[Congressional Record (Bound Edition), Volume 162 (2016), Part 5]
[House]
[Pages 6849-6852]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    FOSTERING INNOVATION ACT OF 2015

  Mr. LUETKEMEYER. Mr. Speaker, I move to suspend the rules and pass 
the bill (H.R. 4139) to amend the Sarbanes-Oxley Act of 2002 to provide 
a temporary exemption for low-revenue issuers from certain auditor 
attestation requirements.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 4139

       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 ``Fostering Innovation Act of 
     2015''.

     SEC. 2. TEMPORARY EXEMPTION FOR LOW-REVENUE ISSUERS.

       Section 404 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 
     7262) is amended by adding at the end the following:
       ``(d) Temporary Exemption for Low-Revenue Issuers.--
       ``(1) Low-revenue exemption.--Subsection (b) shall not 
     apply with respect to an audit report prepared for an issuer 
     that--
       ``(A) ceased to be an emerging growth company on the last 
     day of the fiscal year of the issuer following the fifth 
     anniversary of the date of the first sale of common equity 
     securities of the issuer pursuant to an effective 
     registration statement under the Securities Act of 1933;
       ``(B) had average annual gross revenues of less than 
     $50,000,000 as of its most recently completed fiscal year; 
     and
       ``(C) is not a large accelerated filer.
       ``(2) Expiration of temporary exemption.--An issuer ceases 
     to be eligible for the exemption described under paragraph 
     (1) at the earliest of--
       ``(A) the last day of the fiscal year of the issuer 
     following the tenth anniversary of the date of the first sale 
     of common equity securities of the issuer pursuant to an 
     effective registration statement under the Securities Act of 
     1933;
       ``(B) the last day of the fiscal year of the issuer during 
     which the average annual gross revenues of the issuer exceed 
     $50,000,000; or
       ``(C) the date on which the issuer becomes a large 
     accelerated filer.
       ``(3) Definitions.--For purposes of this subsection:
       ``(A) Average annual gross revenues.--The term `average 
     annual gross revenues' means the total gross revenues of an 
     issuer over its most recently completed three fiscal years 
     divided by three.
       ``(B) Emerging growth company.--The term `emerging growth 
     company' has the meaning given such term under section 3 of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78c).
       ``(C) Large accelerated filer.--The term `large accelerated 
     filer' has the meaning given that term under section 240.12b-
     2 of title 17, Code of Federal Regulations, or any successor 
     thereto.''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Missouri (Mr. Luetkemeyer) and the gentlewoman from Alabama (Ms. 
Sewell) each will control 20 minutes.
  The Chair recognizes the gentleman from Missouri.


                             General Leave

  Mr. LUETKEMEYER. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days in which to revise and extend their 
remarks and to include extraneous material on this bill.

[[Page 6850]]

  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Missouri?
  There was no objection.
  Mr. LUETKEMEYER. Mr. Speaker, I yield myself such time as I may 
consume.
  I rise in support of H.R. 4139, the Fostering Innovation Act, 
introduced by the gentlewoman from Arizona (Ms. Sinema) and the 
gentleman from Pennsylvania (Mr. Fitzpatrick).
  H.R. 4139 extends a narrow exemption to comply with section 404(b) of 
the Sarbanes-Oxley Act for emerging growth companies that would 
otherwise lose their exempt status at the end of a 5-year period 
allowed under current law.
  As such, H.R. 4139 is consistent with the bipartisan aims of the JOBS 
Act to eliminate the one-size-fits-all regulatory structure for public 
companies.
  Under Sarbanes-Oxley, or SOX, section 404(b) requires an independent 
and external assessment of a public company's internal controls over 
financial reporting.
  While important, this translates into significant legal and 
compliance costs, driving up an entity's accounting and auditing 
expenses. In fact, the costs to comply with section 404(b) have far 
exceeded the original estimates done by the SEC, and even a 2011 SEC 
study found that the average costs for companies can exceed $1 million 
annually.
  This burden disproportionately impacts small and emerging growth 
companies, such as biotech firms that are engaging in lifesaving 
research and development. My home State of Missouri alone has over 
1,300 biotech companies that employ over 28,000 people who conduct 
groundbreaking research.
  Section 404(b)'s costs divert the resources of emerging growth 
companies to regulatory compliance costs, which harms the ability of 
those firms to compete in the global marketplace and to even invest in 
creating lifesaving treatments and technologies.
  Brian Hahn, the chief financial officer of GlycoMimetics, which is a 
small, public biotech company, testified at a subcommittee hearing on 
H.R. 4139 on December 2, 2015, that section 404(b) ``provides little-
to-no insight into the health of an emerging biotech company--but is 
extremely costly for a pre-revenue innovator to comply with.''

                              {time}  1600

  Recognizing these issues, the JOBS Act created an exemption to these 
external control attestation requirements, which allows small companies 
to focus on growing their business, going public, and still comply with 
SOx's other provisions. Nevertheless, the smallest of public companies 
still struggle to comply with the significant costs stemming from SOx 
section 404(b).
  Despite claims to the contrary, H.R. 4139 is narrowly tailored to 
provide regulatory relief to the smallest of public companies, those 
with less than $50 million in annual revenue. This legislation provides 
those companies with an additional on-ramp for section 404(b) 
compliance. As Mr. Hahn further testified in the Financial Services 
Committee: ``Legislation like the Fostering Innovation Act will ensure 
that growing companies have the opportunity to be successful on the 
public market without being forced to siphon off innovation capital to 
spend on costly compliance burdens that do not inform emerging biotech 
investors.''
  I thank Ms. Sinema and Mr. Fitzpatrick for their diligent work on the 
bill, which passed the Financial Services Committee by a broad 
bipartisan vote.
  I encourage my colleagues to provide this badly needed regulatory 
relief to our Nation's small innovative companies and join me in 
supporting H.R. 4139.
  Mr. Speaker, I reserve the balance of my time.
  Ms. SEWELL of Alabama. Mr. Speaker, I yield myself such time as I may 
consume.
  Today I rise in opposition to H.R. 4139, the Fostering Innovation 
Act. This bill permits certain public companies that would be valued at 
more than half a billion dollars to avoid an independent audit required 
by the Sarbanes-Oxley Act of 2002 for up to a decade.
  While I support legislation that would enable emerging growth 
companies to use valuable resources to remain competitive, stable, and, 
ultimately, successful, I believe that this bill, as currently drafted, 
is overly broad and would potentially undermine critical investor 
protections and impede confidence in our capital markets.
  Ultimately, these auditor reports on public companies provide 
substantial benefits to investors and to companies. They promote 
confidence in the U.S. markets, strengthen internal controls, and, 
ultimately, prevent fraud.
  I urge my colleagues to oppose this legislation.
  I reserve the balance of my time.
  Mr. LUETKEMEYER. Mr. Speaker, I yield 3\1/2\ minutes to the gentleman 
from Pennsylvania (Mr. Fitzpatrick), who is a distinguished member of 
the Financial Services Committee and chairs the Task Force to 
Investigate Terrorism Financing.
  Mr. FITZPATRICK. Mr. Speaker, I thank Chairman Luetkemeyer for 
yielding time to highlight the importance of this bipartisan 
legislation to assist the innovators and the job creators who drive our 
economy and are those who continue to position the United States as a 
global leader in research and a global leader in development.
  Mr. Speaker, during a previous Congress, the Financial Services 
Committee heard testimony from one of my constituents, the CEO of a 
Philadelphia-based pharmaceutical and biotechnology firm which, at the 
time, employed around 55 individuals. For this firm and for many 
emerging growth companies focused on groundbreaking technologies, it 
could take more than a decade to see a profit; but because of top-line 
numbers, these companies are required to comply with costly regulations 
meant to ensure that the largest corporations are playing by the rules.
  While Congress has made some efforts to reduce some of these 
regulatory burdens in the past, like the JOBS Act of 2012, it created 
an effective yet one-size-fits-all approach to exempt certain companies 
for up to 5 years from section 404(b) of Sarbanes-Oxley, which, of 
course, as we heard, requires the hiring of an external auditor in some 
cases. Unfortunately, a small group of companies remain unprofitable 
even after this period of time.
  This bipartisan Fostering Innovation Act works to address this 
shortcoming by providing targeted relief from these costly regulations 
and requirements, allowing our American firms to focus on what they do 
best: innovation, breakthroughs, and curing diseases. By extending the 
waiver period for smaller companies that meet specific requirements, 
Washington gets out of the way and allows these firms to better compete 
in critical research and development in an increasingly globalized and 
competitive world. That is it.
  I want to applaud Chairman Hensarling and the rest of the committee, 
especially my colleagues, Ms. Sinema of Arizona, who is the bill's 
sponsor, and Representative Delaney. We came together to find 
bipartisan solutions that address regulatory burdens for our emerging 
growth companies, and it is my hope that, with this spirit of 
cooperation, we will be able to find new issues to tackle and continue 
to show the American people that this House can govern and foster an 
economy that works for everyone.
  I urge my colleagues to support this measure.
  Ms. SEWELL of Alabama. Mr. Speaker, I include in the Record letters 
of opposition from Americans for Financial Reform, Public Citizen, and 
the SEC Investor Advocate.

                               Americans for Financial Reform,

                                     Washington, DC, May 23, 2016.
       Dear Representative: On behalf of Americans for Financial 
     Reform, we are writing to reiterate our opposition to H.R. 
     4139, the ``Fostering Innovation Act''
       This legislation would double the length of the existing 
     exemption from compliance with Sarbanes Oxley Section 404(b) 
     for ``emerging growth companies'', from five years to ten 
     years. The exemption granted in H.R. 4139 applies to 
     companies with $50 million or less in annual gross revenues.

[[Page 6851]]

       Section 404(b) of Sarbanes-Oxley requires the auditor of a 
     public company to attest to the accuracy of the company's 
     financial reporting. This requirement was passed in response 
     to the accounting scandals of the late 1990s, which revealed 
     widespread deception and fraud in financial reporting. More 
     recent research by the GAO has found that companies exempted 
     from auditor attestation requirements have a higher frequency 
     of accounting restatements, indicating that the financial 
     reporting at such companies is deficient. Such accounting 
     restatements are harmful both to investors and to the 
     companies themselves, by virtue of making it harder to raise 
     capital.
       We believe that the five year exemption provided for in the 
     JOBS Act is already ample time for a publicly held company 
     with tens of millions of dollars in revenue to develop the 
     capacity to provide fully reliable and accurate financial 
     statements. Ten years is an excessively long exemption. This 
     is especially true given the significance to the public and 
     the financial markets of accurate financial reporting. 
     Congress should reject H.R. 4139.
       Thank you for your consideration.
           Sincerely,
                                   Americans for Financial Reform.

       Following are the Partners of Americans for Financial 
     Reform--All the organizations support the overall principles 
     of AFR and are working for an accountable, fair and secure 
     financial system. Not all of these organizations work on all 
     of the issues covered by the coalition or have signed on to 
     every statement.
       AARP, A New Way Forward, AFL-CIO, AFSCME, Alliance For 
     Justice, American Income Life Insurance, American Sustainable 
     Business Council, Americans for Democratic Action, Inc, 
     Americans United for Change, Campaign for America's Future, 
     Campaign Money, Center for Digital Democracy, Center for 
     Economic and Policy Research, Center for Economic Progress, 
     Center for Media and Democracy, Center for Responsible 
     Lending, Center for Justice and Democracy, Center of Concern, 
     Center for Effective Government, Change to Win, Clean Yield 
     Asset Management, Coastal Enterprises Inc., Color of Change, 
     Common Cause, Communications Workers of America, Community 
     Development Transportation Lending Services, Consumer Action, 
     Consumer Association Council, Consumers for Auto Safety and 
     Reliability, Consumer Federation of America, Consumer 
     Watchdog, Consumers Union, Corporation for Enterprise 
     Development, CREDO Mobile, CTW Investment Group, Demos, 
     Economic Policy Institute, Essential Action.
       Green America, Greenlining Institute, Good Business 
     International, Government Accountability Project, HNMA 
     Funding Company, Home Actions, Housing Counseling Services, 
     Home Defenders League, Information Press, Institute for 
     Agriculture and Trade Policy, Institute for Global 
     Communications, Institute for Policy Studies: Global Economy 
     Project, International Brotherhood of Teamsters, Institute of 
     Women's Policy Research, Krull & Company, Laborers' 
     International Union of North America, Lawyers' Committee for 
     Civil Rights Under Law, Main Street Alliance, Move On, NAACP, 
     NASCAT, National Association of Consumer Advocates, National 
     Association of Neighborhoods, National Community Reinvestment 
     Coalition, National Consumer Law Center (on behalf of its 
     low-income clients), National Consumers League, National 
     Council of La Raza, National Council of Women's 
     Organizations, National Fair Housing Alliance, National 
     Federation of Community Development Credit Unions, National 
     Housing Resource Center, National Housing Trust, National 
     Housing Trust Community Development Fund, National 
     NeighborWorks Association, National Nurses United, National 
     People's Action, National Urban League, Next Step, 
     OpenTheGovemment.org, Opportunity Finance Network, Partners 
     for the Common Good, PICO National Network, Progress Now 
     Action, Progressive States Network.
       Poverty and Race Research Action Council, Public Citizen, 
     Sargent Shriver Center on Poverty Law, SEIU, State Voices, 
     Taxpayer's for Common Sense, The Association for Housing and 
     Neighborhood Development, The Fuel Savers Club, The 
     Leadership Conference on Civil and Human Rights, The Seminal, 
     TICAS, U.S. Public Interest Research Group, UNITE HERE, 
     United Food and Commercial Workers, United States Student 
     Association, USAction, Veris Wealth Partners, Western States 
     Center, We the People Now, Woodstock Institute, World Privacy 
     Forum, UNET, Union Plus, Unitarian Universalist for a Just 
     Economic Community.


                    List of State and Local Partners

       Alaska PIRG, Arizona PIRG, Arizona Advocacy Network, 
     Arizonans For Responsible Lending, Association for 
     Neighborhood and Housing Development, NY, Audubon Partnership 
     for Economic Development LDC, New York, NY, BAC Funding 
     Consortium Inc., Miami, FL, Beech Capital Venture 
     Corporation, Philadelphia, PA, California PIRG, California 
     Reinvestment Coalition, Century Housing Corporation, Culver 
     City, CA, CHANGER, NY, Chautauqua Home Rehabilitation and 
     Improvement Corporation (NY), Chicago Community Loan Fund, 
     Chicago, IL, Chicago Community Ventures, Chicago, IL, Chicago 
     Consumer Coalition, Citizen Potawatomi CDC, Shawnee, OK.
       Colorado PIRG, Coalition on Homeless Housing in Ohio, 
     Community Capital Fund, Bridgeport, CT, Community Capital of 
     Maryland, Baltimore, MD, Community Development Financial 
     Institution of the Tohono O'odham Nation, Sells, AZ, 
     Community Redevelopment Loan and Investment Fund, Atlanta, 
     GA, Community Reinvestment Association of North Carolina, 
     Community Resource Group, Fayetteville A, Connecticut PIRG, 
     Consumer Assistance Council, Cooper Square Committee (NYC), 
     Cooperative Fund of New England, Wilmington, NC, Corporacion 
     de Desarrollo Economico de Ceiba, Ceiba, PR, Delta 
     Foundation, Inc., Greenville, MS, Economic Opportunity Fund 
     (EOF), Philadelphia, PA, Empire Justice Center, NY, 
     Empowering and Strengthening Ohio's People (ESOP), Cleveland, 
     OH, Enterprises, Inc., Berea, KY, Fair Housing Contact 
     Service, OH, Federation of Appalachian Housing, Fitness and 
     Praise Youth Development, Inc., Baton Rouge, LA, Florida 
     Consumer Action Network, Florida PIRG, Funding Partners for 
     Housing Solutions, Ft. Collins, CO, Georgia PIRG, Grow Iowa 
     Foundation, Greenfield, IA, Homewise, Inc., Santa Fe, NM, 
     Idaho Nevada CDFI, Pocatello, ID, Idaho Chapter, National 
     Association of Social Workers, Illinois PIRG, Impact Capital, 
     Seattle, WA, Indiana PIRG, Iowa PIRG, Iowa Citizens for 
     Community Improvement, JobStart Chautauqua, Inc., Mayville, 
     NY, La Casa Federal Credit Union, Newark, NJ, Low Income 
     Investment Fund, San Francisco, CA, Long Island Housing 
     Services, NY, MaineStream Finance, Bangor, ME, Maryland PIRG, 
     Massachusetts Consumers' Coalition, MASSPIRG, Massachusetts 
     Fair Housing Center, Michigan PIRG.
       Midland Community Development Corporation, Midland, TX, 
     Midwest Minnesota Community Development Corporation, Detroit 
     Lakes, MN, Mile High Community Loan Fund, Denver, CO, 
     Missouri PIRG, Mortgage Recovery Service Center of L.A., 
     Montana Community Development Corporation, Missoula, MT, 
     Montana PIRG, New Economy Project, New Hampshire PIRG, New 
     Jersey Community Capital, Trenton, NJ, New Jersey Citizen 
     Action, New Jersey PIRG, New Mexico PIRG, New York PIRG, New 
     York City Aids Housing Network, New Yorkers for Responsible 
     Lending, NOAH Community Development Fund, Inc., Boston, MA, 
     Nonprofit Finance Fund, New York, NY, Nonprofits Assistance 
     Fund, Minneapolis, MN, North Carolina PIRG, Northside 
     Community Development Fund, Pittsburgh, PA, Ohio Capital 
     Corporation for Housing, Columbus, OH, Ohio PIRG, 
     OligarchyUSA Oregon State PIRG, Our Oregon.
       PennPIRG, Piedmont Housing Alliance, Charlottesville, VA, 
     Michigan PIRG, Rocky Mountain Peace and Justice Center, CO, 
     Rhode Island PIRG, Rural Community Assistance Corporation, 
     West Sacramento, CA, Rural Organizing Project, OR, San 
     Francisco Municipal Transportation Authority, Seattle 
     Economic Development Fund, Community Capital Development, 
     TexPIRG, The Fair Housing Council of Central New York, The 
     Loan Fund, Albuquerque, NM, Third Reconstruction Institute, 
     NC, Vermont PIRG, Village Capital Corporation, Cleveland, OH, 
     Virginia Citizens Consumer Council, Virginia Poverty Law 
     Center, War on Poverty--Florida, WashP1RG, Westchester 
     Residential Opportunities Inc., Wigamig Owners Loan Fund, 
     Inc., Lac du Flambeau, WI, WISPIRG.


                            Small Businesses

       Blu, Bowden-Gill Environmental, Community MedPAC, 
     Diversified Environmental Planning, Hayden & Craig, PLLC, Mid 
     City Animal Hospital, Phoenix, AZ, UNET.
                                  ____



                                                PUBLICCITIZEN,

                                     Washington, DC, May 23, 2016.
     Re Vote NO on H.R. 4139 Fostering Innovation Act of 2015.

     House of Representatives,
     Washington, DC.
       Dear Honorable Member: On behalf of more than 400,000 
     members and supporters of Public Citizen, we ask to you to 
     vote no on H.R. 4139 Fostering Innovation Act of 2015. This 
     bill would allow certain firms with up to $50 million in 
     revenue and $700 million in capital floats to escape critical 
     scrutiny in audits by doubling the length of their exemption 
     from the requirements set forth in 404(b) of the 
     SarbanesOxley law.
       A firm where investors have trusted $700 million should be 
     willing to be scrutinized under a Section 404(b) audit. A 
     firm that does not want to withstand such scrutiny is the 
     very firm that likely needs such scrutiny to ensure its 
     financial reporting is not being doctored.
       Already the Dodd-Frank Wall Street Reform and Consumer 
     Protection Act provides relief for smaller companies from the 
     audit requirements of Sarbanes-Oxley. Capital markets thrive 
     when companies are held to reasonable standards. That works 
     both for investors as well as entrepreneurs who hope to avail 
     themselves of the capital markets. Extending firms' 
     exemptions from necessary oversight will only lead to less 
     compliance with standards, and more risk.

[[Page 6852]]

       For questions, please contact Bartlett Naylor, financial 
     policy advocate, at [email protected].
           Sincerely,
     Public Citizen.
                                  ____

                                      United States Securities and


                                          Exchange Commission,

                                     Washington, DC, May 23, 2016.
     Hon. Paul Ryan,
     Speaker of the House, House of Representatives, Washington, 
         DC.
     Hon. Nancy Pelosi,
     Minority Leader, House of Representatives, Washington, DC.
       Dear Speaker Ryan and Minority Leader Pelosi: H.R. 4139, 
     cited as the ``Fostering Innovation Act of 2015,'' is ill-
     advised, and I urge Members of Congress to vote against it. 
     The bill would allow smaller public companies to avoid the 
     auditor attestation requirement of the Sarbanes-Oxley Act for 
     up to 10 years following an initial public offering.
       In a small company, as in a large one, it is management's 
     job to maintain a system of internal controls to help ensure 
     that the financial statements are reliable. A key reform of 
     the Sarbanes-Oxley Act, which followed on the heels of the 
     Enron implosion and other accounting scandals that wreaked 
     havoc on American investors, was to require that a company's 
     auditor attest to management's assessment of the 
     effectiveness of its internal control over financial 
     reporting. This ``second set of eyes'' helps to identify 
     potential risks of material misstatements and is designed to 
     prevent or detect fraud. Unfortunately, H.R. 4139 would chip 
     away further at the requirement for a second set of eyes, 
     even though auditor attestation enhances reliability of 
     financial reporting for investors, which has been shown to 
     reduce the cost of capital for businesses.
       Credible empirical research has established that both 
     investors and companies benefit from having auditors attest 
     to the effectiveness of internal controls. For example, 
     institutional investors rely on the auditor's opinion. 
     Auditor testing uncovers more deficiencies than does 
     management's assessment alone. Moreover, there is a positive 
     correlation between a material weakness in internal control 
     and the future revelation of fraud. Indeed, companies with 
     more serious control problems tend to be smaller, less 
     mature, growing, or rapidly changing. All of this academic 
     research is described at length in the testimony of 
     University of Tennessee professor Joseph V. Carcello on this 
     bill before the Subcommittee on Capital Markets and 
     Government Sponsored Enterprises of the House Financial 
     Services Committee. In addition, a 2011 study published by 
     the staff of the U.S. Securities and Exchange Commission fund 
     that companies that do not have an auditor attestation tend 
     to have significantly more material weaknesses in their 
     internal controls and more financial restatements.
       Since the adoption of the Sarbanes-Oxley Act in 2002, 
     several steps have already been taken to significantly reduce 
     the burden on smaller companies from the auditor attestation 
     requirement in Section 404(b). In 2007, for example, the SEC 
     and the Public Company Accounting Oversight Board took steps 
     to reduce the costs of 404(b) compliance. Later, the Dodd-
     Frank Act exempted approximately 60 percent of companies from 
     this requirement, and the JOBS Act waived the requirement for 
     emerging growth companies for up to five years. H.R. 4139 
     would extend this exemption for up to 10 years for certain 
     issuers, and I believe it is a step too far.
       Aside from weakening an important investor protection, H.R. 
     4139 further compounds the complexity of securities law 
     reporting requirements by creating yet another category of 
     issuers. The development of scaled reporting requirements has 
     resulted in multiple overlapping issuer categories, each 
     eligible for different rules, and that complexity itself adds 
     to the cost of raising capital.
       In short, the independent audit of internal controls 
     provides important protections to investors and the companies 
     in which they invest. It strengthens internal controls, 
     prevents fraud, and promotes confidence in U.S. capital 
     markets. I oppose H.R. 4139 because it would further 
     deteriorate the benefits of Section 404, and I strongly 
     encourage you to oppose it as well. Please call me at if you 
     have any questions.
           Sincerely,
                                                  Rick A. Fleming,
                                                Investor Advocate.

  Ms. SEWELL of Alabama. Mr. Speaker, I yield back the balance of my 
time.
  Mr. LUETKEMEYER. Mr. Speaker, I yield 3 minutes to the gentlewoman 
from Arizona (Ms. Sinema), a distinguished member of the Financial 
Services Committee and a sponsor of the bill.
  Ms. SINEMA. Mr. Speaker, I thank Chairman Hensarling and Congressman 
Fitzpatrick for working with me on this narrow, targeted exemption to 
provide commonsense, regulatory relief for companies on the cutting 
edge of scientific and medical research.
  I have heard from companies throughout my district that burdensome 
and unnecessary regulations continue to stifle their ability to grow 
and succeed. The Fostering Innovation Act allows certain emerging 
growth companies, including some biopharmaceutical companies, to spend 
valuable resources on product research and development instead of 
costly and unnecessary external audits.
  Currently, EGCs are exempt from certain regulatory requirements for 5 
years after their initial public offering. One of the requirements that 
EGCs are exempt from is Sarbanes-Oxley section 404(b), which requires 
public companies to obtain an external audit on the effectiveness of 
their internal controls for financial reporting. This reporting 
requirement is costly and unnecessary because management is still 
required to assess internal controls, and these EGCs, by definition, 
have very limited public exposure.
  H.R. 4139 is a very narrow fix that temporarily extends the Sarbanes-
Oxley section 404(b) exemption for an additional 5 years for a small 
subset of EGCs with an annual average revenue of less than $50 million 
and less than $700 million in public float. This will enable these EGCs 
to use valuable resources to remain competitive, stable, and, 
ultimately, successful.
  In the biopharma market, making it easier and less costly means 
greater competition and results in potentially lower drug prices for 
consumers. Further, nothing in this bill prohibits an external audit if 
a company or a majority of its shareholders determine an audit is 
beneficial
  I urge my colleagues to join us in helping to ensure that costly 
regulations don't stand in the way of success for biopharmaceutical and 
other companies on the cutting edge of scientific and medical research.
  Mr. LUETKEMEYER. Mr. Speaker, I thank Ms. Sinema and Mr. Fitzpatrick 
for their fine work on this piece of legislation, which basically is a 
commonsense piece of legislation to help a lot of our small, biotech 
companies to be able to do a better job of managing their own funds.
  I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Duncan of Tennessee). The question is on 
the motion offered by the gentleman from Missouri (Mr. Luetkemeyer) 
that the House suspend the rules and pass the bill, H.R. 4139.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill was passed.
  A motion to reconsider was laid on the table.

                          ____________________