The Senate Parliamentarian has rejected the provision in the Trump tax bill that would have eliminated the Public Company Accounting Oversight Board and transferred its responsibilities to the Securities and Exchange Commission, ruling it ineligible for passage under a streamlined reconciliation procedure.
The move had threatened to shutter the PCAOB within one year. Last month, the House passed the wide-ranging One Big Beautiful Bill Act, which contained provisions relating to taxes, border security, the debt limit, the PCAOB and more. Senate Republicans have been planning to use a budget reconciliation procedure to pass the bill by a simple majority without needing any votes from Democrats. But Democrats have been challenging various provisions, including the one about the PCAOB, arguing they would violate the so-called Byrd Rule that requires a budgetary impact to qualify for reconciliation.
PCAOB chair Erica Williams has been speaking out against the proposal, pointing out that the work of the PCAOB can’t be simply “cut and pasted” into the SEC. She greeted the announcement of the Senate Parliamentarian’s decision.
“This is good news for millions of Americans whose retirement savings and investments would be put at risk by eliminating the PCAOB,” said Williams.
Former members of the PCAOB have also been urging the Senate to drop the provision from the bill.
“It should have been clear from the beginning that the Big Beautiful Bill provision merging the PCAOB into the SEC was more about policy than about the budget,” said Daniel Goelzer, a founding member of the PCAOB and former acting chairman. “The PCAOB’s role and how it discharges its responsibilities are legitimate topics for discussion. However, budget reconciliation is not the right vehicle to address these issues. I’m pleased that the Parliamentarian has recognized that.”
Earlier this month, he and former PCAOB chairman James Doty were among a group of former regulators, academics and other experts who sent a letter to the Senate banking and budget committees explaining why the provision would violate the Byrd Rule, according to Thomson Reuters.
They noted that the PCAOB doesn’t receive any money directly from Congress but is instead funded through accounting support fees paid by public companies. The PCAOB was established by the Sarbanes-Oxley Act of 2002, which says it’s not “subject to procedures in Congress to authorize or appropriate public funds,” and its accounting support fees and other receipts of the board and the standard-setting body “shall not be considered public monies of the United States.”
“The PCAOB does not receive any money directly from Congress, through the annual appropriations process or otherwise,” they wrote.
They pointed out that Sarbanes-Oxley was enacted through regular order, not by budget reconciliation. “If this provision of the Act is to be overturned, that should also be accomplished through regular order rather than through budget reconciliation,” they wrote.
The Senate Parliamentarian also rejected on Thursday a number of other provisions, including one that would have eliminated the Consumer Financial Protection Bureau, which was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and reduced the pay of many Federal Reserve employees.
Senate Democrats plan to continue to challenge other provisions in the bill with Senate Parliamentarian Elizabeth McDonough.
“Tonight, the Senate Parliamentarian advised that certain provisions in the Republicans’ One Big, Beautiful Betrayal will be subject to the Byrd Rule — ultimately meaning they will need to be stripped from the bill to ensure it complies with the rules of reconciliation,” said Senate Banking Committee ranking member Jeff Merkley, D-Oregon, in a statement Thursday. “As much as Senate Republicans would prefer to throw out the rule book and advance their families lose and billionaires win agenda, there are rules that must be followed and Democrats are making sure those rules are enforced. We will continue examining every provision in this Great Betrayal of a bill and will scrutinize it to the furthest extent.”
