[Federal Register Volume 67, Number 156 (Tuesday, August 13, 2002)]
[Rules and Regulations]
[Pages 52832-52835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-20526]



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Part IV





Department of Housing and Urban Development





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24 CFR Part 3284



Manufactured Housing Program Fee; Final Rule

  Federal Register / Vol. 67, No. 156 / Tuesday, August 13, 2002 / 
Rules and Regulations  

[[Page 52832]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 3284

[Docket No. FR-4665-F-02]
RIN 2502-AH62


Manufactured Housing Program Fee

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, HUD.

ACTION: Final rule.

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SUMMARY: In accordance with recent statutory direction, the Department 
is publishing this rule to modify the amount of the fee that is 
collected from manufacturers of manufactured homes to fund HUD's 
responsibilities under the National Manufactured Housing Construction 
and Safety Standards Act of 1974. The rule also sets minimum payments 
to States participating in the program as State Administrative 
Agencies. This final rule follows publication of an April 15, 2002, 
proposed rule and takes into consideration public comments received on 
the proposed rule. This final rule adopts the proposed rule without 
substantive change.

DATES: Effective Date: September 12, 2002.

FOR FURTHER INFORMATION CONTACT: William W. Matchneer III, 
Administrator, Manufactured Housing Program, Department of Housing and 
Urban Development, 451 Seventh Street, SW., Washington, DC 20410-8000; 
telephone (202) 708-6401 (this is not a toll-free number). Hearing- or 
speech-impaired individuals may access this number via TTY by calling 
the toll-free Federal Information Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    On April 15, 2002, the Department published a proposed rule (67 FR 
18398) to modify the amount of the fee to be collected from 
manufactured home manufacturers in accordance with section 620(d) (42 
U.S.C. 5419(d)) of the National Manufactured Housing Construction and 
Safety Standards Act of 1974 (the Act). These fees are used to offset 
HUD's expenses for carrying out its responsibilities under the Act and 
have not been increased for over 12 years. Section 620(d) of the Act, 
added by the Manufactured Housing Improvement Act of 2000 (Pub. L. 106-
569, 114 Stat. 2944, approved December 27, 2000) (the MHI Act), 
provides that the amount of any fee ``may only be modified: (1) as 
specifically authorized in advance in an annual appropriations Act; and 
(2) pursuant to rulemaking in accordance with section 553 of title 5, 
United States Code.'' (Section 553 of title 5, United States Code 
contains the ``informal'' rulemaking requirements of the Administrative 
Procedure Act.) Section 620(e) of the Act (unless otherwise noted in 
this preamble, references to a section of the Act include the 
amendments made to that section by the MHI Act) further provides that 
amounts from any fee shall be available for expenditure only to the 
extent approved in advance in an annual appropriations Act.
    The fee that HUD collects under the Act is levied upon the 
transportable sections of each new manufactured housing unit, and the 
total amount of the fees that HUD collects annually is dependent upon 
the number of transportable sections produced per year. The amendments 
made by the MHI Act in section 620(d) of the Act, which make the 
modification of the amount of the fee subject to implementation only 
pursuant to rulemaking in accordance with section 553 of title 5, 
United States Code, prompt this rulemaking.

II. This Final Rule

    This rule establishes a new part 3284, under which the amount of 
the fee is codified. This final rule adopts the proposed rule with only 
minor changes.
    The amount established in this rule is unchanged from the final 
rule and has been determined by dividing $13,566,000, the amount 
appropriated for Fiscal Year (FY) 2002, by 350,000, the number of 
manufactured housing transportable units projected to be produced in 
the FY. This calculation results in a revised fee of $39. The 
explanation of this calculation of the amount of the fee has been 
removed from the final rule as unnecessary.
    The final rule also clarifies in Sec. 3284.5 that the manufacturer 
that must pay the fee of $39 is the ``manufacturer'' as defined in 
Sec. 3282.7.
    In accordance with section 620(e)(3) of the Act, which was also 
added by the MHI Act, this rule also provides (as it did at the 
proposed rule stage) that HUD will continue to fund States that have 
approved State plans in amounts not less than the allocated amounts, 
based on the fee distribution system in effect on December 26, 2000. 
The yearly payment to a State would be set by this rule as not less 
than the amount paid to that State for the 12 months ending on December 
26, 2000. As a conforming matter, this final rule adds a specific 
reference to States having approved plans to Sec. 3284.1, 
Applicability.

III. Public Comments

    HUD specifically invited comment on the projected number of 
transportable sections. None of the commenters suggested that a 
different production projection should be used in the final calculation 
of the amount of the fee. Therefore, the projected production level 
announced in the proposed rule has been used in the final calculation 
of the fee.
    HUD received comments from 15 commenters on other aspects of the 
fee. These comments resulted in the issues set out in the numbered 
comments that follow, together with HUD's responses.
    Comment 1: HUD's proposed fee modification was not specifically 
authorized in advance in an annual appropriations Act. Congress has not 
specifically authorized an increase in the amount of the label fee.
    Response: Section 620(d) of the Act states that the ``amount of any 
fee . . . may only be modified'' when two conditions are met: (1) in 
advance of HUD's modification, Congress specifically authorizes in an 
appropriations Act that the amount of the fee be modified; and (2) the 
modification is made through notice-and-comment rulemaking. In HUD's FY 
2002 Appropriations Act (Pub. L. 107-73, 115 Stat. 651, 669, approved 
November 26, 2001), Congress appropriated $13,566,000 for the 
manufactured housing program, and specifically directed that the fee 
established and collected pursuant to section 620 of the Act ``shall be 
modified as necessary'' to ensure that the general fund of the Treasury 
could be reimbursed by fee collections received up to the amount of the 
appropriation (emphasis added). Therefore, through this rule, HUD is 
modifying the amount of the fee as specifically authorized by Congress, 
i.e., HUD is modifying the amount of the fee based on the amount 
necessary to collect $13,566,000. HUD, therefore, both has satisfied 
the requirement in section 620(d)(1) and is complying with the 
subsequent congressional enactment in the FY 2002 Appropriations Act.
    Comment 2: Establishment of a specific level of appropriation by 
Congress does not satisfy the requirement that a modification of the 
amount of the fee be specifically authorized. Rather, specific advance 
authorization in an annual appropriations Act is required for both 
program expenditures (section 620(e)) and fee changes (section 620(d)).
    Response: Congress authorized HUD, in its FY 2002 Appropriations 
Act, to spend up to $13,566,000 for the

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manufactured housing program for the fiscal year. In addition, as 
discussed in the response to Comment 1, Congress mandated that fees be 
modified as necessary to ensure that the general fund of the Treasury 
could be reimbursed for that amount. Therefore, Congress has authorized 
program expenditures, as contemplated in section 620(e), and has 
authorized modification of the amount of the fee, as contemplated in 
section 620(d).
    Comment 3: If specific authorization of a level of program 
expenditures, as required under section 620(e), also authorizes a fee 
increase, the provision in section 620(d) is surplusage.
    Response: As discussed above, HUD does not base its authority to 
issue this rule on the fact that Congress established a level of 
program expenditures, as referenced in section 620(e), but on the fact 
that Congress mandated in the FY 2002 Appropriations Act that fees be 
modified to ensure a level of collections that is defined by the amount 
of the appropriations for the program. This mandate comports with the 
requirements in section 620(d).
    Comment 4: The opportunity for HUD to receive and consider evidence 
of projected production levels through a proposed rule are limited at 
best, so HUD should ask Congress for a specific fee modification. 
Congress can thoroughly test and evaluate the relevant information.
    Response: If Congress is to analyze such information and make a 
determination of a specific fee amount, there is little justification 
for the other statutory requirement that the amount be subject to 
notice-and-comment rulemaking. Congress does not ordinarily involve 
itself with this level of management of such regulatory programs, and 
the mandate in the FY 2002 Appropriations Act that HUD modify fees as 
necessary to ensure the level of appropriations reflects authorization 
by Congress for HUD to pursue a fee modification within certain limits. 
The requirement in the Act for notice-and-comment rulemaking in 
accordance with the Administrative Procedure Act satisfies the interest 
of Congress in establishing appropriate safeguards for HUD's 
modification of the amount of the fee.
    Comment 5: The formula used by HUD to determine the fee level is 
appropriate, but should only be applied after HUD follows the processes 
and procedures in the Act.
    Response: As discussed previously, HUD believes that it has 
followed the required procedures. HUD agrees with the commenter that 
the formula used to establish the new level of the fee is appropriate, 
and notes that none of the commenters suggested changes to the 
production levels used by HUD to calculate the final fee.
    Comment 6: One of the stated purposes of the Act is ``to ensure 
that the public interest in, and need for, affordable manufactured 
housing is duly considered in all determinations relating to the 
Federal standards and their enforcement.'' This statement of purpose 
mandates a specific analysis of the impact of the increased fee on the 
affordability of manufactured housing. Further, the Conferees on the FY 
2002 HUD Appropriations Act directed HUD ``to identify the use of all 
program fees as part of the fiscal year 2003 HUD Budget 
Justification.''
    Response: HUD has always believed that it was required to consider 
the potential effect of its actions in the manufactured housing program 
on the cost of this affordable housing alternative. HUD has considered 
the potential effect on cost of raising the fee to $39. It is HUD's 
position that the $15 increase would have a negligible effect on the 
cost of manufactured housing. While the amount of the fee has been 
increased in comparison to the earlier fee, the $39 fee still 
represents a very small proportion of the overall cost of a 
manufactured home. However, cost is not the only important 
consideration. The first purpose stated in the Act is ``to protect the 
quality, durability, safety, and affordability of manufactured homes.'' 
The Conferees also directed HUD ``to place a priority on monitoring 
safety inspection of homes and the issuance of inspection labels when 
determining the funding requirements for this program during fiscal 
year 2002.'' H.R. Conf. Rep. No. 107-272, p. 112 (2001). HUD has done 
everything required to meet the various mandates established by 
Congress in the authorizing statute for the manufactured housing 
program, the appropriations process, and other relevant legislation, as 
well as various Executive Branch issuances.
    Comment 7: Before the final rule, HUD should publish specific 
information with line-by-line details about its proposed program 
expenditures.
    Response: HUD is not required to publish such information. Choosing 
the most appropriate management of a Federal program is a governmental 
function. While the public has the right and a responsibility to 
observe government operations, the public is represented in the 
management of individual programs through elected officials and the 
structure of the powers accorded to the branches of the Federal 
government. The Secretary has the statutory responsibility to 
administer an effective program that ensures the quality, durability, 
safety, and affordability of manufactured homes. In order to meet that 
responsibility efficiently, the Secretary has concomitant authority to 
manage the resources dedicated to the program, subject to the law and 
the direction of the President.
    On the other hand, Congress has the authority and responsibility to 
establish appropriations levels for government operations, and HUD has 
provided, and will continue to provide, Congress with the information 
it needs to review HUD's operating budget for this program. Through 
this process, the public will be assured that their representatives 
have determined the level of Federal oversight that is appropriate in 
exchange for the benefit of Federal preemption of multiple State and 
local construction and safety requirements as applied to manufactured 
housing.
    Comment 8: HUD has used program fees to engage in unauthorized 
activities.
    Response: HUD strongly disagrees with this comment. In fact, 
although legal challenges to HUD's actions are rare, no court has ever 
found that HUD has acted outside of its authority or responsibility in 
this program. HUD has always been careful to ensure that its actions 
are legal and appropriate. In addition, HUD has tried to be responsive, 
in proportion to its program responsibilities, when consumers or 
industry participants present questions about the authority for, or 
effectiveness of, HUD's actions within the manufactured housing 
program.
    Comment 9: It is unfair to manufacturers and consumers and a 
violation of the Act for HUD to increase the label fee by 62.5 percent. 
HUD should phase in the fee increase over several years to be more in 
line with inflation indices.
    Response: As noted in the preamble of the proposed rule, the 
regulatory fee assessed for each section of manufactured housing to 
assure the public that such housing meets a minimum level of 
performance and safety has not been increased for over 12 years. In 
addition, Congress amended the statute in December 2000 to require the 
Secretary to exercise significant new responsibilities for nationwide 
programs for installation and dispute resolution and for a consensus 
rulemaking procedure, and to authorize the Secretary to use fee 
collections to fund a new program administrator. Although

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the amount of increase of the fee appears large as a percentage change, 
the percent-increase statistic mostly reflects a very small initial fee 
and a substantial increase in the program responsibilities.
    Further, in recent years fee revenue has not covered program 
expenses, even though HUD has significantly reduced ``monitoring safety 
inspections'' and other oversight activities performed by HUD staff 
with the assistance of HUD contractors. As discussed in the response to 
Comment #6, the Conferees on HUD's FY 2002 Appropriations Act had 
directed HUD to place a priority on monitoring safety inspections of 
homes when determining the funding requirements for the program during 
FY 2002. In addition, certain regulatory functions that do not depend 
on the level of production must continue to be performed, such as 
monitoring Design Approval Primary Inspection Agencies (DAPIA's), 
Production Inspection Primary Inspection Agencies (IPIA's), and State 
Administrative Agencies (SAA's) and training. These functions are 
necessary to protect consumers and the public, and to maintain 
confidence in the industry's product. Nevertheless, as fee revenues 
have fallen corresponding to diminished production levels, the program 
has reduced monitoring inspections and has exhausted reserve operating 
funds that had been available in the program account. Therefore, the 
$15-per-section fee increase at this time is reasonable and necessary.
    Comment 10: OMB has determined that the rule is a ``significant 
regulatory action.'' As such, the proposed rule carries a significant 
risk of harming small manufacturing businesses, especially at a time 
when production levels are down.
    Response: The OMB designation is dictated by Executive Order 12866 
and does not necessarily establish a risk of harm. Most rules that 
receive this designation are deemed significant because they either 
have an annual economic effect of at least $100 million, or adversely 
affect in a material way a sector of the economy or public health or 
safety. The proposed rule noted that OMB did not determine that the 
proposal was economically significant. Rather, the designation resulted 
from another criterion: it ``raise(s) novel legal or policy issues 
arising out of legal mandates.* * *'' The comments, as presented and 
responded to in this preamble, reflect such ``novel'' issues, and 
validate the OMB designation of the rule as a significant regulatory 
action. As noted in the response to Comment 6, HUD has undertaken all 
of the required analyses and met all of its responsibilities in issuing 
this rule.
    Comment 11: The State's cost to carry out the required functions of 
an SAA is much higher than the funding provided by HUD, and will 
increase as the State takes on additional responsibilities related to 
retailer alterations and inspections and installation. Proposed 
Sec. 3284.10 should be modified to guarantee a State payment of at 
least $50,000.
    Response: The rule ensures that HUD's payments to the States will 
comply with the statutory minimum requirement. HUD appreciates that a 
higher payment may permit some States to participate more consistently 
in the manufactured housing program, and HUD would like to encourage 
such participation. In the past, HUD has considered whether 
establishment of a minimum payment such as $50,000 would be feasible, 
and in the future, such payments may be possible. This rule merely 
establishes a minimum payment to the States; it does not prevent HUD 
from taking action in the future to seek higher payments to States, if 
such payments are found to be feasible, and it does not affect the per-
section payments to be made to the States under current regulations. 
Because the demands on the program funds are so great at this time, 
however, HUD has not proposed the change suggested by the commenter.
    Comment 12: Based on HUD's stated intent in the final rule that 
established the current fee distribution system (56 FR 65183, December 
16, 1991), proposed Sec. 3284.10 should be modified to provide that 38 
percent of each label fee be paid to the State in which a new 
manufactured home is sited, and 8 percent of each label fee be paid to 
the State in which a new home is produced. This would help the States 
to meet the costs associated with the new requirements for dispute 
resolution and installation programs.
    Response: HUD believes that Sec. 3284.10 in today's final rule is a 
reasonable interpretation of the intent of Congress, especially in 
light of the December 1991 rule cited by the commenter (56 FR 65183). 
In the December 1991 rule, HUD changed the method of payments to States 
from a formula focused solely on the State of siting to a formula based 
on both the States of production and siting. HUD expressly rejected 
utilization of a fixed percentage to define the payments to States, 
stating that ``a more equitable method of distribution of funds to SAAs 
is one based on a fixed fee dollar amount.'' (56 FR 65184-5) HUD noted 
that utilization of a percentage formula could have the effect of 
requiring HUD to seek unnecessarily high fee increases in the future, 
in order to cover HUD's needs but maintain the percentages specified 
for distribution to the States. (See 56 FR 65184.)
    However, HUD understands that the States may need funding beyond 
what is provided by HUD pursuant to new Sec. 3284.10 and 24 CFR 
3282.307(b) to implement optional new State programs for dispute 
resolution and installation. In the December 1991 rule, HUD also noted 
that States could assess their own fees to defray expenses in excess of 
funding received from HUD. (See 56 FR 65185) The law relating to this 
power of the States has not changed; nor has the requirement that a 
State participating as an SAA must provide satisfactory assurance that 
it will devote adequate funds to the administration and enforcement of 
the standards.
    As discussed in the response to Comment 11, this rule merely 
establishes a minimum payment to the States that complies with the 
requirements of the Act and does not foreclose future actions regarding 
payments to the States. The provision is not intended to minimize the 
States' importance to the program, or to limit the amount of funding 
that could eventually be made available to the States from fee 
collections. HUD and the Consensus Committee can consider increasing 
the amounts available to the States for carrying out their approved 
State plans as part of future rulemaking.
    Comment 13: HUD's FY 2002 appropriation request of $13,566,000 did 
not consider the States' costs to implement the Act. However, this 
amount was intended to cover HUD's costs for services that are no 
longer necessary because of lower production levels, and the difference 
could be used for additional funding to the States.
    Response: In its budget request, HUD considered the moneys that 
would need to be paid to the States for activities conducted under 
approved State plans, which the Act authorizes to be offset from the 
fee. Congress did not appropriate the full amount initially requested 
by HUD for the manufactured housing program in FY 2002. Even with lower 
production levels, HUD does not expect to be able to perform all of its 
program activities at optimal levels during the fiscal year. As 
discussed in the response to Comment 9, certain of HUD's regulatory 
functions must continue to be performed, regardless of the level of 
production. Therefore, HUD's regulatory responsibilities are not 
reduced in direct correlation to reduced production levels. HUD does 
not have any reserves available to fund

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program activity, but if such reserves are available in the future, HUD 
agrees that increased funding for approved State activities should be 
given priority consideration.

IV. Findings and Certifications

Paperwork Reduction Act Statement

    Although there are no information collection requirements in this 
rule, which establishes the fee to be collected from manufacturers of 
manufactured homes to fund HUD's responsibilities under the National 
Manufactured Housing Construction and Safety Standards Act of 1974, the 
collection of the fee is related to a form that has been reviewed and 
approved by the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35). The form has 
been assigned OMB control number 2502-0233. However, the form will be 
modified to reflect the cost data as modified by this rule, and a 
modification has been submitted to OMB with a request for approval. An 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless the collection displays 
a valid control number.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for Federal agencies to 
assess the effects of their regulatory actions on State, local, and 
tribal governments and the private sector. This rule does not impose 
any Federal mandates on any State, local, or tribal governments or the 
private sector within the meaning of the UMRA.

Environmental Impact

    In accordance with 24 CFR 50.19(c)(6) of the HUD regulations, this 
rule sets forth fiscal requirements which do not constitute a 
development decision that affects the physical condition of specific 
project areas or building sites, and therefore is categorically 
excluded from the requirements of the National Environmental Policy Act 
and related Federal laws and authorities.

Impact on Small Entities

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed and approved this rule and in so doing 
certifies that this rule will not have a significant economic impact on 
a substantial number of small entities. This rule will have a total 
economic impact this Federal Fiscal Year of no more than $13,566,000, 
the amount approved by Congress in HUD's FY 2002 Appropriations Act. 
Congress further requires HUD to collect this amount in fees from 
manufacturers of manufactured housing. The rule will implement this 
mandate by establishing a per unit fee on transportable sections of 
manufactured housing that is proportional in its impact, with a greater 
impact on larger manufacturers and a lesser impact on smaller 
manufacturers.

Federalism Impact

    Executive Order 13132 (entitled ``Federalism'') prohibits, to the 
extent practicable and permitted by law, an agency from promulgating a 
regulation that has federalism implications and either imposes 
substantial direct compliance costs on State and local governments and 
is not required by statute, or preempts State law, unless the relevant 
requirements of section 6 of the Executive Order are met. This rule 
does not have federalism implications and does not impose substantial 
direct compliance costs on State and local governments or preempt State 
law within the meaning of the Executive Order.

Executive Order 12866, Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this rule under 
Executive Order 12866 (entitled ``Regulatory Planning and Review''). 
OMB determined that this rule is a ``significant regulatory action,'' 
as defined in section 3(f) of the Order (although not economically 
significant, as provided in section 3(f)(1) of the Order). Any changes 
made to the rule subsequent to its submission to OMB are identified in 
the docket file, which is available for public inspection in the office 
of the Rules Docket Clerk, Office of General Counsel, Room 10276, U.S. 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
Washington, DC 20410-0500.

List of Subjects in 24 CFR Part 3284

    Consumer protection, Manufactured homes.

    Accordingly, for the reasons discussed in this preamble, HUD adds 
24 CFR part 3284, as follows:

PART 3284--MANUFACTURED HOUSING PROGRAM FEE

Sec.
3284.1  Applicability.
3284.5  Amount of fee.
3284.10  Payments to States.

    Authority: 42 U.S.C. 3535(d), 5419 and 5424.


Sec. 3284.1  Applicability.

    This part applies to manufacturers that are subject to the 
requirements of the National Manufactured Housing Construction and 
Safety Standards Act of 1974 (the Act), and to States having State 
plans approved in accordance with the Act. The amounts established 
under this part for any fee collected from manufacturers will be used, 
to the extent approved in advance in an annual appropriations Act, to 
offset the expenses incurred by HUD in connection with the manufactured 
housing program authorized by the Act.


Sec. 3284.5  Amount of fee.

    Each manufacturer, as defined in Sec. 3282.7 of this chapter, must 
pay a fee of $39 per transportable section of each manufactured housing 
unit that it manufactures under the requirements of part 3280 of this 
chapter.


Sec. 3284.10  Payments to States.

    Each calendar year HUD will pay each State that, on December 27, 
2000, had a State plan approved pursuant to subpart G of part 3282 of 
this chapter a total amount that is not less than the amount paid to 
that State for the 12 months ending at the close of business on 
December 26, 2000.

    Dated: August 6, 2002.
John C. Weicher,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 02-20526 Filed 8-8-02; 4:49 pm]
BILLING CODE 4210-27-P