IIB 

115TH CONGRESS 

1ST SESSION H. R. 78 

IN THE SENATE OF THE UNITED STATES 

JANUARY 17, 2017 

Received; read twice and referred to the Committee on Banking, Housing, and 

Urban Affairs 

AN ACT 

To improve the consideration by the Securities and Exchange 

Commission of the costs and benefits of its regulations 

and orders. 

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


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘SEC Regulatory Ac3 countability Act’’. 

4 SEC. 2. CONSIDERATION BY THE SECURITIES AND EX5 CHANGE COMMISSION OF THE COSTS AND 

6 BENEFITS OF ITS REGULATIONS AND CER7 TAIN OTHER AGENCY ACTIONS. 

8 Section 23 of the Securities Exchange Act of 1934 

9 (15 U.S.C. 78w) is amended by adding at the end the fol10 lowing: 

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

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

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

14 the Commission shall— 

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

16 of the problem that the proposed regulation is 

17 designed to address, as well as assess the sig18 nificance of that problem, to enable assessment 

19 of whether any new regulation is warranted; 

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

21 the costs and benefits, both qualitative and 

22 quantitative, of the intended regulation and 

23 propose or adopt a regulation only on a rea24 soned determination that the benefits of the in25 tended regulation justify the costs of the regula26 tion; 


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1 ‘‘(C) identify and assess available alter2 natives to the regulation that were considered, 

3 including modification of an existing regulation, 

4 together with an explanation of why the regula5 tion meets the regulatory objectives more effec6 tively than the alternatives; and 

7 ‘‘(D) ensure that any regulation is acces8 sible, consistent, written in plain language, and 

9 easy to understand and shall measure, and seek 

10 to improve, the actual results of regulatory re11 quirements. 

12 ‘‘(2) CONSIDERATIONS AND ACTIONS.— 

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

14 whether and how to regulate, the Commission 

15 shall assess the costs and benefits of available 

16 regulatory alternatives, including the alternative 

17 of not regulating, and choose the approach that 

18 maximizes net benefits. Specifically, the Com19 mission shall— 

20 ‘‘(i) consistent with the requirements 

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

22 2(b) of the Securities Act of 1933 (15 

23 U.S.C. 77b(b)), section 202(c) of the In24 vestment Advisers Act of 1940 (15 U.S.C. 

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1 ment Company Act of 1940 (15 U.S.C. 

2 80a–2(c)), consider whether the rule3 making, in addition to being in the interest 

4 of protecting investors, will promote effi5 ciency, competition, and capital formation; 

6 ‘‘(ii) evaluate whether, consistent with 

7 obtaining regulatory objectives, the regula8 tion is tailored to impose the least burden 

9 on society, including market participants, 

10 individuals, businesses of differing sizes, 

11 and other entities (including State and 

12 local governmental entities), taking into ac13 count, to the extent practicable, the cumu14 lative costs of regulations; and 

15 ‘‘(iii) evaluate whether the regulation 

16 is inconsistent, incompatible, or duplicative 

17 of other Federal regulations. 

18 ‘‘(B) ADDITIONAL CONSIDERATIONS.—In 

19 addition, in making a reasoned determination of 

20 the costs and benefits of a potential regulation, 

21 the Commission shall, to the extent that each is 

22 relevant to the particular proposed regulation, 

23 take into consideration the impact of the regu24 lation on— 

25 ‘‘(i) investor choice; 


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1 ‘‘(ii) market liquidity in the securities 

2 markets; and 

3 ‘‘(iii) small businesses. 

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

5 Commission shall explain in its final rule the nature 

6 of comments that it received, including those from 

7 the industry or consumer groups concerning the po8 tential costs or benefits of the proposed rule or pro9 posed rule change, and shall provide a response to 

10 those comments in its final rule, including an expla11 nation of any changes that were made in response 

12 to those comments and the reasons that the Com13 mission did not incorporate those industry group 

14 concerns related to the potential costs or benefits in 

15 the final rule. 

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

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

18 SEC Regulatory Accountability Act, and every 5 

19 years thereafter, the Commission shall review its 

20 regulations to determine whether any such regula21 tions are outmoded, ineffective, insufficient, or ex22 cessively burdensome, and shall modify, streamline, 

23 expand, or repeal them in accordance with such re24 view. Whenever pursuant to this paragraph the 

25 Commission is engaged in a review, it shall consider 


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1 whether an action is necessary or appropriate in the 

2 public interest, the protection of investors, and 

3 whether the action will promote efficiency, competi4 tion, and capital formation. In reviewing any regula5 tion (including, notwithstanding paragraph (6), a 

6 regulation issued in accordance with formal rule7 making provisions) that subjects issuers with a pub8 lic float of $250,000,000 or less to the attestation 

9 and reporting requirements of section 404(b) of the 

10 Sarbanes-Oxley Act of 2002 (15 U.S.C. 7262(b)), 

11 the Commission shall specifically take into account 

12 the large burden of such regulation when compared 

13 to the benefit of such regulation. 

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

15 ‘‘(A) IN GENERAL.—Whenever the Com16 mission adopts or amends a regulation des17 ignated as a ‘major rule’ within the meaning of 

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

19 shall state, in its adopting release, the fol20 lowing: 

21 ‘‘(i) The purposes and intended con22 sequences of the regulation. 

23 ‘‘(ii) Appropriate post-implementation 

24 quantitative and qualitative metrics to 

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1 lation and to measure the extent to which 

2 the regulation has accomplished the stated 

3 purposes. 

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

5 used, consistent with the requirements of 

6 subparagraph (B) and under the super7 vision of the Chief Economist of the Com8 mission, to assess whether the regulation 

9 has achieved the stated purposes. 

10 ‘‘(iv) Any unintended or negative con11 sequences that the Commission foresees 

12 may result from the regulation. 

13 ‘‘(B) REQUIREMENTS OF ASSESSMENT

14 PLAN AND REPORT.— 

15 ‘‘(i) REQUIREMENTS OF PLAN.—The 

16 assessment plan required under this para17 graph shall consider the costs, benefits, 

18 and intended and unintended consequences 

19 of the regulation. The plan shall specify 

20 the data to be collected, the methods for 

21 collection and analysis of the data and a 

22 date for completion of the assessment. The 

23 assessment plan shall include an analysis 

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


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1 regulation, differentiating between public 

2 and private sector jobs. 

3 ‘‘(ii) SUBMISSION AND PUBLICATION

4 OF REPORT.—The Chief Economist shall 

5 submit the completed assessment report to 

6 the Commission no later than 2 years after 

7 the publication of the adopting release, un8 less the Commission, at the request of the 

9 Chief Economist, has published at least 90 

10 days before such date a notice in the Fed11 eral Register extending the date and pro12 viding specific reasons why an extension is 

13 necessary. Within 7 days after submission 

14 to the Commission of the final assessment 

15 report, it shall be published in the Federal 

16 Register for notice and comment. Any ma17 terial modification of the plan, as nec18 essary to assess unforeseen aspects or con19 sequences of the regulation, shall be 

20 promptly published in the Federal Register 

21 for notice and comment. 

22 ‘‘(iii) DATA COLLECTION NOT SUB23 JECT TO NOTICE AND COMMENT REQUIRE24 MENTS.—If the Commission has published 

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1 ment, specifying the data to be collected 

2 and method of collection, at least 30 days 

3 prior to adoption of a final regulation or 

4 amendment, such collection of data shall 

5 not be subject to the notice and comment 

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

7 United States Code (commonly referred to 

8 as the Paperwork Reduction Act). Any ma9 terial modifications of the plan that require 

10 collection of data not previously published 

11 for notice and comment shall also be ex12 empt from such requirements if the Com13 mission has published notice for comment 

14 in the Federal Register of the additional 

15 data to be collected, at least 30 days prior 

16 to initiation of data collection. 

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

18 180 days after publication of the assess19 ment report in the Federal Register, the 

20 Commission shall issue for notice and com21 ment a proposal to amend or rescind the 

22 regulation, or publish a notice that the 

23 Commission has determined that no action 

24 will be taken on the regulation. Such a no25 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, 


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

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

Passed the House of Representatives January 12, 

2017. 

Attest: KAREN L. HAAS, 

Clerk. 


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