[Federal Register Volume 79, Number 85 (Friday, May 2, 2014)]
[Proposed Rules]
[Pages 25035-25038]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-10129]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 3284

[Docket No. FR-5721-P-01]
RIN 2502-AJ19


Manufactured Housing Program Fee: Proposed Fee Increase

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

ACTION: Proposed rule.

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SUMMARY: This rule proposes to revise HUD's Manufactured Housing 
Program Fee regulations to raise the fee for each transportable section 
of a manufactured home that the manufacturer produces in accordance 
with HUD's Manufactured Home Construction and Safe Standards. The fee, 
referred to as a label fee, is currently set at $39. HUD appropriations 
acts since 2002 have authorized HUD to modify this fee but HUD has not 
raised this fee since 2002. For the reasons presented in the preamble 
to this rule, HUD is proposing to raise the label fee to an amount 
anticipated to be no less than $95 and no more than $105.

DATES: Comment Due Date: June 2, 2014.

[[Page 25036]]


ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Regulations Division, Office of General 
Counsel, Department of Housing and Urban Development, 451 7th Street 
SW., Room 10276, Washington, DC 20410-0500. Communications must refer 
to the above docket number and title. There are two methods for 
submitting public comments. All submissions must refer to the above 
docket number and title.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW., Room 10276, 
Washington, DC 20410-0500.
    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
http://www.regulations.gov. HUD strongly encourages commenters to 
submit comments electronically. Electronic submission of comments 
allows the commenter maximum time to prepare and submit a comment, 
ensures timely receipt by HUD, and enables HUD to make them immediately 
available to the public. Comments submitted electronically through the 
http://www.regulations.gov Web site can be viewed by other commenters 
and interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.

    Note: To receive consideration as public comments, comments must 
be submitted through one of the two methods specified above. Again, 
all submissions must refer to the docket number and title of the 
rule.

    No Facsimile Comments. Facsimile (fax) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m., weekdays, at 
the above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the public comments must be 
scheduled by calling the Regulations Division at (202) 402-3055 (this 
is not a toll-free number). Individuals with speech or hearing 
impairments may access this number via TTY by calling the Federal Relay 
Service, toll-free, at (800) 877-8339. Copies of all comments submitted 
are available for inspection and downloading at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Pamela B. Danner, Administrator, 
Office of Manufactured Housing Programs, Room 9168, Department of 
Housing and Urban Development, 451 Seventh Street SW., Washington, DC 
20410; telephone (202) 708-6423 (this is not a toll free number). 
Persons with hearing or speech impairments may access this number via 
TTY by calling the toll free Federal Relay Service at 1-800-877-8389.

SUPPLEMENTARY INFORMATION:

I. Background

    Through this rule, HUD proposes to modify the amount of the fee 
that will 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, as 
amended by the Manufactured Housing Improvement Act of 2000 (42 U.S.C. 
5401 et seq.) (the Act). Under section 620(d), label fees may be 
increased only ``(1) as specifically authorized in advance in an annual 
appropriations Act; and (2) pursuant to rulemaking in accordance with 
section 553 of title 5.'' Section 553 of title 5 United States Code 
contains the ``informal'' rulemaking requirements of the Administrative 
Procedure Act.
    HUD collects these fees from each manufacturer through the sale of 
labels which it must apply to each transportable section of each 
manufactured housing unit that it produces as evidence that the unit(s) 
conform to HUD's Manufactured Home Construction and Safety Standards 
regulations, codified at 24 CFR part 3280. These fees are used to 
offset HUD's expenses for carrying out its responsibilities under the 
Act, including carrying out inspections, developing manufactured home 
construction and safety standards under 42 U.S.C. 5403, and making 
payments to states as required by statute and HUD's regulations (see 24 
CFR 3284.10).
    Annual appropriations acts since 2002 have authorized HUD to modify 
manufactured housing fees pursuant to section 620 in order to ensure a 
final appropriation for the applicable fiscal year. (See the 
Departments of Veterans Affairs and Housing and Urban Development and 
Independent Agencies Appropriations Act, 2002, Public Law 115 Stat. 
651, approved November 26, 2001. See the account language for HUD's 
Manufactured Housing Fees Trust Fund, at 115 Stat. 669.) The annual 
appropriations language for the Manufactured Housing Fees Trust Fund 
account typically reads as follows: ``Provided further, that the amount 
made available under this heading from the general fund shall be 
reduced as such collections are received during fiscal year [applicable 
fiscal year inserted] so as to result in a final fiscal year 
[applicable fiscal year inserted] appropriation from the general fund 
estimated at not more than $0 and fees pursuant to such section 620 
shall be modified as necessary to ensure such a final fiscal year 
[applicable fiscal year inserted] appropriation.'' Similar language is 
found in the Consolidated Appropriations Act, 2014 (Pub. L. 113-76, 
approved January 17, 2014). Although the statutory authorization to 
modify fees has been in place since the 2002 appropriations act, HUD 
has not revised the manufactured housing fee since 2002. (See HUD's 
final rule published on August 13, 2002, at 67 FR 52832.) Given the 
substantial reduction in appropriations for manufactured housing since 
2002,\1\ HUD proposes that it is time to increase the fee.
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    \1\ HUD's appropriations for the Manufactured Housing Fees Trust 
Fund was $13.566,000 in FY 2002 (Public Law 107-73, approved 
November 26, 2001); $13,000.000 in FYs 2003, 2004, 2005, 2006, and 
2007 (Public Law 108-7, approved February 20, 2003, Public Law 108-
199, approved January 23, 2004, Public Law 108-447, approved 
December 8, 2004, Public Law 109-115, approved November 30, 2005, 
Public Law 110-5, approved February 15, 2007); $16,000,000 in FYs 
2008, 2009, 2010, and 2011(Pub. L. 110-161, approved December 26, 
2007, Pub. L. 111-8, approved March 11, 2009, Pub. L. 111-117, 
approved December 16, 2009, Pub. L. 112-10, approved April 15, 2011) 
$6,500,000 in FYs 2012 and 2013 (Pub. L. 112-55, approved November 
18, 2011, Pub. L. 113-6, approved March 26, 2013); and $7,530,000 in 
FY 2014 (Public Law 113-73, approved January 17, 2014. The Senate 
Report (Report 112-83) accompanying the Senate's FY 2012 
appropriation bill for HUD (S.1596), proposed $9,000,000 to support 
manufactured housing and noted that this amount was $5,000,000 below 
what the Administration requested and almost $7,000,000 below 
appropriations enacted for Manufactured Housing in 2011. The Senate 
Report noted that manufactured housing production has declined 
substantially since peak industry production in 1998, and has 
continued to decline in 2011 due to a variety of factors. The Senate 
Report stated that expenditures supporting the programs should 
therefore reflect and correspond with this decline. The Report noted 
that the Committee continued language allowing HUD to collect fees 
and encouraged HUD to take advantage of this authority. See Senate 
Report 112-83 at page 133. Fiscal Year 2011 was the fiscal year to 
present the most significant reduction in funding for manufactured 
housing.
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II. This Proposed Rule

    When HUD last modified the amount of the fee per transportable 
section in 2002 (67 FR 52832, August 13, 2002), HUD divided the annual 
projected number of manufactured housing transportable units (350,000) 
into the amount appropriated by Congress for the manufactured housing 
program for the fiscal year. (See 67 FR at 52832.) Since 2002, the 
number of transportable units and therefore fee collection has

[[Page 25037]]

decreased and HUD has not adjusted its fee to compensate for the 
decline in production, instead relying on direct appropriations and 
carryover to fund program operations. While the number of transportable 
units has declined, program expenses over the last 12 years have risen. 
Requirements related to overseeing the quality, safety and durability 
of manufactured housing, necessary and important requirements, have 
contributed to increased program expenses. As provided in HUD's 2015 
budget justification, HUD has estimated that, at current production 
levels, approximately $10 million annually is required to administer 
the Manufactured Housing Program in a manner that fulfills HUD's 
statutory oversight responsibilities.\2\
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    \2\ HUD's 2015 Congressional Justification can be found at 
http://portal.hud.gov/hudportal/HUD?src=/program_offices/cfo/reports/fy15_CJ.
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    Based on current projected production levels, the number of 
manufactured housing transportable units ranges from approximately 
95,000 to 105,000 sections. HUD's budget requests for FY 2015 noted 
that HUD would propose, through rulemaking, an increase in the fee that 
is likely to be an amount of up to $100 per label. In determining the 
amount of fee to propose as the new label fee, HUD undertook the 
following calculations based on the current levels of production.
    If the production and placement of manufactured homes were expected 
to equal 95,000 sections, HUD would need to set the fee at 
approximately $105 per section. A fee increase of $66 ($39 to $105) 
would add on average $104 ($66 * 1.57) to the cost of each manufactured 
home, which is approximately 0.17 percent of the average sales price of 
a manufactured home.\3\ Meeks (1993) estimates the price elasticity of 
demand for manufactured homes as -2.4.\4\ This implies that a one 
percent increase in price will decrease demand by 2.4 percent. If 
producers fully absorbed the fee increase and sales remained at 95,000 
sections, the fee would raise $9.975 million, an increase of $6.27 
million. However, if the fee increase were fully passed to the 
consumer, the sales price of manufactured homes would rise on average 
0.17 percent and sales would fall to 94,618 transportable sections. 
Annual collections would increase by $6.230 million to $9.935 million.
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    \3\ According to the Census Survey of Manufactured Housing, the 
average sales price of new manufactured homes is $61,900 and 
contain, on average, 1.57 sections per home.
    \4\ Meeks, C., 1993, Price Elasticity of Demand for Manufactured 
Homes: 1961 to 1989 Mimeo, April 25.
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    If the production and placement of manufactured homes were expected 
to total 100,000 sections, HUD would need to set the fee at 
approximately $100 per section. If producers fully absorbed the fee 
increase and sales remained at 100,000 sections, fee collections would 
increase by $6.1 million and raise exactly $10 million. However, if the 
fee increase were fully passed to the consumer, the sales price of 
manufactured homes would rise on average 0.16 percent and sales would 
fall to 99,628 transportable sections. This would raise $9.963 million, 
an increase of $6.063 million.
    If the production and placement of manufactured homes were expected 
to total 105,000 sections, HUD would need to set the fee at 
approximately $95 per section. If producers fully absorbed the fee 
increase and sales remained at 105,000 sections, fee collections would 
increase by $5.846 million and raise exactly $9.975 million. However, 
if the fee increase were fully passed to the consumer, the sales price 
of manufactured homes would rise on average 0.15 percent and sales 
would fall to 104,642 transportable sections. This would raise $9.941 
million, an increase of $5.846 million.
    Each of these calculations would yield HUD close to the $10 million 
that HUD has estimated that it needs to administer the program based on 
the current level of production. HUD believes that a fee of $100 per 
label, which is the average of the three calculations, would meet the 
program needs for this fiscal year and succeeding fiscal years barring 
subsequent appropriations that require further changes. Based on public 
comment received in response to this proposal, HUD may receive 
information and data that helps HUD better determine what is an 
appropriate fee for current production levels. At this time, however, 
HUD believes that the new label fee would be no less than $95 and would 
be no more than $105.
    HUD recognizes that whether a new fee is $95, $100, or $105, it is 
a substantial fee increase, but one that is necessary to sustain the 
Manufactured Housing Program and ensure that HUD can appropriately 
carry out its statutory responsibilities. It is also a fee increase 
that is overdue given HUD has not increased the fee in 12 years, and 
the production of manufactured homes has declined significantly since 
2002.
    HUD recognizes that the Federal government is more than halfway 
through the FY 2014 and that, given the length, at times, of the 
rulemaking process, application of a new fee may apply only to a 
portion of FY 2014, or may not be feasible until FY 2015. Nevertheless, 
the fee is important to sustain the program, and HUD is proceeding with 
this rulemaking to seek the earliest application possible of a new fee. 
The increase in fee that HUD proposes in this rule, $100 (but possibly 
$95 but no less than $95 and no more than $105), is offered as one that 
would be appropriate for succeeding fiscal years, again, barring 
subsequent appropriations that require further changes.
    HUD solicits and welcomes comments from the manufactured housing 
industry on the increased fee and any additional factors, information 
or data that HUD should consider in determining an appropriate fee for 
the current production level.

III. 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. This rule proposes to adjust the current label fee that 
is collected from manufacturers of manufactured homes upwards from $39 
to possibly $105. While HUD acknowledges that it is not an 
insignificant fee increase, HUD has been public the last two years 
about the need to possibly raise the fee to $100 \5\ to sustain the 
Manufactured Housing Program, and HUD has received no significant 
response from industry on the need to raise significantly the current 
fee. For the reasons already addressed in this preamble, it is 
important to make the amount of the fee effective as soon as possible 
so that the funds will be available as soon as possible to offset the 
expenses incurred by the Department in connection with the manufactured 
housing program authorized by the Act, and to sustain the program. For 
these reasons, the Department has determined that a 30-day public 
comment period is appropriate.
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    \5\ See HUD's Congressional Justifications for 2014 and 2015 at 
http://portal.hud.gov/hudportal/HUD?src=/program_offices/cfo/budget.
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IV. Findings and Certifications.

Impact on Small Entities

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies

[[Page 25038]]

that the rule will not have a significant economic impact on a 
substantial number of small entities. This rule would not have a total 
economic impact of more than $6.1 million, which is the maximum 
additional amount of fees that HUD has determined would be collected if 
the fee is raised to $100 per label.
    By annual appropriations acts, Congress requires HUD to collect 
fees from manufacturers of manufactured housing to ensure the annual 
appropriation that HUD provides in a given fiscal year. In addition to 
the authority to set label fees, the reports accompanying HUD's recent 
annual appropriations acts reflect strong Congressional encouragement 
for HUD to respond to the annual appropriations act authority to modify 
the label fees to obtain additional funding to support the manufactured 
housing program. The per-unit fee would remain as has always been the 
case to be proportional in its impact, with greater collections from 
larger manufacturers and less collections from smaller manufacturers.
    HUD has concluded, generally, that, as is often the case with 
increased fees placed on manufacturers of products used by consumers, 
the fee increase will be passed through to consumer, thereby minimizing 
the impact on manufacturers large and small. If the cost of the fee is 
passed on to the consumer, the purchase price of a manufactured home 
would increase, and placements of new manufactured homes would decrease 
slightly below currently forecasted levels. If manufacturers absorb the 
cost, however, the effect of the increase would result in lower profits 
for the manufacturers and sales would remain unchanged. In either 
scenario, this change in fee collections would represent a transfer to 
tax payers from manufacturers of manufactured housing or consumers 
purchasing new manufactured housing, since the increased fee 
collections will replace funds collected through federal tax 
collections.
    For these reasons, HUD submits that this rule will not have a 
significant economic impact on a substantial number of small entities. 
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 would meet HUD's program 
responsibilities.

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.

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.

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

0
1. The authority citation for 24 CFR part 3284 continues to read as 
follows:

    Authority:  42 U.S.C. 3535(d), 5419, and 5424.
0
2. Revise Sec.  3284.5 to read as follows:


Sec.  3284.5  Amount of fee.

    Each manufacturer, as defined in Sec.  3282.7 of this chapter, must 
pay a fee of $100 per transportable section of each manufactured 
housing unit that it manufactures under the requirements of part 3280 
of this chapter.

    Dated: April 29, 2014.
Carol J. Galante,
 Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2014-10129 Filed 5-1-14; 8:45 am]
BILLING CODE 4210-67-P