[Congressional Record Volume 168, Number 149 (Thursday, September 15, 2022)]
[Senate]
[Pages S4640-S4642]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. REED (for himself, Ms. Cortez Masto, and Ms. Warren):
  S. 4857. A bill to amend the Securities Exchange Act of 1934 to 
require companies to file public reports after meeting certain 
quantitative thresholds, and for other purposes; to the Committee on 
Banking, Housing, and Urban Affairs.
  Mr. REED. Mr. President, today, I am joined by Senator Cortez Masto 
in introducing the Private Markets Transparency and Accountability Act, 
a bill that will address a disturbing trend in our capital markets. 
Increasingly, some of America's largest and most important companies 
are exploiting weaknesses in our securities laws to stay or go dark; 
that is, they are avoiding requirements to enter the public markets, 
where disclosure and transparency are required under law. Instead, they 
are remaining indefinitely in the private markets, where there is less 
visibility into the health and activities of the company.
  Why should average Americans care? First, they are invested in these 
companies through pension plans and mutual funds. Second, transparency 
is the lifeblood of fair and efficient markets. And third, these 
companies have incredible influence over our society and way of life.
  This legislation will address this disturbing trend by requiring the 
Nation's largest and most important private companies to register with 
the Securities and Exchange Commission, SEC. Requiring registration 
would put these companies on par with publicly traded corporations with 
regard to ongoing public disclosure about their business practices and 
financial condition.
  The most significant development in the capital markets over the last 
decade has been the explosive growth of the private markets. According 
to consulting firm McKinsey, annual private market fundraising reached 
a record of almost $1.2 trillion worldwide in 2021 up from $380 billion 
in 2011. More money has been raised in the private markets than in the 
public markets each year over the past 10 years. Many large companies 
find the allure of virtually no public transparency or oversight that 
is available in the private markets irresistible. Under current law, 
they find that it is all too easy to stay private forever.
  Under the Securities Exchange Act of 1934, Exchange Act, a private 
company

[[Page S4641]]

must register with the SEC after reaching 2,000 shareholders ``of 
record.'' But this requirement is easily circumvented because a single 
Wall Street broker or bank, which holds securities on behalf of 
thousands of underlying investors, is counted as one recordholder. The 
SEC estimates that under this threshold, 89 percent of public companies 
could choose to transition to the private markets and go dark tomorrow.
  This threshold desperately needs reform. Former SEC Chairman Mary 
Schapiro has testified before the Banking Committee that ``since the 
definition of `held of record' was put into place, a fundamental shift 
has occurred in how securities are held in the United States.'' And 
Harvard Law Professor John Coates recently testified before the 
committee that ``there is much to be said for revisiting the thresholds 
that are built into the [Exchange] Act, thinking about them in a 
different way, [and] not simply counting numbers.''
  It should be alarming when private companies can become extremely 
large and influential in our economy and raise unlimited amounts of 
capital from an unlimited number of investors, while circumventing the 
basic disclosure and governance requirements that Congress sought to 
apply. That is what is happening today. A central feature of the 
Exchange Act has effectively been gutted.
  Again, these are not small or inconsequential companies. Former SEC 
Commissioner Allison Herren Lee has observed that very large private 
companies are ``notable not just for their size, but for their 
transformational impacts on our way of life. They have, for example, 
changed the transportation and travel habits of millions across the 
globe, spawned billions of dollars in litigation, changed the legal 
underpinnings of entire markets, and launched civilians into space. 
Yet, despite their outsize impact, there is little public information 
available about their activities. They are not required to file 
periodic reports or make the disclosures required in proxy statements. 
They are not even required to obtain, much less distribute, audited 
financial statements. This has consequences for investors and 
policymakers alike, which in turn may have consequences for the broader 
economy.''
  The Private Markets Transparency and Accountability Act would restore 
the Exchange Act in order to provide the public with the essential 
insight it needs to make informed decisions. Under our legislation, 
private companies would be required to register with the SEC if they 
either reach a valuation of $700 million, excluding shares held by 
affiliates, or have at least 5,000 employees and $5 billion in 
revenues. These companies would enter the public disclosure system that 
Congress established in the Exchange Act and would have powerful 
incentives to conduct public stock offerings and list their shares on 
stock exchanges.
  Our legislation would provide mom-and-pop investors in the private 
markets with nearly all of the same protections that they are entitled 
to in the public markets. Pension plans that invest in companies 
through private equity funds would finally be able to obtain basic 
information about those companies, such as their audited financial 
statements, and employees who get compensated with company stock and 
options would be able to determine the true value of their shares. They 
would no longer need to fly blind when deciding whether to take another 
job and face the potentially enormous financial consequences of 
relinquishing their stock or options.
  By mandating that very highly valued or large companies register with 
the SEC, our legislation would raise the bar on governance for 
companies that control huge swaths of our economy. The ability to stay 
private forever has directly led to the dramatic rise of ``unicorns,'' 
or private companies with at least a $1 billion valuation. At the start 
of December 2021, the United States had nearly 473 unicorns. Some of 
these unicorns have been plagued by scandals and toxic cultures, 
without needing to comply with governance requirements for public 
companies designed to curb waste and force management accountability. 
Still others have been exposed as outright frauds. In these situations, 
investors suffer losses while fund managers keep their fees and company 
executives keep their bonuses. Arguably, greater transparency would 
have protected investors from unnecessary losses. Indeed, some unicorns 
that received sky-high valuations in the opaque private markets saw 
those valuations tumble when they faced the discipline and scrutiny 
that comes with public market transparency.
  Finally, our legislation helps markets allocate capital more 
efficiently. When risks are obscured in dark corners of our markets, 
then capital may not be directed towards the most deserving companies. 
When similar companies in similar industries of similar size are 
subject to wildly different disclosure requirements, market 
participants have less information to value those companies. That means 
the shares of many public companies may not be accurately priced. 
Without accurate prices, retail investors cannot have confidence that 
they are getting reasonable returns on their hard-earned savings.
  Our capital markets depend on disclosure and transparency. As more 
companies remain private indefinitely or go dark, we lose those 
features and weaken the foundational strengths of our economy. We need 
to restore these bedrock requirements and ensure that they apply to all 
major companies whether they are in the private or the public markets.
  I thank the bill's supporters, including the AFL-CIO, the Consumer 
Federation of America, the North American Securities Administrators 
Association, the Healthy Markets Association, Public Citizen, former 
SEC Commissioner Robert J. Jackson, Columbia Law Professor John Coffee, 
and Harvard Law Professor John Coates.
  I would like to thank Senator Cortez Masto for working with me on 
this legislation, and I urge our colleagues to join us in supporting 
the Private Markets Transparency and Accountability Act.
                                 ______
                                 
      By Mr. KAINE (for himself and Mr. Warner):
  S. 4864. A bill to amend the Natural Gas Act to bolster fairness and 
transparency in the consideration of interstate natural gas pipeline 
permits, to provide for greater public input opportunities in the 
natural gas pipeline permitting process, and for other purposes; to the 
Committee on Commerce, Science, and Transportation.
  Mr. KAINE. Mr. President, today I am introducing a bill to make the 
process of siting natural gas pipelines fairer, more transparent, and 
more responsive to landowner concerns.
  For some time now, I have been listening to Virginians with 
passionate views on the process involved in permitting the Mountain 
Valley Pipeline, as well as the previous proposal for the Atlantic 
Coast Pipeline. For various reasons, many oppose one or both of these 
projects, while others support these projects. The Federal Energy 
Regulatory Commission, FERC, is tasked with analyzing all the issues--
purpose and need for a project, impacts on people living on the route, 
potential risks to the environment or property--and deciding what 
course best serves the public interest.
  From listening to all sides, I have concluded that while reasonable 
people may reach different conclusions, FERC's public input process is 
flawed and could be better. Accordingly, this legislation proposes 
several steps to address several shortcomings, all of which were 
originally brought to my attention by Virginia constituents. For 
instance, this bill requires programmatic analysis of pipelines 
proposed around the same time and in the same geographic vicinity so 
that the full impacts of multiple projects can be analyzed. It requires 
a greater number of public comment meetings so that citizens are not 
required to commute long distances to meetings at which they must speed 
through just a few minutes of remarks on these complex topics. It 
ensures that affected landowners are given proper notice and 
compensation. It guarantees that landowner complaints will be heard 
before construction commences, and it clarifies the circumstances under 
which eminent domain should and should not be used.
  I am pleased to be joined by my colleague Senator Mark Warner on this 
bill, which is an update to a version we introduced in the 116th 
Congress. The public deserves reasonable opportunity

[[Page S4642]]

to weigh in on energy infrastructure projects, and we are heeding calls 
by our constituents to make this process fairer and more transparent 
without mandating a particular outcome.
  I encourage the Senate to consider this legislation, not to pave the 
way for pipelines nor to throw up insurmountable roadblocks to them but 
to give the public greater certainty that the Federal Government's 
infrastructure decisions are fair and transparent.
                                 ______
                                 
      By Mr. PADILLA (for himself and Mrs. Feinstein):
  S. 4870. A bill to approve the settlement of the water right claims 
of the Tule River Tribe, and for other purposes; to the Committee on 
Indian Affairs.
  Mr. PADILLA. Mr. President, I rise to introduce the Tule River Tribe 
Reserved Water Rights Settlement Act of 2022. This legislation would 
finalize this multidecade effort by the Tule River Tribe to provide 
clean drinking water to their people and uphold the Federal 
Government's trust and treaty responsibilities.
  The Tule River people are descendants of the Yokuts Indians, a large 
group of Native Americans who occupied what is now known as the San 
Joaquin Valley in California for thousands of years prior to contact 
with settlers.
  In 1856, the Federal Government established their reservation in 
Tulare County, with the specific goal of providing the Tribe with 
arable farmland and the water resources necessary to establish self-
sufficiency. However, their land was fraudulently stolen from them, and 
in 1873, President Grant issued an Executive order to create a new 
reservation for the tribe. This land, which is the Tribe's current 
reservation, is comprised of mostly mountainous lands that do not 
provide sufficient irrigation opportunities or water storage 
facilities. Today, the Tule River Tribe struggles to provide clean 
drinking water to their people, and Tule Tribal citizens suffer from a 
low standard of living as a result.
  Since 1971, the Tribe has worked to establish its federally reserved 
water rights to create the viable homeland they were promised and to 
ensure that their citizens have enough water to meet their current and 
future water needs. For decades, the Tribe has worked with the 
Departments of the Interior and Justice as well as downstream water 
users to advance a settlement agreement, thereby avoiding costly 
litigation for both the Tribe and the U.S. Government.
  I am proud to introduce this legislation to quantify the Tribe's 
water right of 5,828 acre-feet per year of surface water and fund $568 
million towards the construction of a water storage project. Our 
legislation would also codify what is known as the 2007 Agreement with 
downstream water users, who support this legislation. Finally, the 
legislation would transfer approximately 9,000 acres of Federal land 
currently in the Sequoia National Monument to allow the Tribe to 
protect the watershed headwaters and 800 acres of grazing land to the 
north and south of the reservation boundary.
  It is long past time for the Federal Government to live up to its 
trust and treaty responsibilities to the Tule River Tribe. We must 
codify this water settlement and settle the Tule River Tribe's claims 
against the United States. Access to clean drinking water now and in 
the future is essential to the continued strength of Tribal nations and 
to ensuring the sustainability and viability of future generations.
  Water is a sacred and necessary resource for Tribal nations and for 
all people. As California and the West continue to experience a 
historic megadrought, enactment of our legislation would provide water 
security to Tule River citizens now and into the future.
  I thank Senator Feinstein for introducing this legislation with me in 
the Senate. I would also like to thank the Tule River Tribe for their 
decades of hard work to finalize this settlement and the downstream 
water users, including the Tule River Association and the South Tule 
Independent Ditch Company, for working with the Tribe to settle this 
issue and avoid litigation.
  I look forward to working with my colleagues to enact the Tule River 
Tribe Reserved Water Rights Settlement Act of 2022 as quickly as 
possible.

                          ____________________