Small Entity Update Act
Floor Speech
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Mr. HILL of Arkansas. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 3382) to require the Securities and Exchange Commission to carry out a study and rulemaking on the definition of the term ``small entity'' under the securities laws for purposes of chapter 6 of title 5, United States Code, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows: H.R. 3382
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'', ``small governmental jurisdiction'', or ``small entity'' under paragraph (3), (4), (5), or (6), 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.--Concurrently with, or 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.--After the Commission issued the final rule revisions required under subsection (c), and every 5 years thereafter, the Commission shall adjust any 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.
Mr. Speaker, I rise in strong support of this bill, H.R. 3382, the Small Entity Update Act.
Small businesses are the backbone of this country. Everyone on both sides of the aisle knows that. They drive innovation and job creation in our districts, but they are often limited from reaching their full capacity or capability because of overregulation.
The bill introduced by our subcommittee chair, Ann Wagner, addresses this challenge by directing the SEC to carry out a study and a rulemaking to modernize the definition of a small entity and ensure that small firms are given tailored, proportional oversight.
Mr. Speaker, years ago I had the privilege of serving as a nonexecutive chairman for a small-cap public company board of directors. I know firsthand the critical need for attention for what we are dealing with here today.
The bipartisan bill of the gentlewoman from Missouri (Mrs. Wagner) will empower our small businesses to focus on growth, hiring, and innovation, rather than unnecessary red tape.
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Mr. HILL of Arkansas. Mr. Speaker, I include in the Record the CBO estimate on this bill. H.R. 3382, SMALL ENTITY UPDATE ACT, AS REPORTED BY THE HOUSE COMMITTEE ON FINANCIAL SERVICES ON JUNE 3, 2025 ------------------------------------------------------------------------ By fiscal year, millions of dollars-- ------------------------------- 2025 2025-2030 2025-2035 ------------------------------------------------------------------------ Direct Spending (Outlays)............... 0 0 0 Revenues................................ 0 0 0 Increase or Decrease (-) in the Deficit. 0 0 0 Spending Subject to Appropriation * * ** (Outlays).............................. ------------------------------------------------------------------------ * = between -$500,000 and $500,000. ** = not estimated.
Increases net direct spending in any of the four consecutive 10-year periods beginning in 2036? No.
Increases on-budget deficits in any of the four consecutive 10-year periods beginning in 2036? No.
Statutory pay-as-you-go procedures apply? No.
Mandate Effects:
Contains intergovernmental mandate? No.
Contains private-sector mandate? Yes, Under Threshold.
H.R. 3382 would require the Securities and Exchange Commission (SEC) to study its current definition of ``small entity'' under the Regulatory Flexibility Act (RFA) and revise its rules based on the results of the study. Under current law, agencies subject to the RFA need to determine if their rules have a significant economic effect on small entities, including businesses, nonprofit organizations, and governmental jurisdictions. If so, agencies must consider alternatives that minimize that effect.
Using information about the cost of similar provisions, CBO estimates that implementing the bill would cost $2 million over the 2025-2030 period. CBO expects that the SEC would need about five employees, at an average annual cost of $330,000 for each employee, to carry out the study and amend the rules. Because 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 2025-2030 period would be negligible, assuming appropriation actions consistent with that authority.
If the SEC increases fees to offset the costs associated with implementing the bill, H.R. 3382 would increase the cost of an existing mandate on private entities required to pay those assessments. CBO estimates that the incremental cost of the mandate would be small and would fall well below the threshold established in the Unfunded Mandates Reform Act (UMRA) for private-sector mandates ($206 million in 2025, adjusted annually for inflation).
H.R. 3382 contains no intergovernmental mandates as defined in UMRA.
The CBO staff contacts for this estimate are Aurora Swanson (for federal costs) and Rachel Austin (for mandates). The estimate was reviewed by H. Samuel Papenfuss, Deputy Director of Budget Analysis. Phillip L. Swagel, Director, Congressional Budget Office.
Mr. Speaker, I rise in full support of Mrs. Wagner's work. This is exactly the kind of commonsense, bipartisan legislation that our constituents expect us to pass. To lower costs and encourage companies to be public is a good thing for our Nation. It will grow the economy faster. Companies can go public sooner in their growth period.
Mr. Speaker, for all the reasons I have explained, I urge my colleagues to support this bill, and I yield back the balance of my time.
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