The U.S. Department of Energy (DOE), as announced in the June 17, 2016 Federal Register publication of its proposed rule for manufactured housing energy standards, held a public meeting regarding that rule at DOE headquarters in Washington, D.C. on July 13, 2016. This proposed rule — as MHARR has already shown and will extensively detail in upcoming written comments to DOE — is the fatally-flawed product of a sham “negotiated rulemaking,” coordinated by DOE, non-MH special interest groups and the industry’s largest manufacturers in the wake of the “impermissible” selective leak of a 2011 “draft” proposed DOE manufactured housing rule to MHI and others, and the rejection of that “draft” proposed rule by the Office of Management and Budget (OMB).

The July 13, 2016 meeting, which provided an overview of the proposed rule and offered participants a preliminary opportunity to raise issues for DOE and pose questions to DOE consultants involved in the development of the proposed rule’s cost-benefit analysis, was attended by representatives of MHARR, MHI, the Community Owners’ Business Alliance (COBA7), the HUD manufactured housing program (including program Administrator Pamela Danner, for part of the meeting), special interest groups that participated in the DOE Manufactured Housing Working Group (MHWG) and others.

As it has consistently, MHARR, in its opening presentation and in its closing remarks, advised DOE that it will oppose the proposed rule as being irreparably flawed in-and-of-itself, as well as being the product of an unacceptable, scandalous standard-development process. The extreme costs of the proposed rule and their potentially devastating impact on smaller industry businesses – and particularly land-lease community operators that purchase manufactured homes – were also stressed by COBA7’s representative.

MHI, however, for its part (and through its research affiliate, the Systems Building Research Alliance – SBRA) – after: (1) helping concoct the sham “negotiated rulemaking” process in coordination with DOE and the aforesaid special interest groups; (2) providing much of the technical input considered by the MHWG; and (3) voting in favor of the MHWG “negotiated” recommendation that formed the basis for the current DOE proposed rule, backtracked, in part, pointing to significant “flaws” in the proposed rule, but ultimately stated that it could “live with” the rule, which would add thousands of dollars to the cost of every new manufactured home.

The meeting, although typical practice for DOE when issuing new proposed “energy conservation” rules, was noteworthy for several reasons.

First, the meeting was attended by four representatives from the U.S. Justice Department, the agency that would be responsible for defending any final DOE manufactured housing rule in court. And MHARR, indeed, has stated – consistently – that it is committing to opposing the rule in all available forums.

Second, a line of questioning by MHARR confirmed what was already evident from the supposed “cost-benefit analysis” contained in the proposed rule and the more detailed DOE “Technical Support Document” (TSD). Specifically, the cost-benefit analysis for the rule is skewed to the point of being arbitrary at best and deceitful at worst.

Among other things, DOE’s consultants admitted, under questioning, that the rule’s calculation of life cycle costs for the proposed rule (i.e., its consumer-level calculation of the time that it would take for operating “savings” from the rule to exceed the significantly higher purchase-prices that it would cause), did not account for the millions of consumers who would be excluded from homeownership entirely under the proposed rule. For those consumers, the DOE rule would have no “benefits,” only costs that are not otherwise captured within the DOE “cost-benefit analysis” at the consumer level and would significantly alter that analysis, if accounted for, to a much higher “cost” component at both the consumer and “national” impact levels.

This major flaw in DOE’s cost-benefit analysis, combined with the failure of that analysis to capture costs related to testing, enforcement and regulatory compliance (among other fatal flaws), means that the analysis nets every conceivable “benefit” of the rule against only part of the rule’s costs, an “apples and oranges” approach that is statistically invalid and fails to satisfy legal requirements applicable to all federal rulemaking activity.

With even its supporters unable to defend this proposed rule on any kind of credible basis, and given the crushing impact that this rule – if adopted – will have on consumers, the industry (particularly its smaller businesses) and the availability of affordable manufactured housing for all Americans, it is critical for all industry members, as well as consumers and those individuals and groups with an interest in affordable housing, to get behind the effort to stop this rule in its current form (or anything close to that form). The industry especially – having been lulled into a false sense of security by MHI’s support for DOE – has been complacent far too long regarding a rule that is genuinely draconian and will have a drastically negative impact.