[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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