the Bureau, including any funds appropriated in accordance with this subsection. 

* * * * * * * 

TITLE 5, UNITED STATES CODE 

PART I—THE AGENCIES GENERALLY 

* * * * * * * 

øCHAPTER 8—CONGRESSIONAL REVIEW OF AGENCY 

RULEMAKING 

ø§ 801. Congressional review 

ø(a)(1)(A) Before a rule can take effect, the Federal agency promulgating such rule shall submit to each House of the Congress 

and to the Comptroller General a report containing— 

ø(i) a copy of the rule; 

ø(ii) a concise general statement relating to the rule, including whether it is a major rule; and 

ø(iii) the proposed effective date of the rule. 

ø(B) On the date of the submission of the report under subparagraph (A), the Federal agency promulgating the rule shall submit 

to the Comptroller General and make available to each House of 

Congress— 

ø(i) a complete copy of the cost-benefit analysis of the rule, 

if any; 

ø(ii) the agency’s actions relevant to sections 603, 604, 605, 

607, and 609; 

ø(iii) the agency’s actions relevant to sections 202, 203, 204, 

and 205 of the Unfunded Mandates Reform Act of 1995; and 

ø(iv) any other relevant information or requirements under 

any other Act and any relevant Executive orders. 

ø(C) Upon receipt of a report submitted under subparagraph (A), 

each House shall provide copies of the report to the chairman and 

ranking member of each standing committee with jurisdiction 

under the rules of the House of Representatives or the Senate to 

report a bill to amend the provision of law under which the rule 

is issued. 

ø(2)(A) The Comptroller General shall provide a report on each 

major rule to the committees of jurisdiction in each House of the 

Congress by the end of 15 calendar days after the submission or 

publication date as provided in section 802(b)(2). The report of the 

Comptroller General shall include an assessment of the agency’s 

compliance with procedural steps required by paragraph (1)(B). 

406 

ø(B) Federal agencies shall cooperate with the Comptroller General by providing information relevant to the Comptroller General’s 

report under subparagraph (A). 

ø(3) A major rule relating to a report submitted under paragraph 

(1) shall take effect on the latest of— 

ø(A) the later of the date occurring 60 days after the date on 

which— 

ø(i) the Congress receives the report submitted under 

paragraph (1); or 

ø(ii) the rule is published in the Federal Register, if so 

published; 

ø(B) if the Congress passes a joint resolution of disapproval 

described in section 802 relating to the rule, and the President 

signs a veto of such resolution, the earlier date— 

ø(i) on which either House of Congress votes and fails to 

override the veto of the President; or 

ø(ii) occurring 30 session days after the date on which 

the Congress received the veto and objections of the President; or 

ø(C) the date the rule would have otherwise taken effect, if 

not for this section (unless a joint resolution of disapproval 

under section 802 is enacted). 

ø(4) Except for a major rule, a rule shall take effect as otherwise 

provided by law after submission to Congress under paragraph (1). 

ø(5) Notwithstanding paragraph (3), the effective date of a rule 

shall not be delayed by operation of this chapter beyond the date 

on which either House of Congress votes to reject a joint resolution 

of disapproval under section 802. 

ø(b)(1) A rule shall not take effect (or continue), if the Congress 

enacts a joint resolution of disapproval, described under section 

802, of the rule. 

ø(2) A rule that does not take effect (or does not continue) under 

paragraph (1) may not be reissued in substantially the same form, 

and a new rule that is substantially the same as such a rule may 

not be issued, unless the reissued or new rule is specifically authorized by a law enacted after the date of the joint resolution disapproving the original rule. 

ø(c)(1) Notwithstanding any other provision of this section (except subject to paragraph (3)), a rule that would not take effect by 

reason of subsection (a)(3) may take effect, if the President makes 

a determination under paragraph (2) and submits written notice of 

such determination to the Congress. 

ø(2) Paragraph (1) applies to a determination made by the President by Executive order that the rule should take effect because 

such rule is— 

ø(A) necessary because of an imminent threat to health or 

safety or other emergency; 

ø(B) necessary for the enforcement of criminal laws; 

ø(C) necessary for national security; or 

ø(D) issued pursuant to any statute implementing an international trade agreement. 

ø(3) An exercise by the President of the authority under this subsection shall have no effect on the procedures under section 802 or 

the effect of a joint resolution of disapproval under this section. 

407 

ø(d)(1) In addition to the opportunity for review otherwise provided under this chapter, in the case of any rule for which a report 

was submitted in accordance with subsection (a)(1)(A) during the 

period beginning on the date occurring— 

ø(A) in the case of the Senate, 60 session days, or 

ø(B) in the case of the House of Representatives, 60 legislative days, 

before the date the Congress adjourns a session of Congress 

through the date on which the same or succeeding Congress first 

convenes its next session, section 802 shall apply to such rule in 

the succeeding session of Congress. 

ø(2)(A) In applying section 802 for purposes of such additional review, a rule described under paragraph (1) shall be treated as 

though— 

ø(i) such rule were published in the Federal Register (as a 

rule that shall take effect) on— 

ø(I) in the case of the Senate, the 15th session day, or 

ø(II) in the case of the House of Representatives, the 

15th legislative day, 

after the succeeding session of Congress first convenes; and 

ø(ii) a report on such rule were submitted to Congress under 

subsection (a)(1) on such date. 

ø(B) Nothing in this paragraph shall be construed to affect the 

requirement under subsection (a)(1) that a report shall be submitted to Congress before a rule can take effect. 

ø(3) A rule described under paragraph (1) shall take effect as 

otherwise provided by law (including other subsections of this section). 

ø(e)(1) For purposes of this subsection, section 802 shall also 

apply to any major rule promulgated between March 1, 1996, and 

the date of the enactment of this chapter. 

ø(2) In applying section 802 for purposes of Congressional review, 

a rule described under paragraph (1) shall be treated as though— 

ø(A) such rule were published in the Federal Register on the 

date of enactment of this chapter; and 

ø(B) a report on such rule were submitted to Congress under 

subsection (a)(1) on such date. 

ø(3) The effectiveness of a rule described under paragraph (1) 

shall be as otherwise provided by law, unless the rule is made of 

no force or effect under section 802. 

ø(f) Any rule that takes effect and later is made of no force or 

effect by enactment of a joint resolution under section 802 shall be 

treated as though such rule had never taken effect. 

ø(g) If the Congress does not enact a joint resolution of disapproval under section 802 respecting a rule, no court or agency 

may infer any intent of the Congress from any action or inaction 

of the Congress with regard to such rule, related statute, or joint 

resolution of disapproval. 

ø§ 802. Congressional disapproval procedure 

ø(a) For purposes of this section, the term ‘‘joint resolution’’ 

means only a joint resolution introduced in the period beginning on 

the date on which the report referred to in section 801(a)(1)(A) is 

received by Congress and ending 60 days thereafter (excluding 

days either House of Congress is adjourned for more than 3 days 

408 

during a session of Congress), the matter after the resolving clause 

of which is as follows: ‘‘That Congress disapproves the rule submitted by the — — relating to — —, and such rule shall have no 

force or effect.’’ (The blank spaces being appropriately filled in). 

ø(b)(1) A joint resolution described in subsection (a) shall be referred to the committees in each House of Congress with jurisdiction. 

ø(2) For purposes of this section, the term ‘‘submission or publication date’’ means the later of the date on which— 

ø(A) the Congress receives the report submitted under section 801(a)(1); or 

ø(B) the rule is published in the Federal Register, if so published. 

ø(c) In the Senate, if the committee to which is referred a joint 

resolution described in subsection (a) has not reported such joint 

resolution (or an identical joint resolution) at the end of 20 calendar days after the submission or publication date defined under 

subsection (b)(2), such committee may be discharged from further 

consideration of such joint resolution upon a petition supported in 

writing by 30 Members of the Senate, and such joint resolution 

shall be placed on the calendar. 

ø(d)(1) In the Senate, when the committee to which a joint resolution is referred has reported, or when a committee is discharged 

(under subsection (c)) from further consideration of a joint resolution described in subsection (a), it is at any time thereafter in order 

(even though a previous motion to the same effect has been disagreed to) for a motion to proceed to the consideration of the joint 

resolution, and all points of order against the joint resolution (and 

against consideration of the joint resolution) are waived. The motion is not subject to amendment, or to a motion to postpone, or to 

a motion to proceed to the consideration of other business. A motion to reconsider the vote by which the motion is agreed to or disagreed to shall not be in order. If a motion to proceed to the consideration of the joint resolution is agreed to, the joint resolution shall 

remain the unfinished business of the Senate until disposed of. 

ø(2) In the Senate, debate on the joint resolution, and on all debatable motions and appeals in connection therewith, shall be limited to not more than 10 hours, which shall be divided equally between those favoring and those opposing the joint resolution. A motion further to limit debate is in order and not debatable. An 

amendment to, or a motion to postpone, or a motion to proceed to 

the consideration of other business, or a motion to recommit the 

joint resolution is not in order. 

ø(3) In the Senate, immediately following the conclusion of the 

debate on a joint resolution described in subsection (a), and a single quorum call at the conclusion of the debate if requested in accordance with the rules of the Senate, the vote on final passage of 

the joint resolution shall occur. 

ø(4) Appeals from the decisions of the Chair relating to the application of the rules of the Senate to the procedure relating to a joint 

resolution described in subsection (a) shall be decided without debate. 

ø(e) In the Senate the procedure specified in subsection (c) or (d) 

shall not apply to the consideration of a joint resolution respecting 

a rule— 

409 

ø(1) after the expiration of the 60 session days beginning 

with the applicable submission or publication date, or 

ø(2) if the report under section 801(a)(1)(A) was submitted 

during the period referred to in section 801(d)(1), after the expiration of the 60 session days beginning on the 15th session 

day after the succeeding session of Congress first convenes. 

ø(f) If, before the passage by one House of a joint resolution of 

that House described in subsection (a), that House receives from 

the other House a joint resolution described in subsection (a), then 

the following procedures shall apply: 

ø(1) The joint resolution of the other House shall not be referred to a committee. 

ø(2) With respect to a joint resolution described in subsection 

(a) of the House receiving the joint resolution— 

ø(A) the procedure in that House shall be the same as 

if no joint resolution had been received from the other 

House; but 

ø(B) the vote on final passage shall be on the joint resolution of the other House. 

ø(g) This section is enacted by Congress— 

ø(1) as an exercise of the rulemaking power of the Senate 

and House of Representatives, respectively, and as such it is 

deemed a part of the rules of each House, respectively, but applicable only with respect to the procedure to be followed in 

that House in the case of a joint resolution described in subsection (a), and it supersedes other rules only to the extent 

that it is inconsistent with such rules; and 

ø(2) with full recognition of the constitutional right of either 

House to change the rules (so far as relating to the procedure 

of that House) at any time, in the same manner, and to the 

same extent as in the case of any other rule of that House. 

ø§ 803. Special rule on statutory, regulatory, and judicial 

deadlines 

ø(a) In the case of any deadline for, relating to, or involving any 

rule which does not take effect (or the effectiveness of which is terminated) because of enactment of a joint resolution under section 

802, that deadline is extended until the date 1 year after the date 

of enactment of the joint resolution. Nothing in this subsection 

shall be construed to affect a deadline merely by reason of the postponement of a rule’s effective date under section 801(a). 

ø(b) The term ‘‘deadline’’ means any date certain for fulfilling 

any obligation or exercising any authority established by or under 

any Federal statute or regulation, or by or under any court order 

implementing any Federal statute or regulation. 

ø§ 804. Definitions 

øFor purposes of this chapter— 

ø(1) The term ‘‘Federal agency’’ means any agency as that 

term is defined in section 551(1). 

ø(2) The term ‘‘major rule’’ means any rule that the Administrator of the Office of Information and Regulatory Affairs of the 

Office of Management and Budget finds has resulted in or is 

likely to result in— 

410 

ø(A) an annual effect on the economy of $100,000,000 or 

more; 

ø(B) a major increase in costs or prices for consumers, 

individual industries, Federal, State, or local government 

agencies, or geographic regions; or 

ø(C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. 

The term does not include any rule promulgated under the 

Telecommunications Act of 1996 and the amendments made by 

that Act. 

ø(3) The term ‘‘rule’’ has the meaning given such term in section 551, except that such term does not include— 

ø(A) any rule of particular applicability, including a rule 

that approves or prescribes for the future rates, wages, 

prices, services, or allowances therefor, corporate or financial structures, reorganizations, mergers, or acquisitions 

thereof, or accounting practices or disclosures bearing on 

any of the foregoing; 

ø(B) any rule relating to agency management or personnel; or 

ø(C) any rule of agency organization, procedure, or practice that does not substantially affect the rights or obligations of non-agency parties. 

ø§ 805. Judicial review 

øNo determination, finding, action, or omission under this chapter shall be subject to judicial review. 

ø§ 806. Applicability; severability 

ø(a) This chapter shall apply notwithstanding any other provision of law. 

ø(b) If any provision of this chapter or the application of any provision of this chapter to any person or circumstance, is held invalid, 

the application of such provision to other persons or circumstances, 

and the remainder of this chapter, shall not be affected thereby. 

ø§ 807. Exemption for monetary policy 

øNothing in this chapter shall apply to rules that concern monetary policy proposed or implemented by the Board of Governors of 

the Federal Reserve System or the Federal Open Market Committee. 

ø§ 808. Effective date of certain rules 

øNotwithstanding section 801— 

ø(1) any rule that establishes, modifies, opens, closes, or conducts a regulatory program for a commercial, recreational, or 

subsistence activity related to hunting, fishing, or camping, or 

ø(2) any rule which an agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor 

in the rule issued) that notice and public procedure thereon are 

impracticable, unnecessary, or contrary to the public interest, 

shall take effect at such time as the Federal agency promulgating 

the rule determines.¿ 

411 

CHAPTER 8—CONGRESSIONAL REVIEW OF BUREAU 

RULEMAKING 

Sec. 

801. Congressional review. 

802. Congressional approval procedure for major rules. 

803. Congressional disapproval procedure for nonmajor rules. 

804. Definitions. 

805. Judicial review. 

806. Exemption for monetary policy. 

807. Effective date of certain rules. 

808. Regulatory cut-go requirement. 

809. Review of rules currently in effect. 

§ 801. Congressional review 

(a)(1)(A) Before a rule may take effect, the Bureau shall satisfy the 

requirements of section 808 and shall publish in the Federal Register a list of information on which the rule is based, including 

data, scientific and economic studies, and cost-benefit analyses, and 

identify how the public can access such information online, and 

shall submit to each House of the Congress and to the Comptroller 

General a report containing— 

(i) a copy of the rule; 

(ii) a concise general statement relating to the rule; 

(iii) a classification of the rule as a major or nonmajor rule, 

including an explanation of the classification specifically addressing each criteria for a major rule contained within sections 

804(2)(A), 804(2)(B), and 804(2)(C); 

(iv) a list of any other related regulatory actions intended to 

implement the same statutory provision or regulatory objective 

as well as the individual and aggregate economic effects of 

those actions; and 

(v) the proposed effective date of the rule. 

(B) On the date of the submission of the report under subparagraph (A), the Bureau shall submit to the Comptroller General and 

make available to each House of Congress— 

(i) a complete copy of the cost-benefit analysis of the rule, if 

any, including an analysis of any jobs added or lost, differentiating between public and private sector jobs; 

(ii) the Bureau’s actions pursuant to sections 603, 604, 605, 

607, and 609 of this title; 

(iii) the Bureau’s actions pursuant to sections 202, 203, 204, 

and 205 of the Unfunded Mandates Reform Act of 1995; and 

(iv) any other relevant information or requirements under any 

other Act and any relevant Executive orders. 

(C) Upon receipt of a report submitted under subparagraph (A), 

each House shall provide copies of the report to the chairman and 

ranking member of each standing committee with jurisdiction under 

the rules of the House of Representatives or the Senate to report a 

bill to amend the provision of law under which the rule is issued. 

(2)(A) The Comptroller General shall provide a report on each 

major rule to the committees of jurisdiction by the end of 15 calendar days after the submission or publication date. The report of 

the Comptroller General shall include an assessment of the Bureau’s 

compliance with procedural steps required by paragraph (1)(B) and 

an assessment of whether the major rule imposes any new limits or 

mandates on private-sector activity. 

412 

(B) Federal agencies shall cooperate with the Comptroller General 

by providing information relevant to the Comptroller General’s report under subparagraph (A). 

(3) A major rule relating to a report submitted under paragraph 

(1) shall take effect upon enactment of a joint resolution of approval 

described in section 802 or as provided for in the rule following enactment of a joint resolution of approval described in section 802, 

whichever is later. 

(4) A nonmajor rule shall take effect as provided by section 803 

after submission to Congress under paragraph (1). 

(5) If a joint resolution of approval relating to a major rule is not 

enacted within the period provided in subsection (b)(2), then a joint 

resolution of approval relating to the same rule may not be considered under this chapter in the same Congress by either the House 

of Representatives or the Senate. 

(b)(1) A major rule shall not take effect unless the Congress enacts 

a joint resolution of approval described under section 802. 

(2) If a joint resolution described in subsection (a) is not enacted 

into law by the end of 70 session days or legislative days, as applicable, beginning on the date on which the report referred to in section 801(a)(1)(A) is received by Congress (excluding days either 

House of Congress is adjourned for more than 3 days during a session of Congress), then the rule described in that resolution shall be 

deemed not to be approved and such rule shall not take effect. 

(c)(1) Notwithstanding any other provision of this section (except 

subject to paragraph (3)), a major rule may take effect for one 90- 

calendar-day period if the President makes a determination under 

paragraph (2) and submits written notice of such determination to 

the Congress. 

(2) Paragraph (1) applies to a determination made by the President by Executive order that the major rule should take effect because such rule is— 

(A) necessary because of an imminent threat to health or safety or other emergency; 

(B) necessary for the enforcement of criminal laws; 

(C) necessary for national security; or 

(D) issued pursuant to any statute implementing an international trade agreement. 

(3) An exercise by the President of the authority under this subsection shall have no effect on the procedures under section 802. 

(d)(1) In addition to the opportunity for review otherwise provided 

under this chapter, in the case of any rule for which a report was 

submitted in accordance with subsection (a)(1)(A) during the period 

beginning on the date occurring— 

(A) in the case of the Senate, 60 session days; or 

(B) in the case of the House of Representatives, 60 legislative 

days, 

before the date the Congress is scheduled to adjourn a session of 

Congress through the date on which the same or succeeding Congress first convenes its next session, sections 802 and 803 shall 

apply to such rule in the succeeding session of Congress. 

(2)(A) In applying sections 802 and 803 for purposes of such additional review, a rule described under paragraph (1) shall be treated 

as though— 

(i) such rule were published in the Federal Register on— 

413 

(I) in the case of the Senate, the 15th session day; or 

(II) in the case of the House of Representatives, the 15th 

legislative day, 

after the succeeding session of Congress first convenes; and 

(ii) a report on such rule were submitted to Congress under 

subsection (a)(1) on such date. 

(B) Nothing in this paragraph shall be construed to affect the requirement under subsection (a)(1) that a report shall be submitted 

to Congress before a rule can take effect. 

(3) A rule described under paragraph (1) shall take effect as otherwise provided by law (including other subsections of this section). 

§ 802. Congressional approval procedure for major rules 

(a)(1) For purposes of this section, the term ‘‘joint resolution’’ 

means only a joint resolution addressing a report classifying a rule 

as major pursuant to section 801(a)(1)(A)(iii) that— 

(A) bears no preamble; 

(B) bears the following title (with blanks filled as appropriate): ‘‘Approving the rule submitted by lll relating to lll.’’; 

(C) includes after its resolving clause only the following (with 

blanks filled as appropriate): ‘‘That Congress approves the rule 

submitted by lll relating to lll.’’; and 

(D) is introduced pursuant to paragraph (2). 

(2) After a House of Congress receives a report classifying a rule 

as major pursuant to section 801(a)(1)(A)(iii), the majority leader of 

that House (or his or her respective designee) shall introduce (by request, if appropriate) a joint resolution described in paragraph (1)— 

(A) in the case of the House of Representatives, within 3 legislative days; and 

(B) in the case of the Senate, within 3 session days. 

(3) A joint resolution described in paragraph (1) shall not be subject to amendment at any stage of proceeding. 

(b) A joint resolution described in subsection (a) shall be referred 

in each House of Congress to the committees having jurisdiction 

over the provision of law under which the rule is issued. 

(c) In the Senate, if the committee or committees to which a joint 

resolution described in subsection (a) has been referred have not reported it at the end of 15 session days after its introduction, such 

committee or committees shall be automatically discharged from 

further consideration of the resolution and it shall be placed on the 

calendar. A vote on final passage of the resolution shall be taken on 

or before the close of the 15th session day after the resolution is reported by the committee or committees to which it was referred, or 

after such committee or committees have been discharged from further consideration of the resolution. 

(d)(1) In the Senate, when the committee or committees to which 

a joint resolution is referred have reported, or when a committee or 

committees are discharged (under subsection (c)) from further consideration of a joint resolution described in subsection (a), it is at 

any time thereafter in order (even though a previous motion to the 

same effect has been disagreed to) for a motion to proceed to the consideration of the joint resolution, and all points of order against the 

joint resolution (and against consideration of the joint resolution) 

are waived. The motion is not subject to amendment, or to a motion 

414 

to postpone, or to a motion to proceed to the consideration of other 

business. A motion to reconsider the vote by which the motion is 

agreed to or disagreed to shall not be in order. If a motion to proceed to the consideration of the joint resolution is agreed to, the joint 

resolution shall remain the unfinished business of the Senate until 

disposed of. 

(2) In the Senate, debate on the joint resolution, and on all debatable motions and appeals in connection therewith, shall be limited 

to not more than 2 hours, which shall be divided equally between 

those favoring and those opposing the joint resolution. A motion to 

further limit debate is in order and not debatable. An amendment 

to, or a motion to postpone, or a motion to proceed to the consideration of other business, or a motion to recommit the joint resolution 

is not in order. 

(3) In the Senate, immediately following the conclusion of the debate on a joint resolution described in subsection (a), and a single 

quorum call at the conclusion of the debate if requested in accordance with the rules of the Senate, the vote on final passage of the 

joint resolution shall occur. 

(4) Appeals from the decisions of the Chair relating to the application of the rules of the Senate to the procedure relating to a joint 

resolution described in subsection (a) shall be decided without debate. 

(e) In the House of Representatives, if any committee to which a 

joint resolution described in subsection (a) has been referred has not 

reported it to the House at the end of 15 legislative days after its 

introduction, such committee shall be discharged from further consideration of the joint resolution, and it shall be placed on the appropriate calendar. On the second and fourth Thursdays of each 

month it shall be in order at any time for the Speaker to recognize 

a Member who favors passage of a joint resolution that has appeared on the calendar for at least 5 legislative days to call up that 

joint resolution for immediate consideration in the House without 

intervention of any point of order. When so called up a joint resolution shall be considered as read and shall be debatable for 1 hour 

equally divided and controlled by the proponent and an opponent, 

and the previous question shall be considered as ordered to its passage without intervening motion. It shall not be in order to reconsider the vote on passage. If a vote on final passage of the joint resolution has not been taken by the third Thursday on which the 

Speaker may recognize a Member under this subsection, such vote 

shall be taken on that day. 

(f)(1) If, before passing a joint resolution described in subsection 

(a), one House receives from the other a joint resolution having the 

same text, then— 

(A) the joint resolution of the other House shall not be referred to a committee; and 

(B) the procedure in the receiving House shall be the same as 

if no joint resolution had been received from the other House 

until the vote on passage, when the joint resolution received 

from the other House shall supplant the joint resolution of the 

receiving House. 

(2) This subsection shall not apply to the House of Representatives 

if the joint resolution received from the Senate is a revenue measure. 

415 

(g) If either House has not taken a vote on final passage of the 

joint resolution by the last day of the period described in section 

801(b)(2), then such vote shall be taken on that day. 

(h) This section and section 803 are enacted by Congress— 

(1) as an exercise of the rulemaking power of the Senate and 

House of Representatives, respectively, and as such is deemed to 

be part of the rules of each House, respectively, but applicable 

only with respect to the procedure to be followed in that House 

in the case of a joint resolution described in subsection (a) and 

superseding other rules only where explicitly so; and 

(2) with full recognition of the Constitutional right of either 

House to change the rules (so far as they relate to the procedure 

of that House) at any time, in the same manner and to the same 

extent as in the case of any other rule of that House. 

§ 803. Congressional disapproval procedure for nonmajor 

rules 

(a) For purposes of this section, the term ‘‘joint resolution’’ means 

only a joint resolution introduced in the period beginning on the 

date on which the report referred to in section 801(a)(1)(A) is received by Congress and ending 60 days thereafter (excluding days 

either House of Congress is adjourned for more than 3 days during 

a session of Congress), the matter after the resolving clause of which 

is as follows: ‘‘That Congress disapproves the nonmajor rule submitted by the lll relating to lll, and such rule shall have 

no force or effect.’’ (The blank spaces being appropriately filled in). 

(b) A joint resolution described in subsection (a) shall be referred 

to the committees in each House of Congress with jurisdiction. 

(c) In the Senate, if the committee to which is referred a joint resolution described in subsection (a) has not reported such joint resolution (or an identical joint resolution) at the end of 15 session days 

after the date of introduction of the joint resolution, such committee 

may be discharged from further consideration of such joint resolution upon a petition supported in writing by 30 Members of the Senate, and such joint resolution shall be placed on the calendar. 

(d)(1) In the Senate, when the committee to which a joint resolution is referred has reported, or when a committee is discharged 

(under subsection (c)) from further consideration of a joint resolution described in subsection (a), it is at any time thereafter in order 

(even though a previous motion to the same effect has been disagreed to) for a motion to proceed to the consideration of the joint 

resolution, and all points of order against the joint resolution (and 

against consideration of the joint resolution) are waived. The motion 

is not subject to amendment, or to a motion to postpone, or to a motion to proceed to the consideration of other business. A motion to 

reconsider the vote by which the motion is agreed to or disagreed 

to shall not be in order. If a motion to proceed to the consideration 

of the joint resolution is agreed to, the joint resolution shall remain 

the unfinished business of the Senate until disposed of. 

(2) In the Senate, debate on the joint resolution, and on all debatable motions and appeals in connection therewith, shall be limited 

to not more than 10 hours, which shall be divided equally between 

those favoring and those opposing the joint resolution. A motion to 

further limit debate is in order and not debatable. An amendment 

to, or a motion to postpone, or a motion to proceed to the considerVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00419 Fmt 6659 Sfmt 6603 E:\HR\OC\HR792.XXX HR792
416 

ation of other business, or a motion to recommit the joint resolution 

is not in order. 

(3) In the Senate, immediately following the conclusion of the debate on a joint resolution described in subsection (a), and a single 

quorum call at the conclusion of the debate if requested in accordance with the rules of the Senate, the vote on final passage of the 

joint resolution shall occur. 

(4) Appeals from the decisions of the Chair relating to the application of the rules of the Senate to the procedure relating to a joint 

resolution described in subsection (a) shall be decided without debate. 

(e) In the Senate, the procedure specified in subsection (c) or (d) 

shall not apply to the consideration of a joint resolution respecting 

a nonmajor rule— 

(1) after the expiration of the 60 session days beginning with 

the applicable submission or publication date; or 

(2) if the report under section 801(a)(1)(A) was submitted during the period referred to in section 801(d)(1), after the expiration of the 60 session days beginning on the 15th session day 

after the succeeding session of Congress first convenes. 

(f) If, before the passage by one House of a joint resolution of that 

House described in subsection (a), that House receives from the 

other House a joint resolution described in subsection (a), then the 

following procedures shall apply: 

(1) The joint resolution of the other House shall not be referred to a committee. 

(2) With respect to a joint resolution described in subsection 

(a) of the House receiving the joint resolution— 

(A) the procedure in that House shall be the same as if 

no joint resolution had been received from the other House; 

but 

(B) the vote on final passage shall be on the joint resolution of the other House. 

§ 804. Definitions 

For purposes of this chapter: 

(1) The term ‘‘Bureau’’ means the Bureau of Consumer Financial Protection. 

(2) The term ‘‘major rule’’ means any rule, including an interim final rule, that the Administrator of the Office of Information and Regulatory Affairs of the Office of Management and 

Budget finds has resulted in or is likely to result in— 

(A) an annual cost on the economy of $100,000,000 or 

more, adjusted annually for inflation; 

(B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government 

agencies, or geographic regions; or 

(C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability 

of United States-based enterprises to compete with foreignbased enterprises in domestic and export markets. 

(3) The term ‘‘nonmajor rule’’ means any rule that is not a 

major rule. 

(4) The term ‘‘rule’’ has the meaning given such term in section 551, except that such term does not include— 

417 

(A) any rule of particular applicability, including a rule 

that approves or prescribes for the future rates, wages, 

prices, services, or allowances therefore, corporate or financial structures, reorganizations, mergers, or acquisitions 

thereof, or accounting practices or disclosures bearing on 

any of the foregoing; 

(B) any rule relating to Bureau management or personnel; or 

(C) any rule of Bureau organization, procedure, or practice that does not substantially affect the rights or obligations of non-Bureau parties. 

(5) The term ‘‘submission date or publication date’’, except as 

otherwise provided in this chapter, means— 

(A) in the case of a major rule, the date on which the 

Congress receives the report submitted under section 

801(a)(1); and 

(B) in the case of a nonmajor rule, the later of— 

(i) the date on which the Congress receives the report 

submitted under section 801(a)(1); and 

(ii) the date on which the nonmajor rule is published 

in the Federal Register, if so published. 

§ 805. Judicial review 

(a) No determination, finding, action, or omission under this 

chapter shall be subject to judicial review. 

(b) Notwithstanding subsection (a), a court may determine whether the Bureau has completed the necessary requirements under this 

chapter for a rule to take effect. 

(c) The enactment of a joint resolution of approval under section 

802 shall not be interpreted to serve as a grant or modification of 

statutory authority by Congress for the promulgation of a rule, shall 

not extinguish or affect any claim, whether substantive or procedural, against any alleged defect in a rule, and shall not form part 

of the record before the court in any judicial proceeding concerning 

a rule except for purposes of determining whether or not the rule is 

in effect. 

§ 806. Exemption for monetary policy 

Nothing in this chapter shall apply to rules that concern monetary policy proposed or implemented by the Board of Governors of 

the Federal Reserve System or the Federal Open Market Committee. 

§ 807. Effective date of certain rules 

Notwithstanding section 801— 

(1) any rule that establishes, modifies, opens, closes, or conducts a regulatory program for a commercial, recreational, or 

subsistence activity related to hunting, fishing, or camping; or 

(2) any rule other than a major rule which the Bureau for 

good cause finds (and incorporates the finding and a brief 

statement of reasons therefore in the rule issued) that notice 

and public procedure thereon are impracticable, unnecessary, or 

contrary to the public interest, 

shall take effect at such time as the Bureau determines. 

418 

§ 808. Regulatory cut-go requirement 

In making any new rule, the Bureau shall identify a rule or rules 

that may be amended or repealed to completely offset any annual 

costs of the new rule to the United States economy. Before the new 

rule may take effect, the Bureau shall make each such repeal or 

amendment. In making such an amendment or repeal, the Bureau 

shall comply with the requirements of subchapter II of chapter 5, 

but the Bureau may consolidate proceedings under subchapter with 

proceedings on the new rule. 

§ 809. Review of rules currently in effect 

(a) ANNUAL REVIEW.—Beginning on the date that is 6 months 

after the date of enactment of this section and annually thereafter 

for the 9 years following, the Bureau shall designate not less than 

10 percent of eligible rules made by the Bureau for review, and shall 

submit a report including each such eligible rule in the same manner as a report under section 801(a)(1). Section 801, section 802, 

and section 803 shall apply to each such rule, subject to subsection 

(c) of this section. No eligible rule previously designated may be designated again. 

(b) SUNSET FOR ELIGIBLE RULES NOT EXTENDED.—Beginning 

after the date that is 10 years after the date of enactment of this section, if Congress has not enacted a joint resolution of approval for 

that eligible rule, that eligible rule shall not continue in effect. 

(c) CONSOLIDATION; SEVERABILITY.—In applying sections 801, 

802, and 803 to eligible rules under this section, the following shall 

apply: 

(1) The words ‘‘take effect’’ shall be read as ‘‘continue in effect’’. 

(2) Except as provided in paragraph (3), a single joint resolution of approval shall apply to all eligible rules in a report designated for a year, and the matter after the resolving clause of 

that joint resolution is as follows: ‘‘That Congress approves the 

rules submitted by the ll for the year ll.’’ (The blank 

spaces being appropriately filled in). 

(3) It shall be in order to consider any amendment that provides for specific conditions on which the approval of a particular eligible rule included in the joint resolution is contingent. 

(4) A member of either House may move that a separate joint 

resolution be required for a specified rule. 

(d) DEFINITION.—In this section, the term ‘‘eligible rule’’ means a 

rule that is in effect as of the date of enactment of this section. 

* * * * * * * 

BALANCED BUDGET AND EMERGENCY DEFICIT 

CONTROL ACT OF 1985 

* * * * * * * 

PART C—EMERGENCY POWERS TO ELIMINATE 

DEFICITS IN EXCESS OF MAXIMUM DEFICIT AMOUNT 

* * * * * * * 

419 

SEC. 257. THE BASELINE. 

(a) IN GENERAL.—For any budget year, the baseline refers to a 

projection of current-year levels of new budget authority, outlays, 

revenues, and the surplus or deficit into the budget year and the 

outyears based on laws enacted through the applicable date. 

(b) DIRECT SPENDING AND RECEIPTS.—For the budget year and 

each outyear, the baseline shall be calculated using the following 

assumptions: 

(1) IN GENERAL.—Laws providing or creating direct spending 

and receipts are assumed to operate in the manner specified in 

those laws for each such year and funding for entitlement authority is assumed to be adequate to make all payments required by those laws. 

(2) EXCEPTIONS.—(A)(i) No program established by a law enacted on or before the date of enactment of the Balanced Budget Act of 1997 with estimated current year outlays greater 

than $50,000,000 shall be assumed to expire in the budget year 

or the outyears. The scoring of new programs with estimated 

outlays greater than $50,000,000 a year shall be based on scoring by the Committees on Budget or OMB, as applicable. OMB, 

CBO, and the Budget Committees shall consult on the scoring 

of such programs where there are differences between CBO 

and OMB. 

(ii) On the expiration of the suspension of a provision of law 

that is suspended under section 171 of Public Law 104–127 

and that authorizes a program with estimated fiscal year outlays that are greater than $50,000,000, for purposes of clause 

(i), the program shall be assumed to continue to operate in the 

same manner as the program operated immediately before the 

expiration of the suspension. 

(B) The increase for veterans’ compensation for a fiscal year 

is assumed to be the same as that required by law for veterans’ 

pensions unless otherwise provided by law enacted in that session. 

(C) Excise taxes dedicated to a trust fund, if expiring, are assumed to be extended at current rates. 

(D) If any law expires before the budget year or any outyear, 

then any program with estimated current year outlays greater 

than $50,000,000 that operates under that law shall be assumed to continue to operate under that law as in effect immediately before its expiration. 

(E) BUDGETARY EFFECTS OF RULES SUBJECT TO SECTION 802

OF TITLE 5, UNITED STATES CODE.—Any rules subject to the congressional approval procedure set forth in section 802 of chapter 

8 of title 5, United States Code, affecting budget authority, outlays, or receipts shall be assumed to be effective unless it is not 

approved in accordance with such section. 

(3) HOSPITAL INSURANCE TRUST FUND.—Notwithstanding any 

other provision of law, the receipts and disbursements of the 

Hospital Insurance Trust Fund shall be included in all calculations required by this Act. 

(c) DISCRETIONARY APPROPRIATIONS.—For the budget year and 

each outyear, the baseline shall be calculated using the following 

assumptions regarding all amounts other than those covered by 

subsection (b): 

420 

(1) INFLATION OF CURRENT-YEAR APPROPRIATIONS.—Budgetary resources other than unobligated balances shall be at the 

level provided for the budget year in full-year appropriation 

Acts. If for any account a full-year appropriation has not yet 

been enacted, budgetary resources other than unobligated balances shall be at the level available in the current year, adjusted sequentially and cumulatively for expiring housing contracts as specified in paragraph (2), for social insurance administrative expenses as specified in paragraph (3), to offset pay 

absorption and for pay annualization as specified in paragraph 

(4), for inflation as specified in paragraph (5), and to account 

for changes required by law in the level of agency payments for 

personnel benefits other than pay. 

(2) EXPIRING HOUSING CONTRACTS.—New budget authority to 

renew expiring multiyear subsidized housing contracts shall be 

adjusted to reflect the difference in the number of such contracts that are scheduled to expire in that fiscal year and the 

number expiring in the current year, with the per-contract renewal cost equal to the average current-year cost of renewal 

contracts. 

(3) SOCIAL INSURANCE ADMINISTRATIVE EXPENSES.—Budgetary resources for the administrative expenses of the following 

trust funds shall be adjusted by the percentage change in the 

beneficiary population from the current year to that fiscal year: 

the Federal Hospital Insurance Trust Fund, the Supplementary Medical Insurance Trust Fund, the Unemployment 

Trust Fund, and the railroad retirement account. 

(4) PAY ANNUALIZATION; OFFSET TO PAY ABSORPTION.—Current-year new budget authority for Federal employees shall be 

adjusted to reflect the full 12-month costs (without absorption) 

of any pay adjustment that occurred in that fiscal year. 

(5) INFLATORS.—The inflator used in paragraph (1) to adjust 

budgetary resources relating to personnel shall be the percent 

by which the average of the Bureau of Labor Statistics Employment Cost Index (wages and salaries, private industry 

workers) for that fiscal year differs from such index for the current year. The inflator used in paragraph (1) to adjust all other 

budgetary resources shall be the percent by which the average 

of the estimated gross domestic product chain-type price index 

for that fiscal year differs from the average of such estimated 

index for the current year. 

(6) CURRENT-YEAR APPROPRIATIONS.—If, for any account, a 

continuing appropriation is in effect for less than the entire 

current year, then the current-year amount shall be assumed 

to equal the amount that would be available if that continuing 

appropriation covered the entire fiscal year. If law permits the 

transfer of budget authority among budget accounts in the current year, the current-year level for an account shall reflect 

transfers accomplished by the submission of, or assumed for 

the current year in, the President’s original budget for the 

budget year. 

(d) UP-TO-DATE CONCEPTS.—In deriving the baseline for any 

budget year or outyear, current-year amounts shall be calculated 

using the concepts and definitions that are required for that budget 

year. 

421 

(e) ASSET SALES.—Amounts realized from the sale of an asset 

shall not be included in estimates under section 251, 252, or 253 

if that sale would result in a financial cost to the Federal Government as determined pursuant to scorekeeping guidelines. 

* * * * * * * 

TITLE 18, UNITED STATES CODE 

PART I—CRIMES 

* * * * * * * 

CHAPTER 121—STORED WIRE AND ELECTRONIC COMMUNICATIONS AND TRANSACTIONAL RECORDS ACCESS 

* * * * * * * 

§ 2702. Voluntary disclosure of customer communications or 

records 

(a) PROHIBITIONS.—Except as provided in subsection (b) or (c)— 

(1) a person or entity providing an electronic communication 

service to the public shall not knowingly ødivulge¿ disclose to 

any person or entity the contents of a communication øwhile 

in electronic storage by that service¿ that is in electronic storage with or otherwise stored, held, or maintained by that service; and 

(2) a person or entity providing remote computing service øto 

the public¿ shall not knowingly ødivulge¿ disclose to any person or entity the contents of any communication øwhich is carried or maintained on that service¿ that is stored, held, or 

maintained by that service— 

(A) on behalf of, and received by means of electronic 

transmission from (or created by means of computer processing of communications received by means of electronic 

transmission from), a subscriber or customer of such service; 

(B) solely for the purpose of providing storage or computer processing services to such subscriber or customer, if 

the provider is not authorized to access the contents of any 

such communications for purposes of providing any services other than storage or computer processing; and 

(3) øa provider of¿ a person or entity providing remote computing service or electronic communication service to the public 

shall not knowingly ødivulge¿ disclose a record or other information pertaining to a subscriber to or customer of such service (not including the contents of communications covered by 

paragraph (1) or (2)) to any governmental entity. 

(b) EXCEPTIONS FOR DISCLOSURE OF COMMUNICATIONS.—A provider described in subsection (a) may ødivulge¿ disclose the contents of a wire or electronic communication— 

ø(1) to an addressee or intended recipient of such communication or an agent of such addressee or intended recipient;¿ 

422 

(1) to an originator, addressee, or intended recipient of such 

communication, to the subscriber or customer on whose behalf 

the provider stores, holds, or maintains such communication, or 

to an agent of such addressee, intended recipient, subscriber, or 

customer; 

(2) as otherwise authorized in section 2517, 2511(2)(a), or 

2703 of this title; 

ø(3) with the lawful consent of the originator or an addressee 

or intended recipient of such communication, or the subscriber 

in the case of remote computing service;¿ 

(3) with the lawful consent of the originator, addressee, or intended recipient of such communication, or of the subscriber or 

customer on whose behalf the provider stores, holds, or maintains such communication; 

(4) to a person employed or authorized or whose facilities are 

used to forward such communication to its destination; 

(5) as may be necessarily incident to the rendition of the 

service or to the protection of the rights or property of the provider of that service; 

(6) to the National Center for Missing and Exploited Children, in connection with a report submitted thereto under section 2258A; 

(7) to a law enforcement agency— 

(A) if the contents— 

(i) were inadvertently obtained by the service provider; and 

(ii) appear to pertain to the commission of a crime; 

ø(B) Repealed. Pub. L. 108-21, title V, Sec. 508(b)(1)(A), 

Apr. 30, 2003, 117 Stat. 684¿ 

(8) to a governmental entity, if the provider, in good faith, 

believes that an emergency involving danger of death or serious physical injury to any person requires disclosure without 

delay of communications relating to the emergency; or 

(9) to a foreign government pursuant to an order from a foreign government that is subject to an executive agreement that 

the Attorney General has determined and certified to Congress 

satisfies section 2523. 

(c) EXCEPTIONS FOR DISCLOSURE OF CUSTOMER RECORDS.—A provider described in subsection (a) may ødivulge¿ disclose a record or 

other information pertaining to a subscriber to or customer of such 

service (not including the contents of wire or electronic communications covered by subsection (a)(1) or (a)(2))— 

(1) as otherwise authorized in section 2703; 

ø(2) with the lawful consent of the customer or subscriber;¿ 

(2) with the lawful consent of the subscriber or customer; 

(3) as may be necessarily incident to the rendition of the 

service or to the protection of the rights or property of the provider of that service; 

(4) to a governmental entity, if the provider, in good faith, 

believes that an emergency involving danger of death or serious physical injury to any person requires disclosure without 

delay of information relating to the emergency; 

(5) to the National Center for Missing and Exploited Children, in connection with a report submitted thereto under section 2258A; 

423 

(6) to any person other than a governmental entity; or 

(7) to a foreign government pursuant to an order from a foreign government that is subject to an executive agreement that 

the Attorney General has determined and certified to Congress 

satisfies section 2523. 

(d) REPORTING OF EMERGENCY DISCLOSURES.—On an annual 

basis, the Attorney General shall submit to the Committee on the 

Judiciary of the House of Representatives and the Committee on 

the Judiciary of the Senate a report containing— 

(1) the number of accounts from which the Department of 

Justice has received voluntary disclosures under subsection 

(b)(8); 

(2) a summary of the basis for disclosure in those instances 

where— 

(A) voluntary disclosures under subsection (b)(8) were 

made to the Department of Justice; and 

(B) the investigation pertaining to those disclosures was 

closed without the filing of criminal charges; and 

(3) the number of accounts from which the Department of 

Justice has received voluntary disclosures under subsection 

(c)(4). 

§ 2703. Required disclosure of customer communications or 

records 

ø(a) CONTENTS OF WIRE OR ELECTRONIC COMMUNICATIONS IN

ELECTRONIC STORAGE.—A governmental entity may require the 

disclosure by a provider of electronic communication service of the 

contents of a wire or electronic communication, that is in electronic 

storage in an electronic communications system for one hundred 

and eighty days or less, only pursuant to a warrant issued using 

the procedures described in the Federal Rules of Criminal Procedure (or, in the case of a State court, issued using State warrant 

procedures) by a court of competent jurisdiction. A governmental 

entity may require the disclosure by a provider of electronic communications services of the contents of a wire or electronic communication that has been in electronic storage in an electronic communications system for more than one hundred and eighty days by the 

means available under subsection (b) of this section. 

ø(b) CONTENTS OF WIRE OR ELECTRONIC COMMUNICATIONS IN A

REMOTE COMPUTING SERVICE.—(1) A governmental entity may require a provider of remote computing service to disclose the contents of any wire or electronic communication to which this paragraph is made applicable by paragraph (2) of this subsection— 

ø(A) without required notice to the subscriber or customer, 

if the governmental entity obtains a warrant issued using the 

procedures described in the Federal Rules of Criminal Procedure (or, in the case of a State court, issued using State warrant procedures) by a court of competent jurisdiction; or 

ø(B) with prior notice from the governmental entity to the 

subscriber or customer if the governmental entity— 

ø(i) uses an administrative subpoena authorized by a 

Federal or State statute or a Federal or State grand jury 

or trial subpoena; or 

ø(ii) obtains a court order for such disclosure under subsection (d) of this section; 

424 

except that delayed notice may be given pursuant to section 

2705 of this title. 

ø(2) Paragraph (1) is applicable with respect to any wire or electronic communication that is held or maintained on that service— 

ø(A) on behalf of, and received by means of electronic transmission from (or created by means of computer processing of 

communications received by means of electronic transmission 

from), a subscriber or customer of such remote computing service; and 

ø(B) solely for the purpose of providing storage or computer 

processing services to such subscriber or customer, if the provider is not authorized to access the contents of any such communications for purposes of providing any services other than 

storage or computer processing. 

ø(c) RECORDS CONCERNING ELECTRONIC COMMUNICATION SERVICE OR REMOTE COMPUTING SERVICE.—(1) A governmental entity 

may require a provider of electronic communication service or remote computing service to disclose a record or other information 

pertaining to a subscriber to or customer of such service (not including the contents of communications) only when the governmental entity— 

ø(A) obtains a warrant issued using the procedures described 

in the Federal Rules of Criminal Procedure (or, in the case of 

a State court, issued using State warrant procedures) by a 

court of competent jurisdiction; 

ø(B) obtains a court order for such disclosure under subsection (d) of this section; 

ø(C) has the consent of the subscriber or customer to such 

disclosure; 

ø(D) submits a formal written request relevant to a law enforcement investigation concerning telemarketing fraud for the 

name, address, and place of business of a subscriber or customer of such provider, which subscriber or customer is engaged in telemarketing (as such term is defined in section 2325 

of this title); or 

ø(E) seeks information under paragraph (2). 

ø(2) A provider of electronic communication service or remote 

computing service shall disclose to a governmental entity the— 

ø(A) name; 

ø(B) address; 

ø(C) local and long distance telephone connection records, or 

records of session times and durations; 

ø(D) length of service (including start date) and types of 

service utilized; 

ø(E) telephone or instrument number or other subscriber 

number or identity, including any temporarily assigned network address; and 

ø(F) means and source of payment for such service (including 

any credit card or bank account number), 

of a subscriber to or customer of such service when the governmental entity uses an administrative subpoena authorized by a 

Federal or State statute or a Federal or State grand jury or trial 

subpoena or any means available under paragraph (1). 

425 

ø(3) A governmental entity receiving records or information 

under this subsection is not required to provide notice to a subscriber or customer.¿ 

(a) CONTENTS OF WIRE OR ELECTRONIC COMMUNICATIONS IN

ELECTRONIC STORAGE.—Except as provided in subsections (i) and 

(j), a governmental entity may require the disclosure by a provider 

of electronic communication service of the contents of a wire or electronic communication that is in electronic storage with or otherwise 

stored, held, or maintained by that service only if the governmental 

entity obtains a warrant issued using the procedures described in 

the Federal Rules of Criminal Procedure (or, in the case of a State 

court, issued using State warrant procedures) that— 

(1) is issued by a court of competent jurisdiction; and 

(2) may indicate the date by which the provider must make 

the disclosure to the governmental entity. 

In the absence of a date on the warrant indicating the date by 

which the provider must make disclosure to the governmental entity, 

the provider shall promptly respond to the warrant. 

(b) CONTENTS OF WIRE OR ELECTRONIC COMMUNICATIONS IN A

REMOTE COMPUTING SERVICE.— 

(1) IN GENERAL.—Except as provided in subsections (i) and 

(j), a governmental entity may require the disclosure by a provider of remote computing service of the contents of a wire or 

electronic communication that is stored, held, or maintained by 

that service only if the governmental entity obtains a warrant 

issued using the procedures described in the Federal Rules of 

Criminal Procedure (or, in the case of a State court, issued 

using State warrant procedures) that— 

(A) is issued by a court of competent jurisdiction; and 

(B) may indicate the date by which the provider must 

make the disclosure to the governmental entity. 

In the absence of a date on the warrant indicating the date by 

which the provider must make disclosure to the governmental 

entity, the provider shall promptly respond to the warrant. 

(2) APPLICABILITY.—Paragraph (1) is applicable with respect 

to any wire or electronic communication that is stored, held, or 

maintained by the provider— 

(A) on behalf of, and received by means of electronic 

transmission from (or created by means of computer processing of communication received by means of electronic 

transmission from), a subscriber or customer of such remote 

computing service; and 

(B) solely for the purpose of providing storage or computer processing services to such subscriber or customer, if 

the provider is not authorized to access the contents of any 

such communications for purposes of providing any services 

other than storage or computer processing. 

(c) RECORDS CONCERNING ELECTRONIC COMMUNICATION SERVICE

OR REMOTE COMPUTING SERVICE.— (1) IN GENERAL.—Except as provided in subsections (i) and 

(j), a governmental entity may require the disclosure by a provider of electronic communication service or remote computing 

service of a record or other information pertaining to a subscriber to or customer of such service (not including the contents 

of wire or electronic communications), only— 

426 

(A) if a governmental entity obtains a warrant issued 

using the procedures described in the Federal Rules of 

Criminal Procedure (or, in the case of a State court, issued 

using State warrant procedures) that— 

(i) is issued by a court of competent jurisdiction directing the disclosure; and 

(ii) may indicate the date by which the provider must 

make the disclosure to the governmental entity; 

(B) if a governmental entity obtains a court order directing the disclosure under subsection (d); 

(C) with the lawful consent of the subscriber or customer; 

or 

(D) as otherwise authorized in paragraph (2). 

(2) SUBSCRIBER OR CUSTOMER INFORMATION.—A provider of 

electronic communication service or remote computing service 

shall, in response to an administrative subpoena authorized by 

Federal or State statute, a grand jury, trial, or civil discovery 

subpoena, or any means available under paragraph (1), disclose 

to a governmental entity the— 

(A) name; 

(B) address; 

(C) local and long distance telephone connection records, 

or records of session times and durations; 

(D) length of service (including start date) and types of 

service used; 

(E) telephone or instrument number or other subscriber 

or customer number or identity, including any temporarily 

assigned network address; and 

(F) means and source of payment for such service (including any credit card or bank account number), 

of a subscriber or customer of such service. 

(3) NOTICE NOT REQUIRED.—A governmental entity that receives records or information under this subsection is not required to provide notice to a subscriber or customer. 

(d) REQUIREMENTS FOR COURT ORDER.—A court order for disclosure under subsection ø(b) or¿ (c) may be issued by any court that 

is a court of competent jurisdiction and shall issue only if the governmental entity offers specific and articulable facts showing that 

there are reasonable grounds to believe that øthe contents of a wire 

or electronic communication, or¿ the records or other information 

øsought,¿ sought are relevant and material to an ongoing criminal 

investigation. In the case of a State governmental authority, such 

a court order shall not issue if prohibited by the law of such State. 

A court issuing an order pursuant to this øsection¿ subsection, on 

a motion made promptly by the service provider, may quash or 

modify such order, if the information or records requested are unusually voluminous in nature or compliance with such order otherwise would cause an undue burden on such provider. 

(e) NO CAUSE OF ACTION AGAINST A PROVIDER DISCLOSING IN- FORMATION UNDER THIS CHAPTER.—No cause of action shall lie in 

any court against any provider of wire or electronic communication 

service, its officers, employees, agents, or other specified persons 

for providing information, facilities, or assistance in accordance 

with the terms of a court order, warrant, subpoena, statutory authorization, or certification under this chapter. 

427 

(f) REQUIREMENT TO PRESERVE EVIDENCE.— (1) IN GENERAL.—A provider of wire or electronic communication services or a remote computing service, upon the request 

of a governmental entity, shall take all necessary steps to preserve records and other evidence in its possession pending the 

issuance of a court order or other process. 

(2) PERIOD OF RETENTION.—Records referred to in paragraph 

(1) shall be retained for a period of 90 days, which shall be extended for an additional 90-day period upon a renewed request 

by the governmental entity. 

(g) PRESENCE OF OFFICER NOT REQUIRED.—Notwithstanding section 3105 of this title, the presence of an officer shall not be required for service or execution of a search warrant issued in accordance with this chapter requiring disclosure by a provider of electronic communications service or remote computing service of the 

contents of communications or records or other information pertaining to a subscriber to or customer of such service. 

(h) COMITY ANALYSIS AND DISCLOSURE OF INFORMATION REGARDING LEGAL PROCESS SEEKING CONTENTS OF WIRE OR ELECTRONIC

COMMUNICATION.— 

(1) DEFINITIONS.—In this subsection— 

(A) the term ‘‘qualifying foreign government’’ means a 

foreign government— 

(i) with which the United States has an executive 

agreement that has entered into force under section 

2523; and 

(ii) the laws of which provide to electronic communication service providers and remote computing service providers substantive and procedural opportunities 

similar to those provided under paragraphs (2) and 

(5); and 

(B) the term ‘‘United States person’’ has the meaning 

given the term in section 2523. 

(2) MOTIONS TO QUASH OR MODIFY.—(A) A provider of electronic communication service to the public or remote computing service, including a foreign electronic communication 

service or remote computing service, that is being required to 

disclose pursuant to legal process issued under this section the 

contents of a wire or electronic communication of a subscriber 

or customer, may file a motion to modify or quash the legal 

process where the provider reasonably believes— 

(i) that the customer or subscriber is not a United States 

person and does not reside in the United States; and 

(ii) that the required disclosure would create a material 

risk that the provider would violate the laws of a qualifying foreign government. Such a motion shall be filed not 

later than 14 days after the date on which the provider 

was served with the legal process, absent agreement with 

the government or permission from the court to extend the 

deadline based on an application made within the 14 days. 

The right to move to quash is without prejudice to any 

other grounds to move to quash or defenses thereto, but it 

shall be the sole basis for moving to quash on the grounds 

of a conflict of law related to a qualifying foreign government. 

428 

(B) Upon receipt of a motion filed pursuant to subparagraph 

(A), the court shall afford the governmental entity that applied 

for or issued the legal process under this section the opportunity to respond. The court may modify or quash the legal 

process, as appropriate, only if the court finds that— 

(i) the required disclosure would cause the provider to 

violate the laws of a qualifying foreign government; 

(ii) based on the totality of the circumstances, the interests of justice dictate that the legal process should be 

modified or quashed; and 

(iii) the customer or subscriber is not a United States 

person and does not reside in the United States. 

(3) COMITY ANALYSIS.—For purposes of making a determination under paragraph (2)(B)(ii), the court shall take into account, as appropriate— 

(A) the interests of the United States, including the investigative interests of the governmental entity seeking to 

require the disclosure; 

(B) the interests of the qualifying foreign government in 

preventing any prohibited disclosure; 

(C) the likelihood, extent, and nature of penalties to the 

provider or any employees of the provider as a result of inconsistent legal requirements imposed on the provider; 

(D) the location and nationality of the subscriber or customer whose communications are being sought, if known, 

and the nature and extent of the subscriber or customer’s 

connection to the United States, or if the legal process has 

been sought on behalf of a foreign authority pursuant to 

section 3512, the nature and extent of the subscriber or 

customer’s connection to the foreign authority’s country; 

(E) the nature and extent of the provider’s ties to and 

presence in the United States; 

(F) the importance to the investigation of the information required to be disclosed; 

(G) the likelihood of timely and effective access to the information required to be disclosed through means that 

would cause less serious negative consequences; and 

(H) if the legal process has been sought on behalf of a 

foreign authority pursuant to section 3512, the investigative interests of the foreign authority making the request 

for assistance. 

(4) DISCLOSURE OBLIGATIONS DURING PENDENCY OF CHALLENGE.—A service provider shall preserve, but not be obligated 

to produce, information sought during the pendency of a motion brought under this subsection, unless the court finds that 

immediate production is necessary to prevent an adverse result 

identified in section 2705(a)(2). 

(5) DISCLOSURE TO QUALIFYING FOREIGN GOVERNMENT.—(A) 

It shall not constitute a violation of a protective order issued 

under section 2705 for a provider of electronic communication 

service to the public or remote computing service to disclose to 

the entity within a qualifying foreign government, designated 

in an executive agreement under section 2523, the fact of the 

existence of legal process issued under this section seeking the 

contents of a wire or electronic communication of a customer 

429 

or subscriber who is a national or resident of the qualifying 

foreign government. 

(B) Nothing in this paragraph shall be construed to modify 

or otherwise affect any other authority to make a motion to 

modify or quash a protective order issued under section 2705. 

(h) NOTICE.—Except as provided in section 2705, a provider of 

electronic communication service or remote computing service may 

notify a subscriber or customer of a receipt of a warrant, court 

order, subpoena, or request under subsection (a), (b), (c), or (d) of 

this section. 

(i) RULE OF CONSTRUCTION RELATED TO LEGAL PROCESS.—Nothing in this section or in section 2702 shall limit the authority of a 

governmental entity to use an administrative subpoena authorized 

by Federal or State statute, a grand jury, trial, or civil discovery 

subpoena, or a warrant issued using the procedures described in the 

Federal Rules of Criminal Procedure (or, in the case of a State 

court, issued using State warrant procedures) by a court of competent jurisdiction to— 

(1) require an originator, addressee, or intended recipient of 

a wire or electronic communication to disclose a wire or electronic communication (including the contents of that communication) to the governmental entity; 

(2) require a person or entity that provides an electronic communication service to the officers, directors, employees, or 

agents of the person or entity (for the purpose of carrying out 

their duties) to disclose a wire or electronic communication (including the contents of that communication) to or from the person or entity itself or to or from an officer, director, employee, 

or agent of the entity to a governmental entity, if the wire or 

electronic communication is stored, held, or maintained on an 

electronic communications system owned, operated, or controlled by the person or entity; or 

(3) require a person or entity that provides a remote computing service or electronic communication service to disclose a 

wire or electronic communication (including the contents of that 

communication) that advertises or promotes a product or service 

and that has been made readily accessible to the general public. 

(j) RULE OF CONSTRUCTION RELATED TO CONGRESSIONAL SUB- POENAS.—Nothing in this section or in section 2702 shall limit the 

power of inquiry vested in the Congress by article I of the Constitution of the United States, including the authority to compel the production of a wire or electronic communication (including the contents of a wire or electronic communication) that is stored, held, or 

maintained by a person or entity that provides remote computing 

service or electronic communication service. 

* * * * * * * 

ø§ 2705. Delayed notice 

ø(a) DELAY OF NOTIFICATION.—(1) A governmental entity acting 

under section 2703(b) of this title may— 

ø(A) where a court order is sought, include in the application 

a request, which the court shall grant, for an order delaying 

the notification required under section 2703(b) of this title for 

a period not to exceed ninety days, if the court determines that 

there is reason to believe that notification of the existence of 

430 

the court order may have an adverse result described in paragraph (2) of this subsection; or 

ø(B) where an administrative subpoena authorized by a Federal or State statute or a Federal or State grand jury subpoena 

is obtained, delay the notification required under section 

2703(b) of this title for a period not to exceed ninety days upon 

the execution of a written certification of a supervisory official 

that there is reason to believe that notification of the existence 

of the subpoena may have an adverse result described in paragraph (2) of this subsection. 

ø(2) An adverse result for the purposes of paragraph (1) of this 

subsection is— 

ø(A) endangering the life or physical safety of an individual; 

ø(B) flight from prosecution; 

ø(C) destruction of or tampering with evidence; 

ø(D) intimidation of potential witnesses; or 

ø(E) otherwise seriously jeopardizing an investigation or unduly delaying a trial. 

ø(3) The governmental entity shall maintain a true copy of certification under paragraph (1)(B). 

ø(4) Extensions of the delay of notification provided in section 

2703 of up to ninety days each may be granted by the court upon 

application, or by certification by a governmental entity, but only 

in accordance with subsection (b) of this section. 

ø(5) Upon expiration of the period of delay of notification under 

paragraph (1) or (4) of this subsection, the governmental entity 

shall serve upon, or deliver by registered or first-class mail to, the 

customer or subscriber a copy of the process or request together 

with notice that— 

ø(A) states with reasonable specificity the nature of the law 

enforcement inquiry; and 

ø(B) informs such customer or subscriber— 

ø(i) that information maintained for such customer or 

subscriber by the service provider named in such process 

or request was supplied to or requested by that governmental authority and the date on which the supplying or 

request took place; 

ø(ii) that notification of such customer or subscriber was 

delayed; 

ø(iii) what governmental entity or court made the certification or determination pursuant to which that delay was 

made; and 

ø(iv) which provision of this chapter allowed such delay. 

ø(6) As used in this subsection, the term ‘‘supervisory official’’ 

means the investigative agent in charge or assistant investigative 

agent in charge or an equivalent of an investigating agency’s headquarters or regional office, or the chief prosecuting attorney or the 

first assistant prosecuting attorney or an equivalent of a prosecuting attorney’s headquarters or regional office. 

ø(b) PRECLUSION OF NOTICE TO SUBJECT OF GOVERNMENTAL AC- CESS.—A governmental entity acting under section 2703, when it is 

not required to notify the subscriber or customer under section 

2703(b)(1), or to the extent that it may delay such notice pursuant 

to subsection (a) of this section, may apply to a court for an order 

commanding a provider of electronic communications service or reVerDate Sep 11 2014 06:40 Jun 29, 2018 Jkt 030568 PO 00000 Frm 00434 Fmt 6659 Sfmt 6601 E:\HR\OC\HR792.XXX HR792
431 

mote computing service to whom a warrant, subpoena, or court 

order is directed, for such period as the court deems appropriate, 

not to notify any other person of the existence of the warrant, subpoena, or court order. The court shall enter such an order if it determines that there is reason to believe that notification of the existence of the warrant, subpoena, or court order will result in— 

ø(1) endangering the life or physical safety of an individual; 

ø(2) flight from prosecution; 

ø(3) destruction of or tampering with evidence; 

ø(4) intimidation of potential witnesses; or 

ø(5) otherwise seriously jeopardizing an investigation or unduly delaying a trial.¿ 

§ 2705. Delayed notice 

(a) IN GENERAL.—A governmental entity acting under section 

2703 may apply to a court for an order directing a provider of electronic communication service or remote computing service to which 

a warrant, order, subpoena, or other directive under section 2703 is 

directed not to notify any other person of the existence of the warrant, order, subpoena, or other directive. 

(b) DETERMINATION.—A court shall grant a request for an order 

made under subsection (a) for delayed notification of up to 180 days 

if the court determines that there is reason to believe that notification of the existence of the warrant, order, subpoena, or other directive will likely result in— 

(1) endangering the life or physical safety of an individual; 

(2) flight from prosecution; 

(3) destruction of or tampering with evidence; 

(4) intimidation of potential witnesses; or 

(5) otherwise seriously jeopardizing an investigation or unduly delaying a trial. 

(c) EXTENSION.—Upon request by a governmental entity, a court 

may grant one or more extensions, for periods of up to 180 days 

each, of an order granted in accordance with subsection (b). 

* * * * * * * 

(432) 

DISSENTING VIEWS 

The Bipartisan Budget Act enacted early this year provided relief 

from unworkable discretionary spending caps. The agreement was 

supposed to provide the country with stability following a year of 

shutdowns, last-minute veto threats, and general uncertainty in 

government. That stability lasted long enough for Congress to pass 

a bipartisan Omnibus appropriations bill for Fiscal Year (FY) 2018, 

and then Republican chaos reigned again. The President threatened to veto the bill, unhappy with Congress’ large investments in 

programs to help low- and middle-income Americans and rejection 

of his campaign-promised border wall. 

Even after the President signed the bill, the Administration and 

Republican leadership in Congress who voted for the Bipartisan 

Budget Act and the Omnibus bill have continued to attempt to 

undo those bipartisan agreements. The majority passed H.R. 3, a 

rescission bill to undo funding and mollify an angry President. We 

have been told by OMB Director Mick Mulvaney that this was the 

first of many rescission packages meant to bring spending in line 

with the President’s priorities, ignoring Congressional action that 

dismissed the President’s draconian FY 2018 budget request. 

In addition to the unacceptable rescissions proposals, the majority’s lack of transparency in allocating the FY 2019 discretionary 

budget also endangers future bipartisan compromise. The majority 

abandoned longstanding committee practice to provide Members 

and the public with a budget blueprint for domestic spending, 

known as 302(b) allocations. Members were asked to vote on bills 

without having the full picture on what impact each bill would 

have on the other bills. 

The Financial Services and General Government (FSGG) bill 

funds critical programs that impact the lives of every American in 

their capacity as consumers, as investors, and as taxpayers. The 

bill’s jurisdiction covers a diverse range of agencies including those 

that provide oversight and regulation of the financial and telecommunications industries, manage government buildings and infrastructure projects, and oversee the federal workforce. In addition, funding in this bill supports the operations of the White 

House, the Federal Judiciary, and the District of Columbia. 

While we appreciate the majority’s work in assembling the Fiscal 

Year (FY) 2019 FSGG bill, the sheer number of policy provisions 

in this bill reflects an unprecedented degree of focus on partisan 

priorities from the Majority’s side of the aisle. The bill’s allocation 

is the same as the 2018 enacted level, $23.423 billion, which does 

not adequately meet the growing needs of taxpayers, consumers, 

and investors. 

The bill’s most galling feature is its failure to provide any funding for Election Assistance Commission grants. Our election infrastructure is outdated, reliant on antiquated technology, and unable 

433 

to adequately defend against future intrusions. For instance, before 

the 2016 election, Russia targeted the election systems of at least 

21 states—including accessing the Illinois voter database. Congress 

has been repeatedly warned that Russia and other hostile actors 

will attempt to tamper with the 2018 or 2020 elections. With foreign governments attempting to disrupt and influence our democratic process, now is the time to double down on our efforts to prevent all forms of election hacking. Yet not a single Republican 

voted for an amendment from Ranking Member Quigley to provide 

$380 million, the amount appropriated in FY 2018, to help states 

fortify and protect election systems. 

The bill would also reduce the Community Development Financial Institutions (CDFI) Fund, one of the most significant bipartisan priorities within the subcommittee’s jurisdiction. Even after 

accepting an amendment to increase funding, the bill as reported 

out of committee is $34 million below the FY 2018 enacted level. 

CDFIs have historically generated twelve dollars of financing for 

every one dollar of appropriated funding. This committee should be 

doing more to ensure that low-income rural, urban, and Native 

American communities have access to quality, affordable, and responsible financial services products. 

Another particularly irresponsible cut targets the General Services Administration (GSA), which functions as the Federal Government’s developer and landlord. The bill decimates funding for the 

Federal Buildings Fund, forcing the agency to neglect high-priority 

safety and security projects. This lack of sufficient funding for repair projects further exacerbates an already dire situation. Every 

dollar that GSA is unable to spend on basic maintenance and repairs leads to a long-term capital liability of four to five dollars in 

the future. 

These reductions are particularly problematic when compared to 

some of the priorities of the majority. Most notable is the creation 

of a $585 million ‘‘Fund for America’s Kids and Grandkids.’’ This 

is an obvious attempt to not spend the subcommittee’s full allocation under the guise of deficit reduction. Instead of throwing $585 

million in a black hole, the resources provided for this program 

could have been far better invested in a number of areas that 

would have actually helped the next generation of Americans. 

Even more troubling than inadequate funding for critical priorities is the laundry list of ideological riders and authorizing provisions included in the bill. Titles IX, X, and XI contain 31 different 

authorizing bills. While several of these are non-controversial and 

received substantial Democratic support, they do not belong in a 

spending bill. It is disappointing that Republicans opposed an 

amendment offered by Rep. Kaptur to strike the extraneous titles. 

As in previous years, House Republicans have used the FSGG 

bill to attempt to weaken campaign finance laws. Riders are included to prevent the Securities and Exchange Commission (SEC) 

from requiring the disclosure of political contributions and to repeal the Federal Election Commission’s prior approval requirement, which places limits on political solicitation. Republicans rejected an amendment from Rep. Cartwright to strike the SEC provision. 

434 

Democrats also tried to remove provisions that interfere in women’s health decisions. Our Republican colleagues evidently are not 

satisfied with the restrictions already in place under current law, 

so this year’s FSGG appropriations bill would make it even more 

difficult for a woman to purchase the health insurance she wants. 

Ranking Member Lowey offered an amendment to strike this harmful provision and protect a woman’s right to make legal and private 

health choices without government interference, which Republicans 

opposed. 

Several of the objectionable Republican provisions that attack 

women’s right to safe and legal abortion services also continued the 

Republican tradition of interfering in the local affairs of the District of Columbia. As in past years, the bill contains a variety of 

provisions that impose limits on the District’s ability to govern 

itself. Rep. Ryan and Rep. Lee offered amendments to protect the 

District’s ability to spend its own funds to enforce its Reproductive 

Health Non-Discrimination Act and to cover safe and legal abortion 

under its Medicaid program, respectively. Republicans opposed 

both of these amendments. 

Rep. Aguilar offered an amendment that was rejected to make 

sure that individuals in the Deferred Action for Childhood Arrivals 

program, which covers certain non-criminal immigrants who entered the country as children and remain without U.S. citizenship, 

can lend their talents to the Federal workforce. Despite more Republican broken promises, Democrats will continue to work to help 

our Dreamers. 

Democrats sought to make a number of other improvements to 

the bill, including an amendment from Rep. McCollum to restore 

a provision to block pay raises for the Vice President and high 

ranking political appointees, an amendment from Rep. Serrano to 

nullify part-time Consumer Financial Protection Bureau Director 

Mulvaney’s firing of the entire Consumer Advisory Board, an 

amendment from Rep. Wasserman Schultz to remove the prohibition on funds for the Internal Revenue Service to deny tax exemption to churches for engaging in political activity, and an amendment from Reps. Price and Serrano to restore the FCC’s Open 

Internet Order and save net neutrality. All of these amendments 

were defeated. 

We were also disappointed that Republicans opposed an amendment from Rep. Joyce to ensure that financial institutions are not 

penalized solely because they provide services to entities involved 

with handling marijuana in states where such activity is legal. 

After several Republicans implied that they would support an 

amendment limited to entities handling medical marijuana, Rep. 

Joyce proposed such an amendment. The Majority encouraged him 

to withdraw that amendment as well. Democrats will continue to 

work to provide clarity for financial institutions and others operating legal businesses. 

Despite the bill’s numerous shortcomings, we are pleased that it 

would increase funding for the Office of Terrorism and Financial 

Intelligence, Federal Defender Services, Small Business Administration, and Office of National Drug Control Policy. Additionally, 

we thank Chairman Graves for directing the United States Postal 

Service to issue a report on the adequacy of personnel levels, the 

435 

use of temporary employees, and consolidation of distribution centers. Inconsistent mail delivery has reached epidemic proportions 

in many areas, and must be improved. 

However, on balance the reductions to critical programs and poison pill riders make this a bill Democrats strongly oppose. It is the 

latest example of House Republicans following President Trump’s 

lead and turning their backs on hardworking American families. 

NITA M. LOWEY. 

MIKE QUIGLEY. 

Æ