[Federal Register Volume 69, Number 40 (Monday, March 1, 2004)]
[Proposed Rules]
[Pages 9740-9742]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-4480]



[[Page 9739]]

-----------------------------------------------------------------------

Part V





Department of Housing and Urban Development





-----------------------------------------------------------------------



24 CFR Part 3284



Manufactured Housing Program: Minimum Payments to States; Proposed Rule

  Federal Register / Vol. 69, No. 40 / Monday, March 1, 2004 / Proposed 
Rules  

[[Page 9740]]


-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 3284

[Docket No. FR-4868-P-01]
RIN 2502-AI16


Manufactured Housing Program: Minimum Payments to States

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

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would revise the minimum payments to states 
approved as State Administrative Agencies under the National 
Manufactured Housing Construction and Safety Standards Act of 1974 in 
order to provide for a more equitable guarantee of minimum funding from 
the Department's appropriation for this program and to avoid the 
differing per-unit payments to the states that have occurred under the 
present rule. This rule would base the minimum payments to states upon 
their participation in production or siting of new manufactured homes.

DATES: Comment Due Date: March 31, 2004.

ADDRESSES: Interested persons are invited to submit comments regarding 
this rule to the Regulations Division, Office of General Counsel, Room 
10276, Department of Housing and Urban Development, 451 Seventh Street, 
SW., Washington, DC 20410-0500. Comments should refer to the above 
docket number and title. A copy of each comment submitted will be 
available for public inspection and copying between 8 a.m. and 5 p.m., 
weekdays, at the above address. Facsimile (FAX) comments will not be 
accepted.

FOR FURTHER INFORMATION CONTACT: William W. Matchneer III, 
Administrator, Office of Manufactured Housing Programs, Room 9156, 
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.) Individuals with speech or hearing impairments may 
access this number through TTY by calling the toll-free Federal 
Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:
    On August 13, 2002, HUD published a final rule, at 67 FR 52832, on 
the Manufactured Housing Program Fee. The August 13, 2002 rule modified 
the amount of the fee collected from manufacturers to fund HUD's 
responsibilities under the program and ensured that states would 
receive at least a steady level of funding from the fees collected by 
HUD. Based on program experience, HUD is proposing to amend 24 CFR 
3284.10, entitled, ``Payments to states.'' At the same time, the 
Department will submit to the Manufactured Housing Consensus Committee 
(MHCC) a draft proposal to amend 24 CFR 3282.307 to increase the 
amounts paid out of fee collections to approved and conditionally 
approved states according to an established formula set forth in that 
section. In accordance with section 604(b) of the National Manufactured 
Housing Construction and Safety Standards Act of 1974 (42 U.S.C. 5401-
5426) (the Act), the MHCC will have 120 days to comment on the proposed 
increase before it is published as a proposed rule for public comment.

Minimum Payments

    The rule published August 13, 2002, in part, prescribed minimum 
payments to each state participating in the manufactured housing 
program as a State Administrative Agency under regulations implementing 
section 620(e)(3) of the Act (42 U.S.C. 5419(e)(3)). Section 620(e)(3) 
states that ``the Secretary shall continue to fund the states having 
approved state plans in the amounts which are not less than the 
allocated amounts, based on the fee distribution system in effect on 
[December 26, 2000].''
    In the previous rule, the Department implemented that statutory 
requirement by establishing the yearly payment to the approved states 
at not less than the amount paid to that state for the 12 months ending 
on December 26, 2000. That minimum amount was based upon payments that 
had been made when production levels were believed to be low enough to 
establish a reasonable minimum payment to each approved state. The 
Department had hoped that implementing the requirement in this way 
would provide additional certainty to those states in their budget 
cycles.
    However, production and sales of new homes in some states have 
continued to decline to significantly lower levels than during the year 
2000. As a result, the August 2002 rule would now require inequitable 
payments among approved states, in addition to inequitable payments 
between approved states and other states. Under that rule, some states 
would receive more funding than other states for each unit of 
manufactured housing produced or sited in those states. For example, 
State A--a fully approved state in which the production and siting 
level has decreased by 30 percent since the current rule's base year of 
2000 (the levels in some states have decreased by more)--may, in 
effect, receive a total of $17.00 or more per unit sited and produced 
in State A, because that payment would represent a pro rata portion of 
the inflated base year amount. But State B--in which production and 
siting level has remained steady or has increased, or which is not an 
approved state--will still be paid a total of $11.50 per unit sited and 
produced in State B, as prescribed by 24 CFR 3282.307.
    Although some inequity might have been foreseen during the 
formulation of the August 2002 rule, the Department was not expecting 
the imbalances that have now resulted nor did any commenter raise the 
concern. Therefore, in order to ensure a more equitable distribution of 
funds, the Department has determined that it should implement the 
statutory requirement in a way that is more directly based on the 
distribution system in effect at the time of the amendments to the Act. 
The statutory requirements would be implemented in a final rule that 
would assure that amounts established in the formula used to distribute 
funds to states (see 24 CFR 3282.307(b)) will not be decreased below 
their current levels, i.e., $9 for each transportable section first 
located within an approved state and $2.50 for each transportable 
section produced in an approved state.
    The Department also has found that the current rule allows 
uncertainty about which states are considered approved for purposes of 
the minimum payment requirement. Conditionally approved states are 
permitted to participate in the program and carry out their state 
plans, pursuant to 24 CFR 3282.302(c), but this same section also 
provides that conditionally approved states shall not be considered 
approved for all purposes. The Act permits the Department to continue 
its previous practice of making formula payments to conditionally 
approved states that are paid using fee collections. See section 620(c) 
of the Act, (42 U.S.C. 5419(c)), authorizing fee amounts to be used for 
program activities engaged in by HUD before December 27, 2000. By 
contrast, the protection provided in the new section 620(e)(3) of the 
Act--for minimum payments--is a new provision and is applicable only to 
states having ``approved State plans'' (42 U.S.C. 5419(e)(3)). This 
section may appropriately cover only fully approved states, especially 
in light of the language in Sec.  3282.302(c) that provides that 
conditional approval allows a state to participate in the program but 
does not constitute approval of a state plan.

[[Page 9741]]

    As the Department proposes to amend the rule, all states receiving 
amounts allocated from the fees collected from manufacturers will be 
paid the same per-unit amounts determined in accordance with the per-
unit formula in 24 CFR 3282.307(b). In the event that the formula 
amounts are changed in the future, however, the proposed revision in 24 
CFR 3284.10 would ensure that each fully approved state would be paid 
not less than $9 for each transportable section first located within 
that state and $2.50 for each transportable section produced in that 
state. It is not likely that, in the future, HUD would reduce these 
amounts, which have been in effect for over 10 years and are currently 
paid to all participating states. Therefore, the proposed approach to 
revising Sec.  3284.10 builds on the language in Sec.  3282.307(b) that 
provides for distribution of a portion of the fees among both fully 
approved and conditionally approved states.
    The Department is proposing to revise Sec.  3284.10 to specify that 
each fully approved state would continue to receive payments that are 
no less than: (1) $9.00 for each transportable section of new 
manufactured housing that is first located on the premises of a 
retailer or purchaser in that state; and (2) $2.50 for each 
transportable section of new manufactured housing that is produced in 
that state. Providing this guarantee to fully approved states complies 
with both the requirement in section 620(e)(3) of the Act and 24 CFR 
3282.302(c). These minimum payments also are consistent with the 
amounts specified in Sec.  3282.307 for distribution to all 
participating states, but do not prevent HUD from amending Sec.  
3282.307 in any future rulemaking to increase the amounts actually 
distributed to those states. In fact, in an action that is separate 
from this rulemaking, HUD will present to the MHCC a draft proposal to 
amend Sec.  3282.307(b) to increase the amount paid to an approved or 
conditionally approved state for each transportable section of new 
manufactured housing that is produced in that state. In accordance with 
requirements established in section 604(b) of the Act (42 U.S.C. 
603(b)), HUD must provide the MHCC 120 days to review and submit 
comments on the draft proposal to amend Sec.  3282.307 before HUD 
publishes the proposal in the Federal Register for public comment. The 
ability of HUD to adopt any additional increases in the amounts paid to 
participating states will depend on HUD receiving appropriated amounts 
that are sufficient to fund its program responsibilities, including the 
new responsibilities for national installation and dispute resolution 
programs and support of the Manufactured Housing Consensus Committee.
    In addition to being more equitable for the participating states, 
HUD believes, after some experience and upon further consideration, 
that this proposed method of implementing the new statutory requirement 
concerning minimum payments to the states would simplify the related 
administrative burdens of HUD and the states. For many years, HUD and 
the states have been making and receiving payments based on the 
manufacturing location and first siting of new homes, pursuant to the 
provisions in Sec.  3282.307. Payments will continue to be made to all 
participating states using the same system under which HUD and the 
states have been operating for years. The proposed revised 
implementation of the statutory provision on minimum payments would be 
based on the same methodology used for compliance with Sec.  3282.307; 
therefore, the revised approach would not require any new payment or 
accounting structures and would implement the statutory requirement 
seamlessly.
    Finally, by removing the reference to ``calendar year,'' the 
revised rule would permit the Department to obligate money due the 
states from fee collections on the federal fiscal year to which the 
program is subject for operational authority through the appropriations 
process. Under the current rule, the payment to the states is 
calculated on a calendar year basis, and accurate calculation of the 
unmet balance can only be done after the close of the calendar year. In 
December 2000, however, the manufactured housing program became subject 
to the federal government's annual fiscal year (October through 
September) appropriations process. Because the two annual schedules--
calendar year for payments to states, and fiscal year for program 
operations--do not coincide, the program's budgeting and reconciliation 
processes are complicated unnecessarily, and the potential for 
inadvertent violations of governmentwide budgeting requirements is 
increased.

Findings and Certifications

Justification for 30-Day Comment Period

    It is the general practice of the Department to provide a 60-day 
public comment period on all proposed rules. However, the Department is 
shortening its usual 60-day public comment period to 30 days for this 
proposed rule. Because of its experience with the rule published as 
final in August 2002, the Department does not expect to receive 
detailed or numerous comments on this proposed rule. Persons likely to 
comment on this rule also will be familiar with the underlying 
requirement because of the recent rulemaking that addressed the same 
subject. The Department seeks a quick resolution of any changes to the 
implementation of the statutory requirement concerning minimum 
payments, which will restore equitable distribution of funds to 
participating states, simplify the administrative procedures of the 
states and the Department, and will minimize any nuisance resulting 
from development of unnecessary accounting structures.

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 proposed 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.

Regulatory Flexibility Act

    The Secretary has reviewed this rule before publication and by 
approving it certifies, in accordance with the Regulatory Flexibility 
Act (5 U.S.C. 605(b)), that this rule would not have a significant 
economic impact on a substantial number of small entities. This rule 
will affect only states that participate in the manufactured housing 
program, and will have a negligible economic impact. Notwithstanding 
HUD's determination that this rule will not have a significant economic 
impact on a substantial number of small entities, HUD specifically 
invites comments regarding any less burdensome alternatives to this 
rule that will meet HUD's program responsibilities.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from

[[Page 9742]]

publishing any rule that has federalism implications if the rule either 
(1) imposes substantial direct compliance costs on state and local 
governments and is not required by statute, or (2) the rule preempts 
state law, unless the agency meets the consultation and funding 
requirements of section 6 of the Executive Order. 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 
Regulations Division, Office of General Counsel, Room 10276, 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 
proposes to amend 24 CFR part 3284 as follows:

PART 3284--MANUFACTURED HOUSING PROGRAM FEE

    1. The authority citation for 24 CFR Part 3284 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d), 5419, and 5424.
    2. Revise Sec.  3284.10 to read as follows:


Sec.  3284.10  Minimum payments to states.

    For each transportable section of each new manufactured housing 
unit produced or sited in a state that has a state plan fully approved 
pursuant to Sec.  3282.302 of this chapter, HUD will pay such state a 
total amount that is the greater of the amount established pursuant to 
Sec.  3282.307 of this chapter, or the amount determined by adding:
    (a) $9.00, if after leaving the manufacturing plant, the 
transportable section is first located on the premises of a retailer or 
purchaser in that state (or $0, if it is not); and
    (b) $2.50, if the transportable section is produced in a 
manufacturing plant in that state (or $0, if it is not).

    Dated: January 30, 2004.
John C. Weicher,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 04-4480 Filed 2-25-04; 2:00 pm]
BILLING CODE 4210-27-P