[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
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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.]
A P P E N D I X
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