    [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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