[Congressional Record Volume 169, Number 92 (Tuesday, May 30, 2023)]
[House]
[Pages H2652-H2653]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SMALL ENTITY UPDATE ACT
Mrs. WAGNER. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 2792) to require the Securities and Exchange Commission to
carry out a study and rulemaking on the definition of the term ``small
entity'' for purposes of the securities laws, and for other purposes,
as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 2792
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Entity Update Act''.
SEC. 2. STUDIES, REPORTS, AND RULES REGARDING SMALL ENTITIES.
(a) Definitions.--In this section--
(1) the term ``Commission'' means the Securities and
Exchange Commission; and
(2) the term ``small entity''--
(A) has the meaning given the term in section 601 of title
5, United States Code, with respect to the activities of the
Commission; and
(B) includes any definition established by the Commission
of the term ``small business'', ``small organization'', or
``small governmental jurisdiction'' under paragraph (3), (4),
or (5), respectively, of section 601 of title 5, United
States Code, with respect to the activities of the
Commission.
(b) Studies and Reports.--Not later than 1 year after the
date of enactment of this Act, and again 5 years thereafter,
the Commission shall--
(1) conduct a study of the definition of the term ``small
entity'' with respect to the activities of the Commission for
the purposes of chapter 6 of title 5, United States Code,
which shall consider--
(A) the extent to which the definition of the term ``small
entity'', as in effect during the period in which the study
is conducted, aligns with the findings and declarations made
under section 2(a) of the Regulatory Flexibility Act (5
U.S.C. 601 note);
(B) the amount by which financial markets in the United
States have grown since the last time the Commission amended
the definition of the term ``small entity'', if applicable;
and
(C) how the Commission should define the term ``small
entity'' to ensure that a meaningful number of entities would
fall under that definition; and
(2) submit to Congress a report that includes--
(A) the results of the applicable study conducted under
paragraph (1); and
(B) specific and detailed recommendations on the ways in
which the Commission could amend the definition of the term
``small entity'' to--
(i) be consistent with the results described in
subparagraph (A); and
(ii) expand the number of entities covered by such
definition.
(c) Rulemaking.--After the completion of each study
required under subsection (b), the Commission shall, subject
to public notice and comment, revise the rules of the
Commission consistent with the results of such study.
(d) Inflation Adjustments.--As soon as practicable
following the date of enactment of this Act, and every 5
years thereafter, the Commission shall adjust all dollar
figures under the definition of small entity established by
the Commission to reflect the change in the Consumer Price
Index for All Urban Consumers published by the Bureau of
Labor Statistics of the Department of Labor.
The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from
Missouri (Mrs. Wagner) and the gentlewoman from California (Ms. Waters)
each will control 20 minutes.
The Chair recognizes the gentlewoman from Missouri.
General Leave
Mrs. WAGNER. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days in which to revise and extend their remarks
and include extraneous material on this bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentlewoman from Missouri?
There was no objection.
Mrs. WAGNER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise today in support of my bill, H.R. 2792, the Small
Entity Update Act.
Mr. Speaker, the slated bills that we are considering today are the
culmination of four hearings that the Capital Markets Subcommittee,
which I have the honor and privilege of chairing, has held this year,
where we heard from over a dozen witnesses, including founders of
private and public companies, investors, former SEC Commissioners,
security law practitioners, and even one of the authors of the IPO-
related provisions of the JOBS Act.
All of these bills play a vital role in expanding investment
opportunities for all Americans, improving access to capital for small
businesses, and strengthening our public markets.
Mr. Speaker, 11 years ago, the Jumpstart Our Business Startups Act,
or JOBS Act of 2012, was enacted into law by a divided Congress with
the intention of increasing access to capital for small businesses and
entrepreneurs in the United States. The purpose of the JOBS Act was to
provide greater opportunities for small business owners and
entrepreneurs to grow their companies and create jobs in their
communities.
Despite the successes of the JOBS Act, there are still significant
regulatory barriers that impede the growth of small businesses and
hinder the competitiveness of job growth in the United States.
Small businesses, Mr. Speaker, make up 99 percent of all enterprises,
employ almost half of the United States' workforce, and are
disproportionately affected by these barriers. These companies
represent the engine of our economy and are far too often subject to
one-size-fits-all regulation. The lack of access to capital makes it
challenging for small business owners to grow and expand their
companies, which can limit job creation and economic growth.
That is why I introduced the Small Entity Update Act. This bipartisan
bill would direct the SEC to conduct a study, followed by a rulemaking
that is consistent with the results of such study every 5 years. This
study would focus on defining the term ``small entity'' under the
Regulatory Flexibility Act.
Regulations often impose disproportionate burdens on startups, small
businesses, and other small entities. Small entities simply can't
afford the number of lawyers and regulatory experts that large
multinational firms can to comply with every regulation while still
being able to afford the cost of doing business.
The government cannot and should not treat a small startup in my
hometown of Ballwin, Missouri, with seven employees as it would a
Fortune 500 company. The reality is that the size of companies and the
underlying makeup of market forces behind them change over time, which
is why my bill requires the SEC to reevaluate their small business
definition every 5 years. What makes sense for companies today in terms
of regulatory compliance may not in 5 years.
My bill addresses longstanding concerns that numerous SEC rules do
not appropriately balance the SEC's mandates to protect investors and
facilitate capital formation. Studying and revising these definitions
will result in a better understanding of regulatory costs on small
entities and ensure that the SEC modernizes its criteria for defining
them.
In order for our economy to thrive, Mr. Speaker, Congress and
regulators must ensure that any policies enacted keep in mind any
impacts they would have on our millions of small businesses.
H.R. 2792 will lead to a more targeted regulatory framework for these
entities and help make the American Dream a reality for all
entrepreneurs.
Mr. Speaker, I thank Mr. Himes, Mr. Torres, Mr. Scott, and Mr. Casten
for their bipartisan support of this
[[Page H2653]]
impactful legislation, and I urge all my colleagues to vote for this
bill.
Mr. Speaker, I reserve the balance of my time.
Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in support of H.R. 2792, the Small Entity Update
Act, sponsored by the gentlewoman from Missouri.
This bill directs the SEC to carry out a study and rulemaking, if
appropriate, on its definitions of ``small entities'' under the
Regulatory Flexibility Act to ensure that the SEC accounts for impacts
on businesses when pursuing rulemakings.
The Regulatory Flexibility Act provides small entities with an
expanded opportunity to participate in the development of certain
regulations. Through the study contemplated under the bill, ``small
entities'' under SEC's jurisdiction would gain a louder voice when it
comes to the development of SEC regulations that directly apply to
them.
I am pleased that Mrs. Wagner was willing to accept changes to this
bill I pressed for that would ensure that the SEC remains in exclusive
control of the study, and whatever the outcome of the study, SEC's
actions would be consistent with its overall mission.
Mr. Speaker, I thank Mrs. Wagner for working with us on this bill. I
also thank Mrs. Wagner for working with Mr. Casten to include his
suggestion related to an inflation adjustment for this bill.
Mr. Speaker, I urge my colleagues to vote ``yes'' on this bill, and I
yield back the balance of my time.
Mrs. WAGNER. Mr. Speaker, I have no further requests for time.
Mr. Speaker, I urge my colleagues to support H.R. 2792, and I yield
back the balance of my time.
Ms. JACKSON LEE. Mr. Speaker, I rise today in support of H.R. 2792,
the Small Entity Update Act.
H.R. 2792 would require the Securities and Exchange Commission to
carry out a study and rulemaking on the definition of the term ``small
entity'' for purposes of the securities laws, and other purposes.
Agencies are required to consider the impact of their rules on small
entities under the Regulatory Flexibility Act.
Under the bill, the SEC must provide specific and detailed
recommendations to Congress on how the SEC can revise the definition of
small entity to (1) align with specified statutory goals, including
reducing unnecessary burdens on small entities; and (2) to expand the
number of entities covered.
Currently, the term ``small entity'' includes any definition
established by the SEC of the term ``small business'', ``small
organization'', or ``small governmental jurisdiction'', with respect to
the activities of the Commission.
This bill would direct the SEC to modernize the criteria it uses to
define a ``small entity'' to reflect the growth of the U.S. economy and
the evolution of the capital markets since the last time the small
entity definition was addressed.
H.R. 2792 requests the study occur no later than one year after the
date of enactment of this Act, and once every 5 years after.
The Congressional Budget Office (CBO) estimates implementation of
this bill would cost about $2 million over the 2023-2028 period.
However, since the SEC is authorized to collect fees each year to
offset its annual appropriation, CBO expects that the net effect on
discretionary spending over the 2023-2028 period would be negligible,
assuming appropriation actions consistent with that authority.
The SPEAKER pro tempore. The question is on the motion offered by the
gentlewoman from Missouri (Mrs. Wagner) that the House suspend the
rules and pass the bill, H.R. 2792, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mrs. WAGNER. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.
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