[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
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THE GOLDEN AGE: UNLEASHING MAIN STREET THROUGH DEREGULATION
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HEARING
before the
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
APRIL 1, 2025
__________
GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT
Small Business Committee Document Number 119-006
Available via the GPO Website: www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
59-819 WASHINGTON : 2025
HOUSE COMMITTEE ON SMALL BUSINESS
ROGER WILLIAMS, Texas, Chairman
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
BETH VAN DUYNE, Texas
JAKE ELLZEY, Texas
MARK ALFORD, Missouri
NICK LALOTA, New York
BRAD FINSTAD, Minnesota
TONY WIED, Wisconsin
ROB BRESNAHAN, Pennsylvania
BRIAN JACK, Georgia
TROY DOWNING, Montana
KIMBERLYN KING-HINDS, Northern Marina Islands
DEREK SCHMIDT, Kansas
NYDIA VELAZQUEZ, New York, Ranking Member
MORGAN MCGARVEY, Kentucky
HILLARY SCHOLTEN, Michigan
LAMONICA MCIVER, New Jersey
GIL CISNEROS, California
KELLY MORRISON, Minnesota
GEORGE LATIMER, New York
DEREK TRAN, California
LATEEFAH SIMON, California
JOHNNY OLSZEWSKI, Maryland
HERB CONAWAY, New Jersey
MAGGIE GOODLANDER, New Hampshire
Lauren Holmes, 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. Patrick Montalban, Chairman and Chief Executive Officer,
Montalban Oil & Gas Operations, Inc., Cut Bank, MT............. 5
Mr. Elden Johnson, Owner, Elden Johnson Transportation, Rush
City, MN....................................................... 7
Mr. Buddy Hughes, Chairman of the Board, National Association of
Home Builders, Lexington, NC................................... 8
Mr. John Arensmeyer, Founder and Chief Executive Officer, Small
Business Majority, Washington, DC.............................. 9
APPENDIX
Prepared Statements:
Mr. Patrick Montalban, Chairman and Chief Executive Officer,
Montalban Oil & Gas Operations, Inc., Cut Bank, MT......... 46
Mr. Elden Johnson, Owner, Elden Johnson Transportation, Rush
City, MN................................................... 56
Mr. Buddy Hughes, Chairman of the Board, National Association
of Home Builders, Lexington, NC............................ 62
Mr. John Arensmeyer, Founder and Chief Executive Officer,
Small Business Majority, Washington, DC.................... 72
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
H.R. 1163 - PROVE IT Act of 2025............................. 82
H.R. 974 - Small Business Regulatory Reduction Act........... 95
Associated Builders and Contractors (ABC).................... 98
National Association of Home Builders (NAHB)................. 99
NH Business.................................................. 102
Small Business & Entrepreneurship Council (SBE).............. 105
THE GOLDEN AGE: UNLEASHING MAIN STREET THROUGH DEREGULATION
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TUESDAY, APRIL 1, 2025
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 10:03 a.m., in Room
2360, Rayburn House Office Building, Hon. Roger Williams
[chairman of the Committee] presiding.
Present: Representatives Williams, Stauber, Meuser, Van
Duyne, Alford, LaLota, Finstad, Wied, Bresnahan, Jack, Downing,
King-Hinds, Velazquez, McGarvey, Scholten, McIver, Cisneros,
Morrison, Latimer, Tran, Simon, Olszewski, Conaway, and
Goodlander.
Chairman WILLIAMS. Okay, before we get started, I want to
recognize Congressman Olszewski from the great State of
Maryland to lead us in the pledge and the prayer.
Mr. OLSZEWSKI. 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.
Dear God, we come before you this day with grateful hearts
that you opened our eyes, brought us to this place where we
have the opportunity to serve the American people. Lord, I pray
that you put your hand and protection over our Chairman, over
our Ranking Member, over my colleagues, over staff who worked
so hard as we seek to advance your will, keeping us a matter of
gratitude and service and love for those whom we serve. Remind
us every day what a blessing and honor it is to serve you,
Lord. To your name we pray, amen.
Chairman WILLIAMS. Good morning, everyone. And now I 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.
Welcome to today's hearing, ``The Golden Age: Unleashing
Main Street Through Deregulation.'' I want to thank our
witnesses for being here today. Many of you have traveled a
long way to share your experiences and your perspectives, and
we deeply value your time and your voice.
Today we will focus on the need to unshackle small
businesses from burdensome regulations created by the previous
administration and examine what actions the Trump
administration and Congress are taking to help free small
businesses from this red tape.
Every small business owner knows that regulations limit
their ability to grow and succeed. Unfortunately, the Biden
administration has cost American businesses more than $1.8
trillion in additional regulatory costs over just the last 4
years.
As a car dealer myself for over 50 years, I know firsthand
how harmful regulations can be for small businesses and
consumers alike. In the car business, the cost of regulations
directly impacts the cost of the car. In fact, regulations
could increase the cost for the car by almost 20 percent.
Emissions regulations and fuel efficiency standards are among
the most expensive to comply with, which directly impacts
consumers.
This mountain of red tape is uniquely costly to main
street. On average, small business owners pay 20 percent more
than larger companies to comply with the same regulation. While
these small business owners are experts in their fields, they
are not experts in regulatory compliance. Small businesses must
dedicate as much as they can and more significant portion of
their workforce and funds to regularly comply, drastically
limiting their ability to grow and discourage the creation of
new small businesses.
Despite the serious headwinds small businesses face due to
this avalanche of regulations, there is reason for hope. The
Trump administration has already made progress in removing some
of the most harmful regulations imposed on our nation's small
businesses by the Biden administration. President Trump's pro-
growth policies have already begun to help our nation's most
prominent job creators and make them survive and thrive.
As a small businessowner, I know the consequences of
stifling regulations. That is why in my time as Chairman, one
of the top priorities of the Committee has been combatting the
red tape that impedes small businesses across America. This
Committee is dedicated to creating solutions that will unburden
Main Street America, which is what the legislation included in
our hearing today intends to address. I hope our conversation
today will further shape the potential solutions.
I want to thank all of you again for being here. I look
forward to our conversation.
And with that, now I recognize my friend and Ranking Member
from New York, Ms. Velazquez, for her opening remarks.
Ms. VELAZQUEZ. Thank you, Chairman Williams.
Good morning, everyone. Thank you to the witnesses for
being here today.
While some may argue that the golden age of deregulation
will pave a path to economic growth, we must recognize that the
unchecked removal of regulations can have lasting consequences.
It is important to understand that regulations provide a
foundation that ensures safety, fairness, and sustainability
for all Americans as well as small businesses.
Regulations make sure the food restaurants serve is safe,
the water craft breweries use to make beer is free of
contaminants, and the air we breathe is clean. Regulations also
provide clear rules of the road for small businesses, offering
certainty and ensuring that they can compete on a level playing
field. Clear, consistent rules help small firms understand what
is expected, foster fair competition, and lead to success.
Regulations promote innovation, especially in the energy and
manufacturing sectors.
The Bipartisan Infrastructure Law and Inflation Reduction
Act created the framework for accelerating clean energy
development and innovation. The accompanying regulations
prioritized investment in renewable energy, energy efficiency,
and clean technologies, driving innovation in the clean energy
sectors.
With that said, I understand certain regulations can be
onerous and difficult for small employers to comply with, but
deregulation is not the answer. The chainsaw approach will roll
back important safeguards and cause uncertainty for small
firms. Uncertainty seems to be par for the course with this
administration.
In 2 short months, reckless policies have wreaked havoc,
chaos, and confusion across the American landscape, harming
main street. On January 24, President Trump illegally fired the
Inspector General who was committed to investigating and
recovering fraudulent funds. Days later, OMB released a memo
requiring agencies to freeze further funding, causing confusion
for small businesses, lenders, and contractors.
On February 3, Elon Musk and his team gained access to all
of SBA's systems, including human resources, contract and
payment systems, endangering the private information of
millions of American small businesses.
Then on Friday, February 7, hundreds of SBA employees
received termination notices, only to be told it was a mistake
on Monday, and then fired for real on Tuesday. A Maryland
District Court judge issued a temporary order reinstating
probationary employees through March 27. However, the SBA
placed them on administrative leave. This is not the way to
lead.
On March 21, the President announced SBA will take over the
federal government's student loan portfolio, which has nothing
to do with advancing the mission of the SBA. It is
incomprehensible that SBA will be asked to take on the
servicing of more than $1.6 trillion in loans while the staff
is being cut almost in half.
If the destruction of the government isn't enough, Donald
Trump is picking a fight with Mexico and Canada using tariffs.
Small retailers, manufacturers, and farmers all over the
country are reeling. The uncertainty has left many small
businesses struggling to keep up.
Our focus today should be on the reckless policies of the
Trump administration that are sowing tariffs, confusion, and
uncertainty for small businesses. Mr. Chairman, so much for
lowering inflation.
Thank you, and I yield back.
Chairman WILLIAMS. The gentlelady yields back.
I will now introduce our witnesses.
The first witness with us today is Patrick Montalban. Mr.
Montalban is the Chairman and Chief Executive Officer of
Montalban Oil & Gas Operations, Inc., in Cut Bank, Montana. Mr.
Montalban has overseen Montalban Oil & Gas operations for over
20 years, taking over from his father who started the company
in the fifties. He has also worked with Mountainview Energy
Limited, Genesis Energy, and Altamont Oil & Gas.
In addition, Mr. Montalban is the Chairman of the National
Stripper Well Association and a member of the American
Association of Petroleum Geologists, the Domestic Energy
Producers Alliance, and the Northern Montana Oil and Gas
Association.
Mr. Montalban holds a bachelor of arts in geology from the
University of Montana and a bachelor of science in geology from
Montana State University at Bozeman.
Thank you for joining us today. Looking forward to our
conversation.
I now yield to the distinguished Member from Minnesota, Mr.
Stauber, to introduce the next witness from his district.
Mr. STAUBER. Thank you, Mr. Chair.
Our next witness here with us today is Mr. Elden Johnson.
Mr. Johnson is the owner and operator of Elden Johnson
Transportation in Rush City, Minnesota, founded in 1999. Elden
Johnson Transportation is a major hub for trucking services in
our region. The company's fleet of vehicles, manned by skilled
drivers, ensures the smooth transportation of goods across
various distances and terrains. The company has established
itself as a go-to option for businesses looking to move their
products swiftly, safely, and securely.
Mr. Johnson is a member of the National Federation of
Independent Business, and currently resides in Rush City
Minnesota, with his wife and son.
Thank you for joining us, Elden, today, and I am looking
forward to your comments.
And I yield.
Chairman WILLIAMS. The gentleman yields back.
And now our next witness here with us today is Mr. Buddy
Hughes. Mr. Hughes is the Chairman of the Board for the
National Association of Home Builders in Washington, D.C. As a
third-generation builder, Mr. Hughes opened his own general
contracting business, Hughes Construction, in 1985. Mr. Hughes
has been an active principal in the National Association of
Home Builders leadership structure at that level and State and
national levels. He currently serves as a life delegate of the
Leadership Council and has been a member of the board of
directors for more than 20 years.
Mr. Hughes is an Eagle Scout and was awarded the Richie
Scott Award form the Insulating Concrete Form Association in
2007 and the National Association of Home Builders S.A. Walters
Award in 2018.
Thank you for joining us today. Looking forward to our
conversation.
I now recognize the Ranking Member from New York, Ms.
Velazquez, to briefly introduce our last witness appearing
before us today.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
I am pleased to introduce Mr. John Arensmeyer, the Founder
and CEO of the Small Business Majority. John launched the Small
Business Majority 20 years ago, and he has built it into a
nationally recognized organization focused on empowering
America's entrepreneurs to build a thriving and equitable
economy. He has become a leading advocate on critical policy
issues affecting small business.
Prior to that, John was the Founder and CEO of an award-
winning interactive communications company. With a background
in business and public policy, John will be able to discuss the
challenges and opportunities facing small businesses today. We
are fortunate to have him here today.
Thank you. I yield back.
Chairman WILLIAMS. The gentlelady yields back.
And, again, we appreciate all of you being here today. And
before recognizing all of you, I want to remind you the way we
operate here, okay, that your oral testimony is restricted to 5
minutes in length. If you see the light turn red in front of
you, it means that your 5 minutes is up and you need to
conclude. If you don't conclude, you are going to hear me doing
this, okay? But it will be fine.
And also, you might see Members coming and going in and
out; it has no reflection on your testimony or anything. There
are other hearings going on today. So you will hear everybody
from me and the Ranking Member and others stepping out and then
stepping back in.
So with that being said, I would like to recognize Mr.
Montalban for his 5-minute opening remarks.
STATEMENTS OF MR. PATRICK MONTALBAN, CHAIRMAN & CEO, MONTALBAN
OIL & GAS OPERATIONS, ON BEHALF OF THE NATIONAL STRIPPER WELL
ASSOCIATION; MR. ELDEN JOHNSON, OWNER, ELDEN JOHNSON
TRANSPORTATION, ON BEHALF OF THE NATIONAL FEDERATION OF
INDEPENDENT BUSINESS; MR. BUDDY HUGHES, CHAIRMAN OF THE BOARD,
THE NATIONAL HOME BUILDERS ASSOCIATION; AND MR. JOHN
ARENSMEYER, FOUNDER & CEO, SMALL BUSINESS MAJORITY
STATEMENT OF PATRICK MONTALBAN
Mr. MONTALBAN. Thank you, Chairman Williams, Ranking Member
Velazquez, Vice Ranking Member McGarvey, and Members of this
Committee.
My name is Patrick Montalban. I reside in Cut Bank,
Montana, and I am the Chairman of the National Stripper Well
Association. We represent the small independents of America
that produce small wells, and we call them the ma and pa
outfits in oil and gas business.
A stripper well is 15 barrels a day or less or 90,000 MCF.
We produce about 13.6 million barrels in this fine country of
ours, and we produce about 10 percent of that production, or
about 1.3 million barrels. This production is produced out of
760,000 wells over 32 States, or about 80 percent of the
production in this great country.
We call it the Strategic Petroleum Reserve, many of us, as
we believe it is a very constant and ready for the citizens of
this great country. We generate great jobs in rural America and
we provide excellent jobs to our local communities. It takes as
many people to run a three-barrel-a-day well as it does a 300-
barrel-a-day well.
We are not large integrated companies. We don't produce
oil, refine oil, and sell oil. We receive a price at the well
head or on the site for what we produce.
We have been in this business for many years. One of the
things many people don't think about are the royalty owners
that are associated with our business. Many people, such as
farmees and retirees, receive this extra income each month to
help them pay their bills. To give you an example, some of the
royalty owners in Texas, 4.4 million; Minnesota, 71,000;
Pennsylvania, 18,000; Kansas, 221,000; and my great State of
Montana, Congressman Downing, 71,000.
I am Chairman and CEO of Montalban Oil and Gas. I had a
degree in geology from the University of Montana. My father
started this company in the 1950s. We have 17 full employees
and pay $35 an hour. We pay a hundred percent of healthcare for
our employees and their families. We provide an excellent
package for each and every employee.
We are the largest producer on the Blackfeet Nation Indian
Reservation in Montana. We pay 19 to 25 percent royalty. A
normal royalty in the oil and gas business is 12.5 to 15
percent.
We are a community orientated company, and we give back to
the schools, to the hospitals, and all the local businesses.
We have been confronted for years on regulations. In the
Obama administration, we look back and we called that operating
under a thousand cuts. We got through those 8 years, but
nothing was like the Biden administration. The Biden
administration wanted to clearly put us out of business. And I
had a few individuals in the Department of Interior and the EPA
tell me so.
Think about that, everyone at this Committee, if you would
like to have someone tell you that the government would like to
put you out of business. These are strong jobs in rural
America.
How were they going to do this? They were going to do this
with the methane tax regulations by the EPA, the bonding
requirements with the Department of Interior, and dear to my
heart, the UIC injection program for water injectivity in our
oil and gas business.
We operate under numerous levels in the State of Montana.
We have state, federal, tribal fee and numerous layers of
regulations.
The three major concerns with the methane rules was the
subpart W, or the reporting, or 0000b, OOOOc, which brought in
the small independents. This would have put every small
independent out of business in America. Don't kid yourself.
The UIC program is the underground injection control
program operated by the EPA. Started in 1986, and it was a very
good program, but, unfortunately, they have gone over their
bounds and have hurt the small independents.
One of the hardest things for federal properties for the
small independents was how they changed the Department of
Interior bonding regulations. They took a 10,000 well dollars--
excuse me. They took a single well bond for $10,000 to
$150,000, and a multiple well bond for, in other words two
wells, from $25,000 to $500,000. What this clearly did was take
us out of operating on small--or federal lands.
Thank you for this time. It is going to be a new golden age
for the small independents of America now that we have new
administrators appointed by the Trump administration.
Chairman WILLIAMS. Thank you very much.
And I now recognize Mr. Johnson for his 5-minute opening
remarks.
STATEMENT OF ELDEN JOHNSON
Mr. JOHNSON. Chairman Williams, Ranking Member Velazquez,
and Members of the House Small Business Committee, thank you
for the opportunity to testify today on behalf of the small
business owners across America. My name is Elden Johnson. I own
Elden Johnson Transportation in Rush City, Minnesota, which I
started in 1999.
Over the last 4 years, small businesses have faced
unprecedented challenges, including COVID shutdowns, supply
chain disruptions, historic inflation, burdensome regulatory
environment, and systemic workforce shortages. These major
challenges have fueled uncertainty and reduced small business
optimism.
One major headwind for small businesses is the
unprecedented regulation--regulatory burden imposed on us over
the last 4 years. The Biden administration has added $1.8
trillion in regulatory compliance costs and added 356 million
paperwork hours.
These compliance costs disproportionately impact businesses
like mine. I do not have compliance officers or lawyers to
navigate complex laws and regulations. Those responsibilities
and many others fall on me as a business owner.
Following the 2024 election, small business optimism
surged. Small businesses saw the election result as a major
shift to the nation's economic and regulatory policy towards a
more pro-business environment.
Although small business remains optimistic, there are
warning signs on the horizon. The looming expiration of key
provisions of the 2017 Tax Cuts and Jobs Act, specifically the
20 percent small business deduction, creates uncertainty about
whether my taxes will go up next year.
Congress can help small businesses like mine, like passing
the Main Street Tax Certainty Act, to prevent the massive high
tax on 9 out of 10 small businesses.
In addition to uncertainty caused by looming tax hikes, the
onerous regulatory environment over the last 4 years has laid a
wet blanket over the economy.
Specifically, the EPA's de facto electric vehicle mandates
and the Department of Labor's independent contractor rule have
the potential to shut my business down for good. These
regulations ignore the reality. The entire industry relies on
longstanding work arrangements like independent contractors or
to an all-electric fleet that is simply not feasible. In rural
Minnesota where I live, there is no infrastructure to support
these vehicles, and industries like trucking can't wait for
hours for batteries to recharge to go back to work.
The Federal Motor Carrier Administration has also put
significant strain on the trucking industry from their
overregulation. Their proposed speed limit regulation and
electronic logging regulation would impose one-size-fits-all
mandates. They will make our roads less efficient and less
safe.
I understand the well-intentioned nature of the rules;
however, the one-size-fits-all approach from Washington ignores
that safety is my number one priority. Truckers want to get
home safely to their families, as we want the others that share
the road with us too. We do not need Congress or federal
agencies to order us to be safe. We already are.
Lastly, the Biden administration beneficial ownership
reporting requirements mandated 32.6 small businesses register
with the federal government or face penalties of up $10,000 and
2 years in prison. Thankfully, President Trump stopped
enforcement, correctly calling the mandate outrageous,
invasive, and an economic menace. This action has saved small
businesses from devastating civil and criminal penalties.
Congress must make this win permanent by passing and
repealing the Big Brother Overreach Act and destroy beneficial
ownership data that has already been collected from U.S. small
businesses.
Small businesses are optimistic that the Trump
administration and Congress will deliver pro-growth, economic,
and regulatory reform policies. However, doing so requires
Congress to roll up its sleeves and go to work.
Congress must enact much-needed regulatory protections for
small businesses like the PROVE It Act, and eliminate vague
statutes like the Corporate Transparency Act. Most importantly,
Congress must provide small businesses an economic certainty
that taxes will not increase at the end of the year. This
certainty will give my business the comfort to expand and
increase the opportunities we can offer our associates and
workforce.
Thank you for the opportunity to discuss this, the impact
of these burdensome regulations on small businesses, and I look
forward to your questions.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Mr. Hughes for his 5-minute opening
remarks.
STATEMENT OF BUDDY HUGHES
Mr. HUGHES. Chair Williams, Ranking Member Velazquez, and
Members of the Committee, thank you for the opportunity to
testify today on behalf of the National Association of Home
Builders.
America is experiencing a housing affordability crisis.
Overly burdensome and, in some cases, unnecessary government
regulations bear some of the responsibility for driving up
construction costs and contributing to our housing
affordability crisis.
Nearly 25 percent of the price of newly built single-family
homes and 41 percent of apartment development costs are due to
regulations. It does not need to be like this. We can have an
effective regulatory environment while minimizing burdens on
small businesses.
Unfortunately, rulemaking agencies fail to consider how
regulations will affect small businesses and often flat out
ignore the Regulatory Flexibility Act. Last year, this
Committee's own RFA compliance investigation highlighted how
widespread this problem is. That investigation also pointed to
potential paths to reform and strengthen the 45-year-old law,
which we support.
One example of the lack of RFA compliance is Waters of the
U.S. regulation. This rule directly impacts builders who need
to determine if a water feature is subject to federal or state
regulation. While over 60,000 permit applications for such
activities are processed each year, the EPA certified that the
2023 proposed rule would not have a significant impact on a
substantial number of small entities, allowing the agency to
skip the compliance with aspects of the RFA. This finding
defies all common sense.
Legislation such as Representative Finstad's PROVE It Act
would go a long way to correcting this by increasing small
business input into the rulemaking process and holding agencies
accountable.
The Trump administration is also taking action to eliminate
unnecessary regulations. NAHB commends this. And I want to
point out three regulations in the pipeline that deserve
greater scrutiny.
First, HUD and USDA's April of 2024 rule to require homes
financed through the agencies to comply with excessive minimum
energy standards. This will not only drive up costs, in some
cases, by more than $30,000 per unit, but only nine States have
fully or partially adopted the new requirements, which means we
won't be able to deliver much-needed housing using these
programs. We urge Congress to support legislation prohibiting
HUD and USDA from adopting any energy standards.
Second, OSHA's August of 2024 proposed one-size-fits-all
rule to establish a federal heat standard contains many
elements that would be infeasible for small businesses in the
construction industry. NAHB urges OSHA to withdraw this
proposed rule. Instead, OSHA should continue encouraging
employers to follow the principles outlined in OSHA's long-
promoted water, rest, and shade campaign.
Third, HUD's April of 2024 rule to implement a Federal
Flood Risk Management Standards expands floodplain management
requirements and fundamentally threatens access to FHA mortgage
insurance programs for single-family home buyers and
multifamily builders. For these reasons, we urge HUD to repeal
its FFRMS rule. An improved regulatory environment will unlock
economic growth and open the door for the millions of Americans
who are priced out of the housing market.
NAHB applauds this Committee for highlighting the lack of
agency compliance with the RFA and ways to improve our
rulemaking process. NAHB stands ready to work with this
Committee to unleash main street through deregulation.
Thanks again for this opportunity.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Mr. Arensmeyer for his 5-minute opening
remarks.
STATEMENT OF JOHN ARENSMEYER
Mr. ARENSMEYER. Chairman Williams, Ranking Member
Velazquez, and Committee Members, thank you for inviting me
here today to speak to you.
At Small Business Majority, we engage our network of more
than 85,000 small businesses and 1,500 partner organizations to
advocate for public policy solutions and deliver resources to
entrepreneurs in order to promote dynamic small business
growth.
Twenty-one million new businesses have been created in the
past 4 years. We need to be doing everything we can to support
these new enterprises by focusing on the issues that are
impacting them the most.
Regulation certainly can be a pain, but small business
owners consistently rank regulations near the bottom of the
list of many challenges they face. I will be addressing some of
the regulatory issues in a bit, but I want to make the point
that businesses are much more concerned with the devastating
impact for the Trump administration's slash-and-burn economic
policies than they are about federal regulations. This is
fueling extreme uncertainty and a severe drop in business
confidence in surveys conducted by organizations across the
ideological spectrum.
Our own most recent survey shows a drop by one-third in
optimism in the past 2 months alone, and more than doubling in
pessimism. For the first time in a long time, pessimism
outranks optimism, and 44 percent have experienced revenue
declines.
On a daily basis we are hearing fear and horror about the
administration's arbitrary, chaotic, and unpredictable actions
that are destabilizing the economy. These actions include
onerous inflationary tariffs, terminating vital federal
programs supporting entrepreneurs, slashing the SBA's workforce
by 43 percent while piling on $1.6 trillion of unrelated
students loan responsibilities, and mass deportations that
exacerbate small businesses' existing workforce challenges.
The tariffs are perhaps what we are hearing about the most.
Seventy-seven percent of small businesses say the expanded
tariffs will be detrimental to our economy. Nikki Bravo, owner
of Momentum Coffee in Chicago; Margo Clayson, owner of The
Mighty Microgreen in Inkom, Idaho; and Mike Roach, owner of
Paloma Clothing in Portland, Oregon, are worried that new
tariffs could be devastating to their businesses.
The same survey finds that two-thirds oppose the
administration's policies, with more than three-quarters
opposed to the SBA cuts.
But back to regulations. Regulations are a necessary fact
of life for small businesses. From food safety to responsible
workplace practices to mitigating environmental harm to
preventing financial scams, there is a legitimate need for
government to ensure a healthy competitive business landscape
undergirded by a level playing field.
The debate over regulations should not be ideological;
rather, it must be based on a case-by-case pragmatic analysis.
Because regulations can sometimes be burdensome, it is
essential that we have a process to assess their costs and
benefits. A one-size-fits-all indiscriminate deregulatory
policy, such as eliminating 10 regulations for every one
enacted, reflects a performative slash-and-burn approach to
governing that has no relationship to actual business
realities.
Small businesses value fair and reasonable regulations that
help them compete with large companies and establish clear,
easy-to-follow rules of the road. They repeatedly point to the
importance of regulations in both fostering competition and
holding large corporations accountable.
Our polling shows that 86 percent of small business owners
agree that some regulation of business is necessary in a modern
economy, and 93 percent agree that their business can live with
regulations if they are fair, manageable, and reasonable. As
such, we support efforts to ensure small business owners are
more involved in the promulgation and implementation of new
regulations.
Existing regulatory structures should be strengthened, such
as those under the Regulatory Flexibility Act, which requires a
review of rules that will have significant impact on a
substantial number of businesses within a 10-year period.
Following the RFA, along with proper coordination with the
SBA's Independent Office of Advocacy, enables agencies to
ensure that regulations are not overly burdensome. Moreover,
the Office of Information and Regulatory Affairs provides
additional insight in the federal rulemaking process. The
previous administration recognized the importance of OIRA's key
functions through an executive order encouraging agencies to
take necessary steps to strengthen the regulatory review
process with public involvement in rulemaking.
Finally, Congress should consider solutions to help main
street work within the regulatory requirements of their
respective industries while maintaining a commitment to health,
safety, and commercial standards.
Small businesses need certainty, consistency, and clear
guidelines from the government, not chaos and confusion.
Congress should be hyper-focused on helping small business
owners navigate the ever-changing and increasingly challenging
economy while helping them find relief from tariffs and
draconian budget cuts.
I look forward to answering your questions.
Chairman WILLIAMS. The gentleman yields back.
And we will now move to the Member questions under the 5-
minute rule. I recognize myself for the first 5 minutes.
Whether by enacting a late-minute halt on domestic drilling
on federal lands or purposely slowing his administration's
approval process for oil and gas projects, one thing was clear,
President Biden's actions threatened American energy
independence. This regulatory assault was particularly painful
for Main Street America. Small businesses and overly regulated
industries had to beg the federal government for approval to
simply conduct business.
So, Mr. Montalban, how did the Biden administration's
withholding of your project approvals and other administrative
prohibitions harm the oil and gas industry?
Mr. MONTALBAN. Thank you, Mr. Chairman.
It started out with the Department of Interior, and the
bonding was critical to the small independents, as I mentioned
before. They stopped the drilling because of the bonding, and
they stopped any transaction between independents on trying to
buy or sell any federal properties.
Chairman WILLIAMS. Did you ever hear from the government
agency officials why an approval was withheld or delayed? Did
you ever hear from them?
Mr. MONTALBAN. We have had numerous situations in our
business over the last 4 years why permitting--permits to
drill, permits to inject water--have not gone through the
process, and we have never heard back.
Chairman WILLIAMS. During the Biden administration,
American businesses were saddled by--we have heard this figure
already--$1.8 trillion in additional regulatory costs. Small
businesses do not have enough resource to hire high-priced
attorneys like large corporations do. Because of that,
compliance has often left the owner or an employee who will
have trouble navigating the complex language of these rules.
And even worse, most industries face regulations from different
agencies that may be conflicting. This has caused confusion,
uncertainty to small businesses trying to navigate the
regulatory minefield.
So, Mr. Johnson, tell us about your experience navigating
the regulatory landscape. What has been the cost to your
business and the impact to your employees?
Mr. JOHNSON. There are numerous regulations. A lot of them
are--I guess the EPA-related are the most expensive and
troublesome for us. I don't know if you want the specific. One
of them is the EPA mandate for the diesel motors called death
fluid, which is burdensome; sometimes putting our trucks in the
shop for weeks at a time, and some of the repair bills up to
like $17- to $20,000, plus the time that our trucks are not
moving.
Chairman WILLIAMS. Yeah, and you don't have time to hire
outside auditors and all that to come in.
Mr. JOHNSON. No. Heavens no.
Chairman WILLIAMS. Creates a heck of a burden for you.
Mr. JOHNSON. Can't do it. Can't do it.
Chairman WILLIAMS. Thank you.
An essential part of the American Dream is homeownership.
Unfortunately, the cost of housing and building has continued
to grow year over year. Studies by the National Home Builders
Association found that 25 percent of the cost of a house is
attributed to the regulations. This has pushed an estimated 14
million Americans away from their home being--having a dream
home and owning one.
So, Mr. Hughes, can you explain how burdensome regulations
cause such a substantial cost increase for home builders, and
what should be done to reduce these regulatory barriers?
Mr. HUGHES. Well, unfortunately, there is a plethora of
reasons and regulations. The one that I deal with the most is
burdensome codes. We have just gone too far with energy
regulations, and a lot of that 25 percent. And it may help to
put that into perspective to say the dollar amount. That 25
percent is $94,000. So the first $94,000 is just regulations,
and a lot of that is codes.
Other things is--Mr. Arensmeyer mentioned the one-size-
fits-all. Too many times our engineering and storm water
regulations for small subdivisions, which I deal with a lot
more, are way too burdensome. And it is not a one size fits
all.
Chairman WILLIAMS. Well, and they get passed on to the
potential buyer----
Mr. HUGHES. Sure.
Chairman WILLIAMS.--who has to go to the bank, borrow that
much money, pay that much more interest.
Mr. HUGHES. Correct.
Chairman WILLIAMS. And it hurts, doesn't it?
But if the government would stay out of your business, we
might see a price reduction.
Mr. HUGHES. Oh, that is----
Chairman WILLIAMS. You are on record,
Mr. HUGHES. Yes.
Chairman WILLIAMS. Okay.
Mr. HUGHES. Absolutely. I would love to see the federal
government get out of the codes business.
Chairman WILLIAMS. All right. Thank you very much.
I now recognize the Ranking Member for 5 minutes of her
questioning.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Mr. Arensmeyer, what are your opinion polls showing? Are
burdensome regulations one of the top priorities?
Mr. ARENSMEYER. Ranking Member, we have been conducting
polls of small business owners and surveys around the network
for the last 20 years. And we talked with small businesses
every day. We do not hear certainly federal regulations listed
as a top concern. It is access to capital, healthcare.
Childcare is now a big issue, unfair competition and all of
the----
Ms. VELAZQUEZ. Is it fair to say that small employers are
worried about tariffs?
Mr. ARENSMEYER. They are incredibly worried about tariffs.
Ms. VELAZQUEZ. Are small businesses concerned about
remaining competitive and turning a profit?
Mr. ARENSMEYER. Absolutely. The level of fear and
uncertainty right now is incredible. We are hearing it every
day.
Ms. VELAZQUEZ. Mr. Hughes, are home builders anxious about
the Trump tariffs being levied against construction imports,
like Canadian lumber, aluminum, and steel? Yes or no?
Mr. HUGHES. Yes.
Ms. VELAZQUEZ. Builder confidence ticked down in February
to the lowest level in 7 months. Is that partly due to the
economic uncertainty? Yes or no?
Mr. HUGHES. Yes.
Ms. VELAZQUEZ. It seems to me that the top concern of small
businesses is the economic uncertainty stemming from the Trump
administration's reckless policies.
I would like to enter into the record, Mr. Chairman, a
press release, May 17, from the National Association of Home
Builders.
Chairman WILLIAMS. So moved.
Ms. VELAZQUEZ. Mr. Arensmeyer, in your testimony, you
mentioned small employers need certainty. Could you describe
how the policies of the Trump administration have sown
confusion and disruption to small businesses?
Mr. ARENSMEYER. Small business owners have no idea what is
happening on a day-to-day basis. They don't know what tariffs
they are going to be hit with. They don't know if their
employees are going to be--legal immigrants are going to get
rounded up from their businesses. And they don't know what next
agency is going to be slashed. They cannot plan in this kind of
environment.
Ms. VELAZQUEZ. President Trump announced SBA will be taking
on the $1.7 trillion student loan program. So I ask you, is SBA
equipped, if that is the core mission of the Small Businesses
Administration?
It exists to help small businesses access capital, federal
procurement. $1.7 trillion student loan program. Do you think
this is consistent with the core mission of SBA, Mr. Hughes?
Mr. HUGHES. I am sorry. Not my area of expertise.
Ms. VELAZQUEZ. Student loans? The Small Business
Administration is in the business of providing access to
capital, it is technical assistance, capacity building for
small businesses.
What do student loan programs have to do with small
businesses? Nothing.
Do you believe the SBA can effectively support small
businesses while taking on the student loan program and cutting
staff by more than 40 percent? Mr. Arensmeyer?
Mr. ARENSMEYER. It is mystifying, Congresswoman. We can't
figure it out at all. I have talked about the growth in small
businesses over the last 4 years. We need to be making sure we
are supporting those businesses, and we need sufficient staff
to do that. And why anybody thinks we take on a $1.6 trillion
student loan program, it boggles the mind.
Ms. VELAZQUEZ. This Committee has jurisdiction over the
Small Business Administration.
Mr. Chairman, when are we going to have a hearing to bring
the Administrator in and to explain to us how she will be able
to handle the needs of small businesses who need certainty and
the student loan program? When will you be asking her to come
into this Committee and discuss the reorganization of the Small
Business Administration?
I sent--we the Committee Democrats have sent five letters
to the Administrator. We haven't received one answer. Remember
when you really got upset, Mr. Chairman----
Chairman WILLIAMS. No.
Ms. VELAZQUEZ.--when the previous Administrator didn't
answer your question--your letters? I even joined with you. So
I expect the same here.
Later this month, we will be marking up the PROVE It Act.
John, do you have a position on this bill?
Mr. ARENSMEYER. Our feeling is that the structures that are
in place right now are sufficient. If they are not being--we
have heard that perhaps the RFA is not being sufficiently
enforced--let's increase enforcement. The previous
administration took steps to improve the OIRA process.
So if we layer another structure on top of this, there is
going to be more confusion and more uncertainty for small
businesses.
Ms. VELAZQUEZ. Thank you. I yield back.
Chairman WILLIAMS. The gentlelady yields back.
I now recognize Mr. Alford from the great State of Missouri
for 5 minutes.
Mr. ALFORD. Well, thank you. That was interesting.
Thank you, Chairman Williams and Ranking Member Velazquez.
The last 4 years, small businesses have been under attack
from an administration determined to crush main street under
the boot of Big Government. In the previous administration,
federal agencies finalized more than 1,000 regulations, costing
taxpayers $1.8 trillion in compliance. That is the same as the
entire federal discretionary budget for fiscal year 2023.
It is unacceptable that federal agencies can put this
burden on the taxpayers of this country. This outrageous abuse
of power by the executive branch is what the American people
rejected when they overwhelmingly elected Donald J. Trump as
President.
I am proud to support the efforts of the President and the
patriots at DOGE working to rightsize our government and ensure
that no future administration can unilaterally place such a
burden on main street. And yes, I am optimistic. I am
optimistic that things are going to turn around in America
finally.
I don't have a woe is me attitude. I am glad we are getting
the $1.7 trillion loan portfolio over to the Small Business
Administration. Finally, maybe 300,000 square feet of office
space that was previously unfilled will be filled with people
actually at their desk working for the American people.
The student loan program should never have been the
business of the federal government to begin with. But now we
have it. Let's do something about it, along with the Pell
grants.
Mr. Montalban, Biden's war on fossil fuels cost jobs, as
you know. It is estimated that it cost up to 59,000 jobs,
either people laid off from pipelines and fracking or jobs not
realized. And yet, in less than 3 months, DOGE, the Department
of Government Efficiency, has laid off some 30,000 federal
workers out of some 33 million. That is less than 1 percent.
And yet, there is all this outcry.
Are federal workers guaranteed a job for life, sir?
Mr. MONTALBAN. No, Congressman.
Mr. ALFORD. Are workers in the fossil fuel industry
entitled to a job for life.
Mr. MONTALBAN. No.
Mr. ALFORD. Why do you think that there is so much outrage
over less than 1 percent of the federal workforce being laid
off and no one gave a hoot about 59,000 workers, and also
farmers who have gone out of business because of the high-input
cost from fertilizer that is made out of natural gas? All these
implications. The President of the United States targeted the
fossil fuel industry, but he trained the crosshairs on the
backs of our farmers and the backs of people who work for you.
Why is that? Why the discrepancy?
Mr. MONTALBAN. Well, first of all, it is nice to have
common sense back in government. And second of all, I don't
think that we should be paying any student loans. I put myself
through college.
But the bottom line is, in our industry, with Department of
Interior Doug Burgum; Chris Wright with the Department of
Energy; and Lee Zeldin, head of the EPA, we think we have a new
future in the oil and gas industry as small independents, sir.
Mr. ALFORD. Thank you.
Mr. Hughes, I am glad you are here today. $95,000 in added
costs. In my area, in the Kansas City market, 6 months before
the policies, the green new scam was initiated and these codes
were adopted by Kansas City, they were averaging 85 single-
family permits per month. Six months after the policy
implementation, only 26 single-family permits were issued in
total. That is crazy.
Do you have anything against if someone wants to build a
nice home for them to add these more efficient measures to
their home at their own expense?
Mr. HUGHES. Absolutely not. And I have been dealing with
what we would call innovative products since the mid-nineties.
More efficient, structurally sound products that we are doing
envelopes (ph) out of. It is a much stronger and more efficient
structure. The bottom line is it costs more.
And I deal with a lot of folks that have that extra money
when they are building their second or third home, but it is
not practical to require that of first-time home buyers.
Mr. ALFORD. And yet it is stifling homeownership in
America. The American Dream is at risk because this past
President, this past administration decided to put their foot
on the neck of home builders, tying them up, shackling them
with those overburdensome regulations, which is killing the
housing market in America. That is why Tracey Mann and I led a
letter to the USDA to pause the implementation of these very
burdensome regulations so we can keep the American Dream alive.
Mr. HUGHES. The dollar mark on that added--2021 IECC--was
around $30,000. $30,000.
Mr. ALFORD. Thank you, sir.
Thank you all for being here today on your own time and
your own dime. God bless you.
I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Mr. Olszewski from the great State of
Maryland for 5 minutes.
Mr. OLSZEWSKI. Well, thank you, Mr. Chairman. And thank you
all for your time today.
I don't know where to start, so I am going to just try to
work this. Hopefully, we can have a bit of a quick conversation
in my time today.
I will just start by an observation. I think done right and
done in partnership, government regulation can save lives and
can boost economic output, done right, in partnership. I hope
that is something we can all sort of agree to as a general
principle as we go about this work.
I think we can also agree there is certainly opportunities
to reassess and to reevaluate, change repeal of regulations
that were not done right. And I will just say, I will speak for
myself, and I am sure some of my colleagues, we welcome that
conversation.
The sense I got from some of the testimony today was that
there should not be a one-size-fits-all approach to regulation.
Is that a fair sort of observation or takeaway?
Okay. Thank you.
So I would just, I guess, put out there that, perhaps as we
consider and have these conversations, we shouldn't take a one-
size approach to peeling them back either. So let's take that
same approach to unwinding regulations that may be onerous
unnecessarily.
And just like we had a conversation today, I do want to
associate myself with the comments of the Ranking Member. I
truly do, and I mean this authentically, welcome a conversation
with the administrator. Hope that she would be willing to
answer questions that are proposed by any Member of this
Committee, because I think that is how we get to some of that
work.
My colleague mentioned outrage about prior employees of the
federal government. My guess to the President's joint address
was actually a federal employee who was helping those farmers
that were mentioned earlier. She worked for U.S. Fish and
Wildlife, helping assist farmers in Maryland. She was hired
under President Trump's first administration and she was let go
under his second administration because she was promoted. She
did such a good job that she was on probation. And so I hope,
again, we cannot take this one-size approach in the work that
we do.
You know, I guess--you know, I also wanted to lean in. I
wasn't planning on doing this on the student loan piece,
because for countless businesses, these training programs,
these pathways are lifelines and pathways to prosperity for so
many people. And so I do think it is critical that we find ways
to support that, just as I think we need to do more for
homeownership. Homeownership is a great frontier.
So, Mr. Hughes, I think we talked about this a little bit.
Is it fair to say that the tariffs that are being talked about
might raise the cost of building a single-family home anywhere
from $7,500 to $10,000? Any sense of what we are looking at for
increased costs?
Mr. HUGHES. A dollar amount, it would be hard to say
because it covers so many different products.
Mr. OLSZEWSKI. Okay.
Mr. HUGHES. Who knows where it is going. We have been
dealing with tariffs for years, truthfully. Lumber coming out
of Canada----
Mr. OLSZEWSKI. Sure.
Mr. HUGHES.--has been tariffed to death already. We are
concerned.
Mr. OLSZEWSKI. Yeah. And I heard, you know, the
conversations earlier about the costs. We obviously--we don't
want to unnecessarily increase costs, but we can agree that
increasing costs through tariffs would be another cost that
would impact businesses and consumers. Is that fair across the
board here?
Mr. HUGHES. Yes.
Mr. OLSZEWSKI. Okay. And I guess just to that point of
employees, I do want to, I guess, reemphasize the point of I am
uncertain how we can do more to work with businesses as we are
peeling away half the workforce of the Small Business
Administration, upending offices, moving people.
So, again, I think I just wanted to lead today with
reenforcing that we would welcome the conversation with you and
with others. So as I have done with prior witnesses, if there
are specific regulations that you all would like this Committee
to consider reviewing, perhaps repealing, if you could just as
a followup submit for the record some of those recommendations,
I truly would welcome that, and I know that we as a Committee
would be welcoming those conversations.
So I really appreciate everyone's time today.
I will do something rare, Mr. Chairman. I will yield back
the balance of my time.
Mr. MEUSER. [Presiding.] The gentleman yields.
I now recognize Ms. Van Duyne from Texas for 5 minutes.
Ms. VAN DUYNE. Thank you very much, Mr. Chairman. Thank you
to our witnesses for joining us today.
Small businesses are the foundation, as you know, of the
American economy, comprising 99 percent of all U.S. farms and
employing nearly half of the nation's workforce. They are
instrumental in fostering innovation, creating jobs, and
driving economic growth within our communities.
Unfortunately, in 2022, regulatory burdens reached an all-
time high of an estimated $3 trillion or approximately 12
percent of the U.S. GDP. And rather than providing the relief,
Biden administration added an additional $1.8 trillion in
regulatory costs. And as I have emphasized before, every dollar
an hour that is spent on compliance is a dollar not invested in
hiring employees, expanding facilities, or fostering
innovation. Small businesses with their limited resources are
particularly vulnerable to these impediments.
President Trump and Administrator Loeffler and
congressional Republicans are committed to streamlining
government and eliminating burdensome regulations. To date, the
administration has halted over $180 billion worth of
regulations. And Congress has an important role to play as we
explore additional reforms necessary to free up small
businesses and promote economic growth.
As a Member of the Oversight Subcommittee, I have
consistently worked to ensure that small business owners are
not buried under bureaucratic red tape. Earlier this year, I
reintroduced the Small Business Regulatory Reduction Act which
mandates that cost neutrality in the SBA's regulations and also
requires the agency to report to Congress on the financial
impact of other financial federal regulations on small
businesses.
Without objection, I move to enter a letter from the Small
Business and Entrepreneurial Council into the record in support
of the bill.
Mr. MEUSER. So moved.
Ms. VAN DUYNE. Mr. Hughes, the price of homes has
skyrocketed. You are having issues now with actually being able
to get a mortgage. Mortgage rates are high. And as you noted,
the regulatory burdens accounted for nearly 25 percent of the
price of a typically new-built, single-family home. And I would
actually do you one further. I think it depends in what State.
While in Texas it may be 25 percent, in places like California
it is actually 40 percent.
So what are some of the regulations at the federal level
that contribute to this issue?
Mr. HUGHES. Codes. I keep going back to codes. But energy
codes in specific. Eighty percent of codes we don't argue
about. Health and safety engineering, those things don't change
much. But it is when the administration's climate agenda
entered into it. Like I say, just one new code, the 2021 IECC,
which is the energy code, came in to being. That is when it
jumped--jumped an average of $30,000 per house. And that is
small houses. Large houses, $30,000. It is hard to swallow.
Ms. VAN DUYNE. How have the home builders in your
association responded to President Trump and the congressional
Republicans to regulatory commitments?
Mr. HUGHES. Everybody is excited, very excited about the
hope that we can get beyond some of these regulations,
particularly--and it goes--it goes farther than codes too.
In my home county, we had a town hall meeting a couple of
weeks ago with three of our Senators, and some folks showed up
in the grading business. We have a severe shortage of lots,
buildable lots that small builders like myself can buy to build
a house on. And the reason for that is storm water regulations,
EPA regulations. And the number that jumped out at me--I have
done--I have only done five or six subdivisions over my career,
and all very small subdivisions, 20 lots or less, and we didn't
have to spend a lot of money in the early nineties for
engineering. The number today, the average is $1,000 per lot
per--just for engineering.
Ms. VAN DUYNE. That is great information to know. Thank
you.
Mr. Johnson, in your testimony, you alluded an issue of a
significant noncompliance for the Regulatory Flexibility Act.
Would you agree that it is time that the SBA take stock of
agencies' compliance and issue a report to Congress so that we
can act on these findings?
Mr. JOHNSON. Yes.
Ms. VAN DUYNE. Excellent.
All right. I yield the rest of my time. And thank you very
much to our witnesses.
Mr. MEUSER. The gentlelady yields.
I now recognize Dr. Conaway from New Jersey for 5 minutes.
Mr. CONAWAY. Thank you, Mr. Chairman.
And before I get to my prepared questions, I just have to
comment on some of these energy regulations. I happen to have
upgraded the energy situation in my own home recently, and it
was due to a State program helping with that cost. But the
reason I did it was because those--that more efficient heating
and air-conditioning system saves money over time and would
enhance the resale value of my house. In fact, I bought my own
home because there were solar panels up on it. I knew it
would--I am sure I paid for that in my purchase price, but, you
know, it certainty saved me substantial amounts of energy
costs, particularly electricity costs, for my home.
And so I think there is a--I guess there is just another
side to tell. I am not asking as a question, just making a
statement. Energy efficiency has its place. And I guess, you
know, when it is applied and when people decide in order to try
to achieve those savings, leave it to the individual. But I
think the more that homeowners do that, the better off we will
be on multiple fronts. The homeowner will save money and will
do hopefully better about preserving our Earth for future
generations.
I will get to my statement. The United States is part of a
global economy that ripples its way through the largest
corporations to the smallest businesses on main street.
According to government statistics, a total of 20,072 companies
exported from New Jersey locations in 2022. And of that number,
18,331 or 91 percent were small-, medium-sized enterprises with
fewer than 500 employees.
Furthermore, New Jersey's largest market was Canada. My
home State exported $8.4 billion in goods to Canada in 2024,
and this represents 20 percent of New Jersey's total goods
exported.
The Trump administration's continued rollout of tariffs
against our closest trading partners, such as Canada and
Mexico, have been unpredictable, to say the least. In fact, I
was at a meeting just last night talking to ministers from
Europe who are now considering how to de-risk themselves from
the United States market because of the chaos they are seeing
with respect to tariff policy. It is here, it is there, it is
everywhere.
And as I understand it, it was on this Committee just
dealing with the small businesses in my community at home,
predictability is one of the main things businesses need in
order to decide about their investments to grow employees, to
bring on new technologies, et cetera. So this unpredictability
hurts the American economy and it inherently hurts main street
businesses across the country.
Mr. Arensmeyer, in your testimony, you speak on how
unpredictable--the unpredictable nature of Trump
administration's tariffs hurt small businesses. Can you speak
more specifically about what you have heard from small
businesses and what tariffs mean for local economies--we have
heard some of that here in our Committee, I can tell you--and
how tariffs might make economic planning increasingly difficult
for such businesses?
Mr. ARENSMEYER. We are hearing from small businesses on a
regular basis that they have no idea how to plan. They have
absolutely no idea how to plan. They are worried about costs.
They worry when dealing with inflation. And now they have to
worry about, you know, further inflation, if you will.
You know, we have $3.3 trillion worth of imports into this
country, and it is just all through the economy. So, you know,
the average small business owner has all sorts of different
ways that they are actually going to be impacted directly or
indirectly with these tariffs, and they can't even begin to,
you know, think about it. They have to think about all their
different supplies, all the different things that they put into
their product. And they have no time to plan. And they don't
know, it could change tomorrow.
So it has been--it is probably the single biggest thing we
are hearing from businesses right now.
Mr. CONAWAY. Thank you.
On March 19, the President signed an executive order that
seeks to dismantle the Department of Education. And we are
going to say more about the significant impacts on New Jersey
meeting with the Governor and others here later this week.
And on top of that it is adding--it is cutting employees
and adding $1.6 trillion in outstanding student loan debt to
SBA's responsibility. Workforce reductions, 43 percent, as I
have alluded to. And this change, and I know this legislation
is seeking to effectuate that. But you have a shrinking
workforce, increase in responsibility, and one wonders how the
agency can possibly manage that change.
How can SBA do this job, taking on new responsibilities
while cutting the workforce by a significant percentage?
And I will yield back. I will await your answer, sir.
Mr. MEUSER. The gentleman's time has expired.
I now recognize Mr. Stauber from Minnesota for 5 minutes.
Mr. STAUBER. Thank you very much, Mr. Chair. And thanks to
all the witnesses for being here and your testimony.
Minnesota's Eighth Congressional District is home to
hardworking minors, truckers, loggers, home builders, and
energy workers. As their Representative, I hear one thing time
and time again: Washington is making it harder for us to do our
jobs. These men and women aren't asking for handouts; they are
simply asking the government to get out of the way.
As I mentioned earlier, I am glad to have one of my
constituents joining us today, Mr. Elden Johnson. He is not
just a business owner, he is a main street success story, a
voice for rural America, and a firsthand witness to how
Washington's red tape affects our way of life in northern
Minnesota.
Mr. Johnson, thank you for making the trip out here.
Mr. Johnson, you have had to navigate the mandates related
to heavy-duty vehicles. Are electric trucks a feasible option
in rural America, and how would these rules affect your ability
to deliver goods across Minnesota and the upper Midwest?
Mr. JOHNSON. They are not feasible. In a word, no, not
feasible. And if I was to comply with that, I would be
completely out of business. We would have to close the doors.
The one size fits all doesn't fit here in rural America with no
infrastructure.
Mr. STAUBER. So you have a truck loading up by Peterson
Wood treating out of Superior, Wisconsin, when it is 25 below,
you are not going to go to Ishpeming, Michigan, with an
electric truck, are you?
Mr. JOHNSON. Well, I personally wouldn't want to.
Mr. STAUBER. You won't get there. Thank you.
Mr. Hughes, nearly a quarter of the cost of a new home is
now regulatory. Yet rulemaking agencies often tell small
businesses that it won't cost much to comply with proposed
regulation.
You just gave an example in your earlier testimony that one
energy rule or regulation, that Congress never voted on, cost a
home $30,000, whether it is a bigger home or a smaller home.
Can you elaborate on that?
Mr. HUGHES. Well, as we said, it is not a one size fits
all. And I am all about energy-efficient products and
construction. But it absolutely has to be choice. It can't be
mandated.
I have three grandsons under the age of 10, and I am
worried, at the pace we are going, they are not going to be
able to own their own home----
Mr. STAUBER. Right.
Mr. HUGHES.--even if pawpaw builds it.
Mr. STAUBER. You know, we just had one of my colleagues
talk about his personal experience with his own home. That is
an example of personal choice.
Mr. HUGHES. Correct.
Mr. STAUBER. He wasn't forced to do it; he chose to do it.
You know, under the Biden administration, they put rules
and regulations to the tune of 1.3 rules and regulations per
day across their administration that affected each and every
one of you. We didn't get a vote on it. These are just rules
and regulations that the bureaucrats in the back room think it
is a good idea.
We always talk about Main Street America. Small businesses
are the engine of our economy. We have to support that.
I have owned a small business for 31 years. We have since
sold it. It is amazing the rules and regulations that came out
of St. Paul, Minnesota, and our nation's capital.
Mr. Johnson, that makes it more difficult for you to
succeed and more difficult for these services to be provided to
rural America.
Mr. JOHNSON. Absolutely, without a doubt.
Mr. STAUBER. I will just say that as we go into this next
administration, President Trump has stated that for every rule
or regulation that comes forward, 10 are going to be removed.
You had one of my colleagues, and I think in good faith,
say, which are the rules and regulations that are bothersome to
you? I challenge you to bring those, all of them, to us. Bring
10 or 20 a week. We can talk about them. Because every time
that I have asked somebody in a Small Business hearing, do you
need more or less rules or regulations, they always say less.
It is disruptive.
So the four of you, raise your hand if you think that you
need more rules and regulations on your small businesses to
succeed. Raise your hand.
Just like the other ones. It is just like the other
hearings. Not one person raised their hands. And what we have
to do is we have to make sure that our small businesses can
succeed. And these bureaucrats in the back room in Washington
that are putting these rules and regulations on you, it has to
stop.
And listen, it just didn't start overnight. It has been
going this way for a long, long time. We have to, in a
bipartisan fashion, stop this--stop these unnecessary rules and
regulations that are punishing you. You are the engine of our
economy. Ninety-nine percent of our businesses are small
business.
And I yield back.
Mr. MEUSER. The gentleman yields.
I now recognize Mr. Cisneros from California for 5 minutes.
Mr. CISNEROS. Thank you, Mr. Chairman.
Look, I believe when done right, deregulation means
increased competition and improves quality of goods and
services and price decreases. When done right, deregulation can
stimulate economic growth, reduce cost, and make businesses
more difficult. But today's hearing is not about deregulation
or how we can work across the aisle to actually help
businesses. This hearing is an infomercial.
As a coequal branch of government, we should be actively
trying to shape how Congress wants support for small business
to look like and not just seek to appease the executive by
stating the name of our congressional hearing with ``the golden
age.''
Our Committee also has oversight authority. We should be
able to hold agencies accountable, and their leadership should
come to this Committee room and explain actions or inactions.
I have joined my colleagues in sending letters to the SBA,
and they go unanswered. We sit through hearings to listen to
what agencies, particularly the SBA, are doing and not doing;
we ask witnesses questions to gouge the impact of actions by
the SBA and the administration. But we need to bring the
director of the SBA here.
So with my time now, I am calling on this Committee to
bring the administrator here to publicly answer our questions.
If the administrator were here, I would want the following
questions answered: What was the extent of DOGE's access to SBA
headquarters and systems, and what was done the SBA to ensure
that systems were not abused or accessed by individuals without
clearance? What specific offices or departments within the SBA
are affected by the announcement of 43 percent reduction in the
workforce? Where is the SBA relocating the six regional
offices, and will any other offices be closed in the future?
How are we appropriating funds being used--or how are
appropriated funds being used or not used with the SBA
undergoing such drastic changes that Congress has not
authorized? What is the SBA's plan to handle $1.7 trillion
student loan portfolio with less staff and staff not trained to
work with such a complex student loan system?
In announcing the Made in America Manufacturing Initiative,
you claim you will find $100 billion in cuts to regulations.
Where are you going to find it, and how are you going to ensure
cuts don't negatively impact small business owners? Also, in
announcing the Made in America Manufacturing Initiative, did
the SBA actively mislead Americans by stating that the previous
administration was losing an average of 9,000 manufacturing
jobs per month?
On the last question, the SBA ignored the fact that
manufacturing jobs rose by 721,000 during the first 3 years of
the Biden administration. Some was part of the comeback from
the pandemic-era job losses, but the Biden administration's
final month numbers was still 12,000 manufacturing jobs higher
than the last pre-pandemic month of President Trump's first
term in office.
The manufacturing employment gains under President Biden
were in fact the strongest in 72 years. I sincerely hope the
administrator comes before this Committee to work with us to
help small businesses flourish because small businesses have
fewer options than larger companies to navigate and survive the
chaotic actions of the Trump administration.
And with that, I yield back.
Mr. MEUSER. The gentleman yields back.
I now recognize Mr. Wied from Wisconsin for 5 minutes.
Mr. WIED. That you, Mr. Chairman, for holding this hearing.
And thank you to all of our witnesses for sharing their
experiences with us today.
It is undeniable that the previous administration was anti-
business, anti-innovation, and anti-free market. I would like
to once again highlight the $1.8 trillion of additional
regulations that were needlessly imposed on businesses across
this nation.
To comply with these regulations, businesses were subjected
to 360 million extra hours of paperwork. As a former small
business owner, I know firsthand the disproportionate burden
small businesses face to comply with additional regulations.
When the government needlessly increases the cost of
operating a business, those that cannot keep up are forced to
close their doors. Those who do manage to stay open, spend
their time focusing on staying afloat, while innovation and
growing their businesses take a backseat.
Working with the Trump administration, Republicans are
committed to repealing these harmful regulations and
reorienting the Small Business Administration to, first and
foremost, help support small business owners instead of
continuing to crush them with regulation after regulation.
In just over 2 months, the Trump administration has stopped
an additional $180 billion in regulations proposed by the Biden
administration.
I look forward to continuing our work to reverse the Biden
administration's burdensome regulatory war and allow small
businesses to grow, innovate, and prosper.
So, Mr. Montalban, the Republicans on this Committee are
steadfast in their mission to reduce the massive number in
regulations imposed by the previous administration and to
promote the extension of the Tax Cuts and Jobs Act signed into
law by President Trump.
If taxes and regulatory burdens levied on your businesses
are reduced, what are the downstream effects for your
customers?
Mr. MONTALBAN. Well, Congressman, unfortunately, we are
just the producer of crude oil and natural gas that comes to
your home or to your vehicles. But I can tell you that the
regulations that have been brought upon us over the last 4
years were to put us out of business, and they were done
through the EPA. This cost us literally, personally on a couple
of wells over 100,000 on one well and over 400,000 on another
well. So the bottom line was they were doing everything they
could to put us out of business through regulations.
Mr. WIED. Thank you.
Mr. Hughes, what current impacts are home buyers facing as
a result of increased regulations place on home builders?
As you know, homes can take several years to construct. It
is very difficult to, you know, even to buy land to develop
property because of all of the regulations. How do the current
regulations hinder the construction of new homes in the coming
years?
Mr. HUGHES. I guess mainly the added cost, also added time.
And there have just been no thought to that added cost. And
what that does to--especially the beginner or the first-time
homeowner that I mentioned before. It has just about put them
out.
Our numbers suggest that every time we add $1,000 to the
cost of a new home, you force 100,000--it is actually a little
over 100,000--116,000 buyers out of the market.
Mr. WIED. Thank you.
Mr. Arensmeyer, on your organization's website, you mention
entrenched discriminatory policies that create obstacles for
businesses owned by people of color, women, and immigrants. So
what is a specific SBA policy that has this discrimination
written into law, and why hasn't the Biden administration
repealed that policy?
Mr. ARENSMEYER. I don't believe, Congressman, we are
referring to actions like government. I think we are referring
to situations in the market that have created dislocations and
differences in opportunities. And our organization is dedicated
at looking to where those issues are, regardless. And we
believe government has an obligation to kind of focus on where
the need is the greatest. So it isn't so much about accusing
the government of doing something, it is truly just stating a
reality, an economic reality.
Mr. WIED. So you weren't referring to the SBA on your
website specifically?
Mr. ARENSMEYER. Not that the SBA was doing anything
discriminatory, no.
Mr. WIED. Okay.
Mr. ARENSMEYER. If I understand your question.
Mr. WIED. Okay. No, I was just--on your website--it said,
Yet these entrepreneurs encounter many obstacles due to
entrenched discriminatory policies and practices, challenges
that have only been exacerbated by the COVID-19 pandemic. I
didn't know if you were referring to the SBA specifically.
Mr. ARENSMEYER. I don't believe we were.
Mr. WIED. You weren't. Okay. So if a policy or practice
explicitly favors a certain category of people over others,
would you consider that to be discriminatory?
Mr. ARENSMEYER. I think it is an obligation of government
to look at where the need is the greatest and look at the
economic need. And you find the greatest economic need in, you
know, certain communities, urban communities, rural
opportunities. It is not limited to a particular race or
demographic. And there are programs in place that address those
needs, and we support those.
Mr. MEUSER. The gentleman's time has expired.
Mr. WIED. I yield back. Thank you.
Mr. MEUSER. The gentleman yields.
I now recognize Mr. Tran from California for 5 minutes.
Mr. TRAN. Thank you, Mr. Chair. Thank you, Ranking Member.
To all the witnesses, I appreciate you being here today.
Mr. Arensmeyer, many of my colleagues on this Committee
make regulations out to be this unyielding bureaucratic
bogeyman for small businesses. But regulations can also benefit
the economy through leveling the playing field, incentivizing
innovation, and protecting American innovation from threats
like the Chinese Communist Party stealing our intellectual
property.
Can you share some of the stories from small businesses
within your organization?
Mr. ARENSMEYER. I mean, again, it is about setting up a
level playing field. For example, in terms of lending, we see a
lot of irresponsible lending going on targeting the most
vulnerable small business owners, and you need regulations in
order to guard against that.
Price discrimination, the SEC was attempting to deal with.
Again, it is the role of government to step in and try to
create a level playing field.
So franchise, unequal franchise relationships, you know,
the list goes on. And that is a function of government to do
that.
And that is why we--we heard a lot about the cost of
regulations, but it is really about a cost-benefit analysis. We
are the first to argue that perhaps there are regulations out
there where the cost is greater than the benefit, and we should
look at those.
But you have got to look at the benefit side. If you only
look at the cost side of things, we wouldn't have had the PPP.
Yes, the PPP created some obligations for small businesses, but
it was a huge benefit as well.
So just looking at the cost side of the Biden policies,
there was a lot of manufacturing and other money that was--
passed by this Congress. Obviously, regulations came along with
that. So, again, across the board, we need to be looking at
what are the benefits and what are the costs. And we are
certain there are cases where the costs outweigh the benefits,
and those should be addressed.
Mr. TRAN. I agree with that. And thank you.
To continue on, Mr. Arensmeyer. On March 14 of 2025, the
President issued an executive directing that Minority Business
Development Agency, MBDA, be eliminated to the maximum extent
consistent with applicable law. The Agency which was created by
President Nixon in 1969 and codified into law by Congress with
bipartisan support in 2021 has been widely successful. In fact,
in fiscal year 2024 alone, the Agency helped the country's more
than 12 million minority businesses access $1.5 billion in
capital and create or retain approximately 23,000 jobs.
What message is the Trump administration sending to small
businesses by eliminating the Minority Business Development
Agency?
Mr. ARENSMEYER. Well, as you mentioned, Congressman, the
MBDA has done a lot of good work. They have 26 offices across
the country that are serving small businesses. And on top of
that, they are a conduit for a large chunk of the State Small
Business Credit Initiative technical assistance money that, by
the way, they haven't distributed all of it. You have got about
$62 million sitting there. With them going away, who knows if
that is going to get distributed.
So they have performed a valuable function. Just to sort of
wipe them off the face of the Earth is absolutely not the way
you are going to help small businesses.
Mr. TRAN. Thank you, Chairman. I yield back.
Chairman WILLIAMS. [Presiding.] The gentleman yields back.
I now recognize Mr. Meuser from the great State of
Pennsylvania for 5 minutes.
Mr. MEUSER. I appreciate that, Mr. Chairman. And thanks to
all of you very much.
You know, obviously, our Committee has oversight over the
SBA, but we are also about advocating and fighting for small
businesses. We are really the only Committee here in Congress.
That is our focus. Not just the SBA, but working for you.
And what I am hearing here today is what I hear when I go
to my chamber events, when I am doing my main street
walkabouts, during COVID, post-COVID, these days, that during
the last 4 years have been very, very tough on small
businesses. That is just the reality. You know, there is
nothing political there. I mean, inflation, supplies were
difficult. We had excessive IRS and OSHA drive-bys because they
didn't' have any better systems to do anything with, so they
were just stopping in on small businesses and creating all
kinds of havoc.
Of course, inflation. Okay. Twenty percent during the
course over the last 4 years. Energy, up and down to keep your
company going, to the cost of logistics and distribution.
Workforce issues. I mean, taxes. Taxes. We have lost--taxes
have gone up from bonus depreciation to the R&D tax credit. The
list goes on.
And now, you know, 199-A is in jeopardy if we don't pass
the incoming tax relief that our friends to the left like
saying, oh, that is nothing but tax cuts for the rich. Okay.
You know, no, it is for all the small businesses that have the
199-A.
And by the way, sir, your organization advocates against
199-A. So I don't even know what to make of that. That is a 20
percent--I have it in writing, okay. You want a $25,000 tax
relief for small businesses and doing away with 199-A.
So let's just get real, as some of our colleagues said.
Look, we need to work on the regulatory cost. That is what this
administration is going to be about. I mean, things like the
beneficial ownership rule that took place. The CFPB. My God, I
don't think there is anybody on Earth or in America that was
favorable to the CFPB, except maybe someone on the political
end of things. The 1071 final rule. A lot of problems that we
need to fix.
So, Mr. Hughes, you mentioned that approximately 25 percent
of the cost to a new home is attributable to government
regulations. Can you discuss, if you wouldn't mind, briefly,
how regulations have led to increased--these housing costs?
Mr. HUGHES. Well, touch on the same things. Added codes,
added storm water regulations that simply aren't needed. When
storm water regulations were first put into practice, they
were, and large enough projects they are. But, again, using the
same term, one size doesn't fit all.
So added regulations from the ground up. Impact fees, which
vary tremendously over the country. We are fortunate in North
Carolina, we don't have a lot of impact fees. But it has been a
battle since the mid-1980s.
Mr. MEUSER. Right. What about HUD's minimum energy
standard? I don't mean to interrupt you, but----
Mr. HUGHES. That is fine. And that goes right back to that
added cost to comply with IECC 21. We are looking at $30,000 to
$35,000 added cost per house.
Mr. MEUSER. Right. Thank you. We are going to work on it.
The regulatory onslaught, Mr. Montalban, if you could try
to sum up regarding energy development in the U.S. I mean,
obviously, you have been talking about it. Maybe you would just
share some other real-life situations.
Mr. MONTALBAN. Thank you, Congressman.
The bottom line with the small independents is they are
trying to regulate us through the EPA on the underground
injection control program and the Department of Interior on the
bonding program. And the key issues for the small independents
would be percentage depletion and the intangible drilling
costs.
Mr. MEUSER. All right. Thank you.
The idea of cutting 10 regulations for each new regulation,
certainly after the last four years, that is not very
difficult.
Mr. Johnson, share with us two or three of the regulations
that you find are most harmful to your business.
Mr. JOHNSON. The ELD mandate, the electric logging mandate,
some of the EPA regs, and the electric vehicle mandate that is
coming is the three that scare us the most.
Mr. MEUSER. All right. Great. Thanks for sharing that.
Now, the TCJA, the Tax Cuts and Jobs Act, of course, most
Democrats hate just because it was implemented during the Trump
administration. How important is that to your business?
Mr. JOHNSON. Well, I am not sure how to answer that one,
sir.
Mr. MEUSER. Okay. The 199A, 20 percent small business tax
relief bonus depreciation.
Mr. JOHNSON. Oh, yes. It is a big part. My business saved
$11,000 last year. Very, very small business, saved $11,000
last year alone.
Mr. MEUSER. And what did you do with that money? You put it
back into your business, grew, became stronger, maybe hired
somebody?
Mr. JOHNSON. Yes. It just goes right back in. It all goes
right back into the business. It isn't some golden nest egg.
Mr. MEUSER. Exactly. Thank you, sir.
I yield back, Mr. Chairman.
Chairman WILLIAMS. Gentleman yields back.
I now recognize Ms. Simon from the great State of
California for 5 minutes.
Ms. SIMON. Thank you, Chair, and thank you, Ranking Member
Velazquez.
And thank you, witnesses, for coming in. I have learned a
lot in the short period of time about real hurdles that I think
it is important for us all to acknowledge.
But before I get into my comments, what I am struck by is
we are talking about regulations and the causation of hurting
main street all over the country. And I am so excited to serve
on this Committee because in this moment in time, clearly,
there are ways that we could be supporting small businesses
with more efficiency.
That said, I find it difficult to talk about regulation
being sort of the poisonous factor in the economy when right
now, in this moment, the SBA just took on work that it knows
that it cannot do.
And for small business owners like the ones represented
here today, because of SBA making the decision to shutter
offices in critical areas in the United States, fire thousands
of workers who are critical to those small business owners
being able to access the small opportunities that we provide,
they are not huge opportunities, they keep businesses moving,
we are firing staff, we are shuttering offices, and, lastly, we
have made the decision to take on federal student loan
provision in the SBA.
You tell me who is directing the ship if we truly are about
supporting mom-and-pop businesses in the United States of
America?
A couple of weeks ago, I hosted an event for over seven
chambers in my district. Those key leaders were clear to me
that it wasn't regulation that was keeping businesses
shuttered. These challenges that these chamber leaders
representing thousands of businesses in my district, they
lifted up that it was the lack of access to capital, and that
already, when they called the SBA, it was hard to get through,
the websites weren't working.
They talked about issues that the SBA could do better in
providing in real time, like translation services. These
chambers talked about the work that they have had to do almost
alone to lift up main streets and broadways across my district
since COVID. None of them talked about overregulation as a
challenge.
So, in fact, three out of four small businesses want
government to do more, to come in, to chip in, to answer the
phone, to follow up on the website inquiry. But, no, we are
shutting offices; no, we are firing staff; no, we are taking on
hundreds of thousands of student loans.
So I ask us, what are we really here doing? What are we
really talking about? If we really cared about small business,
we would be having a very different conversation.
I am curious, to the witness, the Democratic witness--thank
you, sir, for coming today. I know one of the issues that many
of us in the United States Congress are struggling with is with
the shattering of the CFPB.
The work that the organization did, this federal agency
did, was to protect not just elderly people fighting scams, but
the small business owner. And I know the CFPB worked in
conjunction with the SBA.
I am curious, how would you in this moment, sir, explain
how the regulations preventing medical debt, for instance, from
being reported on credit score reports might help a small
business?
Mr. ARENSMEYER. Well, Congresswoman, as everyone at this
table can attest, your personal credit is absolutely essential,
especially when you are starting a small business, and for many
years of growing a small business.
So if medical debt reduces your credit rating, inability to
get loans because of your credit situation, that absolutely
impacts business.
And there is a real intersection, especially with smaller
businesses and a lot of new businesses that have been started,
self-employed businesses, where personal and business debt are
essentially the same thing.
The only regulation, the only provision of Dodd-Frank that
related directly to small businesses was 1071, which was simply
track where you are making the loan so we know, so we get
information, so we can do a better job, so the industry can do
a better job targeting people and making sure there is a
broader range of credits available.
So the CFPB was actually beneficial to small business, both
in terms of 1071 and in terms of helping entrepreneurs avoid
scams and be able to improve their credit.
Ms. SIMON. Thank you. You have just made my point, that we
are making work harder for small business owners. We are making
their lives less equitable in this moment.
And I want to thank all of you all for being here today.
Thank you.
Chairman WILLIAMS. Gentlelady yields back.
I now recognize Mr. Bresnahan from the great State of
Pennsylvania for 5 minutes.
Mr. BRESNAHAN. Thank you, Chairman Williams, for holding
today's hearing.
As many of our witnesses pointed out today, the last 4
years have been brutal for our small businesses, from COVID
shutdowns and supply chain issues to runaway inflation, and we
will focus on today, an overburdensome regulatory environment.
Many of our small businesses were crushed by this wave and
did not survive. Many of those that did survive only did so by
the skin on their teeth.
We must begin now to get back to our small businesses and
entrepreneurs who are disproportionately affected by this
mountain of regulation.
The current state of regulation in America is an
opportunity cost. Just a few months ago I was in the same
situation as our witnesses, balancing my company's budget and
being forced to make tough decisions that affected the future
of my company.
I could give a laundry list of what I wished I could do
with the profits, but too often I was forced to divert funds
and working hours towards compliance of the complex and often
unnecessary network of regulations.
Large corporations can survive this. Another fee to a
lawyer or hiring an additional compliance officer or even a
government affairs team won't make a dent on their income
statement. To our small businesses, however, the legal fees and
fines from regulations are make-or-break costs.
I look forward to working with our small businesses, this
Committee, and the administration to cut the red tape holding
back economic growth in America.
Now I would like to ask a few questions to the panel.
Mr. Johnson, I am sure if your business is anything like
mine, taking a day to come to Washington, D.C., here to testify
means a lot. So I do appreciate you coming here to hear
firsthand what it is like for small businesses to go through.
But I was a heavy highway electrical contractor in my past
life. We had about 350 pieces of equipment on the road.
Are there any specific regulatory challenges that you would
hope to see ease through this administration?
Mr. JOHNSON. Just the EPA mandates. The ones that we have
are not working. I am sure that there are better solutions than
what we had. What we have isn't working. That is our biggest
hurdle, I believe.
Mr. BRESNAHAN. What was it like--I mean, what was it, 2008,
when the dry DPF took into a place? I know we ran a bunch of
Ford F-550 bucket trucks with the old 7.3 inside of them. And,
I mean, constantly we were dealing with the DPF filter and
needing to go into the D-rate situation.
Has the compliance or at least the wet DPF been any more
beneficial or easier to run?
Mr. JOHNSON. No, no. Very troublesome. Repair bills all the
time. Trucks down all the time. One of my constituents in
northern Minnesota had 21 trucks in the logging industry, and
he said he needed 21 to keep 15 on the road every day just
because of the sensors in the cold weather. And these things
don't work, one size fits all doesn't work in our industry.
Mr. BRESNAHAN. I appreciate that and echo your comments and
concerns.
And, actually, the city of Philadelphia implemented a
diesel particulate filter requirement for anything over 50
horsepower where you have to go to a Tier 4 diesel. And if you
can even acquire or procure that specific piece of equipment,
it was hard to come by, specifically during the COVID era.
How have the regulations affected your business' ability to
compete with larger firms?
Mr. JOHNSON. Well, we don't have a lot of DEF trucks, only
a few. I think we are all on the same level. They are suffering
just as much as we are. The big companies still have the same
problems, it is still the same trucks, it is still the same
issues, it is still the same repair bill, it is still the same
employee that goes home that day without work.
Mr. BRESNAHAN. I will redirect my questions to Mr.
Montalban.
I recently had the EPA Administrator, Lee Zeldin, in my
district to talk about the energy demands needed to grow our
manufacturing base and economy.
How have the Biden administration's regulations held back
our energy industry? And what can Congress do to unleash our
domestic energy production to meet the demands of the 21st
century economy?
And the reason I ask that is I am from northeastern
Pennsylvania. Wayne County, by some estimates, has $900 million
worth of natural gas under our own feet. And with the explosion
of AI data centers we are constantly looking for increased
energy production, specifically for electricity.
But can you point to one regulation that totally crippled
our ability to produce domestically?
Mr. MONTALBAN. Thank you, Congressman.
It is very easy. The methane rules and how the methane
rules, both subpart W and the Quato B and Quato C, brought us
into the regulations to put us out of business.
And I would like to touch with the other Members of this
Committee that we are regulated, and we work with the EPA, the
port of oil and gas, the Department of Interior.
Chairman WILLIAMS. Gentleman's time is up.
Mr. MONTALBAN. And so we have many regulatory bodies.
Chairman WILLIAMS. Gentleman's time is up.
Mr. BRESNAHAN. Thank you. I yield back.
Chairman WILLIAMS. I now recognize Mrs. McIver from the
great State of New Jersey for 5 minutes.
Mrs. MCIVER. Thank you, Chairman, and to my
Ranking Member Velazquez, for having this hearing.
And thank you to our witnesses for joining us today.
At a time when small businesses are driving economic
growth, the role of smart, effective regulations has never been
more critical.
Regulations provide the foundation for fair competition,
ensuring that entrepreneurs, no matter their background, have a
real chance to succeed. Strong regulations protect small
businesses from predatory practices, promote access to capital,
and create an environment where innovation can thrive.
In my home district, the 10th Congressional District of New
Jersey, we saw firsthand how regulatory safeguards put in place
by the Biden-Harris administration helped usher in the historic
growth among small businesses.
We must continue to ensure that critical protections remain
in place to protect small businesses against large
corporations, help create jobs, and preserve the American dream
for future generations of entrepreneurs.
With that being said, I have a few follow-up questions to
some of the comments that were made today.
Mr. Hughes, specifically you spent a lot of time talking
about the cost on building and how it hasn't increased.
Do you think that the cost of building was cheaper before
COVID-19?
Mr. HUGHES. Sure, it was. It was cheaper prior. But I don't
feel like there was a connection with COVID that had----
Mrs. MCIVER. Thank you. So basically it was cheaper to
build before COVID-19. You have not mentioned that through all
of your talks about some of the elements of the cost of
housing.
I know in the 10th Congressional District, and in New
Jersey specifically, we have a shortage of about 200,000
affordable housing units specifically that we are dealing with
right now. And many times when I speak to small developers,
they talk about the cost around COVID-19, before COVID-19, and
how materials went up and the cost of that.
But you have not mentioned that in talking about some of
the cost of that, some of the reasons for the cost now based
off the past administration and now.
With the new tariffs being introduced, Mr. Hughes, what
kind of impact do you see, especially on steel and lumber?
Mr. HUGHES. It will have a huge impact because it involves
so many of the materials that we use--copper, aluminum, steel,
lumber.
And like I said earlier, we have dealt with tariffs for
years. That is nothing new for us. And as has been mentioned,
it makes it very unpredictable, hard for us to know where the
cost is going.
Mrs. MCIVER. However, but these new tariffs on lumber
specifically and steel are based upon this current
administration, the Trump administration, not previously.
Mr. HUGHES. Sure.
Mrs. MCIVER. Just want to put that out there on the record.
And then, secondly, I do want to mention something. You
spent a lot of time, and I heard one of my Members across the
aisle talk about it, too, about the waste of some of the
standards that we have now and how that drives costs up, which
I could understand that.
And I think that different agencies, especially ones that
we govern in Congress, should do something more to be able to
help small developers in some of these standards, but it
doesn't mean that the standards are a waste of time.
Specifically, I want to point out for those that may not be
aware and just for their own knowledge the importance of energy
standards.
One, energy efficiency construction. We need that
especially in our urban cities.
Energy savings for renters. I am sure many families would
love to save on energy, especially in my district who are
seeing the costs go up in energy.
Enhancing comfort and health, always very important with
the new energy standards being introduced.
And lastly, reducing the carbon footprint, which is very
important. We need eco-friendly housing in our communities,
especially in those that I represent in New Jersey.
With that, I yield.
Chairman WILLIAMS. The lady yields back.
I now recognize Mr. Downing from the great State of Montana
for 5 minutes.
Mr. DOWNING. Thank you, Mr. Chair.
And thank you to the witnesses.
My background, I have built businesses in highly regulated
industries. You may say I am a glutton for punishment. I have
done it in securities and insurance and alcohol. So I have seen
how heavy-handed regulation can cause problems, not just in
running a business but also in raising capital.
When you are trying to attract capital, if you have a bar
that is always changing in the regulatory environment, it is
hard to get capital if they don't know where that bar is going
to be. You can always plan a business to a bar being someplace.
So I have seen how that--how heavy-handed regulation can
stifle growth, stifle investment, stifle job creation, stifle
innovation, and how ambiguity in this regulation causes the
problems I talked about of attracting capital.
And end of the day, you want to build a business, you need
to somehow find out how to fund it. Money is what drives so
many things in this regulatory environment and cause problems.
I am particularly excited to be joined here by a fellow
Montanan, Mr. Montalban--thank you for being here--deeply
rooted in Montana's energy sector, and I appreciate that.
Thank you for being here today.
And I want to talk to you about how the last administration
has deeply hampered American energy production, hurting our
ability to provide affordable, reliable, resilient power to our
communities. I think about that all the time in energy.
Reliable, affordable is important to building that American
dream.
So I want to just quickly, how did the Biden
administration's overbearing environmental regulations make it
difficult for Montana oil and gas producers like yourself to
operate?
Mr. MONTALBAN. Thank you, Congressman Downing.
The methane rules with subpart W and Quato B, Quato C
bringing us into testing of all the wells in Montana was
critical and very damaging to the small independent.
But the biggest one that we are seeing now is the EPA with
the underground injection control program and holding up
permits in Region 8 in Denver, Colorado.
Mr. DOWNING. Thank you.
Last year, the Biden administration's Bureau of Land
Management, BLM, released its final fluid mineral leases and
leasing process rule. This rule significantly increased the
financial bonding requirements for oil and gas operations in
order to cover for the abandonment of wells.
Again to Mr. Montalban, how has this rule
disproportionately impacted your business and smaller oil and
gas operations across our country?
Mr. MONTALBAN. Thank you again, Congressman Downing.
As we mentioned earlier, a single well bond went from
10,000 to 150,000; multiple well bond went from 25,000 to
500,000.
We cannot by surety bonds, you are well aware of that.
Mr. DOWNING. Right, right.
Mr. MONTALBAN. So these are cash bonds.
And on the other side of that, we are also well bonded on
the EPA, the BLM, the State of Montana side.
So the bottom line is that that has taken away all
possibilities of buying and selling transaction on federal
lands.
Mr. DOWNING. Thank you.
Do you believe that the BLM under the Biden administration
adequately consulted and took into consideration the concerns
of the oil and gas producers while drafting this rule?
Mr. MONTALBAN. Congressman Downing, indeed, great question.
I can give you an example of Bill Fulton out of Billings,
Montana, that contacted the BLM during this process, and he
wanted more time to give his partners and royalty owners time
to answer and ask questions about this, and they would not even
allow him to do that.
Mr. DOWNING. Thank you.
Going back to one of my themes, on the American Dream, I
think of the American Dream as being able to buy your first
home, and I wonder how young families are able to do this.
So I am going to move on here to Mr. Hughes.
One of the things that struck me in your testimony is
pointing out that over 100,000 households would be priced out
of the housing market if the median new home price in the
United States raises by a thousand dollars. This is while 75
percent of U.S. households already are unable to afford a
median price new home. That is incredibly concerning to me.
So, Mr. Hughes, in this environment, do we need more or
less regulation in the home construction industry?
Mr. HUGHES. Well, obviously, we think we need a lot less.
And there are other things that we could focus on rather than
continuing to increase the regulation.
The reality is that homes that we have built in the last 20
years really performed very well. But the existing stock is
where a lot of our energy is wasted. And we would like to see
more focus put on that.
Mr. DOWNING. Right. And in the Biden-Granholm Department of
Energy, they created numerous restrictive energy efficiency
standards for household appliances, like refrigerators, air
conditioners, lighting.
How have these regulations impacted the home builders and
the average American family's ability to buy a home?
Mr. HUGHES. Well, just the increased regulation on
appliances is a whole nother can of worms that we could talk on
forever. And we do see those starting to back off some.
Mr. DOWNING. I have run out of time. Thank you for your
answers.
I yield, Mr. Chair.
Chairman WILLIAMS. The gentleman yields.
I now recognize Dr. Morrison from the great State of
Minnesota for 5 minutes.
Ms. MORRISON. Thank you, Mr. Chair, for holding this
hearing.
And thanks to our witnesses for your testimony.
I acknowledge that regulations can create additional
requirements for small businesses, and as a physician, I am
also acutely aware of the important role that regulations play
in keeping Americans safe and healthy.
Heat is a leading cause of weather-related deaths in the
United States. Excessive heat in the workplace can cause heat
stroke and even death if not treated properly. Heat injury and
illness prevention standards help prevent workers from
succumbing to heat-related illnesses and being hospitalized.
Flooding is the most frequent and costly natural disaster
in the United States. Flood risk management standards help
reduce the effects of current and future flood hazards, helping
prevent our homes from being destroyed by flooding.
As climate change intensifies storms and increases the
severity of hurricanes, we need federal standards to ensure
that our communities are more resilient to extreme flooding.
Many EPA regulations ensure that toxins do not end up in our
environment, our air and our water.
EPA's underground injection program's regulations do ensure
that the brine from oil and gas extraction that contain toxic
metals and radioactive substances does not contaminate people's
drinking water.
These are just a few of the many examples of why
regulations, when implemented correctly, are important tools
for reducing harm.
One way we can reduce the burden of regulations on small
businesses is by creating a consistent and predictable
regulatory environment.
Mr. Arensmeyer, during your testimony you said that small
business owners across the country look to their
representatives in government to help provide certainty,
predictability, and stability in the business environment in
which they operate.
How does the unpredictable and haphazard rolling back of
regulations impact small businesses and affect their ability to
plan for the future?
Mr. ARENSMEYER. Well, small businesses, as we have said,
really need as much predictability and certainty as possible.
And we all recognize there may be need to address regulations.
But once regulations are in place and you have kind of gone
through the analysis, you want to lock them in. And small
businesses then will adapt.
And, as heard, it is sometimes costly for them to change.
So if you have certain regulations governing a certain way to
do things and all of a sudden you come in and say, well, maybe
that wasn't so good, we are going to change it, that is
actually a cost to small business.
So we need to look at not only the sort of cost of the
original regulation, but you need to look at costs of going in
and tinkering with that.
Ms. MORRISON. Thank you, sir.
In addition to introducing regulatory uncertainty, the
Trump administration's trade policies have been erratic and
unpredictable, I think, at best. Proposing, then pausing, then
ultimately implementing tariffs on Canada and Mexico has
created uncertainty for small businesses and consumers.
I worry that President Trump's volatile trade policies will
have dreadful consequences for our economy, with President
Trump himself admitting that his tariffs will cause a period of
transition.
Small businesses often operate on smaller margins than
larger businesses, so a period of transition could be enough to
force small businesses to close their doors permanently.
Mr. Arensmeyer, again, could you describe how economic
periods of short-term pain caused by tariffs will be especially
impactful on small businesses?
Mr. ARENSMEYER. Well, we have already seen a whipsawing of
this dating back even before President Trump took office. Small
businesses all of a sudden were saying we have got to go out
and buy extra inventory, which is also inefficient in many
cases; in some cases the businesses don't have the cash to do
that.
And since President Trump has come into office, we have
seen this whipsawing back and forth. Even today--tomorrow, I
guess, is the big day--we are not really sure what is going to
happen.
And as I mentioned, you have got so many different elements
in the supply chain that are impacted by these; in many cases
for small businesses might have multiple ones. They don't
really know, depending the country it comes from, depending on
what the product is. We have got an ice cream shop in our
network, and he gets his sprinkles from Canada. I mean, who
knew?
So it is everywhere. And the more volatility you have, the
more uncertainty based on country, based on product. It just
makes it impossible for small businesses to do any kind of
planning.
Ms. MORRISON. Thank you, sir.
Thank you, Mr. Chair, and to all of our witnesses.
I just want to end by saying that I hope that we can all
agree that we should reduce regulations where costs outweigh
the benefits and cut down on unnecessary bureaucratic red tape,
and that we should issue this in a responsible--we should
approach this in a responsible manner. And I am open to working
with my Republican colleagues to do just that.
And with that, thank you, Mr. Chair. I see that my time has
expired, so I will yield back.
Chairman WILLIAMS. Gentlelady yields back.
I now recognize Mr. Finstad from the great State of
Minnesota for 5 minutes.
Mr. FINSTAD. Thank you, Chairman Williams, and thank you
for holding this Committee hearing today.
Thank you to our witnesses for taking time away from your
businesses to come here and share your stories with us.
As a small business owner myself, I have seen the impact of
regulations and the mounting compliance costs and what they can
have on a small business.
The Biden administration alone--and we have heard it over
and over again today--has added in the last 4 years over $1.8
trillion in new regulatory compliance costs.
But a point that hasn't been talked about that is as
important and as devastating, I think, to small businesses is
over the 356 million hours in paperwork that it has caused
small businesses. The last 4 years have been the most
burdensome regulatory environment in history.
In 1980, Congress passed the Regulatory Flexibility Act to
protect small businesses from these type of burdens.
Unfortunately, the Biden administration disregarded the law to
push a far left agenda that has hurt our small businesses and
communities.
So with that being said, I want to talk to a fellow
Minnesotan, Mr. Johnson. And that couldn't be more of a
Minnesota name. There are about 10,000 Mr. Johnsons in
Minnesota.
So, Mr. Johnson, as a fellow Minnesotan small business
owner, you know firsthand the impact of overregulation and what
it has had on small business owners. Last year the House passed
my legislation, the PROVE IT Act, to strengthen the RFA and
protect small businesses from these impacts.
In part, the PROVE IT Act would force agencies to consider
the true cost of their regulations, force agencies to comply
with the RFA, and give small businesses a seat at the table in
the regulatory process. If agencies fail to comply with the
law, small businesses would be exempt from that regulation.
Do you think, Mr. Johnson, that federal agencies should be
required to comply with existing law that requires them to
limit their impact on small businesses?
Mr. JOHNSON. Yes. Agencies are not lawmakers. They need to
be held accountable when they disregard protections for the
small businesses that have been enacted by Congress and signed
by the President.
Mr. FINSTAD. So you have all talked about different
regulations maybe in general, but there has been some
specifics.
Mr. Johnson, do you know by name the faceless, maybe
nameless bureaucrat that is establishing those rules or
regulations that you have to comply with?
Mr. JOHNSON. No, sir, I do not.
Mr. FINSTAD. So come election time, you can't throw them
out of office?
Mr. JOHNSON. No, I cannot.
Mr. FINSTAD. Right. Okay.
In your opinion, do you believe agencies should consider
both the direct and indirect costs, like the paperwork hours,
that their regulations put on small businesses?
Mr. JOHNSON. Yeah. The true cost of regulations is actually
behind the scenes in all the time it takes to comply with it,
the paperwork hours and just simply the filings and filings and
filings that never end.
Mr. FINSTAD. So, Mr. Johnson, as I said earlier, I am a
small business owner myself. And I would assume it is probably
similar to you; you don't have a stable full of lawyers,
compliance officers, regulatory specialists. You go down the
list.
Mr. JOHNSON. All of the above, right here.
Mr. FINSTAD. So it is safe to say that you are the janitor,
the carpenter, the mechanic, the HR professional, the legal
adviser, the master time card keeper, all of it.
Mr. JOHNSON. Absolutely. And what I can't do, I have to
hire done with compliance companies. You have to have
compliance companies to keep you compliant now because of all
the rules.
Mr. FINSTAD. So, lastly, Mr. Johnson, do you think small
business owners like yourself should have a larger voice in our
nation's regulatory process?
Mr. JOHNSON. Yes. I believe we should be heard. And maybe
they should be tailored to meet our needs, not just a one size
fits all.
Mr. FINSTAD. Yeah, and that is a good point. And I heard
some of my colleagues in the minority that had talked about
regulations as a way to level the playing field. And the fact
of the matter is, if you are a small mom-and-pop business,
Small Business America, it isn't leveling the playing field,
because you are the carpenter, the janitor, the timekeeper, the
HR director, the everything, and you don't have the man-hours,
where maybe a large business can take that cost over their
bandwidth. And so it does put us, as a small business, on an
unlevel playing field.
So I want to just thank you all again for being here. I
know this costs time and money and effort. I am sure some of
you woke up this morning making sure your employees were at
work, where your trucks were heading today, and I know that is
a stressful situation. So I appreciate you taking time.
Mr. Chair, I would also like to submit into the record a
letter from the Associated Builders and Contractors, a letter
of support of the PROVE IT Act.
Chairman WILLIAMS. So moved.
Mr. FINSTAD. Thank you, Mr. Chair.
And, again, thank you, witnesses, for being here.
I yield back.
Chairman WILLIAMS. Gentleman yields back.
I now recognize Ms. Scholten from the great State of
Michigan for 5 minutes.
Ms. SCHOLTEN. Thank you, Mr. Chair.
Gentlemen, thank you so much for being here.
Two years ago a groundbreaking story broke out in my
district about children, some as young as my two boys, working
in factories where foods like the breakfast cereals that many
of us eat across America, Lucky Charms and Cheerios, are
packaged.
These children were handling machinery that could tear
their fingers off. The company used a staffing agency to hire
workers for this plant, but did not require the agency to
verify ages against Social Security numbers.
Regulations keep us safe. Regulations protect some of the
most vulnerable among us. Regulations protect our children.
Regulations themselves are not the enemy. But regulations that
are overly burdensome, overly cumbersome, and don't do the work
that they set out to do are the problem, and we need to be
clear-eyed when we talk about that.
Mr. Arensmeyer, how can Congress do a better job of
ensuring businesses know the, quote, ``rules of the road'' when
it comes to regulations that keep workers safe?
Mr. ARENSMEYER. Well, a couple things.
First of all, Congress has an oversight role. And we have
heard again that the RFA may not be working all that well.
Congress has an opportunity to identify that and to make
suggestions.
Congress can also make sure there is enough funding to help
small businesses, to support the Office of Ombudsman at the
SBA, to make sure small businesses understand and get the
support that they need.
A lot of the time some small businesses simply need to
know--they need help, they need understanding. So making sure
that those resources are in place.
So it is the oversight and making sure that there is enough
money being allocated to make sure the regulations are being
implemented in a fair way.
Ms. SCHOLTEN. Thank you.
My district in west Michigan is home to one of our State's
46 Community Development Financial Institutions, or CDFIs.
These CDFIs have deployed billions in loans in my home State,
resulting in over 41,000 permanent jobs and 27 million square
feet of real estate development. There are about 25,000 small
and micro businesses in Michigan that have benefited from the
support of a CDFI.
Mr. Arensmeyer, coming back to you. Your testimony
highlights how the Trump administration's recent executive
order to dismantle CDFI funds which provide funding to CDFIs
around the country would impact small firms.
If the CDFI Fund cannot support CDFIs like the one in my
district, what kind of impact can we expect on our local
economy?
Mr. ARENSMEYER. Well, small businesses--the marketplace has
frozen out a lot of businesses who don't have the collateral,
don't have the credit score of some better-off businesses. And
so there are government programs that support that.
And the CDFI, the CRA, the Community Reinvestment Act,
provides for private financial institutions to put money into a
system where that is more mission-driven. But the CDFI Fund
also supports that.
And, again, it is a cut that is directly impacting the most
underresourced businesses. There is no other way to put it. And
we are pleased to see that in the Senate there is actually
bipartisan pushback on that, really pretty strong bipartisan
pushback.
So hopefully--we are hoping that perhaps the House will
also take a look at that because these are--CDFIs exist in
every red, blue, and otherwise district in this country.
Ms. SCHOLTEN. Thank you.
One last comment and question for you.
Another thing that regulations can do is provide a stable
economic environment helping people to understand that there
are rules of the road to follow.
I just came back from hosting two in-person town halls in
my district last week, hundreds and hundreds of people showing
up at each one.
My constituents are worried about the myriad of
uncertainties coming out of this administration, one of them
being the detainment of individuals who are legally working
here, detained just because of the color of their skin, they
happen to have a tattoo that, God forbid, promotes autism
awareness or celebrates their mom and dad.
In Michigan, our service and hospitality industries rely
heavily on immigrant workers.
Mr. Arensmeyer, can you speak to the economic impact these
industries will face if they are unable to find and keep the
workers that they need?
Mr. ARENSMEYER. Well, small businesses are already facing
huge pressures on workforce coming out of the pandemic, and
that has continued. And now to not only have employees rounded
up, but the fear of that happening so they don't even come to
work has created--it has impacted operations. And, again, it
gets back to this whole issue of certainty, if you don't know
that you have got a workforce.
Chairman WILLIAMS. The gentlelady's time is up.
Ms. SCHOLTEN. Thank you, Mr. Arensmeyer.
Mr. ARENSMEYER. Big impact.
Ms. SCHOLTEN. Appreciate it.
Yield back.
Chairman WILLIAMS. Gentlelady yields back.
I now recognize Ms. Goodlander from the great State of New
Hampshire for 5 minutes.
Ms. GOODLANDER. Thank you, Mr. Chairman.
And thank you to our witnesses for being here today.
I want to pick up where you just left off, sir. You, in
your written testimony, pointed out that the National
Federation of Independent Business has released last month its
uncertainty index, which rose to the second-highest reading on
record last month.
Can you speak to--I have traveled all across New Hampshire.
If I had to capture the word that describes how small
businesses are feeling across my State, it is ``uncertain.'' It
is the crippling uncertainty of a trade war with Canada, our
neighbor to the north. New Hampshire shares a 58-mile border
with Canada. So many of our small businesses rely on that
partnership, which has been a model for the world.
Can you tell us more, why do you think we are at record
high levels of uncertainty in this country?
Mr. ARENSMEYER. Well, for all the reasons you have stated.
The fear of not knowing what is happening with tariffs, the
attacks on a workforce that small business owners need, the
gutting of programs that are vital to small businesses.
And it is coming like a tsunami. I mean, this is not like a
little bit here, a little bit there. This is like in the last
two months, it has just been hurtling at small businesses.
And they are really, I will tell you, they are really
scared. We talk to them every day. They are petrified. And they
don't know where it is going.
And as I said before, we have this big sort of event
tomorrow and they don't even know what is going to happen. The
administration--the President could change his mind and decide
I am not going to have this tariff this month; maybe next
month.
So it is--we have never seen anything like this before.
Ms. GOODLANDER. I heard from one of my constituents in
Hopkinton, New Hampshire, who wrote to me to say that the
threat of a trade war and the tariffs that have been imposed so
far are causing customers to cancel projects and suppliers to
preemptively raise prices for tariffs that may or may not
materialize.
Can you talk to us about how consumers are going to feel
the pain of a trade war with Canada?
Mr. ARENSMEYER. Well, absolutely. If this impacts
businesses' ability to deliver products, then that is going to
impact consumers.
And one way or the other, you are going to see price
increases. The whole notion that somehow everything we are
doing is to bring down inflation, it is the exact opposite. If
you can't get workers, if you are getting huge price hikes and
you don't know if you are going to get huge price hikes and so
you are making business decisions that are inefficient,
ultimately, that is going to be reflected in higher prices as
well. So consumers are absolutely going to feel the pain.
Ms. GOODLANDER. We have got a housing crisis in New
Hampshire, and we have got a real imperative to build tens of
thousands more homes in the next 5 years. This is a problem
that I have found partnership with people at every level of
government in New Hampshire, and it is a problem that I am
really committed to addressing.
There was some talk about the median single family home
price in this country. In New Hampshire, it is above $500,000.
I wanted to ask you, Mr. Hughes, I am all about cutting red
tape and creating efficiencies wherever we possibly can. If you
had to advise this Committee on the top three changes that we
could make to make home building more efficient and effective
in this country, what would you prioritize?
Mr. HUGHES. First of all, I keep going back to codes, that
there is no question the increase in energy codes or IECC,
energy and conservation codes, that was the sharpest increase
that we have experienced in years. So we would like to roll
that back, most of all.
Ms. GOODLANDER. Has the threat of a trade war with Canada
had an impact on home builders in this country?
I want to submit, Mr. Chairman, for the record an article
from the Boston Globe this month entitled, ``Tariffs could
drive up New Hampshire housing costs even more, developers
warn.'' Your organization is quoted here.
Home builders in my State have sounded the alarm on the
costs that this trade war is going to exact on home building
and on homebuyers.
So can you please speak to that?
Mr. HUGHES. Sure. Like I have mentioned earlier, we have
dealt with tariffs for years. And it is going to be another 25
percent. It is going to be terrible, to say the least. But we
have had to deal with it for decades because----
Ms. GOODLANDER. What would you say is the closest precedent
that we should look to? Because, as I understand it, we have
never seen the threat of this kind of trade war with Canada
before.
So when you say we have dealt with this before, what should
we be looking to?
Mr. HUGHES. We have just dealt with tariffs on Canadian
lumber because--and this goes back into the 1990s with the
first softwood lumber agreement. And it was all over dumping of
products from Canada that harmed domestic lumber mills. And so
we have been paying those tariffs forever.
Now, to get into the particulars or the weeds about what is
fair and what is not fair between the two countries, I am not
that expert. But like I say, it is--yeah, we are very concerned
about additional tariffs, but we have been dealing with it for
a long time.
Ms. GOODLANDER. Thank you. The people of New Hampshire
share your concern.
And with that, Mr. Chairman, I yield back.
Chairman WILLIAMS. Gentlelady yields back.
I now recognize Mr. McGarvey from the great State of
Kentucky for 5 minutes.
Mr. MCGARVEY. Thank you, Mr. Chairman.
Appreciate everybody being here today.
Look, I am going to read the headline from The Wall Street
Journal in a story written last night on its website. It just
says simply, ``U.S. stocks post worst quarter since 2022 on
threat of trade war.''
In Q1 of 2025, the S&P 500 dropped 5.1 percent and the
NASDAQ fell 10.3 percent and the DOW sunk 2.3 percent.
On Sunday of this week, Goldman Sachs predicted that higher
tariffs, weak economic growth, and greater than expected
inflation would depress the S&P another 5 percent and just
might cause a recession. In fact, they gave that a one-in-three
chance.
It is not just Wall Street feeling this. I think what we
know in this Committee, that main street feels this too. Data
released last week from the University of Michigan's Consumer
Sentiment Index shows main street feels it and that Americans
are more worried about their economic well-being than at any
time since the pandemic.
Concerns about the job market are greater than they have
been at any point since 2009. I know this. I spoke to a home
builder in Kentucky over the weekend who said they are raising
their prices, and he feels a recession is coming.
This is not a golden age that is being ushered in.
And people's anxiety right now doesn't just come from
regulations. Go to any small business in any district in
America, and I promise you, they are going to find regulations
and tell you about regulations they don't like and don't make
sense.
But I think what they will also tell you is they want
certainty. And so what you are seeing right now out of the
White House is the opposite of certainty. You are seeing a
reckless and revelrous approach to governing, and it is not
just putting uncertainty in the regulatory environment; it is
putting in every single part of our economy. Of course it is.
Every week right now we are seeing people who work for the
President go on TV and say they have no idea whether he is
going to follow through on his threats to annex Greenland,
impose a 200 percent tax on Guinness, or get rid of FEMA.
If his closest people don't know what he is doing, how do
we expect the small business owners in our district to know
what is going to happen?
So, Mr. Arensmeyer, a question for you. What do you think
is toughest for small businesses to operate under, smart, well-
crafted policies that agencies take years to write and
implement or the Trump administration's whiplash economic
policies that are making everything more expensive, destroying
supply chains, and cutting off critical export markets?
Mr. ARENSMEYER. Well, we have never seen anything in the 20
years I have been running the Small Business Majority, we have
never seen anything like this in such a short period of time.
Our own--we just got these numbers yesterday, didn't make
it into my written testimony. The confidence levels are just
plummeting in the regular surveying we do of our network.
So compared to a smart regulatory system, there is no
choice. I mean, this is really--I have never had a small
business--and, yes, there are regulations, a lot of them are
State and local. And we are very active in pushing back on
regulations at the local level or State licensing regulations
that are too onerous to keep small entrepreneurs out.
But overall, regulations have never been that important in
terms of the lists of stuff. And right now, believe me, we are
not hearing a word about regulations from anyone out there. We
are hearing about tariffs, we are hearing about mass
deportations, we are hearing about slashing of programs, and
that is where it is at right now.
Mr. MCGARVEY. Yeah. And this brings me no joy to bring this
report.
And at the end of the day, I root for America. I want our
economy to be doing well. I want our trade policies to be doing
well. I want our small businesses to be doing well and people's
401(k)s to be doing well. They are not right now under the
uncertainty that is being caused by this administration.
I know this. Companies in my district are already hurting
from this trade war.
Just quickly about the trade, tariffs aren't good or bad.
Tariffs are a tool. A hammer is a tool. It is a good tool for
putting a nail in a wall. It is not so great to use it to fix
your iPad. How you use these things matters.
And these indiscriminate trade wars right now we are
feeling the impact of in my district, the bourbon industry in
particular. Under a 25 percent retaliatory tariff from Trump's
first term as President, their exports were cut in half. Now
they are talking about a 50 percent tariff that is set to go
into effect tomorrow.
And he is raising all of our prices and hurting the
economy. And for what? For what? A tax package that isn't going
to help main street. It is going to help the richest executives
and companies on Wall Street.
With that, Mr. Chairman, I yield back.
Chairman WILLIAMS. The gentleman yields back.
I now recognize Mr. Jack from the great State of Georgia
for 5 minutes.
Mr. JACK. Well, Mr. Chairman, I appreciate you saving the
best for last. I am very grateful for this hearing.
And if I could, Mr. Hughes, I would love to start my line
of questioning with you.
First and foremost, want to thank your association for its
leadership in trying to generate affordable homes and to make
housing more affordable for my constituents and, really, all
Georgians.
But specifically, I really welcome your testimony. And I am
curious, how would you say burdensome regulations limit your
ability to meet the growing demand for single-family homes, and
what policy changes would most effectively encourage additional
private investment in this sector?
Mr. HUGHES. Well, just the cost and affordability of homes
is the biggest hurdle that we all have to deal with. And higher
interest rates right now. Of course, we expect those to
fluctuate.
But just the overburdensome of--and I hate to keep going
back to codes, but that is the thing that has affected us the
most in the short period of time.
Mr. JACK. Helpful context.
And in your testimony, you spoke to something that means a
lot to me, and that is the Congressional Review Act. You talked
about specifically National Association of Home Builder's
support for H.J. Res. 20, which I will talk about in a moment.
But would welcome thoughts and really open it to the panel
on how Congress can better use the Congressional Review Act to
make housing more affordable.
Mr. HUGHES. I am not that expert. So if you have someone
else, that would be great.
Mr. JACK. Sure.
Anybody else want to take that question?
Well, I will speak to--in your testimony you outlined
support for H.J. Res. 20.
And just to walk the witnesses through, we repealed a
regulation that would have effectively outlawed a very specific
type of tankless water heater.
Rinnai America Corporation is a company within my
congressional district that is headquartered in my hometown of
Peachtree City. And it about 4 years ago opened a state-of-the-
art facility in Griffin, Georgia, that manufactures what is
called a gas-fired instantaneous water heater, noncondensing
tankless water heater, but regardless, a tankless water heater.
And the Biden administration issued a rule in late
December, on December 26, the day after Christmas, that would
have effectively outlawed production of this type of water
heater, thus endangering about 500 jobs within my congressional
district.
And I am proud to report that the House took action on this
in late February. Eleven Democrats voted along with House
Republicans to overturn this rule. But to me it is an effective
usage of the Congressional Review Act, and I welcomed that from
your testimony.
If I can ask just the panel writ large, and we will start
just going down the line--since we only have 2 minutes left--
but if there was one regulation that you think that Congress
could address that would help your industry, we would welcome
your thoughts as we go down.
Mr. MONTALBAN. Thank you, Congressman Jack.
Made it very clear today that those are the methane
emission rules and regulations against the small independents.
And want to tell you that the small independents of America are
excited, we are happy, we are looking forward to develop the
natural resources of this great country.
Mr. JACK. Thank you.
Sir?
Mr. JOHNSON. I guess 20 percent small business tax
deduction is probably the most important one to me right at
this moment.
Mr. JACK. Wonderful. Thank you.
Mr. Hughes?
Mr. HUGHES. I am sorry. I thought I had already commented.
And the question again?
Mr. JACK. I was just saying if there is--just in closing--
if there is one regulation you would love to see us work to
relieve that burden for you, what would it be?
Mr. HUGHES. Well, I hate to keep going back to the
burdensome codes that have hit us all at once. But to be
honest, I would like to see, like Mr. Johnson, I would like to
see the cost of fuel come down.
Took a picture the day Mr. Biden went into office, fuel in
my area was $1.87 a gallon. That has had a huge impact to our
industry, whether it is gas or diesel fuel.
Mr. JACK. Wonderful.
And, Mr. Arensmeyer?
Mr. ARENSMEYER. Well, we heard a lot about the cost of
housing, so I am sure there are some regulations out there
related to housing that could be looked at, absolutely. I am
not an expert like Mr. Hughes on that, but I am sure there are,
and I think that is a big issue.
The one thing I want to mention, Mr. Johnson mentioned the
TCJA, the 199A, and also one of your colleagues mentioned it. I
want to be clear, we support 199A, we support reforming it and
making it where the benefit is benefiting those at the bottom.
Right now 73 percent of the benefit goes to the top 4
percent of pass-through entities. We don't want to eliminate
it. We want to reform it. I want to be very clear about that.
Mr. JACK. Well, thank you all very much for testifying. I
think the whole Committee appreciates your thoughtful comments
today.
And I yield back to our distinguished Chairman, Mr.
Williams.
Chairman WILLIAMS. Gentleman yields back.
And I would like to thank our witnesses for your testimony
today and for your being with us.
Without objection, Members have 5 legislative days to
submit additional materials and written questions for the
witnesses to the Chair, which will be forwarded to the
witnesses.
And I want to ask the witnesses to please respond promptly
if that happens.
No further business, without objection, this Committee is
adjourned.
[Whereupon, at 12:20 p.m., the Committee was adjourned.]
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