II 113th CONGRESS 1st Session S. 450 IN THE SENATE OF THE UNITED STATES March 5, 2013 Mr. Shelby (for himself, Mr. Chambliss , Mr. Crapo , and Mr. Johanns ) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To require enhanced economic analysis and justification of regulations proposed by certain Federal banking, housing, securities, and commodity regulators, and for other purposes.

1. Short title This Act may be cited as the Financial Regulatory Responsibility Act of 2013 . 2. Definitions As used in this Act— (1) the term agency means the Board of Governors of the Federal Reserve System, the Bureau of Consumer Financial Protection, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Financial Stability Oversight Council, the Office of the Comptroller of the Currency, the Office of Financial Research, the National Credit Union Administration, and the Securities and Exchange Commission; (2) the term chief economist means— (A) with respect to the Board of Governors of the Federal Reserve System, the Director of the Division of Research and Statistics, or an employee of the agency with comparable authority; (B) with respect to the Bureau of Consumer Financial Protection, the Assistant Director for Research, or an employee of the agency with comparable authority; (C) with respect to the Commodity Futures Trading Commission, the Chief Economist, or an employee of the agency with comparable authority; (D) with respect to the Federal Deposit Insurance Corporation, the Director of the Division of Insurance and Research, or an employee of the agency with comparable authority; (E) with respect to the Federal Housing Finance Agency, the Chief Economist, or an employee of the agency with comparable authority; (F) with respect to the Financial Stability Oversight Council, the Chief Economist, or an employee of the agency with comparable authority; (G) with respect to the Office of the Comptroller of the Currency, the Director for Policy Analysis, or an employee of the agency with comparable authority; (H) with respect to the Office of Financial Research, the Director, or an employee of the agency with comparable authority; (I) with respect to the National Credit Union Administration, the Chief Economist, or an employee of the agency with comparable authority; and (J) with respect to the Securities and Exchange Commission, the Director of the Division of Risk, Strategy, and Financial Innovation, or an employee of the agency with comparable authority; (3) the term Council means the Chief Economists Council established under section 9; and (4) 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; (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; (iv) a regulation that is certified by the agency to be an emergency action, if such certification is published in the Federal Register; or (v) a regulation that is promulgated by the Board of Governors of the Federal Reserve System or the Federal Open Market Committee under section 10A, 10B, 13, 13A, or 19 of the Federal Reserve Act, or any of subsections (a) through (f) of section 14 of that Act. 3. Required regulatory analysis (a) Requirements for notices of proposed rulemaking An agency may not issue a notice of proposed rulemaking unless the agency includes in the notice of proposed rulemaking an analysis that contains, at a minimum, with respect to each regulation that is being proposed— (1) an identification of the need for the regulation and the regulatory objective, including identification of the nature and significance of the market failure, regulatory failure, or other problem that necessitates the regulation; (2) an explanation of why the private market or State, local, or tribal authorities cannot adequately address the identified market failure or other problem; (3) an analysis of the adverse impacts to regulated entities, other market participants, economic activity, or agency effectiveness that are engendered by the regulation and the magnitude of such adverse impacts; (4) a quantitative and qualitative assessment of all anticipated direct and indirect costs and benefits of the regulation (as compared to a benchmark that assumes the absence of the regulation), including— (A) compliance costs; (B) effects on economic activity, net job creation (excluding jobs related to ensuring compliance with the regulation), efficiency, competition, and capital formation; (C) regulatory administrative costs; and (D) costs imposed by the regulation on State, local, or tribal governments or other regulatory authorities; (5) if quantified benefits do not outweigh quantitative costs, a justification for the regulation; (6) identification and assessment of all available alternatives to the regulation, including modification of an existing regulation or statute, together with— (A) an explanation of why the regulation meets the objectives of the regulation more effectively than the alternatives, and if the agency is proposing multiple alternatives, an explanation of why a notice of proposed rulemaking, rather than an advanced notice of proposed rulemaking, is appropriate; and (B) if the regulation is not a pilot program, an explanation of why a pilot program is not appropriate; (7) if the regulation specifies the behavior or manner of compliance, an explanation of why the agency did not instead specify performance objectives; (8) an assessment of how the burden imposed by the regulation will be distributed among market participants, including whether consumers, investors, or small businesses will be disproportionately burdened; (9) an assessment of the extent to which the regulation is inconsistent, incompatible, or duplicative with the existing regulations of the agency or those of other domestic and international regulatory authorities with overlapping jurisdiction; (10) a description of any studies, surveys, or other data relied upon in preparing the analysis; (11) an assessment of the degree to which the key assumptions underlying the analysis are subject to uncertainty; and (12) an explanation of predicted changes in market structure and infrastructure and in behavior by market participants, including consumers and investors, assuming that they will pursue their economic interests. (b) Requirements for notices of final rulemaking (1) In general Notwithstanding any other provision of law, an agency may not issue a notice of final rulemaking with respect to a regulation unless the agency— (A) has issued a notice of proposed rulemaking for the relevant regulation; (B) has conducted and includes in the notice of final rulemaking an analysis that contains, at a minimum, the elements required under subsection (a); and (C) includes in the notice of final rulemaking regulatory impact metrics selected by the chief economist to be used in preparing the report required pursuant to section 6. (2) Consideration of comments The agency shall incorporate in the elements described in paragraph (1)(B) the data and analyses provided to the agency by commenters during the comment period, or explain why the data or analyses are not being incorporated. (3) Comment period An agency shall not publish a notice of final rulemaking with respect to a regulation, unless the agency— (A) has allowed at least 90 days from the date of publication in the Federal Register of the notice of proposed rulemaking for the submission of public comments; or (B) includes in the notice of final rulemaking an explanation of why the agency was not able to provide a 90-day comment period. (4) Prohibited Rules (A) In general An agency may not publish a notice of final rulemaking if the agency, in its analysis under paragraph (1)(B), determines that the quantified costs are greater than the quantified benefits under subsection (a)(5). (B) Publication of Analysis If the agency is precluded by subparagraph (A) from publishing a notice of final rulemaking, the agency shall publish in the Federal Register and on the public website of the agency its analysis under paragraph (1)(B), and provide the analysis to each House of Congress. (C) Congressional waiver If the agency is precluded by subparagraph (A) from publishing a notice of final rulemaking, Congress, by joint resolution pursuant to the procedures set forth for joint resolutions in section 802 of title 5, United States Code, may direct the agency to publish a notice of final rulemaking notwithstanding the prohibition contained in subparagraph (A). In applying section 802 of title 5, United States Code, for purposes of this paragraph, section 802(e)(2) shall not apply and the term— (i) joint resolution or joint resolution described in subsection (a) means only a joint resolution introduced during the period beginning on the submission or publication date and ending 60 days thereafter (excluding days either House of Congress is adjourned for more than 3 days during a session of Congress), the matter after the resolving clause of which is as follows: “That Congress directs, notwithstanding the prohibition contained in section 3(b)(4)(A) of the Financial Regulatory Responsibility Act of 2013, the __ to publish the notice of final rulemaking for the regulation or regulations that were the subject of the analysis submitted by the __ to Congress on __.” (The blank spaces being appropriately filled in.); and (ii) submission or publication date means— (I) the date on which the analysis under paragraph (1)(B) is submitted to Congress under paragraph (4)(B); or (II) if the analysis is submitted to Congress less than 60 session days or 60 legislative days before the date on which the Congress adjourns a session of Congress, the date on which the same or succeeding Congress first convenes its next session. 4. Rule of construction For purposes of the Paperwork Reduction Act ( 44 U.S.C. 3501 et seq. ), obtaining, causing to be obtained, or soliciting information for purposes of complying with section 3 with respect to a proposed rulemaking shall not be construed to be a collection of information, provided that the agency has first issued an advanced notice of proposed rulemaking in connection with the regulation, identifies that advanced notice of proposed rulemaking in its solicitation of information, and informs the person from whom the information is obtained or solicited that the provision of information is voluntary. 5. Public availability of data and regulatory analysis (a) In general At or before the commencement of the public comment period with respect to a regulation, the agency shall make available on its public website sufficient information about the data, methodologies, and assumptions underlying the analyses performed pursuant to section 3 so that the analytical results of the agency are capable of being substantially reproduced, subject to an acceptable degree of imprecision or error. (b) Confidentiality The agency shall comply with subsection (a) in a manner that preserves the confidentiality of nonpublic information, including confidential trade secrets, confidential commercial or financial information, and confidential information about positions, transactions, or business practices. 6. Five-year regulatory impact analysis (a) In general Not later than 5 years after the date of publication in the Federal Register of a notice of final rulemaking, the chief economist of the agency shall issue a report that examines the economic impact of the subject regulation, including the direct and indirect costs and benefits of the regulation. (b) Regulatory impact metrics In preparing the report required by subsection (a), the chief economist shall employ the regulatory impact metrics included in the notice of final rulemaking pursuant to section 3(b)(1)(C). (c) Reproducibility The report shall include the data, methodologies, and assumptions underlying the evaluation so that the agency’s analytical results are capable of being substantially reproduced, subject to an acceptable degree of imprecision or error. (d) Confidentiality The agency shall comply with subsection (c) in a manner that preserves the confidentiality of nonpublic information, including confidential trade secrets, confidential commercial or financial information, and confidential information about positions, transactions, or business practices. (e) Report The agency shall submit the report required by subsection (a) to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives and post it on the public website of the agency. The Commodity Futures Trading Commission shall also submit its report to the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee on Agriculture of the House of Representatives. 7. Retrospective review of existing rules (a) Regulatory improvement plan Not later than 1 year after the date of enactment of this Act and every 5 years thereafter, each agency shall develop, submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives, and post on the public website of the agency a plan, consistent with law and its resources and regulatory priorities, under which the agency will modify, streamline, expand, or repeal existing regulations so as to make the regulatory program of the agency more effective or less burdensome in achieving the regulatory objectives. The Commodity Futures Trading Commission shall also submit its plan to the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee on Agriculture of the House of Representatives. (b) Implementation progress report Two years after the date of submission of each plan required under subsection (a), each agency shall develop, submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives, and post on the public website of the agency a report of the steps that it has taken to implement the plan, steps that remain to be taken to implement the plan, and, if any parts of the plan will not be implemented, reasons for not implementing those parts of the plan. The Commodity Futures Trading Commission shall also submit its plan to the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee on Agriculture of the House of Representatives. 8. Judicial review (a) In general Notwithstanding any other provision of law, during the period beginning on the date on which a notice of final rulemaking for a regulation is published in the Federal Register and ending 1 year later, a person that is adversely affected or aggrieved by the regulation is entitled to bring an action in the United States Court of Appeals for the District of Columbia Circuit for judicial review of agency compliance with the requirements of section 3. (b) Stay The court may stay the effective date of the regulation or any provision thereof. (c) Relief If the court finds that an agency has not complied with the requirements of section 3, the court shall vacate the subject regulation, unless the agency shows by clear and convincing evidence that vacating the regulation would result in irreparable harm. Nothing in this section affects other limitations on judicial review or the power or duty of the court to dismiss any action or deny relief on any other appropriate legal or equitable ground. 9. Chief Economists Council (a) Establishment There is established the Chief Economists Council. (b) Membership The Council shall consist of the chief economist of each agency. The members of the Council shall select the first chairperson of the Council. Thereafter the position of Chairperson shall rotate annually among the members of the Council. (c) Meetings The Council shall meet at the call of the Chairperson, but not less frequently than quarterly. (d) Report One year after the effective date of this Act and annually thereafter, the Council shall prepare and submit to the Committee on Banking, Housing, and Urban Affairs and the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee on Financial Services and the Committee on Agriculture of the House of Representatives a report on— (1) the benefits and costs of regulations adopted by the agencies during the past 12 months; (2) the regulatory actions planned by the agencies for the upcoming 12 months; (3) the cumulative effect of the existing regulations of the agencies on economic activity, innovation, international competitiveness of entities regulated by the agencies, and net job creation (excluding jobs related to ensuring compliance with the regulation); (4) the training and qualifications of the persons who prepared the cost-benefit analyses of each agency during the past 12 months; (5) the sufficiency of the resources available to the chief economists during the past 12 months for the conduct of the activities required by this Act; and (6) recommendations for legislative or regulatory action to enhance the efficiency and effectiveness of financial regulation in the United States. 10. Conforming amendments Section 15(a) of the Commodity Exchange Act ( 7 U.S.C. 19(a) ) is amended— (1) by striking paragraph (1); (2) in paragraph (2), by striking (2) and all that follows through light of— and inserting the following: (1) Considerations Before promulgating a regulation under this chapter or issuing an order (except as provided in paragraph (2)), the Commission shall take into consideration— ; (3) in paragraph (1), as so redesignated— (A) in subparagraph (B), by striking futures and inserting the relevant ; (B) in subparagraph (C), by adding and at the end; (C) in subparagraph (D), by striking and at the end; and (D) by striking subparagraph (E); and (4) by redesignating paragraph (3) as paragraph (2). 11. Other regulatory entities (a) Securities and exchange commission Not later than 1 year after the date of enactment of this Act, the Securities and Exchange Commission shall provide to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report 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 of this Act, other than direct representation on the Council. (b) Commodity futures trading commission Not later than 1 year after the date of enactment of this Act, the Commodity Futures Trading Commission shall provide to the Committee on Banking, Housing, and Urban Affairs of the Senate, the Committee on Financial Services of the House of Representatives, the Committee on Agriculture, Nutrition, and Forestry of the Senate, and the Committee on Agriculture of the House of Representatives a report setting forth a plan for subjecting any futures association registered under section 17 of the Commodity Exchange Act ( 7 U.S.C. 21 ) to the requirements of this Act, other than direct representation on the Council. 12. Avoidance of duplicative or unnecessary analyses An agency may perform the analyses required by this Act in conjunction with, or as a part of, any other agenda or analysis required by any other provision of law, if such other analysis satisfies the provisions this Act. 13. Severability If any provision of this Act or the application of any provision of this Act to any person or circumstance, is held invalid, the application of such provision to other persons or circumstances, and the remainder of this Act, shall not be affected thereby.