[Federal Register Volume 85, Number 219 (Thursday, November 12, 2020)]
[Proposed Rules]
[Pages 71856-71859]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24382]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 3282 and 3284

[Docket No. FR-6234-A-01]
RIN 2502-AJ57


Manufactured Housing Program: Minimum Payments to the States; 
Advanced Notice of Proposed Rulemaking and Request for Public Comment

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

ACTION: Advanced notice of proposed rulemaking and request for public 
comment.

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SUMMARY: This advanced notice of proposed rulemaking (ANPR) informs of 
and seeks public comment on changes that HUD is considering for the 
minimum payments that HUD distributes to states that participate in the 
Manufactured Housing Program as State Administrative Agencies (SAAs). 
HUD is considering two changes intended to achieve more equitable 
payments that more appropriately reflect state responsibilities and to 
incentivize continued and new state partnerships: First, HUD is 
considering payment to each SAA for its participation as partners in 
each of the various program elements, including SAA roles, 
participation in joint monitoring, and for administering installation 
and dispute resolution programs. Second, HUD is considering a change in 
annual funding from minimum end of Fiscal Year lump sum payments to 
payments for each operational element at the end of each Fiscal Year, 
and a sunset provision for states to strategize and plan for this 
change. HUD is seeking public comment on questions related to these 
changes and will consider the comments in developing a proposed rule to 
further streamline and enhance the minimum payment formula. This ANPR 
will also

[[Page 71857]]

be shared with the Manufactured Housing Consensus Committee (MHCC) and 
the relevant MHCC subcommittee and all state partners for feedback and 
comments prior to moving forward in the rulemaking process. A Proposed 
Rule developed in consideration of this ANPR will also be shared with 
the MHCC prior to moving forward in the rulemaking process in 
accordance with statutory requirements.

DATES: Comments due January 11, 2021.

ADDRESSES: Interested persons are invited to submit comments regarding 
this ANPR. Comments should 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 HUD Regulations Division, Office of Housing, Department of 
Housing and Urban Development, 451 7th Street SW, Washington, DC 20410-
8000; telephone: (202) 708-2625 (this is not a toll-free number), (800) 
481-9895 (this is a toll-free number). Hearing- or speech-impaired 
individuals may access these numbers through TTY by calling the Federal 
Relay Service at (800) 877-8339 (this is a toll-free number).
    2. Electronic submission of comments: Comments may be submitted 
electronically through the Federal eRulemaking Portal at 
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 
www.regulations.gov website can be viewed by other commenters and 
interested members of the public. Commenters should follow 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 this ANPR.
    No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
    3. 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 appointment to review the public comments must be 
scheduled in advance by calling the Regulations Division at (202) 402-
5731 (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 at (800) 877-8339 (this is a toll-free number). 
Copies of all comments submitted are available for inspection and 
downloading at www.regulations.gov.

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 Federal Relay Service at 800-877-8389. (This 
is a toll-free number.)

SUPPLEMENTARY INFORMATION:

I. Background

    HUD is considering streamlining and enhancing the minimum payment 
formula to provide more equitable payments to State Administrative 
Agencies (SAAs) that more appropriately reflect the responsibility of 
the corresponding state and better encourage states to participate to 
the maximum extent possible in the Federal-State manufactured housing 
partnership program. First, HUD is considering payment to each SAA for 
its participation as partners in various program elements, including 
SAA roles, participation in joint monitoring, and for administering 
installation and dispute resolution programs. Second, HUD is 
considering a change in annual funding from minimum end of Fiscal Year 
lump sum payments to payments for each operational element at the end 
of each Fiscal Year, and a sunset provision for states to strategize 
and plan for this change.
    Elsewhere in today's issue of the Federal Register, HUD published a 
final rule that would revise HUD's regulations at 24 CFR 3282.307 and 
3284.10 on minimum payments to states to provide more equitable and 
fair payments to states. HUD continues to seek solutions to the issue 
of inequitable payments between states and to encourage states to 
participate in the Federal-state manufactured housing partnership 
program to the maximum extent possible. Due to the preemptive nature of 
this building regulatory program and the geographical distribution of 
home production facilities combined with interstate commerce, Federal-
state partnerships are integral to achieving the purposes of the 
National Manufactured Home Construction and Safety Standards Act of 
1974 and to protecting the residents and general public. This ANPR will 
also be shared with the MHCC and the relevant MHCC subcommittee and all 
state partners for feedback and comments prior to moving forward in the 
rulemaking process. A Proposed Rule developed in consideration of this 
ANPR will also be shared with the MHCC prior to moving forward in the 
rulemaking process in accordance with statutory requirements (42 U.S.C. 
5403(b)(3)).
    Compensating state partners has been a cornerstone of HUD's 
commitment to its state partners. In accordance with section 620 of the 
National Manufactured Housing Construction and Safety Standards Act of 
1974 (the Act), 42 U.S.C. 5401-5426, HUD regulations provide for HUD to 
establish and collect from manufactured home manufacturers a reasonable 
fee to, among other things, provide funding for states that offsets the 
costs of administering various responsibilities states choose to 
execute as identified in the respective state plan. 42 U.S.C. 
5419(a)(1)(B). States that participate in the federal program as SAAs 
are currently compensated through a formula calculation. 42 U.S.C. 
5419(e)(3). Currently, some SAAs with either fully or conditionally 
approved State plans receive an additional end-of-Fiscal-Year lump sum 
payment in the amounts which are not less than the total allocated 
amount, based on the fee distribution system in effect on December 27, 
2000. 42 U.S.C. 5419(e)(3). Under the distributions included in this 
ANPR, eligible states would continue to receive fee distribution 
amounts which are not less than the allocated amounts in effect on 
December 27, 2000.
    The Manufactured Housing Improvement Act of 2000 amended the 
National Manufactured Housing Construction and Safety Standards Act of 
1974. Since then, HUD's payments to SAAs have consisted of evaluating 
each fully-approved SAA's total annual payment and ensuring that such 
total payment does not fall below the total HUD payments to the fully-
approved SAA for Calendar Year 2000. 42 U.S.C. 5419(e)(3).
    Elsewhere in today's issue of the Federal Register is a final rule 
by HUD, which would move the baseline payment to the amounts paid to 
the states in Fiscal Year 2014 (FY14) to ensure payments do not go 
below the

[[Page 71858]]

Calendar Year 2000 (CY00) payments, and now also includes states that 
have conditionally approved state plans to address previous inequities. 
This final rule followed from a proposed rule published December 16, 
2016 (81 FR 91083) and the public comments received in response.
    However, HUD believes that even with these changes there may be 
even more equitable approaches to ensure SAA compensation in compliance 
with statutory provisions. While the current formula establishes a 
payment that allows each SAA to obtain a minimum level of funding, that 
minimum funding level does not align workload with financial resource 
needs. For example, some states are still being provided funding under 
the statutory minimums, even though those states no longer have any 
operating manufacturing plants. Further, even with minimum payments now 
being based on production and shipment numbers that existed in FY14, 
minimum payments do not reflect workload due to changing dynamics of 
production and shipments. The updated regulation related to 
supplemental payment at the end of the fiscal year paid to eligible 
states is based on FY14 production outputs, and no other factors albeit 
update to the calculation based on CY00 production outputs. Therefore, 
HUD is considering an allocation of financial resources more closely 
based on the workload needs arising from the various levels of 
participation that any given state may experience or elect.
    HUD is soliciting comment on potential action related to its 
partial funding of state programs in accordance with 42 U.S.C. 
5419(e)(3), which directs that states do not receive less than the 
formula distribution amounts that were in place for production states 
($2.50 per transportable section) and location states ($9.00 per 
transportable section) in CY00. Elsewhere in today's issue of the 
Federal Register, HUD published a final rule that would substantially 
increase the payment to production states from $2.50 per transportable 
section to $14.00 per transportable section. HUD is also now 
considering payment to each SAA for its participation as partners in 
various program elements, including SAA roles, participation in joint 
monitoring, and for administering installation and/or dispute 
resolution programs.
    HUD is considering this change to better reinforce HUD's 
commitments to HUD-state partnerships while incentivizing states to 
maintain current partnerships and consider additional partnerships and 
participation in all aspects of the program. It is important to 
understand that these payments are distinct from any HUD funding to 
SAAs provided through formula distribution calculated from production 
and shipments. It is also important to understand that based on 
statute, only SAAs with state plans are eligible for funding, 
therefore, those states that may choose to operate individual optional 
programs such as Dispute Resolution and or Installation, would not get 
payments unless the state becomes an SAA.
    This change from minimum end of Fiscal Year lump sum payments to 
payments for each operational element at the end of each Fiscal Year 
would occur over an established time period, such as 5 or 10 years. HUD 
is considering a sunset of the supplemental payment(s) over a to-be-
determined time frame to better incentivize states to participate to 
the maximum extent possible in the manufactured housing program that 
was initially created as a Federal-state partnership.
    HUD's current partnership elements include states that have chosen 
to partner as:

 State Administrative Agencies with manufacturers located in 
the state (SAAM)
 State Administrative Agencies without manufacturers located in 
the state (SAAL)
 State Administrative Agencies that partner with HUD to 
participate in Joint Monitoring (JM)
 States that partner with HUD to administer Dispute Resolution 
(DR)
 States that partner with HUD to administer Installation 
Oversight (IN)

    HUD is considering the provision of lump sum annual payments for 
each partnership element to help offset the costs of standing up and 
operating each aspect in addition to the $9 and $14.00 that will be 
paid for location and production through a final rule being published 
elsewhere in today's issue of the Federal Register. HUD is 
contemplating setting the annual payments for each element within the 
following ranges:

 SAAM: $5,000-$8,000
 SAAL: $5,000-$8,000
 JM: $5,000-$8,000
 DR: $3,000-$5,000
 IN: $5,000-$7,000

    In addition, because the work related to the oversight of 
installation of new manufactured homes is generally dependent on the 
number of home installations in each state, HUD is considering 
augmenting the per-unit formula up to $2.00 per transportable section 
to account for installation oversight work for each transportable 
section with a manufacturer-reported first destination in a state that 
administers a HUD-approved installation program.
    Using FY21 as an example, production and shipments are estimated to 
be 5% to 8% above production and shipments for FY20. Therefore, in this 
following examples, FY21 total production and shipments are estimated 
to be around 150,000 to 158,000 transportable sections.

Hypothetical State A

    State A is an SAA with production within the state and participates 
in the program as an SAAM and SAAL but does not participate as a state 
partner for JM, IN, or DR state. Production for the plants within this 
state are estimated to be about 4,500 transportable sections in FY21 
and shipments within or to this state are estimated to be 2,500 
transportable sections in FY21. Therefore, according to HUD's formula 
payments, payment to State A in FY21 would be comprised of:

 Production: 4,500 transportable sections x $14 per section = 
$63,000, and
 Shipments: 2,500 transportable sections x $9 per section = 
$22,500

In addition to the formula payments above, State A would receive an 
FY21 year end payment for participation as an SAAM and SAAL, comprised 
of the following:

 SAAM: $5,000-$8,000, and
 SAAL: $5,000-$8,000

Since FY21 is within the to be determined sunset period, State A would 
also receive a year end supplemental payment that would initially be 
calculated based on the FY14 total payment minus the sum of formula and 
participation payments: FY14 total payment--($63,000 + $22,500 + 
$10,000 to $16,000 \1\).
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    \1\ Depending on the established participation payment for each 
of the SAAM and SAAL elements, the participation payment for State A 
is expected to be $5,000 to $8,000 or SAAM plus $5,000 to $8,000 for 
SAAL, totaling a payment range of $10,000 to $16,000.
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    The end of year supplemental would continue to be paid through the 
sunset period, though in potentially reduced amounts (see Question 3).
    After the sunset period, the year-end supplemental payment would be 
discontinued entirely and payments to the state would reflect potential 
increases in production and shipments as well as any additional program 
participation payment for program elements the state may choose and is 
approved to conduct within the HUD-state partnership (including Joint

[[Page 71859]]

Monitoring at $5,000 to $8,000, Dispute Resolution at $3,000 to $5,000, 
and Installation at $5,000 to $7,000). In addition, if State A were to 
partner as an Installation state, aside from the Installation program 
element payment of $5,000 to $7,000, the state would receive up to 
$5,000 for per-section installation fees based on the number of 
transportable sections shipped within and to the state (2,500 
transportable sections x up to $2 per section).

Hypothetical State B

    State B is an SAA state that does not have any production within 
the state but otherwise fully participates in the program as an SAAL, 
JM, DR, and IN state. Shipments to this state are estimated to be 3,500 
transportable sections in FY21. Therefore, according to HUD's formula 
payments, payment to State B would be comprised of:

 Production: 0 transportable sections x $14 = $0
 Shipments: 3,500 transportable sections x $9 = $31,500

In addition to the formula payments above, State B would receive an 
FY21 year end payment for participation, comprised of the following:

 SAAL: $5,000-$8,000
 JM: $5,000-$8,000
 DR: $3,000-$5,000
 IN: $5,000-$7,000
 Per-section Installation Fee: Up to $7,000 (3,500 
transportable sections x up to $2 per section)

Since FY21 is within the to be determined sunset period, State B would 
continue to receive a year end supplemental payment that would 
initially be calculated based on the FY14 total payment minus the sum 
of formula and participation payments: FY14 total payment--($31,500 + 
$18,000 to $28,000 \2\ + up to $7,000 \3\).
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    \2\ Depending on the established participation payment for each 
of the SAAL, JM, DR, and IN elements, the participation payment for 
State B would be expected to be $5,000 to $8,000 for SAAL plus 
$5,000 to $8,000 for Joint Monitoring plus, $3,000 to $5,000 for 
Dispute Resolution plus $5,000 to $7,000 for Installation, totaling 
a payment range of $18,000 to $28,000.
    \3\ The per section Installation Fee would total up to $7,000 
(3,500 transportable sections x up to $2 per section).
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    The end of year supplemental would continue to be paid through the 
sunset period, though in potentially reduced amounts (see Question 3).
    After the sunset period, the year-end supplemental payment would be 
discontinued entirely and payments to the state would reflect potential 
increases in shipments and installations as well as production payments 
if a plant were to begin production within the state.

II. Request for Public Comment

    HUD seeks public feedback on any elements of this ANPR. In 
particular, HUD seeks information and recommendations on the following 
issues:
    1. Should HUD change from a minimum annual payment structure to a 
payment structure that is based on an eligible state's participation in 
the federal program? Are the activities proposed by HUD for 
incorporation into the payment structure appropriate? Are there 
activities that should be added to or removed from that list? Provide 
the reasoning for your response.
    2. Should HUD provide a uniform annual funding amount associated 
with each partnership element? Is the range of funding proposed by HUD 
for each partnership element appropriate? What amounts within the 
ranges proposed by HUD are appropriate:
    a. For incenting existing SAA states to continue participation in 
each partnership element?
    b. For incenting existing SAA states to implement additional 
partnership elements?
    3. Can a state determine its budgeting needs and establish and 
implement additional partnership elements to retain maximum 
compensation within a 5 or 10-year sunset period? Would another time 
frame be more appropriate? By what means, if any, should the remaining 
supplemental payment be phased out during the sunset period? For 
example, should the supplemental payment (calculated after subtracting 
payments for production and state participation) be reduced by a 
particular percentage each year (20% in year 2, 40% in year 3, and so 
on)? Provide the reasoning for your responses.
    4. Will states that are not currently SAAs be incentivized to 
become SAAs? If so, will those states also be incentivized to become 
active participants to the maximum extent possible in each aspect of 
the manufactured housing program? Provide the reasoning for your 
response.
    5. Should HUD consider payments to states that are not SAAs? If so, 
what instrument needs to be implemented to enable such payments? 
Provide the reasoning for your response.
    6. Should HUD augment the per-unit formula to account for each 
transportable section with a manufacturer-reported first destination in 
a state that administers a HUD-approved installation program? What are 
states' costs of overseeing installation, and if HUD were to help 
offset those costs, what amount of payment per transportable unit would 
help to meaningfully offset those costs?

Dana T. Wade,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2020-24382 Filed 11-10-20; 8:45 am]
BILLING CODE 4210-67-P