After a prolonged delay, HUD has published a final rule adopting the second set of consensus standards developed and recommended by the Manufactured Housing Consensus Committee (MHCC) in 2005 (copy attached). The rule published in the Federal Register on December 9, 2013 – which will become effective on June 9, 2014 — implements, with some modifications, MHCC recommendations initially incorporated within a proposed HUD rule issued on July 13, 2010. Currently, MHARR is analyzing all aspects of the rule in detail, as a preliminary review has already identified certain issues that warrant further examination and follow-up.
As an initial matter, certain changes from the proposed rule, as published, were not unexpected. Specifically, the final rule omits energy related provisions that could potentially conflict with energy conservation rules being developed by the Department of Energy (DOE) under the Energy Independence and Security Act of 2007. Similarly, the final rule omits MHCC-proposed changes to the HUD formaldehyde standards – including a proposed standard for emissions from medium-density fiberboard – based on the statutory directive of the 2010 Formaldehyde Standards for Composite Wood Products Act, that HUD revise its manufactured housing formaldehyde standards to “reflect” the national composite wood standards being developed and implemented by the U.S. Environmental Protection Agency under that law. Both of these matters remain pending and are being closely monitored by MHARR (including pending MHARR Freedom of Information Act requests concerning the development of the DOE energy rule).
Significantly, HUD also rejected a request by “a commenter” in the rulemaking proceeding that it “consider whether sprinkler systems should be required” in manufactured homes. The Department’s response is illuminating and gratifying, in that it recites arguments that MHARR has advanced against any type of mandatory or “voluntary” sprinkler standard. In this regard, industry members will recall that a “voluntary” sprinkler standard has been advanced within the MHCC by certain Western manufacturers and the Manufactured Housing Institute (MHI). However, as MHARR has fully documented before both the MHCC and HUD, it has opposed — and will continue to oppose — any such standard as both unnecessary and unrealistic within a program of comprehensive federal regulation, where a “voluntary” standard could ultimately evolve into a mandatory requirement. HUD thus stated, in relevant part:
“This issue is currently being considered by the MHCC. Recent fire data analysis prepared by the National Fire Protection Association (NFPA) indicated that HUD standard units have asimilar fire safety record to that of one- and two-family dwelling units. In addition, a comparison of code requirements … shows [that] many fire safety provisions for manufactured homes … are not included in model building codes for one- and two-family homes. Further, there is [a] considerable cost impact to install a sprinkler system in a manufactured home for what would appear to be marginal benefits.”
(Emphasis added). These comments, in themselves, are encouraging regarding ultimate HUD policy on this matter and could also be helpful to the industry in discouraging the adoption of state and/or local sprinkler mandates in the first place or, alternatively, arguing for the federal preemption of any such mandate that is adopted.
However, not all the changes in the final rule are deletions. The final rule adopts certain requirements that were not considered by the MHCC, including new mandates that the preamble notes will “impact the production cost of manufactured homes.” The Manufactured Housing Improvement Act of 2000, however, is clear that all new or revised standards (absent an “emergency” declared in writing by the Secretary) must be developed and recommended through the MHCC consensus process based on the criteria and considerations set forth in the law, including both proper justification and evaluation of the cost impact on manufactured homebuyers.
By altering MHCC recommendations as part of a final rule, with no further MHCC considerations or input, HUD regulators unilaterally change the compromises and agreements between interest groups and members underlying an MHCC consensus – potentially leading to final standards that would not have achieved an MHCC consensus as modified. Even worse, unilateral HUD changes undermine the highly-transparent MHCC process, empowering un-named special interests to enter and influence the regulatory process – potentially for the purpose, among other things, of advancing proprietary products or processes –after the conclusion of MHCC debate and development of an MHCC consensus. This not only alters the careful balance of stakeholder interests represented by the MHCC, but also represents a further downgrade of the entire MHCC process, following a year in which there were no MHCC full Committee meetings whatsoever (for the first time since the establishment of the MHCC) and the MHCC Administering Organization (AO) contract was allowed to expire without replacement – a continuation of prior actions by HUD regulators to undermine the role, authority, independence and functionality of the MHCC.
Accordingly, each of these after-the-fact changes should have gone back to the MHCC for a further evaluation of their impact on the original MHCC consensus proposals. MHARR has consistently maintained this position with HUD regulators and, based on its full analysis of the final rule, will address this issue further in its upcoming communication with HUD Assistant Secretary Carol Galante – currently the highest ranking HUD official with direct authority over the federal manufactured housing program – as was reported to and considered by the MHARR Board at its November 2013 meeting.
Finally, we would appreciate it if you would share this important document with your technical, regulatory and legal executives, and provide us with any input that you may have.