19–006 

112TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 112–453 

SEC REGULATORY ACCOUNTABILITY ACT 

APRIL 25, 2012.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. BACHUS, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

together with 

MINORITY VIEWS 

[To accompany H.R. 2308] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 2308) to improve the consideration by the Securities and 

Exchange Commission of the costs and benefits of its regulations 

and orders, having considered the same, report favorably thereon 

with an amendment and recommend that the bill as amended do 

pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘SEC Regulatory Accountability Act’’. 

SEC. 2. CONSIDERATION BY THE SECURITIES AND EXCHANGE COMMISSION OF THE COSTS 

AND BENEFITS OF ITS REGULATIONS AND CERTAIN OTHER AGENCY ACTIONS. 

Section 23 of the Securities Exchange Act of 1934 (15 U.S.C. 78w) is amended by 

adding at the end the following: 

‘‘(e) CONSIDERATION OF COSTS AND BENEFITS.— 

‘‘(1) IN GENERAL.—Before issuing a regulation under the securities laws, as 

defined in section 3(a), the Commission shall— 

‘‘(A) clearly identify the nature and source of the problem that the proposed regulation is designed to address, as well as assess the significance 

of that problem, to enable assessment of whether any new regulation is 

warranted; 

‘‘(B) utilize the Chief Economist to assess the costs and benefits, both 

qualitative and quantitative, of the intended regulation and propose or 

adopt a regulation only on a reasoned determination that the benefits of the 

intended regulation justify the costs of the regulation; 


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‘‘(C) identify and assess available alternatives to the regulation that were 

considered, including modification of an existing regulation, together with 

an explanation of why the regulation meets the regulatory objectives more 

effectively than the alternatives; and 

‘‘(D) ensure that any regulation is accessible, consistent, written in plain 

language, and easy to understand and shall measure, and seek to improve, 

the actual results of regulatory requirements. 

‘‘(2) CONSIDERATIONS AND ACTIONS.— ‘‘(A) REQUIRED ACTIONS.—In deciding whether and how to regulate, the 

Commission shall assess the costs and benefits of available regulatory alternatives, including the alternative of not regulating, and choose the approach that maximizes net benefits. Specifically, the Commission shall— 

‘‘(i) consistent with the requirements of section 3(f) (15 U.S.C. 78c(f)), 

section 2(b) of the Securities Act of 1933 (15 U.S.C. 77b(b)), section 

202(c) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(c)), and 

section 2(c) of the Investment Company Act of 1940 (15 U.S.C. 80a– 

2(c)), consider whether the rulemaking will promote efficiency, competition, and capital formation; 

‘‘(ii) evaluate whether, consistent with obtaining regulatory objectives, the regulation is tailored to impose the least burden on society, 

including market participants, individuals, businesses of differing sizes, 

and other entities (including State and local governmental entities), 

taking into account, to the extent practicable, the cumulative costs of 

regulations; and 

‘‘(iii) evaluate whether the regulation is inconsistent, incompatible, or 

duplicative of other Federal regulations. 

‘‘(B) ADDITIONAL CONSIDERATIONS.—In addition, in making a reasoned determination of the costs and benefits of a potential regulation, the Commission shall, to the extent that each is relevant to the particular proposed regulation, take into consideration the impact of the regulation on— 

‘‘(i) investor choice; 

‘‘(ii) market liquidity in the securities markets; and 

‘‘(iii) small businesses 

‘‘(3) EXPLANATION AND COMMENTS.—The Commission shall explain in its final 

rule the nature of comments that it received, including those from the industry 

or consumer groups concerning the potential costs or benefits of the proposed 

rule or proposed rule change, and shall provide a response to those comments 

in its final rule, including an explanation of any changes that were made in response to those comments and the reasons that the Commission did not incorporate those industry group concerns related to the potential costs or benefits 

in the final rule. 

‘‘(4) REVIEW OF EXISTING REGULATIONS.—Not later than 1 year after the date 

of enactment of the SEC Regulatory Accountability Act, and every 5 years 

thereafter, the Commission shall review its regulations to determine whether 

any such regulations are outmoded, ineffective, insufficient, or excessively burdensome, and shall modify, streamline, expand, or repeal them in accordance 

with such review. 

‘‘(5) POST-ADOPTION IMPACT ASSESSMENT.— 

‘‘(A) IN GENERAL.—Whenever the Commission adopts or amends a regulation designated as a ‘major rule’ within the meaning of section 804(2) of 

title 5, United States Code, it shall state, in its adopting release, the following: 

‘‘(i) The purposes and intended consequences of the regulation. 

‘‘(ii) Appropriate post-implementation quantitative and qualitative 

metrics to measure the economic impact of the regulation and to measure the extent to which the regulation has accomplished the stated purposes. 

‘‘(iii) The assessment plan that will be used, consistent with the requirements of subparagraph (B) and under the supervision of the Chief 

Economist of the Commission, to assess whether the regulation has 

achieved the stated purposes. 

‘‘(iv) Any unintended or negative consequences that the Commission 

foresees may result from the regulation. 

‘‘(B) REQUIREMENTS OF ASSESSMENT PLAN AND REPORT.— 

‘‘(i) REQUIREMENTS OF PLAN.—The assessment plan required under 

this paragraph shall consider the costs, benefits, and intended and unintended consequences of the regulation. The plan shall specify the 

data to be collected, the methods for collection and analysis of the data 

and a date for completion of the assessment. 


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‘‘(ii) SUBMISSION AND PUBLICATION OF REPORT.—The Chief Economist 

shall submit the completed assessment report to the Commission no 

later than 2 years after the publication of the adopting release, unless 

the Commission, at the request of the Chief Economist, has published 

at least 90 days before such date a notice in the Federal Register extending the date and providing specific reasons why an extension is 

necessary. Within 7 days after submission to the Commission of the 

final assessment report, it shall be published in the Federal Register 

for notice and comment. Any material modification of the plan, as necessary to assess unforeseen aspects or consequences of the regulation, 

shall be promptly published in the Federal Register for notice and comment. 

‘‘(iii) DATA COLLECTION NOT SUBJECT TO NOTICE AND COMMENT RE- QUIREMENTS.—If the Commission has published its assessment plan for 

notice and comment, specifying the data to be collected and method of 

collection, at least 30 days prior to adoption of a final regulation or 

amendment, such collection of data shall not be subject to the notice 

and comment requirements in section 3506(c) of title 44, United States 

Code (commonly referred to as the Paperwork Reduction Act). Any material modifications of the plan that require collection of data not previously published for notice and comment shall also be exempt from 

such requirements if the Commission has published notice for comment 

in the Federal Register of the additional data to be collected, at least 

30 days prior to initiation of data collection. 

‘‘(iv) FINAL ACTION.—Not later than 180 days after publication of the 

assessment report in the Federal Register, the Commission shall issue 

for notice and comment a proposal to amend or rescind the regulation, 

or publish a notice that the Commission has determined that no action 

will be taken on the regulation. Such a notice will be deemed a final 

agency action. 

‘‘(6) COVERED REGULATIONS AND OTHER AGENCY ACTIONS.—Solely as used in 

this subsection, the term ‘regulation’— 

‘‘(A) means an agency statement of general applicability and future effect 

that is designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency, including rules, 

orders of general applicability, interpretive releases, and other statements 

of general applicability that the agency intends to have the force and effect 

of law; and 

‘‘(B) does not include— 

‘‘(i) a regulation issued in accordance with the formal rulemaking 

provisions of section 556 or 557 of title 5, United States Code; 

‘‘(ii) a regulation that is limited to agency organization, management, 

or personnel matters; 

‘‘(iii) a regulation promulgated pursuant to statutory authority that 

expressly prohibits compliance with this provision; and 

‘‘(iv) a regulation that is certified by the agency to be an emergency 

action, if such certification is published in the Federal Register.’’. 

SEC. 3. SUBMISSION OF PLAN FOR SUBJECTING OTHER REGULATORY ENTITIES TO COST AND 

BENEFIT REQUIREMENTS. 

Not later than 1 year after the date of enactment of this Act, the Securities and 

Exchange Commission shall provide to the Committee on Financial Services of the 

House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate a report setting forth a plan for subjecting the Public Company 

Accounting Oversight Board, the Municipal Securities Rulemaking Board, and any 

national securities association registered under section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o–4(a)) to the requirements subsection (e) of section 

23 of such Act, as added by this Act. 

PURPOSE AND SUMMARY

H.R. 2308, the ‘‘SEC Regulatory Accountability Act,’’ requires the 

Securities and Exchange Commission (SEC) to conduct cost-benefit 

analyses in order to ensure that the benefits of its regulation justify the costs of the regulation. 

H.R. 2308 requires, in general, the SEC to identify a problem 

and assess its significance before the SEC issues a rule in order to 

determine whether regulation is warranted. The bill requires the 


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SEC’s Chief Economist to conduct a cost-benefit analysis of proposed regulations, and it requires that the benefits of proposed regulations justify their costs before the SEC can issue them. The bill 

requires the SEC to identify and assess alternatives to regulations 

that it considers, and to explain why a regulation that it issues 

meets regulatory objectives more effectively than the alternatives. 

The bill requires the SEC to ensure that its regulations be accessible, consistent, written in plain language, and easy to understand, and to measure and seek to improve the results of regulatory requirements. 

More specifically, H.R. 2308 requires the SEC, in deciding whether and how to regulate, to assess the costs and benefits of regulatory alternatives, including the alternative of not regulating, and 

to choose the approach that maximizes net benefits. The bill requires the SEC to specifically consider whether rulemaking will 

promote efficiency, competition, and capital formation; to evaluate 

whether the regulation is tailored to impose the least burden on society—including market participants, individuals, different-sized 

businesses, and other entities (including state and local governments)—taking into account the cumulative costs of regulation; and 

to evaluate whether the regulation is inconsistent with, incompatible with, or duplicative of other federal regulations. The bill also 

requires the SEC to consider the effect of a potential regulation on 

investor choice, market liquidity, and small businesses. The SEC is 

not required to conduct cost-benefit analyses for orders that are not 

‘‘generally applicable,’’ formal rulemakings related to enforcement 

actions, or regulations certified by the SEC as an emergency action. 

H.R. 2308 requires the SEC to review its existing regulations 

within one year of the bill’s enactment and every five years thereafter, to determine whether any of its regulations are outmoded, ineffective, insufficient, or excessively burdensome, and to modify, 

streamline, expand, or repeal them in accordance with that review. 

The bill also requires the SEC to conduct a post-adoption or postamendment assessment of any major regulation to measure the 

economic impact of the regulation and the extent to which it has 

accomplished its stated purposes. 

Finally, H.R. 2308 requires the SEC to report its plans to Congress for subjecting the Public Company Accounting Oversight 

Board, the Municipal Securities Rulemaking Board, and any national securities association registered under section 15A of the Securities Exchange Act of 1934 to the requirements of the bill within 

one year of the bill’s enactment. 

BACKGROUND AND NEED FOR LEGISLATION

Introduced by Capital Markets and Government Sponsored Enterprises Subcommittee Chairman Garrett, H.R. 2308 requires the 

SEC to generally follow the principles set forth in Executive Order 

No. 13563, which directs non-independent executive branch agencies to adopt regulations only if the benefits of the regulations justify their costs; to tailor regulations to impose the least burden on 

society; and to develop plans for retrospectively analyzing rules to 

identify those that are outmoded, ineffective, insufficient, or excessively burdensome and to modify, streamline, expand, or repeal 


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1 Exec. Order No. 13,563, ‘‘Improving Regulation and Regulatory Review,’’ 76 Fed. 3,821 (Jan. 

21, 2011). 2See Follow-Up Review of Cost-Benefit Analyses in Selected SEC Dodd-Frank Act 

Rulemakings, Office of Inspector General, Office of Audits, Jan. 27, 2012, available at: http:// 

www.sec-oig.gov/Reports/Audits,Inspection/2012/499.pdf. 3See Business Roundtable v. SEC, 647 F.3d 1144. (D.C. Cir. 2011). 

them accordingly.1 Although Executive Order No. 13563 applies to 

non-independent agencies, it does not apply to independent agencies, such as the SEC. As the Executive Office of the President 

noted on February 2, 2011, ‘‘Executive Order 13563 does not apply 

to independent agencies.’’ Nonetheless, ‘‘such agencies are encouraged to give consideration to all of its provisions, consistent with 

their legal authority. In particular, such agencies are encouraged 

to consider undertaking, on a voluntary basis, retrospective analysis of existing rules.’’ SEC Chairman Mary Schapiro has indicated 

that under her leadership, the SEC would voluntarily follow the 

guidance set forth in Executive Order No. 13563. 

Nonetheless, neither Executive Order 13563 nor statute compels 

the SEC to weigh the costs and benefits of the regulations that it 

issues. The SEC Office of Inspector General has reported that the 

SEC ‘‘is not subject to an express statutory requirement to conduct 

cost-benefit analyses for its rulemakings.’’ Because there is no express statutory requirement that the SEC conduct cost-benefit 

analyses, the SEC has neither uniformly nor consistently conducted 

such analyses as part of its rulemaking. As the SEC Office of Inspector General noted, ‘‘The extent of quantitative discussion of 

cost-benefit analyses varied among rulemakings,’’ and ‘‘none of the 

rulemakings examined in our phase II review attempted to quantify either benefits or costs other than information collection costs 

as required by the Paperwork Reduction Act.’’ The SEC Inspector 

General also found that ‘‘some SEC Dodd-Frank Act rulemakings 

lacked clear, explicit explanations of the justification for regulatory 

action.’’ 2

Perhaps the most compelling rationale for H.R. 2308 was offered 

by the U.S. Court of Appeals for the D.C. Circuit when it struck 

down the SEC’s proxy access rule. As the court’s unanimous opinion explained, the SEC—in promulgating its rule—‘‘inconsistently 

and opportunistically framed the costs and benefits of the rule; 

failed adequately to quantify the certain costs or to explain why 

those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters.’’ 3 To address the shortcomings in the SEC’s rulemaking identified by both the SEC’s own 

Office of Inspector General and the D.C. Circuit Court of Appeals, 

H.R. 2308 mandates that the SEC conduct cost-benefit analyses, 

rather than leaving that decision to the discretion of the SEC’s 

Chairman. 

HEARINGS

On September 15, 2011, the Committee on Financial Services 

held a hearing titled ‘‘Fixing the Watchdog: Legislative Proposals 

to Improve and Enhance the Securities and Exchange Commission,’’ at which the provisions of H.R. 2308 were discussed. The following witnesses testified: 


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• The Honorable Mary Schapiro, Chairman, U.S. Securities 

and Exchange Commission • Mr. Shubh Saumya, Partner and Managing Director, Boston Consulting Group • The Honorable Paul Atkins, Visiting Scholar, American 

Enterprise Institute, and Former Commissioner, U.S. Securities and Exchange Commission • Mr. Stephen D. Crimmins, Partner, K&L Gates LLP, and 

Former Deputy Chief Litigation Counsel, Division of Enforcement, U.S. Securities and Exchange Commission • Mr. Jonathan G. ‘‘Jack’’ Katz, Former Secretary, U.S. Securities and Exchange Commission, on behalf of the U.S. 

Chamber of Commerce • The Honorable Harvey Pitt, Chief Executive Officer, 

Kalorama Partners, LLC, and Former Chairman, U.S. Securities and Exchange Commission • Mr. J.W. Verret, Assistant Professor of Law, George 

Mason University School of Law 

COMMITTEE CONSIDERATION

The Subcommittee on Capital Markets and Government Sponsored Enterprises met in open session on November 15, 2011, and 

ordered H.R. 2308, as amended, favorably reported to the full Committee by a record vote of 19 yeas and 15 nays (Record vote no. 

CM–46). 

The Committee on Financial Services met in open session on 

February 16, 2012, and ordered H.R. 2308, as amended, favorably 

reported to the House by a record vote of 30 yeas and 26 nays 

(Record vote no. FC–62). 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. A motion by Chairman Bachus to report the bill, as amended, to the House with a 

favorable recommendation was agreed to by a record vote of 30 

yeas and 26 nays (Record vote no. FC–62). The names of Members 

voting for and against follow: 

RECORD VOTE NO. FC–62 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Bachus ........................... X ........... ............. Mr. Frank (MA) ..................... ........... X .............

Mr. Hensarling ...................... X ........... ............. Ms. Waters ........................... ........... X .............

Mr. King (NY) ........................ ........... ........... ............. Mrs. Maloney ........................ ........... X .............

Mr. Royce .............................. X ........... ............. Mr. Gutierrez ........................ ........... X .............

Mr. Lucas .............................. X ........... ............. Ms. Vela ́zquez ...................... ........... X .............

Mr. Paul ................................ ........... ........... ............. Mr. Watt ............................... ........... X .............

Mr. Manzullo ......................... X ........... ............. Mr. Ackerman ....................... ........... X .............

Mr. Jones ............................... X ........... ............. Mr. Sherman ........................ ........... X .............

Mrs. Biggert .......................... X ........... ............. Mr. Meeks ............................. ........... X .............

Mr. Gary G. Miller (CA) ......... ........... ........... ............. Mr. Capuano ........................ ........... X .............

Mrs. Capito ........................... X ........... ............. Mr. Hinojosa ......................... ........... X .............

Mr. Garrett ............................ X ........... ............. Mr. Clay ................................ ........... X .............

Mr. Neugebauer .................... X ........... ............. Mrs. McCarthy (NY) .............. ........... X .............

Mr. McHenry .......................... X ........... ............. Mr. Baca .............................. ........... X .............

Mr. Campbell ........................ ........... ........... ............. Mr. Lynch ............................. ........... X .............

Mrs. Bachmann .................... X ........... ............. Mr. Miller (NC) ..................... ........... X .............


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RECORD VOTE NO. FC–62—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. McCotter ......................... X ........... ............. Mr. David Scott (GA) ............ ........... X .............

Mr. McCarthy (CA) ................ X ........... ............. Mr. Al Green (TX) ................. ........... X .............

Mr. Pearce ............................. X ........... ............. Mr. Cleaver ........................... ........... ........... .............

Mr. Posey .............................. X ........... ............. Ms. Moore ............................. ........... X .............

Mr. Fitzpatrick ....................... X ........... ............. Mr. Ellison ............................ ........... X .............

Mr. Westmoreland ................. X ........... ............. Mr. Perlmutter ...................... ........... X .............

Mr. Luetkemeyer .................... X ........... ............. Mr. Donnelly ......................... ........... X .............

Mr. Huizenga ......................... X ........... ............. Mr. Carson ........................... ........... X .............

Mr. Duffy ............................... X ........... ............. Mr. Himes ............................. ........... X .............

Ms. Hayworth ........................ X ........... ............. Mr. Peters ............................. ........... X .............

Mr. Renacci ........................... X ........... ............. Mr. Carney ............................ ........... X .............

Mr. Hurt ................................ X ........... .............

Mr. Dold ................................ X ........... .............

Mr. Schweikert ...................... X ........... .............

Mr. Grimm ............................. X ........... .............

Mr. Canseco .......................... X ........... .............

Mr. Stivers ............................ X ........... .............

Mr. Fincher ............................ X ........... .............

During consideration of H.R. 2308 by the Committee, the following amendments were considered: 

1. An amendment offered by Mr. Carson, no. 3, to strike the operative provisions of the bill and instead require the Government 

Accountability Office (GAO) to evaluate the uses and limits of costbenefit analyses as part of the SEC’s regulatory processes, to compare the SEC’s use of economic analysis in rulemaking to that of 

other financial regulatory agencies, and to identify metrics to 

evaluate the benefits and costs of regulatory action, was not agreed 

to by a record vote of 25 yeas and 30 nays (Record vote no. FC– 

58). 

RECORD VOTE NO. FC–58 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Bachus ........................... ........... X ............. Mr. Frank (MA) ..................... X ........... .............

Mr. Hensarling ...................... ........... X ............. Ms. Waters ........................... X ........... .............

Mr. King (NY) ........................ ........... ........... ............. Mrs. Maloney ........................ ........... ........... .............

Mr. Royce .............................. ........... X ............. Mr. Gutierrez ........................ X ........... .............

Mr. Lucas .............................. ........... X ............. Ms. Vela ́zquez ...................... X ........... .............

Mr. Paul ................................ ........... ........... ............. Mr. Watt ............................... X ........... .............

Mr. Manzullo ......................... ........... X ............. Mr. Ackerman ....................... X ........... .............

Mr. Jones ............................... ........... X ............. Mr. Sherman ........................ X ........... .............

Mrs. Biggert .......................... ........... X ............. Mr. Meeks ............................. X ........... .............

Mr. Gary G. Miller (CA) ......... ........... ........... ............. Mr. Capuano ........................ X ........... .............

Mrs. Capito ........................... ........... X ............. Mr. Hinojosa ......................... X ........... .............

Mr. Garrett ............................ ........... X ............. Mr. Clay ................................ X ........... .............

Mr. Neugebauer .................... ........... X ............. Mrs. McCarthy (NY) .............. X ........... .............

Mr. McHenry .......................... ........... X ............. Mr. Baca .............................. X ........... .............

Mr. Campbell ........................ ........... ........... ............. Mr. Lynch ............................. X ........... .............

Mrs. Bachmann .................... ........... X ............. Mr. Miller (NC) ..................... X ........... .............

Mr. McCotter ......................... ........... X ............. Mr. David Scott (GA) ............ X ........... .............

Mr. McCarthy (CA) ................ ........... X ............. Mr. Al Green (TX) ................. X ........... .............

Mr. Pearce ............................. ........... X ............. Mr. Cleaver ........................... ........... ........... .............

Mr. Posey .............................. ........... X ............. Ms. Moore ............................. X ........... .............

Mr. Fitzpatrick ....................... ........... X ............. Mr. Ellison ............................ X ........... .............

Mr. Westmoreland ................. ........... X ............. Mr. Perlmutter ...................... X ........... .............

Mr. Luetkemeyer .................... ........... X ............. Mr. Donnelly ......................... X ........... .............

Mr. Huizenga ......................... ........... X ............. Mr. Carson ........................... X ........... .............

Mr. Duffy ............................... ........... X ............. Mr. Himes ............................. X ........... .............

Ms. Hayworth ........................ ........... X ............. Mr. Peters ............................. X ........... .............

Mr. Renacci ........................... ........... X ............. Mr. Carney ............................ X ........... .............


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RECORD VOTE NO. FC–58—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Hurt ................................ ........... X .............

Mr. Dold ................................ ........... X .............

Mr. Schweikert ...................... ........... X .............

Mr. Grimm ............................. ........... X .............

Mr. Canseco .......................... ........... X .............

Mr. Stivers ............................ ........... X .............

Mr. Fincher ............................ ........... X .............

2. An amendment offered by Mr. Miller of North Carolina, no. 4, 

to strike the operative provisions of the bill and instead require the 

GAO to study the costs and benefits of implementing H.R. 2308, 

was not agreed to by a record vote of 25 yeas and 30 nays (Record 

vote no. FC–59). 

RECORD VOTE NO. FC–59 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Bachus ........................... ........... X ............. Mr. Frank (MA) ..................... X ........... .............

Mr. Hensarling ...................... ........... X ............. Ms. Waters ........................... X ........... .............

Mr. King (NY) ........................ ........... ........... ............. Mrs. Maloney ........................ ........... ........... .............

Mr. Royce .............................. ........... X ............. Mr. Gutierrez ........................ X ........... .............

Mr. Lucas .............................. ........... X ............. Ms. Vela ́zquez ...................... X ........... .............

Mr. Paul ................................ ........... ........... ............. Mr. Watt ............................... X ........... .............

Mr. Manzullo ......................... ........... X ............. Mr. Ackerman ....................... X ........... .............

Mr. Jones ............................... ........... X ............. Mr. Sherman ........................ X ........... .............

Mrs. Biggert .......................... ........... X ............. Mr. Meeks ............................. X ........... .............

Mr. Gary G. Miller (CA) ......... ........... ........... ............. Mr. Capuano ........................ X ........... .............

Mrs. Capito ........................... ........... X ............. Mr. Hinojosa ......................... X ........... .............

Mr. Garrett ............................ ........... X ............. Mr. Clay ................................ X ........... .............

Mr. Neugebauer .................... ........... X ............. Mrs. McCarthy (NY) .............. X ........... .............

Mr. McHenry .......................... ........... X ............. Mr. Baca .............................. X ........... .............

Mr. Campbell ........................ ........... ........... ............. Mr. Lynch ............................. X ........... .............

Mrs. Bachmann .................... ........... X ............. Mr. Miller (NC) ..................... X ........... .............

Mr. McCotter ......................... ........... X ............. Mr. David Scott (GA) ............ X ........... .............

Mr. McCarthy (CA) ................ ........... X ............. Mr. Al Green (TX) ................. X ........... .............

Mr. Pearce ............................. ........... X ............. Mr. Cleaver ........................... ........... ........... .............

Mr. Posey .............................. ........... X ............. Ms. Moore ............................. X ........... .............

Mr. Fitzpatrick ....................... ........... X ............. Mr. Ellison ............................ X ........... .............

Mr. Westmoreland ................. ........... X ............. Mr. Perlmutter ...................... X ........... .............

Mr. Luetkemeyer .................... ........... X ............. Mr. Donnelly ......................... X ........... .............

Mr. Huizenga ......................... ........... X ............. Mr. Carson ........................... X ........... .............

Mr. Duffy ............................... ........... X ............. Mr. Himes ............................. X ........... .............

Ms. Hayworth ........................ ........... X ............. Mr. Peters ............................. X ........... .............

Mr. Renacci ........................... ........... X ............. Mr. Carney ............................ X ........... .............

Mr. Hurt ................................ ........... X .............

Mr. Dold ................................ ........... X .............

Mr. Schweikert ...................... ........... X .............

Mr. Grimm ............................. ........... X .............

Mr. Canseco .......................... ........... X .............

Mr. Stivers ............................ ........... X .............

Mr. Fincher ............................ ........... X .............

3. An amendment offered by Ms. Waters, no. 5, to make the costbenefit analyses mandated by H.R. 2308 subject to appropriations 

made specifically for the purpose of conducting these analyses and 

to authorize appropriations for these analyses, was not agreed to 

by a record vote of 26 yeas and 30 nays (Record vote no. FC–60). 


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RECORD VOTE NO. FC–60 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Bachus ........................... ........... X ............. Mr. Frank (MA) ..................... X ........... .............

Mr. Hensarling ...................... ........... X ............. Ms. Waters ........................... X ........... .............

Mr. King (NY) ........................ ........... ........... ............. Mrs. Maloney ........................ X ........... .............

Mr. Royce .............................. ........... X ............. Mr. Gutierrez ........................ X ........... .............

Mr. Lucas .............................. ........... X ............. Ms. Vela ́zquez ...................... X ........... .............

Mr. Paul ................................ ........... ........... ............. Mr. Watt ............................... X ........... .............

Mr. Manzullo ......................... ........... X ............. Mr. Ackerman ....................... X ........... .............

Mr. Jones ............................... ........... X ............. Mr. Sherman ........................ X ........... .............

Mrs. Biggert .......................... ........... X ............. Mr. Meeks ............................. X ........... .............

Mr. Gary G. Miller (CA) ......... ........... ........... ............. Mr. Capuano ........................ X ........... .............

Mrs. Capito ........................... ........... X ............. Mr. Hinojosa ......................... X ........... .............

Mr. Garrett ............................ ........... X ............. Mr. Clay ................................ X ........... .............

Mr. Neugebauer .................... ........... X ............. Mrs. McCarthy (NY) .............. X ........... .............

Mr. McHenry .......................... ........... X ............. Mr. Baca .............................. X ........... .............

Mr. Campbell ........................ ........... ........... ............. Mr. Lynch ............................. X ........... .............

Mrs. Bachmann .................... ........... X ............. Mr. Miller (NC) ..................... X ........... .............

Mr. McCotter ......................... ........... X ............. Mr. David Scott (GA) ............ X ........... .............

Mr. McCarthy (CA) ................ ........... X ............. Mr. Al Green (TX) ................. X ........... .............

Mr. Pearce ............................. ........... X ............. Mr. Cleaver ........................... ........... ........... .............

Mr. Posey .............................. ........... X ............. Ms. Moore ............................. X ........... .............

Mr. Fitzpatrick ....................... ........... X ............. Mr. Ellison ............................ X ........... .............

Mr. Westmoreland ................. ........... X ............. Mr. Perlmutter ...................... X ........... .............

Mr. Luetkemeyer .................... ........... X ............. Mr. Donnelly ......................... X ........... .............

Mr. Huizenga ......................... ........... X ............. Mr. Carson ........................... X ........... .............

Mr. Duffy ............................... ........... X ............. Mr. Himes ............................. X ........... .............

Ms. Hayworth ........................ ........... X ............. Mr. Peters ............................. X ........... .............

Mr. Renacci ........................... ........... X ............. Mr. Carney ............................ X ........... .............

Mr. Hurt ................................ ........... X .............

Mr. Dold ................................ ........... X .............

Mr. Schweikert ...................... ........... X .............

Mr. Grimm ............................. ........... X .............

Mr. Canseco .......................... ........... X .............

Mr. Stivers ............................ ........... X .............

Mr. Fincher ............................ ........... X .............

4. An amendment offered by Messrs. Schweikert and Garrett, no. 

6, to require the SEC to consider the impact of proposed regulations on small businesses in determining the costs and benefits of 

potential regulation; and to require the SEC, when it amends or 

adopts a major rule, to list in its adopting release any unintended 

or negative consequences that the SEC foresees may result from 

the regulation, was agreed to by a record vote of 30 yeas and 26 

nays (Record vote no. 61). 

RECORD VOTE NO. FC–61 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Bachus .................. X ........... ............. Mr. Frank (MA) ............ ........... X .............

Mr. Hensarling ............. X ........... ............. Ms. Waters .................. ........... X .............

Mr. King (NY) ............... ............................. ........... ............. Mrs. Maloney ............... ........... X .............

Mr. Royce ..................... X ........... ............. Mr. Gutierrez ................ ........... X .............

Mr. Lucas ..................... X ........... ............. Ms. Vela ́zquez .............. ........... X .............

Mr. Paul ....................... ............................. ........... ............. Mr. Watt ...................... ........... X .............

Mr. Manzullo ................ X ........... ............. Mr. Ackerman .............. ........... X .............

Mr. Jones ..................... X ........... ............. Mr. Sherman ................ ........... X .............

Mrs. Biggert ................. X ........... ............. Mr. Meeks .................... ........... X .............

Mr. Gary G. Miller (CA) ............................. ........... ............. Mr. Capuano ................ ........... X .............

Mrs. Capito .................. X ........... ............. Mr. Hinojosa ................ ........... X .............

Mr. Garrett ................... X ........... ............. Mr. Clay ....................... ........... X .............

Mr. Neugebauer ........... X ........... ............. Mrs. McCarthy (NY) ..... ........... X .............

Mr. McHenry ................. X ........... ............. Mr. Baca ...................... ........... X .............

Mr. Campbell ............... ............................. ........... ............. Mr. Lynch ..................... ........... X .............


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RECORD VOTE NO. FC–61—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mrs. Bachmann ........... X ........... ............. Mr. Miller (NC) ............ ........... X .............

Mr. McCotter ................ X ........... ............. Mr. David Scott (GA) ... ........... X .............

Mr. McCarthy (CA) ....... X ........... ............. Mr. Al Green (TX) ........ ........... X .............

Mr. Pearce ................... X ........... ............. Mr. Cleaver .................. ........... ........... .............

Mr. Posey ..................... X ........... ............. Ms. Moore .................... ........... X .............

Mr. Fitzpatrick ............. X ........... ............. Mr. Ellison ................... ........... X .............

Mr. Westmoreland ........ X ........... ............. Mr. Perlmutter ............. ........... X .............

Mr. Luetkemeyer .......... X ........... ............. Mr. Donnelly ................ ........... X .............

Mr. Huizenga ............... X ........... ............. Mr. Carson ................... ........... X .............

Mr. Duffy ...................... X ........... ............. Mr. Himes .................... ........... X .............

Ms. Hayworth ............... X ........... ............. Mr. Peters .................... ........... X .............

Mr. Renacci ................. X ........... ............. Mr. Carney ................... ........... X .............

Mr. Hurt ....................... X ........... .............

Mr. Dold ....................... X ........... .............

Mr. Schweikert ............. X ........... .............

Mr. Grimm ................... X ........... .............

Mr. Canseco ................. X ........... .............

Mr. Stivers ................... X ........... .............

Mr. Fincher .................. X ........... .............

The following amendments were also considered by the Committee: 

1. An amendment offered by Mr. Miller of California, no. 1, to require the SEC to explain in final rules that it issues the nature of 

comments that it received concerning potential costs or benefits of 

a proposed rule or proposed rule change and to respond to those 

comments in its final rule, was agreed to by voice vote. 

2. An amendment in the nature of a substitute offered by Mrs. 

Maloney, no. 2, to strike the bill’s text and replace it with a sense 

of Congress relating to existing requirements for economic analysis 

applicable to the SEC, was not agreed to by voice vote. 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee has held hearings and made 

findings that are reflected in this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee establishes the following performance related goals and objectives for this legislation: 

The objectives of H.R. 2308, the ‘‘SEC Regulatory Accountability 

Act,’’ are the following: 

• To require the SEC to conduct cost-benefit analyses in 

order to ensure that the benefits of any of its regulations justify the costs of the regulation; 

• To require the SEC to identify a problem and assess its 

significance before the SEC issues a rule in order to determine 

whether regulation is warranted; 

• To require the SEC to use its Chief Economist to assess 

the costs and benefits of proposed regulations; 

• To require that the benefits of regulations proposed by the 

SEC justify the costs of those regulations before the SEC can 

issue them; 


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• To require the SEC to identify alternatives to new regulations that it considers, including modifications of existing regulations; • To ensure that regulations issued by the SEC are accessible, consistent, written in plain language, and easy to understand, and that the SEC seek to improve the results of its regulatory requirements; • To require the SEC to consider whether proposed regulations will promote efficiency, competition, and capital formation; • To require the SEC to tailor regulations to impose the 

least burden on society from a cumulative cost standpoint, including the costs imposed on market participants, differentsized businesses, state and local governments, and other entities; • To require the SEC to consider the effect of regulation on 

investor choice, market liquidity, and small businesses; • To require the SEC to review its existing regulations to determine whether any are outmoded, ineffective, insufficient, or 

excessively burdensome, and to modify, streamline, expand, or 

repeal them accordingly; 

• To require the SEC to conduct a post-adoption impact assessment of major regulations that it adopts or amends; and 

• To require the SEC to report a plan to Congress for requiring regulatory entities registered with the SEC to conduct costbenefit analyses for the regulations they promulgate. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

APRIL 5, 2012. 

Hon. SPENCER BACHUS, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2308, the SEC Regulatory 

Accountability Act. 


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If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Susan Willie. 

Sincerely, 

DOUGLAS W. ELMENDORF. 

Enclosure. 

H.R. 2308—SEC Regulatory Accountability Act 

Summary: H.R. 2308 would broaden the scope of analysis performed by the Securities and Exchange Commission (SEC) when 

issuing or amending regulations. The bill also would direct the SEC 

to develop a plan to implement the same procedural changes at the 

Public Company Accounting Oversight Board (PCAOB) and other 

entities that supervise securities markets. 

Based on information from the SEC, CBO estimates that implementing H.R. 2308 would cost the SEC about $22 million over the 

2013–2017 period, assuming appropriation of the necessary 

amounts. Under current law, the SEC is authorized to collect fees 

sufficient to offset its annual appropriation; therefore, CBO estimates the net budgetary effect of the SEC’s activities undertaken 

to implement H.R. 2308 would not be significant, assuming appropriation actions consistent with the commission’s authorities. 

Through its effects on the PCAOB, CBO estimates that enacting 

H.R. 2308 would increase direct spending by $8 million and revenues by $6 million over the 2013–2022 period. Taken together, 

those changes would increase the budget deficit by $2 million over 

the ten-year period. Because enacting H.R. 2308 would increase 

both direct spending and revenues, pay-as-you-go procedures apply. 

H.R. 2308 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA) and would impose no 

costs on state, local, or tribal governments. 

Assuming that the SEC and PCAOB increase fees to offset the 

costs of implementing the additional regulatory activities required 

by the bill, H.R. 2308 would increase the costs of existing mandates 

on private entities required to pay those fees. The bill also would 

impose private-sector mandates by requiring certain private regulatory organizations to incorporate additional analyses into their 

rulemaking processes. Based on information from the SEC and 

other regulatory organizations, CBO estimates that the aggregate 

cost of those mandates would fall below the annual threshold for 

private-sector mandates established in UMRA ($146 million in 

2012, adjusted annually for inflation). 

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 2308 is shown in the following table. The costs 

of this legislation fall within budget function 370 (commerce and 

housing credit). 

By fiscal year, in millions of dollars— 

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013– 

2017 

2013– 

2022 

CHANGES IN DIRECT SPENDING 

Estimated Budget Authority .. 0 * 1 1 1 1 1 1 1 1 3 8 

Estimated Outlays ................. 0 * 1 1 1 1 1 1 1 1 3 8 

CHANGES IN REVENUES 

Estimated Revenues .............. 0 * 1 1 1 1 1 1 1 1 2 6 


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By fiscal year, in millions of dollars— 

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013– 

2017 

2013– 

2022 

NET INCREASE IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND RECEIPTS 

Estimated Increase in Deficit 0 * * * * * * * * * 1 2 

Notes: * = less than $500,000. Components may not sum to totals because of rounding. 

CBO estimates that implementing H.R. 2308 would cost the Securities and Exchange Commission $22 million over the 2013–2017 period, 

assuming appropriation of the necessary amounts. The commission is authorized to collect fees sufficient to offset its annual appropriations. 

CBO estimates, therefore, that the net budgetary effect of the SEC’s activities undertaken to implement H.R. 2308 would not be significant, 

assuming appropriation actions consistent with the commission’s authorities. 

Basis of estimate: For this estimate, CBO assumes that the bill 

will be enacted before the end of fiscal year 2012, that the necessary amounts will be appropriated for each year, and that spending will follow historical patterns for the affected agencies. 

Spending subject to appropriation 

H.R. 2308 would require the SEC to expand the amount of analysis performed when developing or amending regulations. Specifically, the bill would require the SEC to: 

• Assess the significance of the problem the regulation is designed to address, 

• Determine whether the estimated costs of the proposed regulation justify its estimated benefits, and 

• Identify alternatives to the proposed regulation that are 

available. 

Further, H.R. 2308 would require the SEC to review its regulations every five years to determine whether they are outmoded, ineffective, or excessively burdensome. Using the results of the review, the agency would be required to consider modifying or repealing such rules. 

For major rules (that is, rules expected to have an economic impact greater than $100 million annually), the bill also would require the SEC to develop and publish a plan to assess whether the 

regulation has achieved its stated purposes. H.R. 2308 would direct 

the agency, no later than two years after the date such a rule was 

published, to publish an assessment that considers the costs, benefits, and consequences of the rule using performance measures that 

were identified when the rule was adopted. 

Finally, the bill would direct the SEC to develop a plan for applying the new rulemaking requirements to the PCAOB, the Municipal Securities Rulemaking Board (MSRB), and any national securities association that is registered with the SEC. 

Based on information from the SEC, CBO estimates that the 

commission would need 20 additional staff positions to handle the 

new rulemaking, reporting, and analytical activities required under 

the bill. CBO estimates that implementing H.R. 2308 would cost 

the SEC $22 million over the 2013–2017 period, assuming appropriation of the necessary amounts, for additional personnel and 

overhead expenses. Under current law, the SEC is authorized to 

collect fees sufficient to offset its annual appropriation; therefore, 

CBO estimates the net budgetary effect of the SEC’s activities undertaken to implement H.R. 2308 would not be significant, assuming appropriation actions consistent with the commission’s authorities. 


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Direct spending 

Enacting H.R. 2308 would increase both direct spending and revenues by applying the new procedural requirements to the PCAOB. 

The agency, whose spending authority is not subject to appropriation action, is authorized to collect fees to offset its operating expenses. Those fees are recorded in the budget as revenues. 

Based on information from the PCAOB, CBO estimates that enacting H.R. 2308 would increase direct spending by $8 million over 

the 2013–2022 period to cover additional personnel and overhead 

costs. In addition, CBO assumes that the PCAOB would exercise 

its authority to increase fee collections to offset those additional 

costs. Because payments of those additional fees would reduce payroll and income tax liabilities, the net revenue increase would be 

less than the amount collected from the fees. Hence, CBO estimates that enacting the bill would increase revenues by $6 million 

over the same period, net of effects on payroll and income taxes. 

All together, CBO estimates that enacting H.R. 2308 would increase budget deficits by about $2 million over the 2013–2022 period. 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget reporting and enforcement procedures 

for legislation affecting direct spending or revenues. The net 

changes in outlays and revenues that are subject to those pay-asyou-go procedures are shown in the following table. 

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 2308, AS ORDERED REPORTED BY THE 

HOUSE COMMITTEE ON FINANCIAL SERVICES ON FEBRUARY 16, 2012 

By fiscal year, in millions of dollars— 

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012– 

2017 

2012– 

2022 

NET INCREASE IN THE DEFICIT 

Statutory Pay-As-YouGo Impact ............. 0 0 0 0 0 0 0 0 0 0 0 1 2 

Memorandum: 

Changes in 

Outlays ........ 0 0 0 1 1 1 1 1 1 1 1 3 8 

Changes in 

Revenues ..... 0 0 0 1 1 1 1 1 1 1 1 2 6 

Note: Components may not sum to totals because of rounding. 

Estimated impact on state, local, and tribal governments: H.R. 

2308 contains no intergovernmental mandates as defined in UMRA 

and would impose no costs on state, local, or tribal governments. 

Estimated impact on the private sector: H.R. 2308 contains private-sector mandates on entities required to pay fees assessed by 

the SEC or PCAOB and on certain private regulatory organizations. Assuming the SEC and PCAOB would increase annual fee 

collections to offset the costs of their additional regulatory activities, the bill would increase the costs of existing mandates by requiring certain private entities to pay higher fees. The bill also 

would require private regulatory organizations to incorporate additional analyses into their rulemaking processes. 

Based on information from the SEC and PCAOB, CBO estimates 

that the cost for those agencies to implement the additional regulatory activities required by the bill, and the necessary increase in 

fees to offset those costs, would be about $5 million per year over 


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the next several years. In addition, because private regulatory 

agencies issue fewer rules than the SEC each year on average, the 

incremental cost for those organizations to comply with the new 

rulemaking requirements would probably amount to less than the 

additional costs incurred by the SEC to implement the same requirements. Consequently, CBO estimates that the cost of the private-sector mandates in the bill would fall below the annual 

threshold established in UMRA ($146 million annually adjusted for 

inflation). 

Estimate prepared by: Federal Costs: Susan Willie; Impact on 

State, Local, and Tribal Governments: Elizabeth Cove Delisle; Impact on the Private Sector: Vi Nguyen. 

Estimate approved by: Theresa Gullo, Deputy Assistant Director 

for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

EARMARK IDENTIFICATION

H.R. 2308 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

The short title of the bill is the ‘‘SEC Regulatory Accountability 

Act.’’ 

Section 2. Consideration by the Securities and Exchange Commission of the costs and benefits of its regulations and certain other 

agency actions 

This section amends the Securities Exchange Act of 1934 (15 

U.S.C. 78w) to require the SEC to consider the costs and benefits 

of its regulations. The section requires the SEC to identify a problem and assess its significance before the SEC issues a regulation 

in order to determine whether regulation is warranted. This section 

also requires the SEC’s Chief Economist to conduct a qualitative 

and quantitative cost-benefit analysis of intended regulations, and 

it requires the SEC to propose or adopt a regulation only on a reasoned determination that the benefits of the intended regulation 

justify the costs of the regulation. This section also requires that 


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the SEC identify and assess available alternatives to the regulation 

that were considered, including modification of existing regulations, 

and to explain why the proposed regulation meets the regulatory 

objectives more effectively than the alternatives. The section also 

requires the SEC to ensure that any regulation is accessible, consistent, written in plain language, and easy to understand, and 

that the SEC seek to improve the actual results of regulatory requirements. 

The section also requires the SEC, in deciding whether and how 

to regulate, to assess the costs and benefits of available regulatory 

alternatives, including the alternative of not regulating, and to 

choose the approach that maximizes net benefits. This section specifically requires the SEC to consider—consistent with the requirements of section 3(f) of the Securities Act of 1933, section 202(c) of 

the Investment Advisers Act of 1940, and section 2(c) of the Investment Company Act of 1940—whether rulemaking will promote efficiency, competition, and capital formation. This section requires the 

SEC to evaluate whether—consistent with achieving regulatory objectives—a regulation is tailored to impose the least burden on society, including market participants, individuals, businesses of differing sizes, and other entities (including state and local governments), taking into account, to the extent practicable, the cumulative costs of regulations. In addition, this section requires the 

SEC to evaluate whether a regulation is inconsistent with, incompatible with, or duplicative of other federal regulations. 

This section also requires the SEC to consider, to the extent relevant to the particular proposed regulation, the impact of a proposed regulation on investor choice, market liquidity in the securities markets, and small businesses. 

This section also requires the SEC to explain in its final rule the 

nature of comments that it received, including those from industry 

or consumer groups concerning the potential costs or benefits of the 

proposed rule or rule change, and to provide a response to the comments contained in its final rule, including an explanation of any 

changes made in response to those comments and the reasons that 

the SEC did not incorporate industry group concerns related to the 

potential costs or benefits in the final rule. 

This section also requires the SEC, not later than one year after 

enactment of the bill and every five years thereafter, to review its 

regulations to determine whether any regulations are outmoded, 

ineffective, insufficient, or excessively burdensome, and to modify, 

streamline, expand, or repeal such regulations in accordance with 

that review. 

This section also requires the SEC to conduct a post-adoption impact assessment of any ‘‘major rule,’’ as defined by 5 U.S.C. 

§ 804(2), that it adopts or amends. This section requires the SEC, 

when it adopts or amends a ‘‘major rule,’’ to state in the adopting 

release the following: the purposes and intended consequences of 

the rule; post-implementation quantitative and qualitative metrics 

to measure the rule’s economic impact and the extent to which the 

rule has accomplished its stated purposes; an assessment plan to 

evaluate whether the rule has achieved its stated purpose; and any 

unintended or negative consequences that the SEC foresees may 

result from the rule. This section also requires the assessment plan 

to consider the costs, benefits, and intended and unintended conVerDate Mar 15 2010 14:49 Apr 26, 2012 Jkt 019006 PO 00000 Frm 00016 Fmt 6659 Sfmt 6602 E:\HR\OC\HR453.XXX HR453

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sequences of the rule, and to specify the data to be collected, the 

methods for collecting and analyzing data, and the deadline for the 

assessment to be completed. 

This section also requires the SEC’s Chief Economist to submit 

an assessment report to the SEC no later than two years after the 

publication of a regulation’s adopting release, unless the SEC, at 

the request of the Chief Economist, has published an explanatory 

notice of extension in the Federal Register at least 90 days before 

the assessment is due. This section requires that the assessment 

report be published in the Federal Register seven days after it is 

submitted to the SEC for notice and comment. This section provides that if the SEC has published its assessment plan for notice 

and comment, specifying the data to be collected and the method 

of collection, at least 30 days prior to the adoption of a final regulation or amendment, such data collection will not be subject to the 

notice and comment requirements of the Paperwork Reduction Act. 

Similarly, this section provides that modifications of the assessment plan that require the collection of data not previously published for notice and comment are exempt from the notice and comment requirements of the Paperwork Reduction Act if the SEC has 

published notice for comment in the Federal Register of additional 

data to be collected at least 30 days before it is collected. This section requires the SEC, within 180 days of the assessment report’s 

publication in the Federal Register, to issue for notice and comment a proposal to amend or rescind the rule or to publish a notice 

that the SEC has determined that no action will be taken on the 

regulation. 

This section also defines the term ‘‘regulation’’—as used in this 

section—as an SEC statement of general applicability and future 

effect designed to implement, interpret, or prescribe law or policy 

or to describe the procedure or practice requirements of the SEC, 

including rules, orders of general applicability, interpretive releases, and other statements of general applicability that the SEC 

intends to have the force and effect of law, and does not include 

a regulation issued in accordance with the formal rulemaking provisions of the Administrative Procedure Act; a regulation limited to 

SEC organization, management, or personnel matters; a regulation 

promulgated pursuant to statutory authority that expressly prohibits compliance with this provision; and a regulation certified by 

the SEC to be an emergency action, if such certification is published in the Federal Register. 

Section 3. Submission of plan for subjecting other regulatory entities 

to cost and benefit requirements 

This section requires the SEC to submit within one year of the 

bill’s enactment to the House Committee on Financial Services and 

to the Senate Committee on Banking, Housing, and Urban Affairs 

a report setting forth a plan for subjecting the Public Company Accounting Oversight Board, the Municipal Securities Rulemaking 

Board, and any national securities association registered under section 15A of the Securities Exchange Act of 1934 to the requirements of the bill. 


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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 (new matter is printed in italic 

and existing law in which no change is proposed is shown in 

roman): 

SECURITIES EXCHANGE ACT OF 1934 

TITLE I—REGULATION OF SECURITIES EXCHANGES 

* * * * * * * 

RULES, REGULATIONS, AND ORDERS; ANNUAL REPORTS

SEC. 23. (a) * * * 

* * * * * * * 

(e) CONSIDERATION OF COSTS AND BENEFITS.— (1) IN GENERAL.—Before issuing a regulation under the securities laws, as defined in section 3(a), the Commission shall— 

(A) clearly identify the nature and source of the problem 

that the proposed regulation is designed to address, as well 

as assess the significance of that problem, to enable assessment of whether any new regulation is warranted; 

(B) utilize the Chief Economist to assess the costs and 

benefits, both qualitative and quantitative, of the intended 

regulation and propose or adopt a regulation only on a reasoned determination that the benefits of the intended regulation justify the costs of the regulation; 

(C) identify and assess available alternatives to the regulation that were considered, including modification of an 

existing regulation, together with an explanation of why the 

regulation meets the regulatory objectives more effectively 

than the alternatives; and 

(D) ensure that any regulation is accessible, consistent, 

written in plain language, and easy to understand and 

shall measure, and seek to improve, the actual results of 

regulatory requirements. 

(2) CONSIDERATIONS AND ACTIONS.— (A) REQUIRED ACTIONS.—In deciding whether and how to 

regulate, the Commission shall assess the costs and benefits 

of available regulatory alternatives, including the alternative of not regulating, and choose the approach that 

maximizes net benefits. Specifically, the Commission 

shall— 

(i) consistent with the requirements of section 3(f) (15 

U.S.C. 78c(f)), section 2(b) of the Securities Act of 1933 

(15 U.S.C. 77b(b)), section 202(c) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(c)), and section 2(c) 

of the Investment Company Act of 1940 (15 U.S.C. 

80a–2(c)), consider whether the rulemaking will promote efficiency, competition, and capital formation; 

(ii) evaluate whether, consistent with obtaining regulatory objectives, the regulation is tailored to impose 

the least burden on society, including market participants, individuals, businesses of differing sizes, and 


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other entities (including State and local governmental 

entities), taking into account, to the extent practicable, 

the cumulative costs of regulations; and 

(iii) evaluate whether the regulation is inconsistent, 

incompatible, or duplicative of other Federal regulations. 

(B) ADDITIONAL CONSIDERATIONS.—In addition, in making a reasoned determination of the costs and benefits of a 

potential regulation, the Commission shall, to the extent 

that each is relevant to the particular proposed regulation, 

take into consideration the impact of the regulation on— 

(i) investor choice; 

(ii) market liquidity in the securities markets; and 

(iii) small businesses 

(3) EXPLANATION AND COMMENTS.—The Commission shall explain in its final rule the nature of comments that it received, 

including those from the industry or consumer groups concerning the potential costs or benefits of the proposed rule or 

proposed rule change, and shall provide a response to those 

comments in its final rule, including an explanation of any 

changes that were made in response to those comments and the 

reasons that the Commission did not incorporate those industry 

group concerns related to the potential costs or benefits in the 

final rule. 

(4) REVIEW OF EXISTING REGULATIONS.—Not later than 1 year 

after the date of enactment of the SEC Regulatory Accountability Act, and every 5 years thereafter, the Commission shall 

review its regulations to determine whether any such regulations are outmoded, ineffective, insufficient, or excessively burdensome, and shall modify, streamline, expand, or repeal them 

in accordance with such review. 

(5) POST-ADOPTION IMPACT ASSESSMENT.— 

(A) IN GENERAL.—Whenever the Commission adopts or 

amends a regulation designated as a ‘‘major rule’’ within 

the meaning of section 804(2) of title 5, United States Code, 

it shall state, in its adopting release, the following: 

(i) The purposes and intended consequences of the 

regulation. 

(ii) Appropriate post-implementation quantitative 

and qualitative metrics to measure the economic impact of the regulation and to measure the extent to 

which the regulation has accomplished the stated purposes. 

(iii) The assessment plan that will be used, consistent with the requirements of subparagraph (B) and 

under the supervision of the Chief Economist of the 

Commission, to assess whether the regulation has 

achieved the stated purposes. 

(iv) Any unintended or negative consequences that 

the Commission foresees may result from the regulation. 

(B) REQUIREMENTS OF ASSESSMENT PLAN AND REPORT.— (i) REQUIREMENTS OF PLAN.—The assessment plan 

required under this paragraph shall consider the costs, 

benefits, and intended and unintended consequences of 


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the regulation. The plan shall specify the data to be 

collected, the methods for collection and analysis of the 

data and a date for completion of the assessment. 

(ii) SUBMISSION AND PUBLICATION OF REPORT.—The 

Chief Economist shall submit the completed assessment 

report to the Commission no later than 2 years after 

the publication of the adopting release, unless the Commission, at the request of the Chief Economist, has 

published at least 90 days before such date a notice in 

the Federal Register extending the date and providing 

specific reasons why an extension is necessary. Within 

7 days after submission to the Commission of the final 

assessment report, it shall be published in the Federal 

Register for notice and comment. Any material modification of the plan, as necessary to assess unforeseen 

aspects or consequences of the regulation, shall be 

promptly published in the Federal Register for notice 

and comment. 

(iii) DATA COLLECTION NOT SUBJECT TO NOTICE AND

COMMENT REQUIREMENTS.—If the Commission has 

published its assessment plan for notice and comment, 

specifying the data to be collected and method of collection, at least 30 days prior to adoption of a final regulation or amendment, such collection of data shall not 

be subject to the notice and comment requirements in 

section 3506(c) of title 44, United States Code (commonly referred to as the Paperwork Reduction Act). 

Any material modifications of the plan that require collection of data not previously published for notice and 

comment shall also be exempt from such requirements 

if the Commission has published notice for comment in 

the Federal Register of the additional data to be collected, at least 30 days prior to initiation of data collection. 

(iv) FINAL ACTION.—Not later than 180 days after 

publication of the assessment report in the Federal 

Register, the Commission shall issue for notice and 

comment a proposal to amend or rescind the regulation, or publish a notice that the Commission has determined that no action will be taken on the regulation. 

Such a notice will be deemed a final agency action. 

(6) COVERED REGULATIONS AND OTHER AGENCY ACTIONS.— 

Solely as used in this subsection, the term ‘‘regulation’’— 

(A) means an agency statement of general applicability 

and future effect that is designed to implement, interpret, 

or prescribe law or policy or to describe the procedure or 

practice requirements of an agency, including rules, orders 

of general applicability, interpretive releases, and other 

statements of general applicability that the agency intends 

to have the force and effect of law; and 

(B) does not include— 

(i) a regulation issued in accordance with the formal 

rulemaking provisions of section 556 or 557 of title 5, 

United States Code; 


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(ii) a regulation that is limited to agency organization, management, or personnel matters; 

(iii) a regulation promulgated pursuant to statutory 

authority that expressly prohibits compliance with this 

provision; and 

(iv) a regulation that is certified by the agency to be 

an emergency action, if such certification is published 

in the Federal Register. 

* * * * * * * 


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MINORITY VIEWS 

H.R. 2308 prohibits the Securities and Exchange Commission 

(SEC) from proposing or adopting any rulemakings and general 

regulatory orders unless it makes ‘‘a reasoned determination that 

the benefits of the intended regulation or order justify the costs of 

the intended regulation or order,’’ while effectively weighting the 

analysis in favor of the market over investors. By imposing severe 

burdens on the SEC’s cost-benefit analysis, the legislation drastically undermines the ability of the SEC to carry out its regulatory 

functions, and makes it difficult to protect investors even when the 

SEC has identified practices that harm them. The bill also increases operating costs for the agency without increasing its budget, thereby forcing it to divert funds from other functions, such as 

enforcement. 

The SEC is already subject to stringent economic analyses for 

which it is held accountable. Current law requires the SEC to conduct economic analyses as other agencies do pursuant to the Paperwork Reduction Act, the Congressional Review Act, and the Regulatory Flexibility Act. Unlike all other financial regulators, the SEC 

has additional statutory requirements to study how its rules affect 

market efficiency, competition, and capital formation. Last year, 

the D.C. Circuit Court of Appeals overturned an SEC rulemaking 

on the merits of its cost-benefit analysis, demonstrating that SEC 

has a sufficiently high bar when issuing rules. H.R. 2308 would set 

the bar impossibly high, opening up SEC’s regulatory actions to ongoing and repeated litigation. 

The debate over H.R. 2308 reveals sharply different views of 

stricter regulation of the financial services industry. Republican 

Members claimed that possible costs to the industry would be burdensome; Democrats cited the tangible cost the financial crisis already has had on investors, pension funds, and American families. 

Democrats offered several amendments to improve the legislation, 

including amendments that provide adequate funding to comply 

with the bill’s requirements and a study of how cost-benefit analyses can inform the regulatory process. While the Majority rejected 

these amendments, the Republicans readily, though illogically, 

adopted a new requirement that requires, among other things, that 

the SEC report ‘‘any unintended and negative consequences that 

the Commission foresees.’’ 

Because this bill represents an attempt by proxy to cut back on 

financial regulations, Democrats overwhelmingly oppose H.R. 2308. 

BARNEY FRANK. WM. LACY CLAY. GWEN MOORE. 

JIM HIMES. 

RUBE ́ N HINOJOSA. 

KEITH ELLISON. 


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ED PERLMUTTER. MICHAEL E. CAPUANO. AL GREEN. STEPHEN F. LYNCH. DAVID SCOTT. MAXINE WATERS. CAROLYN B. MALONEY. MELVIN L. WATT. LUIS V. GUTIERREZ. GARY C. PETERS. ANDRE ́ CARSON. GARY L. ACKERMAN. GREGORY MEEKS. BRAD MILLER. 

Æ 


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