[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.] A P P E N D I X [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]