A delegation of MHARR officials and staff, including its present Chairman and two past-Chairmen, met on December 10, 2014 with HUD manufactured housing program Administrator Pamela Danner, Deputy Administrator Theresa Payne and other program officials. The meeting addressed key regulatory issues identified and prioritized by the MHARR Board of Directors at its November 2014 meeting, as set forth in a November 12, 2014 communication from MHARR to the Administrator. Because of the crucial nature of these issues, we suggest that you share copies of this report with your company’s technical, regulatory and legal executives.
The topics addressed and the substance of the discussion on each such issue, are briefly summarized below:
1. USE OF MANUFACTURED HOMES OTHER THAN AS “SINGLE-FAMILY” HOUSING: MHARR reiterated its objection to any attempt by HUD to regulate the post-sale “use” of manufactured homes as discriminatory and in excess of its statutory authority, which: (1) only permits HUD to regulate the design, construction, delivery and installation of manufactured homes; and (2) defines manufactured homes as “dwellings” without referring or otherwise limiting them to “single-family” occupancy. MHARR noted that so long as the home is not taken out of compliance with the standards, the post-sale “use” of a manufactured home is a matter for state and local authorities and not HUD. Those state and local authorities, moreover, would not be preempted from such regulation by a HUD label, because the HUD standards do not address “use” of the home. Conversely de facto “use” regulation by HUD would effectively discriminate against manufactured housing and put HUD in the awkward and unnecessary position of having to define what is or is not a “single-family.”
The Administrator stated that despite references in her October 3, 2014 memorandum on this subject to “civil and criminal penalties” for non-complying homes and referral of “cases involving manufactured homes designed, built or sold for other than single-family use to [the] Office of General Counsel for further enforcement action,” the October 3, 2014 memorandum was meant to be an alert or “heads-up” rather than a threat of imminent enforcement activity. Instead, the Administrator agreed with MHARR that current law could, in fact, allow for HUD-labelled multi-family manufactured homes and noted, positively, that the Manufactured Housing Consensus Committee (MHCC) at its just concluded December 2014 meeting, referred the matter of multi-family designs to its General Subcommittee for the possible development of HUD Code standards for such homes. MHARR will, of course, fully participate in the work of that Subcommittee and the MHCC as a whole as this issue moves forward.
2. EXPANDED IN-PLANT REGULATION: Citing numerous examples of “make-work” activity and demands, as well as inconsistent and arbitrary enforcement of HUD’s costly program of expanded in-plant regulation by both IPIAs and the monitoring contractor (together with HUD’s failure to bring this entire program to the MHCC as required by the 2000 reform law), MHARR pointed out that the federal program is rapidly reverting to the regulatory practices of the 1990s, albeit with even more funding available for the monitoring contractor as a result of the increase in HUD’s certification label fee from $39.00 to $100.00 per section. MHARR stressed that this program, which is totally inconsistent with the procedures and substance of the 2000 reform law, discriminates against the industry’s smaller businesses, is suffocating those businesses under growing layers of arbitrary requirements, and is unacceptable to the Association, particularly insofar as HUD has ignored key safeguards of the 2000 reform law in order to initiate and expand the program, such as section 604(b)(6), which was specifically designed to ensure that all such changes to enforcement, inspections and monitoring were brought to the MHCC.
Given the fact, however, that this program has already been in place on a “voluntary” basis for more than four years, MHARR, in a gesture of cooperation with the Department, noted that HUD had a perfect second opportunity to properly address this issue before moving to finalize mandatory enforcement that would be in violation of the 2000 reform law. Specifically, that would entail using the extensive data gathered by HUD during the “voluntary” phase of this program to prepare and submit a legitimate cost-justified proposal on this matter for presentation to and consideration by the MHCC. Short of such compliance with the 2000 reform law, though, MHARR made it clear to the HUD meeting participants that it will continue to seek the reversal of the current arbitrary program of expanded in-plant enforcement, including a roll-back of the just-increased certification label fee (see, Item 7, below).
3.SUBPART I MONTHLY RECORD INSPECTIONS: MHARR reiterated its position that the last-minute HUD change to the final Subpart I modification rule, requiring “at least monthly” IPIA inspections of manufacturer Subpart I records, instead of the “periodic” review recommended by the MHCC and published by HUD in the proposed rule, is illegitimate, and further expanded on the rationale for that position. HUD contends that this key change, which, in and of itself, imposes major additional regulatory compliance costs on manufacturers with no clear basis or justification, was made on the basis of one public comment following publication of the proposed rule. MHARR maintains, however, that HUD’s de facto rejection of the “periodic review” recommendation of the MHCC, without a specific written explanation of that rejection to the MHCC, violates section 604(b)(4)(B) of the 2000 reform law. Consequently, as MHARR has consistently asserted, this entire matter should have been – and still should be – returned to the MHCC for proper explanation, analysis and consideration, without diminishing in any way the Secretary’s final authority over this critical matter, in full compliance with the 2000 reform law.
MHARR pointed out that this automatic requirement for “at least monthly” IPIA record reviews – regardless of the performance track record of a particular production facility – eliminates legitimate IPIA discretion that could have been exercised under the original “periodic review” recommendation to tailor the frequency of such reviews to manufacturer performance levels. By imposing a one-size-fits-all standard at such a frequent interval, the monthly inspection requirement is an excuse for needless, “make-work” activity by both IPIAs and the program monitoring contractor – and automatic “date-certain” billing by IPIAs (to manufacturers) and the monitoring contractor (to HUD) — that will result in substantially higher, yet totally unnecessary, regulatory compliance costs for manufacturers that will ultimately be passed on to consumers. With consumer complaints regarding HUD Code homes and dispute resolution referrals at very low levels, there is no basis or justification for such frequent mandatory reviews.
Thus, MHARR emphasized that HUD should consider triggering the specific relevant sections of the 2000 reform law in connection with this critical regulatory matter.
4. ENFORCEMENT OF ATTACHED GARAGES: MHARR – as it did at the recent MHCC meeting – emphasized that it strongly objects to elements of the Administrator’s June 12, 2014 memorandum regarding “attached garages” including, most particularly: (1) retroactive Subpart I investigations based on a new de facto HUD interpretation of the standards; (2) HUD’s failure to bring that change in interpretation, policy or practice to the MHCC for review and consideration as required by the 2000 law; (3) requiring Alternate Construction (AC) letters for homes that are fully compliant with the standards when they leave the factory; and (4) imposing an ambiguous and unduly vague regulatory requirement on manufacturers to determine which designs – if any – improperly “facilitate” attached garages.
In response, the Administrator agreed that HUD’s focus would not be on past activity and retroactive Subpart I investigations of homes produced before the June 12, 2014 HUD memorandum, but on getting AC letters for attached garage home designs filed and processed as quickly as possible. MHARR thanked the Administrator for her positive clarification of this matter and for visibly expediting the AC process in general. That said, however, MHARR stressed that this across-the-board change in HUD enforcement policy should have been – and still should be — brought to the MHCC under section 604(b)(6) of the 2000 reform law. Thus, MHARR strongly supported and encouraged a resolution adopted at the December 2014 MHCC meeting, calling on HUD to suspend enforcement under the June 12, 2014 memorandum pending further review of the entire issue – and will continue to pursue, and fully participate in, proper MHCC review and resolution of this matter.
5. RECREATIONAL VEHICLE DEFINITION – REGULATORY REFORM: With the action of the MHCC at its December 2014 meeting to adopt and recommend to HUD a modified version of an MHARR proposal to create a regulatory firewall between residential manufactured homes and non-residential recreational vehicles – in lieu of further tampering with the federal manufactured housing law — this issue has now been properly presented to HUD on a regulatory basis. MHARR reiterated at the meeting that it supports the MHCC recommendation and a final regulatory resolution of this long-lingering issue by HUD consistent with the directive of the Senate HUD Appropriations Subcommittee in its 2014 Report for HUD to address this matter via its transparent regulatory process.
The Administrator agreed and confirmed that the MHCC recommendation for a regulatory resolution of this matter will be the subject of an upcoming HUD rulemaking proceeding.
6. MANUFACTURED HOUSING ENERGY STANDARDS: MHARR emphasized that proper “consultation” between the U.S. Department of Energy (DOE) and HUD concerning impending DOE manufactured housing energy standards, as required by the Energy Independence and Security Act of 2007 (EISA), is absolutely essential and must occur at a meaningful stage in the proceedings — not after publication of a DOE proposed rule. MHARR also thanked HUD for its previously-stated commitment to bring this matter to the MHCC for its consideration and recommendations based on the requirements of the federal manufactured housing law.
MHARR pointed out that the energy criteria developed by a DOE “Working Group” dominated by the industry’s largest businesses and energy special interests, entailed extremely high costs to consumers with recovery periods that could extend well beyond occupancy of the home by the initial buyer. It also stressed that the costs currently estimated by DOE, based exclusively on information obtained from those large businesses — and analyzed and calculated by their consultants — are necessarily understated by thousands of dollars and do not include testing, enforcement and regulatory compliance costs which were never considered by the DOE Working Group.
MHARR advised HUD that while it will monitor all rulemaking activity at DOE and HUD on this matter very closely, it has already asked the DOE Secretary to return this entire matter to Congress for reconsideration and full hearings including all stakeholders and will oppose the Working Group-based DOE standards at every available stage. It noted further, that such standards, if adopted, could end-up tangled in litigation for years to come.
7. CERTIFICATION LABEL FEE INCREASE AND UTILIZATION: MHARR stressed that the recent certification label fee increase from $39.00 to $100.00 per section – contrary to HUD representations to Congress — is apparently being misused to fund unnecessary expanded regulation and particularly make-work activity by the program monitoring contractor as part of HUD’s program of expanded in-plant regulation. At the same time, much-needed additional funding for state manufactured housing programs – a vital component of the federal-state partnership envisioned by the original 1974 federal manufactured housing law, has not been provided or even considered by HUD, although the Administrator indicated that this would be “looked-at” by the Department.
The MHARR delegation emphasized that the continuation of such make-work activity as part of a program of expanded regulation is directly contrary to the directive of the Senate HUD Appropriations Subcommittee in its 2014 report, for regulatory activities and expenditures to be consistent with current lowered production levels. The Administrator was alerted, moreover, that the Association is already being approached by lawmakers in both houses of Congress who are hearing from constituents about an increasingly apparent relationship between this label fee increase and the ongoing expansion of unnecessary and costly regulation – and that MHARR has already begun to very closely and carefully scrutinize use of the increased label fee revenues in relation to such expanded regulation.
8. SOUTHERN YELLOW PINE DESIGN VALUES: The Administrator confirmed that, as requested by the MHCC and MHARR, enforcement of modified design values under the Southern Yellow Pine (SYP) reference standard will be deferred beyond the current January 1, 2015 enforcement date to allow the MHCC to fully consider the substance of those changes as well as their cost implications. An official HUD document providing another six-month extension of this deadline will be issued soon.
