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[From the U.S. Government Publishing Office]


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;
                  ``(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.
                          ``(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;
                          ``(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 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 post-amendment 
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 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.
---------------------------------------------------------------------------
    \1\Exec. Order No. 13,563, ``Improving Regulation and Regulatory 
Review,'' 76 Fed. 3,821 (Jan. 21, 2011).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \2\See 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.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \3\See Business Roundtable v. SEC, 647 F.3d 1144. (D.C. Cir. 2011).
---------------------------------------------------------------------------

                                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:
           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. Velazquez....  ........        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      ........        X   .........
                                                                 (NY).
Mr. McHenry....................        X   ........  .........  Mr. Baca.........  ........        X   .........
Mr. Campbell...................  ........  ........  .........  Mr. Lynch........  ........        X   .........
Mrs. Bachmann..................        X   ........  .........  Mr. Miller (NC)..  ........        X   .........
Mr. McCotter...................        X   ........  .........  Mr. David Scott    ........        X   .........
                                                                 (GA).
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 cost-benefit 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. Velazquez....        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            X   ........  .........
                                                                 (NY).
Mr. McHenry....................  ........        X   .........  Mr. Baca.........        X   ........  .........
Mr. Campbell...................  ........  ........  .........  Mr. Lynch........        X   ........  .........
Mrs. Bachmann..................  ........        X   .........  Mr. Miller (NC)..        X   ........  .........
Mr. McCotter...................  ........        X   .........  Mr. David Scott          X   ........  .........
                                                                 (GA).
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   .........
----------------------------------------------------------------------------------------------------------------


    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. Velazquez....        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            X   ........  .........
                                                                 (NY).
Mr. McHenry....................  ........        X   .........  Mr. Baca.........        X   ........  .........
Mr. Campbell...................  ........  ........  .........  Mr. Lynch........        X   ........  .........
Mrs. Bachmann..................  ........        X   .........  Mr. Miller (NC)..        X   ........  .........
Mr. McCotter...................  ........        X   .........  Mr. David Scott          X   ........  .........
                                                                 (GA).
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 
cost-benefit 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).

                                              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. Velazquez....        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            X   ........  .........
                                                                 (NY).
Mr. McHenry....................  ........        X   .........  Mr. Baca.........        X   ........  .........
Mr. Campbell...................  ........  ........  .........  Mr. Lynch........        X   ........  .........
Mrs. Bachmann..................  ........        X   .........  Mr. Miller (NC)..        X   ........  .........
Mr. McCotter...................  ........        X   .........  Mr. David Scott          X   ........  .........
                                                                 (GA).
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. Velazquez...................  ........        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   ........  .........
--------------------------------------------------------------------------------------------------------------------------------------------------------

    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;
           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, different-sized 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 cost-benefit 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.
    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-
                                                        2013    2014    2015    2016    2017    2018    2019    2020    2021    2022    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

                                        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.

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-as-you-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-You-Go 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 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 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. Sec. 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 consequences 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.

         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 
                        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.
                          (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;
                          (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.

           *       *       *       *       *       *       *


                             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.
                                   Ruben Hinojosa.
                                   Keith Ellison.
                                   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.