[House Hearing, 118 Congress] [From the U.S. Government Publishing Office] BURDENSOME REGULATIONS: EXAMINING THE EFFECTS OF DEPARTMENT OF ENERGY REGULATIONS ON AMERICA'S JOB CREATORS ======================================================================= HEARING BEFORE THE COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED EIGHTEENTH CONGRESS FIRST SESSION __________ HEARING HELD NOVEMBER 8, 2024 __________ [GRAPHIC NOT AVAILABLE IN TIFF FORMAT] Small Business Committee Document Number 118-029 Available via the GPO Website: www.govinfo.gov __________ U.S. GOVERNMENT PUBLISHING OFFICE 54-085 WASHINGTON : 2024 HOUSE COMMITTEE ON SMALL BUSINESS ROGER WILLIAMS, Texas, Chairman BLAINE LUETKEMEYER, Missouri PETE STAUBER, Minnesota DAN MEUSER, Pennsylvania BETH VAN DUYNE, Texas MARIA SALAZAR, Florida TRACEY MANN, Kansas JAKE ELLZEY, Texas MARC MOLINARO, New York MARK ALFORD, Missouri ELI CRANE, Arizona AARON BEAN, Florida WESLEY HUNT, Texas NICK LALOTA, New York NYDIA VELAZQUEZ, New York, Ranking Member JARED GOLDEN, Maine KWEISI MFUME, Maryland DEAN PHILLIPS, Minnesota GREG LANDSMAN, Ohio MORGAN MCGARVEY, Kentucky MARIE GLUESENKAMP PEREZ, Washington HILLARY SCHOLTEN, Michigan SHRI THANEDAR, Michigan JUDY CHU, California SHARICE DAVIDS, Kansas CHRIS PAPPAS, New Hampshire Ben Johnson, Majority Staff Director Melissa Jung, Minority Staff Director C O N T E N T S OPENING STATEMENTS Page Hon. Roger Williams.............................................. 1 Hon. Nydia Velazquez............................................. 2 WITNESSES Mr. Marlo Lewis, Senior Fellow, Competitive Enterprise Institute, Washington, DC................................................. 4 Ms. Alicia Huey, President, AGH Homes, Inc., Birmingham, AL...... 6 Mr. Jeff Bauman, Manager of Regulatory Affairs, National Refrigeration & Air Conditioning Products, Inc., Bensalem, PA.. 7 Prof. Emily Hammond, Professor of Law, The George Washington University, Washington, DC..................................... 9 APPENDIX Prepared Statements: Mr. Marlo Lewis, Senior Fellow, Competitive Enterprise Institute, Washington, DC.................................. 32 Ms. Alicia Huey, President, AGH Homes, Inc., Birmingham, AL.. 35 Mr. Jeff Bauman, Manager of Regulatory Affairs, National Refrigeration & Air Conditioning Products, Inc., Bensalem, PA......................................................... 43 Prof. Emily Hammond, Professor of Law, The George Washington University, Washington, DC................................. 46 Questions for the Record: None. Answers for the Record: None. Additional Material for the Record: Appliance Standards Awareness Project Letter................. 52 Manufactured Housing Institute (MHI)......................... 61 BURDENSOME REGULATIONS: EXAMINING THE EFFECTS OF DEPARTMENT OF ENERGY REGULATIONS ON AMERICA'S JOB CREATORS ---------- WEDNESDAY, NOVEMBER 8, 2023 House of Representatives, Committee on Small Business, Washington, DC. The Committee met, pursuant to call, at 10:20 a.m., in Room 2360, Rayburn House Office Building, Hon. Roger Williams [chairman of the Committee] presiding. Present: Representatives Williams, Stauber, Meuser, Van Duyne, Mann, Molinaro, Alford, Bean, Velazquez, Golden, Landsman, McGarvey, Gluesenkamp Perez, Scholten, Thanedar, and Chu. Chairman WILLIAMS. Good morning, and I want to apologize for being late to both my democratic colleagues and Republican colleagues. Before we get started, I want to recognize Representative Bean here to lead us in the pledge and prayer. Okay. I will do that if you all stand, please. I pledge allegiance to the flag of the United States of America and to the Republic for which it stands, one nation, under God, indivisible, with liberty and justice for all. Please bow your heads. Heavenly Father, God of all people, thank you for allowing us to be here today to talk about the greatness of our country and how both sides can do everything we can in your name to improve, but we have the opportunity to do so with. We appreciate our witnesses coming today. In your name we pray. Amen. I now call the committee on small business to order. Without objection, the Chair is authorized to declare a recess of the committee at any time. I now recognize myself for my opening statement. Good morning to all of you again. Thank you for being here, and welcome to today's hearing which will focus on examining the detrimental effects of the Department of Energy's regulations on our nation's job creators. First I want to thank our witnesses for joining us today, and I know you traveled to be with us this morning. We appreciate, again, all of you taking time to do so. The Biden administration seemingly has it out for Main Street America. Through their misguided economic policies and increased regulatory requirements, small businesses are finding it harder to make ends meet. Rather than looking for growth opportunities, small businesses are forced to play defense in order to deal with a whole host of new regulations coming down the pipeline. President Biden's Energy Department has been especially active in the past few years in passing new rules that have dramatic repercussions on small businesses. By implementing tighter energy-efficient standards, manufacturers are being forced to change significant portions of their operations. This is increasing the cost of producing this equipment which is ultimately passed along to businesses and the American people. The actions are forcing Main Street America to foot the bill for this administration's radical climate agenda. Inflation remains a top concern for job creators, yet the DOE's new regulations on gas stoves, ceiling fans, and transformers are increasing costs for businesses and consumers alike. Not only are these new standards forcing businesses to purchase updated equipment, but they are reducing consumer choice in the marketplace. Competition and consumer preference should be what determines what is produced, not government mandates. These policies provide minimal benefit to our small businesses and only make it harder for them to operate. So while small businesses suffer under this administration, their concerns continue to be ignored. It is the job of this committee to be main street's voice in Washington, and we are proud to have this hearing to shine a light on the devastating effects of these new actions taken by the Biden administration. And if we want to ensure America continues to have a thriving small business economy, our agencies must do better by listening to main street--repeat, listening to main street-- throughout the rulemaking process and limit the negative impacts of new regulations. The government should be in the business of ensuring the economy works for Americans and guaranteeing regulations aren't hamstringing job creators. This committee's goal is to ensure Main Street America is given a fair shot at the American Dream. Our nation's job creators have been forced to endure profound challenges over the past--last couple of years, and I hope this hearing helps spotlight some of the detrimental consequences of this administration's regulatory policies and will help us come up with solutions to support our nation's small businesses. Again, I want to thank you all for being here today with us. I am looking forward to today's conversation. With that, I want to yield to our distinguished Ranking Member from New York, Ms. Velazquez, for her opening remarks. Ms. VELAZQUEZ. Thank you, Chairman Williams. As Members of the Small Business Committee, we understand that complying with federal, state, and local regulations can be burdensome for small business owners, and that is why Congress created the Office of Advocacy to ensure that federal agencies are taking the views of small businesses into consideration throughout the rule-writing process. In our oversight role, we can send letters, hold hearings, and request meetings in an effort to hold agencies accountable to the Regulatory Flexibility Act. The Department of Energy is required, under the bipartisan Energy Policy and Conservation Act, to establish energy conservation standards for approximately 60 consumer products and reevaluate them every 6 years. Unfortunately, the previous administration violated the law and missed 26 deadlines, including one for distribution transformers. Don't be fooled by some of the rhetoric you may hear today. The Trump DOE was sued, and as part of a court settlement, the Biden administration is required to review these long overdue standards. This isn't a case of federal overreach. The reality is, the Trump delays hurt small businesses, costing them more to do business. Since taking office, the Biden administration has issued efficiency standards for more than 20 product categories, saving Americans $570 billion and reducing greenhouse gas emissions by more than 2.4 billion metric tons over 30 years. That translates into significant energy savings for small businesses. Today I hope to have a productive discussion about energy conservation standards that lower energy bills for small businesses, and I would like also to learn more about the steps that the Department of Energy is taking to consider small businesses throughout the rule-writing process. Maybe in the near future we can bring the federal agencies to hear directly from them, and to give them an opportunity to explain their thinking. I would like to request that the written testimony of Andrew deLaski, the Executive Director of the Appliance Standards Awareness Project be entered into the record. Chairman WILLIAMS. So ordered. Ms. VELAZQUEZ. Thank you, and I yield back. Chairman WILLIAMS. Thank you. And I will now introduce our witnesses. Unfortunately, our original witness, Mr. Ben Lieberman is sick and unable to testify. So, Mr. Marlo Lewis, we have gone to the bullpen and brought you out, and we appreciate you being here today on such short notice. So Mr. Lewis is a senior fellow at the Competitive Enterprise Institute located here in Washington, D.C. Mr. Lewis specializes in energy and public policy issues, and previously he served as the director of external relations at the Reason Foundation Los Angeles and the staff director of the House Government Reform Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs. Mr. Lewis, thank you for being with us again today, and we look forward to hearing your conversation with us. Our next witness here today is Ms. Alicia Huey. Ms. Huey is president of AGH Homes located in Birmingham, Alabama. AGH Homes is a custom homebuilding company which specializes in high-end custom homes for buyers on individual lots. Ms. Huey has also been an active Member of the National Association of Home Builders and is currently serving as the Chairman of the Board of Directors. And while attending the University of Montevallo and volunteering for Habitat for Humanity, she decided to switch careers from early childhood education to homebuilding. Ms. Huey, thank you for being here today, and we look forward to this important conversation ahead. Our next witness here with us today is Mr. Jeff Bauman. Mr. Bauman is manager of regulatory affairs at National Refrigeration located in Pennsylvania. Mr. Bauman has been with National Refrigeration, a full-service HVAC and plumbing mechanical contractor since 2008. Prior to working at National Refrigeration, he spent 21 years as director of the engineering at Victory Refrigeration. Mr. Bauman attended Drexel University where he received his bachelor of science in mechanical engineering. Mr. Bauman, thank you for being here today, and we look forward to your testimony. And now I recognize the Ranking Member from New York, Ms. Velazquez, to briefly introduce our last witness appearing before us today. Ms. VELAZQUEZ. Thank you. It is my pleasure to introduce Professor Emily Hammond who is a nationally recognized expert in energy, environment, and administrative law. Professor Hammond's research on policy work has focused on transparency and public participation in the regulatory processes. She has served as the Deputy Counsel for litigation, regulations, and enforcement at the Department of Energy as well. Welcome, Professor, and thank you for being here with us today. Chairman WILLIAMS. Thank you. And we appreciate, again, all of you being with us on this date. So before recognizing the witnesses, I would like to remind them that their oral testimony is restricted to 5 minutes in length. If you hear me do this, you need to shut it down. Okay? And if you see the light turn red in front of you, it means your 5 minutes has concluded and you should wrap up your testimony. So with that, I now recognize Mr. Lewis for his 5-minute opening remarks. STATEMENTS OF MARLO LEWIS, SENIOR FELLOW, COMPETITIVE ENTERPRISE INSTITUTE; ALICIA HUEY, PRESIDENT, AGH HOMES, INC.; JEFF BAUMAN, MANAGER OF REGULATORY AFFAIRS, NATIONAL REFRIGERATION & AIR CONDITIONING PRODUCTS, INC; AND EMILY HAMMOND, PROFESSOR OF LAW, THE GEORGE WASHINGTON UNIVERSITY STATEMENT OF MARLO LEWIS Mr. LEWIS. Chairman Williams, Ranking Member Velazquez, and Committee Members, thank you for the opportunity to testify. I am Marlo Lewis, a senior fellow at the Competitive Enterprise Institute, and as you have heard, I am filling in today for my colleague, Ben Lieberman, who is ill and can't be here, but he sends his regrets, and I want to thank the committee for understanding these last-minute circumstances. Appliance overregulation has been a problem for years, and things have gotten worse since January 2023. The year began with the Chair of the Consumer Product Safety Commission telling the media that a ban on gas stoves is a real possibility. That sparked a powerful public backlash, followed by strenuous denials from the Biden administration that any such ban was under consideration. And then only weeks later, the Department of Energy opened a second regulatory front against gas stoves. While DOE did not propose an outright ban, compliance stoves would have to sacrifice product features that have helped make gas the choice of 38 percent of homeowners and the strong preference of many serious cooks--and all for the energy savings that DOE estimated at $1.51 per year. Other DOE efficiency rulemakings in 2023 target dishwashers, water heaters, ceiling fans, furnaces, and washing machines. Each proposed or final rule likely entails higher appliance prices, compromised performance, and reduced choices. With a regulatory agenda so out of touch with what most people want, it is not surprising that Congress is pushing back with legislative initiatives to repeal specific appliance regulations, defund their implementation, or reform the entire program. So far most of the attention has been on the adverse consumer impacts. This hearing adds a much needed focus on the equally concerning small business impacts. As with homeowners, small businesses already face hardship and risk from high gasoline prices, rising interest rates, and regulatory campaigns to transform America's motor vehicle electricity and financial sectors. The last thing small businesses need is a bunch of new appliance mandates that they didn't ask for. I would note that DOE efficiency standards need not target commercial-grade equipment to hinder small businesses. For example, many catering businesses operate out of people's homes and use consumer stoves. Many home-based chefs depend on the high heat setting of gas stoves for searing and stir-frying. So for them, an electrification mandate is simply unacceptable. I should also note that DOE's stove and furnace rules are part of the Biden administration's climate policy plan to phase out natural gas usage and electrify everything. Yet DOE admits that electricity is three times more expensive than gas on a per-unit energy basis. The electrification agenda disfavors small businesses that rely on natural gas for cooking, heating, and other purposes. DOE's efficiency standards also impose costs on small businesses that manufacture appliances. That topic deserves more attention and study. And in general, I think we would all agree that small businesses already incur a higher per-employee regulatory costs than do large firms. The best reform, it seems to me, is to sunset DOE's standard-setting authority entirely. Doing so would have no down side for small businesses, only an up side. Any business owner that actually wants to purchase or manufacture the kinds of appliances favored by DOE will always be free to do so, with or without such regulations. The only thing that appliance efficiency mandates accomplish is to force government's particular preference on everyone, including the businesses that don't want them. So we recommend--CEI recommends that Congress use the Congressional Review Act and other authorities to take on each and every rule that imposes hardships on small businesses. Thank you very much, and I look forward to your questions. Chairman WILLIAMS. Thank you very much, Mr. Lewis. I now recognize Ms. Huey for her 5-minute opening remarks. STATEMENT OF ALICIA HUEY Ms. HUEY. Thank you, and I am pleased to appear before you today on behalf of the National Association of Home Builders to share our views on how the Department of Energy regulations are adding to the affordability crisis. Access to safe, decent, and affordable housing is essential to the well-being of all Americans. While today's hearing is focused specifically on Department of Energy regulations, there are a vast array of regulatory burdens imposed on the homebuilding industry. On average, regulations imposed by all levels of government account for nearly 25 percent of the price of a single-family home and over 40 percent of the cost of a typical multifamily development. Government policies and regulations are making it harder for homebuilders and multifamily developers to build housing that is affordable. I would like to share three examples of how excessive regulations originating from the Department of Energy worsen the housing affordability. Number one is the transformer standards. Soaring costs and shortages of electrical distribution transfers are delaying housing projects across the nation. Some projects face an 18- to 24-month wait for a transformer. The administration is well aware of the shortages of electrical transformers, yet DOE is pursuing a regulatory change that will make the situation much worse. Specifically, DOE is seeking to increase the energy efficiency of transformers by a mere one-tenth of a percentage point. This requirement would force manufacturers to retool production lines and worsen the historic backlog. Transformers are an essential part of the electrical grid, and homes cannot be sold unless a transformer is installed and working. DOE's proposal will have little impact on energy efficiency and will exacerbate the current transformer shortage. This is why NAHB supports the Protecting America's Distribution Transformer Supply Chain Act. The legislation would prohibit the Secretary of Energy from changing energy conservation standards for distribution transformers for a period of 5 years, which would allow time for the market to stabilize and so manufacturers could catch up with the demand. The next DOE regulation concerns gas stoves. DOE has proposed a rule that would ban the sale of most current gas cook top models sold in the United States. Currently more than 187 million Americans use natural gas appliances, saving them an average of $1,068 each year. Each American deserves to live in a home of their choice, in a location of their choice, and fueled by the energy type of their choice. Neither DOE, nor the administration, should take these options away. And finally the Building Energy Codes. The Inflation Reduction Act included $1 billion in grants to States that adopt updated Energy Codes, specifically, the 2021 Energy Code. Adoption of the 2021 Code adds as much as $31,000 to the price of a new home. NAHB understands the importance of energy efficiency, but the savings from the 2021 Code can take a homeowner as long as 90 years to see payback. That is not a reasonable trade-off. If you want to make a difference on energy efficiency, we must focus on existing housing, particularly older homes built before the introduction of modern Energy Codes. According to the National Renewable Energy Laboratory, upgrades to the existing housing stock could yield a projected reduction of 5.7 percent of the total annual U.S. electricity consumption by 2030. Given this potential, upgrading the existing housing stock must be the primary focus if the nation is going to make measurable progress. That billion dollars could have been spent smarter by focusing on upgrading older homes versus making new, already energy-efficient housing unaffordable for many American families. Improving the nation's housing supply and easing housing affordability challenges will take a coordinated and concerted effort at all levels of government. Let's begin by fixing the broken regulatory process. Congress should pass legislation such as the Small Business Regulatory Flexibility Improvement Act to ensure that all regulations are designed with small businesses in mind, that regulatory rulemaking agencies are required to consider the true cost of regulations on small businesses, and that agencies comply with the letter and intent of the law in crafting new legislation. Thank you again for the opportunity, and we look forward to working with you. Chairman WILLIAMS. Thank you, Ms. Huey. And now I want to recognize Mr. Bauman for his 5-minute opening remarks. STATEMENT OF JEFFREY BAUMAN Mr. BAUMAN. Thank you, Chairman Williams, Ranking Member Velazquez, and distinguished Members of the Committee. My name is Jeffrey Bauman. I am the manager of regulatory affairs for National Refrigeration and Air Conditioning Products, which embodies Continental Refrigerator and National Comfort Products. I am truly thankful and honored for the opportunity to discuss the impact of Department of Energy regulations on small businesses like ours. I have worked in the commercial, food service equipment industry for over 34 years, including the past 15 years with Continental where I previously held the position of engineering manager. Approximately 2 years ago our company made the decision that a new full-time position was needed to help manage the barrage of multiple regulatory actions that continue to confront our companies, and I took over that role. National Refrigeration and Air Conditioning Products is a small, domestic manufacturer that represents approximately 250 high quality manufacturing jobs in Bensalem, Pennsylvania. Continental Refrigerator is a leading manufacturer of commercial refrigeration equipment, offering over 2,500 different model configurations. We design, build, and certify all of our products to provide superior performance, to maintain safe food temperatures in the harsh environments of commercial kitchens. Our products must comply with numerous regulations for safety and sanitation as well as DOE energy regulations. The refrigerants and foam insulations that are critical components of these products, must comply with EPA global warming potential, or GWP, limits. Our company has made significant investments in research and development, and production changes over the past 6 years to transition to extremely low GWP insulation and convert over 99 percent of our products to self-contained R-290 refrigerant, with the lowest GWP available for these types of products. Multimillion dollar capital expenditures made for new production equipment, including new temperature-controlled foam fixtures to address flow issues with the new low-GWP foams, and new charging stations required for flammable refrigerants. We also built in-house, state-of-the-art, laboratory-grade test chambers. These labs continue to run around the clock 7 days a week to evaluate product performance and manage the multitude of energy testing required for regulatory compliance. As a small manufacturer in a heavy regulated industry, Continental is particularly challenged by continual changes in regulations while working to control rising costs and develop innovative products in a highly competitive market. In 2017, we discontinued a line of horizontal freezers that could not economically meet new DOE energy standards. We compete with numerous, low-cost, imported products from foreign manufacturers who benefit from government subsidies. Despite our resource limitations, Continental is an active member of industry associations, including AHRI, NAFEM, ASHRAE, ASTM, and the NSF Standards Task Force. We hold positions on numerous committees that are critical to developing robust and reliable industry test methods and standards. Our company actively works to engage with the Department of Energy and the EPA in rulemaking. We analyze and regularly submit comments in response to Requests for Information and proposed rules. This effort is critical to our business because compliance with excessive regulations significantly impedes our ability to develop new products, which have been a keystone to the successful growth of our business. We also work with the Small Business Administration Office of Advocacy and helped initiate a small business roundtable to discuss concerns in the commercial refrigeration industry that we participated in last year with other stakeholders. On October 10th of this year, DOE published a Notice of Proposed Rulemaking in regards to energy conservation standards for commercial refrigerators and freezers. Our company, along with other manufacturers and industry associations, are extremely concerned with DOE's unrealistic proposals in this notice. Analysis of the proposed standard level shows extremely excessive reductions that are up to 60 percent lower than currently allowed. We have been unable to identify any potential paths to these types of extraordinary cuts. DOE's consultants conducted manufacturing interviews that we participated prior to this proposed rule, but it appears the information was not thoroughly evaluated for this rulemaking. Technology options that DOE indicates would reduce energy consumption in the near future, such as fan controls and high efficiency fans motors, are already in use. Other proposed technologies, such as microchannel condenser coils, have so far proven to be impractical for many applications. Proposed technologies, such as variable-speed compressors, have shown some promise in reducing energy consumption but have not proven to be economically viable options for many of our products over the next few years. Increasing our costs to adopt this technology would impede our ability to compete against other products, particularly those from foreign manufacturers. A review of information in DOE's Compliance Certification Database indicates that more than 85 percent of self-contained products currently certified would fail to meet the new standards. Manufacturers would have to redesign almost every product to significantly reduce energy consumption in a very short period of time, using proposed technologies that are not proven. Another example of what we believe is DOE overreach is DOE adding refrigerated chef bases to the scope. There is no test procedure for this product that has been proven to be tested, and DOE is proposing new standards for products that have not been evaluated properly. Thank you again for this opportunity to share the information about our company, and the significant burden presented by DOE regulations on small businesses like ours. We look forward to working with Congress to address these concerns and will continue to engage with regulatory agencies. Chairman WILLIAMS. Thank you, Mr. Bauman. I now recognize Professor Hammond for her 5-minute opening remarks. STATEMENT OF EMILY HAMMOND Ms. HAMMOND. Thank you, Chairman Williams, Ranking Member Velazquez, and distinguished Members of the Committee for the opportunity to testify today. I will be testifying concerning the Department of Energy's approach to rulemaking for its Energy Conservation Standards Program, how the process is structured to ensure that the voices of small businesses are heard and how these standards benefit small businesses. As you noted, I am a professor of law, and I previously served at the Department of Energy, but the testimony I offer today is my own, and I don't represent or speak for any party. Before I speak about the legal requirements DOE must follow to complete its standards, I want to emphasize that my experience with the Agency revealed a committed group of professionals, whether lawyers, engineers, or economists, who did not treat these legal requirements as boxes to check but rather thoughtfully carried out both the letter and the spirit of these laws in service of good governance. I will begin with the Energy Policy and Conservation Act, or EPCA. As you know, Congress passed EPCA in 1975 at a time when consumer energy costs were rising and there was a scarcity of energy resources to meet rising demand. Congress, itself, set the first energy efficiency standards, and it directed DOE to periodically reassess those standards and update them using a detailed set of criteria. The standards must achieve the maximum improvement in energy efficiency that are technologically feasible and economically justified, and the standards must result in a significant conservation of energy. Congress explicitly instructed the agency to consider seven factors for this analysis, which include economic impact of the standards on manufacturers as well as consumers. DOE always sets forth its methodology for evaluating these factors in its proposed and final rules, and that methodology allows it to hone in on costs and benefits to small businesses. In formulating these standards, DOE offers far more opportunities to participate than required by the Administrative Procedure Act or EPCA, and indeed it will even interview small business owners to ensure that it is fully considering their interests. This process also helps the agency ensure that it complies with the Regulatory Flexibility Act, the analysis for which is detailed in every proposed rule. That offers further opportunities for engagement with the Agency before the rule is final. Once a standard is adopted, there is usually a 3- to 5-year timeframe before compliance is expected, and under EPCA, small businesses can seek an additional 2-year exception. Moreover, DOE offers guidance to small businesses in plain language on the website, complete with real phone numbers to call, and a searchable FAQ section. So small businesses can easily learn how to seek an exception or to get assistance in understanding their obligations. It bears emphasis that this program brings concrete benefits on householders, small businesses, and other commercial enterprises in the form of real and meaningful savings. For example, one recent study concluded that energy conservation standards saved businesses almost $23 billion nationwide. Each proposed and final rule also documents these kinds of savings, like the $9 billion that consumers will save under the proposed battery charger standards. These consumers are small businesses themselves, and also the owners and employees of these small businesses whose financial pressures at home are diminished when their bills are lower. There are other benefits too. By reducing energy use, these standards reduce air pollution, which brings health benefits and avoids lower worker productivity and lost work days. Those kinds of disruptions are especially hard on small businesses, which are already feeling the strain of labor supply shortages. And as climate disruption presents even more risks to the economy and worker well-being, this important program's additional benefits should not be understated. Reduced energy reliance translates to grid resiliency, and of course reduced cost to consumers alleviate the burdens of those who are most impacted by climate disasters. DOE values its avoided greenhouse gas emissions and the billions of dollars for its major rules, and these benefits extend to small businesses too. Thank you again for the opportunity to testify today, and I look forward to your questions. Chairman WILLIAMS. Thank you very much, and we will now move to the Member questions under the 5-minute rule. I recognize myself for 5 minutes. The Department of Energy is not typically thought of as a regulatory entity. However, it appears the Biden administration is working to undo these norms. Mr. Lewis, in your testimony, you highlight that you believe the best thing that Congress could do to protect small business and consumers is to take away DOE's standard-setting authority entirely. So, question, can you expand on why you feel this is an important step and why DOE should not be the one responsible for setting these standards? Mr. LEWIS. Well, these standards have been developed over decades---- Chairman WILLIAMS. Microphone. Mr. LEWIS. Oh, I am sorry. DOE has been setting these standards ever since EPCA was adopted--and perhaps parts of the federal government even before that--and EPCA was enacted in 1975. So we have had literally decades of mandatory increases in energy efficiency of appliances, and we have, I think, long passed the point of capturing all the low-hanging fruit. And so we had an example that was mentioned before of improving energy efficiency by one-tenth of 1 percent, and it is really hard to believe that that translates into gigantic net savings to small businesses or the economy. At a certain point, you have to, I think, trust that there are--that consumers are--have the primary interest in looking out for what is best for them and that they can make their own choices, and that DOE doesn't need to continually put its thumb on the scales. So I think, you know, DOE should just declare a victory, say that, yes, you know, mission accomplished and now it is up to competitive forces and the economy to determine to what extent we prioritize energy efficiency versus other product features, qualities, and consumer choices. Chairman WILLIAMS. Competition always works. Ms. Huey, I am concerned that the Department of Energy is prioritizing expensive and burdensome energy efficiency standards, while providing meager efficiency benefits. Distribution transformers you have talked about are a clear example of this. The critical devices are already 99.5 percent efficient, and they are hard to come by due to supply chain pressure. So, question, please tell us how this new rule would impact homebuilders and hurt your industry. Ms. HUEY. We have several areas that have houses that are sitting waiting on transformers. I believe in one area of the country, we have over 4,000 homes that are ready, but--and also time is money, so those houses are costing more. As they are sitting there, builders and developers, are paying interest. And then ultimately it comes down to the American consumer having to wait to buy the American Dream. Chairman WILLIAMS. Bad timing right now with interest, right? Ms. HUEY. Yes, sir. Chairman WILLIAMS. Let me follow-up on that. Given the challenges you just outlined, do you think the Department of Energy appropriately balanced consumer needs and energy efficiency when drafting this rule? Ms. HUEY. No, sir, I don't think so. With the efficiency that there already is, if we could just put a pause on increasing the efficiency right now until we can narrow down the backlog, get rid of the 18- to 24-month waiting period, and then look at the energy efficiency again. Chairman WILLIAMS. Okay. With what I have remaining, Mr. Bauman, a few years ago, your company created a new position to help manage the regulatory burden by the federal government. Please share with us what led your company to make that decision. Mr. BAUMAN. Our company primarily does commercial refrigeration equipment. We have had new standards that came out in 2014, additional new standards that have been--or first comes the test procedures, and we--when we looked at what the test procedures, as I mentioned in my testimony, that we are involved in, which did not--not a lot of small businesses are able to do, that we are involved in those many organizations that I mentioned because those are the organizations that write the test procedures. And we have seen test standards that came out previously that were excessive that just, when it came down to it, we had to shut down production and development, we had to shut down other programs, and we realized a need to really dedicate a lot of resources to that effort to get the regulations. Chairman WILLIAMS. Okay. Quickly, regulatory compliance is expensive, and can you describe quickly what endeavors your business has had to forego so that you can keep up with changing regulatory standards. Mr. BAUMAN. We had a line of freezers that we had to discontinue. We also have to annually recertify all of our products with the Department of Energy. We also have, as I mentioned, we built a new test lab, and that was primarily because of the onslaught of numerous energy regulations that we had to comply with, and that lab is running continuously primarily doing energy testing. Chairman WILLIAMS. All right. Thank you for that, and I now recognize the Ranking Member for 5 minutes of questions. Ms. VELAZQUEZ. Thank you, Mr. Chairman. Mr. Bauman, I heard you mention that you have worked with the Office of Advocacy. Is that true? Mr. BAUMAN. Yes, we have. Ms. VELAZQUEZ. Okay. How has that experience been? Mr. BAUMAN. I would say we have had conversations. In all honesty, we---- Ms. VELAZQUEZ. Good? Bad? Mr. BAUMAN. Good conversations with some, I will say, some of the previous staff. We have had less responses back in recent months. Ms. VELAZQUEZ. Okay. This week, we are debating the SBA funding on the floor, and Republicans cut the Office of Advocacy budget by $800 million, yet right now we are discussing how regulations affect small firms. Does it make sense to cut the budget of an office that exists to monitor federal agency regulatory small business compliance, and advocate for small firms? It seems disingenuous to me. Professor Hammond, how many years does the Department of Energy typically give small businesses to transition to new standards? Ms. HAMMOND. It gives typically 3 to 5 years with the opportunity for an exception for up to an additional 2 more. Ms. VELAZQUEZ. So there is an extension allowed? Ms. HAMMOND. That is right. Ms. VELAZQUEZ. And have small firms utilized this extension? Ms. HAMMOND. Yes. And those are all published in the Federal Register. Ms. VELAZQUEZ. Is this enough time to comply, in your opinion? Ms. HAMMOND. Yes. Ms. VELAZQUEZ. Do any standards apply retroactively? Ms. HAMMOND. No. They all apply in the future. Ms. VELAZQUEZ. Okay. Professor, the Energy Policy and Conservation Act allows DOE to adopt consensus standards that were negotiated by the industry and energy efficiency experts. Could you please discuss this option. Ms. HAMMOND. Yes. The agency convened a federal advisory committee to enable negotiated rulemaking, which is an alternative to typical notice-and-comment procedures that allows for a consensus-based process, promoting deeper collaboration between the Agency and stakeholders. Ms. VELAZQUEZ. So, the industry is part of the negotiations and at the table? Ms. HAMMOND. Yes. Ms. VELAZQUEZ. Correct? Ms. HAMMOND. [Nonverbal response.] Ms. VELAZQUEZ. Mr. Lewis, CEI's testimony failed to mention that DOE was presented with a private consensus agreement for a proposed final standard for gas stoves in September 2023. Yes or no, are you aware of this agreement? Mr. LEWIS. No, I am not. Ms. VELAZQUEZ. Okay. Would you support it? Mr. LEWIS. I would have to look at it first. Ms. VELAZQUEZ. Okay. Professor Hammond, can you discuss the previous administration's failure to meet the statutory deadlines under the Energy Policy and Conservation Act and why DOE is issuing standards more frequently? Ms. HAMMOND. Yes. Congress instructed the agency to reconsider these standards every 6 years, and the Trump administration didn't do what Congress instructed, and it got sued. So now DOE is operating under a consent decree where it has to play catch-up, and it has to maintain its regular rhythm of review that Congress has set forth. Ms. VELAZQUEZ. Professor, there is a tremendous amount of misinformation circulating about DOE's appliance standards. Can you discuss the benefits of the new energy efficient standards for small firms? Ms. HAMMOND. Yes. Small firms save in a number of ways, and a number of these ways are itemized in the rulemaking record. They save on energy, and then of course they also save on the indirect benefits like the health benefits from reduced air pollution. Ms. VELAZQUEZ. Thank you. And knowing that small manufacturers may be disproportionately impacted by the new standards, how does DOE seek out the input of the smallest of small firms? Ms. HAMMOND. It does a significant amount of research on the front end to make sure it has identified all of the small businesses that might be impacted, and among other things, it reaches out to them individually and offers the opportunity for a conversation. Ms. VELAZQUEZ. Thank you. Ms. Huey, the DOE standards apply to new products and give small firms 3 to 5 years to comply. Moreover, DOE's process allows small manufacturers, advocates, and states to work together to jointly recommend regulations. Given the flexibility built into the process, why doesn't NAHB work collaboratively with the agency rather than opposing regulations that can lower energy bills for homeowners? Ms. HUEY. I wouldn't say that we were against the regulation. We just have such a backlog now that we would like to catch up before we implement any new energy efficiency standards for the transformers. Ms. VELAZQUEZ. I yield back, Mr. Chairman. Chairman WILLIAMS. Okay. Thank you very much. And I now recognize Representative Stauber from the great State of Minnesota for 5 minutes. Mr. STAUBER. Thank you very much, Mr. Chair and Ranking Member Velazquez, for holding this hearing today, and thank you to our witnesses for taking time away from your busy schedules to help shed light on this important topic. Today we are here to talk about the devastating effects of the DOE's efficiency standards on small businesses and families in our districts. These standards are designed to reduce energy consumption in our homes and businesses. However, they have had the unintended consequence of making our homes less affordable and more expensive to build. Ms. Huey, you mentioned in your testimony that you think federal regulatory agencies should include the, quote, true, end quote, cost of the regulations in the rulemaking process. Can you expand a bit what you mean by the ``true cost''? Ms. HUEY. Yes, sir. Thank you for the question. What I have come to learn in the regulatory rulemaking process here in Washington is that agencies are only required to consider the direct cost of crafting new regulations. They don't take into consideration sometimes just the waiting time. Time is money. Time that I have to spend waiting for water taps to be installed, waiting for zoning approval, waiting for permitting, all of those sorts of things need to be taken into consideration as well. Mr. STAUBER. So when we talk about gas furnaces, the Department of Energy wants to get rid of gas furnaces or change the way they operate. Water heaters. A new water heater, their recommendation is to get water heaters that reduce energy. To replace a water heater is $2,800. Ms. HUEY. And that is just the water heater. That doesn't include installing the electrical plug for it. Mr. STAUBER. Exactly right. Dishwashers---- Ms. HUEY. Yes, sir, same. Mr. STAUBER.--$225 more. Gas stoves, between $800 and $3,200 it is going to cost the American people. Light bulbs, $140 more. Washers, $200. Air conditioners, pushing $2,000. And would you believe our federal government wants to regulate ceiling fans? Think about the overreach by this federal government. Ms. Huey, these aren't my numbers. These are administration's numbers. $320 billion--that is with a B--$320 billion of additional regulations on American small businesses and manufacturers. What do you--give us an estimate of the cost per household if these changes were made. Can the American people afford this? I mean, the government wants to be in every part of our lives--ceiling fans, dishwashers, water heaters, light bulbs. It is unbelievable. Give us a cost from the builders, and what is their sense? Ms. HUEY. And, you know, we are talking about costs for small businesses, but in my business it is ultimately passed down to the consumer. With the new Energy Codes, the 2021 Energy Codes, that is an additional cost of $31,000 to a new home. That is something that a teacher or a firefighter or a nurse cannot afford. Mr. STAUBER. Or a police officer like myself? Ms. HUEY. Or a police officer, yes, sir. Mr. STAUBER. I just--Mr. Chair, Mr. Chair, $31,000 these bureaucrats put on somebody that wants to build a new home, not through Congress, through these three-letter agencies, unaccountable, nonelected, to put on the American people. And this is just what you are talking about--$31,000. The median income in the district that I represent is 60-ish- thousand dollars. This is unbelievable. And the interest rates right now, it is simply--it is simply unacceptable. I can't imagine what folks are thinking when the government is telling us what type of water heaters we can use or gas furnaces we need to change, gas stoves--banning gas stoves. My 90-year-old father says, what am I going to cook at the hunting shack with? It is a gas stove. He has been doing it for 60 years. This is overreach, Mr. Chair, by our federal government, in every aspect of our lives, complete overreach, and it is unacceptable. I think the American people have had it, and I yield back. Chairman WILLIAMS. Thank you very much. I now recognize Representative Golden from the great State of Maine for 5 minutes. Mr. GOLDEN. Thank you, Mr. Chair. Professor Hammond, I really only have two questions, I believe. I reserve the right for follow-ups, but by all means, take your time and answer them as best you can. You mentioned in your opening testimony that the Agency does a good job of speaking in very plain terms to businesses to help them understand new regulations and compliance, and I am hoping you can treat the committee the same way here and not assume that we are deep in the weeds. If you were to hand us some kind of blueprint, like a one- pager, that would tell us a little bit about the process that DOE conducts to do outreach to small businesses as part of the rulemaking process, what would it show us? What concrete steps? If you could be, you know, detailed. Ms. HAMMOND. It would show a very--a years' long process to not only develop the standards themselves but also the test procedures that come before the standards. These begin with Requests for Information--which are widely extended and as well as published in the Federal Register--the development of technical support documents, webinars, and then specific research to identify particular small businesses who may be impacted, to seek them out directly. And that is all before a rulemaking is even proposed. Once it is proposed, it goes through that process again. It works with the Office of Advocacy as well to make sure that it is properly considering the interests of small businesses, and again---- Mr. GOLDEN. You bring specific industry, small business owners in and actually sit around the table with them? Ms. HAMMOND. Well, yes. For example, I am aware that yesterday DOE hosted a public meeting on the commercial refrigeration standards. Mr. GOLDEN. Okay. And how--could you describe, like, attendance? What is the update? Ms. HAMMOND. I haven't checked on the attendance yesterday. The ones that I previously participated in were very well attended. Mr. GOLDEN. Thank you. So kind of moving on from there, how often do you think that input is received and then acted upon such that between a proposal and a final rule, changes are actually made that incorporate what small businesses have given back to DOE? Ms. HAMMOND. Very often. It is extremely common for the Agency to adjust its final rule in response to all of the input it received during the proposed rule. And I should note that a number of the standards we are talking about today are proposed standards, so there is still an opportunity for lots of engagement with the Agency, and it indeed will address those comments. Mr. GOLDEN. Are there any specific examples that you can recall in your own time in the Department where you saw that process play out and changes made and incorporated? Ms. HAMMOND. I--yes. And of course I was serving as counsel, so I--I will maybe not be quite as detailed, but I will say an example is for the general standard--the general service lamp, the light bulb standard which, of course, Congress directed the agency to undertake. And the Agency considered all of the feedback of businesses, and it developed a different enforcement timeline to provide even further a glide path to make sure that people had a chance to be ready for the standard going into effect. Mr. GOLDEN. Sure. And finally in your testimony you mentioned Congress built in a relief valve for small businesses. Can you talk a little bit about the flexibility that that affords the Agency and small businesses? And can you think of any examples where that has actually been utilized? Ms. HAMMOND. I don't have a concrete example right at hand, but essentially this is written into the statute, and the Department has very clear guidance on its website about what a small business would need to do. Once a small business does present a request, then that is published in the Federal Register, and assuming it is granted, that is also published in the Federal Register. So it is---- Mr. GOLDEN. Is that like a specific waiver request from one business or is it---- Ms. HAMMOND. That is right. Mr. GOLDEN. Okay. So it is not a broad waiver across an entire industry? Ms. HAMMOND. That is right. A small business can take advantage of that. For the test procedures, there is also a waiver process available, and that relates to the procedures themselves and the technology. Mr. GOLDEN. All right. Thank you. I yield back. Chairman WILLIAMS. The gentleman yields back. I now recognize Representative Alford from the great State of Missouri for 5 minutes. Mr. ALFORD. Thank you, Mr. Chair, and thank you, Ranking Member Velazquez. Thank you to all of our witnesses here today. I know you come here on your own dime and own time, and we really appreciate that. Hey, this is a very important hearing for us for a couple of reasons. You know, the past few months, we have all seen the news about the Department of Energy--or I think I am going to rename it the department of encroachment now--and their new energy efficiency rules. And now we are really learning the impact that it is going to have on our businesses and our American families. The Biden-Harris administration time and time again, I think, fails to consider the impact of these erroneous over- regulations, what it is going to have on our homebuilders, our families, and our businesses. If we do not champion main street interests, then we will lose the small businesses that are part of the fabric of America, and a contributing factor to the closure of small business is the current regulatory environment. Ms. Huey, I want to start with you if I can, ma'am. In your testimony you said regulatory burdens account for 25 percent of the cost of a typical newly built home. I just gave up my real estate license, sold new homes actually in the Kansas City area for many years. The average or median price there for a home is $270,000. That would bump it up to $337,500. And when you consider the interest rates now that, especially younger folks, new families are trying to get into homes, it seems like the Biden administration does not believe in the American Dream. It is trying to kill the American Dream, the American Dream of homeownership, moving our society from owners into renters. I have had conversations with Will Ruder, the president of our local Home Builders Association there in Kansas City. He says the exact same thing, that this 25 percent increase is going to drive people out of the Kansas City area and into places that are not having to conduct, because of other regulations--the Kansas City Council is imposing on Building Codes there, but it is a monstrous really burden that people are having to pay to get into the American Dream of homeownership. How do you see this playing out long-term for builders? How did they keep building when the Biden administration keeps putting a foot on their neck? Ms. HUEY. It does make it extremely more difficult because we have federal, state, and regulations all to follow. It is noted that NAHB illustrates that for every $1,000 increase in the price of a median home, which is about $425,700, that prices out 140,436 households out of the market--for every $1,000 increase in the price of a house. Mr. ALFORD. Well, when you consider this--and this is getting off into another topic, I realize it, but investment companies like BlackRock that are also investing in build-to- rent communities--we have seen that in the Kansas City area-- where they are building entire neighborhoods of rental homes that look like regular, single-family homes, and they are, but they are like apartments. And you know what else, it is a lot easier to get people into rentals and apartments especially. You can ballot harvest a lot easier in an apartment than you can walking a single- family neighborhood. It is scary what is happening to the American Dream, and I applaud you and the homebuilders of America who are trying to make that dream possible and affordable for the American people. I am running out of time. Mr. Lewis, in your testimony, you mentioned the RFA's and lack of Agency's willingness to take it seriously. Please talk about how we can better utilize or improve the RFA so we can use it as effective tool rather than just a check box. Mr. LEWIS. Yes. Well, one thing that--oh, sorry, the mike again. Yeah. I mean, the agencies have flexibility--they get flexibility in determining what is a significant impact or what is a substantial number of small entities. So I would think that maybe tightening up or clarifying those definitions. Like I was just trying to think--I was talking to my colleague on the way over here and kicking some ideas around, and what is a significant impact, it seems to me, would be relative to the profit margin of the business that is affected. And so maybe there could be some standard that will be adopted that would say, you know, for the industrywide average---- Mr. ALFORD. Sir, we are out of time. I am sorry. Mr. LEWIS. Okay. --the regulation cannot cost more than, say, 3 percent of your profit margin. I mean, that might be an idea. Mr. ALFORD. I like that idea. Mr. Chairman, I yield back. Chairman WILLIAMS. The gentleman yields back. I now recognize Representative McGarvey from the great State of Kentucky for 5 minutes. Mr. MCGARVEY. Thank you, Mr. Chairman. Thank you all for being here today. Thank you, Professor Hammond. I want to especially thank you for highlighting some of the contributions of our civil servants who do a really good job in trying to do the best they can for all of us in this country. I am going to repeat a little bit of myself from one of the previous hearings we had in this committee, and that is, we are here to talk about regulations. We care about how regulations impact people and how they impact businesses. And that well written and well executed regulations are important--they save lives. They save money. They save money for our government. They save money for our consumers. They also can save our planet--and I want to go to these specific standards as an example of that. The American Council for an Energy-Efficient Economy estimates that efficiency standards for appliances and lighting would save the average Kentuckian, where I am from, an estimated 15 percent of their annual bill. This isn't surprising. I see in my own home, which was built in the late 1920s, early 1930s, the importance of having energy-efficient items. The DOE estimates that by 2030, cumulative savings from all standards in effect since 1987 will reach nearly $2 trillion. So I want to go back and, Professor Hammond, I want to start with you, in part because I am a recovering lawyer and I have always wanted to ask a law professor a question instead of having them ask me a question. But the administration is required by law to issue these regulations, correct? Ms. HAMMOND. That is right. Mr. MCGARVEY. And it is a result of a court decision from the Trump administration not issuing these regulations that is requiring them to not just issue the regulations but to have to play catch-up for what the Trump administration didn't do in the 4 years it was in office? Ms. HAMMOND. That is right. Mr. MCGARVEY. Okay. So these are required by law, and obviously this committee is not suggesting that the administration break the law. So let's talk about what these standards are doing. And it has been shown that the standards we are examining today will help benefit small businesses and save them money in the long run. Again, we care about small businesses. Small businesses are the backbone of my community in Louisville, Kentucky. We want them to succeed and thrive and do well. So how do these standards benefit the broader economy and the country, including small business, small business employees, and those who do business with them? Ms. HAMMOND. In a number of ways. There is, of course, the direct benefit, which is lower energy bills, and I should note, lower water bills too for some of the standards. So that is a direct impact that is true for a business that is using any of these appliances or equipment, as well as the homeowners or householders who also use them in the house and also work at small businesses. Then of course there are the broader impacts, like the health benefits and the climate benefits that I mentioned. Mr. MCGARVEY. Thank you. Okay. So kind of just reframing this again, the court has said the administration has to issue these. They have to issue more because the Trump administration didn't do it. They can be helpful, but we want to make sure they are helpful to small businesses. Is there a process by which the administration is considering the needs of small businesses? Do they have community engagement sessions? Must they take into consideration any of these comments in the proposed rule? Ms. HAMMOND. Yes. First of all, to answer your final question, they are required by law to respond--not just consider but respond--to significant comments raised, and of course the overall process is very much designed to consider interests of all stakeholders but particularly small businesses. Mr. MCGARVEY. Thank you. And when they find a legitimate concern, how do they work to address it? Ms. HAMMOND. They work first to just understand what it is and make sure that they have thoroughly considered the issue. They look to see whether there are adjustments to be made and how those trade off against the other factors that Congress required the Agency to consider. So it is very much a case-by-case decision, but those comments do have an impact. Mr. MCGARVEY. Thank you, Professor, I appreciate that because, again, we want to make sure that our small businesses are being heard, that they are being represented, that these regulations make sense for them. So I appreciate that very much. Mr. Chairman, I yield back. Chairman WILLIAMS. The gentleman yields back. I now recognize Representative Van Duyne from the great State of Texas for 5 minutes. Ms. VAN DUYNE. Thank you very much, Mr. Chairman. This hearing today is one of tremendous importance. With Americans suffering under 3 years of disastrous policies from the Biden administration that have been painfully driving up cost of living. It has made food, electricity, housing, and transportation impossible to afford, and it has made new homeownership an impossibly distant dream for many young Americans. Now we need to deal with a reckless agenda from the Department of Energy, pushing overreaching energy-efficiency rules that will burden small manufacturers. Earlier this year, this committee passed my bill, the Small Business Regulatory Reduction Act, which requires the Small Business Administration to ensure, for each fiscal year, the cost to small businesses of the administration's rulemaking is not greater than zero, and while also requiring the SBA to issue a report on any regulations issued by other federal agencies that impact small businesses. And I am looking to expand this to obviously the Department of Energy now, and I think it is a perfect place to start. This hearing is a great example of why my bill is necessary, and which is to ensure Congress is reigning in the power of out-of-control, regulatory, glutton executive branch. And I look forward to continuing to work with the committee to see my bill move forward and to work to strengthen small businesses across the country. We just heard testimony on, in answers to some of the questions, that said that these regulations benefit small businesses. Mr. Bauman, I want to ask you--you work for a small business--how often do you guys Go, Oh, goody, we got more regulations, these are going to benefit us? Mr. BAUMAN. We don't--it hurt us, as I said, from the product side, our competitiveness and ability to offer-- innovate products and work along those lines versus we are taking time to address regulations to meet with and--as Ms. Hammond mentioned, we were in a meeting yesterday with DOE in regards to commercial refrigeration equipment, and I was there. I was basically the only small business. There were a few others, there were a handful, but a lot of small businesses don't have the opportunity like we have invested in to do that. So it has absolutely been a burden. And the other---- Ms. VAN DUYNE. So this is going to cost small businesses money? Mr. BAUMAN. Yes, yes. Ms. VAN DUYNE. But we just heard about all of these cost savings that they were going to have. Do you actually see that? I mean, there is one thing to say that that is going to happen on paper, but in reality do you see that that is happening? Mr. BAUMAN. We do not see that happening. It continues to be a burden on our sales and on our manufacturing. Ms. VAN DUYNE. So you have got increased inflation as well, and that is being coupled with increased federal regulations. Has that made it more difficult for your business to grow? Mr. BAUMAN. Yes, it has. We are privately owned. We are very short-term borrowers. We try to not do a lot of investments that we can't afford to invest ourselves. But, yeah, there is all different types of capital expenditures that are harsh on our business. Ms. VAN DUYNE. And, Ms. Huey, I am going to ask you the same question. I mean, do your home builders--are they excited with these new regulations? Do they see all of the cost savings that we have heard are going to come? Are they actually seeing that in reality? Ms. HUEY. Yeah, no. Thank you for the question. As I talked about earlier, one-quarter of the cost of new construction of a single-family home is government regulations, and that is at all levels. For me I looked back at a house I built recently. I spent $35,000 before I ever started building the house. That was permit--building permit, land disturbance permit, water tap, sewer tap, driveway permit, gravel, silt fence. All of those add up before I ever really started building the house. Ms. VAN DUYNE. What State? Ms. HUEY. Alabama. Ms. VAN DUYNE. In Alabama. So be happy that you are not building in California because pre-pandemic it was 40 percent regulatory costs. Ms. HUEY. Yes, ma'am. Ms. VAN DUYNE. But, you know, have you found that in your increased inflation as well, coupled with increased regulations, has that made it difficult for you to grow your business? Ms. HUEY. It has. And it is difficult for the consumers. They don't understand that when I give them a price of what-- that estimate of what their house is going to be and then when those estimates grow because of things like fuel surcharge, you know, in the last couple of years that we have had. Now I understand the fuel prices are down, but in the last couple of years they were up. So it is things like that that added on to the top that we didn't expect. Ms. VAN DUYNE. So you are saying that not only are these regulations overburdensome and harmful to small businesses, but you are saying actually people who want to buy homes are also affected negatively by this? Ms. HUEY. Absolutely. Ms. VAN DUYNE. So how much more have homes cost in the last 3 years, if you could, in Alabama or anywhere in the country? Ms. HUEY. I know that in the last couple of years, one point of reference I have is during the pandemic--and I know that we are not talking about lumber prices, but our lumber package went from $35,000 to $125,000, and it settled somewhere around $75,000. Ms. VAN DUYNE. Well, I would look forward to hearing if you guys have any solutions. I know typically what I hear is we just want the government to stay out of our business. That was the best way to help it grow. I appreciate you guys being here. And I yield back. Chairman WILLIAMS. The gentlelady yields back. I now recognize Representative Chu from the great State of California for 5 minutes. Ms. CHU. While those on the other side of the aisle are trying to make it sound like the Biden administration decided to just do rulemaking on its own, but let me emphasize this is the law. And the Department of Energy is required by law to evaluate energy efficiency standards for various products and appliances every 6 years. Once an updated standard is published, small businesses get 3 years to comply and get an extra 2 years' grace period before they have to come into compliance. So that is 5 years total to do so. And let's not forget that these standards only apply to newly manufactured products, not to existing products that consumers already owned. We also heard from Professor Hammond's testimony that there is ample opportunity for small businesses' and small manufacturers' concerns to be considered at every step of the department's process when they decide how to update a particular standard. And, in fact, she said that the department even goes further than what is required, offering webinars and conducting other types of direct outreach to small business stakeholders. So, actually, the Biden administration is going above and beyond to consider small business voices in the rulemaking. Actually, we are in this situation because the previous administration missed scores of deadlines violating the requirements in the law. And, in addition, there was a lawsuit over the previous administration's failure to meet the standards. It was settled, and the settlement was that the DOE was required to review these regulations. So, Professor Hammond, can you explain why the Department of Energy is being required to issue so many new standards now and give an example of how this benefits small businesses? Ms. HAMMOND. Sure. As you described, it is required to do so many now because it has its existing statutory obligations, plus the backlog that now a court is enforcing that it has to comply with. And then in terms of the kinds of benefits, these benefits can be for all kinds of small businesses. We are not just talking about manufacturers here. We are talking about all small businesses. It is the convenience store owner. It is the person who has the restaurant or cooks out of their home. Any number of businesses who use appliances are going to be saving on their bills because of these standards. Ms. CHU. Well, let's talk about one particular appliance because there is so much misinformation about the proposed gas stove standards. The Department of Energy is not proposing to ban gas cooking products any more than it is trying to ban light bulbs. Does the DOE even have the authority to ban gas stoves? Ms. HAMMOND. No, it doesn't. Ms. CHU. When would these proposed standards for gas stoves go into effect? And, by the way, can you explain what the standard is now? Ms. HAMMOND. Well, I will mention that the proposed rules, they are not even finalized yet, so they will still benefit from input, the types of which we are hearing today. The proposed rules are not just for gas stoves. They are for gas and electric stoves as the department is required to do. And they will go into effect, I think it is 3 to 5 years from when the rule is final. I just want to note, those are future- looking for new stoves. It has nothing to say about what happens for people who already have gas stoves. Ms. CHU. And, in fact, the DOE does not have the authority to take products out of consumers' homes or small businesses. Is that correct? Ms. HAMMOND. Absolutely. Ms. CHU. Now, can you also give us an example of where the DOE did a review and maybe cite a standard that the DOE decided not to update because it did not meet the criteria? Ms. HAMMOND. One that comes to mind is space heaters. DOE decided not to set efficiency standards for those. So it does look at these and decide whether it is called for under the statutory requirements. Ms. CHU. So the process works, and the DOE is not overreaching. Correct? Ms. HAMMOND. That is right. Ms. CHU. And let me ask also about the particular savings that the average American household is saving, because it is not just small businesses. It is every American that is saving on their utility bills. Can you talk more about that? Ms. HAMMOND. Sure. And that is true. All of these rules have to be cost justified. That means the costs have to be outweighed by the benefits, and DOE published those transparently for everyone to see. The deLaski and Mauer study that I cite in my written testimony provides State-by-State analyses of benefits not just to businesses but also to consumers. Ms. CHU. Thank you. I yield back. Chairman WILLIAMS. The gentlelady yields back. I now recognize Representative Meuser from the great State of Pennsylvania for 5 minutes. Mr. MEUSER. Thank you, Chairman. I appreciate it very much. Thank you very much to our witnesses. So we just heard--and I say this in all due respect--how wonderful the DOE's regulations and rulemaking is and how positive it must be for small business. Mr. Lewis, do you find that from gas stoves to other rules being made that that has been beneficial to the industry that you are familiar with? Mr. LEWIS. Well, I don't have much industry specific experience, but I will say that--mike. Oh, sorry, the mike. I can't---- Mr. MEUSER. Well, Competitive Enterprise Institute, you must--that deals with businesses. Right? Mr. LEWIS. Yes, that's right. But, in other words, we don't--we are not spokespersons for any particular industry. My colleague, Ben Lieberman, who was supposed to testify, actually does have much more contact with industry experts. I wish he were here. Mr. MEUSER. And I will move on down the line. Ms. Huey. Mr. LEWIS. But if I could---- Mr. MEUSER. Yeah, go ahead. Mr. LEWIS. Yeah. But if I could mention, you know, some of these costs are in the form of degraded performance. Like many people complain that the dishwasher has to be run twice in order to get the dishes clean, that clothes washers now, they are so efficient in their use of, say, water that you have to wash the clothes twice. Mr. MEUSER. Right. Mr. LEWIS. And we actually had an ad back a few years ago which was billed ``Send Your Underpants to the Undersecretary,'' because a lot of people were complaining that they had to run the same load twice. So those are costs that the agency is really not terribly concerned about. Mr. MEUSER. Good. Great points. And if they actually were to talk with stakeholders, as we are hearing, that the overreach is just phenomenal--you know, I was in business for nearly 25 years. And, Mr. Bauman, I want to ask you, when you all have improved air-conditioners, when you make air-conditioners more efficient, you make them less cost, you make them utilize less energy, did any of that come from a mandate or a rule from the government? Mr. BAUMAN. No. We---- Mr. MEUSER. It is laughable. Right? Mr. BAUMAN. Yeah. We look at what the regulations are, but in the air-conditioning and on the refrigeration side, we are because of the competitive market---- Mr. MEUSER. You make it better? Mr. BAUMAN. Right. Mr. MEUSER. So your customers--so it costs them less, so they are using less fuel, so as they are cooling the area in the best manner and most effective way possible. It is called American innovation. It is called entrepreneurship. Would you call it government rulemaking and mandates? Mr. BAUMAN. I would say the innovation is where we--not the mandates, but having products that are innovative and, again, primarily that are providing refrigeration for safe food or those that really are providing safety and comfort. Mr. MEUSER. And, Chairman, I am sorry I sound a little sarcastic, but it is a little hard to take. So, Ms. Huey, I would like to ask you a couple of questions on the transformer issue that you spoke about in your testimony and the shortage that exists and the Department of Energy now submitting that it needs to have some new standards for these transformers, and yet they have gone through all kinds of efficiency measures over the last several years. Do you want to just speak on that a little bit further, please? Ms. HUEY. Yes. So as we have talked about, they are already, you know, like 97.9 percent energy efficient, and we are only increasing the efficiency by 1/10 of a percent while we have an 18- to 24-month backlog of people that need them, the houses that are sitting. I think it is in the Houston area there is about 4,000 houses that are sitting. And then recently the tornadoes that ripped through Mississippi, I think there was about 400 transformers that were torn out there. So it only adds to the backlog and the time. Mr. MEUSER. Sure. Has your industry been in--has the DOE been in contact with you folks and said, Hey, what do you think about this action? Give us some input. We are very interested in whether or not we should pursue this. Ms. HUEY. We did participate in the SBA's advocacy. We had over 60 of our builders that were part of a round table discussion, and they expressed all of their concerns. It will be very interesting to see if the DOE will heed those concerns. Mr. MEUSER. Okay. So you haven't had a response yet? Ms. HUEY. No. Mr. MEUSER. You have only had the original rule, so nothing has been affected or changed as of yet? Ms. HUEY. That is my understanding, yes. Mr. MEUSER. Okay. Well, maybe we can help you follow up on that with them and see because, in the end, we are interested in reasonable initiatives. However, at this point in time, you think the current rule is quite unreasonable for your industry? Ms. HUEY. Right now because we have a backlog I do believe that it is, yes. Mr. MEUSER. Okay. Ms. HUEY. When you think about the energy efficiency that we already have in homes right now and in the transformers, to go another step when we have such a backlog and the American dream is unaffordable and unattainable for so many. Mr. MEUSER. All right. Thank you very much. I yield back, Mr. Chairman. Chairman WILLIAMS. The gentleman yields back. I now recognize Representative Scholten from the great State of Michigan for 5 minutes. Ms. SCHOLTEN. Thank you so much, Mr. Chair. And thank you to all of our witnesses for coming here today. Your testimony is incredibly enlightening. This is such an important topic. My district is home to a very large portion of the Grand River Watershed, the largest river in the State of Michigan. And we also represent miles of beautiful Lake Michigan shoreline, the Great Lakes region multibillion dollar economy. I am very serious about protecting these natural resources, not only for their inherent worth, but what they contribute to our economy. That being said, there is nothing more frustrating to a west Michigan small business owner than regulations that do nothing and just stand in their way, impede their business and don't even do what they purport to do. My colleagues on this committee know that I have been the first among Democrats many times to push back against unnecessary regulations. But one of the things that I want to talk about today is the process that the department goes through to make sure that these regulations are doing what they intend to do. And so I have two questions for you, Professor Hammond. I am wondering if you can explain how the Department of Energy's current rulemaking process takes into consideration the priorities of small businesses and consumers and what DOE does to ensure that regulations are cost-effective and not overly burdensome for consumers--or for businesses. Excuse me. Yeah, thank you. Ms. HAMMOND. Sure. So the process itself has that seven- factor analysis that Congress required, and that looks at both costs and benefits to consumers, to manufacturers. And then, of course, DOE further evaluates specifically the interests of small businesses in that process. It always has to be cost justified. And then further--I am sorry. Could you just remind me of your second question? Ms. SCHOLTEN. Yeah. So how is the DOE ensuring that these regulations are cost-effective and not overly burdensome for small businesses? What is the process beyond maybe those seven steps? Ms. HAMMOND. It also complies, of course, with Executive Order 12866, and it does a cost-benefit analysis that is reviewed both by OIRA. It collects interagency comments on, again, not just the proposed rules but also the final rules, and for many of the standards we are talking about today, they are still just proposed. Ms. SCHOLTEN. Okay. Thank you so much. And what's your impression of that process, the feedback loop that happens and the consideration that is taken in? You know, are small businesses being heard when they weigh in about how that would impact their business? Ms. HAMMOND. They are. My experience is that the agency takes small business feedback very seriously and thinks long and hard about how these standards will affect those businesses. Ms. SCHOLTEN. Thank you. My second question is, you know, I hear so much from constituents who regard regulations as unnecessary government intervention in the market. Can you explain how regulations around energy conservation standards actually serve to bolster innovation and positively impact the economy? Ms. HAMMOND. Sure. And I want to say maybe two things about the EPCA standards. The first is that these are national standards to avoid additional costs that manufacturers would have to comply with if they had to go State by State for various standards. So there is an efficiency built in right there. And they push innovation. Typically the standards do apply in a way that already there are existing products on the market, but it allows new entrants to the market and invites innovation to even push forward. Ms. SCHOLTEN. Thank you so much. Yield back the remainder of my time. Chairman WILLIAMS. The gentlelady yields back. I now recognize Representative Molinaro from the great State of New York for 5 minutes. Mr. MOLINARO. Thank you, Mr. Chairman. Although great State of New York, it may not be the right moniker for the purposes of this hearing as New York has created--made a science and art form of overregulating even the most basic behaviors. I came at the right moment. I take no--I don't want to take much issue, but, you know, uniformity of regulation is nice and efficiencies to achieve that. It might come out of uniformity of regulation, but we live in a Republican democracy, and in that form of government, the States have certain responsibilities, the federal government has certain responsibilities. And we are not supposed to tread on those. And small businesses in particular, they understand the burden, the challenge of overregulation. I have often said, having spent the last 30 years in both State and local government, that when it comes to federal regulation or federal government, not only doesn't the federal government know what the left--the right hand doesn't know what the left hand is doing. In the federal government, sometimes the left hand doesn't even know there is a right hand. And that overburdensome bureaucracy, if you will, that labyrinth of regulation adds enormous burden, pressure, compliance concerns, and costs to small businesses. And so I happen to think that we ought to expect greater consolidation of regulation. We ought to demand greater transparency, and there needs to be better understanding by the small business owners in particular as to what regulation they are to follow, when, how, and what the impact is to them. And so to that end, I joined in introducing the POST It Act which requires federal agencies to post guidance on rules that will have significant impact on small businesses. I represent small communities all across Upstate New York. Small business is, as it is across America, the engine of economic opportunity in our community. 70 percent of new jobs created by existing small business, they are overburdened. To that end, Mr. Marlo Lewis, I want to just get your take and opinion on the necessity of the POST It Act, the benefit it might provide, and how small businesses might be helped should it be adopted. Mr. LEWIS. Yes. This is a straight-up transparency and accountability reform. It is almost unbelievable that anyone would oppose this or that the access to regulatory guidance wasn't already readily available. It was for a period under the Trump administration that we have heard so much about, but the Biden administration, one of its first moves in the regulatory sphere was to repeal the requirement that every agency provide a portal with a database, a searchable database so that businesses could find out what guidance documents--and there are literally thousands of them--apply to them and that they must know in order in turn to comply with regulations. So we are all behind your bill. We think it is great and it is long overdue. And we are also flabbergasted that it is even necessary. Mr. MOLINARO. Yeah, I thought you might say that. And not only is it important for transparency purposes, but the lack of transparency allows the federal government and, by extension, State governments to enforce without either understanding or the ability by small businesses to effectively react or even prevent such enforcement. Ms. Huey, I wanted to--because I only have a minute left. I just wanted to acknowledge, in your testimony you talk a little bit about recent efforts by the DOE to use the rulemaking process to limit consumer access to residential gas stoves. New York has already taken such an action, which for me, you know, I come from a part of the country where, by the way, the modern day environmental movement was born in the Hudson River Valley. I get it. We understand the value of both environmental protection and addressing climate change. However, the policy is misguided, and it does focus a heavy bureaucracy on a fragile industry and overtaxed individuals. And I did join in opposing Governor Hochul's proposed ban and requiring the federal government to evaluate the actual costs of such a ban to small businesses. Could you just speak quickly about how the DOE's proposed rule on gas stoves might affect your business and, by extension, customers? Ms. HUEY. Yes, sir. Thank you for the question. I recently built a home for a customer that cooked, loved to cook. When we walked through the house at the rough-in, she said, I guess we need to add an electrical plug because they are going to come and take my gas stove. She really said that to me. And she said, And I guess we need to put one upstairs for the hot water heater too. And I said, No, ma'am, they are not going to come take it out of your house. Mr. MOLINARO. Mr. Chairman, I just would add, this is precisely why we need the transparency. I yield with we have consumers that are unduly burdened and worried that the federal government is looking around their kitchen tables. Chairman WILLIAMS. Thank you very much. The gentleman yields back. I now represent Representative Gluesenkamp from the great State of Washington for 5 minutes. Ms. GLUESENKAMP PEREZ. Thank you, Mr. Chair. And I think I know the answer to this. And I want to say I sincerely appreciate the witnesses. I know you all pay your own way to be here. I really appreciate that you are here. But do any of you--have any you of you--none of you currently work as technicians fixing appliances. Correct? Have any of you been technicians? Okay. Thank you to the committee staff who ensured that someone on the panel has worked actually fixing appliances, because I think that is a critical piece that has been missing from this discussion. I want to say that I appreciate the department's statutory obligation to review the standards, but I am deeply concerned why these washing machines can play Tchaikovsky, but they only last 2 years now. And it is something that--you know, they say there is lies, damn lies, and statistics. And I am very concerned about the horizon. So, Professor Hammond, I don't know if you know the answer to this, but when they do these cost-benefit analysis, like, how do they reflect back the durability of an appliance? And what's the horizon that they are expected to last? Ms. HAMMOND. They do consider the lifetime of the appliance. And, of course, that varies by appliance. I will say they also consider the efficacy. I know they just did a test procedure for dishwashers to ensure that there is a washability standard there too. Ms. GLUESENKAMP PEREZ. Do you know what the timeline--like, how many years are they expected to last? Ms. HAMMOND. I would have to go look for which specific appliances we are talking about, but sometimes, you know, 10 to 12 years. Ms. GLUESENKAMP PEREZ. Because every time I am driving around I see these front-loading washing machines out on the street, you know, and it is a huge environmental impact, and it is a huge cost to consumers and small businesses to have appliances that do not last anymore. Like, my washing machine is from 2003. My fridge is from 1997. You know, like, the old stuff can last if we support it. But often we are seeing a huge explosion in the number of chips involved in any given appliance. Everything is made out of plastic now. I, you know, work on cars. Right? Like, the quality of parts is very, very concerning to me, of components within them. And so that is what I am--you know, I think these standards can be useful, but I am very, very concerned the horizon under which they are considered. So I had a question for Mr. Bauman. I understand that you have an obligation to abide by these standards, and you have expressed concerns today about this process and its impact on your business. But I am also curious and thinking about how we make sure that manufacturers, like, are prioritizing durability. What is the thing--like, what can we do to put more pressure on increasing the life cycle and the durability? Why do some brands, like--you know, I probably shouldn't say this-- Speed Queen still pretty good. Right? But a lot of these things have just gone through the floor. Mr. BAUMAN. Thank you for the question. And I personally have very similar home appliances, our front-loading washing machine, we have had to replace our refrigerator where we had refrigerators that lasted, you know, 20 years. I think trying to regulate that, I think that is really a market control issue, because one of the things on our refrigeration side particularly--and, again, we always talk about on that side of it--is that in commercial refrigeration, those are the harshest. I mean, your kitchen is harsh, but your commercial kitchen is many times even more harsh. And, competitively, that is what we promote in our products. That has always been our kind of baseline is making sure we have safe temperatures. We use heavier gauged materials and such than others. And I have to say that, unfortunately, with meeting, again, very aggressive energy standards like the Department of Energy is actually proposing actually hurts that because we have to take out materials in other areas to try to---- Ms. GLUESENKAMP PEREZ. But, like, any technician can look at something and say what is trash and what is going to last, you know. Like, you can--you know, mechanical engineers I don't think have that brain necessarily, but---- Mr. BAUMAN. I'm both. Ms. GLUESENKAMP PEREZ. But do you see any way that you can implement or is this going to be more regulation? Mr. BAUMAN. Because of the complexity, again, as you get into electronic controls, fan speeds, a number of the things I mentioned as far as, again, talking about commercial refrigeration and also on the air-conditioning side with the new refrigerants that are required, they all required a lot more electronics, a lot more things that all--additional components that break down and reduce the overall life of the product as it is used, again, in very harsh conditions. Ms. GLUESENKAMP PEREZ. Okay. Well, thank you sincerely to all of our witnesses for being here today. I yield back. Chairman WILLIAMS. The gentlelady yields back. I would like to--we are right on time. I would like to thank our witnesses for their testimony today and for appearing here. Without objection, the Members have 5 legislative days to submit additional materials and written requests, questions for the witnesses to the Chair which will be forwarded to the witnesses. I ask the witnesses to please respond promptly. If there is no further objection, without objection, the committee is adjourned. [Whereupon, at 11:50 a.m., the committee was adjourned.] A P P E N D I X [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] [all]