MHARR Comments on HUD’s Failure to Implement Obama’s Regulatory Fairness Order


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APRIL 28, 2011


Regulations Division
Office of General Counsel
U.S. Department of Housing and Urban Development
Room 10276
451 Seventh Street, S.W.
Washington, D.C. 20410-0500

Re:  Docket No. FR-5506-N-01
Reducing Regulatory Burden — Retrospective Review Under E.O. 13563

Dear Sir or Madam:

The following comments are submitted on behalf of the Manufactured Housing Association for Regulatory Reform (“MHARR”).  MHARR is a Washington, D.C.-based national trade association representing the views and interests of producers of manufactured housing regulated by the U.S. Department of Housing and Urban Development (“HUD”) pursuant to the National Manufactured Housing Construction and Safety Standards Act of 1974, 42 U.S.C. 5401, et seq., as amended by the Manufactured Housing Improvement Act of 2000 (“2000 law“).  MHARR was founded in 1985 and represents manufactured housing producers from all regions of the United States.


On March 2, 2011, the Office of General Counsel published a Request for Information (“RFI”) in the Federal Register seeking public comment regarding HUD’s implementation of Executive Order 13563, “Improving Regulation and Regulatory Review” (January 18, 2011) (“EO“). (See, 76 Federal Register, No. 41 at 11395).  Specifically, the RFI invites public comment on two distinct issues: (1) comments “to assist in the development of a plan for periodically analyzing existing significant regulations to determine whether they should be modified, streamlined, expanded or repealed;” and (2) comments “to identify specific current regulations that may be outdated, ineffective, or excessively burdensome.”  Id. at p. 11395, col. 1.  The following comments address both issues.


1.  HUD Manufactured Housing Program Standards, Regulations and
Related Matters Should be Part of the E.O. 13563 Review Process

EO 13563 contains both prospective provisions relating to future rules and retrospective provisions regarding existing rules.  Insofar as the March 2, 2011 RFI seeks public comment, at this time, only regarding retrospective review of existing regulations, these comments are limited to that function.  MHARR will submit separate comments pertaining to the prospective impact of the EO on new standards and regulations when HUD seeks comment on those issues.

Section 6 of EO 13563 provides: “To facilitate the periodic review of existing significant regulations, agencies shall consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.” For purposes of this mandate, all HUD manufactured housing program standards and regulations, as well as interpretations of these rules and quasi-legislative practices and policies relating to enforcement and monitoring, are “significant regulations” that are subject to retrospective HUD review under the EO.

EO 13563 expressly states that its provisions are “supplemental to and reaffirm the principles, structures and definitions governing contemporary regulatory review that were established in Executive Order 12866 of September 30, 1993.”  (Emphasis added). EO 12866, in turn, defines a “significant regulatory action” as, among other things, “any regulatory action that is likely to result in a rule that may — have an annual effect on the economy of $100 million or adversely affect in a material way, the economy, a sector of the economy, productivity, competition, [or] jobs ….”  (Emphasis added).

In 2008, the most recent year for which statistics are available, domestic retail sales of federally-regulated manufactured homes totaled $5.3 billion.  Insofar as the HUD Federal Manufactured Home Construction and Safety Standards (FMHCSS), federal manufactured home installation standards and Procedural and Enforcement Regulations (PER) address nearly every aspect of the production, inspection, installation and performance of manufactured homes and their components, the annual economic impact of these rules far exceeds $100 million.  Moreover, unwarranted HUD regulation, as described in greater detail below, is having a materially adverse impact on manufactured housing industry productivity and jobs. Over the past decade, manufactured home production has declined by more than 86% (from 373,143 units in 1998 to 50,046 in 2010), nearly 75% of the industry‘s production facilities have closed (from 430 to fewer than 110) and more than 7,500 retail centers have closed, leading to the loss of more than 200,000 jobs throughout the manufactured housing industry.   

Accordingly, under the applicable definition of a “significant” regulatory action, HUD’s retroactive review pursuant to EO 13563 should encompass all of the: (1) FMHCSS standards; (2) federal manufactured home installation standards; (3) PER regulations; (4) federal installation program regulations; (5) dispute resolution program regulations; (6) interpretations of all such standards and regulations that impact the cost of manufactured housing; and (7) quasi-legislative practices and policies related to inspections and monitoring, such as the “Guidelines for Investigation and Reporting of Quality System Issues, “enhanced” HUD checklists for “quality control” manuals, plant inspections and audits, and related HUD “Standard Operating Procedures.”

A complete review of all these mandates is also necessary because the fundamental regulatory policy established by the EO is identical to and reinforces the central premise of the substantive law that authorizes and governs all rules and requirements of the HUD manufactured housing program.  Specifically, Section 1 of EO 13563 states that “Our regulatory system must protect public health, welfare, safety and our environment while promoting economic growth, innovation, competitiveness and job creation.”  The same policy — and the same mandatory balancing between homebuyer safety and affordability — lies at the heart of the substantive law governing the federal manufactured housing program. The Manufactured Housing Improvement Act of 2000, therefore, among other relevant provisions, requires that “the public interest in, and need for, affordable manufactured housing” be “duly considered in all determinations relating to the federal standards and their enforcement.” (See, 42 U.S.C. 5401(b)(8)) (Emphasis added).    

Thus, the balance between protection on the one hand, and economic growth, innovation, competitiveness and job creation, on the other, established as Administration policy by the EO, is of particular importance and relevance for the federal manufactured housing program which, by substantive law, operates as both a regulatory program and an affordable housing program, and must balance both interests to ensure the availability of affordable manufactured housing and the ongoing viability of the manufactured housing industry.  Given these dual roles of the federal program, as well as the basic purpose of the 2000 law — to ensure the status of manufactured homes as legitimate housing — it is essential that the HUD manufactured housing program have up-to-date, cost effective requirements, rather than stale or unduly burdensome mandates that unnecessarily increase regulatory compliance cost  burdens passed to consumers, with little or no corresponding benefit.  Yet, even with the 2000 law that directs the federal program to change its past practices regarding the development and enforcement of program mandates, the program has reverted to closed-door practices, resulting in unjustified and unjustifiable regulatory actions.  As a result, the intersection of the policies and requirements of the 2000 law and EO 13563 require a full and complete review of all HUD manufactured housing mandates.

2.  The Preliminary and Final Plans for the Implementation of E.O.
13563 Should Provide for MHCC Involvement and Participation

While recommendations concerning specific elements of an agency-wide HUD plan “for periodically analyzing existing significant regulations to determine whether they should be modified, streamlined, expanded or repealed” are beyond the scope of these comments, to the extent that any such review involves aspects of the federal manufactured housing program, the HUD plan should provide not only for the participation of the public and interested parties through notice and comment rulemaking, but also the full involvement and participation of the Manufactured Housing Consensus Committee (MHCC).

The MHCC was established by Congress as the centerpiece reform of the 2000 law, to ensure accountable, transparent and consensus-based regulation, in order to minimize disputes and lawsuits, and assure the reasonable, cost-effective regulation that is critical to industry competitiveness and its ability to provide affordable home ownership for lower and moderate-income American families.  Comprised of twenty members appointed by the Secretary, representing producers, consumers and the general public interest, the MHCC has a broad statutory mandate under the 2000 law to “provide periodic recommendations to the Secretary to adopt, revise and interpret” both the FMHCSS and the PER regulations.  (See, 42 U.S.C. 5403(a)(3)(A)).  In addition, section 604(b)(6) of the 2000 law authorizes the MHCC to review and comment on virtually all quasi-legislative actions, whether characterized as a “rule” or not,  to establish or change existing manufactured housing standards, regulations and inspection, monitoring and enforcement policies or practices.  (See, 42 U.S.C. 5403(b)(6)).

Given the central substantive role of the MHCC — both under the 2000 law and  relevant regulations  — in the development, maintenance, interpretation and revision of the federal standards and regulations, and given the specific expertise of the MHCC in evaluating both the technical merits and cost-efficiency of such mandates, HUD’s plan for the implementation of EO 13536, as it relates to the HUD manufactured housing program, should provide a specific role for the MHCC to offer consensus recommendations and comments regarding “rules that may be outmoded, ineffective, insufficient, or excessively burdensome,” and corresponding ways “to modify, streamline … or repeal them….”

3.  All Manufactured Housing Program Requirements Should be Reassessed 
On a Cost-Benefit Basis as Required by Substantive Law and E.O. 13563

In addition to aspects of a retrospective review plan, HUD’s RFI seeks comments “to identify specific current regulations that may be outdated, ineffective, or excessively burdensome.”  Although MHARR believes that all aspects of the HUD program should be reviewed and reassessed based on this standard, MHARR specifically recommends review of Subpart I of the PER regulations and all aspects of expanded in-plant regulation as HUD has sought to implement since September 2008.

Specifically, Subpart I, as noted by MHARR in comments submitted April 14, 2011 regarding HUD Docket FR-5238-P-01/RIN 2502-AI84, is an outdated relic that is inappropriate for manufactured housing, as legitimate housing, statutorily at parity with other types of homes and other segments of the housing industry.  An artifact of an earlier era when manufactured homes were relegated to the status of “trailers” and treated as a type of specialty vehicle, Subpart I unfairly implies, by its very existence, that manufactured housing is inferior to other types of housing, helping to fuel and compound discrimination against manufactured housing in critical areas such as consumer financing, placement and zoning. 

During 35 years since Subpart I was promulgated, manufactured housing technology, materials and construction techniques have advanced significantly, while the utilization of manufactured housing has changed as well.  Today, the vast majority of manufactured homes are never moved once they are sited at a particular location. This tracks the corresponding growth and sophistication of the typical manufactured home, to the point that over the past decade, the majority of the manufactured homes sold have been multi-section, with an average of nearly 1,800 square feet of floor space.  Together with the new, cost-effective, multi-level and multi-party homeowner safeguards — appropriate for housing — established by Congress as part of the 2000 law,  these changes warrant a more flexible, less onerous and less costly approach to Subpart I than has been the case since 1976, or is evinced by a proposed rule to amend Subpart I published by HUD on February 15, 2011.

Accordingly, those regulations — and HUD’s February 15, 2011 proposed Subpart I amendments — should be reviewed and modified in accordance with the recommendations of the MHCC and the comments filed by MHARR in that proceeding.

In addition, in accordance with EO 13563, HUD should review and terminate all aspects of its ongoing expansion of in-plant regulation.  Specifically, both HUD and its monitoring contractor have been pressuring manufacturers to implement costly changes to their in-plant inspection procedures based on “enhanced“ checklists that go beyond the requirements of the current standards and a “Standard Operating Procedure“ developed behind closed doors by program regulators.  None of these de facto standards have been submitted to the MHCC for consensus review and comment — even though they make major changes to HUD policy and practice regarding inspections and monitoring — and none have been published for notice and comment, as required by the 2000 law. None have had a cost-benefit analysis, and none have been shown to produce any benefits for consumers to offset their increased cost.  Furthermore, a proposed rule that would have authorized such requirements — that was brought to the MHCC — failed to gain consensus approval for lack of necessary justification and cost-benefit support, and has not been published for notice and comment as a proposed rule.

All of this regulatory expansion, which was initially characterized by HUD regulators as “voluntary,” but has since been incrementally implemented in the field as “not optional” — complete with mandatory audits and enforcement developed by HUD and its monitoring contractor and detailed during a closed-door November 2010 meeting between HUD regulators, the monitoring contractor and third-party inspection agencies — is a source of needless cost and confusion for manufacturers, and is producing an uneven playing field among participants and non-participants, and even among different participating companies.  Thus, what began as a simple voluntary program, has been transformed into a full-blown system of new de facto regulation, developed and adopted without complying with either the relevant requirements of the 2000 law or EO 13563.  Accordingly, based on the intersection of the 2000 law and EO 13563, all elements of this de facto regulatory expansion should be withdrawn.  If HUD subsequently wants to make changes in compliance with the law, the Department should take this matter to the MHCC as the law requires, show that the changes are justified and cost-effective, follow the required section 604(b) procedures and then go forward with rulemaking.     


For all of the foregoing reasons, MHARR urges HUD to adopt the foregoing recommendations as part of its final procedures and review to implement E.O. 13563.


Danny D. Ghorbani

Manufactured Housing Association for Regulatory Reform
1331 Pennsylvania Ave N.W., Suite 508
Washington, D.C. 20004
Phone: 202/783-4087
Fax: 202/783-4075


Danny D. Ghorbani is President of the Manufactured Housing Association
for Regulatory Reform. MHARR is a Washington, DC-based national
trade association representing the views and interests of producers of federally-
regulated manufactured housing.

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