Fall 2013 Semiannual Regulatory Agenda Report and Analysis

MHARRThe Fall segment of the federal 2013 Semi-Annual Regulatory Agenda (SRA), detailing pending and anticipated rulemaking activities, and  published in November 2013 by the Regulatory Information Service Center, has now been fully analyzed by MHARR as set forth below.  

The Fall segment updates the initial 2013 federal SRA analyzed by MHARR in a memorandum dated January 8, 2013. As usual, the SRA includes significant information pertaining to the federal regulation of manufactured home construction and safety – including one entry that, on its face, is not directly related to HUD Code manufactured housing, but could have an extremely negative impact on the industry and consumers. 

I.  Department of Housing and Urban Development (HUD)

The SRA shows five HUD regulatory actions pertaining to manufactured housing, with projected rulemaking timeframes as follows:

A.  Affordability Determination – Energy Efficiency Standards (Proposed Rule: Unknown)

      B.  Manufactured Housing Program Fee (Proposed Rule: March 2014)

C.  On-Site Completion of Construction of Manufactured Homes (Final Rule: April 2013)

D.  Installation Standards–Ground Anchors (Final Rule: February 2014)

E.  Manufactured Housing Construction and Safety Standards (Final Rule: December 2013)

Item A:  Potentially the most significant pending action is a rulemaking that, on its face, does not even pertain to manufactured housing. Item A, above, involves a joint HUD-Department of Agriculture (USDA) “affordability determination” under the Energy Independence and Security Act of 2007 (EISA) — the same law that requires the Department of Energy (DOE) to develop energy conservation standards for manufactured homes in “consultation with HUD” and with “further counsel from the Manufactured Housing Consensus Committee” (MHCC). 

As described in the SRA, EISA section 481 requires HUD and USDA “to adopt the most recent revisions to the 2006 International Energy Conservation Code [IECC] … subject to a determination that the revised codes do not negatively affect the availability or affordability of new construction of single and multi-family housing covered by the Act….”  This language is very similar to EISA section 413, which requires DOE to develop new manufactured home energy conservation standards (in consultation with HUD and the MHCC) “based on the most recent version of the International Energy Conservation Code … except in cases in which the Secretary finds that the code is not cost effective.”  (Emphasis added).  Thus, section 413 requires an IECC “affordability” determination much like that required by EISA section 481.  The SRA notice is significant because it states HUD’s intent to issue a proposed section 481 rule finding no adverse consequences from the adoption of IECC, based on absolutely no independent analysis or information whatsoever. Instead, the notice indicates that HUD will defer to and rely upon a “computer model” developed by DOE. 

Such deference to DOE on the cost implications of the IECC, with no effort to independently determine the legitimacy or accuracy of that data, should raise a red flag for the industry and homebuyers – which neither can afford to ignore — because it potentially signals similar HUD deference in the context of EISA section 413 and manufactured housing.  Indeed, this indicates that instead of playing the active role contemplated by Congress in EISA section 413 (and the Manufactured Housing Improvement Act of 2000) in maintaining and preserving the affordability of manufactured housing — in conjunction with the expert analysis and input of the MHCC – HUD may take the route of least resistance and simply accept whatever “findings” are concocted by DOE, which has already engaged in regulatory misconduct by selectively leaking a “draft” of the proposed rule.  With this advance warning, the industry and consumers should demand accountability from HUD based on full compliance with section 413 (and the 2000 reform law), including MHCC review, debate and recommendations before any DOE rule is published, as MHARR has maintained consistently since the enactment of EISA – and will do so again, on this critically important matter, shortly.    

Item B: This item relates to a proposed increase in the program label fee for manufactured homes, with a proposed rule projected for March 2014.  This is not a new issue, as HUD has referenced such a fee increase in its annual budget justification documents for several years.  As MHARR has consistently maintained, however – most recently in its testimony at the February 1, 2012 congressional oversight hearing regarding the implementation of the Manufactured Housing Improvement Act of 2000 — any such increase must be “specifically justified by HUD and approved in advance by Congress as required by the 2000 reform law (see, section 620(e)).” Furthermore, the additional program revenues generated by any such fee increase must be allocated in a manner that is consistent with the priorities and mandates of the 2000 law, in order to (among other things) – provide additional revenue to State Administrative Agencies (and the Council of State Administrative Agencies — COSAA), which provide the first line of homebuyer protection for an ever growing number of homes, provide for the appointed non-career administrator required by the 2000 law; and ensure an independent and fully functional MHCC (which at present lacks an administering organization and has not met once during 2013), while simultaneously reducing contractor revenues and functions in proportion to industry production. 

Item CItem C concerns HUD’s June 23, 2010 proposed rule for on-site completion.  MHARR filed written comments in this proceeding on July 28, 2010 (please see your copy of MHARR’s July 29, 2010 packet and accompanying memorandum).  According to the SRA, HUD projects final – and long over-due action — on this matter by April 2014.  The proposed rule, aggressively pursued by MHARR prior to the exclusion of collective industry representatives from the MHCC, would allow construction on-site to bring homes already substantially completed in an approved construction facility into compliance with the federal standards without direct HUD involvement, based on on-site inspection by an IPIA or a qualified third-party inspector approved by the IPIA.  The MHCC adopted this recommendation over a competing proposal advanced by state agencies (an outgrowth of HUD’s misguided re-codification of installation as separate from the federal construction and safety standards – which remains unacceptable to MHARR) which would have required inspection of on-site work by state authorities, including inspections for compliance with state standards.   Because the HUD proposed rule invited comments on the proper role of state authority, however, it remains to be seen whether the final rule will make any changes to the MHCC-recommended proposal.

Item D: Revisions to the installation standards to provide a testing protocol for ground anchors were published as a proposed rule on July 26, 2013.  MHARR filed written comments on the proposed rule on September 18, 2013 (please see your copy of MHARR’sSeptember 18, 2013 packet and accompanying memorandum).  According to the SRA, HUD projects adoption of a final rule in February 2014.  MHARR, as previously reported, filed written comments on the proposed rule urging HUD, among other things, to allow the continued use of existing anchors produced and certified prior to the effective date of the new standards, until such existing inventories are exhausted.  The comments also emphasize that MHARR continues to object to the re-codification of the federal installation standards.  

Item E: Item E, regarding the second group of construction and safety standards recommended by the MHCC, has already been concluded through a December 9, 2013 final rule (please see your copy of MHARR’s December 10, 2013 packet and accompanying memorandum).

            The HUD SRA list is also significant for what it does not include, most importantly any projected rulemaking activity concerning a conditional fire sprinkler standard as advanced by the manufactured Housing Institute (MHI).  MHARR has consistently opposed the adoption of any federal sprinkler standard on the ground that the current HUD Fire Safety standards – as conclusively shown by the National Fire Protection Association (NFPA) – already meet the standard of protection established by federal law without extremely costly sprinkler systems. 

II.  Department of Energy (DOE)

The energy conservation rule for manufactured homes mandated by EISA did not appear in the initial 2013 SAR, but is now projected for publication of a proposed rule by September 2014.  As was fully documented by MHARR in July 24, 2013 comments in response to a DOE Request for Information regarding the cost impact and other aspects of a potential proposed rule, the entire rulemaking process in this matter has been irretrievably tainted by the selective disclosure of a “draft proposed rule” to certain parties in interest. MHARR, accordingly, has urged DOE to scrap its “draft proposed rule” and go back to the drawing board with input and recommendations by the MHCC.  In the interim, MHARR is conducting a full investigation of all aspects of this matter and will consider further action in the event that DOE proceeds on the basis of the tainted draft proposed rule.

III. Environmental Protection Agency (EPA)

The Environmental Protection Agency (EPA) published proposed rules to establish federal standards for formaldehyde emissions from certain defined composite wood products, as well as a framework for a third-party certification program for composite wood product panel producers in the June 10, 2013 edition of the Federal Register.  MHARR filed written comments in this proceeding onSeptember 9, 2013 (please see your copy of MHARR’s September 10, 2013 packet and accompanying memorandum). The SRAprojects publication of a final rule by September 2014.

The proposed standards are important for manufactured housing because their authorizing legislation, the Formaldehyde Standards for Composite Wood Products Act of 2010, Act directs HUD to revise its own manufactured housing standards to “reflect” the final EPA standards.   Given the fact that the EPA standards will mean more restrictive emissions criteria and higher costs for composite wood products used in all homes, MHARR’s comments note that both the industry and manufactured homebuyers deserve relief in the form of the repeal of the existing HUD formaldehyde standards, and the red formaldehyde “health” notice concurrent with the effective date of the EPA standards.  As emphasized by MHARR, if all composite wood products supplied to the home-building industry in the future will comply with the higher EPA formaldehyde standards, there is no need for the costs associated with the HUD standards enforced at the home manufacturer level or the discriminatory formaldehyde “health” notice.

 MHARR will continue to carefully monitor all of these ongoing proceedings and will take action as necessary, while updating you, as warranted and/or as new developments unfold.

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