[Federal Register Volume 85, Number 219 (Thursday, November 12, 2020)]
[Rules and Regulations]
[Pages 71831-71834]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24380]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 3282 and 3284

[Docket No. FR-5848-F-02]
RIN 2502-AJ37


Manufactured Housing Program: Minimum Payments to the States

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

ACTION: Final rule.

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SUMMARY: This rule revises the minimum payments that HUD distributes to 
states that participate in the Manufactured Housing Program as State 
Administrative Agencies (SAAs) in order to provide for a more equitable 
guarantee of minimum funding and to reduce administrative burden. This 
rule changes the minimum payments to SAAs so that payments are based on 
SAAs' participation in the production or siting of new manufactured 
homes, regardless of whether the state was fully or conditionally 
approved to participate in the program as of December 27, 2000. This 
rule also changes the formula for minimum payments to SAAs by 
increasing the amount paid to SAAs for each transportable section of 
new manufactured housing that is produced in that state, and by 
ensuring that each state participating in the program will receive an 
annual payment no less than the amount of cumulative payments resulting 
from production and shipments due to that State for the Fiscal Year 
2014 period.

DATES: Effective date: December 14, 2020.

FOR FURTHER INFORMATION CONTACT: Teresa B. Payne, Administrator, Office 
of Manufactured Housing Programs, Department of Housing and Urban 
Development, 451 Seventh Street SW, Room 9164, Washington, DC 20410; 
telephone number 202-402-5365. (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 1-800-877-8389.

SUPPLEMENTARY INFORMATION:

I. Background

    In accordance with section 620(e)(3) of the National Manufactured 
Housing Construction and Safety Standards Act of 1974, (42 U.S.C. 5401-
5426) (the Act), as amended, HUD regulations provide for minimum 
payments to the states participating in the Manufactured Housing 
Program as an SAA. Since August 13, 2002, HUD regulations at 24 CFR 
3284.10 provide that each SAA would receive an amount not less than the 
amount paid to that SAA for the 12 months ending on December 26, 2000, 
if that state had a fully approved state plan on December 27, 2000. As 
HUD explained in a proposed rule published on March 1, 2004 (69 FR 
9740), the fact that Sec.  3284.10 only applied to states that had a 
fully approved state plan as of December 27, 2000, resulted in 
inequitable payments between states and resulted in some states 
receiving more funding than other states for each

[[Page 71832]]

unit of manufactured housing produced or sited in the state.
    In accordance with section 620 of the Act, HUD's regulations also 
provide for HUD to establish and collect from manufactured home 
manufacturers a reasonable fee to, among other things, provide funding 
to States for the administration and implementation of approved State 
plans. At Sec.  3282.307(b), HUD regulations provide that HUD will 
distribute a portion of the monitoring inspection fees collected from 
all manufactured home manufacturers to SAAs based on a formula. Prior 
to issuance of this rule, that formula provided each state $9.00 for 
each new manufactured housing unit that, after leaving the 
manufacturing plants, is first located on the premises of a retailer, 
distributor, or purchaser in that state, plus $2.50 for each 
transportable section of each new manufactured housing unit produced in 
a manufacturing plant in that State.
    Since HUD's March 1, 2004, proposed rule, which was not finalized, 
HUD has sought a solution to the issue of inequitable payments between 
states and worked with its partner SAAs and the Manufactured Housing 
Consensus Committee (MHCC) to develop proposed solutions. On May 2, 
2014 (79 FR 25035), HUD published a proposed rule to revise the amount 
of the fee collected from manufacturers. In response to HUD's proposed 
rule, several commenters stated that the fees paid to SAAs are not 
reflective of current production and shipment levels. HUD responded to 
these comments by stating that it would review revisions to the current 
fee distribution formula to ensure that states are provided with 
adequate funding to perform the required SAA function. (See, 79 FR 
47373, August 13, 2014).
    HUD agreed that it should establish a more equitable distribution 
of funds among SAAs and, in 2015, solicited comments from both its 
partner SAAs and the MHCC on how to more equitably distribute fees 
among the states. The MHCC recommended a formula of $9.00 per 
transportable section located in a state, and $14.00 per transportable 
section manufactured in a state. Under this formula, whether a state 
was fully or conditionally approved would cease to affect funding. 
Additionally, the formula provided that the amounts states would 
receive would not decrease below that received during Fiscal Year (FY) 
2014.
    On December 16, 2016, HUD issued a proposed rule (81 FR 91083) to 
adopt the proposal as recommended by MHCC. HUD proposed to amend Sec.  
3282.307(b) to increase the amount paid to both fully approved and 
conditionally approved states for each transportable section of new 
manufactured housing produced in that state from $2.50 to $14.00, in 
order to more appropriately reflect the responsibility of these states 
and to encourage states to participate in the Federal-State program to 
the maximum extent possible. HUD also proposed revising Sec.  3284.10 
to ensure participating states (regardless of approval status before 
December 27, 2000) would receive a funding level no less than the 
cumulative amount that state received in FY 2014. These proposed 
funding levels would also meet or exceed the allocated amounts paid to 
fully approved states based on the fee distribution system in effect on 
December 27, 2000, in accordance with 620(e)(3) of the Act. HUD noted 
in the proposed rule that these proposed changes would be more 
equitable for the participating states. HUD also noted its belief that 
the changes would simplify administrative burdens of HUD and the 
states, as payments would continue to be made to all participating 
states, regardless of whether they are fully or conditionally approved, 
using the methodology of Sec.  3282.307, under which HUD and the states 
have been operating for years. As a result, the proposed rule noted 
that the revised approach would not require any new payment or 
accounting structures and states should be able to seamlessly implement 
the statutory requirement. Additionally, HUD noted that this new method 
of determining state payments would also largely eliminate the need for 
a year-end supplemental payment to states, as most states would meet or 
exceed their FY 14 manufacturing and location levels.
    The proposed rule specifically invited comment on the following 
three questions:
    1. In determining a revised equitable fee distribution formula, 
what methods and data should HUD consider to increase the amounts paid 
to the states? For example, should HUD rely on the past three years or 
more of fee income data received by both fully approved and 
conditionally approved states in assessing the amount of the increase 
of the payment to each SAA?
    2. Should fully approved states be entitled to higher levels of 
payments than conditionally approved SAAs? In addition to the number of 
home placements and production levels in each state, should the 
increase in payment consider the number of complaints handled by each 
SAA for the past three years in determining the amount of the increase 
(HUD would need each SAA to provide a list of all complaints handled 
over the past three years)?
    3. Should HUD revise 24 CFR 3282.307(b) to allow the amount of the 
distribution of fees among the states to be established by Notice in 
order to more timely address changes or fluctuations in production 
levels, in order to assure that the states are adequately funded for 
the inspections and work they perform?

II. Public Comments and Response

    The public comment period for the proposed rule closed on February 
14, 2016. HUD received three public comments in response to this 
proposed rule. One comment did not address the proposed rule and stated 
that people should be able to live in what they want. The other two 
comments were responsive to the rule and were submitted by national 
trade associations that represent the manufactured housing industry. 
The responsive comments supported the proposed rule and stressed the 
importance of state participation in the Manufactured Housing Program. 
One commenter said that SAAs are state entities that are accountable to 
the public. This commenter said that SAAs should receive increased 
funding while program monitoring contractors who needlessly increase 
regulatory compliance costs should receive less. The responsive 
comments approved of the proposal to pay SAAs $9.00 for each 
transportable section of a new manufactured home located in the state, 
and $14.00 for each transportable section of a new manufactured home 
produced in the state. The responsive comments also approved of the 
proposal to pay states a minimum of the amount they received in FY 
2014, regardless of whether the state had been fully or conditionally 
approved. Additionally, the responsive commenters provided answers to 
the three questions that HUD had posed in the proposed rule.
    In response to the first question of what methods HUD should 
consider to increase the amounts paid to states, one commenter said 
that it does not object to distribution increases based on an aggregate 
of cumulative in-state production and shipment data reflecting a 
reasonable time-defined period, as long as the minimum annual 
distribution level to any state, regardless of approval status, does 
not fall below the minimum level mandated by the 2000 law. The other 
responsive commenter said that the primary data that should be used to 
determine a revised fee distribution formula is the actual shipment and 
production in each

[[Page 71833]]

of the SAA states, and that HUD should consider overall performance of 
the SAAs both individually and collectively.
    In response to the second question of whether fully approved states 
should be entitled to higher levels of payments than conditionally 
approved SAAs, and whether increases in payments should consider the 
number of complaints handled by each SAA for the past three years, both 
of the substantive commenters said that conditionally and fully 
approved states should receive the same level of funding. One commenter 
responded to the question of whether increases in payments should 
consider the number of complaints handled by each SAA by saying it does 
not believe this would be necessary or feasible, as it would require 
SAAs to undertake additional recordkeeping, and would eliminate the 
level playing field needed to ensure that all states can meet their 
responsibilities under the Act.
    In response to the third question of whether HUD should revise 24 
CFR 3282.307(b) to allow the amount of the distribution fees to be 
established by Notice, both of the responsive commenters said that 
there is a statutory requirement for HUD to go through rulemaking 
before changing payments to SAAs. One of the commenters said that 
because section 620(d) of the Act says that any fee collected under the 
section may only be modified pursuant to rulemaking, and subsection 
(a)(1)(B) of section 620 addresses funding to states using the fees 
collected, any utilization of those fees for payments to states is also 
subject to the requirement that modifications can only be done through 
rulemaking. The other commenter said that HUD should obtain public 
input when making revisions to the funding formula.
    In response to these comments, HUD notes that it appreciates these 
responses and will consider them for future changes to the fee 
distribution formula. HUD understands commenters' concerns that HUD 
should seek input from interested parties before making changes to the 
distribution formula. HUD posed the question about whether HUD should 
consider making future changes to Sec.  3282.307(b) by notice with the 
thought that this might facilitate HUD's ability to respond more 
quickly in the future to requests from the states for more adequate 
funding.
    As requested by the commenters, this final rule maintains HUD's 
proposed changes in its December 16, 2016, proposed rule, with some 
minor edits for clarity. In the proposed rule, Sec.  3282.307(b)(1) 
said that states will receive $9.00 for each transportable section of 
each new manufactured housing unit that, after leaving the 
manufacturing plant in another state, is first located in that state. 
This final rule says that states will receive $9.00 for each 
transportable section of each new manufactured housing unit that, after 
leaving the manufacturing plant, is first located in that state. This 
clarifies that the states where manufactured housing units are first 
located will receive the $9.00 whether the transportable section was 
manufactured in another state, or in the same state where it is first 
located. Thus, if a transportable section of a manufactured housing 
unit is produced in a state and first located in that same state, that 
state would receive $23.00 for that transportable section, the 
combination of the amounts in Sec.  3282.307(b)(1) and (b)(2).
    This final rule also revises Sec.  3284.10 to clarify that the 
minimum payment to each state will be no less than that due to that 
state for production and shipments for the period between October 1, 
2013 to September 30, 2014, rather than the minimum payment simply 
being the amount the state received during this time period. The change 
was needed because states typically receive payments after September 
30th, up to December, for shipments and production that occurred during 
the FY 14 period.
    Additionally, this final rule revises the wording of Sec.  
3284.10(a) for readability. The proposed rule said that states would 
receive $9.00, if after leaving the manufacturing plant, for every 
transportable section that is first located on the premises of a 
retailer, distributor, or purchaser in that state after leaving the 
manufacturing plant (or $0, if it is not) during the year for which 
payment is received. This final rule says that states will receive 
$9.00 for every transportable section that is first located on the 
premises of a retailer, distributor, or purchaser in that state after 
leaving the manufacturing plant (or $0, if it is not) during the year 
for which payment is received.
    Finally, HUD is adding at this final rule stage language to 
Sec. Sec.  3282.307(b) and 3284.10 that states that HUD shall 
distribute the monitoring fee under Sec.  3282.307 and pay the minimum 
payment to states under Sec.  3284.10 ``subject to the availability of 
appropriations.'' HUD is adding this language to clarify that should 
its annual appropriation fail to provide sufficient funds to pay the 
states at the formula levels established by this rule, section 
620(e)(2) of the Act limits HUD to distribute fees ``only to the extent 
approved in advance in an annual appropriations Act.'' Consequently, 
the language added to Sec. Sec.  3282.307(b) and 3284.10 codifies 
existing statutory authority.

III. Findings and Certifications

Executive Order 12866 and Executive Order 13563

    Under Executive Order 12866 (Regulatory Planning and Review), a 
determination must be made whether a regulatory action is significant 
and, therefore, subject to review by the Office of Management and 
Budget (OMB) in accordance with the requirements of the order. 
Executive Order 13563 (Improving Regulations and Regulatory Review) 
directs executive agencies to analyze regulations that are ``outmoded, 
ineffective, insufficient, or excessively burdensome, and to modify, 
streamline, expand, or repeal them in accordance with what has been 
learned. Executive Order 13563 also directs that, where relevant, 
feasible, and consistent with regulatory objectives, and to the extent 
permitted by law, agencies are to identify and consider regulatory 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public. This rule was determined to not be a significant 
regulatory action under section 3(f) of Executive Order 12866, 
Regulatory Planning and Review, and therefore was not reviewed by OMB.

Executive Order 13771

    Executive Order 13771, entitled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017. Section 2(a) of 
Executive Order 13771 requires an agency, unless prohibited by law, to 
identify at least two existing regulations to be repealed when the 
agency publicly proposes for notice and comment or otherwise 
promulgates a new regulation. In furtherance of this requirement, 
section 2(c) of Executive Order 13771 requires that the new incremental 
costs associated with new regulations shall, to the extent permitted by 
law, be offset by the elimination of existing costs associated with at 
least two prior regulations. OMB's interim guidance issued on February 
2, 2017, explains that for Fiscal Year 2017 the above requirements only 
apply to each new ``significant regulatory action that imposes costs.'' 
It has been determined that this rule is not a ``significant regulatory 
action that imposes costs'' and thus does not trigger the above 
requirements of Executive Order 13771.

Impact on Small Entities

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires

[[Page 71834]]

an agency to conduct a regulatory flexibility analysis of any rule 
subject to notice and comment rulemaking requirements unless the agency 
certifies that the rule will 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.

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

    This rule establishes rates and sets forth related fiscal 
requirements which do not constitute a development decision that 
affects the physical condition of specific project areas or building 
sites. Accordingly, under 24 CFR 50.19(c)(6), this rule is 
categorically excluded from the requirements of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321).

Federalism Impact

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

List of Subjects

24 CFR Part 3282

    Manufactured home procedural and enforcement regulations, 
Administrative practice and procedure, Consumer protection, 
Intergovernmental relations, Investigations, Manufactured homes, 
Reporting and recordkeeping requirements.

24 CFR Part 3284

    Consumer protection, Intergovernmental relations, Manufactured 
homes.

    Accordingly, for the reasons discussed in this preamble, HUD amends 
24 CFR parts 3282 and 3284 as follows:

PART 3282--MANUFACTURED HOME PROCEDURAL AND ENFORCEMENT REGULATIONS

0
1. The authority citation for part 3282 continues to read as follows:

    Authority:  15 U.S.C. 2697, 42 U.S.C. 3535(d), 5403, and 5424.


0
2. Revise Sec.  3282.307(b) to read as follows:


Sec.  3282.307  Monitoring inspection fee establishment and 
distribution.

* * * * *
    (b) The monitoring inspection fee shall be paid by the manufacturer 
to the Secretary or to the Secretary's Agent, who shall distribute a 
portion of the fees collected from all manufactured home manufacturers 
among the approved and conditionally-approved States in accordance with 
an agreement between the Secretary and the States and based upon the 
following formula subject to the availability of appropriations:
    (1) $9.00 of the monitoring inspection fee collected for each 
transportable section of each new manufactured housing unit that is 
first located on the premises of a retailer, distributor, or purchaser 
in that State; plus
    (2) $14.00 of the monitoring inspection fee collected for each 
transportable section of each new manufactured housing unit produced in 
a manufacturing plant in that State.
* * * * *

PART 3284--MANUFACTURED HOUSING PROGRAM FEE

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

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


0
4. Revise Sec.  3284.10 to read as follows:


Sec.  3284.10  Minimum payments to states.

    For every State that has a State plan fully or conditionally 
approved pursuant to Sec.  3282.302 of this chapter, and subject to the 
availability of appropriations, HUD will pay such State annually a 
total amount that is the greater of either the amount of cumulative 
payments resulting from production and shipments due to that State for 
the period between October 1, 2013, and September 30, 2014; or the 
total amount determined by adding:
    (a) $9.00 for every transportable section that is first located on 
the premises of a retailer, distributor, or purchaser in that State 
after leaving the manufacturing plant (or $0, if it is not) during the 
year for which payment is received; and
    (b) 14.00 for every transportable section that is produced in a 
manufacturing plant in that State (or $0, if it is not) during the year 
for which payment is received.

Dana T. Wade,
Assistant Secretary for Housing, Federal Housing Commissioner.
[FR Doc. 2020-24380 Filed 11-10-20; 8:45 am]
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