H. Rept. 113-53 - 113th Congress (2013-2014)
May 13, 2013, As Reported by the Financial Services Committee

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House Report 113-53 - SEC REGULATORY ACCOUNTABILITY ACT




[House Report 113-53]
[From the U.S. Government Publishing Office]


113th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     113-53

======================================================================



 
                   SEC REGULATORY ACCOUNTABILITY ACT

                                _______
                                

  May 13, 2013.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 1062]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 1062) 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 without amendment and recommend that the bill 
do pass.

                          Purpose and Summary

    H.R. 1062, the SEC Regulatory Accountability Act, requires 
the U.S. Securities and Exchange Commission (SEC) to conduct 
enhanced cost-benefit analyses in order to ensure that the 
benefits of its regulation justify the costs of the regulation.

                  Background and Need for Legislation

    Introduced by Capital Markets and Government Sponsored 
Enterprises Subcommittee Chairman Garrett on March 12, 2013, 
H.R. 1062 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 analyzing existing rules to identify those 
that are outmoded, ineffective, insufficient, or excessively 
burdensome and to modify, streamline, expand, or repeal them 
accordingly.
    H.R. 1062 requires, in general, the SEC to identify a 
problem and assess its significance before the SEC issues a 
rule. 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 are 
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. 1062 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. 1062 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. 1062 includes a Sense of Congress that 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 should comply with the requirements of the 
bill.
    Perhaps the most compelling rationale for H.R. 1062 was 
offered by the U.S. Court of Appeals for the D.C. Circuit when 
it struck down the SEC's proxy access rule.\1\ 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.''
---------------------------------------------------------------------------
    \1\See Bus. Roundtable v. SEC, 2011 WL 2936808 (D.C. Cir. July 22, 
2011).
---------------------------------------------------------------------------

                                Hearings

    The Committee on Financial Services' Subcommittee on 
Capital Markets and Government Sponsored Enterprises held a 
hearing on H.R. 1062 on April 11, 2013.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
May 7, 2013 and ordered H.R. 1062 favorably reported to the 
House by a record vote of 31 yeas to 28 nays (Record vote no. 
FC-17), a quorum being present.

                            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 Hensarling to report the bill to the House 
with a favorable recommendation was agreed to by a record vote 
of 31 yeas and 28 nays (Record vote no. FC-17).

                                              RECORD VOTE NO. FC-17
----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Hensarling.................        X   ........  .........  Ms. Waters.......  ........        X   .........
Mr. Gary G. Miller (CA)........        X   ........  .........  Mrs. Maloney (NY)  ........        X   .........
Mr. Bachus.....................        X   ........  .........  Ms. Velazquez....  ........        X   .........
Mr. King (NY)..................        X   ........  .........  Mr. Watt.........  ........        X   .........
Mr. Royce......................        X   ........  .........  Mr. Sherman......  ........        X   .........
Mr. Lucas......................        X   ........  .........  Mr. Meeks........  ........        X   .........
Mrs. Capito....................        X   ........  .........  Mr. Capuano......  ........        X   .........
Mr. Garrett....................        X   ........  .........  Mr. Hinojosa.....  ........        X   .........
Mr. Neugebauer.................        X   ........  .........  Mr. Clay.........  ........        X   .........
Mr. McHenry....................        X   ........  .........  Mrs. McCarthy      ........        X   .........
                                                                 (NY).
Mr. Campbell...................        X   ........  .........  Mr. Lynch........  ........        X   .........
Mrs. Bachmann..................        X   ........  .........  Mr. David Scott    ........        X   .........
                                                                 (GA).
Mr. McCarthy (CA)..............        X   ........  .........  Mr. Al Green (TX)  ........        X   .........
Mr. Pearce.....................  ........  ........  .........  Mr. Cleaver......  ........        X   .........
Mr. Posey......................        X   ........  .........  Mr. Moore........  ........        X   .........
Mr. Fitzpatrick................        X   ........  .........  Mr. Ellison......  ........        X   .........
Mr. Westmoreland...............  ........  ........  .........  Mr. Perlmutter...  ........        X   .........
Mr. Luetkemeyer................        X   ........  .........  Mr. Himes........  ........        X   .........
Mr. Huizenga (MI)..............        X   ........  .........  Mr. Peters (MI)..  ........        X   .........
Mr. Duffy......................        X   ........  .........  Mr. Carney.......  ........        X   .........
Mr. Hurt.......................        X   ........  .........  Ms. Sewell (AL)..  ........        X   .........
Mr. Grimm......................        X   ........  .........  Mr. Foster.......  ........        X   .........
Mr. Stivers....................        X   ........  .........  Mr. Kildee.......  ........        X   .........
Mr. Fincher....................        X   ........  .........  Mr. Murphy (FL)..  ........        X   .........
Mr. Stutzman...................        X   ........  .........  Mr. Delaney......  ........        X   .........
Mr. Mulvaney...................        X   ........  .........  Ms. Sinema.......  ........        X   .........
Mr. Hultgren...................        X   ........  .........  Mrs. Beatty......  ........        X   .........
Mr. Ross.......................        X   ........  .........  Mr. Heck (WA)....  ........        X   .........
Mr. Pittenger..................        X   ........  .........
Mrs. Wagner....................        X   ........  .........
Mr. Barr.......................        X   ........  .........
Mr. Cotton.....................        X   ........  .........
Mr. Rothfus....................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

                      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 states that H.R. 1062 
will improve consideration by the SEC of the costs and benefits 
of its regulations and orders.

   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 Estimates

    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:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 13, 2013.
Hon. Jeb Hensarling,
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. 1062, 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,
                                                          Director.
    Enclosure.

H.R. 1062--SEC Regulatory Accountability Act

    H.R. 1062 would expand the amount of analysis performed by 
the Securities and Exchange Commission (SEC) when developing or 
amending regulations. Specifically, the bill would direct 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, under the bill, the SEC would be required 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 then need 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 
would require the SEC to develop and publish a plan to assess 
whether the regulation has achieved its stated purposes. H.R. 
1062 would direct the agency, no later than two years after the 
date such a rule was published, to publish a report assessing 
the costs, benefits, and consequences of the rule using 
performance measures that were identified when the rule was 
adopted.
    Based on information from the SEC, CBO estimates that the 
commission would ultimately need 20 additional staff positions 
(less than a 1 percent increase in the agency's 2012 staffing 
level) to handle the new rulemaking, reporting, and analytical 
activities required under the bill. CBO estimates that 
implementing H.R. 1062 would cost the SEC $23 million over the 
2013-2018 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 
that the net budgetary effect of the SEC's activities to 
implement H.R. 1062 would not be significant, assuming 
appropriation actions consistent with the commission's 
authorities. Pay-as-you-go procedures do not apply to this 
legislation because it would not affect direct spending or 
revenues.
    H.R. 1062 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 increases fees to offset the costs of 
implementing the additional regulatory activities required by 
the bill, H.R. 1062 would increase the cost of an existing 
mandate on private entities required to pay those fees. Based 
on information from the SEC, CBO estimates that the aggregate 
cost of the mandate would fall well below the annual threshold 
for private-sector mandates established in UMRA ($150 million 
in 2013, adjusted annually for inflation).
    The CBO staff contacts for this estimate are Susan Willie 
(for federal costs) and Paige Piper/Bach (for the impact on the 
private sector). The estimate was 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 the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 1062 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                    Duplication of Federal Programs

    Pursuant to section 3(j) of H. Res. 5, 113th Cong. (2013), 
the Committee states that no provision of H.R. 1062 establishes 
or reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program.

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(k) of H. Res. 5, 113th Cong. (2013), 
the Committee estimates that H.R. 1062 does not require any 
directed rule makings.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section states that the bill may be referred to as 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 to 
require the SEC to weigh the burden of compliance with its 
regulations against the benefits of such regulations. It 
requires the SEC to explain in its findings the nature of the 
comments it received while crafting the regulation and to 
provide the SEC's response to those comments. The section also 
requires the SEC to conduct a cost-benefit analysis of its 
current regulations and to monitor the ongoing impact of its 
regulations after they are implemented. The section provides a 
statutory definition for ``regulation'' for purposes of the 
legislation.

Section 3. Sense of Congress relating to other regulatory entities

    This section expresses the sense of Congress that other 
regulatory entities, including those in the financial services 
sector, should also follow the requirements of this 
legislation.

         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. In reviewing any 
        regulation (including, notwithstanding paragraph (6), a 
        regulation issued in accordance with formal rulemaking 
        provisions) that subjects issuers with a public float 
        of $250,000,000 or less to the attestation and 
        reporting requirements of section 404(b) of the 
        Sarbanes-Oxley Act of 2002 (15 U.S.C. 7262(b)), the 
        Commission shall specifically take into account the 
        large burden of such regulation when compared to the 
        benefit of such regulation.
          (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. 1062 seeks to substantially raise the bar for the 
Securities and Exchange Commission (SEC) to propose or adopt 
any rule or general order, by requiring that the agency meet a 
heightened standard to justify any action. Not only would the 
bill require the SEC to meet a long list of requirements, but 
that list is weighted significantly in favor of industry and 
``investor choice,'' with no mention of investor protection, 
the prime mission of the SEC.
    This is an agency that already operates under stringent 
standards for economic reviews. Many of the current 
requirements for economic analysis to which the SEC is subject 
are the same as other agencies: the Paperwork Reduction Act, 
the Congressional Review Act, and the Regulatory Flexibility 
Act. Unlike other agencies, however, the SEC also is subject to 
additional statutory requirements under the National Securities 
Markets Improvement Act of 1996.
    The courts have held the SEC responsible for meeting these 
standards, as evidenced by the DC Circuit Court striking down 
the SEC's rules to expand proxy access for shareholders on the 
basis of its cost/benefit analysis. In response to that case, 
the SEC has developed guidelines for economic review that, in 
the view of the Government Accountability Office (GAO), include 
all the elements of sound regulatory economic analysis.
    Not only does the bill impose an extremely high level of 
review for a new rule to be adopted, it requires the SEC to 
review all of its rules every five years. This is essentially a 
recipe for an agency enmeshed in permanent litigation, unable 
to issue any new rules and potentially unable to maintain even 
its current rules.
    There is an irony to the fact that this bill has been 
brought forward at the same time the majority continues to push 
the SEC to adopt rules to implement the JOBS Act, which would 
relax a number of SEC rules. The majority want these rules 
adopted faster and without the level of analysis they say is 
necessary for rules under the Dodd-Frank Wall Street Reform and 
Consumer Protection Act, even though the Dodd-Frank Act was 
enacted more than a year earlier than the JOBS Act.
    The main casualty here is investor protection. For that 
reason, Democrats overwhelmingly oppose H.R. 1062.

                                   Maxine Waters,
                                           Ranking Member.
                                   Gwen Moore.
                                   James A. Himes.
                                   Daniel T. Kildee.
                                   John K. Delaney.
                                   Gary C. Peters.
                                   Ed Perlmutter.
                                   Melvin L. Watt.
                                   Carolyn McCarthy.
                                   Kyrsten Sinema.
                                   Stephen F. Lynch.
                                   David Scott.
                                   Michael E. Capuano.
                                   Gregory W. Meeks.
                                   Carolyn B. Maloney.
                                   Bill Foster.
                                   Keith Ellison.
                                   Al Green.
                                   Joyce Beatty.
                                   Ruben Hinojosa.
                                   Denny Heck.
                                   Terri A. Sewell.
                                   Emanuel Cleaver.
                                   Patrick Murphy.
                                   Brad Sherman.
                                   John C. Carney, Jr.
                                   Wm. Lacy Clay.