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114th Congress }                                           { Report
                        HOUSE OF REPRESENTATIVES
 2d Session    }                                           { 114-403

======================================================================
 
        STREAMLINING EXCESSIVE AND COSTLY REGULATIONS REVIEW ACT

                                _______
                                

January 28, 2016.--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. 2354]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 2354) to direct the Securities and Exchange 
Commission to review all its significant regulations to 
determine whether such regulations are necessary in the public 
interest or whether such regulations should be amended or 
rescinded, having considered the same, report favorably thereon 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 ``Streamlining Excessive and Costly 
Regulations Review Act''.

SEC. 2. REGULATORY REVIEW.

  (a) Review and Action.--Not later than 5 years after the date of 
enactment of this Act, and at least once within each 10-year period 
thereafter, the Securities and Exchange Commission shall--
          (1) review each significant regulation issued by the 
        Commission;
          (2) determine by Commission vote whether each such 
        regulation--
                  (A) is outmoded, ineffective, insufficient, or 
                excessively burdensome; or
                  (B) is no longer necessary in the public interest or 
                consistent with the Commission's mandate to protect 
                investors, maintain fair, orderly, and efficient 
                markets, and facilitate capital formation;
          (3) provide notice and solicit public comment as to whether a 
        regulation described in subparagraph (A) or (B) of paragraph 
        (2) (as determined by Commission vote pursuant to such 
        paragraph) should be amended to improve or modernize such 
        regulation so that such regulation is in the public interest, 
        or whether such regulation should be repealed; and
          (4) amend or repeal any regulation described in subparagraph 
        (A) or (B) of paragraph (2), as determined by Commission vote 
        pursuant to such paragraph.
  (b) Definition.--As used in this Act and for purposes of the review 
required by subsection (a) the term ``significant regulation'' has the 
meaning given the term ``major rule'' in section 804(2) of title 5, 
United States Code.
  (c) Report to Congress.--Not later than 45 days after any final 
Commission vote described in subsection (a)(2), the Commission shall 
transmit a report to the Committee on Financial Services of the House 
of Representatives and the Committee on Banking, Housing, and Urban 
Affairs of the Senate describing the Commission's review under 
subsection (a), its vote or votes, and the actions taken pursuant to 
paragraph (3) of such subsection. If the Commission determines that 
legislation is necessary to amend or repeal any regulation described in 
subparagraph (A) or (B) of subsection (a)(2), the Commission shall 
include in the report recommendations for such legislation.
  (d) Not Subject to Judicial Review.--Any vote by the Commission made 
pursuant to subsection (a)(2) shall be final and not subject to 
judicial review.

                          PURPOSE AND SUMMARY

    On May 15, 2015, Representative Hurt introduced H.R. 2354, 
the Streamlining Excessive and Costly Regulations Review Act, 
which requires the Securities and Exchange Commission (SEC) to 
review significant regulations it has previously issued. H.R. 
2354 requires that within the first five years after enactment, 
and every ten years thereafter, the SEC engage in a 
retrospective review of all significant SEC rules and 
regulations. Significant regulations are those with (1) an 
annual economic impact of $100 million or more as defined by 
the Office of Management and Budget, or that (2) result in a 
major increase in costs or prices for consumers, individual 
industries, federal, state, or local governments, or geographic 
regions, or (3) cause significant adverse effects on 
competition, employment, investment, productivity, innovation, 
or on the ability of U.S. enterprises to compete against their 
foreign counterparts. H.R. 2354 requires the five SEC 
Commissioners to vote on whether each regulation identified by 
the review is outmoded, ineffective, insufficient, excessively 
burdensome, or no longer necessary in the public interest or 
inconsistent with the SEC's mandates to protect investors, 
maintain fair, orderly, and efficient markets, and facilitate 
capital formation. H.R. 2354 requires the SEC to allow for 
notice and public comment and mandates that the Commissioners 
vote to amend or repeal any regulation identified as outmoded, 
ineffective, insufficient, or excessively burdensome, or as no 
longer necessary in the public interest or consistent with the 
SEC's mandates.

                  BACKGROUND AND NEED FOR LEGISLATION

    H.R. 2354 is modeled on an existing statute and Executive 
Orders. Section 2222 of the Economic Growth and Regulatory 
Paperwork Reduction Act of 1996 (EGRPRA) requires the Federal 
Financial Institutions Examination Council, Office of the 
Comptroller of the Currency (OCC), Federal Deposit Insurance 
Corporation (FDIC), and Board of Governors of the Federal 
Reserve System (FRB) to review their regulations at least every 
10 years to identify any outdated or otherwise unnecessary 
regulations imposed on insured depository institutions. Only 
the OCC, FRB, and FDIC are statutorily required to undertake 
this review. While it is not required to do so, the National 
Credit Union Administration also reviews its regulations under 
the EGRPRA guidelines. The Consumer Financial Protection Bureau 
is also not included in the EGRPRA process, but is required to 
review its significant regulations and publish a report five 
years after the regulations take effect. The last EGRPRA review 
was completed in 2006, and the prudential regulators are 
currently engaged in their decennial EGRPRA review.
    In addition to EGRPRA, President Obama has issued two 
executive orders, E.O. 13563 and E.O. 13579, to facilitate 
regulatory review by executive branch and independent agencies. 
E.O. 13579 instructs independent agencies, including the SEC, 
``to facilitate the periodic review of existing significant 
regulations,'' and directs them to ``consider how best to 
promote retrospective analysis of rules that may be outmoded, 
ineffective, insufficient, or excessively burdensome, and to 
modify, streamline, expand, or repeal them in accordance with 
what has been learned.''
    In response to E.O. 13579, on September 6, 2011, then-
Chairman Mary Schapiro announced that the SEC had issued a 
request for comment on the process it should use to conduct 
retrospective reviews of its existing regulations. The SEC 
received comments but did not create a process to review or 
eliminate old rules. SEC Chair Mary Jo White testified before 
the Senate Appropriations Committee on May 5, 2015, that the 
SEC preforms retrospective review ``really every year.'' 
Despite her testimony, however, there has been little evidence 
to suggest that the SEC has eliminated or streamlined outmoded, 
ineffective, insufficient, or excessively burdensome 
regulations.
    At a May 13, 2015 Capital Markets and Government Sponsored 
Enterprises Subcommittee hearing, U.S. Chamber of Commerce 
Senior Vice President Tom Quaadman testified that Congress 
should mandate that regulatory agencies periodically review 
their regulations:

          Unfortunately, without legislation, the 2011 
        retrospective review went nowhere, while the current 
        efforts on Disclosure Effectiveness--updating corporate 
        disclosures to provide investors with meaningful 
        decision useful information--is threatened by 
        bureaucratic inertia. The periodic structure of the 
        draft bill and reports to Congress are critical to 
        keeping the SEC's feet to the fire.

                                HEARINGS

    The Committee on Financial Services' Subcommittee on 
Capital Markets and Government Sponsored Enterprises held a 
hearing examining matters relating to H.R. 2354 on May 13, 
2015.

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
May 20, 2015, and ordered H.R. 2354 to be reported favorably to 
the House with an amendment by a recorded vote of 41 yeas to 16 
nays (recorded vote no. FC-40), a quorum being present. Before 
the motion to report was offered, the Committee adopted an 
amendment offered by Representative Hurt by voice vote and 
rejected an amendment by Representative Hinojosa by recorded 
vote of 24 yeas to 33 nays (FC-39).

                            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. An 
amendment offered by Representative Hinojosa was not agreed to 
by a recorded vote of 24 yeas to 33 nays (FC-39). The second 
and last recorded vote was on a motion by Chairman Hensarling 
to report the bill favorably to the House with an amendment. 
The motion was agreed to by a recorded vote of 41 yeas to 16 
nays (Record vote no. FC-40), a quorum being present.


                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of 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. 2354 
will reduce regulatory burden by requiring the Securities and 
Exchange Commission to periodically review its significant 
rules.

   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, July 6, 2015.
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. 2354, the 
Streamlining Excessive and Costly Regulations Review Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Susan 
Willie and Ben Christopher.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 2354--Streamlining Excessive and Costly Regulations Review Act

    H.R. 2354 would require the Securities and Exchange 
Commission (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 then need to consider modifying or repealing such 
rules and submit a report to the Congress for each rule change.
    Based on information from the SEC, CBO estimates that the 
new review and reporting activities required under the bill 
would not have a significant effect on the agency's workload. 
CBO estimates that implementing H.R. 2354 would cost less than 
$500,000 over the 2016-2020 period, assuming availability of 
the necessary amounts. 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. 2354 would be negligible, 
assuming appropriation actions consistent with that authority. 
Because the legislation does not affect direct spending or 
revenues, pay-as-you-go procedures do not apply.
    H.R. 2354 contains no intergovernmental or private mandates 
as defined in the Unfunded Mandates Reform Act and would not 
affect the budgets of state, local, or tribal governments.
    The CBO staff contacts for this estimate are Susan Willie 
and Ben Christopher. The estimate was approved by H. Samuel 
Papenfuss, 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. 2354 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(g) of H. Res. 5, 114th Cong. (2015), 
the Committee states that no provision of H.R. 2354 establishes 
or reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                   DISCLOSURE OF DIRECTED RULEMAKING

    Pursuant to section 3(i) of H. Res. 5, 114th Cong. (2015), 
the Committee states that H.R. 2354 contains no directed 
rulemaking.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    This Section cites H.R. 2354 as the ``Streamlining 
Excessive and Costly Regulations Review Act.''

Section 2. Regulatory review

    This section requires the SEC to periodically review each 
significant regulation and determine, by vote of the 
Commissioners, whether such regulation is outmoded, 
ineffective, insufficient, or excessively burdensome, or is no 
longer necessary in the public interest or consistent with the 
SECs statutory mandates. This section further requires notice 
and public comment regarding whether any such regulation should 
be amended; requires the Commissioners to vote whether to amend 
or repeal the regulation; and mandates that the SEC issue a 
report to Congress following the Commissioners' vote.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    H.R. 2354 does not repeal or amend any section of a 
statute. Therefore, the Office of Legislative Counsel did not 
prepare the report contemplated by Clause 3(e)(1)(B) of rule 
XIII of the House of Representatives.

                             MINORITY VIEWS

    H.R. 2354 would require the Securities and Exchange 
Commission to, within five years of enactment, and then once 
every ten years thereafter, review all significant SEC rules 
and determine by Commission vote whether they are ``outmoded, 
ineffective, insufficient, or excessively burdensome,'' or are 
no longer in the public interest or consistent with the SEC's 
mission. The SEC would then be required to provide public 
notice and comment, amend or repeal any rule, and report to 
Congress its vote, as well as, any suggestions for legislative 
changes. The Manager's Amendment, accepted by voice vote, 
modestly improved the bill by limiting judicial challenges to 
the SEC's initial vote in the process.
    While regular review of regulations by our regulators is 
necessary to ensure that those rules are still relevant to our 
ever-changing economy, this bill places an additional 
administrative burden on the SEC, an already overburdened and 
underfunded regulator. Today, the SEC has a number of formal 
and informal processes for identifying existing rules for 
review. For example, the Regulatory Flexibility Act requires 
the SEC to conduct a 10-year retrospective rule review, and the 
Paperwork Reduction Act requires periodic reviews of 
information collection burdens. The agency is also currently 
conducting several broad-based reviews of rules of issuer 
disclosures, equity market structure, and the definition of 
accredited investor.
    The bill is designed to replicate the retrospective rule 
review applicable to our banking regulators. However, there are 
important distinctions between their review and the review that 
this bill would impose on the SEC. For example, the SEC would 
be required to first vote, then provide notice and comment, and 
then ``amend or repeal any regulation,'' possibly supplanting 
the normal notice and comment process under the Administrative 
Procedures Act. In addition, unlike the bank regulators review, 
the SEC may be able to amend or replace a congressionally-
mandated rulemaking, simply if it determines that it is 
``ineffective.'' Perversely then, even if it is in the public 
interest to retain such a rule, the SEC could override the will 
of Congress and repeal the provision.
    The bill also appears to require the SEC to review and 
amend all of its significant regulations dating from 1934 
within the first 5 years of the bill's enactment, which would 
be exceptionally resource intensive and unworkable. This 
initial review and the ongoing burden on the SEC is 
particularly concerning without providing the agency with 
additional funds to carry out those burdens. Democrats offered 
an amendment to address this by authorizing appropriations of 
such sums as necessary to comply with the bill. By rejecting 
this amendment on a party-line vote (24-33), Republicans 
threaten to compromise the work of the SEC, an already a cash-
strapped agency, as it attempts to implement the remaining 
provisions in Dodd-Frank and the JOBS Act and to fulfill its 
mandate to oversee our rapidly expanding securities markets. 
For these reasons, we oppose H.R. 2354.
                                   Maxine Waters.
                                   Al Green.
                                   Joyce Beatty.
                                   Gwen Moore.
                                   Keith Ellison.
                                   Carolyn B. Maloney.
                                   Wm. Lacy Clay.
                                   David Scott.
                                   Ruben Hinojosa.
                                   Emanuel Cleaver.
                                   Juan Vargas.
                                   Daniel T. Kildee.

                                  [all]