IB 

Union Calendar No. 622 

114TH CONGRESS 

2D SESSION H. R. 5429 

[Report No. 114–799] 

To improve the consideration by the Securities and Exchange Commission 

of the costs and benefits of its regulations and orders. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 9, 2016 

Mr. GARRETT (for himself and Mr. HURT of Virginia) introduced the following 

bill; which was referred to the Committee on Financial Services 

SEPTEMBER 28, 2016 

Additional sponsor: Mr. NEUGEBAUER

SEPTEMBER 28, 2016 

Committed to the Committee of the Whole House on the State of the Union 

and ordered to be printed 


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A BILL 

To improve the consideration by the Securities and Exchange 

Commission of the costs and benefits of its regulations 

and orders. 


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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘SEC Regulatory Ac5 countability Act’’. 

6 SEC. 2. CONSIDERATION BY THE SECURITIES AND EX7 CHANGE COMMISSION OF THE COSTS AND 

8 BENEFITS OF ITS REGULATIONS AND CER9 TAIN OTHER AGENCY ACTIONS. 

10 Section 23 of the Securities Exchange Act of 1934 

11 (15 U.S.C. 78w) is amended by adding at the end the fol12 lowing: 

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

14 ‘‘(1) IN GENERAL.—Before issuing a regulation 

15 under the securities laws, as defined in section 3(a), 

16 the Commission shall— 

17 ‘‘(A) clearly identify the nature and source 

18 of the problem that the proposed regulation is 

19 designed to address, as well as assess the sig20 nificance of that problem, to enable assessment 

21 of whether any new regulation is warranted; 

22 ‘‘(B) utilize the Chief Economist to assess 

23 the costs and benefits, both qualitative and 

24 quantitative, of the intended regulation and 

25 propose or adopt a regulation only on a reaVerDate Sep 11 2014 01:46 Sep 29, 2016 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5429.RH H5429

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1 soned determination that the benefits of the in2 tended regulation justify the costs of the regula3 tion; 

4 ‘‘(C) identify and assess available alter5 natives to the regulation that were considered, 

6 including modification of an existing regulation, 

7 together with an explanation of why the regula8 tion meets the regulatory objectives more effec9 tively than the alternatives; and 

10 ‘‘(D) ensure that any regulation is acces11 sible, consistent, written in plain language, and 

12 easy to understand and shall measure, and seek 

13 to improve, the actual results of regulatory re14 quirements. 

15 ‘‘(2) CONSIDERATIONS AND ACTIONS.— 

16 ‘‘(A) REQUIRED ACTIONS.—In deciding 

17 whether and how to regulate, the Commission 

18 shall assess the costs and benefits of available 

19 regulatory alternatives, including the alternative 

20 of not regulating, and choose the approach that 

21 maximizes net benefits. Specifically, the Com22 mission shall— 

23 ‘‘(i) consistent with the requirements 

24 of section 3(f) (15 U.S.C. 78c(f)), section 

25 2(b) of the Securities Act of 1933 (15 


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1 U.S.C. 77b(b)), section 202(c) of the In2 vestment Advisers Act of 1940 (15 U.S.C. 

3 80b–2(c)), and section 2(c) of the Invest4 ment Company Act of 1940 (15 U.S.C. 

5 80a–2(c)), consider whether the rule6 making will promote efficiency, competi7 tion, and capital formation; 

8 ‘‘(ii) evaluate whether, consistent with 

9 obtaining regulatory objectives, the regula10 tion is tailored to impose the least burden 

11 on society, including market participants, 

12 individuals, businesses of differing sizes, 

13 and other entities (including State and 

14 local governmental entities), taking into ac15 count, to the extent practicable, the cumu16 lative costs of regulations; and 

17 ‘‘(iii) evaluate whether the regulation 

18 is inconsistent, incompatible, or duplicative 

19 of other Federal regulations. 

20 ‘‘(B) ADDITIONAL CONSIDERATIONS.—In 

21 addition, in making a reasoned determination of 

22 the costs and benefits of a potential regulation, 

23 the Commission shall, to the extent that each is 

24 relevant to the particular proposed regulation, 


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1 take into consideration the impact of the regu2 lation on— 

3 ‘‘(i) investor choice; 

4 ‘‘(ii) market liquidity in the securities 

5 markets; and 

6 ‘‘(iii) small businesses. 

7 ‘‘(3) EXPLANATION AND COMMENTS.—The 

8 Commission shall explain in its final rule the nature 

9 of comments that it received, including those from 

10 the industry or consumer groups concerning the po11 tential costs or benefits of the proposed rule or pro12 posed rule change, and shall provide a response to 

13 those comments in its final rule, including an expla14 nation of any changes that were made in response 

15 to those comments and the reasons that the Com16 mission did not incorporate those industry group 

17 concerns related to the potential costs or benefits in 

18 the final rule. 

19 ‘‘(4) REVIEW OF EXISTING REGULATIONS.—Not 

20 later than 1 year after the date of enactment of the 

21 SEC Regulatory Accountability Act, and every 5 

22 years thereafter, the Commission shall review its 

23 regulations to determine whether any such regula24 tions are outmoded, ineffective, insufficient, or ex25 cessively burdensome, and shall modify, streamline, 


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1 expand, or repeal them in accordance with such re2 view. In reviewing any regulation (including, not3 withstanding paragraph (6), a regulation issued in 

4 accordance with formal rulemaking provisions) that 

5 subjects issuers with a public float of $250,000,000 

6 or less to the attestation and reporting requirements 

7 of section 404(b) of the Sarbanes-Oxley Act of 2002 

8 (15 U.S.C. 7262(b)), the Commission shall specifi9 cally take into account the large burden of such reg10 ulation when compared to the benefit of such regula11 tion. 

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

13 ‘‘(A) IN GENERAL.—Whenever the Com14 mission adopts or amends a regulation des15 ignated as a ‘major rule’ within the meaning of 

16 section 804(2) of title 5, United States Code, it 

17 shall state, in its adopting release, the fol18 lowing: 

19 ‘‘(i) The purposes and intended con20 sequences of the regulation. 

21 ‘‘(ii) Appropriate post-implementation 

22 quantitative and qualitative metrics to 

23 measure the economic impact of the regu24 lation and to measure the extent to which 


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1 the regulation has accomplished the stated 

2 purposes. 

3 ‘‘(iii) The assessment plan that will be 

4 used, consistent with the requirements of 

5 subparagraph (B) and under the super6 vision of the Chief Economist of the Com7 mission, to assess whether the regulation 

8 has achieved the stated purposes. 

9 ‘‘(iv) Any unintended or negative con10 sequences that the Commission foresees 

11 may result from the regulation. 

12 ‘‘(B) REQUIREMENTS OF ASSESSMENT

13 PLAN AND REPORT.— 

14 ‘‘(i) REQUIREMENTS OF PLAN.—The 

15 assessment plan required under this para16 graph shall consider the costs, benefits, 

17 and intended and unintended consequences 

18 of the regulation. The plan shall specify 

19 the data to be collected, the methods for 

20 collection and analysis of the data and a 

21 date for completion of the assessment. The 

22 assessment plan shall include an analysis 

23 of any jobs added or lost as a result of the 

24 regulation, differentiating between public 

25 and private sector jobs. 


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1 ‘‘(ii) SUBMISSION AND PUBLICATION

2 OF REPORT.—The Chief Economist shall 

3 submit the completed assessment report to 

4 the Commission no later than 2 years after 

5 the publication of the adopting release, un6 less the Commission, at the request of the 

7 Chief Economist, has published at least 90 

8 days before such date a notice in the Fed9 eral Register extending the date and pro10 viding specific reasons why an extension is 

11 necessary. Within 7 days after submission 

12 to the Commission of the final assessment 

13 report, it shall be published in the Federal 

14 Register for notice and comment. Any ma15 terial modification of the plan, as nec16 essary to assess unforeseen aspects or con17 sequences of the regulation, shall be 

18 promptly published in the Federal Register 

19 for notice and comment. 

20 ‘‘(iii) DATA COLLECTION NOT SUB21 JECT TO NOTICE AND COMMENT REQUIRE22 MENTS.—If the Commission has published 

23 its assessment plan for notice and com24 ment, specifying the data to be collected 

25 and method of collection, at least 30 days 


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1 prior to adoption of a final regulation or 

2 amendment, such collection of data shall 

3 not be subject to the notice and comment 

4 requirements in section 3506(c) of title 44, 

5 United States Code (commonly referred to 

6 as the Paperwork Reduction Act). Any ma7 terial modifications of the plan that require 

8 collection of data not previously published 

9 for notice and comment shall also be ex10 empt from such requirements if the Com11 mission has published notice for comment 

12 in the Federal Register of the additional 

13 data to be collected, at least 30 days prior 

14 to initiation of data collection. 

15 ‘‘(iv) FINAL ACTION.—Not later than 

16 180 days after publication of the assess17 ment report in the Federal Register, the 

18 Commission shall issue for notice and com19 ment a proposal to amend or rescind the 

20 regulation, or publish a notice that the 

21 Commission has determined that no action 

22 will be taken on the regulation. Such a no23 tice will be deemed a final agency action. 


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1 ‘‘(6) COVERED REGULATIONS AND OTHER

2 AGENCY ACTIONS.—Solely as used in this subsection, 

3 the term ‘regulation’— 

4 ‘‘(A) means an agency statement of gen5 eral applicability and future effect that is de6 signed to implement, interpret, or prescribe law 

7 or policy or to describe the procedure or prac8 tice requirements of an agency, including rules, 

9 orders of general applicability, interpretive re10 leases, and other statements of general applica11 bility that the agency intends to have the force 

12 and effect of law; and 

13 ‘‘(B) does not include— 

14 ‘‘(i) a regulation issued in accordance 

15 with the formal rulemaking provisions of 

16 section 556 or 557 of title 5, United States 

17 Code; 

18 ‘‘(ii) a regulation that is limited to 

19 agency organization, management, or per20 sonnel matters; 

21 ‘‘(iii) a regulation promulgated pursu22 ant to statutory authority that expressly 

23 prohibits compliance with this provision; 

24 and 


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1 ‘‘(iv) a regulation that is certified by 

2 the agency to be an emergency action, if 

3 such certification is published in the Fed4 eral Register.’’. 

5 SEC. 3. SENSE OF CONGRESS RELATING TO OTHER REGU6 LATORY ENTITIES. 

7 It is the sense of the Congress that the Public Com8 pany Accounting Oversight Board should also follow the 

9 requirements of section 23(e) of such Act, as added by 

10 this title. 

11 SEC. 4. ACCOUNTABILITY PROVISION RELATING TO OTHER 

12 REGULATORY ENTITIES. 

13 A rule adopted by the Municipal Securities Rule14 making Board or any national securities association reg15 istered under section 15A of the Securities Exchange Act 

16 of 1934 (15 U.S.C. 78o–3) shall not take effect unless 

17 the Securities and Exchange Commission determines that, 

18 in adopting such rule, the Board or association has com19 plied with the requirements of section 23(e) of such Act, 

20 as added by section 2, in the same manner as is required 

21 by the Commission under such section 23(e). 


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Union Calendar No. 622 

114TH CONGRESS 

2D SESSION H. R. 5429 

[Report No. 114–799] 

A BILL 

To improve the consideration by the Securities and 

of its regulations and orders. Exchange Commission of the costs and benefits 

SEPTEMBER 28, 2016 

Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 


SSpencer on DSK4SPTVN1PROD with BILLS