[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]





 
               SBA MANAGEMENT REVIEW: OFFICE OF ADVOCACY

=======================================================================

                                HEARING

                               before the

               SUBCOMMITTEE ON UNDERSERVED, AGRICULTURAL,
                     AND RURAL BUSINESS DEVELOPMENT

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                             APRIL 6, 2022

                               __________

                             
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                           
                             
                               

            Small Business Committee Document Number 117-052
             Available via the GPO Website: www.govinfo.gov
             
             
             
             
                         ______

             U.S. GOVERNMENT PUBLISHING OFFICE 
47-194               WASHINGTON : 2022              
             
             
             
             
             
                   HOUSE COMMITTEE ON SMALL BUSINESS

                 NYDIA VELAZQUEZ, New York, Chairwoman
                          JARED GOLDEN, Maine
                          JASON CROW, Colorado
                         SHARICE DAVIDS, Kansas
                         KWEISI MFUME, Maryland
                        DEAN PHILLIPS, Minnesota
                         MARIE NEWMAN, Illinois
                       CAROLYN BOURDEAUX, Georgia
                         TROY CARTER, Louisiana
                          JUDY CHU, California
                       DWIGHT EVANS, Pennsylvania
                       ANTONIO DELGADO, New York
                     CHRISSY HOULAHAN, Pennsylvania
                          ANDY KIM, New Jersey
                         ANGIE CRAIG, Minnesota
              BLAINE LUETKEMEYER, Missouri, Ranking Member
                         ROGER WILLIAMS, Texas
                        PETE STAUBER, Minnesota
                        DAN MEUSER, Pennsylvania
                        CLAUDIA TENNEY, New York
                       ANDREW GARBARINO, New York
                         YOUNG KIM, California
                         BETH VAN DUYNE, Texas
                         BYRON DONALDS, Florida
                         MARIA SALAZAR, Florida
                      SCOTT FITZGERALD, Wisconsin

                 Melissa Jung, Majority Staff Director
            Ellen Harrington, Majority Deputy Staff Director
                     David Planning, Staff Director
                     
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Jared Golden................................................     1
Hon. Claudia Tenney..............................................     2

                                WITNESS

Mr. Major Clark, Deputy Chief Counsel for Advocacy, (Performing 
  the non-exclusive functions and duties of the Chief Counsel for 
  Advocacy), Office of Advocacy, United States Small Business 
  Administration, Washington, DC.................................     4

                                APPENDIX

Prepared Statement:
    Mr. Major Clark, Deputy Chief Counsel for Advocacy, 
      (Performing the non-exclusive functions and duties of the 
      Chief Counsel for Advocacy), Office of Advocacy, United 
      States Small Business Administration, Washington, DC.......    17
Questions and Answers for the Record:
    Questions from Hon. Tenney and Responses from Mr. Major Clark    42
Additional Material for the Record:
    American Sustainable Business Network Letter.................    49
    Credit Union National Association (CUNA).....................    52
    Report on the Regulatory Flexibility Act, FY2021.............    53


               SBA MANAGEMENT REVIEW: OFFICE OF ADVOCACY

                              ----------                              


                        WEDNESDAY, APRIL 6, 2021

              House of Representatives,    
               Committee on Small Business,
         Subcommittee on Underserved, Agricultural,
                            and Rural Business Development,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:02 a.m., in 
Room 2360, Rayburn House Office Building, Hon. Jared Golden 
[chairman of the Subcommittee] presiding.
    Present: Representatives Golden, Carter, Delgado, Williams, 
Stauber, and Tenney.
    Chairman GOLDEN. Good morning. I am calling this hearing to 
order.
    Without objection, the Chair is authorized to declare a 
recess at any time.
    I would like to begin by noting a few requirements for this 
hearing. Standing House and Committee rules continue to apply 
during hybrid proceedings. All Members are reminded that they 
are expected to adhere to these rules, including the rules of 
decorum.
    House regulations require Members to be visible through a 
video connection throughout the proceeding, so keep your 
cameras on. Also, remember to remain muted until recognized to 
minimize background noise.
    In the event a Member encounters technical issues that 
prevent them from being recognized for questioning, I will move 
to the next available Member of the same party and recognize 
that Member at the next appropriate time slot provided they 
have returned to the proceeding.
    I would like to start off today by recognizing 
Congresswoman Tenney, who is here today for her first hearing 
as Ranking Member of this Subcommittee.
    Like me, Rep. Tenney represents a primarily rural district, 
so I look forward to working with her to help rural and other 
underserved small businesses. Today, the Committee will examine 
the management and operations of the Small Business 
Administration's Office of Advocacy. The Office of Advocacy 
serves as the voice of small businesses within the federal 
government. It is their job to promote the concerns of small 
firms before all three branches of the federal government and 
state policymakers.
    This is an important mission. Small businesses are the 
backbone of the American economy, so they need a seat at the 
table when policy is being crafted. One of the core pillars of 
the Office of Advocacy's mission is to study the role of small 
businesses in the economy and the issues impacting 
entrepreneurs. Recent research initiatives include creating 
small business profiles for all 50 states, collecting data on 
small business recovery from the pandemic, and producing 
reports on the availability of capital for entrepreneurs. 
Information like this is helpful for policymakers. In-depth 
analysis on the issues impacting small businesses can be hard 
to come by. Moreover, Advocacy's economic research drives more 
informed policy that accounts for the interests of small 
businesses. However, it is difficult for this research to keep 
up with the constantly evolving small business community. I am 
interested in ways Advocacy can provide more real time data to 
better inform our policy decisions.
    Another vital function of the Office is representing small 
businesses when it comes to regulatory matters. For more than 
40 years, Advocacy has enforced the Regulatory Flexibility Act 
(RFA) and other laws to ensure small businesses are heard 
throughout the regulatory process.
    In FY2021, Advocacy provided 17 official public comment 
letters to 10 federal agencies on various proposed rules. It 
also hosted 20 virtual roundtable discussions on proposed rules 
and regulatory issues. During that year, Advocacy's 
interventions resulted in regulatory cost savings for small 
businesses.
    By advocating for the interests of small businesses during 
the rulemaking process, the office helps level the playing 
field for small firms, who do not always have attorneys, 
accountants, and compliance officers to determine the impact of 
regulations on their enterprise. The office works with agencies 
to ensure that rules are smart, well crafted, and do not impose 
an undue burden on small firms.
    One important and timely example of the Office's work on 
behalf of small businesses in the regulatory process is the 
effort of Region 1 advocate, Louis Luchini, to raise concerns 
with a regulation related to Maine's lobster fishery, which is 
a priority I share. I hope to find ways to collaborate with the 
Office on this and other topics in the future.
    So today, I look forward to hearing from Mr. Clark about 
how we can strengthen the Office of Advocacy and ensure that 
small businesses have a voice at all levels of government and 
that we, as legislators, have the information that can help us 
to craft better policy.
    I would now like to yield to the Ranking Member, Ms. 
Tenney, for her opening statement.
    Ms. TENNEY. Thank you, Mr. Chairman. And I am also a small 
business owner. Our business is celebrating its 76th year in 
rural upstate New York. And this morning as we hold this 
hearing, small businesses are facing record high inflation, 
labor shortages, and a supply chain disruption which we are 
seeing everywhere. At the same time, the Biden administration 
continues reckless spending here in Washington, proposes tax 
increases on main street, and burdens small businesses with an 
ever-growing number of needless regulations. If there was ever 
a time for small businesses to have an advocate in Washington, 
it is now.
    The Office of Advocacy is responsible for representing the 
concerns of small businesses. The Office is also a source of 
government statistics. It produces research for policymakers 
and stakeholders and provides comments on behalf of small 
businesses in the regulatory process. The Office of Advocacy 
has consistently shown that small businesses bear a heavier 
burden from regulations than large businesses. As a New Yorker, 
I can tell you that is the case in New York as well. And I hear 
this from my businesses back in upstate New York in my small, 
rural, sort of suburban district. They tell me the lack of 
staff to comply with copious amounts of paperwork and onerous 
technical requirements is evident.
    We also know that small businesses operate on thin margins. 
Time and money spent working to comply with burdensome 
regulations is time and money taken away from their business 
operations and revenue. Compliance costs are really, really 
hitting small businesses hard.
    The previous administration cut unnecessary and overly 
burdensome regulations. This allowed our entrepeneurs and 
innovators to do what they do best: create jobs, grow the 
economy, and serve our communities. Unfortunately, the opposite 
has become the case with the Biden administration. The American 
Action Forum reports, ``The Biden administration capped off its 
first full year in office with more than $201 billion in 
regulatory costs and $131 million hours in new annual 
paperwork.'' My office held a digital focus group with 40 local 
businesses and found 35 percent of small businesses in my 
district cannot expand. Imagine that. Cannot expand due to 
government regulations. The Regulatory Flexibility Act (RFA) 
requires federal agencies to assess the impact of their 
proposed final rules on small businesses. The Office of 
Advocacy, specifically the chief counsel for Advocacy, is 
charged with monitoring compliance with the RFA and ensuring 
small businesses are represented in the rule-making process.
    I must stress the importance of a chief counsel for 
Advocacy, something the Committee Republicans called on 
President Biden to do over a year ago. The chief counsel for 
Advocacy is the government's top watchdog. Allowing this office 
to remain vacant sends the wrong message to American small 
businesses during such a difficult time. It is crucial that we 
fill the vital role soon to ensure small businesses are 
empowered to grow and prosper. When Washington rushes to solve 
problems without listening to small employers, they end up 
creating even more problems for our small businesses. As a 
small business owner, myself, I know the stress of trying to 
meet the bottom line, not to mention trying to meet weekly 
payroll. I understand the sleepless nights worrying about how 
to provide for your employees and service our customers. Small 
businesses' success is vital to our nation's economic success.
    Mr. Clark, I want to thank you for your time today and for 
your advocacy on behalf of the small business community. I look 
forward to learning more about your work to represent the small 
businesses and ways we can support the Office of Advocacy in 
making sure their voices are heard. And we all look forward 
today to your testimony.
    I yield back, Mr. Chairman.
    Chairman GOLDEN. Thank you very much.
    With that, I am going to introduce our witness, Mr. Major 
Clark III, the deputy chief counsel for the Office of Advocacy 
performing the nonexclusive functions and duties of the chief 
counsel position. Mr. Clark formerly served as the acting chief 
counsel from 2017 to November 2021. And as a chief of staff and 
senior administrative officer for this Committee under former 
Chairman Parren Mitchell. In addition, Mr. Clark has vast 
experience working as the assistant chief counsel for 
procurement policy at the Office of Advocacy and in the private 
sector as the executive vice president of corporate development 
and administration at the Maxima Corporation.
    Welcome back, Mr. Clark, and you are now recognized for 5 
minutes.

 STATEMENT OF MAJOR CLARK, DEPUTY CHIEF COUNSEL FOR ADVOCACY, 
OFFICE OF ADVOCACY, UNITED STATES SMALL BUSINESS ADMINISTRATION

    Mr. CLARK. Thank you very much, Chairman Golden. And good 
morning, Chairman Golden, and Ranking Member Tenney, and 
Members of the Subcommittee. I am honored to be here today on 
behalf of the Office of Advocacy. I do apologize for not being 
able to appear in person, but I am recovering from a recent 
surgery. So, I thank the Committee for the flexibility of 
allowing me to do this from home.
    I, too, want to join Chairman Golden in recognizing Member 
Tenney as the new Ranking Member on her recent appointment, and 
congratulations on that.
    Advocacy is an independent office that speaks on behalf of 
the small business community before federal agencies, Congress, 
and the White House. The testimony that I am presenting today 
does not reflect the views of the administration and has not 
been circulated to the Office of Management and Budget for 
clearance. In fact, none of our products are cleared by the 
administration because of our independence.
    As deputy chief counsel, and on behalf of the entire 
Advocacy family, I would like to thank the Subcommittee for the 
tremendous support you have shown over the years to the work 
that we do.
    Now, Congress, as Chairman Golden recognized, recognized 
the importance of small business to our nation's economy. The 
Office of Advocacy was created in 1976 to be an independent 
voice for small businesses within the federal regulatory 
process. And I will note, if I may, that 4 years after the 
passage of this statute, I became the senior staff Member for 
this Committee. So, I know firsthand the importance of 
legislation, and I know firsthand the importance of the 
commitment of this Committee to our small business community.
    At the outset, let me state clearly, because of our 
independence, Advocacy is not directly involved in any of SBA's 
programs. Independently, Advocacy represents small business 
interests in many ways. Our economic research team conducts 
important research on the needs of small businesses and their 
role in the economy. Our legal team works to ensure agencies do 
not enact regulations that unduly burden small businesses, and 
our regional advocates provide direct contact with small 
business stakeholders as indicated earlier by Chairman Golden 
with Louie and Region 1.
    The Regulatory Flexibility Act requires federal agencies to 
consider the impact of their regulatory proposals on small 
entities, analyze effective alternatives, and minimize small 
entity impacts and make their analysis available for public 
comment. As the watchdog for small businesses, Congress charged 
Advocacy with ensuring agency compliance with this law. The 
specific requirements of the RFA are discussed in more detail 
in my written testimony.
    Advocacy reports to this Committee and to Congress every 
year when the agency complies with the RFA. And I am pleased to 
announce that the report for fiscal year 2021 was published 
last week and sent to this Committee as required by law.
    Now, in recent years, the most frequent concerns Advocacy 
has cited in its public comment letters to agencies were 
deficiencies in the RFA analysis. This includes but is not 
limited to inadequate analysis on small entity impacts and lack 
of consideration of significant alternatives.
    For a moment, let me just move to our legislative 
priorities. Advocacy currently as stated does not have a 
Senate-confirmed chief counsel. Thus, our legislative 
priorities have not been fully updated since 2016. Those 
priorities are discussed in more detail in my written 
testimony. However, Advocacy is also aware of H.R. 6454, the 
Small Business Advocacy Improvements Act, which recently passed 
this Committee. This bill would amend Advocacy's charter to 
clarify our authority to research and represent small business 
interests on international issues. Because we already do this 
under the Trade Facilitation and Trade Enforcement Act, we 
support the change to our charter and support, thus, this bill.
    Mr. Chairman, this concludes my oral testimony and I 
request that Advocacy's RFA report, which I mentioned earlier, 
as well as my written report, be included in the hearing 
record.
    Chairman GOLDEN. Thank you, Mr. Clark. And we appreciate 
your testimony.
    I will now begin the question part of the hearing by 
recognizing myself for 5 minutes.
    The first thing I want to talk about today is something I 
mentioned in my opening statement and I think that you will be 
familiar with, sir. So, as I referenced up in Region 1, 
Advocate Louis Luchini worked with your office on behalf of 
small business owners in Maine who are all lobstermen. And you 
ultimately approved and put out a March 3rd letter to the 
Department of Commerce. In that letter you talked about how the 
May 1st deadline for lobstermen to buy new gear, despite that 
gear not yet being widely available in the marketplace, was 
going to put fishermen in ``an impossible scenario'' that could 
lead to delays in their ability to comply but that it would 
also lead to their losing a significant amount of revenue, or 
in some instances could put them out of business and unable to 
fish. As of today, the department has not granted an extension 
of the looming May 1st deadline.
    Do you continue to believe, sir, that the department is 
lacking in flexibility here with this deadline and an 
unwillingness to push it back given the reality of the 
availability of gear that would be necessary to comply?
    Mr. CLARK. Mr. Chairman, thank you for the question. And 
yes, we continue to believe in what we submitted to Commerce in 
terms of our comment letter and the fact that the extension has 
not been granted leaves us to continue to support our request 
that such be granted. I think the request by the lobstermen is 
not an unrealistic request. They are not saying that they do 
not want to comply; they are just simply saying that because of 
the requirements to get the equipment, because of shortages in 
the supply marketplace, the chain right now, because of other 
factors, they are going to be hampered by trying to comply with 
this regulation. And if that is the case, then they begin to 
lose revenue and that becomes a trickling effect to not only 
the consumer, lobster lovers like myself, but to the other 
businesses that are associated with the lobster industry. So, I 
think the request to delay it is very reasonable.
    Chairman GOLDEN. Thank you. Well, we very much appreciate 
the letter. We feel like the deadline really does need to be 
moved. Of course, myself, and most, well, all of the Maine 
delegation opposed the regulations to begin with. In fact, I 
have never seen a better example of unjustified regulations, 
just completely unsupported by data. In my entire life, really. 
I have told lobstermen in Maine it is the kind of thing that 
will just make you lose complete faith in government and paying 
attention and using real data and facts to move forward with 
something like this. So, I am opposed across the board but I 
know that is not your position but I certainly appreciate the 
advocacy on behalf of small business owners in regard to this 
May 1st deadline on having to comply and seeking flexibility.
    Mr. CLARK. And I thank you, sir. I thank you, sir, for the 
support from your office on this. That is very well received by 
my staff to know that there is support beyond what we have put 
out there. So, thank you very much.
    Chairman GOLDEN. I wanted to ask, SBAR panels that you do, 
where you meet with small business owners and entrepreneurs 
across the country to have a better understanding of the impact 
of regulations, my understanding is that these really only 
relate to regulations proposed by organizations like OSHA, 
CFPB, and EPA. Would you favor expanding that coverage to 
additional agencies, for instance, like NOAA, who is a part of 
the Department of Commerce?
    Mr. CLARK. First of all, yes, you are absolutely correct. 
The agencies you have mentioned are statutorily required to 
have these panels. We have looked at several agencies. We have 
looked at Fish and we have looked at the Department of 
Taxation. But we believe that these panels generally are very 
beneficial to the small business community and to the agency in 
formulating what should be good agency policy as it 
specifically relates to small business. So, we would definitely 
take a look at other agencies to see whether or not the panel 
process fits within what can be done to improve their 
regulatory process.
    Chairman GOLDEN. Thank you very much, sir. I appreciate it.
    At this point I am going to recognize the Ranking Member 
for 5 minutes of questions.
    Ms. TENNEY. Thank you so much, Mr. Clark. Thank you for 
your congratulations. It is certainly an honor to take the 
place of the late, great Jim Hagedorn who we all remembered 
recently and the great work he did on this Committee. So, I 
wanted to just ask you, as a small business owner, I know, and 
also from an area that is among the biggest agricultural 
regions in New York State, I hear from business owners all the 
time about burdensome regulations and they tell me that the 
Biden administration's Updated Waters of the U.S. would hurt 
their farms. This new regulation has been narrowed again or 
broadened again. And also, restauranteurs who are also very 
significant in our region are describing the Department of 
Labor's Tip Credit Rule impairs their ability to run their 
business effectively and hurts entrepeneurs, especially those 
trying to get in to the business with additional paperwork. 
Maybe you could just tell us what you think in your experience, 
what are the maybe top five most harmful regulations for small 
businesses that are coming across your desk and just quickly 
what your response has been.
    I have a couple of other questions for you but I would love 
to hear that first.
    Mr. CLARK. Thank you very much for your question.
    I am hesitating to answer that in a sense because I have a 
very excellent staff of lawyers and I think each lawyer on 
staff thinks that their regulations are as important as all 
regulations. So, running the risk of incurring their wrath when 
this hearing is over, I think any regulation, all regulations 
are important to us if those regulations have a way of stymying 
or prohibiting small business growth, small business expansion, 
and small businesses continuing to be the economic backbone of 
this country.
    Ms. TENNEY. Let me just ask you this. As a lawyer, I can 
totally understand that remark. You know, lawyers tend to think 
they are more important than everybody else and their ideas are 
more important than everyone. But we know that is not true. But 
I will just give you an example. On the Waters of the U.S. law, 
that is among the top priorities of the New York Farm Bureau, 
for example, as cited as one of the biggest obstacles to their 
effective management of their businesses and the ability for 
them to be competitive, produce food, and provide food security 
for our communities. Would you say that that is like among a 
regulation that you would see in a rural setting, the expansion 
of the Waters of the U.S.?
    Mr. CLARK. Yes. And that regulation not only in a rural 
setting but in urban settings as well. And we actually have, as 
you well know, or hopefully you know that we actually did 
provide a comment to the EPA and Army Corps on that particular 
regulation, and that would be one of the regulations that 
continues to be at the top of our list of concerns. And we, 
too, have heard from small businesses across the country in the 
areas of agricultural capacities and other capacities regarding 
this attempt. So, it is----
    Ms. TENNEY. We appreciate that work. I just want to move on 
to the Office of Advocacy has consistently found that small 
businesses experience the burden of sort of ``one size fits 
all'' regulations more deeply than other businesses and 99 
percent of the businesses across America are actually small 
businesses. So, when we put out these big sweeping regulations, 
we tend to hurt 99 percent of our business community because 
they tend to be small businesses and they are employing people 
and families across our country.
    About a year ago, this Committee Republicans sent a letter 
to President Biden urging him to swiftly nominate a chief 
counsel for Advocacy. Can you elaborate on how a chief counsel 
would help in this situation? Would help the operation of the 
office in assisting you and being able to meet the needs of our 
small business community, particularly the ones that are 
fighting with some of these burdensome regulations. I just want 
to add before you answer that quickly, President Trump made 
deregulation a top priority which helped our business 
community. His Executive Order 13771 required that any new 
regulation be balanced by removing at least two other 
regulations. Unfortunately, that Executive Order was 
immediately revoked incredibly by President Biden. Could you 
comment on the fact that your office says that burdensome 
regulations hurt small business but yet the Biden 
administration has deliberately cut off our ability to minimize 
regulations?
    And I believe my time has run out but I will leave that to 
the Chairman.
    Chairman GOLDEN. You are more than welcome to answer the 
question.
    Ms. TENNEY. If you could answer. Thank you.
    Mr. CLARK. All right. Thank you very much.
    Yes, President Trump's administration did do an executive 
order. It is what we call the 2-for-1 regulation. But I will 
also remind the Subcommittee that even prior to that executive 
order, 610 of the Regulatory Flexibility Act requires agencies 
to periodically review regulations in terms of the impact of 
those regulations on small business. And that has been part of 
the benchmark of the RFA since its inception in 1980.
    The other part of the issues as we look at this whole 
process is the issue of alternatives. And alternatives become, 
again a benchmark within the RFA where we want to look at 
agencies, what agencies are proposing in terms of their 
regulation and ensure that those regulations have provided 
alternatives for small businesses because we, too, recognize 
that a regulation, that one regulation does not fit all 
entities. And therefore, part of the Regulatory Flexibility Act 
requires agencies to provide meaningful alternatives for small 
businesses when proposing regulations.
    Ms. TENNEY. Thank you. When I get my second round, I want 
to ask you about that RFA review and how many of those 
regulations have actively been effective in removing burdensome 
regulations. So, we will get to that in the second round. Thank 
you so much. I really appreciate your answers.
    Mr. CLARK. Thank you.
    Mr. GOLDEN. We will now recognize the Vice Ranking Member 
of the Committee from Texas's 25th Congressional District, 
Representative Roger Williams.
    Mr. WILLIAMS. Thank you, Mr. Chairman, and Ranking Member 
Tenney. And Mr. Clark, for you being here today.
    I, too, like Ms. Tenney, am a small business owner, an 
automobile dealer for 51 years. Family 89 years. So, I am a 
small business owner also.
    The Biden administration continues to show their complete 
disregard for the real issues facing America's small 
businesses. Inflation is skyrocketing, supply chain disruptions 
are leaving store shelves empty. The worker shortage is 
hindering business operations and the pending Biden tax hikes 
have business owners concerned that they will not be able to 
compete in the future. It is the Office of Advocacy's 
responsibility to assist and help represent American small 
business interests with the federal government.
    So, Mr. Clark, what are the top concerns you are hearing 
from American small businesses right now and how do you ensure 
their concerns are being heard at the highest levels of the 
SBA?
    Mr. CLARK. Well, our responsibility, sir, is to really 
provide concerns that we hear from small businesses directly to 
the agencies. And we do that in various ways. We actually have 
roundtables. We talk with small businesses across the country. 
We interact with Members of Congress and their staff on various 
issues impacting small business. And we then provide that 
information directly where possible to the agencies in terms 
of----
    Mr. WILLIAMS. But if I may interrupt you, Mr. Clark, my 
question is, what are the concerns you are hearing from small 
businesses right now?
    Mr. CLARK. We are hearing many of the same concerns----
    Mr. WILLIAMS. If you are passing something on, what are you 
passing on?
    Mr. CLARK. We are passing on many of the same concerns that 
you have that some regulations are overburdensome. Some 
regulations are not necessarily beneficial to the businesses 
being able to continue to be profitable. A lot of these 
businesses are actually coming out of the COVID situation that 
we have had. They are now trying to get themselves back on 
their feet.
    Mr. WILLIAMS. Okay. Let's move on. I appreciate you 
carrying those and maybe I can help with some of the issues 
that are hurting small businesses.
    As a small business owner for over 50 years, I know 
firsthand that the free market gives businesses the opportunity 
to compete and grow. Competition is the key word. However, the 
Biden administration is creating new and unnecessary 
regulations. We talked about that. Overwhelming small 
businesses with more red tape and administrative burdens.
    American Action Form recently reported, and we have heard 
it today, that last year alone the Biden administration had 
over 130 million new compliance hours, which is unbelievable 
for small businesses to execute these actions that they want us 
to do. And we cannot expect small business owners whose 
resources are already stretched thin to handle the increased 
costs and manhours that come with the increased regulations. 
Businesses are already working within tight margins and 
compliance costs could be their tipping point. And in many 
cases businesses are hiring more compliance officers than they 
are salesman or loan officers. And so, businesses knew they 
would not be caught off guard by federal regulations because 
for every regulation made we talked about two had to be 
repealed by President Trump.
    So, Mr. Clark, the Office of Advocacy is meant to act as a 
government watchdog for small business ensuring the 
administration and federal agencies are aware of how 
regulations will impact businesses and not go rogue on small 
business.
    So, question. Does increasing compliance burdens and costs 
on small businesses help them to succeed?
    Can you hear me?
    Mr. CLARK. I can, and I am thinking. We have not seen any 
data to indicate that increased costs on compliance burdens 
help small businesses to succeed.
    Mr. WILLIAMS. So you are saying that high compliance 
burdens, what we are saying, do hurt small businesses when they 
are trying to succeed. They are a negative?
    Mr. CLARK. Yes, sir. We have taken the position that one of 
the things we want agencies to look at is the actual compliance 
costs of the regulations as they affect small business. But 
also recognizing that that compliance cost has a 
disproportionate impact on the size of that small business.
    Mr. WILLIAMS. Okay. Thank you.
    One other question, too. So, we talk about regulations. 
What about raising taxes? Do you think that helps them succeed 
like President Biden wants to do?
    Mr. CLARK. We have not looked at the issue of the impact of 
raising taxes. But the issue of raising taxes is very similar I 
would suggest to other issues in which that cost has to be 
factored into the businesses' operation. And thus, ultimately, 
that cost in some ways will be passed on to consumers or sold 
by that business.
    Mr. WILLIAMS. Well, I see my time is up. I have got more 
questions but I yield back, Mr. Chairman.
    Chairman GOLDEN. Thank you very much, sir.
    I think certainly it sounds like people have other 
questions so we will do a second round.
    I wanted to give you the opportunity, sir, to talk a little 
bit more about how Congress can better help your office so that 
you can do an even better job advocating for small businesses. 
So, I know you referenced the Small Business Advocacy and 
Improvements Act. I have also seen that the president's 
proposed budget would increase your budget modestly by about 
$750,000 from FY22 enacted levels. You are sitting at about $10 
million, I think annually. So, what can we do in partnership 
with you to make sure that you can do more good work for small 
businesses around the country?
    Mr. CLARK. Thank you very much, Chairman, for that, for 
that question. And I appreciate that. I appreciate that 
question.
    One of the things that we find that is very effective as we 
continue to represent small businesses is to get input from 
small businesses across the country in terms of issues that are 
impacting them. So clearly we work with many Members of 
Congress, many Members of this Committee on various issues in 
their jurisdiction. And that helps us also to present a more 
total picture to the agency when we talk about impacts of those 
regulations. So, we first of all would welcome, and continue to 
welcome that support from the Members of this Committee 
throughout the United States.
    The other area that we are looking at and we continue to 
recognize, and as you mention our budget, it is also important 
to realize that our budget has stayed flat for the last 5 or 6 
years and the money that has been placed there now really takes 
care of cost of living increase and other factors that we had 
to absorb without an increase. Some of that money will also be 
used to allow us to develop and reach out and get better 
economic research tools so that those tools can hopefully give 
us better data on impacts and be able to then provide this 
Committee with better information on policy actions.
    Chairman GOLDEN. Thank you. Could you give us an example of 
ways in which Advocacy works with federal agencies on the 
actual drafting of regulations to help them achieve the 
intended policy goals without unduly harming small businesses? 
And are there any relationships that your office has with 
agencies out there where you feel like it is a good model for 
other agencies to look at how to best utilize your office to 
get their regulations right without harming small businesses?
    Mr. CLARK. Thank you for the question. And yes. I will say 
that this office has moved in a very positive way since I came 
on board in Advocacy in 1998. We work internally with the 
regulatory components of the various agencies. Each advocate, 
each lawyer within the Office of Advocacy has a portfolio and 
that person works with their regulatory component. Many times, 
we are working with those regulatory components before the 
regulation is actually published. And a lot of that has 
resulted in a much better regulation. In addition to that, by 
statute, we are now required to provide training to all federal 
agencies, the regulatory components, and that also has enhanced 
our exposure to the agency but it has also enhanced the 
agency's understanding of what we do, why we do it, and how we 
do it. And it also ultimately has resulted in agencies 
understanding that we are there to ensure that they come out 
with the best regulation, but that best regulation should be 
very sensitive and reflect the concerns of small business.
    Chairman GOLDEN. Thank you.
    Representative Tenney?
    Ms. TENNEY. Thank you. I would love to go back and address 
that issue again. You mentioned Section 610 of the Regulatory 
Flexibility Act. I just wanted to follow up a little bit on 
comparing it to the effectiveness of President Trump's 
executive order which eliminated regulations. I was just 
wondering if you could actually tell us that through the 
Regulatory Flexibility Act, did we actually eliminate any 
regulations or change them to benefit small businesses by the 
nature of the review of that agency? Because I am concerned 
that we can talk about it but President Trump's Executive Order 
actually eliminated those regulations which had a huge impact 
on the ability of small businesses to thrive, compete, and the 
rise of entrepeneurs, the growth in our economy, and now we are 
seeing huge problems with work force and supply chains and I 
just wonder if you could just say in the RFA, did we actually 
effectively implement the cutting of regulations and benefit 
small businesses? And if you could cite, you know, a couple of 
examples I would really appreciate that.
    Mr. CLARK. Sure. And yes, I would say that the 610 has been 
effective as we move through the process. I know as one 
example, SBA made some changes to its 8(a) regulation as a 
result of a 610 review. I know that there have been other 
changes by other agencies. I do not have a detailed list of 
those. I would be happy to provide those to you and to the 
Committee. But 610 has been there. It has been used by 
agencies, and we continue to work with agencies to ensure that 
antiquated components of the regulatory process are eliminated.
    I know, for example, with the FAR Council, there has been 
elimination of various components dealing with the receiving of 
certain types of electronic transmission which is just 
antiquated based on the technology that we have today. Like you 
know, there has been movement and improvement in things like 
accepting signature on documents, electronic signatures on 
documents as opposed to those documents having to be signed 
directly as have been some of the regulations in the past. So, 
there is a whole series of those types of situations out there 
but I will be happy to provide the Committee with more detail 
of those.
    Ms. TENNEY. I would appreciate that.
    Also, just one more thing on that. If the RFA and 610 is 
actually effective and it can change rules, in your opinion, 
and I am asking you for your opinion, do you think that under 
the Waters of the U.S., for example, this broadened EPA 
designation that is hurting our agricultural community, do you 
think that an RFA Committee could actually strike down and 
narrow that definition under Waters of the USA that is hurting 
our farmers? Is that something you think we could effectively 
do through your office and through the RFA?
    Mr. CLARK. Well, the RFA is considered to be a procedural 
statute, so we do not have the substance of ability to strike 
down a particular regulation. We do have, however, the ability 
to request a review or a panel process that was talked about 
earlier. So, our panel process to solicit and get a better 
understanding of the impact of those regulations on small 
business. But the RFA does not give us statutory authority to 
actually strike down a particular proposed regulation.
    Ms. TENNEY. Right. Let me just read for your information. 
It says, ``Agencies, under the RFA, the Regulatory Flexibility 
Act, requires the federal agency to consider the impact of a 
regulatory proposal on small entities.'' And so, the agency can 
certify you are not an agency. So, if you do not certify, for 
example, the Waters of the U.S., does that mean that is a step 
towards striking down the Waters of the U.S. regulation that 
would benefit our farmers? Is that something that would be sent 
back and we could actually go through the regulatory process 
and have that, for example, have EPA take that into 
consideration in either striking down or narrowing their 
definition under the new Waters of the U.S.?
    I know Mr. Boland has got his lobsters which we are 
grateful for him to preserve them. I am a huge lobster lover 
and Maine lover. I am just saying, I want to know about the 
effectiveness. Can your office, you are an office full of 
lawyers, Office of Advocacy, if you had an actual chief 
counsel, can we do that effectively to actually implement real 
change in the regulatory process, which everybody knows this is 
a big burdensome problem that we have in the United States is 
this growth in our bureaucracy and the ability of regulations 
to overwhelm even rights and the ability of our small business 
community to thrive. We see that on a number of scores. You 
know, the Chevron decision gave deference to these regulatory 
agencies and we want to empower our small business community on 
the Small Business Committee here, especially those in the Ag 
world and so, and our small business community. Which actually 
in New York State is, you know, agriculture is among one of our 
top businesses actually in New York.
    Mr. CLARK. Yes. The certification component that you are 
referencing is one in which we have consistently and as 
necessary informed the agency that there is a particular 
certification lack, a significant factual basis, and that the 
certification had to be redone. In the alternative, we have 
strongly suggested that an initial regulatory flexibility 
analysis be done as opposed to attempting to certify the rule. 
And a lot of that is discussed as we train agencies in terms of 
those components and we find more and more agencies willing to 
do the initial regulatory flexibility analysis as opposed to 
just trying to certify the rule.
    Ms. TENNEY. Thank you.
    I think I am over my time. I yield back.
    Chairman GOLDEN. It sounds like the Congresswoman would 
like to have an SBAR panel specific to this issue which might 
even be a real possibility given that it is EPA that she is 
talking about.
    Representative Williams?
    Mr. WILLIAMS. Thank you, Mr. Chairman.
    A couple things. I am excited to hear as a business guy, 
you are one of the first persons, if not the first person in 
the Biden administration to tell me that you agree that raising 
taxes is bad for small business and raising regulations is bad 
for small business. So, I appreciate that attitude.
    A couple questions real quick. You all are independent, but 
how do you stay independent with this administration that is 
totally divisive?
    Mr. CLARK. Well, we stay independent because we are not 
partisan in any way with the issues. We look at the issues as 
they impact small business and we call those issues as they 
are. And we are not in any way political. I am not a political 
appointee in any way. I am a bureaucrat in the context of that 
structure. My staff, the same way. So, we work our job as 
created by you, Congress, is to represent small business. And 
we do that notwithstanding the other situations that may be out 
there.
    Mr. WILLIAMS. Well, I appreciate that. As it should be. So, 
we have got people in other agencies that do not feel that way.
    But anyway, moving on. As a small business owner, and you 
hear this. You hear from small business people, inflation is 
the number one concern that really we all have. What can you 
tell small business on how the best way to deal with this 
inflationary environment we are in. I am old enough, as you 
are. I go back to 1981 when we had high inflation, high 
interest rates. What would your recommendation be to a small 
business owner saying what should I do with this inflation?
    Mr. CLARK. I probably go back to 1976. But----
    Mr. WILLIAMS. So do I, unfortunately. 1971 as far as gas.
    Mr. CLARK. Clearly, one of the biggest issues with 
inflation with small business and you have said it and Ranking 
Member Tenney said and Chairman Golden has said it and we say 
it continuously is that small businesses operate from a very 
small margin. And with that, as inflation increases, small 
businesses have to become innovative. I know for a fact that in 
the restaurant industry, many small businesses are apologizing 
but yet they are increasing their prices on various meals and 
various food products to deal with that not only supply 
shortage but also with that inflation.
    The other aspect of this, I think small businesses have to 
continuously be innovative in finding different ways to 
continue to provide the services they do. And as you well know, 
small businesses are the most resilient and innovative 
businesses in this country. They have survived inflation. I 
very firmly believe that they will continue to find ways to 
sell their product, to be productive, to provide food on the 
table for the family, and all those things that they do.
    Mr. WILLIAMS. Thank you. And small business is, as you 
know, more than half the jobs, half the businesses in our 
country.
    Real quickly, what I hear from all my people back in Texas 
and you hear it too, is how hard it is to hire anybody. Nobody 
wants to work. You cannot get a workforce. You cannot sell the 
product. You cannot deliver the product. So, with all that we 
know about, you have some vacant positions. Have they affected 
your operations, your ability to assist and properly represent 
the interests of small businesses, people like me and Ms. 
Tenney?
    Mr. CLARK. The vacant positions that we have are our 
regional advocate positions. As the Chairman mentioned, we just 
hired a regional advocate for Region 1. We have some other 
regional advocates, some other candidates that we are examining 
and having conversation with. But overall, our ability to be 
responsive to our stakeholders continues to be extremely high. 
Our lawyers are very active in their various areas with small 
businesses across the country in the areas that they deal with 
and we do that through regional roundtables. We have listening 
sessions. We are constantly reaching out to small business 
trade groups. So, our ability to be effective continues. I 
think continues to be very high.
    Mr. WILLIAMS. Well, you have seen in your own industry, or 
your office. But anyway, do not send me those lawyers. Send me 
some car salesmen. Okay?
    Mr. CLARK. Alrighty, sir.
    Mr. WILLIAMS. I yield back. Thank you.
    Chairman GOLDEN. We are going to recognize Representative 
Stauber from Minnesota's 8th.
    Mr. STAUBER. Thank you very much, Mr. Chair.
    As everyone well knows, small business owners, farmers and 
ranchers were very negatively impacted by the Obama era Waters 
of the United States, the Waters Rule. It expanded federal 
jurisdiction far beyond what was authorized by Congress and 
resulted in the burdensome requirements and widespread legal 
uncertainty for Americans across this nation.
    The Trump administration rightfully chose to heed the 
concerns of these small entities and created the Navigable 
Waters Protection Rule. Unfortunately, the EPA is back to 
interpreting the Waters Rule and actually announced their 
intention to revise the Waters Rule and make it even worse.
    Mr. Clark, as the leader at the Office of Advocacy, can you 
tell me what you have done to illuminate the concerns of small 
business owners to the EPA as they look to revise this rule?
    Mr. CLARK. Thank you for your question, Congressman.
    Yes, we have worked with the EPA. We have worked with the 
Army Corps of Engineers on their intent. We have actually 
submitted a formal comment letter which I will make available 
to you if you have not seen it, but we have expressed to EPA, 
we have expressed to the Army Corps the concerns that we have.
    Mr. STAUBER. And with that, has the EPA committed or have 
they shown even any willingness to follow your recommendations 
and convene an official small business panel in accordance with 
the Regulatory Flexibility Act?
    Mr. CLARK. I need to get a more current response from the 
lawyer that is handling that for us but the last time I looked 
which was just a couple days ago they have not.
    Mr. STAUBER. So the EPA has not responded to your concerns.
    My next question is can you explain why going through an 
official SBRIFA panel is so important to understanding the 
significant economic impacts the Waters Rule will have on small 
businesses and small entities?
    Mr. CLARK. Sure. The SBREFA panel would actually allow 
small entities to come forward and to present their view and 
their viewpoints on the proposed rule before that rule becomes 
a final rule. This we have found to be very effective with 
several other agencies. So, it gives small businesses this 
opportunity to present their concerns in a very formal way and 
gives the agency an opportunity to ask direct questions to 
those small businesses regarding what they are proposing to do.
    Mr. STAUBER. Well, I think that we have all agreed that 
small businesses are the engine of our economy and they 
certainly should have a seat at this table.
    What can we do to support you as you try to fight off the 
Biden administration and their army of regulators that hold our 
small business owners in such contempt? And I will give you an 
example. The Biden administration's own numbers in 2021 were 
$201 billion. That is B. $201 billion of additional regulations 
and regulatory burdens on our small businesses. What are you 
doing and how can we support you in defending small businesses 
against this type of assault?
    Mr. CLARK. Well, Congressman, thank you for your question. 
Our statutory authority, which this Committee was responsible 
for generating some years ago, continues to be the basis for 
our ability to represent small businesses. So, continuing to 
have that ability is very critical for us. We always like to 
hear from small businesses directly as to the issues they are 
facing, so our system is very open. You call us and you are not 
going to get a voice message that says, you know, call back 
some other time.
    Mr. STAUBER. And I do appreciate that. Just with my 20 
seconds remaining a couple things. Would it be your opinion 
that an additional regulatory burden on small businesses to the 
tune of $201 billion, is that good or bad for small business?
    Mr. CLARK. Well, anytime there is a regulatory burden as I 
stated earlier, we have to look at the cost of compliance of 
that regulatory burden. And that cost of compliance for small 
businesses is not a uniform cost that complies because our 
businesses vary in size. And so, we have to look at all of that 
in terms of what the specifics of those burdens are and how 
those burdens specifically impact the various sectors. But we 
have always positioned ourselves to believe through statute, 
through economic research that we want agencies to consider 
cost of compliance and consider alternatives as the primary 
enforcement mechanisms for the RFA.
    Mr. STAUBER. Thank you for your answer.
    Mr. Chair, I would like to enter the comments of the Office 
of Advocacy submitted to the EPA regarding the proposed rule 
revisions to Waters. And I yield back.
    Chairman GOLDEN. Thank you very much.
    That is going to conclude the Q&A here, sir. We appreciate 
you taking the time to answer our questions and be with us here 
today.
    I will just say in closing that everyone here knows and 
agrees that America's small businesses are critically important 
to the country. Everyone knows that. Nearly half of the private 
workforce comes from small businesses and of course, it is 99 
percent of our economy. The work that your office does we think 
obviously is very important. I think it is very hard for small 
business owners to keep up with the regulatory process. It is 
often hard for them to even know when rules are being pushed 
out and even harder to interpret them and know how to deal with 
them. I certainly have known many small business owners who 
feel a lot of frustration in not knowing how to engage with the 
government and make sure that their feedback is being received. 
So, your office obviously, that is exactly what your mission 
is. So, I look forward to continuing to work with your team up 
in Region 1 as we are talking to small business owners and 
funneling them to your office so that we at least are giving 
them the opportunity to provide feedback, whether that is 
upstream from new regulations that they see being developed or 
comment after the fact on how it is impacting them. So, we 
appreciate the work that you all do in the region very much and 
thanks for joining us here today.
    Representative Tenney, did you want to say anything?
    Ms. TENNEY. Sure. Thank you so much. And thanks for holding 
this meeting. Great to hear form you, Major Clark. We really 
appreciate your work, your testimony, and we are hoping that we 
can continue to give you the support and give you the people 
that we need to protect our small business communities. So, we 
still have a lot of questions but I am sure that you will be 
submitting those for the record. And I just want to say thank 
you again for your service and for doing what you do for small 
business. Thank you.
    Mr. CLARK. Thank you. Thank you, Chairman and Members of 
the Subcommittee.
    Chairman GOLDEN. Well, thank you again, sir.
    Without objection, Members have 5 legislative days to 
submit statements and supporting materials for the record. And 
if there is no further business to come before the Committee, 
without objection, we are adjourned. Thank you.
    [Whereupon, at 11:01 a.m., the subcommittee was adjourned.]
    
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