[Federal Register Volume 86, Number 163 (Thursday, August 26, 2021)]
[Proposed Rules]
[Pages 47744-47838]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-17684]
[[Page 47743]]
Vol. 86
Thursday,
No. 163
August 26, 2021
Part II
Department of Energy
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10 CFR Part 460
Energy Conservation Program: Energy Conservation Standards for
Manufactured Housing; Proposed Rule
Federal Register / Vol. 86 , No. 163 / Thursday, August 26, 2021 /
Proposed Rules
[[Page 47744]]
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DEPARTMENT OF ENERGY
10 CFR Part 460
[EERE-2009-BT-BC-0021]
RIN 1904-AC11
Energy Conservation Program: Energy Conservation Standards for
Manufactured Housing
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Notice of supplemental notice of proposed rulemaking and
request for comment.
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SUMMARY: The U.S. Department of Energy (``DOE'' or ``the Department'')
is publishing a supplemental notice of proposed rulemaking (``SNOPR'')
to establish energy conservation standards for manufactured housing
pursuant to the Energy Independence and Security Act of 2007. This
document presents an updated proposal based on the 2021 version of the
International Energy Conservation Code (``IECC'') and comments received
during interagency consultation with the U.S. Department of Housing and
Urban Development, as well as from stakeholders. This proposal presents
two potential approaches--one would provide a set of ``tiered''
standards based on the manufacturer's retail list price for the
manufactured home that would apply the 2021 IECC-based standards to
manufactured homes, except that manufactured homes with a
manufacturer's retail list price of $55,000 and below would be subject
to less stringent building thermal envelope requirements based on
manufacturer's retail list price. The alternative approach would apply
standards based on the 2021 IECC to all manufactured homes, with no
exceptions for building thermal envelope requirements based on
manufacturer's retail list price.
DATES:
Meeting: DOE will hold a public meeting via webinar on Tuesday,
September 28, 2021, from 11:00 a.m. to 4:00 p.m. See section VI,
``Public Participation,'' for webinar registration information,
participant instructions and information about the capabilities
available to webinar participants.
Comments: DOE will accept comments, data, and information regarding
this SNOPR not later than October 25, 2021.
ADDRESSES: Interested persons are encouraged to submit comments using
the Federal eRulemaking Portal at https://www.regulations.gov. Follow
the instructions for submitting comments. Alternatively, interested
persons may submit comments by email to:
[email protected]. Include docket number EERE-2009-BT-
STD-0021 and/or RIN number 1904-AC11 in the subject line of the
message. Submit electronic comments in WordPerfect, Microsoft Word,
PDF, or ASCII file format, and avoid the use of special characters or
any form of encryption.
Although DOE has routinely accepted public comment submissions
through a variety of mechanisms, including postal mail and hand
delivery/courier, the Department has found it necessary to make
temporary modifications to the comment submission process in light of
the ongoing Covid-19 pandemic. DOE is currently suspending receipt of
public comments via postal mail and hand delivery/courier. If a
commenter finds that this change poses an undue hardship, please
contact Appliance Standards Program staff at (202) 586-1445 to discuss
the need for alternative arrangements. Once the Covid-19 pandemic
health emergency is resolved, DOE anticipates resuming all of its
regular options for public comment submission, including postal mail
and hand delivery/courier.
No telefacsimilies (faxes) will be accepted. For detailed
instructions on submitting comments and additional information on the
rulemaking process, see section VI of this document.
Docket: The docket for this activity, which includes Federal
Register notices, comments, and other supporting documents/materials,
is available for review at https://www.regulations.gov. All documents
in the docket are listed in the https://www.regulations.gov index.
However, not all documents listed in the index may be publicly
available, such as information that is exempt from public disclosure.
The docket web page can be found at https://www.regulations.gov/docket?D=EERE-2009-BT-BC-0021. The docket web page contains
instructions on how to access all documents, including public comments,
in the docket. See section VI for information on how to submit comments
through https://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT:
Mr. John Cymbalsky, U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy, Building Technologies Program (EE-2J),
1000 Independence Avenue SW, Washington, DC 20585; 202-287-1692;
[email protected].
Mr. Matthew Ring, U.S. Department of Energy, Office of the General
Counsel (GC-33), 1000 Independence Avenue SW, Washington, DC 20585;
202-586-2555; [email protected].
SUPPLEMENTARY INFORMATION:
This SNOPR proposes to incorporate by reference into 10 CFR part
460 the following industry standards:
ANSI/ACCA 2 Manual J-2016 (``ACCA Manual J''), ``Manual J--
Residential Load Calculation (8th edition)'', Copyright 2016.
ANSI/ACCA 3 Manual S-2014 (``ACCA Manual S''), ``Manual S--
Residential Equipment Selection (2nd edition)'', Copyright 2014.
Copies of Manual J and Manual S may be purchased from Air
Conditioning Contractors of America Inc., (ACCA), 2800 S Shirlington
Road, Suite 300, Arlington, VA 22206, Telephone: 703-575-4477.
www.acca.org/.
PNL-8006 (``Overall U-values and Heating/Cooling Loads--
Manufactured Homes''), ``Overall U-values and Heating/Cooling Loads--
Manufactured Homes'', C.C. Conner and Z.T. Taylor of Pacific Northwest
Laboratory, prepared for the Department of Housing and Urban
Development, published February 1992.
A copy of Overall U-Values and Heating/Cooling Loads--Manufactured
Homes may be purchased from: www.huduser.org/portal/publications/manufhsg/uvalue.html. Telephone: 800-245-2691.
See section V.M of this document for further discussion of these
standards.
Table of Contents
I. Summary of the SNOPR
A. Benefits and Costs to Purchasers of Manufactured Housing
B. Impact on Manufacturers
C. Nationwide Impacts
D. Nationwide Energy Savings and Emissions Benefits
E. Total Benefits and Costs
F. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. The International Energy Conservation Code (IECC)
3. Development of the Initial Proposal and Responses
4. Development of the Current Proposal
III. Discussion of the Proposed Standards
A. The Basis for the Proposed Standards
1. Scope
2. Proposed Standards
B. Rulemaking Process
C. Test Procedure
D. Certification, Compliance, and Enforcement
E. Energy Conservation Standards Requirements
1. Subpart A: General
2. Subpart B: Building Thermal Envelope
3. Subpart C: HVAC, Service Water Heating, and Equipment Sizing
[[Page 47745]]
4. Remaining Comments Regarding the Energy Conservation Standard
Requirements
F. Crosswalk of Standards With the HUD Code
IV. Discussion and Results of the Economic Impact and Energy Savings
A. Economic Impacts on Individual Purchasers of Manufactured
Homes
1. Discussion of Comments and Analysis Updates
2. Results
B. Manufacturer Impacts
1. Conversion Costs
2. Manufacturer Production Costs and Markups
3. Manufacturer Markup Scenarios
4. Cash-Flow and INPV Results
5. Impact of Any Lessening of Competition
C. Nationwide Impacts
1. Discussion of Comments and Analysis Updates
2. Results
D. Nationwide Energy Savings and Emissions Benefits
1. Emissions Analysis
2. Monetizing Emissions Impacts
3. Discussion of Comments
4. Results
E. Total Benefits and Costs
V. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
1. Need for, and Objectives of, the Rule
2. Significant Issues Raised in Response to the IRFA
3. Description and Estimate of the Number of Small Entities
Affected
4. Description and Estimate of Compliance Requirements
5. Significant Alternatives Considered and Steps Taken To
Minimize Significant Economic Impacts on Small Entities
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Information Quality
M. Materials Incorporated by Reference
VI. Public Participation
A. Participation in the Webinar
B. Procedure for Submitting Prepared General Statements for
Distribution
C. Conduct of the Webinar
D. Submission of Comments
E. Issues on Which DOE Requests Comment
VII. Approval of the Office of the Secretary
I. Summary of the SNOPR
The Energy Independence and Security Act of 2007 (``EISA,'' Pub. L.
110-140) directs the U.S. Department of Energy (``DOE'' or in context,
``the Department'') to establish energy conservation standards for
manufactured housing.\1\ (42 U.S.C. 17071) Manufactured homes are
constructed according to a code administered by the U.S. Department of
Housing and Urban Development (``HUD Code''). 24 CFR part 3280. See
also generally 42 U.S.C. 5401-5426. Structures, such as site-built and
modular homes that are constructed to the state, local or regional
building codes are excluded from the coverage of the HUD Code.\2\
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\1\ The National Manufactured Housing Construction and Safety
Standards Act of 1974, as amended, defines ``manufactured home'' as
``a structure, transportable in one or more sections, which in the
traveling mode is 8 body feet or more in width or 40 body feet or
more in length or which when erected on-site is 320 or more square
feet, and which is built on a permanent chassis and designed to be
used as a dwelling with or without a permanent foundation when
connected to the required utilities, and includes the plumbing,
heating, air-conditioning, and electrical systems contained therein;
except that such term shall include any structure that meets all the
requirements of this paragraph except the size requirements and with
respect to which the manufacturer voluntarily files a certification
required by the Secretary [pursuant to 24 CFR 3282.13] and complies
with the standards established under this title [24 CFR part 3280];
and except that such term shall not include any self-propelled
recreational vehicle.'' 42 U.S.C. 5402(6).
\2\ See 42 U.S.C. 5403(f). See also 24 CFR 3282.12.
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EISA directs DOE to base the standards on the most recent version
of the International Energy Conservation Code (``IECC'') and any
supplements to that document, except in cases where DOE finds that the
IECC is not cost-effective or where a more stringent standard would be
more cost-effective, based on the impact of the IECC on the purchase
price of manufactured housing and on total lifecycle construction and
operating costs. (See 42 U.S.C. 17071(b)(1)) Standards shall be
established after notice and an opportunity to comment by manufacturers
of manufactured housing and other interested parties, and consultation
with the Secretary of Housing and Urban Development (``HUD''), who may
seek further counsel from the Manufactured Housing Consensus Committee.
(42 U.S.C. 17071(a)(2)) The energy conservation standards established
by DOE may (1) take into consideration the design and factory
construction techniques of manufactured homes, (2) be based on the
climate zones established by HUD rather than the climate zones of the
IECC, and (3) provide for alternative practices that result in net
estimated energy consumption equal to or less than the specified
standards. (42 U.S.C. 17071(b)(2))
On June 17, 2016, DOE published in the Federal Register a notice of
proposed rulemaking (``NOPR''), including proposals recommended by the
negotiated rulemaking working group for manufactured housing. 81 FR
39756 (June 2016 NOPR). DOE also issued a comprehensive technical
support document. See Document ID EERE-2009-BT-BC-0021-0136.\3\ The
agency also issued for public review and comment a draft Environmental
Assessment (``EA'') pursuant to the National Environmental Policy Act.
In conjunction with the draft EA, DOE issued a request for information
that would help it analyze potential impacts of the proposed standards
on the indoor air quality of manufactured homes. See Draft
Environmental Assessment for Notice of Proposed Rulemaking, ``Energy
Conservation Standards for Manufactured Housing'' With Request for
Information on Impacts to Indoor Air Quality, 81 FR 42576 (June 30,
2016) (``2016 EA-RFI''). DOE received nearly 50 comments on the
proposed rule during the comment period. In addition, DOE also received
over 700 substantively similar form letters from individuals. DOE also
received 7 comments to the 2016 EA-RFI during its comment period.
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\3\ Available at: https://www.regulations.gov/document?D=EERE-2009-BT-BC-0021-0136.
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During DOE's interagency consultation with HUD, HUD expressed
concerns about the adverse impacts on manufactured housing
affordability that would likely follow if DOE were to adopt the
approach laid out in its June 2016 NOPR. A variety of commenters also
expressed concerns over the potentially negative impacts on the
affordability of manufactured housing flowing from increased consumer
costs resulting from DOE's approach in the June 2016 NOPR. DOE
published a Notice of Data Availability (NODA) on August 3, 2018. 83 FR
38073 (August 2018 NODA). In the August 2018 NODA, DOE stated it was
examining a number of possible alternatives to those proposed in the
June 2016 NOPR on which it sought further input from the public,
including the first-time costs related to the purchase of these homes.
After evaluating the comments received in response to the June 2016
NOPR and the August 2018 NODA, in this SNOPR, DOE proposes energy
conservation standards for manufactured homes based on the 2021 IECC.
These standards would be based on the current HUD zones.
In this SNOPR, DOE's primary proposal is the ``tiered'' approach,
based on the 2021 IECC, wherein a subset of
[[Page 47746]]
the energy conservation standards would be less stringent for certain
manufactured homes in light of the cost-effectiveness considerations
required by statute. DOE's alternate proposal is the ``untiered''
approach, wherein energy conservation standards for all manufactured
homes would be based only on the 2021 IECC. Both proposals replace
DOE's June 2016 proposal and the selected approach would be codified in
a new part of the Code of Federal Regulations (``CFR'') under 10 CFR
part 460 subparts A, B, and C.
As proposed in this document, subpart A presents generally the
scope of the rule and provides definitions of key terms. Proposed
subpart B would establish new requirements for manufactured homes that
relate to climate zones, the building thermal envelope, air sealing,
and installation of insulation. Subpart C proposes new requirements
related to duct sealing, heating, ventilation, and air conditioning
(``HVAC''); service hot water systems; mechanical ventilation fan
efficacy; and heating and cooling equipment sizing.
Under either approach, subparts A and C would remain the same;
however, the stringency of the requirements under proposed subpart B
would depend on the manufacturer's retail list price of the
manufactured home for the tiered approach. Under the tiered proposal,
two sets of standards would be established in proposed subpart B (i.e.,
Tier 1 and Tier 2). Tier 1 would apply to manufactured homes with a
manufacturer's retail list price of $55,000 or less, and also
incorporate building thermal envelope measures based on certain thermal
envelope components subject to the 2021 IECC but would limit the
incremental purchase price increase to an average of approximately
$750. Tier 2 would apply to manufactured homes with a manufacturer's
retail list price above $55,000, and incorporate building thermal
envelope measures based on certain thermal envelope components and
specifications of the 2021 IECC (i.e., the Tier 2 requirements would be
the same as those under the proposed single, ``untiered'' set of
standards).
As mentioned previously, in the tiered proposal, DOE proposes to
base the applicability of the two tiers on the manufacturer's retail
list price. This is more appropriate than basing the tiers on the
purchase price as the purchase price may not be known until after a
manufactured home leaves the manufacturer, and manufacturers may have
limited control of the final purchase price of manufactured homes sold
by third-party retailers. DOE also notes that the manufacturer's retail
list price is specified in EISA for the purpose of determining
penalties for non-compliance. (42 U.S.C. 17071(d)) However, DOE relies
on purchase price in its analysis for assessing incremental price
increases for manufactured homes as an appropriate approximation for
manufacturer's retail list price because available data for
manufactured homes are only in terms of purchase price.
Under both approaches, DOE proposes to adopt a compliance date such
that the standards would apply to manufactured homes starting one year
after the publication date of the final rule in the Federal Register.
While DOE has tentatively concluded that either approach could be
considered cost-effective, DOE requests comment regarding the cost-
effectiveness of both options to inform its final decision.
A. Benefits and Costs to Purchasers of Manufactured Housing
As explained in greater detail in section IV.A of this document and
in chapter 9 of the SNOPR technical support document (``TSD''), DOE
tentatively estimates that benefits to manufactured home homeowners--in
terms of lifecycle cost (``LCC'') savings and energy cost savings of
the requirements as proposed in both proposals--could outweigh the
potential increase in purchase price for manufactured homes.
Table I.1 and Table I.2 present the average purchase price increase
of a manufactured home as a result of the energy conservation standards
for the tiered standards, i.e., Tier 1 standard and Tier 2 standard,
respectively. Table I.3 presents the average purchase price increase of
a manufactured home as a result of the energy conservation standards
for manufactured homes under the proposed single set of standards based
on 2021 IECC (``untiered'' standard). The average purchase price
increase for the Tier 2 standard and the untiered standard are the
same.
Table I.1--National Average Manufactured Housing Purchase Price (and Percentage) Increases Under Tier 1 Standard
[2020$]
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Single-section Multi-section
---------------------------------------------------------------
$ % $ %
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Climate Zone 1.................................. $629 1.2 $900 0.9
Climate Zone 2.................................. 629 1.2 900 0.9
Climate Zone 3.................................. 721 1.4 702 0.7
National Average................................ 663 1.2 839 0.8
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Table I.2--National Average Manufactured Housing Purchase Price (and Percentage) Increases Under Tier 2 Standard
[2020$]
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Single-section Multi-section
---------------------------------------------------------------
$ % $ %
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................. $2,574 4.8 $4,143 4.0
Climate Zone 2.................................. 4,820 9.1 6,167 5.9
Climate Zone 3.................................. 4,659 8.8 5,839 5.6
National Average................................ 3,914 7.4 5,289 5.1
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[[Page 47747]]
Table I.3--National Average Manufactured Housing Purchase Price (and Percentage) Increases Under the Untiered
Standard
[2020$]
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Single-section Multi-section
---------------------------------------------------------------
$ % $ %
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Climate Zone 1.................................. $2,574 4.8 $4,143 4.0
Climate Zone 2.................................. 4,820 9.1 6,167 5.9
Climate Zone 3.................................. 4,659 8.8 5,839 5.6
National Average................................ 3,914 7.4 5,289 5.1
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The analysis results for the annual energy cost savings and simple
payback periods are projected to be the same for both the Tier 2
standard and the untiered standard because they have the same energy
efficiency measures and inputs (e.g., purchase price inputs). Because
the loan parameters are different for both proposed standards, however,
the lifecycle cost savings results are different. See section IV.A.2
for further details.
Table I.4 presents the estimated national average LCC savings and
energy savings for the compliance year that a manufactured homeowner
would experience under the proposals compared to a manufactured home
constructed in accordance with the minimum requirements of existing HUD
Manufactured Home Construction and Safety Standards (``HUD Code'') at
24 CFR part 3280 et. seq. Table I.4, Figure I.1, Figure I.2 and Figure
I.3 present the nationwide average simple payback period (purchase
price increase divided by first year energy cost savings) estimated
under the proposals. The methods and information used for these
analyses are discussed more in section IV.A.
Table I.4--National Average Per-Home Cost Savings Under the SNOPR *
------------------------------------------------------------------------
Single-section Multi-section
------------------------------------------------------------------------
Tier 1 Standards
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Lifecycle Cost Savings (30-Year $1,643 $2,235
Lifetime)...........................
Lifecycle Cost Savings (10-Year $761 $1,050
Lifetime)...........................
Annual Energy Cost Savings in 2020$.. $181 $242
Simple Payback Period................ 3.7 3.5
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Tier 2 Standards
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Lifecycle Cost Savings (30-Year $2,105 $3,033
Lifetime)...........................
Lifecycle Cost Savings (10-Year $124 $264
Lifetime)...........................
Annual Energy Cost Savings in 2020$.. $359 $499
Simple Payback Period................ 10.9 10.6
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Untiered Standard
------------------------------------------------------------------------
Lifecycle Cost Savings (30-Year $1,727 $2,511
Lifetime)...........................
Lifecycle Cost Savings (10-Year ($12) $77
Lifetime)...........................
Annual Energy Cost Savings in 2020$.. $359 $499
Simple Payback Period................ 10.9 10.6
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* Negative values in parenthesis.
BILLING CODE 6450-01-P
[GRAPHIC] [TIFF OMITTED] TP26AU21.000
[[Page 47748]]
[GRAPHIC] [TIFF OMITTED] TP26AU21.001
[GRAPHIC] [TIFF OMITTED] TP26AU21.002
BILLING CODE 6450-01-C
B. Impact on Manufacturers
As discussed in more detail in section IV.B of this document and
chapter 12 of the SNOPR TSD, the industry net present value (``INPV'')
is the sum of the discounted cash flows to the industry from the
reference year (2021) through the end of the analysis period (2052).
Using a real discount rate of 9.2 percent, DOE tentatively estimates
the INPV under a no-regulatory-action alternative, which would maintain
energy conservation requirements at the levels established in the
existing HUD Code, to be $16.2 billion. Under the tiered approach, the
change in INPV would range from -1.7 percent to 2.0 percent. Industry
would incur total conversion costs of $1.8 million. Under the untiered
standard, the change in INPV would range from -2.1 percent to 2.4
percent. Industry would incur total conversion costs of $1.8 million.
C. Nationwide Impacts
As described in more detail in section IV.C of this document and
chapter 11 of the SNOPR TSD, DOE's national impact analysis (``NIA'')
projects a net benefit to the nation as a whole under both the tiered
and untiered proposals, in terms of national energy savings (``NES'')
and the net present value (``NPV'') of expected total manufactured
homeowner costs and savings compared with the baseline. In this case,
the baseline is manufactured homes built to the minimum standards
established in the HUD Code. As part of its NIA, DOE has projected the
energy savings, operating cost savings, incremental costs, and NPV of
manufactured homeowner benefits for manufactured homes sold in a 30-
year period from the compliance year of 2023 through 2052. The NIA
builds off the LCC analysis by aggregating results for all affected
shipments over a 30-year period. All NES and percentage energy savings
calculations are relative to a no-regulatory-action alternative, which
would maintain energy conservation requirements at the levels
established in the existing HUD Code.
Table I.5 illustrates the cumulative NES over the 30-year analysis
period under both the tiered and untiered standards on a full-fuel-
cycle (``FFC'') energy savings basis. FFC energy savings apply a factor
to account for losses associated with generation, transmission, and
distribution of electricity, and the energy consumed in extracting,
processing, and transporting or distributing primary fuels. NES differ
among the different climate zones because of varying energy
conservation requirements and varying shipment projections in each
climate zone. All NES and percentage energy savings calculations are
relative to a no-regulatory-action alternative, which as discussed
would maintain energy conservation requirements at the levels
established in the existing HUD Code. DOE tentatively estimates that,
under the tiered standards, 2.32 quads of FFC energy would be saved
relative to the baseline over the 30-year analysis period. DOE
tentatively estimates that, under the proposed untiered standard, 2.58
quads of FFC energy would be saved relative to the baseline over the
30-year analysis period.
[[Page 47749]]
Table I.5--Cumulative Full-Fuel-Cycle National Energy Savings of
Manufactured Homes Purchased 2023-2052 With a 30-Year Lifetime
------------------------------------------------------------------------
Single-section
quadrillion Btu Multi-section
(quads) (quads)
------------------------------------------------------------------------
Tiered Standards
------------------------------------------------------------------------
Climate Zone 1........................ 0.222 0.616
Climate Zone 2........................ 0.172 0.491
Climate Zone 3........................ 0.324 0.499
---------------------------------
Total............................. 0.718 1.606
------------------------------------------------------------------------
Untiered Standard
------------------------------------------------------------------------
Climate Zone 1........................ 0.316 0.616
Climate Zone 2........................ 0.254 0.491
Climate Zone 3........................ 0.405 0.499
---------------------------------
Total............................. 0.976 1.606
------------------------------------------------------------------------
Table I.6 and Table I.7 illustrate the NPV of consumer benefits
over the 30-year analysis period under both proposals for a discount
rate of 7 percent and 3 percent, respectively. The NPV of consumer
benefits differ among the three climate zones because of differing
initial costs and corresponding operating cost savings, as well as
differing shipment projections in each climate zone.
Table I.6--Net Present Value of Consumer Benefits for Manufactured Homes
Purchased 2023-2052 With a 30-Year Lifetime at a 7% Discount Rate
------------------------------------------------------------------------
Single-section Multi-section
(billion 2020$) (billion 2020$)
------------------------------------------------------------------------
Tiered Standards
------------------------------------------------------------------------
Climate Zone 1........................ $0.22 $0.47
Climate Zone 2........................ 0.08 0.08
Climate Zone 3........................ 0.42 0.36
---------------------------------
Total............................. 0.72 0.90
------------------------------------------------------------------------
Untiered Standard
------------------------------------------------------------------------
Climate Zone 1........................ 0.24 0.46
Climate Zone 2........................ 0.00 0.06
Climate Zone 3........................ 0.26 0.35
---------------------------------
Total............................. 0.49 0.87
------------------------------------------------------------------------
Table I.7--Net Present Value of Consumer Benefits for Manufactured Homes
Purchased 2023-2052 With a 30-Year Lifetime at a 3% Discount Rate
------------------------------------------------------------------------
Single-section Multi-section
(billion 2020$) (billion 2020$)
------------------------------------------------------------------------
Tiered Standards
------------------------------------------------------------------------
Climate Zone 1........................ $0.70 $1.69
Climate Zone 2........................ 0.38 0.79
Climate Zone 3........................ 1.34 1.50
---------------------------------
Total............................. 2.42 3.98
------------------------------------------------------------------------
Untiered Standard
------------------------------------------------------------------------
Climate Zone 1........................ 0.85 1.63
Climate Zone 2........................ 0.29 0.73
Climate Zone 3........................ 1.12 1.44
---------------------------------
Total............................. 2.26 3.80
------------------------------------------------------------------------
[[Page 47750]]
D. Nationwide Energy Savings and Emissions Benefits
As discussed in section IV.C of this document and in the NIA
included in chapter 11 of the SNOPR TSD, DOE's analyses indicate that
both the tiered and untiered proposals would reduce overall demand for
energy in manufactured homes. Both proposals also would produce
environmental benefits in the form of reduced emissions of air
pollutants and greenhouse gases associated with electricity production.
Emissions avoided under the proposed rule as a result of the energy
savings that would be achieved within manufactured homes. As discussed
previously, DOE tentatively estimates that, under the proposed tiered
standard, 2.32 quads of FFC energy would be saved over the 30-year
analysis period relative to the baseline. DOE tentatively estimates
that, under the untiered standards, 2.58 quads of FFC energy would be
saved over the 30-year analysis period relative to the baseline. DOE
estimates reductions in emissions of six pollutants associated with
energy savings: Carbon dioxide (CO2), mercury (Hg), nitric
oxide and nitrogen dioxide (NOX), sulfur dioxide
(SO2), methane (CH4), and nitrous oxide
(N2O). These emissions reductions are referred to as
``site'' emissions reductions. Furthermore, DOE estimates reductions in
emissions associated with the production of these fuels (including
extracting, processing, and transporting these fuels to power plants or
manufactured homes). These emissions reductions are referred to as
``upstream'' emissions reductions. Together, site emissions reductions
and upstream emissions reductions account for the FFC.
Table I.8 lists the emissions reductions under the proposed rule
for both single-section and multi-section manufactured homes.
Table I.8--Emissions Reductions Associated With Electricity Production for Manufactured Homes Purchased 2023-
2052 With a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
Tiered standard Untiered standards
Pollutant -------------------------------------------------------------------
Single-section Multi-section Single-section Multi-section
----------------------------------------------------------------------------------------------------------------
Site Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)................... 31.7 67.7 42.4 67.7
Hg (metric tons)............................ 0.063 0.146 0.087 0.146
NOX (thousand metric tons).................. 18.3 37.3 24 37.3
SO2 (thousand metric tons).................. 12.8 27.7 17.2 27.7
CH4 (thousand metric tons).................. 1.86 4.14 2.51 4.14
N2O (thousand metric tons).................. 0.35 0.74 0.47 0.74
----------------------------------------------------------------------------------------------------------------
Upstream Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)................... 3.1 6.32 4.09 6.32
Hg (metric tons)............................ 3.42E-4 7.67E-04 4.65E-04 7.67E-04
NOX (thousand metric tons).................. 39.7 81.7 52.5 81.7
SO2 (thousand metric tons).................. 0.32 0.64 0.42 0.64
CH4 (thousand metric tons).................. 221 463 293 463
N2O (thousand metric tons).................. 0.016 0.033 0.021 0.033
----------------------------------------------------------------------------------------------------------------
Total Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)................... 34.8 74.0 46.4 74
Hg (metric tons)............................ 0.064 0.147 0.087 0.147
NOX (thousand metric tons).................. 58 119 76.5 119
SO2 (thousand metric tons).................. 13.1 28.3 17.6 28.3
CH4 (thousand metric tons).................. 223 467 296 467
N2O (thousand metric tons).................. 0.37 0.78 0.49 0.78
----------------------------------------------------------------------------------------------------------------
DOE calculates the value of the CO2, CH4, and
N2O (collectively, greenhouse gases or GHGs) using a range
of values per metric ton of pollutant, consistent with the interim
estimates issued in February 2021 under Executive Order 13990. The
derivation of these Social Cost of Carbon, Methane, and Nitrous Oxide
values is discussed in section IV.D of this document. DOE also
estimated the monetary benefits of NOX and SO2
emission reduction, also discussed in section IV.D of this document.
Table I.9 provides the NPV of monetized emissions benefits from
reduction in emissions of GHGs for which social cost is considered, and
NOX and SO2 under both proposals.
Table I.9--Net Present Value of Monetized Benefits From GHG and Emissions Reductions Under the SNOPR
----------------------------------------------------------------------------------------------------------------
Net present value (million 2020$)
-------------------------------------------------------------------
Monetary benefits Discount Tiered standard Untiered standards
rate (%) -------------------------------------------------------------------
Single-section Multi-section Single-section Multi-section
----------------------------------------------------------------------------------------------------------------
GHG Reduction (using avg. social 5 344.4 731.0 459.5 731.0
costs at 5% discount rate) *...
GHG Reduction (using avg. social 3 1,448.6 3,076.4 1,932.9 3,076.4
costs at 3% discount rate) *...
GHG Reduction (using avg. social 2.5 2,372.9 5,039.4 3,166.2 5,039.4
costs at 2.5% discount rate) *.
[[Page 47751]]
GHG Reduction (using 95th 3 4,347.5 9,235.5 5,801.6 9,235.5
percentile social costs at 3%
discount rate) *...............
NOX Reduction **................ 3 149.0 297.1 194.6 297.1
7 52.4 104.8 68.6 104.8
SO2 Reduction **................ 3 240.9 493.8 317.2 493.8
7 84.8 174.5 111.8 174.5
----------------------------------------------------------------------------------------------------------------
* Estimates of SC-CO2 SC-CH4, and SC-N2O are calculated using a range of discount rates for use in regulatory
analyses. Three sets of values are based on the average social costs from the integrated assessment models, at
discount rates of 5 percent, 3 percent, and 2.5 percent. The fourth set, which represents the 95th percentile
of the social cost distributions calculated using a 3-percent discount rate, is included to represent higher-
than-expected impacts from climate change further out in the tails of the social cost distributions. The
social cost values are emission year specific. See section IV.D for more details.
** The benefits from NOx and SO2 were based on the low estimate monetized value. See section IV.D.2 of this
document for more details.
E. Total Benefits and Costs
Table I.10 summarizes the economic benefits and costs expected to
result from the proposed standards for manufactured homes.
Table I.10--Summary of Economic Benefits and Costs to Manufactured Home Homeowners Under the Proposed Standards
----------------------------------------------------------------------------------------------------------------
Net present value (billion 2020$)
-------------------------------------------------- Discount rate (%)
Tiered Untiered
----------------------------------------------------------------------------------------------------------------
Benefits:
Consumer Operating Cost Savings 5.5.................... 6.1.................... 7.
14.3................... 15.9................... 3.
GHG Reduction (using avg. 1.1.................... 1.2.................... 5.
social costs at 5% discount
rate) *.
GHG Reduction (using avg. 4.5.................... 5.0.................... 3.
social costs at 3% discount
rate) *.
GHG Reduction (using avg. 7.4.................... 8.2.................... 2.5.
social costs at 2.5% discount
rate) *.
GHG Reduction (using 95th 13.6................... 15.0................... 3
percentile social costs at 3%
discount rate) *.
NOX Reduction.................. 0.2.................... 0.2.................... 7.
0.4.................... 0.5.................... 3.
SO2 Reduction.................. 0.3.................... 0.3.................... 7.
0.7.................... 0.8.................... 3.
--------------------------------------------------------------------------------
Total Benefits......... 7 to 19.5.............. 7.8 to 21.6............ 7 plus GHG range.
10.5................... 11.6................... 7.
20.0................... 22.2................... 3.
16.6 to 29.1........... 18.4 to 32.2........... 3 plus GHG range.
Costs:
Consumer Incremental 3.9.................... 4.7.................... 7.
Product Costs [dagger].
7.9.................... 9.6.................... 3.
Total Net Benefits:
Including GHG and Emissions 3.1 to 15.6............ 3 to 16.9.............. 7 plus GHG range.
Reduction Monetized Value. 6.6.................... 6.9.................... 7.
12.1................... 12.6................... 3.
8.7 to 21.2............ 8.7 to 22.6............ 3 plus GHG range.
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with manufactured homes shipped in 2023-2052.
* The benefits from GHG reduction were calculated using global benefit-per-ton values. See section IV.D.2 of
this document for more details.
** Total Benefits for both the 3-percent and 7-percent cases are presented using the average GHG social costs
with 3-percent discount rate. In the rows labeled ``7% plus GHG range'' and ``3% plus GHG range,'' the
consumer benefits and NOX and SO2 benefits are calculated using the labeled discount rate, and those values
are added to the GHG reduction using each of the four GHG social cost cases.
[dagger] The incremental costs include incremental costs associated with principal and interest, mortgage and
property tax for the analyzed loan types.
The benefits and costs of the proposed standards for manufactured
housing sold in 2023-2052 can also be expressed in terms of annualized
values. The monetary values for the total annualized net benefits are
(1) the savings in consumer operating costs, minus (2) the increases in
product installed costs, plus (3) the value of the benefits of GHG and
NOX and SO2 emission reductions, all
annualized.\4\ Total Benefits for both the 3-percent and 7-percent
cases are presented using the average social costs
[[Page 47752]]
with 3-percent discount rate. Estimates of social cost of greenhouse
gases (``SC-GHG'') values are presented for all four discount rates in
section IV.D.4.b of this document.
---------------------------------------------------------------------------
\4\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2020, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2020 or 2030), and then discounted the present value from
each year to 2020. The calculation uses discount rates of 3 and 7
percent for all costs and benefits. Using the present value, DOE
then calculated the fixed annual payment over a 30-year period,
starting in the compliance year, which yields the same present
value.
---------------------------------------------------------------------------
The national operating cost savings are domestic private U.S.
consumer monetary savings that occur as a result of purchasing the
covered housing and are measured for the lifetime of manufactured
housing shipped in 2023-2052. The benefits associated with reduced GHG
emissions achieved as a result of the proposed standards are also
calculated based on the lifetime of manufactured housing shipped in
2023-2052.
Table I.11 and Table I.12 present the total estimated benefits and
costs to manufactured housing homeowners associated with the proposed
tiered standard and the untiered standards, expressed in terms of
annualized values.
Table I.11--Annualized Benefits and Costs to Manufactured Home Homeowners Under the Proposed Tiered Standard
----------------------------------------------------------------------------------------------------------------
Low-net- benefits High-net-
Category Primary estimate estimate benefits estimate Discount rate (%)
----------------------------------------------------------------------------------------------------------------
(Million 2020$/year)
----------------------------------------------------------------------------------------------------------------
Benefits:
Consumer Operating Cost 509............... 471............... 554.............. 7.
Savings. 774............... 701............... 858.............. 3.
GHG Reduction (using avg. 70................ 69................ 74............... 5.
social costs at 5%
discount rate) **.
GHG Reduction (using avg. 231............... 227............... 243.............. 3.
social costs at 3%
discount rate) **.
GHG Reduction (using avg. 354............... 348............... 374.............. 2.5.
social costs at 2.5%
discount rate) **.
GHG Reduction (using 95th 693............... 681............... 730.............. 3.
percentile social costs
at 3% discount rate) **.
NOX Reduction **.......... 13................ 12................ 13............... 7.
23................ 22................ 24............... 3.
SO2 Reduction **.......... 21................ 21................ 22............... 7.
37................ 37................ 39............... 3.
---------------------------------------------------------------------------------
Total Benefits 613 to 1,236...... 573 to 1,185...... 663 to 1,319..... 7 plus GHG range.
[dagger][dagger].
773............... 731............... 832.............. 7.
1,065............. 987............... 1,165............ 3.
904 to 1,527...... 829 to 1,441...... 995 to 1,651..... 3 plus GHG range.
Costs:
Consumer Incremental 359............... 352............... 385.............. 7.
Product Costs [dagger]. 427............... 407............... 464.............. 3.
Total Net Benefits:
Including GHG and 254 to 877........ 221 to 833........ 278 to 934....... 7 plus GHG range.
Emissions Reduction 414............... 379............... 447.............. 7.
Monetized Value
[dagger][dagger].
638............... 580............... 701.............. 3.
477 to 1,100...... 422 to 1,034...... 531 to 1,187..... 3 plus GHG range.
----------------------------------------------------------------------------------------------------------------
Note: This table presents the annualized costs and benefits associated with manufactured homes shipped in 2023--
2052. These results include benefits to consumers which accrue after 2052 from the products purchased in 2023--
2052. The Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from
the AEO2020 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In
addition, incremental product costs reflect a medium decline rate in the Primary Estimate, a low decline rate
in the Low Net Benefits Estimate, and a high decline rate in the High Net Benefits Estimate. The methods used
to derive projected price trends are explained in section IV.A and IV.C of this document. Note that the
Benefits and Costs may not sum to the Net Benefits due to rounding.
* The benefits from GHG reduction were calculated using global benefit-per-ton values. See section IV.D.2 of
this document for more details.
** The benefits from NOX and SO2 were based on the low estimate monetized value. See section IV.D.2 of this
document for more details.
[dagger] The incremental costs include incremental costs associated with principal and interest, mortgage and
property tax for the analyzed loan types. Further discussion can be found in chapter 8 of the TSD.
[dagger][dagger] Total Benefits for both the 3-percent and 7-percent cases are presented using the average
social costs with 3-percent discount rate. In the rows labeled ``7% plus GHG range'' and ``3% plus GHG
range,'' the consumer cost and benefits and NOX and SO2 benefits are calculated using the labeled discount
rate, and those values are added to the GHG reduction calculation using each of the four social cost cases.
Table I.12--Annualized Benefits and Costs to Manufactured Home Homeowners Under the Proposed Untiered Standards
----------------------------------------------------------------------------------------------------------------
High-Net-
Category Primary estimate Low-net- benefits benefits Discount rate (%)
estimate estimate
----------------------------------------------------------------------------------------------------------------
(Million 2020$/year)
----------------------------------------------------------------------------------------------------------------
Benefits:
Consumer Operating Cost 565............... 523............... 615.............. 7.
Savings. 859............... 778............... 951.............. 3.
GHG Reduction (using avg. 77................ 76................ 81............... 5.
social costs at 5%
discount rate) **.
GHG Reduction (using avg. 256............... 251............... 269.............. 3.
social costs at 3%
discount rate) **.
GHG Reduction (using avg. 392............... 385............... 414.............. 2.5.
social costs at 2.5%
discount rate) **.
GHG Reduction (using 95th 767............... 754............... 808.............. 3.
percentile social costs
at 3% discount rate) **.
NOX Reduction **.......... 14................ 14................ 15............... 7.
25................ 25................ 26............... 3.
SO2 Reduction **.......... 23................ 23................ 24............... 7.
41................ 41................ 43............... 3.
---------------------------------------------------------------------------------
Total Benefits 679 to 1,369...... 636 to 1,314...... 735 to 1,462..... 7 plus GHG range.
[dagger][dagger].
858............... 811............... 923.............. 7.
1,181............. 1,095............. 1,290............ 3.
1,003 to 1,693.... 920 to 1,597...... 1,102 to 1,829... 3 plus GHG range.
Costs:
Consumer Incremental 440............... 429............... 471.............. 7.
Product Costs [dagger]. 530............... 503............... 576.............. 3.
[[Page 47753]]
Total Net Benefits:
Including GHG and 239 to 929........ 207 to 885........ 264 to 991....... 7 plus GHG range.
Emissions Reduction 418............... 382............... 452.............. 7.
Monetized Value
[dagger][dagger].
651............... 592............... 714.............. 3.
473 to 1,163...... 417 to 1,094...... 526 to 1,253..... 3 plus GHG range.
----------------------------------------------------------------------------------------------------------------
Note: This table presents the annualized costs and benefits associated with manufactured homes shipped in 2023--
2052. These results include benefits to consumers which accrue after 2052 from the products purchased in 2023--
2052. The Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from
the AEO2020 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In
addition, incremental product costs reflect a medium decline rate in the Primary Estimate, a low decline rate
in the Low Net Benefits Estimate, and a high decline rate in the High Net Benefits Estimate. The methods used
to derive projected price trends are explained in section IV.A and IV.C of this document. Note that the
Benefits and Costs may not sum to the Net Benefits due to rounding.
* The benefits from GHG reduction were calculated using global benefit-per-ton values. See section IV.D.2 of
this document for more details.
** The benefits from NOX and SO2 were based on the low estimate monetized value. See section IV.D.2 of this
document for more details.
[dagger] The incremental costs include incremental costs associated with principal and interest, mortgage and
property tax for the analyzed loan types. Further discussion can be found in chapter 8 of the TSD.
[dagger][dagger] Total Benefits for both the 3-percent and 7-percent cases are presented using the average
social costs with 3-percent discount rate. In the rows labeled ``7% plus GHG range'' and ``3% plus GHG
range,'' the consumer cost and benefits and NOX and SO2 benefits are calculated using the labeled discount
rate, and those values are added to the GHG reduction calculation using each of the four social cost cases.
DOE's analysis of the national impacts of the proposed standards is
described in sections IV.C, IV.D, and IV.E of this document.
F. Conclusion
DOE has tentatively determined that the energy conservation
standards under either approach in this SNOPR (i.e., the tiered
approach or the untiered approach) could be considered cost-effective
when evaluating the impact of the standards on the purchase price of a
manufactured home and on the total lifecycle construction and operating
costs, but DOE requests comment regarding the cost-effectiveness of
both options to inform its final decision. Additionally, DOE has
tentatively determined that under either proposal the benefits to the
Nation of the standards (energy savings, consumer LCC savings, positive
NPV of consumer benefit, and emission reductions) outweigh the burdens
(loss of INPV, LCC increases for some homeowners of manufactured
housing, and price-sensitive consumers who do not purchase manufactured
homes).
II. Introduction
This section addresses the legal and factual background to date
regarding DOE's efforts to establish energy conservation standards for
manufactured housing. By statute, DOE is obligated to set standards for
manufactured housing in consultation with HUD and to consider certain
specific factors when establishing these standards. DOE is also
obligated to update these standards within a prescribed period of time.
A. Authority
Section 413 of EISA directs DOE to:
Establish standards for energy conservation in
manufactured housing;
Provide notice of, and an opportunity for comment on, the
proposed standards by manufacturers of manufactured housing and other
interested parties;
Consult with the Secretary of HUD, who may seek further
counsel from the Manufactured Housing Consensus Committee (MHCC); and
Base the energy conservation standards on the most recent
version of the IECC and any supplements to that document, except in
cases where DOE finds that the IECC is not cost-effective or where a
more stringent standard would be more cost-effective, based on the
impact of the IECC on the purchase price of manufactured housing and on
total lifecycle construction and operating costs.
(42 U.S.C. 17071(a) and (b)(1))
Section 413 of EISA also provides that DOE may:
Consider the design and factory construction techniques of
manufactured housing;
Base the climate zones on the climate zones established by
HUD \5\ rather than the climate zones under the IECC; and
---------------------------------------------------------------------------
\5\ The statute uses the term ``climate zones'' in reference to
the HUD requirements (42 U.S.C. 17071(b)(2)(B). HUD has not
established ``climate zones'' but has established ``insulation
zones.'' See, U/O Value Zone Map for Manufactured Housing at 24 CFR
3280.506. DOE understands the statutory reference to ``climate
zones'' in this context to mean the established insulation zones at
24 CFR 3280.506.
---------------------------------------------------------------------------
Provide for alternative practices that, while not meeting
the specific standards established by DOE, result in net estimated
energy consumption equal to or less than the specific energy
conservation standards.
(42 U.S.C. 17071(b)(2))
DOE is directed to update its standards not later than one year
after any revision to the IECC. (42 U.S.C. 17071(b)(3)) Finally, under
EISA, a manufacturer of manufactured housing that violates a provision
of Part 460 ``is liable to the United States for a civil penalty not
exceeding 1 percent of the manufacturer's retail list price of the
manufactured housing.'' (42 U.S.C. 17071(c))
B. Background
1. Current Standards
Section 413 of EISA provides DOE with the authority to regulate
energy conservation in manufactured housing, an area of the building
construction industry traditionally regulated by HUD. HUD has regulated
the manufactured housing industry since 1976, when it first promulgated
the HUD Code. (42 U.S.C. 5401 et seq.; 24 CFR part 3280) The purpose of
the HUD Code includes protecting the quality, durability, safety, and
affordability of manufactured homes; facilitating the availability of
affordable manufactured homes and increasing homeownership for all
Americans; protecting residents of manufactured homes with respect to
personal injuries and the amount of insurance costs and property
damages in manufactured housing; and ensuring 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. (42 U.S.C. 5401(b))
The HUD Code includes requirements related to the energy
conservation of
[[Page 47754]]
manufactured homes. Specifically, Subpart F of the HUD Code, entitled
``Thermal Protection,'' establishes requirements for Uo of
the building thermal envelope. Uo is a measurement of the
heat loss or gain rate through the building thermal envelope of a
manufactured home; therefore, a lower Uo corresponds with a
more insulated building thermal envelope. The HUD Code contains maximum
requirements for the combined Uo value of walls, ceilings,
floors, fenestration, and external ducts within the building thermal
envelope for manufactured homes installed in different zones. 24 CFR
3280.506(a).
The HUD Code also provides an alternate pathway to compliance that
allows manufacturers to construct manufactured homes that meet adjusted
Uo requirements based on the installation of high-efficiency
heating and cooling equipment in the manufactured home. 24 CFR
3280.508(d). Moreover, Subpart F of the HUD Code establishes
requirements to reduce air leakage through the building thermal
envelope. 24 CFR 3280.505.
Subpart H of the HUD Code, entitled ``Heating, Cooling, and Fuel
Burning Systems,'' establishes requirements for sealing air supply
ducts and for insulating both air supply and return ducts. 24 CFR
3280.715(a). R-value is the measure of a building component's ability
to resist heat flow (thermal resistance). A higher R-value represents a
greater ability to resist heat flow and generally corresponds with a
thicker level of insulation. The HUD Code contains no requirements for
fenestration solar heat gain coefficient (``SHGC''), mechanical system
piping insulation, or installation of insulation.
The statutory authority for DOE's rulemaking effort is different
from the statutory authority underlying the HUD Code. EISA directs DOE
to establish energy conservation standards for manufactured housing
without reference to existing HUD Code requirements that also address
energy conservation. However, EISA also requires DOE to consult with
HUD. (42 U.S.C. 17071(a)(2)(B)) Such consultations have informed DOE in
development of the regulations proposed in this document, and DOE
remains cognizant of the HUD Code, as well as HUD's Congressional
charge to protect the quality, durability, safety, affordability, and
availability of manufactured homes. Compliance with the DOE
requirements would not prevent a manufacturer from complying with the
requirements set forth in the HUD Code. Section III.F provides a
crosswalk of the energy conservation standards that are proposed in
this rule with the standards in the HUD Code. Moreover, as discussed
further in section III, DOE considered the potential impact on
manufactured home purchasers resulting from costs associated with
additional energy efficiency measures.
2. The International Energy Conservation Code (IECC)
The statutory authority for this rulemaking requires DOE to base
its standards on the most recent version of the IECC and any
supplements to that document, subject to certain exceptions and
considerations. (42 U.S.C. 17071(b)(1)) The IECC is a nationally
recognized model code, developed under the auspices of and published by
the International Code Council (``ICC''). Many state and local
governments have adopted the IECC \6\ in establishing minimum design
and construction requirements for the energy efficiency of residential
and commercial buildings, including site-built residential and modular
homes.\7\ The IECC is developed through a consensus process that seeks
input from a number of relevant stakeholders and is updated on a
rolling basis, with new editions of the IECC published approximately
every three years. The IECC was first published in 1998, with the most
recent version, the 2021 IECC, being published in January 2021.
---------------------------------------------------------------------------
\6\ The current status of the adoption of the IECC is provided
at https://www.energycodes.gov/status-state-energy-code-adoption.
\7\ Modular homes are generally excluded from the coverage of
the National Manufactured Housing Construction and Safety Standards
Act and constructed to the same state, local or regional building
codes as site-built homes. See 42 U.S.C. 5403(f); 24 CFR 3282.12.
---------------------------------------------------------------------------
The 2021 IECC is divided into two major sections, with provisions
for both residential and commercial buildings. The manufactured housing
energy conservation standards and test procedure are based on the
requirements for residential buildings. The residential building
requirements of the 2021 IECC, however, are not specific to
manufactured housing.
Chapter 4 of the residential section of the 2021 IECC sets forth
specifications for residential energy efficiency, including
specifications for building thermal envelope energy conservation,
thermostats, duct insulation and sealing, mechanical system piping
insulation, heated water circulation system, and mechanical
ventilation. To the extent that the HUD Code regulates similar aspects
of energy conservation as the 2021 IECC, the 2021 IECC is generally
considered more stringent than the corresponding requirements in the
HUD Code, given that many areas of the HUD Code have not been updated
as frequently as the IECC.
DOE notes that the IECC is designed for building structures that
have a permanent foundation. Manufactured housing structures, however,
are not built on permanent foundations but are built on a steel chassis
to enable them to be moved or towed when needed. As a result, because
they present their own set of unique considerations that the IECC was
not intended to address, some aspects of the IECC are unable, or highly
impractical, to be applied to manufactured housing. Instead, as DOE
proposed in its June 2016 NOPR and consistent with the considerations
required by EISA, this supplemental proposal utilizes aspects of the
IECC that are appropriate for manufactured housing as the basis for the
standards proposed herein, thereby accounting for the unique physical
characteristics of manufactured housing.
Additionally, the ``tiered'' proposal provides an approach to
mitigate the potential adverse impacts of increased costs on
manufactured housing affordability that may arise from increasing the
stringency of energy efficiency requirements applied to manufactured
homes. In its tiered proposal, by dividing the market into designated
manufacturer retail list price-based segments and assigning efficiency
levels as appropriate for each segment, DOE suggests a way to address
the affordability concerns presented in this housing segment, and
relatedly the cost-effectiveness considerations set forth in EISA,
while also promoting that the statutory objective of improving
manufactured housing energy efficiency.
3. Development of the Initial Proposal and Responses
Manufactured housing accounts for approximately six percent of all
homes in the United States.\8\ Because the purchase price of
manufactured homes often is lower than similarly sized site-built
homes, manufactured homes serve as affordable housing options,
particularly for low-income families. However, many manufactured homes
often have higher utility bills than comparably sized site-built and
modular homes in part due to different energy conservation standards
and variability
[[Page 47755]]
among building codes and industry practices.\9\
---------------------------------------------------------------------------
\8\ U.S Census Bureau, American Housing Survey 2019--National
Summary Tables. Available at https://www.census.gov/programs-surveys/ahs/data.html.
\9\ American Council for an Energy-Efficient Economy; Mobilizing
Energy Efficiency in the Manufactured Housing Sector, July 2012;
https://www.aceee.org/sites/default/files/publications/researchreports/a124.pdf.
---------------------------------------------------------------------------
Establishing improved energy conservation requirements for
manufactured homes results in the dual benefit of reducing manufactured
home energy use and enabling owners of manufactured homes to experience
lower utility expenses over the long-term. Improved energy conservation
standards are also expected to provide nationwide benefits of reducing
utility energy production levels that would in turn reduce greenhouse
gas emissions and other air pollutants.
DOE published an advance notice of proposed rulemaking (``ANOPR'')
to initiate the process of developing energy conservation standards for
manufactured housing and to solicit information and data from industry
and stakeholders.\10\ See 75 FR 7556 (February 22, 2010). DOE also
consulted with HUD in developing the requirements and in obtaining
input and suggestions that would increase energy conservation in
manufactured housing, while maintaining affordability. In addition to
meeting with HUD on multiple occasions, DOE attended three MHCC
meetings, where DOE gathered information from MHCC members. DOE also
initiated discussions with members of the manufactured housing industry
following the issuance of the ANOPR.\11\ A summary of each meeting is
available at the regulations.gov web page at https://www.regulations.gov/docket?D=EERE-2009-BT-BC-0021. The June 2016 NOPR
provides more details on the comments received in response to the
ANOPR. 81 FR 39755 (June 17, 2016).
---------------------------------------------------------------------------
\10\ The ANOPR comments can be accessed at: https://www.regulations.gov/#!docketDetail;D=EERE-2009-BT-BC-0021.
\11\ These included discussions with the Manufactured Housing
Institute (``MHI'') and several of its member manufacturers, the
California Department of Housing and Community Development, the
Georgia Manufactured Housing Division, three private-sector third-
party primary inspection agencies under the HUD manufactured housing
program, and one private-sector stakeholder familiar with
manufactured housing.
---------------------------------------------------------------------------
On June 25, 2013, DOE published a request for information (``RFI'')
seeking information on indoor air quality, financing and related
incentives, model systems of enforcement, and other studies and
research relevant to DOE's effort to establish energy conservation
standards for manufactured housing. 78 FR 37995 (``June 2013 RFI'').
The June 2016 NOPR provides more details on the comments received on
the RFI. 81 FR 39765 (June 17, 2016).
After reviewing the comments received in response to the ANOPR, the
June 2013 RFI, and other stakeholder input, DOE ultimately determined
that development of proposed manufactured housing energy conservation
standards would benefit from a negotiated rulemaking process. On June
13, 2014, DOE published a notice of intent to establish a negotiated
rulemaking manufactured housing (``MH'') working group to discuss and,
if possible, reach consensus on a proposed rule. 79 FR 33873. On July
16, 2014, the MH working group was established under the Appliance
Standards and Rulemaking Federal Advisory Committee (``ASRAC'') in
accordance with the Federal Advisory Committee Act and the Negotiated
Rulemaking Act. 79 FR 41456; 5 U.S.C. 561-570, App. 2. The MH working
group consisted of representatives of interested stakeholders with a
directive to consult, as appropriate, with a range of external experts
on technical issues in developing a term sheet with recommendations on
the proposed rule. The MH working group consisted of 22 members,
including one member from ASRAC, and one DOE representative. 79 FR
41456. The MH working group met in person during six sets of public
meetings held in 2014 on August 4-5, August 21-22, September 9-10,
September 22-23, October 1-2, and October 23-24. 79 FR 48097 (Aug. 15,
2014); 79 FR 59154 (Oct. 1, 2014).
On October 31, 2014, the MH working group reached consensus on
energy conservation standards in manufactured housing and assembled its
recommendations for DOE into a term sheet that was presented to ASRAC.
Public docket EERE-2009-BT-BC-0021-0107 (``Term Sheet''). ASRAC
approved the term sheet during an open meeting on December 1, 2014 and
sent it to the Secretary of Energy to develop a proposed rule.
On February 11, 2015, DOE published an RFI requesting information
that would aid in determining proposed solar heat gain coefficient
(``SHGC'') requirements for certain climate zones. 80 FR 7550
(``February 2015 RFI''). Following preparation and submission of the
term sheet by the MH working group, DOE also consulted further with HUD
regarding DOE's proposed energy conservation standards. In addition to
meeting with HUD, DOE prepared two presentations to discuss the
proposed rule with MHCC members, which were designed to gather
information on development of the proposed standards.\12\
---------------------------------------------------------------------------
\12\ Available at https://www.regulations.gov/document?D=EERE-2009-BT-BC-0021-0069 and https://www.regulations.gov/document?D=EERE-2009-BT-BC-0021-0058.
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On June 17, 2016, DOE published a NOPR for the manufactured housing
energy conservation standards rulemaking. 81 FR 39755. (``June 2016
NOPR'') DOE posted the NOPR analysis as well as the complete NOPR TSD
on its website.\13\ In response to comments on the 2013 RFI DOE also
published the 2016 EA-RFI to accompany the 2016 NOPR. The draft EA drew
no conclusions regarding the potential impacts on the indoor air
quality of manufactured homes as a result of implementing any final
energy conservation standard for these structures. DOE held a public
meeting on July 13, 2016, to present the June 2016 NOPR, which included
the proposed prescriptive and performance requirements, in addition to
the LCC, NIA, manufacturer impact analysis (``MIA''), and emissions
analyses. In response to the June 2016 NOPR, DOE received comments from
a variety of stakeholders.
---------------------------------------------------------------------------
\13\ The NOPR analysis, NOPR TSD, and NOPR public meeting
information are available at https://regulations.gov under docket
number EERE-2009-BT-BC-0021.
Table II.2--June 2016 NOPR Written Comments
----------------------------------------------------------------------------------------------------------------
Organization(s) Reference in this SNOPR Organization type
----------------------------------------------------------------------------------------------------------------
Advanced Energy...................................... Advanced Energy............. Manufacturer.
Air Conditioning Contractors of America.............. ACCA........................ Trade association.
American Chemistry Council........................... ACC FSSC.................... Trade association.
American Council for an Energy-Efficient Economy..... ACEEE....................... Efficiency organization.
American Gas Association and American Public Gas AGA and APGA................ Trade association.
Association.
Arkansas Manufactured Housing Association............ AMHA........................ Trade association.
Better Homes AHEAD................................... Better Homes................ Manufacturer.
[[Page 47756]]
Cato Institute....................................... Cato Institute.............. ...........................
Cavco Industries..................................... Cavco....................... Manufacturer.
Clayton Home Building Group.......................... Clayton Homes............... Manufacturer.
Commodore Corporation................................ Commodore Corporation....... Manufacturer.
Community Owners (7 Part) Business Alliance.......... COBA........................ Trade association.
Earthjustice......................................... Earthjustice................ Efficiency organization.
Environmental Defense Fund, Institute for Policy Joint Advocates............. Efficiency organizations.
Integrity, Natural resources Defense Council, and
Union of Concerned Scientists.
George Washington University Regulatory Studies GWU......................... Academia.
Center.
International Code Council........................... ICC......................... Codes organization.
Lippert Components................................... Lippert Components.......... Manufacturer.
Manufactured Housing Association for Regulatory MHARR....................... Trade association.
Reform.
Manufactured Housing Consensus Committee............. MHCC........................ Advisory committee.
Manufactured Housing Industry of Arizona............. MHIAZ....................... Trade association.
Manufactured Housing Institute....................... MHI......................... Trade association.
Manufactured Housing Institute of Maryland........... MHIM........................ Trade association.
Manufactured Housing Institute of South Carolina..... MHISC....................... Trade Association.
Mississippi Manufactured Housing Association......... MMHA........................ Trade association.
Modular Lifestyles, Inc.............................. Modular Lifestyles.......... Manufacturer.
National Propane Gas Association..................... NPGA........................ Trade association.
New Mexico Manufactured Housing Association.......... NMMHA....................... Trade association.
Next Step Network, Inc............................... Next Step................... Efficiency organization.
North Carolina Justice Center........................ NCJC........................ Consumer organization.
Northwest Energy Efficiency Alliance................. NEEA........................ Efficiency organization.
Ohio Manufactured Homes Association.................. OMHA........................ Trade Association.
Palm Harbor Homes, Inc............................... Palm Harbor Homes........... Manufacturer.
Pennsylvania Manufactured Housing Association........ PMHA........................ Trade association.
Bob Pfeiffer......................................... Pfeiffer.................... Individual.
Pleasant Valley Homes, Inc........................... Pleasant Valley Homes....... Manufacturer.
Responsible Energy Codes Alliance.................... RECA........................ Efficiency organization.
Skyline Corporation.................................. Skyline Corporation......... Manufacturer.
South Mountain Co., Inc.............................. South Mountain.............. Manufacturer.
Systems Building Research Alliance................... SBRA........................ Trade association.
U.S. Chamber of Commerce, American Chemistry Council, U.S. Chamber of Commerce.... Trade association.
American Coke and Coal Chemicals Institute, American
Forest & Paper Association, American Fuel &
Petrochemical Manufacturers, American Petroleum
Institute, Association of Home Appliance
Manufacturers, Brick Industry Association, Council
of Industrial Boiler Owners, National Association of
Home Builders, National Association of
Manufacturers, National Mining Association, National
Oilseed Processors Association, Portland Cement
Association.
U.S. Small Business Administration's Office of Advocacy.................... Government agency.
Advocacy.
Vermont Energy Investment Corporation................ VEIC........................ Efficiency organization.
West Virginia Housing Institute, Inc................. WVHI........................ Trade association.
Window and Door Manufacturers Association............ WDMA........................ Trade association.
----------------------------------------------------------------------------------------------------------------
DOE also received over 700 substantively similar form letters from
individuals. All of the comment submissions are available in the docket
for this rulemaking. The comments and DOE's responses are discussed in
sections III, IV, and V of this document.
4. Development of the Current Proposal
DOE received a number of responses to its June 2016 NOPR. In
response to concerns related to potential adverse impacts on price-
sensitive, low-income purchasers of manufactured homes from the
imposition of energy conservation standards on manufactured housing,
DOE sought additional information from the public regarding these
impacts by publishing the August 2018 NODA. See 83 FR 38073 (August 3,
2018). That NODA indicated that DOE had re-examined its available data
and re-evaluated its approach in developing standards for manufactured
housing. The August 2018 NODA also indicated that HUD had made DOE
aware of the adverse impacts on manufactured housing affordability that
would likely follow if DOE were to adopt the approach laid out in its
June 2016 NOPR. See 83 FR 38073, 38075. These discussions with HUD,
along with a concern over the initial first-cost impacts that DOE's
earlier proposal would have on low-income buyers, led DOE to examine a
potential tiered proposal that would require varying levels of energy
efficiency performance with specified increases in incremental upfront-
costs that would still improve the overall energy efficiency of
manufactured homes. See 83 FR 38077.
DOE has not included test procedure or compliance and enforcement
provisions in this SNOPR. DOE also has not included provisions related
to waivers or exception relief that might be available to manufacturers
regarding compliance with any standards that DOE may adopt. DOE does
not intend to address test procedures or compliance and enforcement
provisions in this rulemaking. DOE notes that HUD has an established
design approval, monitoring and enforcement system, defined in 24 CFR
part 3282, that is robust and provides compliance and enforcement of
the manufactured housing industry standards. Moreover, manufacturers
must comply with referenced standards incorporated by HUD in its
regulations. While DOE would consider HUD's established compliance and
enforcement mechanism appropriate to support any standards HUD
incorporates by reference from any final
[[Page 47757]]
manufactured housing rule, DOE is seeking comment on such an approach.
DOE intends to continue consulting with HUD on potential approaches and
is seeking comment on other potential approaches to compliance with,
and enforcement of, a final energy conservation standard for
manufactured housing.
III. Discussion of the Proposed Standards
A. The Basis for the Proposed Standards
1. Scope
DOE's authority under 42 U.S.C. 17071 to establish energy
conservation standards for manufactured homes specifies that those
standards ``shall be based on'' the most recent version of the IECC.
Because the IECC is specific to site-built structures, DOE's
supplemental proposal, while based on the 2021 IECC, has required
modifications to IECC provisions for application to manufactured homes.
In DOE's view, the language Congress used in instructing DOE to set
standards for these structures is broad and does not require the
imposition of requirements for manufactured homes that are identical to
those that IECC provides for site-built structures. The use of the
phrase ``based on'' readily indicates that Congress anticipated that
DOE would need to use its discretion in adapting elements of the IECC's
provisions for manufactured housing use, including whether those
elements would be appropriate in light of the specific circumstances
related to the structure. Further, Congress indicated that DOE has
discretion to depart from the IECC to the extent it is not cost-
effective.
Pursuant to this discretion afforded by Congress, as opposed to
complete adoption of the 2021 IECC, DOE is proposing, first, a tiered
standard whereby manufactured homes with manufactured retail list
prices of $55,000 or less (``Tier 1'' manufactured homes) would be
subject to different building thermal envelope requirements (subpart B
of proposed 10 CFR part 460) than all other manufactured homes (``Tier
2'' manufactured homes). Both tiers are based on the 2021 IECC in that
both tiers have requirements for the building thermal envelope, duct
and air sealing, installation of insulation, HVAC specifications,
service hot water systems, mechanical ventilation fan efficacy, and
heating and cooling equipment sizing provisions of the 2021 IECC.
However, in light of cost-effectiveness concerns, Tier 1 provides
tailored improvements in efficiency with regard to building thermal
envelope, which are projected to result in an approximately $750
incremental price increase. Tier 2 focuses on the building thermal
envelope, duct and air sealing, insulation installation, HVAC
specifications, service hot water systems, mechanical ventilation fan
efficacy, and heating and cooling equipment sizing provisions, based on
the 2021 IECC, and is estimated to result in an average incremental
price increase of $3,900-$5,300 for single- and multi-section homes,
respectively. As an alternative, DOE is also proposing a single,
untiered standard for manufactured homes that is the same as the Tier 2
standard.
In establishing standards for manufactured housing, Congress
directed DOE to: (1) Consult with the Secretary of HUD (42 U.S.C.
17071(a)(2)(b)), and (2) base the standards on the most recent version
of the IECC, except in cases in which the Secretary finds that the code
is not cost-effective, or a more stringent standard would be more cost-
effective, based on the impact of the codeon the purchase price of
manufactured housing and on total life-cycle construction and operating
costs. (42 U.S.C. 17071(b)(1)) Relatedly, the Secretary of HUD is
mandated to establish standards for manufactured housing that, in part,
``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.'' (42 U.S.C. 5401(b))
In this consultative role, HUD raised a concern with the potential
adverse impacts on manufactured housing affordability that could result
from additional energy efficiency standards being established for
manufactured homes. More specifically, HUD noted concerns that
increases in the purchase prices for manufactured homes resulting from
the costs of requiring to meet standards based upon the IECC could
result in prospective manufactured homeowners being unable to purchase
a manufactured home. With this concern in mind, in the August 2018
NODA, DOE requested comment on a report released in 2014 from the
Consumer Financial Protection Bureau (``CFPB'') indicating manufactured
housing purchasers face substantial constraints compared to traditional
home purchasers.\14\ 83 FR 38073, 38076. As discussed in the August
2018 NODA, the report, ``Manufactured-Housing Consumer Finance in the
United States,'' (hereinafter, ``CFPB Report'') presented the following
key findings:
---------------------------------------------------------------------------
\14\ See https://files.consumerfinance.gov/f/201409_cfpb_report_manufactured-housing.pdf.
---------------------------------------------------------------------------
Manufactured home ownership varies widely by region, with
the majority of manufactured homes located outside of metropolitan
areas;
Manufactured home owners tend to have lower incomes and
less net worth than their counterparts who own site-built homes;
There is an extremely constrained secondary market for
manufactured homes, following the collapse of the manufactured home
market in the late 1990s through the early 2000s;
Most manufactured-housing purchasers who finance their
homes obtained a loan of between $10,000 and $80,000, with a median
loan value of $55,000.
These constraints may make purchasers of manufactured homes more
price sensitive to potential changes that would impact the costs to
construct (and purchase) a manufactured home. Moreover, the CFPB Report
suggests that manufactured home consumers are particularly cost-
driven.\15\
---------------------------------------------------------------------------
\15\ In particular, the report noted: ``There is evidence that
some households who move into manufactured housing are less
satisfied with their homes than those who choose to move into site-
built housing. These results suggest that for at least some
households, the choice to live in a manufactured home may be more
cost-driven than quality-driven.'' CFPB Report at 22.
---------------------------------------------------------------------------
The CFPB Report stated that the median annual income of families
living in manufactured homes is slightly over $26,000, and the median
net worth of these families is $26,000 (a quarter of the median net
worth for families in site-built homes). See id. at 16-18.
Additionally, owners of manufactured homes who finance their homes
tend to pay higher interest rates than their site-built home
counterparts. A key reason for this difference is that the vast
majority of manufactured housing stock is titled as chattel (i.e.
personal property), and as a result is eligible only for chattel
financing. Chattel financing is typically offered to purchasers at a
significantly higher interest rate than the rates offered to site-built
home owners. While most manufactured home
[[Page 47758]]
owners who also own the land on which the manufactured home is sited
may be eligible for mortgage financing, there is a tradeoff between
lower origination costs with significantly higher interest rates
(chattel loans) and higher origination costs with significantly lower
interest rates and greater consumer protections (mortgage). See id. at
pp. 23-25.
Therefore, in response to the affordability concerns raised by HUD
and commenters, DOE is contemplating whether there are cost-effective
approaches that would also mitigate first-cost impacts for purchasers
at the lower end of the manufactured home price range. Accordingly, DOE
is presenting a tiered proposal that would provide in proposed subpart
B tiered standards based on a manufacturer's retail list price.
According to 2019 data, the average purchase price (i.e., sales price
if the home is intended for sale) of a single section manufactured home
is $53,200, the average purchase price of a multi-section manufactured
home is $104,000, and the average purchase price of all manufactured
homes is $81,900.\16\ To the extent that manufactured home purchasers
are cost-driven, in conjunction with the lower median income and net
worth of these purchasers, consumers at the lower end of the
manufactured home purchase price range generally would be more
sensitive to increases in purchase price. Accordingly, DOE created a
tiered proposal to address affordability issues associated with the
full implementation of the 2021 IECC in the untiered proposal.
---------------------------------------------------------------------------
\16\ Manufactured Housing Survey 2019; U.S. Census Data; https://www.census.gov/data/tables/time-series/econ/mhs/annual-data.html.
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Accordingly, under the tiered proposal, the stringency of the
standards under proposed subpart B applicable to Tier 1 manufactured
homes (i.e., manufactured homes with a manufacturer's retail list price
of $55,000 or less) would require building thermal envelope measures
that would result in an incremental purchase price increase of
approximately $750. Section III.A.2 provides further discussion on how
the manufacturer's retail list price tier threshold and $750
incremental purchase price were developed.
DOE estimates the SNOPR would result in a loss in demand and
availability of about 53,329 homes (single section and multi-section
combined) for the tiered standard and about 71,290 homes (single
section and multi-section combined) for untiered standards based on a
price elasticity of demand of -0.48 for the analysis period (2023-
2052). Out of the 53,329 homes in the tiered standard, the majority of
the reduction is in Tier 2 (93 percent) vs. Tier 1 (7 percent). Within
Tier 1, DOE estimates a 0.52 percent reduction (essentially no
reduction) in availability due to Tier 1 standards for low income
purchasers. Table III.1 provides a summary of the change in shipments
for tiered standards. See section IV.c.1.b. for a discussion of price
elasticity with respect to manufactured housing shipments and people
who do not buy because they are price-sensitive.
Table III.1--Change in Shipments for Tiered Standards *
--------------------------------------------------------------------------------------------------------------------------------------------------------
No-standards shipments Standards case shipments Change in shipments, tiered
---------------------------------------------------------------------------------------------------------------
Tier 1 Tier 2 Tier 1 Tier 2 Tier 1 Tier 2 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
30-year analysis........................ 703,725 2,086,927 700,032 2,037,291 (3,693) (49,636) (53,329)
Annual.................................. .............. .............. .............. .............. (123) (1,655) (1,778)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parenthesis are negative.
As a sensitivity, DOE also considered a price elasticity of demand
of -2.4 instead of -0.48. Further discussion on this sensitivity is
provided in section IV.C.2 of this document. Table III.2 provides a
summary of the change in shipments for tiered standards for price
elasticity of -2.4 instead of -0.48.
Table III.2--Change in Shipments Compared to Baseline, -0.48 and -2.4 Price Elasticity
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in shipments,-0.48 price elasticity Change in shipments,-2.4 price elasticity
-----------------------------------------------------------------------------------------------
Tier 1 Tier 2 Total Tier 1 Tier 2 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
30-year analysis........................................ (3,693) (49,636) (53,329) (18,375) (247,692) (266,067)
Annual.................................................. (123) (1,655) (1,778) (613) (8,256) (8,869)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parenthesis are negative.
On May 27, 2021, the CFPB issued another report entitled
``Manufactured Housing Finance: New Insights from the Home Mortgage
Disclosure Act Data'' (the ``2021 CFPB Report'').\17\ DOE is aware of
the 2021 CFPB report, but has not yet reviewed it in detail.
Accordingly, DOE did not incorporate any new or additional data from
the 2021 CFPB report into the analysis presented in this SNOPR. DOE is
also aware that the U.S. Census has released the 2020 Manufactured
Housing Survey,\18\ but similarly has not reviewed the results in
detail or incorporated these new data into the analysis presented here.
DOE welcomes comment on the use of the data in 2021 CFPB report and the
2020 Manufactured Housing Survey in DOE's analyses for this rulemaking.
---------------------------------------------------------------------------
\17\ The report may be found at: files.consumerfinance.gov/f/documents/cfpb_manufactured-housing-finance-new-insights-hmda_report_2021-05.pdf.
\18\ https://www.census.gov/data/tables/time-series/econ/mhs/annual-data.html.
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DOE invites comment on whether (1) the manufacturer's retail list
price threshold for Tier 1 under the tiered proposal is appropriate,
(2) the untiered proposal in this SNOPR is cost-effective, generally,
and (3) the untiered proposal is cost-effective for low-income
consumers.
Finally, the scope proposed in this document provides additional
clarification that the proposed energy conservation standards would
apply to the design, construction and aspects of onsite completion of
manufactured
[[Page 47759]]
homes--not to the installation of a home.
On November 9, 2016, DOE published a NOPR for test procedures (2016
Test Procedure NOPR), as a companion to the draft energy efficiency
standards rule for manufactured housing. See 81 FR 78733 (November 9,
2016). The 2016 Test Procedure NOPR proposed procedures for how those
subject to energy conservation standards for manufactured housing would
confirm products are in compliance with the standards. More
specifically, the 2016 Test Procedure NOPR proposed procedures to
determine compliance with the following metrices from the June 2016
NOPR: The R-value of insulation; the U-factor of windows, skylights,
and doors; the solar heat gain coefficient of fenestration; U-factor
alternatives to R-value requirements; the air leakage rate of air
distribution systems; and mechanical ventilation fan efficacy. 81 FR
78733. A discussion of the 2016 Test Procedure NOPR may be found in
section III.C of this document.
DOE is not addressing a test procedure, or compliance and
enforcement provisions for an energy conservation standard for
manufactured housing in this document. DOE continues to consult with
HUD about pathways to address testing, compliance and enforcement for
this proposed standard in a manner consistent with the current HUD
inspection and enforcement process so that such testing, compliance and
enforcement procedures are not overly burdensome for manufacturers.
While many of the requirements in the proposed standard and alternative
proposal would require minimal compliance efforts and costs (e.g.,
documenting the use of materials subject to separate Federal or
industry standards, such as the R-value of insulation or U-factor
values for fenestration), DOE acknowledges that it has not fully
enumerated testing and enforcement costs at this time. However, because
testing and compliance and enforcement requirements may be dependent
upon the final outcome of this rulemaking, DOE is not proposing any
testing, compliance or enforcement provisions at this time. DOE has
also not included any potential associated costs of testing, compliance
or enforcement. DOE intends to continue working with HUD on potential
approaches and is seeking comment on other potential approaches for
testing, compliance and enforcement that will ensure manufacturer
compliance with the standard in a manner that is not overly burdensome
or costly to manufacturers.
DOE welcomes comment on approaches for testing, compliance and
enforcement provisions for the proposed standards and alternative
proposal. DOE also welcomes comments and information related to
potential testing, compliance and enforcement under the current HUD
inspection and enforcement process, and potential costs of testing,
compliance and enforcement of the proposed standards and alternative
proposal in this document.
2. Proposed Standards
EISA requires DOE to base standards for manufactured housing on the
IECC. However, application of the IECC standards is also subject to a
number of considerations set forth by the statute in order to ensure
standards will be appropriately tailored for manufactured homes and the
manufactured home market. Specifically, EISA requires that DOE
establish energy conservation standards for manufactured housing that
are ``based on the most recent version of the [IECC], except in cases
in which [DOE] finds that the [IECC] is not cost-effective, or a more
stringent standard would be more cost-effective, based on the impact of
the [IECC] on the purchase price and on total life-cycle construction
and operating costs.'' (42 U.S.C. 17071(b)(1)).
In addition to the required cost-effectiveness considerations, EISA
explicitly allows DOE to consider the differences in design and factory
construction techniques of manufactured homes, as compared to site-
built and modular homes. (42 U.S.C. 17071(b)(2)) As noted in section
II.B.2, the 2021 IECC applies generally to residential buildings,
including site-built and modular housing, and is not specific to
manufactured housing. The energy conservation standards proposed in
this SNOPR are generally based on certain specifications included in
the 2021 IECC while also accounting for the unique aspects of
manufactured housing. DOE carefully considered the following aspects of
manufactured housing design and construction in developing the
standards:
Manufactured housing structural requirements contained in
the HUD Code;
External dimensional limitations associated with
transportation restrictions;
The need to optimize interior space within manufactured
homes; and
Factory construction techniques that facilitate sealing
the building thermal envelope to limit air leakage.
Upon consideration of these aspects of manufactured housing design
and construction, DOE is not proposing to include several of the 2021
IECC requirements such as more stringent ceiling R-value requirements
(greater than R-38) in the northern climate zones and the requirement
for the exterior ceiling insulation to be of uniform thickness or
uniform density given the space constraints of manufactured homes
(discussed in further detail in section III.E.2.b).
EISA also allows DOE to base standards on the climate zones of the
HUD Code instead of the IECC. (42 U.S.C. 17071(b)(2)(B)) There are
differences in the number and boundaries of the HUD zones as compared
to the IECC climate zones. For example, under the 2021 IECC climate
zone map, California is divided into five climate zones (including zone
variation based on moisture regimes), with four of the zones subject to
SHGC maximums (0.40 applicable to climate zones 4 and 5, and 0.25
applicable to climate zones 2 and 3). Under the HUD zone map, all of
California is within a single zone. Developing energy conservation
standards based on the HUD climate zones, as DOE is proposing to do in
this SNOPR and as permitted under EISA, necessitates deviating from the
IECC. The updated proposal would establish thermal envelope
requirements, as does the 2021 IECC, but setting the values for those
requirements necessitates that DOE develop standard levels different
than those in the 2021 IECC to account for the difference in the number
of climate zones.
In addition, DOE has conducted a sensitivity analysis for an
alternative exterior insulation requirement, R-21, for Tier 2 in zones
2 and 3. This alternative insulation requirement is based on (but not
identical to) the 2021 IECC, which includes a requirement for
continuous insulation (R-20+5). DOE developed this sensitivity analysis
to evaluate the effects on life-cycle costs and payback period for Tier
2 consumers. This sensitivity analysis is further discussed in section
IV.A.2 of this document.
In modifying the IECC requirements, DOE relied, in part, on the
statutorily required interagency consultation with HUD. As discussed,
the HUD consultation ensures that DOE is informed by HUD's expertise
and statutory duties as they pertain to the role of manufactured
housing in the U.S. housing market, as recognized by Congress. As a
result of concerns raised by HUD regarding the need to maintain
affordability, which interrelate with the cost-effectiveness concerns
specified in 42 U.S.C. 17071, DOE is presenting a primary proposal
based on tiered standards that would prescribe a complement of cost-
effective energy
[[Page 47760]]
conservation requirements based on requirements in the 2021 IECC.
The proposed Tier 1 standards would apply to manufactured homes
with a manufacturer's retail list price of $55,000 or less (in real
2019$). The proposed Tier 1 requirements incorporate IECC-based
building thermal envelope component measures that result in an
incremental purchase price increase of approximately $750. The proposed
Tier 2 standards would apply to manufactured homes with a
manufacturer's retail list price that is greater than $55,000 (in real
2019$). The Tier 2 standards would be based on the most recent version
of the IECC, with consideration of the design and factory construction
techniques of manufactured homes. As an alternative, DOE also proposes
an untiered standard in which all manufactured homes would be at the
same stringencies as the standards based on the most recent version of
the IECC, similar to the Tier 2 standard.
a. Manufacturer's Retail List Price Tier Threshold
The proposed manufacturer's retail list price tier threshold for
the tiered standard was developed using loan and manufactured home
purchase price data. The loan data were derived from the CFPB
report.\19\ The purchase price data were derived from the manufactured
housing survey (``MHS'') 2019 public use file (``PUF'') data, which
provide estimates of average sales prices for new manufactured homes
sold or intended for sale by geographical region and size of home.\20\
The CFPB report states that high-priced manufactured housing loans
(including chattel loans) account for roughly 68 percent of total
manufactured housing loans.\21\ If people typically receive one primary
loan, the percentage of high-priced loans used should roughly equal the
percentage of people receiving high-priced loans and, thus, homes
purchased with high-priced loans (i.e., 68 percent). Assuming that
price-sensitive, low-income purchasers rely on high-priced loans, and
pairing the CFPB figure with the MHS 2019 PUF data, the 68th percentile
manufactured housing price gives a reasonable estimate for the upper
bound for a manufactured home sales price that a price-sensitive low-
income purchaser would pay. DOE considered that low-income purchasers
would mainly purchase single-section homes that are, on average, at a
lower sales price than multi-section homes. Accordingly, applying the
68th percentile for a single-section manufactured home using the MHS
2019 PUF data, yields a sales price of approximately $55,000. This
price serves as the proposed threshold for Tier 1. Using this
threshold, Tier 1 consists of approximately 25 percent of the total
sales (single-section and multi-section) of manufactured homes. Tier 2
consists of approximately 75 percent of the sales total (single-section
and multi-section) of manufactured homes.
---------------------------------------------------------------------------
\19\ CFPB report, 2014. https://files.consumerfinance.gov/f/201409_cfpb_report_manufactured-housing.pdf. At the time of this
analysis, the 2014 CFPB report was the latest that was available.
\20\ Manufactured Housing Survey, Public Use File (PUF) 2019.
https://www.census.gov/data/datasets/2019/econ/mhs/puf.html.
\21\ The Consumer Finance Protection Bureau (CFPB) in general
describes a higher-priced mortgage loan as a loan with an annual
percentage rate, or APR, higher than a benchmark rate called the
Average Prime Offer Rate. The requirements for this loan can be
found in 12 CFR 1026.35.
---------------------------------------------------------------------------
DOE acknowledges that the boundary of the proposed tiers is being
applied to manufacturers' retail list prices, while the underlying data
from which the boundary is derived in the MHS 2019 PUF data are sales
and/or purchase price data of manufactured homes. DOE understands the
manufacturer's retail list price to be the price that the manufacturer
provides in the sales contract to a distributor or retailer--i.e., the
price that the manufactured home is originally listed at by the
manufacturer. On the other hand, the purchase price is the final sales
price of the home to the consumer. The manufacturer's retail list price
and the purchase price are not the same. However, the MHS 2019 PUF
purchase price data are the most robust and reliable data of the
manufactured housing market that, to date, DOE has found in its own
search, or that has been provided to DOE. DOE believes these data are
still largely representative of the overall manufactured housing market
and that the tiers are appropriately set based on this data.
DOE believes the proposed threshold based on manufacturer's retail
list price can sufficiently address the affordability concerns
previously expressed by HUD and other stakeholders. DOE also notes
that, based on its understanding of the MHS 2019 PUF data, the proposed
$55,000 threshold would not vary significantly across regions. Although
DOE is proposing a national retail price-based threshold, in
consultations with HUD and the MHCC, DOE received comments and
questions regarding the use of alternative metrics upon which to base
the boundary between tiers, such as the size of the manufactured home.
Accordingly, DOE also considered other threshold types that would be
based on size (e.g., square footage or for single-section vs. multi-
section homes) or region (e.g., retail price thresholds tailored to
specific regions rather than a single national value). For example, the
MHS 2019 PUF data set provides data that relates home size (in terms of
square feet) with purchase price. Table III.3 summarizes the average,
minimum and maximum sales prices based on home size using square
footage and section. In general, the data indicates that while price
increases with home size, the minimum and maximum prices do not vary
significantly with home size (with certain exceptions).
Table III.3--MHS PUF 2019 Home Size and Sales Price Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single-section sales price (2019$) Dual-section sales price (2019$)
Home size (square feet) ---------------------------------------------------------------------------------------------------------------------------
Average Minimum Maximum Average Minimum Maximum Average Minimum Maximum
----------------------------------------------------------------------------------------------------------------------------------- ---------------------------
440-539............................ $36,786 $28,400 $53,000 .............. .............. ..............
540-639............................ 46,769 29,600 100,000 .............. .............. ..............
640-739............................ 45,012 32,100 100,000 .............. .............. ..............
740-839............................ 49,011 28,400 101,000 .............. .............. ..............
840-939............................ 44,497 28,400 101,000 $90,274 $60,000 $226,000
940-1039........................... 49,943 32,100 101,000 87,596 55,000 156,000
1040-1139.......................... 52,698 29,600 101,000 79,413 52,000 226,000
1140-1239.......................... 57,330 29,600 101,000 94,153 54,000 256,000
1240-1339.......................... 59,781 28,400 100,000 84,873 52,000 256,000
1340-1439.......................... 63,848 39,000 74,000 105,697 54,000 256,000
1440-1539.......................... .............. .............. .............. 97,973 52,000 256,000
1540-1639.......................... .............. .............. .............. 94,109 52,000 256,000
[[Page 47761]]
1640-1739.......................... .............. .............. .............. 101,684 52,000 256,000
1740-1839.......................... .............. .............. .............. 109,921 52,000 256,000
1840-1939.......................... .............. .............. .............. 103,365 60,000 226,000
1940-2039.......................... .............. .............. .............. 105,981 52,000 256,000
2040-2139.......................... .............. .............. .............. 117,584 52,000 226,000
2140-2239.......................... .............. .............. .............. 118,631 52,000 226,000
2240-2339.......................... .............. .............. .............. 122,939 79,000 164,000
2340-2439.......................... .............. .............. .............. 136,305 103,000 162,000
2440-2539.......................... .............. .............. .............. 136,428 60,000 226,000
--------------------------------------------------------------------------------------------------------------------
All............................ 53,246 28,400 101,000 104,006 52,000 256,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
The MHS 2019 PUF data set also provides data that relates Census
region (the U.S. Census Bureau divides the country into four census
regions) with purchase price. Table III.4 summarizes the average,
minimum and maximum sales prices based on census region and section. In
general, the data indicates that average price (specifically for
single-section homes) does not differ significantly based on census
region.
Table III.4--MHS PUF 2019 Census Region and Sales Price Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single-section sales price (2019) Dual-section sales price (2019)
Census region -----------------------------------------------------------------------------------------------
Average Minimum Maximum Average Minimum Maximum
--------------------------------------------------------------------------------------------------------------------------------------------------------
Northeast............................................... $54,430 $33,800 $101,000 $106,502 $55,000 $256,000
Midwest................................................. 54,025 32,100 75,000 98,512 54,000 162,000
South................................................... 52,879 29,600 74,000 102,222 52,000 164,000
West.................................................... 53,318 28,400 100,000 113,312 60,000 226,000
-----------------------------------------------------------------------------------------------
All................................................. 53,246 28,400 101,000 104,006 52,000 256,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
At this time, DOE has tentatively determined that a national retail
price-based threshold will accomplish the purposes of EISA while taking
into account the importance of affordable housing. However, DOE is
considering conducting additional analyses on alternative thresholds
prior to the final rule stage. DOE requests comment on this approach
and whether other types of thresholds are worth considering for the
final rule stage.
DOE requests comment on the use of a tiered approach to address
affordability and PBP concerns from HUD, other stakeholders, and the
policies outlined in Executive Order 13985. DOE also requests comment
regarding whether the price point boundary between the proposed tiers
is appropriate, and if not, at what price point should it be set and
the basis for any alternative price points. DOE also requests comment
on its assumptions regarding the use of high-priced loans (e.g.,
chattel loans) by low-income purchasers, or other purchasers, of
manufactured housing.
DOE also requests comment on alternate thresholds (besides price
point) to consider for the tiered approach, including a size-based
threshold (e.g., square footage or whether a home is single- or multi-
section). DOE requests comment on the square footage and region versus
sales price data provided in the notice (from MHS PUF 2019) and how
that data (or more recent versions of that data) could be used to
create either a size-based or region-based threshold instead. DOE
further requests input on whether there should be single national
threshold as proposed, or whether it should vary based on geography or
other factors, and if so, what factors should be considered.
As mentioned previously, the threshold proposed in this SNOPR is
based in real 2019 dollars. Accordingly, DOE also proposes under the
tiered proposal that the manufacturer's retail list price thresholds
would be adjusted for inflation (for the applicable year of compliance)
using the most recently available Annual Energy Outlook (``AEO'') GDP
deflator time series. For AEO 2020, Table III.5 provides the values of
the GDP deflator time series.\22\
---------------------------------------------------------------------------
\22\ See Table 20. Macroeconomic Indicators; GDP Chain-type
Price Index; Reference case.
Table III.5--AEO 2020 GDP Deflator
------------------------------------------------------------------------
GDP deflator
------------------------------------------------------------------------
2019................................................. 1
2020................................................. 1.024394
2025................................................. 1.152839
2030................................................. 1.296141
2035................................................. 1.445744
2040................................................. 1.614055
2045................................................. 1.809366
2050................................................. 2.041051
------------------------------------------------------------------------
DOE requests comment on using the AEO GDP deflator series to adjust
the manufacturer's retail list price threshold for inflation. DOE
requests comment on whether other time series, including those that
account for regional variability, should be used to adjust
manufacturer's retail list price.
b. Tier Proposals
The proposed lower incremental purchase price for manufactured
homes covered by the Tier 1 standard was developed in response to
concerns from HUD and other commenters regarding the incremental
purchase price, and the ability of the first homeowner/purchaser for
these homes to recoup the increase in purchase price and realize the
savings offered by the greater energy
[[Page 47762]]
efficiency of a Tier 1 manufactured home. As discussed in section
IV.A.1.a, several commenters expressed concern that first homeowners of
manufactured homes would not live in the homes long enough to recoup
the increases in purchase price or realize the energy savings of the
energy efficiency measures proposed in the June 2016 NOPR.
In determining the energy efficiency measure (EEM) combinations,
DOE ensured that the performance-based overall thermal transmittance
(Uo) for these combinations would be more stringent than the current
HUD requirements. DOE's objective in defining the Tier 1 incremental
purchase price threshold was based on which threshold a low-income
buyer purchasing a single-section home (using typical loan terms
available to these homebuyers, primarily chattel loans with higher
interest rates) would, on average, realize a positive cash flow within
Year 1 of the standard based on the down payment, incremental loan
payment, and energy cost savings. As such, DOE preliminarily determined
that an incremental purchase price of no more than $750 provided a
beneficial financial outcome for these consumers given lifecycle cost
savings and energy cost savings, while minimizing first cost impacts.
Specifically, for single-section manufactured homes, DOE determined the
set of energy efficiency measures with an average incremental purchase
price of $663 (as presented in Table I.1) with a 10 percent down
payment (using a chattel loan, as discussed in section IV.A.1.d) would,
on average, result in a positive cash flow within the first year, as
presented in Table III.6. Further discussion on the LCC inputs to this
subgroup calculation are presented in section Chapter 9 of the TSD.
Table III.6--Tier 1 LCC Sub-Group National Results
------------------------------------------------------------------------
Single-section only; 30-year analysis period; national
results Tier 1
------------------------------------------------------------------------
Incremental cost........................................ $662.64
Down-payment (10%)...................................... 66.26
Yearly Incremental Loan Payment......................... 78.55
First Year Incremental Payment (Down-payment + Loan).... 144.81
Yearly Energy Cost Savings.............................. 180.83
First Year Savings (Energy Cost Savings-Incremental 36.01
Payment)...............................................
------------------------------------------------------------------------
Accordingly, by focusing the Tier 1 standards on those measures
that would result in an incremental purchase price increase of
approximately $750, DOE proposes a way to take into account energy
efficiency and cost-effectiveness in a manner consistent with the
statute. Further discussion is provided in Chapter 6 of the TSD.
The proposed Tier 2 standard would be at the same stringencies as
the standards based on the most recent version of the IECC, with
consideration of cost-effectiveness and design and factory construction
techniques of manufactured homes. (42 U.S.C. 17071(b)(1); 42 U.S.C.
17071(b)(2)(A)) The proposed building thermal envelope requirements for
both tiers are presented in section III.E.2.b of this document.
c. General Comments to the June 2016 NOPR on Energy Conservation
Standards
This SNOPR reflects general comments to the June 2016 NOPR
regarding the need to update the energy conservation standards for
manufactured homes and the basis for any standards established. MHARR
stated that HUD-regulated manufactured homes are already energy
efficient, with median monthly energy costs that are either lower or
comparable to the median monthly costs for site-built homes, without
high costs to the consumer. (MHARR, No. 143 at p. 4) Next Step cited a
study done by the American Council for Energy Efficient Economy
(``ACEEE'') that found that residents of manufactured homes spend 30
percent more income on energy than the average American household and
66 percent more than owners of site-built homes. (Next Step, No. 174 at
p. 1)
DOE also received several comments regarding the use of the IECC as
a basis for this rulemaking. SBRA stated that the IECC is a weak
regulatory basis for developing manufactured housing standards, as IECC
is not developed with cost-effectiveness as a primary consideration.
SBRA recommended that in the future, DOE base changes to energy
conservation standards for manufactured housing primarily on methods
and practices specific to the MH industry. (SBRA, No. 163 at p. 1)
As described in section II.A, EISA mandates that the manufactured
housing energy conservation standards be based upon the most recent
IECC, except in cases in which the Secretary finds that the IECC is not
cost-effective, or a more stringent standard would be more cost-
effective, based on the impact of the IECC on the purchase price of
manufactured housing and on total life-cycle construction and operating
costs. (42 U.S.C. 17071(b)(1)) As discussed, DOE evaluated the
requirements of the IECC along with the other considerations enumerated
by EISA. EISA also requires DOE to update the energy conservation
standards no later than one year after any revisions to the IECC;
therefore, future revisions to the standards will also be based on the
IECC along with the other considerations identified by EISA. In this
SNOPR, DOE proposes to include several IECC provisions with
modification, incorporating some of the MH working group's
recommendations that were based on cost-effectiveness. DOE also
proposes to include modified IECC provisions to make the DOE standards
better tailored to the manufactured housing industry, as discussed in
further depth in the next paragraphs.
Regarding the statutory requirement to base standards on the IECC,
the ICC stated in its comments that its codes generally do not apply
rules that distinguish among buildings based on their structure or how
they were built. ICC went on to state that it understands there may be
technical reasons that warrant modifying the IECC standards, but it
asserted that those changes should be based on a showing of
impossibility and incompatibility with the manufactured housing
process. (ICC, No. 160 at p. 2)
One of the considerations provided by EISA in establishing
standards is ``the design and factory construction techniques of
manufactured homes.'' (42 U.S.C. 17071(b)(2)(A)) The design and
construction of manufactured homes was a main focus of the MH working
group while developing the recommendations that DOE has considered in
this rulemaking. For example, section R402.2.4 of the 2015 IECC (which
was considered by the MH working group) and the 2021 IECC (which is the
latest version of the IECC and considered in this SNOPR) include
[[Page 47763]]
a specification for vertical doors that provide access from conditioned
to unconditioned spaces to meet certain fenestration insulation
requirements. However, doors that separate conditioned and
unconditioned space rarely are relevant to manufactured homes.
Therefore, the MH working group recommended that this provision be
removed from the energy conservation standards as it was deemed not
relevant to manufactured housing design and construction. Modifications
to the IECC in this proposal were based on unique, technical aspects of
the manufactured housing industry, as well as use of the HUD zones and
to address cost-effectiveness concerns related to the potential impact
cost increases would have on the affordability of the manufactured
housing market.
Additionally, as noted previously, the authority under 42 U.S.C.
17071 to establish energy conservation standards for manufactured homes
specifies that those standards ``shall be based on'' the most recent
version of the IECC. In DOE's view, this does not require the energy
conservation standards for manufactured homes to be an identical or
verbatim equivalent of the IECC, especially in light of the other
considerations DOE must make under the statute (i.e., the design and
construction techniques of manufactured homes, cost-effectiveness,
etc.). Because the IECC is specific to site-built structures, both
approaches proposed in this document would establish requirements using
modified versions of those related IECC provisions that can be adapted
for manufactured homes.
In another comment regarding the IECC, VEIC commented that DOE
should include a provision to regularly update the standards with
changes made to the IECC in the future. (VEIC, No. 187 at p. 2) In
response, DOE notes that EISA already requires the agency to update its
energy conservation standards for manufactured housing not later than
``one year after any revision to the IECC.'' (42 U.S.C. 17071(b)(3)(B))
DOE has considered the latest version of the IECC (the 2021 IECC) for
this SNOPR, and is proposing energy conservation standards based on the
latest version of the IECC. DOE will review subsequent IECC standards
issued in the future and evaluate whether to update the energy
conservation standards for manufactured housing based on the
considerations required by EISA.
Southern Company questioned whether the new regulations are subject
to the seven-factor test for cost-effectiveness as found in 10 CFR part
430. (Southern Company, Public Meeting Transcript, No. 148 at p. 143)
DOE understands the question from Southern Company to refer to the
seven statutory factors, as described in 42 U.S.C. 6295(o)(2)(B)(i)(I)-
(VII), that apply to energy conservation standards established under
the Energy Conservation Program for Consumer Products Other than
Automobiles (Title III, Part B of the Title III, Part B of the Energy
Policy and Conservation Act of 1975 (EPCA)). Manufactured housing is
not a covered product under Title III, Part B of EPCA, and is subject
to a separate statutory scheme (i.e., 42 U.S.C. 17071). Therefore, this
rulemaking is not directly subject to the EPCA seven-factors test,
although similar analyses have been conducted for this rulemaking
(e.g., LCC, MIA).
B. Rulemaking Process
As part of developing energy conservation standards for
manufactured housing, DOE is undertaking a multi-stage process
providing numerous opportunities for public comment and engagement, as
discussed in further detail in section II.B.3 of this document. For
this rulemaking, EISA requires DOE to ``consult with the Secretary of
HUD, who may seek further counsel from the Manufactured Housing
Consensus Committee''. 42 U.S.C. 17071(a)(2)(B). Pursuant to the
statutory requirement, DOE has consulted with HUD throughout the
development of these standards, as discussed in section II.B.3. DOE met
with HUD multiple times during the preliminary stages of the proposed
rule, as well as throughout the rest of the rulemaking process, and
consulted HUD in the development of the proposals in this SNOPR. As
EISA expressly states that the Secretary of HUD may engage with the
MHCC with regard to this rulemaking, DOE has attended three MHCC
meetings, most recently in June of 2021, to gather further information
and input on the rule. This proposed rule includes a number of the
changes submitted by the MHCC (MHCC, No. 162), which mirrored comments
from other individual stakeholders on the June 2016 NOPR. A number of
other stakeholders, including industry stakeholders, have also provided
information, data, and opinions regarding the rule. All interested
stakeholders will have the opportunity to provide input and comments on
this SNOPR.
In response to the 2016 NOPR, DOE received several comments
regarding the rulemaking process used by DOE for these energy
conservation standards. MHARR had numerous comments regarding issues
with the overall process used for this rulemaking. MHARR asserted that
the DOE rulemaking process was not transparent, and that the proposed
rule was a violation of the 1974 National Manufactured Housing
Construction and Safety Standards Act; the ``arbitrary, capricious [or]
abuse of discretion'' standard of the Administrative Procedure Act; the
Negotiated Rulemaking Act; and EISA. (MHARR, No. 154 at pp. 2-15)
MHARR was also concerned that a 2011 draft of the proposed rule was
distributed to a select group of organizations. MHARR stated that
following this distribution, a ``fresh start'' was required for the
proposed rule, but there is no evidence that a ``fresh start'' actually
occurred. (MHARR, No. 154 at pp. 2-15; MHARR, No. 143 at pp. 1, 3;
MHARR, Public Meeting Transcript, No. 148 at p. 149)
As stated earlier, DOE is conducting this rulemaking pursuant to
the statutory provisions in EISA that direct DOE to establish energy
conservation standards for manufactured housing. This statutory
directive is separate from the 1974 National Manufacturing Housing
Construction and Safety Standards Act that governs HUD's authority in
promulgating regulations for manufactured housing. Additionally, DOE
demonstrates in section III.F how the standards proposed in this SNOPR
do not conflict with those established by HUD. Furthermore, this
discussion and related supporting analyses together present the
analytical approach used by DOE in evaluating the relevant information
and on which DOE based its determinations regarding the proposed
requirements in accordance with the directives in EISA, the
Administrative Procedure Act and the Negotiated Rulemaking Act.
Accordingly, as discussed previously, in preparation for the prior
negotiated rulemaking that produced the June 2016 NOPR, DOE set up a
negotiated rulemaking process in accordance with the Federal Advisory
Committee Act and the Negotiated Rulemaking Act, which included a broad
and balanced array of stakeholder interests and expertise, and included
a representative from MHARR. 79 FR 41456 (July 16, 2014).
DOE also received several comments regarding the consensus approach
used in the June 2016 NOPR. SBRA and Clayton Homes supported the ASRAC
decision to use a consensus approach for this rulemaking and
recommended DOE should continue this method for future rulemakings
regarding
[[Page 47764]]
manufactured housing. (SBRA, No. 163 at p. 1; Clayton Homes, No. 185 at
p. 5) DOE appreciates these comments supporting the use of a negotiated
rulemaking process by DOE and will consider these and all other
permissible options for future manufactured housing rulemakings.
With regard to the rulemaking process, DOE received several
comments regarding the inclusion of the MHCC during the rulemaking.
Several commenters stated that the proposed rule should not be
finalized until the views and comments of MHCC are incorporated, as
they have done for past HUD rulemakings. (Pleasant Valley Homes, No.
154 at p. 2; WVHI, No. 156 at p. 2; MHIM, No. 155 at p. 2; NMMHA, No.
157 at p. 2; MHIAZ, No. 161 at p. 2; PMHA, No. 164 at p. 2; Skyline
Corporation, No. 165 at p. 1; OMHA, No. 166 at p. 2; MHI, No. 182 at p.
2; MMHA, No. 170 at p. 2; MHISC, No. 191 at p. 2; AMHA, No. 173 at p.
2, Commodore Corporation, No. 195 at p. 2) AMHA also stated that the
proposed rule should not be finalized without thoughtful consideration
of the detailed comments of professionals involved with manufactured
housing including the MHCC, as well as MHARR and MHI. (AMHA, No. 173 at
p. 3)
MHARR stated that DOE must consult with HUD and MHCC during the
formulation of DOE standards, and that there is no evidence that these
consultations ever occurred. (MHARR, No. 154 at p. 18) MHARR also
commented that DOE never provided a chance for MHCC to provide
substantive consensus input regarding the proposed rule and actively
prevented any input from MHCC at any point when it would have mattered.
(MHARR, No. 154 at p. 19) As stated previously, DOE has consulted both
with HUD and engaged with the MHCC with regard to this rulemaking, and
has incorporated information and considerations provided by HUD and the
MHCC into this SNOPR.
C. Test Procedure
DOE published a test procedure NOPR for manufactured housing on
November 9, 2016. 81 FR 78733 (November 2016 test procedure NOPR). The
November 2016 test procedure NOPR proposed applicable test methods to
determine compliance with the following metrics that were included in a
June 2016 NOPR: the R-value of insulation; the U-factor of windows,
skylights, and doors; the SHGC of fenestration; U-factor alternatives
to R-value requirements; the air leakage rate of air distribution
systems; and mechanical ventilation fan efficacy. The November 2016
test procedure NOPR proposed test methods that would dictate the basis
on which a manufactured home's performance is represented and how
compliance with the energy conservation standards would be determined.
DOE notes that a number of the test methods that were proposed were
consistent with test methods from the IECC, which includes test methods
for R-value of insulation, U-factor and SHGC of fenestration, duct
leakage and mechanical fan efficacy.
The November 2016 test procedure NOPR provided stakeholders an
opportunity to comment on the proposed test procedure for manufactured
housing. As discussed above, DOE is not addressing a test procedure in
this rulemaking. DOE will consider the comments related to test
procedures in any future action on test procedures.
D. Certification, Compliance, and Enforcement
In the November 2016 test procedure NOPR, DOE did not propose a
system of certification, compliance, and enforcement (``CCE''), instead
indicating those items would be addressed in a separate rulemaking. At
this time, DOE is not addressing CCE issues in this rulemaking, but may
do so in the future.
DOE received several comments identifying compliance and
enforcement as a major issue that needs to be addressed. Several
commenters stated that they are concerned that establishing standards
prior to the establishment of a compliance regime would risk
manufacturers facing complicated, conflicting, and overlapping
requirements from both HUD and DOE. (Pleasant Valley Homes, No. 153 at
p. 2; WVHI, No. 156 at p. 2; MHIM, No. 155 at p. 2; NMMHA, No. 157 at
p. 2; MHIAZ, No. 161 at p. 2; OMHA, No. 166 at p. 2; MHCC, No. 162 at
p. 2; MHI, No. 182 at p. 2; Clayton Homes, No. 185 at p. 1; Palm Harbor
Homes, No. 193 at p. 3; MHISC, No. 191 at p. 2; AMHA, No. 173 at p. 2;
Skyline Corporation, No. 165 at p. 2; NCJC, No. 184 at p. 2; Form
Letters, No. 182 at p. 1; MHARR, No. 154 at p. 22) Commenters suggested
that the proposed rule not be finalized until DOE and HUD can determine
a single, efficient, and practical enforcement strategy, where HUD is
the prime regulator. (MHI, Public Meeting Transcript, No. 148 at p. 11;
MHI, Public Meeting Transcript, No. 148 at p. 142; Washington State
University (WSU) Energy Program, Public Meeting Transcript, No. 148 at
p. 146; Pleasant Valley Homes, No. 153 at p. 2; WVHI, No. 156 at p. 2;
MHIM, No. 155 at p. 2; NMMHA, No. 157 at p. 2; MHIAZ, No. 161 at p. 2;
Better Homes, No. 168 at p. 1; OMHA, No. 166 at p. 2; MHI, No. 182 at
p. 2; ACEEE, No. 178 at p. 3; Next Step, No. 174 at p. 2; MMHA, No. 170
at p. 2; Clayton Homes, No. 185 at p. 1; Palm Harbor Homes, No. 193 at
p. 3; MHISC, No. 191 at p. 2; AMHA, No. 173 at p. 2; Skyline
Corporation, No. 165 at p. 2; MHI, No. 182 at p. 8; Form Letters, No.
182 at p. 1, Commodore Corporation, No. 195 at p. 2)
NEEA suggested that DOE establish a collaborative method with HUD
to provide compliance oversight with the DOE standards. As suggested by
NEEA, HUD could continue to use the existing Design Approval Primary
Inspection Agencies (DAPIA) and Inspection Primary Inspection Agencies
(IPIA) system, with DOE serving as a third-party review and technical
support through periodic energy code compliance studies. (NEEA, No. 190
at p. 2)
ACEEE and South Mountain stated that in order to have effective
compliance, it is important that DOE provide training and tools to
assist manufacturers in compliance and to monitor effectiveness of
implementation, particularly during the initial implementation period.
(ACEEE, No. 178 at p. 4; South Mountain, No. 151 at p. 1) One
particular technical tool that was suggested by SBRA and Palm Harbor
Homes was a single software package that provides a platform for
overall compliance. This software could check for HUD and DOE Code
compliance, conduct loads analysis (Manual J), equipment sizing (Manual
S), generate an Energy Rating Index, and check for ENERGY STAR[supreg]
compliance. (SBRA, No. 163 at p. 2; Palm Harbor Homes, No. 193 at p. 3)
Lastly, ACEEE commented that the residential compliance software used
by DOE, REScheck, also be adapted to verify these new requirements.
(ACEEE, No. 178 at p. 4)
DOE also received comments regarding specific aspects of compliance
and enforcement. Earthjustice commented that DOE should move quickly to
propose and finalize provisions related to compliance and enforcement,
but that these specific provisions should not delay finalizing the
overall rule. (Earthjustice, No. 169 at p. 2)
WSU Energy Program commented that insulation installations and air
leakage compliance must be clear for IPIA- and DAPIA-approved quality
assurance, suggesting a compliance approach that relies on existing HUD
mechanisms. (WSU Energy Program, Public Meeting Transcript, No. 148 at
pp. 42, 57)
[[Page 47765]]
ACEEE commented that some degree of energy-related information
should be provided to purchasers, renters, and owners. To make this
possible, ACEEE urged DOE to require MH manufacturers to use effective
labeling and sales information that would easily convey the effects of
the energy conservation standards to consumers, but without undue
burden on manufacturers. (ACEEE, No. 178 at p. 4)
Modular Lifestyles commented that consumers do not usually buy
homes directly from the manufacturer; normally, retailers will purchase
the manufactured homes from the manufacturer to then sell to consumers.
Modular Lifestyle commented that the manufacturer should be held
accountable, upon the purchase of the manufactured home by the
retailer, that the home meets the consumer's local energy conservation
standards, as the manufacturer and consumer may be located in different
DOE climate zones. (Modular Lifestyle, No. 141 at p. 2)
NCJC suggested both that compliance and enforcement standards be
included in the energy conservation standard, and that a provision be
added that would allow homeowners to sue manufacturers for failure to
construct homes in accordance with these energy conservation standards.
(NCJC, No. 184 at p. 2) GWU suggested DOE consider retrospectively
reviewing its rule after implementation to assess any potential overlap
or conflicts with the existing HUD Code. (GWU, No. 175 at p. 11)
DOE appreciates the comments received on potential options for a
CCE system. DOE will consider the comments related to CCE received in
this rulemaking and will consult with HUD in any future action on CCE.
E. Energy Conservation Standards Requirements
This section discusses in detail the energy conservation standards
proposed in this SNOPR, in particular as compared to the energy
conservation standards as proposed in the June 2016 NOPR. In response
to the 2021 IECC, additional analyses conducted by DOE, and comments
received to the June 2016 NOPR, including those regarding potential
adverse impacts on price-sensitive low-income purchasers of
manufactured homes, DOE is updating the proposed energy conservation
standards as presented in the June 2016 NOPR.
The following paragraphs discuss the tiered and untiered standard
proposed for manufactured homes based on the 2021 IECC. As discussed
previously, the proposed Tier 1 standard would include manufactured
homes with a manufacturer's retail list price of $55,000 or less (in
real 2019$) and would be subject to a less stringent set of standards,
while providing cost-effective energy bill savings and positive cash
flow within the first year of occupancy.
DOE is continuing to propose that standards would be codified in a
new part of the CFR under 10 CFR part 460 subparts A, B, and C. Subpart
A, as proposed, provides the scope of the standards, definitions of key
terms, and other commercial standards that are incorporated by
reference into this part. The subpart also would establish a compliance
date of one year following the publication of the final rule.
As proposed, subpart B would include energy conservation standards
requirements associated with the building thermal envelope of a
manufactured home according to the climate zone in which the home is
located. DOE bases its proposed building thermal envelope energy
conservation standards on the three HUD zones. Under the proposal,
manufacturers may choose between two pathways to comply, with each one
ensuring an appropriate level of thermal transmittance through the
building thermal envelope. The first pathway relies on prescriptive
requirements for components of the building thermal envelope. The
second pathway relies on performance requirements, under which a
manufactured home is required to achieve a maximum Uo in addition to
fenestration U-factor and SHGC requirements. Manufactured homes would
be required to comply with one of these two pathways. Subpart B would
also establish prescriptive requirements for insulation and sealing the
building thermal envelope to limit air leakage.
Proposed subpart C includes requirements related to duct leakage,
HVAC thermostats and controls, service water heating, mechanical
ventilation fan efficacy, and equipment sizing.
1. Subpart A: General
DOE received several comments regarding the rulemaking in general,
both in favor of and opposed. A number of commenters stated that they
support the overall standards proposed by DOE in the June 2016 NOPR.
(ACEEE, Public Meeting Transcript, No. 148 at p. 17; NEEA, No. 190 at
p. 1; South Mountain, No. 151 at p. 1; RECA, No. 188 at p. 1) ACEEE and
RECA also commented on the many benefits of the requirements as
proposed in the June 2016 NOPR, especially on the energy savings for
the owners of manufactured homes. (ACEEE, Public Meeting Transcript,
No. 148 at p. 17; RECA, No. 188 at p. 1) NEEA commented that it
supports the improved overall building thermal envelope efficiency,
citing both increased insulation and lower fenestration U-values.
(NEEA, No. 190 at p. 1) Natural Resource Defense Council (NRDC) stated
that DOE's standards as proposed in the June 2016 NOPR have
opportunities for very high return on investments and are justified on
an overall economic perspective. (NRDC, Public Meeting Transcript, No.
148 at p. 16) NJCJ and WSU Energy Program commented that the improved
standards will help address not only high energy bills, but also help
reduce physical degradation to the house, which is an issue that
plagues many manufactured home homeowners. (NCJC, No. 184 at p. 2; WSU
Energy Program, Public Meeting Transcript, No. 148 at p. 106) While
these commenters expressed general support for the rulemaking, some
provided specific criticisms, which are discussed in more detail
throughout this SNOPR.
Earthjustice and NCJC urged DOE to implement the proposed rule as
soon as possible, as it has gone through a prolonged development
process and general consensus was reached in late 2014. These
commenters stated that additional time taken to implement this rule
deprives new manufactured home homeowners the benefits of greater
energy conservation standards. (Earthjustice, No. 169 at p. 1; NCJC,
No. 184 at p. 1) NEEA stated that DOE provided more than adequate time
for stakeholders to participate and provide comment, and that the rule
should be finalized. (NEEA, No. 190 at p. 1)
DOE appreciates the comments supporting the proposed energy
conservation standards and the projected benefits. DOE notes that the
currently proposed standards were developed with consideration of
recommendations received through an in-depth consensus process,
recommendations received from a working group, consultations with HUD,
and comments received during rulemaking. As noted, EISA requires DOE to
base the energy conservation standards on the most recent version of
the IECC (42 U.S.C. 17071(b)(1)), and that following the June 2016
NOPR, the 2018 and 2021 editions of the IECC were published. In
response, DOE considered the changes to the IECC from the version used
in the June 2016 SNOPR (2015 IECC), as well as cost-effectiveness
considerations, in developing the energy conservation standards
proposed in this SNOPR.
DOE also received comments urging caution in establishing a final
rule. SBRA and NCJC stated that while they
[[Page 47766]]
believe that sections of the document can be improved, the overall rule
should be adopted. (SBRA, Public Meeting Transcript, No. 148 at p. 148;
NCJC, No. 184 at p. 1) Cavco stated that this rulemaking should be
thoroughly vetted and reviewed because any errors in the calculation of
cost-effectiveness could have a significant negative impact on
consumers and the manufactured housing industry. (Cavco, Public Meeting
Transcript, No. 148 at p. 151) MHI stated that given the magnitude of
issues to be addressed (a general reference to all comments raised by
MHI), DOE should consider publishing another draft rule for comment
before moving to a final rule. (MHI, No. 182 at p. 8)
Several commenters were specifically concerned with increased
consumer cost, which is addressed in section IV.A.1.g, and issues
regarding compliance, which is addressed in section III.D. (OMHA, No.
166 at p. 1; MHISC, No. 191 at p. 1; WVHI, No. 156 at p. 1; MHIM, No.
155 at p. 1; NMMHA, No. 157 at p. 1; MHIAZ, No. 161 at p. 1; PMHA, No.
164 at p. 1; Skyline Corporation, No. 165 at p. 1; Commodore
Corporation, No. 195 at p. 1)
In response to comments received related to potential adverse
impacts on price-sensitive, low-income purchasers, and in light of the
consultation with HUD, DOE has updated its analyses specifically to
evaluate the potential burden of incremental costs from energy
conservation standards on low-income purchasers. To allow stakeholders
to comment on the updated proposal contained in this SNOPR, DOE notes
that it is proposing updated requirements based on further analyses and
is requesting additional comments before establishing a final rule.
a. Proposed Sec. 460.1 Scope
Section 431 of EISA directs DOE to establish energy conservation
standards for manufactured housing. (42 U.S.C. 17071(a)(1)) In this
SNOPR, DOE proposes that Sec. 460.1 (1) restate the statutory
requirement and introduce the scope of the requirements, and (2)
require manufactured homes that are manufactured on or after one year
following publication of the final rule to comply with the requirements
established, consistent with the June 2016 NOPR. 81 FR 39756, 39766 DOE
stated that a 1-year notice period is a common industry practice for
changes to building codes, and would allow manufacturers to transition
their designs, materials, and factory processes to comply with the
finalized DOE energy conservation standards. Id.
In response to the June 2016 NOPR, ACEEE and South Mountain
supported the 1-year period before the rule becomes effective, stating
a 1-year period appropriately balances the urgency of implementing the
energy conservation standards and the work required of manufacturers to
implement changes. (ACEEE, No. 178 at p. 1; South Mountain, No. 151 at
p. 1) RECA recommended an implementation timeline of no longer than one
year, as outlined in the June 2016 SNOPR. (RECA, No. 188 at p. 2) RECA,
Next Step Network, and Modular Lifestyles commented that many
manufacturers produce higher efficiency homes that already meet the
energy conservation standards, indicating that the path to compliance
was known and well established. (RECA, No. 188 at p. 2; Next Step, No.
174 at p. 1; Modular Lifestyles, No. 141 at p. 2) AGA and APGA
suggested that the lead time for compliance instead be 5 years, as this
would both allow more time for the market to adjust as well as give
more time to educate consumers. (AGA and APGA, No. 172 at p. 1) In
addition, Advocacy recommended that DOE adopt delayed compliance
schedules for small manufacturers, as this would allow them to manage
their limited resources. (Advocacy, No. 177 at p. 4)
As noted in comments previously, the industry has experience with
the means to comply with the proposed requirements. DOE notes that
section 413 requires DOE to update the manufactured home standards
within one year following an update to the IECC. (42 U.S.C.
17071(b)(3)(B)) A one-year lead time for compliance would allow DOE to
evaluate industry compliance with the proposed standards, if made
final, prior to consideration of updates to the IECC in 2024, as
required by the statute. The one-year lead time would also minimize the
lag time between updates to the IECC and any potential updates to the
DOE standards, ensuring that manufactured home purchasers are receiving
energy savings based on the most recent model energy codes.
DOE recognizes that compliance with the DOE energy conservation
standards may require manufacturers to update designs and
certifications required under the HUD Code. However, EISA requires DOE
to base the energy conservation standards for manufactured homes on the
latest edition of the IECC, with considerations made for cost-
effectiveness. As discussed in detail in section I.A, while
manufacturers may incur costs to update designs to meet the proposed
standards, if finalized, these costs appear outweighed by the benefits
gained in energy savings by manufactured home purchasers as a result of
the standards.
DOE requests comment on whether a one-year lead time would be
sufficient given potential constraints that compliance with the DOE
standards may initially place on the HUD certification process, and
whether a longer lead time (e.g., a three-year lead time) or some other
alternative lead-time for this first set of standards (e.g., phased-in
over three years, with one-year lead-times thereafter) should be
provided.
b. Proposed Sec. 460.2 Definitions
In this SNOPR, DOE proposes to maintain certain definitions
proposed in the June 2016 NOPR, update other definitions from the June
2016 NOPR based on comments received, and add/update certain
definitions based on the later IECC version published since the June
2016 NOPR (the 2018 IECC and the 2021 IECC). As such, DOE proposes the
definitions for the following terms proposed in the June 2016 NOPR
remain the same for Sec. 460.2: ``automatic,'' ``ceiling,'' ``climate
zone,'' ``continuous air barrier,'' ``door,'' ``duct,'' ``duct
system,'' ``fenestration,'' ``floor,'' ``glazed or glazing,''
``insulation,'' ``manufactured home,'' ``manufacturer,'' ``manual,''
``R-value (thermal resistance),'' ``rough opening,'' ``service hot
water,'' ``solar heat gain coefficient (SHGC),'' ``state,''
``thermostat,'' ``U-factor (thermal transmittance),'' ``Uo (overall
thermal transmittance),'' ``ventilation,'' ``vertical fenestration,''
``wall,'' ``whole-house mechanical ventilation system,'' ``window,''
and ``zone.''
Furthermore, DOE proposes definitions in the SNOPR for the
following terms that are either (1) updates from the June 2016 NOPR,
(2) new proposals based on the 2018 and 2021 IECC, or (3) other
clarifications needed, as discussed later in this section: ``access
(to)''; ``air barrier''; ``building thermal envelope''; ``conditioned
space''; ``dropped ceiling''; ``dropped soffit''; ``eave'';
``equipment''; ``exterior ceiling''; ``exterior floor''; ``exterior
wall''; ``heated water circulation system''; ``2021 IECC''; ``opaque
door''; ``skylight''; ``skylight well'';
The following paragraphs summarize the comments received to the
June 2016 NOPR and DOE's analysis of the 2018 and 2021 IECC updates to
the definitions.
COBA requested that a definition of the term ``affordable housing''
be added. COBA suggested the following:
[[Page 47767]]
``Housing is affordable when individuals or households earning less
than half the Area Median Income or AMI can afford to rent a
conventional apartment or buy a home in their local housing market.''
\23\ (COBA, No. 158 at p. 3) Regarding affordability, WSU Energy
Program stated that ``affordability'' should be defined as affordable
to purchase at the upfront cost, as suggested by COBA, but also
affordable to maintain and operate. (WSU Energy Program, No. 148 at pp.
20, 85) Impact on purchase price is a particular consideration in the
development of the energy conservation standards for manufactured
housing, and DOE requested comments on the potential impact of
standards on affordability/purchase price. 81 FR 39756, 39765, 39784.
However, affordability is not an element of the proposed regulatory
text in this SNOPR and ``affordability'' as a defined term is not
needed to support the energy conservation standard regulatory text (at
10 CFR part 460). As such DOE is not proposing a definition of
``affordability''.
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\23\ Allen, G. and Savage, B. The First 20 Years! 2013. PMN
Publishing; Franklin, IN.
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ACC FSC requested that DOE define ``continuous insulation.'' (ACC
FSC, No. 186 at p. 1) DOE determined in the June 2016 NOPR that a
definition for ``continuous insulation'' was not necessary, as it was
deemed not relevant to the proposed energy conservation requirements.
Because the regulatory text proposed does not use the term ``continuous
insulation,'' DOE is not proposing a definition for this term.
NEEA commented that improved clarity on what is considered interior
conditioned space is needed. NEEA stated that the space under the floor
but above insulation should not be considered conditioned space. (NEEA,
No. 190 at p. 2) DOE recognizes that there was some confusion regarding
the definition of ``conditioned space'' proposed in the June 2016 NOPR.
DOE intended to use the 2015 IECC definition for the term ``conditioned
space,'' but an error led to an incorrect definition being listed in
Sec. 460.2 of the proposed regulatory text. For this SNOPR, DOE
proposes that the definition of conditioned space match the 2021 IECC
definition, which is the same as the 2015 IECC definition for
conditioned space. Using this proposed definition, the space under the
floor but above the insulation is considered conditioned space. As DOE
is proposing the term as defined in the IECC, the term is appropriately
understood by industry. Therefore, DOE proposes to define ``conditioned
space'' as an area, room, or space that is enclosed within the building
thermal envelope and that is directly or indirectly heated or cooled.
Spaces are indirectly heated or cooled where they communicate through
openings with conditioned space, where they are separated from
conditioned spaces by uninsulated walls, floors or ceilings, or where
they contain uninsulated ducts, piping, or other sources of heating or
cooling.
NEEA recommended that ``skylight wells'' be defined as exterior
walls, to clearly indicate that they require insulation to at least
exterior wall insulation levels. (NEEA, No. 190 at p. 3) While
``skylight'' is defined in the 2021 IECC, ``skylight well'' is not
defined. As suggested by NEEA, a ``skylight well'' would extend from
the interior finished surface of the exterior ceiling to the exterior
surface of the roof. For some homes, the upper part of this well may
exist above the exterior ceiling insulation. This upper part of the
well would provide an uninsulated path from the interior to the
exterior of the home if the skylight well were not insulated. Per the
proposed definition of exterior wall, ``skylight wells'' would be
considered exterior walls. DOE agrees with NEEA's suggestion to define
the term ``skylight well,'' which DOE proposes to define as
encompassing the walls underneath a skylight that extend from the
interior finished surface of the exterior ceiling to the exterior
surface of the location to which the skylight is attached.
DOE also proposes to specify that skylight wells are exterior walls
by updating the definition of ``exterior wall'' to include skylight
wells. DOE proposes to define ``exterior wall'' as a wall, including a
skylight well, that separates conditioned space from unconditioned
space.
HUD's allowance of ``alternative construction'' of manufactured
homes permits manufacturers to utilize new designs or techniques. 24
CFR 3282.14. One such home design can be a multistory manufactured
home. In this SNOPR, DOE proposes that the ceiling, wall, and floor
building thermal requirements for these energy conservation standards
are only for the exterior ceiling, wall, and floor that separate
conditioned space from unconditioned space, not for any internal
ceilings that can be found in a multistory manufactured home, or for
interior walls. Therefore, DOE proposes adding definitions for the term
``exterior ceiling'' as a ceiling that separates conditioned space from
unconditioned space and ``exterior floor'' as a floor that separates
conditioned space from unconditioned space.
DOE also proposes to update the following definitions proposed in
the June 2016 NOPR that included ``ceiling'' and ``floor'' to include
the use of ``exterior ceiling'' and ``exterior floor,'' as appropriate:
``building thermal envelope,'' ``dropped ceiling,'' ``dropped soffit,''
``eave,'' and ``rough opening.''
DOE also reviewed several relevant definitions updated since the
publication of the 2015 IECC (in the 2018 IECC and the 2021 IECC). For
the 2018 IECC, the updates included the following terms: ``air
barrier'' and ``building thermal envelope.'' These same updates were
carried over to the 2021 IECC. DOE reviewed these updates and finds
them to be clarifications rather than substantive changes.
Specifically, the 2018 (and 2021) IECC definition for ``air barrier''
clarified that the materials should be joined together in a continuous
manner to restrict or prevent passage of air through the building
thermal envelope; the ``continuous manner'' element was not part of the
same definition in the 2015 IECC. The addition of this term means that
the material should be joined together without any thermal bridges,
other than fasteners and service openings, so that any passage of air
through the building thermal envelope is prevented. DOE notes that the
term ``continuous'' is one generally used by and understood within
industry and is consistently used in the 2021 IECC (without being
defined).
The 2018 (and 2021) IECC definition for ``building thermal
envelope'' specified that it should be building element assemblies as
opposed to just building elements. DOE has tentatively determined this
update to be non-substantive because it clarifies the original intent
of the definition to include all components that separate conditioned
from unconditioned space. In addition, the 2018 IECC also added a new
definition for ``opaque door.'' The term opaque door is included in the
definition for ``vertical fenestration'' but previously had not been
defined. The 2018 IECC defines an opaque door as a door that is not
less than 50 percent opaque in surface area.
For the 2021 IECC, the relevant updates included the following
terms: ``accessible,'' which was replaced by ``access (to),'' and
``skylights.'' DOE had only previously proposed a definition for
``accessible'' because the 2015 IECC defined the term and included the
term in the residential provisions, which DOE had incorporated into the
regulatory text. However, the 2021 IECC replaces ``accessible'' with
``access (to)''
[[Page 47768]]
and no longer includes the term ``accessible'' in the residential
provisions of the IECC. In response to the June 2016 NOPR, NEEA
commented that a clearer definition of the word ``access'' was
required.\24\ (NEEA, 190 at p. 2). As the definition of the word
``access'' is now found in the 2021 IECC, DOE is proposing to include a
definition for ``access''. Further, to prevent confusion, DOE proposes
to revise the regulatory text to incorporate the use of the word
``access'' instead of ``accessible,'' similar to the updates in the
2021 IECC. Therefore, DOE proposes to define the term ``access (to)''
as ``that which enables a device, appliance or equipment to be reached
by ready access or by a means that first requires the removal or
movement of a panel or similar obstruction.''
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\24\ In the June 2016 NOPR, DOE proposed that access hatches,
panels, and doors must provide access to all equipment that prevents
damaging or compressing of the insulation.
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In addition, the 2021 IECC clarifies that skylights include ``unit
skylights, tubular daylighting devices, and glazing materials in
solariums, sunrooms, roofs and sloped walls.'' DOE understand these
updates to be clarifications rather than a substantive change and does
not alter the meaning of the original definition. Therefore, DOE
proposes to include this clarification in the proposed skylight
definition. Accordingly, DOE proposes to include the updated
definitions for ``air barrier,'' ``building thermal envelope'' and
``skylight'' and the new definition for ``opaque door'' and ``access
(to)'' in this SNOPR.
In review of the proposed regulatory text from the June 2016 NOPR,
DOE also recognized that the term ``Circulating hot water system'' is
defined, but the term ``heated water circulation system'' is used in
the substantive requirements of the June 2016 NOPR. In this SNOPR, DOE
proposes to change this defined term to reflect what is used in the
substantive provisions of the regulations. Additionally, DOE defined
the term ``service hot water'' in the June 2016 SNOPR, but the proposed
substantive requirements also used the term ``service water heating.''
The IECC uses both terms. For consistency DOE proposes to define and
use the term ``service hot water'' throughout the regulations.
DOE also recognized that the June 2016 NOPR definition for
``equipment'' included the term ``appliances''. However, the MH working
group generally did not recommend provisions addressing appliances.
Furthermore, this SNOPR is not proposing requirements for appliances
that are regulated pursuant to the statutory scheme in EPCA. Therefore,
DOE proposes to remove ``appliances'' from the definition of
``equipment.''
DOE also recognized that the term ``infiltration'' was defined in
the proposed regulations in the June 2016 NOPR but was not otherwise
used. As the term is not used in the regulatory text, DOE proposes to
not include a definition for ``infiltration'' in this SNOPR.
DOE requests comment on its understanding of the definitional
changes in the 2018 IECC and the 2021 IECC. DOE also requests comments
on its changes to the proposed definitions as compared to those
proposed in the June 2016 NOPR.
c. Proposed Sec. 460.3 Materials Incorporated by Reference
In this SNOPR, DOE is not proposing to incorporate the 2021 IECC by
reference. The 2021 IECC serves as the basis for the regulations
proposed in this document, with the proposed requirements addressing
technical issues specific to manufactured homes, relying on the HUD
zones, and addressing issues related to health and safety, as well as
the need to preserve the affordability of manufactured homes.
Further, DOE continues to propose to incorporate by reference Air
Conditioning Contractors of America (``ACCA'') Manual J; ACCA Manual S;
and ``Overall U-Values and Heating/Cooling Loads--Manufactured Homes''
by Conner and Taylor (the Battelle Method). DOE proposes that ACCA
Manuals J and S would be incorporated by reference in Sec. 460.205 of
the regulatory text and would relate to the selection and sizing of
heating and cooling equipment. In addition, the Battelle Method is an
industry standard methodology for calculating the overall thermal
transmittance (Uo) of a manufactured home and is also currently
referenced in the HUD Code for calculation of overall thermal
transmittance. DOE proposes to use the Battelle method to determine the
same (Uo).
In response to the June 2016 NOPR, ACCA commented in favor of the
references to Manual J and Manual S. (ACCA, No. 159 at p. 2) DOE also
received comments regarding the 2015 IECC (which was the basis of the
June 2016 NOPR requirements). The ICC commented that it is concerned
with the manner that DOE proposed to use and modify the IECC, which is
copyrighted, specifically that DOE did not incorporate by reference the
2015 IECC. Referencing Circular OMB Circular A-119, ``Federal
Participation in the Development and Use of Voluntary Consensus
Standards and in Conformity Assessment Activities, Revised,'' ICC
stated that all ``Federal agencies must use voluntary consensus
standards in lieu of government-unique standards in their procurement
and regulatory activities,'' and that DOE must report the reasons for
its use of government-unique standards in lieu of voluntary consensus
standards. The ICC also commented that section 5.g of the OMB Circular
A-119 directs agencies ``to observe and protect the rights of the
copyright holder.'' (ICC, No. 160 at p. 3) ICC commented that in order
to meet minimum requirements for OMB-A119, DOE must ``(a) expressly
acknowledge that the IECC is a copyright protected document, published
and owned by ICC; (b) explicitly state that any reproduction or copying
of the standard (other than for personal, non-commercial purposes)
requires express written permission or license from ICC; and (c) state
that copies of the IECC are available for purchase from ICC at its
website, www.iccsafe.org.'' (ICC, No. 160 at p. 4) ACCA also commented
that the incorporation of the 2015 IECC language, either directly or
with slight modification, should require DOE to properly acknowledge
the ICC and its work, as the 2015 IECC is copyright protected. (ACCA,
No. 159 at p. 2)
Subject to copyright law, DOE acknowledges that the IECC is a
copyright protected document, published and owned by the ICC, and that
reproduction or copying of the IECC requires written permission or
license from the ICC. As noted above, copies of the IECC are available
for purchase at www.iccsafe.org. They may also be viewed for free on
ICC's public access website at: https://codes.iccsafe.org/public/collections/I-Codes. As discussed previously, DOE and the MH working
group evaluated the 2015 IECC, and DOE subsequently evaluated the 2018
and the 2021 IECC. The MH working group recommendations and the June
2016 NOPR were based on the 2015 IECC, but as explained throughout this
document, modifications are necessary to address technical issues that
are specific to manufactured housing, as opposed to site-built housing,
which is the focus of the IECC. As such, the SNOPR's proposals (1) are
based directly on certain IECC sections, (2) are based on other
sections of the IECC with modification, and (3) do not include certain
other sections as they were either not pertinent to manufactured
[[Page 47769]]
housing or not needed to establish energy conservation standards.
DOE requests comment on incorporating by reference ACCA Manual J,
ACCA Manual S, and ``Overall U-Values and Heating/Cooling Loads--
Manufactured Homes'' by Conner and Taylor.
d. Proposed Sec. 460.4 Energy Conservation Standards
Proposed Sec. 460.4 would specify that manufactured homes would be
required to comply with the proposed building thermal envelope in
subpart B and the equipment and controls requirements in subpart C, as
applicable. The proposed requirements of subparts B and C are discussed
in the following paragraphs. As discussed, DOE is proposing a tiered
proposal with two tiers of energy conservation standards based on the
manufacturer's retail list price of a manufactured home. Under the
tiered proposal proposed Sec. 460.4 would specify the requirements
applicable to the two tiers.\25\
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\25\ In the proposed regulatory text provided at the end of this
document, bracketed language is specific to the tiered proposal.
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2. Subpart B: Building Thermal Envelope
The proposed requirements in subpart B relate to climate zones, the
building thermal envelope, installation of insulation and building
thermal envelope leakage for manufactured homes. The following sections
provide further details, a discussion of comments on the June 2016 NOPR
relevant to subpart B and responses to any such comments. As discussed
above, the tiered standards approach is DOE's primary proposal in this
document i.e. manufactured homes with manufactured retail list prices
of $55,000 or less (Tier 1 manufactured homes) would be subject to
different building thermal envelope requirements than all other
manufactured homes (Tier 2 manufactured homes). The requirements are
discussed in the following sections.
a. Proposed Sec. 460.101 Climate Zones
Pursuant to EISA, DOE may base its energy conservation standards on
the climate zones established by HUD rather than on the climate zones
contained in the IECC. (42 U.S.C. 17071(b)(2)(B)) The potential for
climactic differences to affect energy consumption supports an approach
in which energy conservation standards account for geographic
differences in climate. In this SNOPR, DOE proposes to align with the
HUD climate zones.
As indicated in Figure III.1, the HUD Code divides the United
States into three distinct climate zones for the purpose of setting its
building thermal envelope requirements, the boundaries of which are
separated along state lines. By contrast, as indicated in Figure III.2,
section R301 of the 2021 IECC divides the country into nine climate
zones, the boundaries of which are separated along county lines. The
2021 IECC also provides requirements for three possible variants (dry,
moist, and marine) within certain climate zones, as indicated in Figure
III.2. The HUD Code zones were developed to be sensitive to the manner
in which the manufactured housing industry constructs and places
manufactured homes into the market. The IECC climate zones are
separated along county lines to reflect a more granular overview of
climate distinctions within the United States, and to facilitate state
and local enforcement of the IECC for residential and commercial
buildings, including site-built and modular construction.
BILLING CODE 6450-01-P
[GRAPHIC] [TIFF OMITTED] TP26AU21.003
[[Page 47770]]
[GRAPHIC] [TIFF OMITTED] TP26AU21.004
In the June 2016 NOPR, proposed Sec. 460.101 provided for four
climate zones, as illustrated in Figure III.3. This was based on the MH
working group recommendation that DOE establish four climate zones that
placed cities with the same set of most-cost-effective building thermal
envelope requirements in the same climate zone. DOE's proposed climate
zones bifurcated Texas, Louisiana, Alabama, Mississippi, Georgia, and
Arizona.
[GRAPHIC] [TIFF OMITTED] TP26AU21.005
BILLING CODE 6450-01-C
DOE received several comments regarding climate zones. Modular
Lifestyles recommended alternate climate zones. It stated that the
local building ZIP code should be used to determine the building
climate zone for the placement of a manufactured home. As an example,
it referenced the California Energy Commission's climate zones for
California, which has 16 building climate zones based on ZIP codes.
(Modular Lifestyles, No. 141 at p. 1) In essence, Modular Lifestyles
advocated for a finer resolution in climate zones, potentially with
even more climate zones than listed in the IECC.
In the June 2016 NOPR, DOE proposed four climate zones based on the
recommendation and analysis completed by the MH working group (using
the 2015 IECC), which placed cities with the same set of most-cost-
effective building thermal envelope requirements in the same climate
zone. As noted above, in this document DOE is proposing in this SNOPR a
set of energy efficiency requirements applicable to Tier 1 manufactured
[[Page 47771]]
homes to provide energy savings at an incremental purchase price of
approximately $750 and Tier 2 manufactured homes. The June 2016 NOPR
climate zone analysis did not consider this tiered proposal.
In this SNOPR, DOE proposes to incorporate the HUD zones instead of
the June 2016 NOPR-proposed climate zones, as explicitly permitted
under EISA. (42 U.S.C. 17071(b)(2)(B)) As noted, the HUD zones were
developed with specific consideration of the manner in which the
manufactured housing industry constructs and places manufactured homes
into the market. The HUD zone boundaries are separated along state
lines, whereas the June 2016 NOPR-proposed climate zones bifurcated
certain states. Aligning the climate zones between the DOE requirements
and the HUD Code would reduce the complexities faced by manufacturers
in coordinating compliance between the two sets of requirements.
Additionally, it would reduce the potential for confusion of
manufactured home purchasers, by allowing them to rely on a single map
to determine whether a manufactured home would be appropriate for a
given location, as opposed to requiring them to consult one map under
the HUD Code and a different map under the DOE requirements.
Modular Lifestyle's suggestion to use local building zone ZIP codes
to determine climate zones would extend the subdivision of states and
be overly burdensome for manufacturers. Although its suggested climate
zones could more accurately account for U.S. climatic conditions that
affect energy use, the potential benefit of this accounting would be
offset by the impracticality to the manufactured housing industry of
developing homes per building ZIP code, with multiple zones existing
within the same state, where the eventual destination of the home is
not always known when the home is manufactured.
DOE also received comments regarding the proposed climate zone map
(Figure 460.101), Table 460.101-1, and Table 460.101-2 from the June
2016 NOPR that provided a list of the U.S. states located in each
climate zone. Several commenters stated that there was inconsistency
between where Kentucky was located in Figure 460.101, and where it was
located in Table 460.101-1. (Cavco, No. 167 at p. 1; Earthjustice, No.
169 at p. 2; MHI, No. 182 at p. 1; Clayton Homes, No. 185, at p. 2;
PMHA, No. 164 at p. 3) Cavco, Clayton Homes, and MHI recommended that
Kentucky be moved to climate zone 3 in the map figure. Several
commenters also stated that California was missing in Table 460.101-1
and Table 460.101-2, and therefore the tables needed to be updated.
(Clayton Homes, No. 185 at p. 2; MHCC, No. 162 at p. 1; Earthjustice,
No. 169 at p. 2; Skyline, No. 165 at p. 2) As already discussed, for
this SNOPR, DOE proposes to align with the HUD zones as opposed to the
June 2016 NOPR-proposed climate zones. Accordingly, comments received
regarding issues with the June 2016 proposed climate zone map are no
longer applicable to this SNOPR.
DOE requests comment on basing the climate zones on the three HUD
zones instead of the June 2016 NOPR-proposed four climate zones, or
other configuration of climate zones. DOE further requests input on
whether energy efficiency requirements should be based on smaller
geographic areas than provided with the 3 or 4 zone model.
b. Proposed Sec. 460.102 Building Thermal Envelope Requirements
In this SNOPR, DOE's primary proposal is the tiered proposal and
the alternate proposal is the untiered proposal. Both proposals are
based on the HUD zones. For the tiered proposal, Tier 1 would
incorporate building thermal envelope measures based on certain thermal
envelope components subject to the 2021 IECC but would limit the
incremental purchase price increase to an average of approximately
$750. For Tier 2, DOE proposes building thermal envelope measures based
on those proposed in the June 2016 NOPR, updated to reflect the HUD
zones and the 2021 IECC requirements. The alternate untiered proposal
requirements would be the same as the Tier 2 requirements.
Consistent with the June 2016 NOPR, DOE proposes to add Sec.
460.102 in the regulatory text to establish requirements related to the
building thermal envelope, including the materials within a
manufactured home that separate the interior conditioned space from the
exterior of the building or interior spaces that are not conditioned
space. Further DOE also proposes that Sec. 460.102(a) would provide
manufacturers the option of choosing one of two pathways for compliance
to ensure that the building thermal envelope would meet more stringent
energy conservation levels. These two pathways are known as the
prescriptive approach and the performance approach. Consistent with the
recommendation of the MH working group and the June 2016 NOPR, DOE
proposes to allow manufacturers to choose between these two pathways
for compliance, which would result in cost-effective energy savings for
homeowners while providing for flexibility within the manufactured
housing industry. Term Sheet, No. 107 at pp. 3-4. This approach is
consistent with the 2021 IECC, which provides a climate zone-specific
prescriptive building thermal envelope component pathway (R402.1.2) and
an alternate pathway to compliance, which allows for a home to be
constructed using a variety of materials as long as the entire building
thermal envelope has a maximum, singular total UA value \26\
(R402.1.5).
---------------------------------------------------------------------------
\26\ UA is the U-factor multiplied by area.
---------------------------------------------------------------------------
Further, consistent with the June 2016 NOPR, DOE continues to
propose that the prescriptive requirements would establish specific
component minimum R-value, maximum U-factor, and SHGC requirements,
providing a straightforward option for construction planning. The
prescriptive requirements were proposed under Sec. 460.102(b), with
the building thermal envelope requirements proposed under Sec.
460.102(b)(1) The compliance option based on performance requirements,
on the other hand, would allow a manufactured home to be constructed
using a variety of materials with varying thermal properties so long as
the building thermal envelope achieved a required level of overall
thermal performance. The performance requirements thus would provide
manufacturers with greater flexibility in identifying and implementing
cost-effective approaches to building thermal envelope design. The Uo
requirements would be determined by applying the proposed prescriptive
building thermal envelope requirements to manufactured homes using
typical dimensions and construction techniques and then calculating the
resulting Uo.
In developing the set of Tier 1 energy efficiency measures proposed
in this document, DOE considered measures for building elements of
manufactured homes based on building components subject to the 2021
IECC (i.e., exterior floor, exterior walls, exterior ceiling, and
fenestration). DOE evaluated different combinations of energy
efficiency measures and stringencies for exterior floor, wall, ceiling,
and windows (fenestration). DOE compared the potential energy savings
for each of the different combinations analyzed and preliminarily
determined the optimal set of energy efficiency measures that would
yield an incremental cost increase of approximately $750. For this
analysis, DOE evaluated the same range of energy efficiency measures
and costs that were used for the June 2016 NOPR.
[[Page 47772]]
In developing the set of Tier 2 energy efficiency measures proposed
in this document, DOE first mapped the June 2016 NOPR requirements
(based on four climate zones) to HUD zones (based on three climate
zones). DOE used the manufactured home national shipment percentages
for each of the cities analyzed,\27\ and the corresponding HUD zone and
the June 2016 NOPR climate zone identifiers for each of the cities. DOE
then summed the shipment percentages of the cities with the same June
2016 NOPR proposed climate zones within each of the HUD zones.
According to which of the June 2016 NOPR-proposed climate zones showed
the maximum shipment weight per HUD zone, DOE incorporated those
proposed June 2016 NOPR requirements for that HUD zone.
---------------------------------------------------------------------------
\27\ DOE used shipments for 2019 from the annual production and
shipment data provided by MHI. See Manufactured Home Shipments by
Product Mix, Manufactured Housing Institute (2019).
---------------------------------------------------------------------------
For proposed climate zone 1, the cities identified were in either
the June 2016 NOPR-proposed climate zones 1 or 2; however, the summed
shipment weights per the June 2016 NOPR-proposed climate zone did not
provide an obvious indicator as to which of the energy efficiency
measures to incorporate for proposed climate zone 1. The only
difference between the June 2016 NOPR-proposed climate zone 1 and 2
energy efficiency measures was the glazed fenestration requirement.
Therefore, in this SNOPR, DOE proposes to use the less stringent glazed
fenestration requirement (0.33 vs. 0.25) to accommodate cost-effective
measures that were proposed in the June 2016 NOPR for proposed climate
zone 2.
Next, DOE considered the updates to the 2021 IECC. In reviewing
Section R402.1 of the 2021 IECC, DOE determined the following relevant
updates are merited when compared to the 2015 IECC that the MH working
group had considered:
The maximum fenestration U-factors were updated from 0.35
to 0.30 for IECC climate zones 3 and 4 (except marine); and from 0.32
to 0.30 for IECC climate zones marine 4, 5 through 8.
The maximum glazed fenestration SHGC was updated from NR
to 0.40 for IECC climate zones 5 and marine 4.
The minimum ceiling R-value was updated from R-38 to R-49
for IECC climate zones 2 and 3; and from R-49 to R-60 for IECC climate
zones 4 through 8.
The minimum wall R-value was updated from R-13 to R-13 or
R-0+10 for IECC climates zones 0 through 2; from R-20 or R-13+5 to R-20
or R-13+5ci or R-0+15 for IECC climate zones 3; from R-20 or R-13+5 to
R-20+5 or R-13+10ci or R-0+15 for IECC climate zones 4 and 5; and from
R-20+5 or R-13+10ci to R-20+5ci or R-13+10ci or R-0+20 for IECC climate
zones 6 through 8.
With regards to the 2021 IECC updates, DOE did not incorporate the
minimum ceiling R-value updates given the physical space constraints of
manufactured homes and because EISA allows DOE to consider the design
and factory construction techniques of manufactured homes as compared
to site-built and modular homes. (42 U.S.C. 17071(b)(2)). Specifically,
manufactured homes typically have a lower overall height compared to
site-built homes, which leads to constrained space, and therefore there
is less exterior ceiling insulation. DOE did consider all other updates
consistent with EISA and the analysis done for the June 2016 NOPR.
Accordingly, DOE similarly mapped the 2021 IECC updates to the
corresponding proposed climate zone.
Therefore, for the tiered proposal, the Tier 1 prescriptive
building thermal envelope requirements are presented in Table III.7 and
the Tier 2 prescriptive building thermal envelope requirements are
presented in Table III.8. The untiered proposal's building thermal
envelope requirements would be the same as the Tier 2 requirements
presented in Table III.8.
Table III.7--Tier 1 Building Thermal Envelope Prescriptive Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Exterior Exterior
Exterior wall ceiling floor Window U- Skylight U- Glazed
Climate zone insulation R- insulation R- insulation R- factor factor Door U-factor fenestration
value value value SHGC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................... 13 22 22 1.08 0.75 0.40 0.7
2....................................... 13 22 19 0.5 0.55 0.40 0.6
3....................................... 19 22 22 0.35 0.55 0.40 Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table III.8--Tier 2 (and Untiered) Building Thermal Envelope Prescriptive Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Exterior Exterior
Exterior wall ceiling floor Window U- Skylight U- Glazed
Climate zone insulation R- insulation R- insulation R- factor factor Door U-factor fenestration
value value value SHGC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................... 13 30 13 0.32 0.75 0.40 0.33
2....................................... 20+5 30 19 0.30 0.55 0.40 0.25
3....................................... 20+5 38 30 0.30 0.55 0.40 Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------
For the exterior wall insulation, the ``+5'' involves using
``continuous insulation,'' which is insulation that runs continuously
over structural members and is free of significant thermal bridging. As
a sensitivity analysis, DOE considered the impacts on the LCC savings
from requiring less stringent exterior wall insulation (at R-21 instead
of R-20+5) to remove the continuous insulation requirement. At R-20+5,
the incremental cost relative to the baseline is $2,500, versus $850
for R-21. DOE considered this alternative insulation requirement for
zones 2 and 3 to address potential equity impacts in the regional
distribution of benefits and costs and to ensure that each metro area
analyzed could experience a positive LCC at Tier 2. DOE is considering
additional analysis to further explore the impacts of R-21 for Tier 2
homes and the untiered proposal prior to the final rule stage. Further
discussion on the sensitivity analysis results is provided in section
IV.A.2.
[[Page 47773]]
As discussed, use of the HUD zones (or the climate zones proposed
in the June 2016 NOPR) instead of the IECC climate zones does not allow
for use of the IECC requirements absent modification. In line with the
building thermal envelope requirements and use of the HUD zones,
proposed in this document, DOE proposes the following changes to the
June 2016 NOPR-proposed regulatory text:
Update the requirement regarding the use of a combination
of R-21 batt insulation and R-14 blanket insulation in lieu of R-30 for
the purpose of compliance with the climate zone 3 exterior floor
insulation R-value requirement. (Under the tiered proposal this would
be applicable for Tier 2 only.)
Update the maximum U-factor values as alternatives to the
minimum R-value requirements. DOE calculated the maximum U-factor
values by using the Battelle method that was recommended by the MH
working group.\28\ DOE performed these calculations based on typical
wall, ceiling, and floor assemblies used by the manufactured home
industry. Table III.9 provides the updated maximum U-factor values for
Tier 1 manufactured homes under the tiered proposed rule. Table III.10
provides the updated maximum U-factor values for Tier 2 manufactured
homes (and the untiered manufactured homes) under the tiered proposed
rule.
---------------------------------------------------------------------------
\28\ ``Overall U-Values and Heating/Cooling Loads--Manufactured
Homes'' by Conner and Taylor.
Table III.9--U-Factor Alternatives to the Tier 1 R-Value Requirements
----------------------------------------------------------------------------------------------------------------
Exterior ceiling U-factor
Climate zone -------------------------------- Exterior wall Exterior floor
Single-section Multi-section U-factor U-factor
----------------------------------------------------------------------------------------------------------------
1............................................... 0.061 0.057 0.094 0.049
2............................................... 0.061 0.057 0.094 0.056
3............................................... 0.061 0.057 0.068 0.049
----------------------------------------------------------------------------------------------------------------
Table III.10--U-Factor Alternatives to the Tier 2 (and Untiered) R-Value Requirements
----------------------------------------------------------------------------------------------------------------
Exterior ceiling U-factor
Climate zone -------------------------------- Exterior wall Exterior floor
Single-section Multi-section U-factor U-factor
----------------------------------------------------------------------------------------------------------------
1............................................... 0.045 0.043 0.094 0.078
2............................................... 0.045 0.043 0.047 0.056
3............................................... 0.038 0.037 0.047 0.032
----------------------------------------------------------------------------------------------------------------
Update the building thermal envelope performance
requirements. DOE calculated the updated Uo values using the Battelle
method for single- and multi-section manufactured homes. Table III.11
provides the updated Uo values for Tier 1 manufactured homes under the
tiered proposal. The proposed Tier 1 standards provide energy
efficiency standards more stringent than the HUD thermal protection
standards required in 24 CFR 3280.506(a). Table III.12 provides the
updated Uo values for Tier 2 (and untiered) manufactured homes.
Table III.11--Tier 1 Building Thermal Envelope Performance Requirements
------------------------------------------------------------------------
Single-section Multi-section
Climate zone U U
------------------------------------------------------------------------
1....................................... 0.110 0.109
2....................................... 0.091 0.087
3....................................... 0.074 0.072
------------------------------------------------------------------------
Table III.12--Tier 2 (and Untiered) Building Thermal Envelope
Performance Requirements
------------------------------------------------------------------------
Single-section Multi-section
Climate zone U U
------------------------------------------------------------------------
1....................................... 0.086 0.082
2....................................... 0.062 0.063
3....................................... 0.053 0.052
------------------------------------------------------------------------
Update the area-weighted average vertical fenestration U-
factor requirements to the HUD zones instead. DOE proposes that the
area-weighted average vertical fenestration U-factor must not exceed
0.48 in climate zone 2 or 0.40 in climate zone 3.
Update the area-weighted average skylight U-factor
requirements to reflect use of the HUD zones instead. DOE proposes that
the area-weighted average skylight U-factor must not exceed 0.75 in
climate zone 2 and climate zone 3.
DOE also notes that section R401.2.5 of the 2021 IECC requires that
in addition to the prescriptive compliance option, additional energy
efficiency requirements must be utilized to achieve further energy
savings. Section 408.2 provides five additional efficiency package
options to achieve these additional energy savings, which include: (1)
Enhanced envelope performance; (2) more efficient HVAC equipment
performance; (3) reduced energy use in service water heating; (4) more
efficient duct thermal distribution; and (5) improved air sealing and
efficient ventilation system.
In developing recommendations the MH working group evaluated the
2015 IECC, which does not include comparable provisions to section
R401.2.5 and R408.2 of the 2021 IECC. However, the MH working group
generally did not recommend provisions addressing minimum appliance
efficiencies. For example, the MH working group reached consensus that
R401.5 of 2015 IECC, which provided for tradeoffs between the building
thermal envelope and HVAC equipment and other appliances, was not
applicable to manufactured homes. (MH working group, No. 107 at p. 22)
Consistent with the recommendations of the MH working group, the
performance requirements in the proposed energy conservation standards
are specific to the building thermal envelope only, and do not
incorporate any specifications on HVAC energy efficiency. Accordingly,
[[Page 47774]]
DOE did not consider the more efficient HVAC equipment performance and
reduced energy use in service water heating options in this SNOPR.
Further, DOE also did not examine the more efficient duct thermal
distribution option based on EISA's allowance to consider the design
and factory construction techniques of manufactured housing. (42 U.S.C.
17071(b)(2)) DOE understands that the requirements in R408.2 of the
2021 IECC focus primarily on the location of the duct or ductless
systems in a home (in terms of duct thermal distribution design) as
opposed to improving efficiency of the ducts as already installed and
designed. Therefore, the options remaining were those that DOE
considered are relevant to manufactured homes and this rulemaking,
which include the enhanced envelope performance option and the improved
air sealing and efficient ventilation option.
The enhanced envelope performance option in the 2021 IECC requires
that the total building thermal envelope UA (the sum of U-factor times
assembly area) shall be less than or equal to 95 percent of the total
UA resulting from multiplying the U-factors in Table R402.1.2. (Section
R408.2.1 of the 2021 IECC) For this SNOPR, DOE was unable to
incorporate this requirement given the proposed building thermal
envelope requirements in Table III.8 and the space constraints of
manufactured homes.
The improved air sealing and efficient ventilation system option
requires that the measured air leakage rate is less than or equal to
three air changes per hour (``ACH''), with either heat recovery
ventilators (``HRV'') or energy recovery ventilators (``ERV''),
installed (with specific requirements on airflow). An HRV recovers heat
from the exhaust air and then adds it to the supply air drawn from
outside the home. An ERV also recovers heat from the exhaust air, but
also transfers some of the moisture from the exhaust air to keep the
humidity in the home at a constant level. DOE notes that ERV and HRV
fans can be applicable to manufactured housing. However, this option
would require an HRV or ERV, which the MH working group or DOE had not
considered previously.
Analysis conducted in support of the DOE Building Energy Codes
Program (``BECP'') suggests that a primary first cost for HRV could be
as high as $1,500.\29\ ERVs were not considered in the analysis.
Although the BECP analysis concluded that HRVs are cost effective for
certain northern climate zones, DOE notes that the analysis conducted
is based on a single-family home size conditioned floor area (1,200 to
4,500 ft\2\ CFA), whereas manufactured homes are typically smaller in
size (single section homes are analyzed with 924 ft\2\ CFA). For this
SNOPR, DOE is not proposing either the HRV or ERV option because DOE
has not yet determined whether this requirement would be cost-effective
in manufactured homes.
---------------------------------------------------------------------------
\29\ Taylor, Zachary T. Residential Heat Recovery Ventilation.
United States. https://doi.org/10.2172/1488935.
---------------------------------------------------------------------------
DOE requests comment on the Tier 1 energy conservation standards,
which would be applicable to manufactured homes with a manufacturer's
retail list price of $55,000 or less. DOE also requests comment on the
proposed energy conservation standards based on the most recent version
of the IECC for the Tier 2 and untiered standards and the consideration
of R-21 sensitivity for exterior wall insulation for climate zones 2
and 3.
DOE requests comment on the additional energy efficiency
requirements from the 2021 IECC and whether they should apply to
manufactured homes, including those that DOE has initially considered
as not applicable to manufactured homes. If so, DOE requests comment on
how these requirements would apply and the costs and savings associated
with these requirements.
The following sections discuss comments DOE received regarding the
building thermal envelope requirements proposed in the June 2016 NOPR,
and any other corresponding proposed changes to the June 2016 NOPR
requirements.
General Comments on the Prescriptive Requirements
DOE received several comments regarding the prescriptive
requirements proposed in the June 2016 NOPR. NEEA commented that the
prescriptive requirements for exterior walls, floor, ceiling, and
fenestration should be based on U-factors, not current prescriptive
requirements for R-value or U-factor alternative. NEEA stated that the
proposed approach may result in two different thresholds depending on
how the engineer chooses to calculate the U-factor alternative. (NEEA,
No. 190 at p. 2) In response, DOE notes that allowing for both
insulation R-value and fenestration U-factor requirements, in addition
to equivalent U-factor alternatives to R-values, allows for more
flexibility for manufacturers to comply with the energy conservation
standards. Having both insulation R-value and fenestration U-factor
requirements are also in line with the 2021 IECC requirements. Further,
DOE is proposing that manufacturers use the Battelle method for
calculating the overall thermal transmittance (Uo) of a manufactured
home, which is the same as the HUD Code and provides a consistent way
to calculate the component U-factors to determine Uo. Therefore, DOE
continues to propose in this SNOPR both R-value and U-factor options
for the prescriptive requirements, and a U-factor alternative
requirement.
DOE also received several comments regarding the U-factor
alternatives to R-value requirements. NEEA recommended that the U-
factors used for the standard be recalculated based on framing factors
used in the manufactured home industry. For example, in section 7.4.2
of the June 2016 NOPR TSD, the assumed framing factor in walls is 25
percent, which NEEA commented is reasonable for site-built homes, but
not for manufactured homes. NEEA commented that typical framing factors
in manufactured homes rarely exceed 18 percent because they are single-
story structures built in factories with glazing fractions (applicable
to windows, skylights, and doors, for example) most commonly less than
12 percent. NEEA also stated that updating the U-factors using
manufactured home-specific factors would increase the cost-
effectiveness of the proposal. (NEEA, No. 190 at p. 2) RECA and ACEEE
commented that the proposed U-factor values for specified R-values were
significantly less efficient that the equivalent U-factors set by the
IECC. (RECA, No. 188 at p. 6 ACEEE, No. 178 at p. 2) WSU Energy Program
commented that there might be some issues with the R-value and U-factor
calculations and that the U-factor equivalent to R-21 that DOE used is
much lower than the standard at R-21. WSU Energy Program provided the
same comment with respect to the exterior floor. (WSU Energy Program,
Public Meeting Transcript, No. 148 at p. 42)
Based on the comments received, DOE revisited the calculations
performed to determine the U-factor alternatives to R-value
requirements. To perform the calculations, DOE used the Battelle method
that was recommended by the MH working group.\30\ DOE performed these
calculations based on typical wall, ceiling, and floor
[[Page 47775]]
assemblies used by the manufactured home industry.
---------------------------------------------------------------------------
\30\ ``Overall U-Values and Heating/Cooling Loads--Manufactured
Homes'' by Conner and Taylor.
---------------------------------------------------------------------------
DOE used a different R-value to U-factor equivalency conversion
than the IECC because the IECC equivalency conversion is primarily
based on typical site-built home construction parameters (focus of the
2015 IECC and the 2021 IECC) whereas DOE's focus is typical
manufactured home construction parameters. EISA allows for DOE to take
the design and factory construction techniques of manufactured homes
into consideration for the energy conservation standards. (42 U.S.C.
17071(b)(2)(A)) As such, the R-value to U-factor equivalency conversion
used in this SNOPR is modified from the 2021 IECC conversion approach
to reflect manufactured homes rather than site-built homes. When
comparing the U-factors from the proposal and the U-factors from the
2015 IECC and the 2021 IECC, the largest difference is with the
exterior ceiling and exterior floor U-factors. The manufactured home
dimensions that were used in the analysis were those recommended by the
MH working group. Manufactured homes typically have a lower overall
height compared to site-built homes, which leads to constrained space,
and therefore there is less exterior ceiling and exterior floor
insulation. See Chapter 7 of the TSD for further details on how the
equivalent U-factors were determined.
DOE based certain aspects of its rulemaking analysis (R-value to U-
factor conversion, energy use calculations, incremental costs, etc.) on
a home built to the typical specifications recommended by the MH
working group. These specifications included an assumption of a 25
percent framing fraction, which the MH working group considered typical
for manufactured homes. Absent sufficient justification to change the
assumptions, which could result in significant changes to fundamental
aspects of the recommendations of the MH working group, DOE maintains
the assumptions from its analysis in the June 2016 NOPR. As discussed
previously, DOE is proposing that manufacturers use the Battelle method
for calculating the overall thermal transmittance (Uo) of a
manufactured home, which allows for the option to use framing fractions
based on the construction of the home, in addition to typical framing
fractions. Therefore, in practice, if a manufacturer uses a framing
fraction specific to the construction of the home, the manufacturer may
use more or less insulation relative to the representative home in
DOE's model, but the energy use will be the same when using the U-
factor alternative path to compliance. Therefore, in its analysis, DOE
used the recommendations for typical assemblies and the calculation
methodology from the MH working group. As previously discussed in this
section, DOE has updated the U-factor alternatives to match the SNOPR-
proposed prescriptive R-value building thermal requirements, which
reflect use of the HUD zones and the tiered proposal.
DOE also received a comment regarding U-factor alternatives for
single-section versus multi-section homes. ACEEE stated that basing the
U-factor alternatives on single-section home construction means the
values are less stringent (i.e., can be achieved with lower insulation
R-values) for multi-section homes. ACEEE urged DOE to use the more
stringent multi-section U-factors for all homes, or to provide separate
values for the two types of homes as is done for the overall U-factors
(Uo) in the performance building thermal envelope requirements. (ACEEE,
No. 178 at p. 3)
In response, DOE notes that the objective of the U-factor
alternative is to create an equivalent U-factor requirement when
compared to the corresponding R-value. Based on this objective, DOE
agrees that the U-factor alternative should be different for single-
section compared to multi-section homes for the external ceiling
assembly because the assumed typical construction of the external
ceiling differs in the ratio of insulation to framing members. Other
assemblies, such as the external wall and floor, are assumed to be the
same for single- and multi-section homes, so the U-factor alternative
for those assemblies would also be the same for both home sizes. For
this SNOPR, DOE proposes separate U-factor alternatives for the
external ceilings of single- and multi-section homes. DOE used the
Battelle method to determine the external ceiling U-factor for both
single- and multi-section homes. More details on the assumptions used
for this calculation are provided in chapter 7 of the TSD. See Table
III.9 and Table III.10 for the updated proposed external ceiling U-
factor alternatives.
DOE also received specific comments regarding the prescriptive
requirements. NEEA recommended that DOE should provide a list of
typical constructions with nominal R-value batt insulation
configurations that meet the U-value targets, as this allows designers
to comply with standards without considering all possible framing, door
and window configurations. (NEEA, No. 190 at p. 2) The proposed
prescriptive requirements already serve this purpose: The prescriptive
requirements would allow a manufacturer or designer to simply install
certain insulation and fenestration components in the house to achieve
compliance with regulations. The U-factor alternative and the
performance path would provide greater flexibility in selecting
insulation and fenestration components if the manufacturer chooses to
run the necessary calculations.
ACC FSC stated that there should be a reference to a document that
lists U-factor assumptions for non-insulation components when
calculating U-factors. (ACC FSC, No. 186 at p. 1) DOE notes that the
Battelle method provides details on typical framing factors, and any
component specific rules for U-factor calculations. The Battelle method
also provides references (including the ASHRAE HOF) and values for non-
insulation components. The Battelle method is referenced in proposed
section 460.3.
Palm Harbor Homes stated that Table 460.102-2 lists alternative U-
factors to the fourth decimal, which is inconsistent with the Battelle
method incorporated by reference and in which U-values are to the third
decimal. Palm Harbor Homes recommended rounding the listed U-values to
three decimal points. (Palm Harbor Homes, No. 193 at p. 2) DOE agrees
that the U-values should be consistent with the Battelle method, and
therefore has rounded the proposed U-factor alternatives to three
decimal places.
General Comments on the Performance Requirements
DOE received a comment regarding the performance requirements
proposed in the June 2016 NOPR. ACC FSC stated that the performance
requirements allow for unlimited tradeoffs to the building envelope, as
long as the net thermal performance is achieved. It commented that this
approach assumes that all components are working together
simultaneously, and that the maintenance of HVAC components is
sustained. ACC FSC stated, however, that the thermal envelope will last
much longer than the service lives of tradeoff components such as HVAC,
and the short-term components will be required to be replaced. It
suggested that the performance path should have a back-stop to prevent
excessive tradeoffs of the thermal envelope. (ACC FSC, No. 186 at p. 1)
The performance requirements in the proposed energy conservation
standards are specific to the building thermal envelope, and do not
incorporate any specifications on HVAC energy efficiency or
maintenance. Therefore, tradeoffs are only allowed within the
[[Page 47776]]
building thermal envelope, and not HVAC equipment or other appliances.
For the thermal envelope, DOE proposes to limit tradeoffs between
insulation and fenestration products via the following constraints,
consistent with the MH working group recommendations and the 2021 IECC:
A maximum area-weighted average vertical fenestration U-
factor of 0.48 in climate zone 2, or 0.40 for climate zone 3,
A maximum area-weighted average skylight U-factor of 0.75
in climate zones 2 and 3,
Windows, skylights, and doors containing more than 50
percent glazing by area to satisfy the SHGC requirements under Sec.
460.102(a) on the basis of an area-weighted average.
Prescriptive SHGC Requirements
DOE received several comments on the June 2016 NOPR that suggested
that climate zones 1 and 2 should be combined into one climate zone,
such that there would be three climate zones in total. Commenters
stated that a SHGC requirement of 0.33 would then apply to all homes in
the new combined climate zone. (Lippert Components, No. 152 at p. 1;
MHIAZ, No. 161 at p. 3; PMHA, No. 164 at p. 3; Cavco, No. 167 at p. 1;
SBRA, No. 163 at p. 3; Skyline, No. 165 at p. 2; OMHA, No. 166 at p. 2;
MHI, No. 182 at p. 1; MMHA, No. 170 at p. 3; Clayton Homes, No. 185 at
p. 2; Palm Harbor Homes, No. 193 at p. 1; MHISC, No. 191 at p. 2; MHIM,
No. 155 at p. 3; Commodore Corporation, No. 195 at p. 3) During the
June 2016 NOPR public meeting and in its written comments, ACEEE and
South Mountain supported the four proposed climate zones. (ACEEE,
Public Meeting Transcript, No. 148 at p. 35; ACEEE, No. 178 at p. 2;
South Mountain, No. 151 at p. 1)
As part of its written comment, SBRA also performed its own
analysis on SHGC for climate zones 1 and 2 and found that 0.33 for both
climate zones 1 and 2 was most cost-effective for both zones. SBRA
stated that it believes that DOE's analysis in the February 2015 RFI
was based on an atypical set of assumptions (e.g., all windows due
west, no window shading, no landscaping), which it stated would be at
odds with the MH working group's approach of using industry average or
market representative assumptions when evaluating the economic benefits
of measures that improve energy performance. (SBRA, No. 163 at p. 5)
SBRA acknowledged that its analysis applied markedly different
assumptions than DOE's analysis. The differences included the
following: Window shading, window orientation, window area, and window
cost. In addition, SBRA used the REMRate computer model, which is
different than the Energy Plus 5.0 model used by DOE. (SBRA, No. 163 at
p. 5)
Regarding the SHGC requirements proposed by DOE in the June 2016
NOPR, Lippert Components stated that the increased stringency on solar
heat gain only really benefits those in the glazing industry, and the
increased cost associated with increased stringency will reduce the
sales of manufactured homes. Lippert Components suggested that the more
stringent value of SHGC only be considered after real energy usage in
homes has been evaluated and shows that it is a cost-viable option.
(Lippert Components, No. 152 at p. 1)
For climate zone 2, RECA commented that SHGC should be 0.25,
consistent with the 2015 IECC, but did not comment in the context of
the number of climate zones. It stated that DOE should not diverge from
the IECC value, as the statute only allows deviations from the IECC
value when the code is either not cost-effective, or when ``a more
stringent standard would be more cost-effective.'' RECA asserted that
the IECC value of 0.25 is cost-effective, and the statute does not
allow for a less stringent standard that would be more cost-effective.
(RECA, No. 188 at p. 3) RECA also commented that DOE's analysis of cost
effectiveness for SHGC values did not use worst-case orientation of all
windows facing west. (RECA, No. 188 at p. 3) (In response to comments
received on the February 2015 RFI, DOE changed the assumption from all
windows oriented west to assuming an even distribution of the windows.)
RECA also stated that low-SHGC fenestration is both widely available
and widely used in the proposed climate zone 2. (RECA, No. 188 at p. 4)
ACEEE stated that it has no objection to climate zones 1 and 2 having
the same required SHGC level considering that all other aspects of the
standard are the same for the two zones; however, ACEEE did not
recommend any specific SHGC. (ACEEE, No. 178 at p. 2)
As already discussed in III.E.2.a of this document, DOE proposes to
align the climate zones to the HUD zones (three zones) instead of the
June 2016 NOPR-proposed climate zones (four zones). In addition, as
detailed previously in this document, DOE is proposing energy
conservation standards based on the 2021 IECC, with a tiered and
untiered proposal. For Tier 1 of the tiered proposal, DOE proposes to
base the standards on an incremental cost increase maximum because of
concerns from HUD and stakeholders regarding the high upfront cost from
the June 2016 NOPR standards. For the Tier 2 and untiered proposal,
however, because of the proposed updates of the energy efficiency
measures to HUD zones, DOE is proposing a glazed fenestration
requirement of 0.33 for proposed climate zone 1. The proposed building
thermal envelope measures are discussed in section III.E.2.b of this
document.
For the energy modeling in Energy Plus 5.0, DOE used the same
assumptions as the June 2016 NOPR analysis for window-to-floor area,
window shading, and window cost, which were recommendations from the MH
working group and formed the basis of the MH working group's
deliberations and recommendations. DOE continues to find the
assumptions of the MH working group appropriate and is continuing to
apply them in this SNOPR rather than those assumptions from the SBRA
analysis. As explained in the June 2016 NOPR, DOE did not find reason
to use assumptions different from those recommended by the MH working
group based on the considerations of the MH working group arriving at
them. 81 FR 39756, 39772.
In addition, while DOE had originally modeled all windows facing
west, based on comments received in response to the February 2015 RFI,
DOE changed the assumption from all windows oriented west to assuming
an even distribution of the windows. DOE maintains the assumption of
uniform window distribution in the SNOPR, rather than RECA's assumption
of all windows due west. As explained in the June 2016 NOPR, although
the assumption of all windows facing west represents the highest energy
use window orientation, consumers of manufactured homes with other
window orientations would not experience as large an economic benefit.
81 FR 39756, 39772.
Regarding the window costs specifically, SBRA stated that DOE's
estimate for the incremental cost to the consumer to improve the SHGC
from 0.33 to 0.25 for a single-section home was too low. While DOE used
an incremental cost of $91, SBRA stated that it determined that the
incremental cost for the SHGC improvement would be $144. SBRA stated
that it gathered pricing data from the industry's major window
suppliers but did not provide the sources for this information or the
calculations used to arrive at this estimate. Additionally, it did not
provide its estimate for the incremental cost for multi-section homes.
In response to SBRA's comment on window costs, DOE conducted
further
[[Page 47777]]
research on the costs of windows with comparable U-factor and SHGC
values. DOE's research found that both DOE's and SBRA's window cost
estimates are within the range of common industry costs per square foot
of fenestration. Because DOE has seen no evidence that the assumptions
agreed to by the MH working group are no longer representative of
typical manufactured home construction, DOE continues to use the same
assumptions from the MH working group for the SHGC analysis. Term
Sheet, No. 107 at p. 3.
RECA commented that reduced SHGC fenestration can result in
benefits like smaller air conditioning systems (which have a lower
purchase price) and the reduction of peak-load electricity demand due
to smaller cooling loads (and the smaller cooling equipment). (RECA,
No. 188 at p. 3) In the June 2016 NOPR, DOE did not include air
conditioner downsizing and associated cost savings opportunities in its
SHGC analysis (or any of its cost-effectiveness analysis).
DOE recognizes that decreases in air conditioning equipment size
and peak electric load may result from the proposed requirements.
However, these outcomes may not happen in practice for all consumers.
Further, while reduction in peak demand is a benefit to the nation, not
all consumers have an energy bill pricing structure (time of use based)
that would afford them direct benefits. Therefore, DOE did not
introduce the uncertainty associated with these potential benefits into
the LCC analysis, and instead continues to focus on the direct impacts
of improvements to the building thermal envelope insulation and other
energy efficiency measures.
Window/Fenestration U-Factors
In the June 2016 NOPR, DOE proposed window U-factors of 0.35 for
climate zones 1, 2, and 3; and 0.32 for climate zone 4. Skyline
Corporation commented that the 2015 IECC allows for window U-factor of
0.40 for climate zones 1 and 2, which is higher than the window U-
factor allowed in the proposed rule. It recommended that a U-factor of
0.40 be used for climate zone 1. (Skyline, No. 165 at p. 2)
As already discussed, DOE is proposing to rely on the HUD zones.
Further, for the Tier 2 and untiered proposals, DOE has updated the
proposed requirements based on the latest version of the IECC (the 2021
IECC), in accordance with the EISA mandate. See 42 U.S.C. 17071(b)(1)
Accordingly, DOE proposes updated window U-factor requirements based on
a review of the 2021 IECC, which are summarized in Table III.8.
In the tiered proposed approach DOE is proposing as Tier 1
requirements a set of energy conservation requirements with a first-
cost impact of approximately $750. The Tier 1 energy efficiency
measures proposed in this document would provide energy savings
exceeding that amount and are presented in section III.E.2.b. DOE has
tentatively determined that a window U-factor of 1.08, 0.5 and 0.35 for
climate zones 1, 2 and 3 respectively, in addition to the combination
of the other thermal envelope measures, would provide savings above the
first-cost impact in each of the proposed climate zones.
Sections R405 and R406 From the IECC
In the June 2016 NOPR, DOE did not propose including sections R405
and R406 from the IECC. Section R405 of the 2015 IECC establishes
criteria for compliance using a simulated energy performance analysis,
which involves calculating expected building energy use and comparing
that value to the energy use of a standard reference building that
complies with the minimum specifications of the 2015 IECC. Section R405
compliance is based on the total estimated annual energy usage across
the whole building: Envelope, mechanical, and service water heating.
Section R406 of the 2015 IECC establishes criteria for compliance using
an energy rating index that contemplates the use of software to
calculate the energy use of a building. DOE stated that while both
sections are valid and technically feasible options, the options do not
appear to offer additional flexibility in the design of a manufactured
home relative to the performance requirements for the building thermal
envelope.
Several commenters, however, stated that the proposed rule lacks a
performance path that enables tradeoff among a wider range of energy
features than the envelope alone, and recommended that DOE consider
compliance options tailored for the manufactured housing industry,
using section R405, Simulated Performance Alternative, and section
R406, Energy Rating Index Compliance Alternative, from the 2015 IECC as
models. (SBRA, No. 163 at p. 2; MHI, No. 182 at p. 8; Palm Harbor
Homes, No. 193 at p. 2; NPGA, No. 171 at p. 2; AGA & APGA, No. 172 at
p. 1)
Sections R405 and R406 incorporate the energy use of the whole
building, including mechanical equipment such as appliances. The
performance requirements in the proposed energy conservation standards
are specific to the building thermal envelope only. As discussed, the
MH working group generally did not recommend provisions addressing
minimum appliance efficiencies and specifically identified R405 and
R406 as inapplicable to manufactured homes. (MH working group, No. 107
at p. 22) Consistent with the recommendations of the MH working group,
the performance requirements in the proposed energy conservation
standards are specific to the building thermal envelope only, and do
not provide for tradeoffs with mechanical equipment such as appliances.
DOE does capture a key element of sections R405 and R406 in its
performance path to compliance. The IECC does not have a Uo-based
performance path; it instead has the options described in sections R405
and R406. Similar to those sections, a Uo calculation gives the
manufactured home manufacturer the flexibility to design the
manufactured home, as long as the overall Uo is met.
DOE also received comments regarding the use of sections R405 and
R406 of the IECC, citing the use of a full-fuel-cycle (FFC) calculation
in those provisions as an advantage in terms of fully accounting for
the impact of homes heated with different fuel types. (NPGA, No. 171 at
p. 2; AGA & APGA, No. 172 at p. 1) An FFC measure of energy includes
point-of-use (site) energy; the energy losses associated with
generation, transmission, and distribution of electricity; and the
energy consumed in extracting, processing, and transporting or
distributing primary fuels.
NPGA commented that R405 includes an exception for the performance-
based compliance approach, which allows the energy use to be based on
source energy by using a source energy multiplier (one for electricity
and another for fuels other than electricity). NPGA stated that this
exception would be consistent with DOE's approach of incorporating
energy consumption and emissions beyond the site in DOE's national
impact analysis. In addition, NPGA commented that the adoption of R405
would provide a means for manufacturers of HUD homes to choose
appliances based on their FFC efficiency ratings, and in turn, benefit
from any reductions in FFC energy consumption and carbon emissions.
(NPGA, No. 171 at p. 2) AGA and APGA encouraged DOE to reconsider
incorporating sections R405 or R406 of the IECC, which utilizes the FFC
analysis, for the national impact analysis. (AGA & APGA, No. 172 at p.
1)
[[Page 47778]]
As discussed previously, sections R405 and R406 would incorporate
the energy use of the whole building, including mechanical equipment.
Therefore, any FFC energy use resulting from sections R405 and R406
would also include energy use of the whole building. However, for the
reasons discussed, this rulemaking only proposes provisions specific to
the building thermal envelope. Therefore, DOE continues to not propose
requirements associated with alternative performance from the 2015 and
the 2021 IECC sections R405 and R406 in this SNOPR.
Ceiling Insulation Requirement
In the June 2016 NOPR, DOE proposed that exterior ceiling
insulation must have uniform thickness or a uniform density. Several
commenters stated that uniform thickness will generally not be
possible, and uniform density would not allow high-density insulation
in the truss heel area. (SBRA, Public Meeting Transcript, No. 148 at p.
52; NEEA, Public Meeting Transcript, No. 148 at p. 53; MHIM, No. 155 at
p. 3; MHIAZ, No. 161 at p. 3; PMHA, No. 164 at p. 3; Cavco, No. 167 at
p. 2; SBRA, No. 163 at p. 3; Skyline, No. 165 at p. 3; OMHA, No. 166 at
p. 3; MHCC, No. 162 at p. 1; MHI, No. 182 at p. 3; MMHA, No. 170 at p.
3; Clayton Homes, No. 185 at p. 3; Palm Harbor Homes, No. 193 at p. 2;
MHISC, No. 191 at p. 3; Commodore Corporation, No. 195 at p. 3)
DOE tentatively agrees with commenters that the exterior ceiling
insulation proposal of uniform thickness or a uniform density would
prohibit effective insulation techniques. While uniform thickness and
density is sound insulation installation practice in most situations,
given that the space between the roof and exterior ceiling is limited,
particularly at the eaves, this uniformity may not be possible at the
insulation levels proposed in the NOPR. In addition, there is no
requirement in the 2015 or the 2021 IECC for uniform thickness or
density. Therefore, DOE is not proposing in this SNOPR to require that
exterior ceiling insulation must have uniform thickness or a uniform
density.
DOE requests comment on the proposal to not require that exterior
ceiling insulation must have uniform thickness or a uniform density.
Total Area of Glazed Fenestration Requirement
In the June 2016 NOPR, DOE proposed a maximum ratio of 12 percent
for glazed fenestration area to floor area for energy modeling
purposes, consistent with the recommendation from the MH working group.
DOE used this ratio as a typical housing characteristic in its analyses
for determining the prescriptive requirements. DOE also required the
same ratio in the proposed prescriptive requirements. DOE received
several comments regarding the proposed prescriptive requirement for
the maximum total area of glazed fenestration. Several commenters
stated that there is no such total area of glazed fenestration
requirement in the 2015 IECC, and therefore the requirement must be
removed from DOE's prescriptive requirements. (Skyline, No. 165 at p.
3; MHCC, No. 162 at p. 1; MHI, No. 182 at p. 4; Clayton Homes, No. 185
at p. 3; RECA, No. 188 at p. 5; PMHA, No. 164 at p. 4; WDMA, No. 183 at
p. 2)
DOE agrees that there are no similar glazing requirements in the
2015 or the 2021 IECC. DOE proposed a fenestration area to floor area
limit in the June 2016 NOPR to preserve energy savings associated with
the prescriptive requirements. While the performance requirements
improved building thermal envelope insulation to offset larger
fenestration to floor area percentages (fenestration typically has a
much higher U-factor than an exterior wall), the prescriptive
requirements would prohibit a home to be constructed primarily from
fenestration. DOE now tentatively finds that a 12-percent ratio was too
restrictive given current manufacturing practices for manufactured
homes. Therefore, in this SNOPR, DOE is not proposing a limit on the
total area of glazed fenestration. DOE still maintains that a 12-
percent ratio is typical in practice and does not expect the absence of
such a requirement to result in an increase in the construction of
homes with larger fenestration to floor area ratios. Such design would
likely be much more expensive (windows are costly relative to opaque
wall), and thereby limit the increase in use of fenestration.
DOE requests comment on the proposal not to limit the total area of
glazed fenestration.
Using NFRC for U-Factor and SHGC Values
DOE received several comments regarding the use of the National
Fenestration Rating Council (``NFRC'') labels for the fenestration U-
factor and SHGC values. RECA commented that the IECC has always had a
requirement that fenestration be labeled and certified to certain NFRC
standards, and that a set of default U-factors and SHGCs are given for
fenestration that are not labeled to these standards. RECA recommended
using NFRC standards to maintain consistency with the 2015 IECC, and
that DOE clarify that products lacking the NFRC labels shall be
assigned the default U-factor or SHGC values. (RECA, Public Meeting
Transcript, No. 148 at p. 45; RECA, No. 188 at p. 7). Lippert
Components commented that the June 2016 NOPR proposal was unclear as to
when to use the default U-factor and SHGC values. Lippert Components
stated that the MH working group intended the default U-factor and SHGC
tables to apply to fenestration that did not have third-party certified
thermal performance ratings developed in accordance with NFRC
methodology. Therefore, Lippert Components suggested updating the
language, and clarifying what constitutes certified ratings by using
similar wording to that found in C303.1.1 in the 2015 IECC. (Lippert
Components, No. 152 at p. 2)
WDMA commented that fenestration U-factor and SHGC should be
determined with NFRC 100 and 200, respectively. WDMA also commented
that the lack of a proposed test procedure leaves the proposed
standards incomplete. (WDMA, No. 183 at p. 2) Additionally, ACEEE
stated that the 2015 IECC (section R303.1.3) directs that fenestration
generally be rated by the NFRC. It recommended incorporating this
standard, stating that it will ensure consistency with site-built homes
and allow for more window options. (ACEEE, No. 178 at p. 2)
NFRC standards are widely used by industry in a variety of
capacities. Many component manufacturers affix an NFRC label to their
fenestration products, which includes the U-factor, SHGC, visible
transmittance, and air leakage values. The NFRC program has a large
number of participants (more than 500 component manufacturers), and
NFRC-certified products frequently are used to comply with local energy
code requirements. In addition, a fenestration product must be NFRC-
certified to meet the criteria for becoming an ENERGY STAR product.
Also, the 2021 IECC reference NFRC in section R303.1.3 for fenestration
product rating.
Since DOE published the June 2016 NOPR, DOE has also published the
November 2016 test procedure NOPR for manufactured housing, which
proposed NFRC standards to determine fenestration U-factor and SHGC.
See 81 FR 78733, 78738-78739. Specifically, in the November 2016 test
procedure NOPR, DOE proposed that the fenestration U-factors and SHGC
be tested based on ANSI/NFRC 100 and
[[Page 47779]]
200 respectively. In addition, DOE proposed that for the prescriptive
requirements, manufacturers be allowed to use either the NFRC-rated
fenestration U-factor and SHGC values, or the default U-factor and SHGC
values provided by DOE. Because the use of the NFRC standards applies
directly to the manufactured housing test procedure, DOE will address
these comments in any future action addressing testing, compliance and
enforcement provisions related to these standards.
In addition, regarding NFRC labels, NEEA recommended that the final
rule be explicit that the NFRC labels should remain on the windows
until the house arrives at the site. (NEEA, No. 190 at p. 3) DOE's
authority for this rulemaking is to establish energy conservation
standards for manufactured housing as manufactured. (42 U.S.C.
17071(c)) The proposed energy conservation standards are specific only
to the building thermal requirements for a manufactured home. However,
DOE notes that the energy conservation standards, if finalized as
proposed, would not prevent industry from pursuing this labeling
practice suggested by NEEA.
Other Remaining Comments Regarding Sec. 460.102
DOE also received individual comments regarding the proposed
building thermal envelope requirements in Sec. 460.102. ACC FSC stated
that exterior foam sheathing should be listed as an alternative to
cavity-only insulation. (ACC FSC, No. 186 at p. 1) For this rule as
proposed, DOE is not precluding the use of foam sheathing. As long as
the installed insulation would meet the building thermal envelope
requirements, as finalized, then it would be an acceptable option for
use in a manufactured home.
ACC FSC also specifically requested that DOE add an ``R13+5ci''
\31\ option to climate zones 3 and 4 for the wall R-value under the
prescriptive path. (ACC FSC, No. 186 at p. 1) As long as the installed
insulation would meet the adopted building thermal envelope
requirements, the proposed requirements would not prohibit certain
insulation options from being used in the manufactured home.
---------------------------------------------------------------------------
\31\ The first value is cavity insulation and the second value
is continuous insulation. Therefore, ``13+5'' would mean R-13 cavity
insulation plus R-5 continuous insulation. In general, the cavity
insulation is interrupted by framing members, which lets heat
through more readily, whereas continuous insulation is
uninterrupted. Therefore, a layer of cavity insulation is less
effective than a layer of continuous insulation for the same R-
value. To calculate the wall assembly's overall R-value, as would be
required under the proposed rule, one would need to use the Battelle
method, which references the ASHRAE HOF.
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c. Proposed Sec. 460.103 Installation of Insulation
Consistent with the June 2016 NOPR, DOE proposes in Sec. 460.103
of the regulatory text to require manufacturers to install insulation
according to both the insulation manufacturer's installation
instructions and the instructions set forth in proposed Table 460.103.
DOE also proposes to require manufacturers to comply with the
insulation manufacturer's installation instructions to ensure that the
intended performance of the insulation is achieved. Further, consistent
with the June 2016 NOPR, DOE proposes to add as part of a new Table
460.103 several component installation requirements, including general
requirements, and requirements for access hatches, panels and doors,
baffles, ceiling or attic, eave vents, narrow cavities, rim joists,
shower or tub adjacent to exterior wall, and walls.
The following paragraphs discuss comments DOE received regarding
the installation of insulations requirements proposed in the June 2016
NOPR, and any other corresponding proposed changes to the June 2016
NOPR requirements based on comments received, or updates to the 2021
IECC.
DOE received a comment on the June 2016 NOPR regarding the quality
of insulation installation. Wisconsin Energy Conservation Corporation
(WECC) commented that the overall quality of the insulation
installation is important to avoid any degradation in insulation
performance. (WECC, No. 150 at p. 3) Consistent with the 2015 and the
2021 IECC, DOE has maintained that insulation is to be installed
according to the manufacturer's instructions to ensure the insulation
achieves its rated R-value.
DOE received several comments on the June 2016 NOPR regarding the
exterior floor insulation requirements. In general, commenters stated
that the provision requiring exterior floor insulation be placed in
contact with the subflooring material be removed because the
requirement is not supported by building scientists; DOE has not
demonstrated its value for manufactured home energy efficiency;
assuming the bottom board acts as the air barrier (as seen in Table
460.104) obviates the need for the insulation to be in contact with the
decking; the overall efficiency of the home decreases as exterior floor
insulation between I-beams is usually placed beneath ducts (effectively
moving the ducts inside the thermal envelope minimizing thermal
losses); and it is difficult to do in a factory setting. (MHIM, No. 155
at p. 3; MHIAZ, No. 161 at p. 3; PMHA, No. 164 at p. 3; Cavco, No. 167
at p. 1; SBRA, No. 163 at p. 3; OMHA, No. 166 at p. 3; MHI, No. 182 at
p. 3; MMHA, No. 170 at p. 3; Clayton Homes, No. 185 at p. 3; Palm
Harbor Homes, No. 193 at p. 2; MHISC, No. 191 at p. 3; Commodore
Corporation, No. 195 at p. 3; Skyline, No. 165 at p. 3; MHCC, No. 162
at p. 1).
During the public meeting, NEEA also stated that the permanent
contact with the underside of the subfloor is virtually impossible in
the center of a manufactured home. (NEEA, Public Meeting Transcript,
No. 148 at p. 55) WECC commented that it is impractical to require
insulation to completely contact the subfloor; completely filling the
floor with insulation results in cooler floor temperatures leading to
consumer complaints. WECC also questioned how the insulation under the
ductwork will be supported and maintained, and to what extent the
cross-braces have an effect on compaction of increased fiberglass.
Overall, WECC stated that it sees many logistical problems with the
extra levels of insulation. (WECC, No. 150 at p. 2)
The requirement that exterior floor insulation installed must
maintain permanent contact with the underside of the subfloor is found
in the 2015 IECC, which was the basis of the June 2016 NOPR
requirement. However, a study provided by MHI and other stakeholders
shows that this requirement is not necessary and can actually be
harmful to homes.\32\ The study finds that installing insulation on the
underside of the floor decking results in the wood floor joists from
the floor framing to get cold enough that the temperature falls below
the dewpoint temperature of the air in the crawlspace. The low
temperatures would therefore form condensation on the surface of the
wood, which could affect the integrity of the flooring. Based on the
comments received, including the cited study, DOE tentatively agrees
that it is inappropriate for MH manufacturers to give insulation
permanent contact under the whole subfloor. In addition, in
manufactured homes, the common practice is to lay blanket insulation
over the duct work below the floor, placing the ducts between the
insulation and the rough floor decking, which creates a pocket of air
between the blanket insulation and the rough floor decking in the space
near the ducts. Therefore, by taking into account common manufactured
home
[[Page 47780]]
building practice, in this SNOPR, DOE is deviating from the 2015 and
the 2021 IECC and proposes to remove the requirement that exterior
floor insulation installed must maintain permanent contact with the
underside of the rough floor decking over which the finished floor,
flooring material, or carpet is laid.
---------------------------------------------------------------------------
\32\ Lstiburek, Joseph, BSI-009: New Light in Crawlspaces,
Building Science Corporation (2010), et al.
---------------------------------------------------------------------------
DOE requests comment on removing the proposed requirement that
exterior floor insulation installed must maintain permanent contact
with the underside of the rough floor decking.
DOE also received several comments specifically on duct material
and insulation. Cavco and Pfeffer stated that high-density duct board
and flex duct is subject to severe rodent degradation over time, and so
ductwork material should be considered in the rulemaking. (Cavco,
Public Meeting Transcript, No. 148 at p. 67; Pfeiffer, No. 150 at p. 1)
WECC and NCJC advocated using metal ductwork for the entire duct
system. Metal ductwork is less susceptible to damage from animals,
water, and moisture degradation. (WECC, No. 150 at p. 1; NCJC, No. 184
at p. 2) In addition, WECC commented that both the flex duct and duct
boards that are commonly used are capable of being crushed or
compressed, which reduces efficiency, as well as being hard to install
and permanently repair. (WECC, No. 150 at p. 1)
EISA directs DOE to establish energy conservation standards for
manufactured housing. While there may be an issue with the reliability
of certain building materials, this issue only indirectly relates to
the energy efficiency of manufactured homes and is beyond the scope of
this rulemaking. Therefore, DOE is not assessing or proposing
regulations relating to duct material.
Regarding duct insulation, NEEA recommended that R-8 insulation
should be required everywhere where ducts are not embedded in
insulation. This specifically ensures that ducts under the floor are
insulated. (NEEA, No. 190 at p. 3) VEIC stated that HVAC ductwork
located in the floor assembly with crossover ducts should be eliminated
and relocated inside the thermal envelope, as this would improve energy
performance and increase durability. (VEIC, No. 187 at p. 2) NEEA
commented that all crossover ducts should have R-8 insulation. (NEEA,
No. 190 at p. 3)
DOE's research indicates that HVAC ducts are generally located
between the floor and the insulation and are therefore within the
conditioned space. Cavco also commented that the common practice on
entry-level products is to locate them in the floor. (Cavco, Public
Meeting Transcript, No. 148 at p. 65) Therefore, because ducts are
already located within the conditioned space, and would already be
insulated because of the insulation required within the conditioned
space, DOE is not proposing any additional insulation for ducts in this
SNOPR.
NEEA and WSU Energy Program stated that a clearer statement on how
insulation should contain no voids or compression as installed, is
necessary. (NEEA, No. 190 at p. 2; WSU Energy Program, Public Meeting
Transcript, No. 148 at p. 54, 57). Manufacturer installation
instructions specify that insulation be installed per the insulation
chart. Insulation charts, depending on the type of insulation, are
required by the Federal Trade Commission (``FTC'') to show the R-value
for a certain insulation thickness, or at an installed thickness. 16
CFR 460.12. Because DOE requires that insulation must be installed
according to the insulation manufacturer's installation instructions,
the MH manufacturer would have to determine the correct thickness for
the R-value required in the manufactured home.\33\ Any compression
would result in a different thickness, which would in turn change the
R-value of the insulation. Additionally, certain insulation
manufacturer's installation instructions specifically state that
compression must be avoided when installing insulation, because
compression will reduce the R-value. Likewise, insulation
manufacturer's installation instructions also state that there cannot
be gaps between pieces of insulation, as it can reduce the installed R-
value of insulation.\34\ Therefore, DOE continues to find the
requirements proposed in section 460.103 of the June 2016 NOPR are
sufficient to prohibit compression and voids, and DOE continues to
propose these requirements without change, consistent with R303.2 of
the 2021 IECC.
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\33\ Green Fiber insulation fact sheet; https://www.greenfiber.com/uploads/documents/Fact-Sheet-INS541LD-19.05LB-Retail-Bag.pdf.
\34\ CertainTeed sustainable insulation installation manual;
https://www.buildsite.com/pdf/certainteed/CertainTeed-Sustainable-Insulation-Installation-Instructions-1814058.pdf.
---------------------------------------------------------------------------
The 2021 IECC included several updates (relative to the 2015 IECC)
in sections R402.2 through R402.3 and Table R402.4.1.1 for insulation
installation criteria relevant to manufactured housing, which are
discussed in Table III.13.
Table III.13--The 2021 IECC Updates for Installation of Insulation
----------------------------------------------------------------------------------------------------------------
The 2021 IECC updates, SNOPR
Component June 2016 NOPR proposal proposal
----------------------------------------------------------------------------------------------------------------
General............................ Air-permeable insulation must not be No relevant updates made from the
used as a material to establish the 2015 IECC to the 2021 IECC.
air barrier. Therefore, DOE proposes no changes
between the 2016 NOPR and this
SNOPR.
Access hatches, panels, and doors.. Access hatches, panels, and doors Relevant updates from the 2015 IECC
between conditioned space and to the 2021 IECC include requiring
unconditioned space must be access hatches and doors from
insulated to a level equivalent to conditioned to unconditioned spaces
the insulation of the surrounding be insulated to the same R-value
surface, must provide access to all required by Table R402.1.3 for the
equipment that prevents damaging or wall or ceiling in which they are
compressing the insulation, and must installed, with certain exceptions.
provide a wood-framed or equivalent For this SNOPR, DOE is seeking
baffle or retainer when loose fill comment on whether the 2021 IECC
insulation is installed within an update applies to manufactured
exterior ceiling assembly to retain homes.
the insulation both on the access
hatch, panel, or door and within the
building thermal envelope.
[[Page 47781]]
Baffles............................ Baffles must be constructed using a Relevant updates from the 2015 IECC
solid material, maintain an opening to the 2021 IECC include
equal or greater than the size of requirements that the baffle be
the vents, and extend over the top installed to the outer edge of the
of the attic insulation. exterior wall top plate so as to
provide maximum space for attic
insulation coverage over the top
plate. In addition, where soffit
ventilation is not continuous,
requires that baffles be installed
continuously to precent ventilation
air in the eave soffit from
bypassing the baffle.
For this SNOPR, DOE is seeking
comment on whether the 2021 IECC
update applies to manufactured
homes.
Ceiling or attic................... The insulation in any dropped ceiling No relevant updates made from the
or dropped soffit must be aligned 2015 IECC to the 2021 IECC.
with the air barrier. Therefore, DOE proposes no changes
between the 2016 NOPR and this
SNOPR.
Eave vents......................... Air-permeable insulations in vented No relevant updates made from the
attics within the building thermal 2015 IECC to the 2021 IECC.
envelope must be installed adjacent Therefore, DOE proposes no changes
to eave vents. between the 2016 NOPR and this
SNOPR.
Floors............................. Floor insulation must be installed to No relevant updates made from the
maintain permanent contact with the 2015 IECC to the 2021 IECC.
underside of the rough floor decking However, as previously discussed in
over which the finished floor, this section, DOE is no longer
flooring material, or carpet is proposing this requirement from the
laid, except where air ducts June 2016 proposal.
directly contact the underside of
the rough floor decking.
Narrow cavities.................... Batts in narrow cavities must be cut Relevant updates from the 2015 IECC
to fit or narrow cavities must be to the 2021 IECC were editorial in
filled with insulation that upon nature and intended to improve
installation readily conforms to the clarity.
available cavity space. DOE proposes to include these
updates in this SNOPR.
Rim joists......................... Rim joists must be insulated......... Relevant updates from the 2015 IECC
to the 2021 IECC include additional
updates that the insulation be
installed such that the insulation
maintain permanent contact with the
exterior rim board.
DOE proposes to include this update
in this SNOPR as it provides
further clarity on how the rim
joists must be insulated.
Shower or tub adjacent to exterior Exterior walls adjacent to showers No relevant updates made from the
wall. and tubs must be insulated. 2015 IECC to the 2021 IECC.
Therefore, DOE proposes no changes
between the 2016 NOPR and this
SNOPR.
Walls.............................. Air permeable exterior building No relevant updates made from the
thermal envelope insulation for 2015 IECC to the 2021 IECC.
framed exterior walls must Therefore, DOE proposes no changes
completely fill the cavity, between the 2016 NOPR and this
including within stud bays caused by SNOPR.
blocking lay flats or headers.
Shaft, penetrations................ None................................. Relevant updates from the 2015 IECC
to the 2021 IECC include
requirements that the insulation
shall be fitted tightly around
utilities passing through shafts
and penetrations in the building
thermal envelope to maintain
required R-value.
For this SNOPR, DOE is seeking
comment on whether the requirement
generally applies to manufactured
homes.
----------------------------------------------------------------------------------------------------------------
The 2021 IECC also includes building thermal envelope updates for
mass walls, steel-framed buildings, basement walls, slab-on grade
floors, crawl space walls, sunroom and heated garage insulation. DOE
has not included these requirements in the proposed rule because they
are not directly relevant to manufactured housing.
DOE requests comment on the proposed updates to the installation of
insulation criteria as it applies to manufactured homes construction
only.
DOE requests comments on whether there are any of the 2021 IECC
updates relevant to manufactured housing that should be considered as
part of this rulemaking. Specifically, DOE requests comment on whether
the 2021 IECC updates for installation criteria for access hatches and
doors, baffles and shafts are applicable to manufactured housing and
should be considered in this rulemaking.
d. Proposed Sec. 460.104 Building Thermal Envelope Air Leakage
Consistent with the June 2016 NOPR, DOE proposes to add a new Sec.
460.104 that would require manufacturers to seal manufactured homes
against air leakage. Air leakage sealing limits air infiltration
through the building thermal envelope, in turn reducing heating and
cooling loads. Proposed Sec. 460.104 would specify both general and
specific requirements for sealing a manufactured home to prevent air
leakage, all of which are based on Table R402.4.1.1 of the 2015 IECC
with modifications based on recommendations from the MH working group
(Term Sheet No. 107 at p. 5) and any further modifications based on
DOE's review of the 2021 IECC (discussed further in this section). The
MH working group also recommended prescriptive air leakage sealing
requirements that are designed to achieve an overall air exchange rate
of five air changes per hour (ACH) within a manufactured home. Term
Sheet No. 107 at p. 5.
The proposed general requirements in Sec. 460.104 would require
that manufacturers properly seal all joints, seams, and penetrations in
the building thermal envelope to establish a continuous air barrier,
and use appropriate sealing materials to allow for differential
expansion and contraction of dissimilar materials. The proposed
specific requirements in Table 460.104 include air barrier criteria for
[[Page 47782]]
ceiling or attic, duct system register boots, electrical box or phone
on exterior walls, floors, mating line surfaces, recessed lighting, rim
joists, shower or tub adjacent to exterior wall, walls and windows,
skylights and doors.
In developing its recommendations, the MH working group also
identified concerns regarding the potential impacts of the air sealing
requirements on the indoor air quality in manufactured homes, but
understood indoor air quality to be outside the scope of the working
group. (MH Working Group Meeting Transcript No. 115, pp. 95-96)
Prior to issuing the 2016 EA-RFI, DOE issued a request for
information (RFI) regarding ``data, studies, and other such materials
that address the relationship between potential reductions in levels of
natural air infiltration and both indoor air quality and occupant
health for a manufactured home.'' (June 25, 2013, 78 FR 37995).
Specifically, DOE requested information on the relationship between
potential reductions in levels of natural air infiltration and both
indoor air quality and occupant health for a manufactured home. 78 FR
37995, 37996. With regard to indoor air quality, one commenter
mentioned that reductions in air leakage can lead to increased
formaldehyde concentrations and noted that increased mechanical
ventilation also can increase moisture infiltration in humid climates,
potentially leading to deleterious impacts such as mold growth. (MHARR,
No. 36 at pp. 6-7) Several commenters suggested including measures
approved by the MHCC at the time, including requirement for carbon
monoxide alarms, vent termination separation from air intake and an
option for individual manufacturers to adopt ASHRAE Standard 62.2.
(Joint commenters,\35\ No. 38 at p. 2; NEEA, No. 40 at p. 3) NEEA also
recommended NFPA 501 standard for window and door flashing and weather
resistant barriers to improve durability and reduce moisture-related
indoor air quality problems associated with wind driven rain and long-
term failure of the building envelope siding and window systems. (NEEA,
No. 40 at p. 3) Several other commenters noted that there have been no
reported issues with occupant health in energy efficient homes that
have been sealed tightly to reduce air infiltration. (MHI, No. 39, at
p. 5; Joint commenters, No. 38 at p. 2) Specifically, whole house
mechanical ventilation systems have been incorporated into the HUD
MHCSS for nearly 20 years. (Joint commenters, No. 38 at p. 2) Further,
NEEA noted that for voluntary energy efficiency programs (i.e., EPA
ENERGY STAR homes and DOE Challenge home) the few IAQ problems
encountered were associated with HVAC commissioning and/or occupant
education, not with building tightness. (NEEA, No. 40 at p. 3)
---------------------------------------------------------------------------
\35\ The letter comprised the joint comments of ACEE, MHI,
National Association of State Energy Officials, National Consumer
Law Center (on behalf of its low-income clients), National
Manufactured Home Owners Association, Natural Resources Defense
Council, Northwest Power & Conservation Council, and SBRA.
---------------------------------------------------------------------------
In the June 2016 NOPR, DOE again requested information on the
relationship between a reduction in levels of natural air infiltration
(through sealing leaks in the building thermal envelope) and health and
safety. 81 FR 39756, 39798. In response to the June 2016 NOPR, DOE did
not receive any studies or data regarding the potential impact on
health and safety from reduced levels of natural air infiltration in a
manufactured home. However, DOE is considering measures to mitigate
potential adverse impacts to indoor air quality that could arise from
this SNOPR proposal. See section III.E.3.d of this document for further
details.
The following paragraphs discuss comments DOE received regarding
the building thermal envelope air leakage requirements proposed in the
June 2016 NOPR, and any other corresponding proposed changes to the
June 2016 NOPR requirements based on comments received, or updates to
the 2021 IECC.
WSU Energy Program commented that ACH rate of five can be achieved
through the prescriptive approaches recommended by the MH working group
and that to ensure it is met, specific direction must be provided as to
the areas required to be sealed and further that DOE needs to provide
education and training to MH manufacturers. (WSU Energy Program, Public
Meeting Transcript, No. 148 at p. 57)
As discussed, the June 2016 proposed envelope air leakage
requirements were based on Table R402.4.1.1 of the 2015 IECC with
modifications. The IECC applies generally to residential buildings,
including site-built and modular housing, and is not specific to
manufactured housing. As stated by WSU Energy Program in its comments,
the building thermal envelope air leakage requirements (as proposed in
Sec. 460.104) are prescriptive requirements intended to achieve an
envelope tightness of five ACH when depressurized to 50 pascals. Term
Sheet, No. 107 at p. 5. Further, DOE reviewed the 2021 IECC and is
proposing additional updates to the air barrier criteria, as discussed
later in this section.
NEEA commented that a clearer definition of how a proper air
barrier should be designed was needed in order to make construction
requirements more specific, and to establish a single meaning without
ambiguity. (NEEA, No. 190 at p. 2). NEEA did not provide a further
explanation of how the proposed requirements for an air barrier were
lacking or presented an opportunity for misapplication. As stated
earlier in this section, DOE has listed many specific requirements for
proper air barrier installation in Table 460.104. These requirements
were based on Table R402.4.1.1 of the 2015 IECC and related
recommendations from the MH working group. Further, DOE reviewed the
2021 IECC to make any additional updates to the air barrier criteria.
DOE also received a comment regarding installation requirements.
VEIC stated that the rule should also have clear installation
requirements for insulation, as well as for air and duct sealing.
(VEIC, No. 187 at p. 2) DOE notes that its proposal would require that
insulation and air leakage sealing must be done according to
manufacturer's instructions, and the requirements set forth in proposed
Sec. Sec. 460.103 and 460.104, accordingly.
WDMA recommended that a provision regarding fenestration air
leakage requirements be added. WDMA stated that provisions regarding
fenestration air leakage are necessary for natural air infiltration
limits required by the IECC to be met. WDMA cited section R402.4.3 of
the 2015 IECC as an example. (WDMA, No. 183 at p. 3) As stated in the
June 2016 NOPR, DOE did not include specifications for air leakage of
fenestration consistent with the MH working group recommendation to
reduce testing burden. In addition, as discussed in the following
paragraphs, DOE is proposing air leakage requirements at the full
building thermal envelope level, which will capture any air leakage
associated with installed fenestration. Additionally, the proposed
prescriptive building thermal envelope air leakage standards include
requirements to seal the space between fenestration and framing.
Therefore, DOE is not proposing fenestration specific quantitative air
leakage requirements.
DOE also received several comments on the June 2016 NOPR regarding
the building's air barrier. NEEA recommended that the standards be
explicit that the multi-section marriage line air seal shall be
installed at the factory with proper quality control rather than being
installed in the field.
[[Page 47783]]
(NEEA, No. 190 at p. 3) All requirements proposed in this SNOPR would
apply to the manufactured home as manufactured, i.e., the manufacturer
of the manufactured home is responsible for ensuring compliance with
the requirements proposed in this SNOPR. (42 U.S.C. 17071(c)) A
manufactured home would have to comply with the requirements, once
finalized, prior to being installed in the field. DOE proposes to
clarify in Sec. 460.1 that the requirements apply to the manufactured
home as manufactured, prior to installation.
DOE also received a comment regarding the duct system register
boots air barrier installation criteria. The June 2016 NOPR proposed
that duct system register boots that penetrate the building thermal
envelope or the air barrier must be sealed to the air barrier or the
interior finish materials with caulk, foam, gasket, or other suitable
material. WECC recommended that boot penetration be sealed to the
subfloor. In WECC's experience with retrofit work, sealing to a
finished vinyl flooring surface causes the flooring to float when the
air handler is energized. (WECC, Public Meeting Transcript, No. 148 at
p. 61) DOE reinvestigated this topic and acknowledges that the 2015
IECC requires that the duct register boots that penetrate building
thermal envelope be sealed to the subfloor or drywall. The MH working
group also voted to include this statement from the 2015 IECC in the
term sheet. Term Sheet, No. 107 at p. 19. The 2018 and the 2021 IECC
replaces the use of the term ``drywall'' with ``wall covering or
ceiling penetrated by the boot.'' In this SNOPR, DOE is proposing to
revise its earlier proposed regulatory text in Table 460.104 regarding
register boots consistent with the language in the 2021 IECC to clarify
that duct systems register boots may also be sealed to the subfloor.
DOE is proposing the following air barrier criteria for duct system
register boots in this SNOPR: ``Duct system register boots that
penetrate the building thermal envelope or the air barrier must be
sealed to the subfloor, wall covering or ceiling penetrated by the
boot, air barrier, or the interior finish materials with caulk, foam,
gasket, or other suitable material.'' This revision provides added
flexibility, addresses WECC's concern, and follows the provisions of
the 2021 IECC and the recommendations of the MH working group.
Further, DOE considered several other updates of the 2021 IECC in
section R402.4 and Table R402.4.1.1 (relative to the 2015 IECC) for air
barrier criteria relevant to manufactured housing--see Table III.14.
Table III.14--The 2021 IECC Updates for Air Barrier Criteria
----------------------------------------------------------------------------------------------------------------
The 2021 IECC updates; SNOPR
Component June 2016 NOPR proposal proposal
----------------------------------------------------------------------------------------------------------------
Ceiling or attic................... The air barrier in any dropped No relevant updates made from the
ceiling or dropped soffit must be 2015 IECC to the 2021 IECC.
aligned with the insulation and any Therefore, DOE proposes no changes
gaps in the air barrier must be between the 2016 NOPR and this
sealed with caulk, foam, gasket, or SNOPR.
other suitable material. Access
hatches, panels, and doors, drop-
down stairs, or knee wall doors to
unconditioned attic spaces must be
weather-stripped or equipped with a
gasket to produce a continuous air
barrier.
Duct system register boots *....... Duct system register boots that As previously discussed, DOE
penetrate the building thermal proposes to update this requirement
envelope or the air barrier must be consistent with the 2021 IECC.
sealed to the air barrier or the
interior finish materials with
caulk, foam, gasket, or other
suitable material.
Electrical box or phone box on The air barrier must be installed Relevant updates from the 2015 IECC
exterior walls. behind electrical or communication to the 2021 IECC include a
boxes or the air barrier must be clarification that the air barrier
sealed around the box penetration shall be installed behind
with caulk, foam, gasket, or other electrical ``and'' communication
suitable material. boxes, not ``or''. DOE proposes to
update this requirement in this
SNOPR.
Floors............................. The air barrier must be installed at No relevant updates made from the
any exposed edge of insulation. The 2015 IECC to the 2021 IECC.
bottom board may serve as the air Therefore, DOE proposes no changes
barrier. between the 2016 NOPR and this
SNOPR.
Mating line surfaces............... Mating line surfaces must be equipped No relevant updates made from the
with a continuous and durable gasket. 2015 IECC to the 2021 IECC.
Therefore, DOE proposes no changes
between the 2016 NOPR and this
SNOPR.
Recessed lighting.................. Recessed light fixtures installed in Relevant updates from the 2015 IECC
the building thermal envelope must to the 2021 IECC include requiring
be sealed to the drywall with caulk, sealing in accordance with section
foam, gasket, or other suitable R402.4.5, which includes specific
material. air leakage rate requirements.
Considering the original proposal
was determined to be prescriptive
only, DOE is not including the
updates in this SNOPR, but is
requesting comment on this.
Rim joists......................... The air barrier must enclose the rim Relevant updates from the 2015 IECC
joists. to the 2021 IECC include updates
that the junctions of the rim board
to the sill plate and the rim board
and the subfloor shall be air
sealed.
DOE proposes to include this update
in this SNOPR as it provides
further clarity on how the rim
joists must be sealed.
Shower or tub adjacent to exterior The air barrier must separate showers No relevant updates made from the
wall. and tubs from exterior walls. 2015 IECC to the 2021 IECC.
Therefore, DOE proposes no changes
between the 2016 NOPR and this
SNOPR.
Walls.............................. The junction of the top plate and the No relevant updates made from the
exterior ceiling, and the junction 2015 IECC to the 2021 IECC.
of the bottom plate and the exterior Therefore, DOE proposes no changes
floor, along exterior walls must be between the 2016 NOPR and this
sealed with caulk, foam, gasket, or SNOPR.
other suitable material.
[[Page 47784]]
Windows, skylights, and exterior The rough openings around windows, No relevant updates made from the
doors. exterior doors, and skylights must 2015 IECC to the 2021 IECC.
be sealed with caulk or foam. Therefore, DOE proposes no changes
between the 2016 NOPR and this
SNOPR.
Shafts, penetration................ Sealing methods between dissimilar Relevant updates from the 2015 IECC
materials must allow for to the 2021 IECC clarifies that
differential expansion and sealing should allow for expansion,
contraction and must establish a contraction and mechanical
continuous air barrier upon vibration.
installation of all opaque DOE proposes to include the term
components of the building thermal ``mechanical vibration'' to provide
envelope. further clarity.
All gaps and penetrations in the
exterior ceiling, exterior floor,
and exterior walls, including ducts,
flue shafts, plumbing, piping,
electrical wiring, utility
penetrations, bathroom and kitchen
exhaust fans, recessed lighting
fixtures adjacent to unconditioned
space, and light tubes adjacent to
unconditioned space, must be sealed
with caulk, foam, gasket or other
suitable material.
Narrow cavities.................... None................................. Relevant updates from the 2015 IECC
to the 2021 IECC include updates
that narrow cavities of 1 inch or
less that are not able to be
insulated shall be air sealed.
For this SNOPR, DOE is not proposing
to include this update because DOE
is unsure how it would affect the
June 2016 NOPR conclusion that the
proposed prescriptive air leakage
sealing requirements are designed
to achieve 5 ACH. DOE requests
comment on this topic.
Plumbing, wiring or other None................................. Relevant updates from the 2015 IECC
obstructions. to the 2021 IECC include update
that all holes created by wiring,
plumbing or other obstructions in
the air assembly must be air
sealed.
For this SNOPR, DOE is not proposing
to include this update because DOE
is unsure how it would affect the
June 2016 NOPR conclusion that the
proposed prescriptive air leakage
sealing requirements are designed
to achieve 5 ACH. DOE requests
comment on this topic.
----------------------------------------------------------------------------------------------------------------
* Updates based on comments received to the June 2016 NOPR.
The 2021 IECC also includes air barrier criteria updates for
basement crawl space and slab foundations, garage separation, and
concealed sprinklers. DOE has not included these requirements in the
proposed rule because they are not directly relevant to manufactured
housing.
DOE requests comment on the proposed updates to the air barrier
criteria as it applies to manufactured homes construction only.
Further, DOE requests comment whether the SNOPR proposal continues to
be designed to achieve air leakage sealing requirements of 5 ACH.
DOE requests comments on whether there are any of the 2021 IECC
updates relevant to manufactured housing that should be considered as
part of this rulemaking. Specifically, DOE requests comment on whether
the 2021 IECC updates for air barrier criteria for recessed lighting,
narrow cavities and plumbing are applicable to manufactured housing and
should be considered in this rulemaking. If so, DOE requests comment on
whether the requirements would alter the 5 ACH designation.
3. Subpart C: HVAC, Service Water Heating, and Equipment Sizing
Subpart C proposes requirements that would be applicable to
manufactured homes related to ducts; HVAC; service hot water systems;
mechanical ventilation fan efficacy; and heating and cooling equipment
sizing. The proposed subpart C requirements would be applicable to all
manufactured homes under either the proposed rule or the tiered
proposed rule (i.e., under the tiered proposed rule the subpart C
requirements would be applicable to Tier 1 and Tier 2 manufactured
homes). The following sections provide further details regarding
Subpart C.
a. Proposed Sec. 460.201 Duct System
DOE proposes to include in Sec. 460.201(a) a requirement that
manufactured homes equipped with a duct system be designed to limit
total air leakage to less than or equal to 4 cubic feet per minute
(``cfm'') per 100 square feet of conditioned floor area. DOE initially
determines this proposal to be consistent with R403 of the 2021 IECC.
In addition, DOE also proposes to require that building framing
cavities not be used as ducts or plenums under Sec. 460.201(a),
consistent with the 2021 IECC and the recommendation of the MH working
group (Term Sheet, No. 107 at p. 1). Building framing cavities are
typically not tightly sealed and do not provide an adequate barrier to
foreign bodies for air quality reasons. The use of building framing
cavities as ducts and plenums is generally considered to be poor
construction practice and is not a typical practice in the manufactured
housing industry.
The following paragraphs discuss comments DOE received regarding
the duct system requirements proposed in the June 2016 NOPR, and any
other corresponding proposed changes to the June 2016 NOPR requirements
based on comments received, or updates to the 2021 IECC.
The majority of the comments were recommending more specificity on
the proposed duct sealing requirements. Several commenters suggested
that the duct leakage requirements should only be applicable to homes
that are equipped with a duct system, so as not to prohibit use of a
ductless HVAC system. (MHIM, No. 155 at p. 3; MHIAZ, No. 161 at p. 3;
PMHA, No. 164 at p. 4; Cavco, No. 167 at p. 2; SBRA, No. 163 at p. 4;
OMHA, No. 166 at p. 3; MHI, No. 182 at p. 4; Clayton Homes, No. 185 at
p. 3; Palm Harbor Homes, No. 193 at p. 2; MHISC, No. 191 at p. 3; SBRA,
[[Page 47785]]
Public Meeting Transcript, No. 148 at p. 59; Commodore Corporation, No.
195 at p. 3; Skyline, No. 165 at p. 3; MHCC, No. 162 at p. 2; NEEA, No.
190 at p. 3)
In the June 2016 NOPR, DOE proposed to include in section
460.201(a) a requirement that manufacturers equip each manufactured
home with a duct system designed to limit total air leakage to less
than or equal to 4 cubic feet per minute (cfm) per 100 square feet of
conditioned floor area. DOE agrees with the commenters that each
manufactured home should not be required to have a duct system. An
implicit requirement for including a duct system would prohibit usage
of ductless HVAC systems, which could improve the energy performance of
the home.\36\ Therefore, in this SNOPR, DOE proposes to require only
manufactured homes with duct systems to limit total duct air leakage to
less than or equal to 4 cfm per 100 square feet of conditioned floor.
---------------------------------------------------------------------------
\36\ Duct losses can account for more than 30 percent of energy
consumption for space conditioning, so ductless heating and cooling
systems prevent energy losses that can occur via ductwork (http://energy.gov/energysaver/ductless-mini-split-air-conditioners).
---------------------------------------------------------------------------
DOE received other comments regarding the design of duct systems.
Skyline Corporation and MHCC questioned the wording of proposed Sec.
460.201 Duct Systems--section (b), which stated, ``building framing
cavities must not be used as ducts or plenums.'' They stated this is
ambiguous as to whether it applies to return air plenums. They
recommended that the section be revised to include ``. . . as ducts or
plenums when directly connected to mechanical systems.'' (Skyline, No.
165 at p. 3; MHCC, No. 162 at p. 2) Clayton Homes stated that proposed
Sec. 460.201(a), the last sentence should be changed to read
``Building framing cavities must not be used as supply ducts or
plenums.'' Clayton Homes commented that the addition of the word
``supply'' will enable cavities to be used for return air, as intended
and allowed by the IECC. (Clayton Homes, No. 185 at p. 4) DOE agrees
with commenters that return air plenums should not be included in the
requirement because they are free-flowing and generally not ducted.
Therefore, DOE is proposing to state the return air plenums are not
included.
DOE also received a comment on higher performing duct systems. WSU
Energy Program commented that some manufacturers are looking toward
higher performing duct systems than the minimum standards, and there is
no incentive for manufacturers to use these better performing systems
(e.g., ductless mini-split heat pumps, and other HVAC systems without a
central duct system). It also commented that there could be a
prescriptive requirement or alternative option for a manufacturer
willing to redesign its manufactured homes so that the supply ducts
would be within the thermal envelope. (WSU Energy Program, Public
Meeting Transcript, No. 148 at p. 60) As noted, DOE has based its
proposed energy conservation standards for manufactured homes on the
most recent IECC, as directed by EISA. (42 U.S.C. 17071(b)(1)) DOE
emphasizes that the energy conservation standards proposed in this
SNOPR are minimum standards, but this does not prohibit manufacturers
from employing more efficient measures.
NEEA recommended that the standard include specifics on air leakage
testing on ducts to be performed, and that duct leakage be tested in
the factory. (NEEA, No. 190 at p. 2) As discussed previously, DOE is
not addressing a test procedure in this rulemaking.
DOE also reviewed the updates to section R403.3.4 of the 2021 IECC
(relative to the 2015 IECC reviewed by the MH Working Group) as it
relates to duct sealing and leakage. As previously discussed, DOE is
not proposing any testing provisions at this time. As it relates to
duct leakage requirements, DOE notes that section R403.3.6 of the 2021
IECC was updated to require that for ducts and air handlers that are
located entirely within building thermal envelope, the total leakage
would be less than or equal to 8 cfm per 100 square feet of conditioned
floor area. For manufactured homes, DOE notes that it is not always the
case that ducts and air handlers are located entirely within the
building thermal envelope. Accordingly, for this rulemaking, DOE
continues to propose the MH Working Group recommendation that total air
leakage of duct systems is to be less than or equal to 4 cfm per 100
square feet of conditioned floor area under a post-construction test.
DOE requests comment on the proposal to require that total air
leakage of duct systems for all manufactured homes is to be less than
or equal to 4 cfm per 100 square feet of conditioned floor area.
b. Proposed Sec. 460.202 Thermostats and Controls
Consistent with the June 2016 NOPR, DOE proposes including
specifications for thermostats in Sec. 460.202(a) of the regulatory
test based on the IECC. Section R403.1 of the 2015 and 2021 IECC
specifies that at least one thermostat shall be provided for each
separate heating and cooling system. DOE also proposes specifications
for programmable thermostats in Sec. 460.202(b), based on section
R403.1.1 of the 2015 and 2021 IECC. Section R403.1.1 of the 2015 and
2021 IECC also specifies that the thermostat controlling the primary
heating or cooling system must be capable of controlling the heating
and cooling system on a daily schedule to maintain different
temperature set points at different times of the day. In addition,
consistent with the June 2016 NOPR, DOE proposes to include in Sec.
460.202(c) specifications for heat pumps having supplementary heat,
based on section R403.1.2 of the 2015 and 2021 IECC.
The following paragraphs discuss comments DOE received regarding
the thermostat and controls requirements proposed in the June 2016
NOPR, and any other corresponding proposed changes to the June 2016
NOPR requirements based on comments received, or updates to the 2021
IECC.
Regarding thermostat control, NEEA recommended that the final rule
be explicit that the electric resistance lockout in central heat pump
systems when the outdoor air temperature is greater than 40 [deg]F.
(NEEA, No. 190 at p. 3). While section R403.1.2 of the 2015 and the
2021 IECC provides requirements for the shutoff of heat pumps having
supplementary electric-resistance heat under certain conditions, the
2015 and the 2021 IECC do not provide any temperature specifications
for this shutoff. Therefore, DOE did not consider these requirements in
the proposed energy conservation standards.
DOE also reviewed the updates to sections R403.1 of the 2021 IECC
(relative to the 2015 IECC reviewed by the MH Working Group) as it
relates to thermostats and controls. DOE notes that section R403.1 is
no longer identified as ``mandatory'' in the 2021 IECC. DOE's
understanding of this update is that no technical changes were
intended, rather the removal of the label ``mandatory'' was only to
make the IECC more understandable and easier to use because the label
``mandatory'' was not used consistently in the IECC. The 2021 IECC
prescriptive compliance option application described in section
R401.2.1 continues to require compliance with section R403.1,
regardless of whether the label ``mandatory'' is included in that
section. Therefore, DOE preliminarily concludes this update is not a
substantive change. In addition, DOE observed that the programmable
thermostat requirements were updated to allow for maintaining different
temperature set point at different days of the week in addition to
[[Page 47786]]
at different times of day. For this SNOPR, DOE proposes to continue to
include thermostat and controls requirements, as recommended by the MH
working group. In addition, DOE proposes to include the updated
requirements of ``different days of the week,'' consistent with the
2021 IECC.
DOE requests comment on DOE's interpretation of R403.1 and the
proposed updates to the thermostat and controls requirements. In
addition, DOE requests comments on whether there are any of the 2021
IECC updates relevant to manufactured housing that should be considered
as part of this rulemaking.
c. Proposed Sec. 460.203 Service Hot Water
Consistent with the June 2016 NOPR, DOE proposes to require in
Sec. 460.203(a) that manufacturers install service water heating
systems according to the service water heating system manufacturer's
installation instructions. As proposed, Sec. 460.203 would apply to
any service water heating system installed by a manufacturer. In
addition, Sec. 460.203 would require manufacturers to provide
maintenance instructions for the service water heating system with the
manufactured home. These requirements would promote the correct
installation and maintenance of service water heating equipment and
help to ensure that such equipment performs at its intended level of
efficiency.
Further, DOE proposes that Sec. 460.203(b) would require any
automatic and manual controls, temperature sensors, and pumps
associated with service water heating systems to be similarly
accessible. This requirement would ensure that homeowners would have
adequate control over service water heating equipment in order to
achieve the intended level of efficiency contemplated in 10 CFR part
460. This proposal was consistent with the recommendation of the MH
working group. Term Sheet, No. 107 at p. 1.
DOE also proposes specifications for heated water circulation
systems in Sec. 460.203(c) based on section R403.5.1.1 of the 2015 and
2021 IECC. The specifications proposed included: (1) Requiring heated
water circulation systems be provided with a circulation pump, and that
the system return pipe be a dedicated return pipe or cold water supply
pipe; (2) prohibiting gravity and thermosyphon circulation systems; (3)
requiring that controls for heated water circulation system pumps
identify a demand for hot water within the home when starting the pump;
and (4) requiring the controls to automatically turn off the pump when
the water in the circulation loop is at the desired temperature and
when there is no demand for hot water.
Finally, DOE also proposes that all hot water pipes outside
conditioned space be required to be insulated to at least R-3, and that
all hot water pipes from a water heater to a distribution manifold be
required to be insulated to at least R-3. These requirements are
consistent with the recommendations of the MH working group. Term
Sheet, No. 107 at p. 6.
The following paragraphs discuss comments DOE received regarding
the service hot water requirements proposed in the June 2016 NOPR, and
any other corresponding proposed changes to the June 2016 NOPR
requirements based on comments received, or updates to the 2021 IECC.
NEEA recommended that pipe insulation be required on the hot water
main branch and locations where the insulation is not in direct contact
with the pipe or underfloor. (NEEA, No. 190 at p. 3) WSU Energy Program
recommended that all hot water pipes be insulated. (WSU Energy Program,
Public Meeting Transcript, No. 148 at p. 63) Taking the opposite
viewpoint, Cavco commented that there is minimal to no energy savings
from insulating pipes inside the conditioned space. (Cavco, Public
Meeting Transcript, No. 148 at p. 66)
DOE's proposal of requiring a minimum R-value for all hot water
pipes outside conditioned space, and from a service hot water system to
a distribution manifold, was based on the 2015 IECC, and is consistent
with the 2021 IECC. Term Sheet, No. 107 at p. 6. Therefore, DOE
continues to propose the hot water pipe insulation requirement from the
June 2016 NOPR. DOE notes that its energy conservation standards do not
prohibit manufacturers from employing additional insulation beyond
DOE's requirements.
DOE also reviewed the updates to sections R403.5 of the 2021 IECC
(relative to the 2015 IECC reviewed by the MH Working Group) as it
relates to service hot water systems. DOE notes that section R403.5 is
no longer identified as ``mandatory'' in the 2021 IECC. Similar to
R403.1 of the 2021 IECC, DOE's understanding of this update is that no
technical changes were intended, rather the removal of the label
``mandatory'' was only to make the IECC more understandable and easier
to use because the label ``mandatory'' was not used consistently in the
IECC. Therefore, DOE preliminarily concludes this update is not a
substantive change. In addition, DOE observed the additional
requirement that the controls for circulating hot water system shall
limit the temperature of the water entering the cold water piping to
not greater than 104 [deg]F (40 [deg]C). For this SNOPR, DOE proposes
to continue to include service hot water systems requirements, as
recommended by the MH working group. In addition, DOE understands that
the temperature limitation is not directly applicable to manufactured
homes and therefore DOE is not proposing to incorporate in this SNOPR.
DOE requests comment on DOE's interpretation of R403.5 and the
proposed updates to the service hot water requirements. In addition,
DOE requests comments on whether there are any of the 2021 IECC updates
relevant to manufactured housing that should be considered as part of
this rulemaking. Specifically, DOE requests comment on whether the
circulating hot water system temperature limit should be included as a
requirement.
d. Proposed Sec. 460.204 Mechanical Ventilation Fan Efficacy
DOE proposes mechanical ventilation fan efficacy requirements in
proposed Table 460.204 based on Table R403.6.2 of the 2021 IECC, which
provides requirements for mechanical ventilation system fan efficacy.
DOE received one comment on the June 2016 NOPR regarding mechanical
fan efficacy. NEEA commented that the fan efficacy requirement is not
as high as it could be, especially with bathroom utility fans, but did
not provide a suggested efficacy level. (NEEA, Public Meeting
Transcript, No. 148 at p. 64) The mechanical efficacy requirements
being proposed in this SNOPR are based on the 2021 IECC. However, DOE
emphasizes that it is proposing energy conservation standards
established as minimum standards. The requirements as proposed would
not prohibit manufacturers from employing more efficient measures.
DOE also reviewed the updates to section R403.6 of the 2021 IECC
(relative to the 2015 IECC reviewed by the MH Working Group) as it
relates to mechanical ventilation. The 2021 IECC includes new mandatory
requirements for IECC climate zones 7 and 8, where dwelling units must
be provided with a heat or energy recovery ventilation, and the system
must be balanced with a minimum sensible heat recovery efficiency of 65
percent at 32 [deg]F (0 [deg]C) at a flow greater than or equal to the
design flow. Further, Table R403.6.2 of 2021 IECC updates the
mechanical fan efficacy requirements to include new minimum efficacy
requirements for heat recovery ventilators (HRV) and energy recovery
ventilators (ERV), and air
[[Page 47787]]
handlers that are integrated to tested and listed HVAC equipment, in
addition to more stringent minimum efficacy requirements for in-line
supply or exhaust fans, other exhaust fans (with separate requirements
for fans having a minimum airflow rate of <90 CFM and >=90 CFM).
Finally, DOE notes that the 2021 IECC no longer includes the
requirement that where mechanical ventilation fans are integral to
tested and listed HVAC equipment, they shall be powered by an
electronically commutated motor.
As discussed in section III.E.2.b, ERV and HRV fans can be
applicable to manufactured housing. DOE notes that per the 2021 IECC,
these requirements would only be applicable to homes in IECC climate
zones 7 and 8, which would translate to manufactured homes in HUD zone
3 only, and about 8 percent shipments within the HUD zone. At a primary
cost of $1,500 (based on the analysis performed in support of the BECP
\37\), the incremental cost for single-section manufactured homes would
be as high as $6,159 (see Table I.3 for the purchase price increase).
Mandatory requirements for ERV and HRV were not considered by the MH
working group and DOE has not yet determined whether this requirement
would be cost-effective in manufactured homes.
---------------------------------------------------------------------------
\37\ Taylor, Zachary T. Residential Heat Recovery Ventilation.
United States. https://doi.org/10.2172/1488935.
---------------------------------------------------------------------------
Regarding the updates to minimum efficacy requirements, this SNOPR
proposes to include all requirements except the efficacy requirements
for air handlers that are integrated to tested and listed HVAC
equipment. This SNOPR is not proposing requirements for appliances and
equipment that are regulated pursuant to the statutory scheme in EPCA.
Further, DOE proposes to remove the requirement that mechanical fans
that are integral to HVAC equipment must be powered by an
electronically commutated motor, in line with the 2021 IECC. DOE is
also clarifying that the mechanical ventilation fan efficacy
requirements would not apply to furnace fans, which are regulated under
EPCA.\38\ To the extent that a mechanical ventilation fan that is
integral to tested and listed HVAC equipment is a furnace fan as
defined in 10 CFR 430.2, the furnace fan would be excluded from the
proposed efficiency and motor requirements in Sec. 460.204.
---------------------------------------------------------------------------
\38\ ``Furnace fan'' is defined as an electrically-powered
device used in a consumer product for the purpose of circulating air
through ductwork. 10 CFR 430.2.
---------------------------------------------------------------------------
In this SNOPR, DOE is also considering energy efficiency measures
to reduce uncontrolled air infiltration and air exchange associated
with leaks in the air distribution ductwork for the central heating and
cooling system, as well as measures that would reduce the energy
consumption of mechanical ventilation equipment that is required in the
HUD Code.\39\ The proposal considers a continuously-operated whole-
house exhaust fan. Alternate ventilation approaches include a central
fan integrated supply system (in which outdoor air is supplied into the
return side of the central heating and cooling system air handler fan
by negative pressure whenever the central fan operates for heating/
cooling or ventilation); and a heat-recovery ventilation (HRV) system,
which is required for certain (colder) climate zones in the 2021 IECC.
Various operating schedules could be considered for each type of
ventilation equipment.
---------------------------------------------------------------------------
\39\ Based on the HUD requirement for equipment that can provide
at least 0.035 cubic feet per minute (cfm) per square foot of floor
area (or hourly average equivalent) and a minimum airflow of 50 cfm,
HUD requires airflow of at least 50 cfm for any unit up to 1429
square feet, i.e., for all single-wide MH, and 55 cfm for a typical
1570 square foot double-wide unit.
---------------------------------------------------------------------------
In addition, DOE is considering measures to mitigate potential
adverse impacts to indoor air quality that could arise from the
proposal. Considerations include signage for ventilation controls
related to energy efficiency, informing the manufactured homeowner of
the benefits to indoor air quality of using the system (reinforcing HUD
encouragement to operate it whenever the home is occupied per 24 CFR
3280.103(b)(6)), as well as measures that would mitigate indoor air
quality impacts per other current ventilation standards (e.g., ASHRAE
Standard 62.2, Ventilation and Acceptable Indoor Air Quality in
Residential Buildings). In accordance with the Section 413(b)(2) of
EISA, such measures are being considered to take into consideration the
design and factory construction techniques of manufactured homes and
provide for alternative practices that result in net estimated energy
consumption equal to or less than the specified standards, and to
address previous comments received regarding potential impacts to
indoor air quality.
DOE requests comment on the proposal to include the 2021 IECC fan
efficacy standard requirements. DOE requests comment on whether any of
the fan efficacy requirements are not applicable to manufactured homes.
DOE requests comment on whether the HRV and ERV provisions under
2021 IECC for site-built homes are applicable to manufactured homes and
whether they would be cost-effective. Specifically, DOE requests
comment on costs for the HRV and ERV requirements as it applies to
manufactured homes in all climate zones.
DOE requests comment on the above ventilation strategies, including
(but not limited to) cost, performance, noise, and any other important
attributes that DOE should consider, including those related to
mitigation measures. While the alternate ventilation approaches are not
integrated into the analysis presented as part of this proposal, DOE is
giving serious consideration as to whether it should incorporate one or
more of these options as part of its final rule based on any additional
data and public comments it receives.
e. Proposed Sec. 460.205 Equipment Sizing
Consistent with the June 2016 NOPR, DOE proposes specifications for
equipment sizing in Sec. 460.205 of the regulatory text, based on
section R403.7 of the 2015 and 2021 IECC, which sets forth
specifications on the appropriate sizing of heating and cooling
equipment within a manufactured home. This section of the 2015 and 2021
IECC requires the use of ACCA Manual S to select appropriately sized
heating and cooling equipment based on building loads calculated using
ACCA Manual J. The MH working group recommended the inclusion of this
specification in the proposed rule. Term Sheet, No. 107 at p. 1.
DOE received several comments on the June 2016 NOPR regarding
equipment sizing. ACCA commented that while HVAC manufacturers are
producing highly efficient products that exceed DOE's regulatory
demands, DOE does not require MH manufacturers to follow the minimum
installation design standards that HVAC manufacturers recommend. ACCA
asserted that as a result, HVAC systems are significantly less
efficient and have shorter lifespans due to incorrect installation.
(ACCA, No. 159 at p. 1) ACCA also commented that if DOE educated and
incentivized homeowners to demand HVAC systems be installed to industry
recommended standards by trained technicians, DOE could promote energy
savings. (ACCA, No. 159 at p. 1) WSU Energy Program stated that DOE
should consider including regulations regarding the installation of
HVAC equipment. (WSU Energy Program, Public Meeting Transcript, No. 148
at p. 116)
DOE acknowledges that installation can affect the efficiency of
HVAC
[[Page 47788]]
equipment and that HVAC equipment may be installed after a home is
manufactured (i.e., at the point of installation). As previously
discussed, this rulemaking addresses energy efficiency standards for
manufactured housing. To the extent that issues arise in the
installation of HVAC equipment by the manufacturer related to proper
sizing, Sec. 460.205 addresses such concerns. In addition, HUD
provisions in subpart H of 24 CFR part 3280 provide installation
requirements for heating, cooling, and fuel burning systems.
DOE did not receive any other comments regarding equipment sizing.
In addition, section R403.7 of the 2021 IECC provides no updates to the
equipment sizing and efficiency rating requirements.
4. Remaining Comments Regarding the Energy Conservation Standard
Requirements
DOE also received numerous other comments that were not specific to
the preceding sections or that could not be placed in only one of the
preceding sections. Advanced Energy commented that, given the negative
health effects of carbon monoxide exposure, carbon monoxide detection
should be added to the proposed rule, similar to section 915 of the
2015 International Building Code. (Advanced Energy, No. 189 at p. 1)
EISA provides DOE with the authority to regulate energy conservation in
manufactured housing. (42 U.S.C. 17071(a)) Because the installation of
a carbon monoxide detector is a health and safety matter as opposed to
an energy conservation matter, DOE has not proposed this requirement in
the SNOPR.
ACC FSC stated that air-permeable insulation without the proper
vapor retarder will cause condensation problems and that reducing air
leakage and increasing insulation in homes will increase the
possibility of condensation unless the proper materials are specified.
(ACC FSC, No. 186 at p. 1) DOE is not proposing specifications for
condensation control and vapor retarders because condensation control
is not an energy conservation measure. The HUD Code, however, includes
specifications for condensation control and installation of vapor
retarders at 24 CFR 3280.504. DOE's proposed energy conservation
standard would not prevent manufacturers from meeting the condensation
and vapor retarder requirements established by HUD. This SNOPR, if made
final, would not prevent or impede manufacturers from selecting
construction materials, assembly methods, and designs that prevent the
concerns raised by ACC FSC.
VEIC stated that high-tier and middle-tier efficiency standards for
HVAC, domestic hot water, lighting, and appliances should be included
as requirements for certification. (VEIC, No. 187 at p. 2) NEEA
commented that DOE should include the following energy savings elements
in future revisions to the energy conservation standard: Lighting,
appliances, domestic hot water efficiency, and HVAC efficiency. (NEEA,
No. 190 at p. 4) ACEEE noted that section R404.1 of the 2015 IECC
requires that 75 percent of lighting be high-efficacy lamps. It
commented that this yields significant additional cost-effective
savings over the federal lighting standards. ACEEE urged DOE to include
this provision in the standard. (ACEEE, No. 178 at p. 2)
DOE is not proposing energy conservation standards for HVAC, water
heaters, lighting, and appliances. As discussed, the energy efficiency
of those products is specifically governed by the comprehensive
Appliance Standards program established under EPCA. (42 U.S.C. 6291-
6317) However, manufacturers would not be prohibited from installing
more efficient products and appliances, as long as the energy
conservation standards are met. DOE also invites parties interested in
energy conservation standards for appliances to comment on the
rulemakings associated with those products.\40\
---------------------------------------------------------------------------
\40\ http://energy.gov/eere/buildings/standards-and-test-procedures.
---------------------------------------------------------------------------
VEIC stated that the proposed rule should include requirements for
insulation and air barrier installation training, quality assurance
oversight, commissioning, and field performance testing. (VEIC, No. 187
at p. 2) As discussed, EISA directs DOE to establish energy
conservation standards for manufactured housing. While DOE is proposing
regulations, DOE's Building America Solution Center \41\ provides
training materials for construction generally, including on topics
applicable to manufactured homes. In terms of enforcement and
performance testing, DOE will address compliance and enforcement
provisions in a separate rulemaking.
---------------------------------------------------------------------------
\41\ https://basc.pnnl.gov/.
---------------------------------------------------------------------------
Modular Lifestyles and VEIC both offered comments regarding the
benefits of zero energy homes. VEIC commented that an alternative to
manufactured homes is to replace them with zero energy modular homes.
(VEIC, No. 187 at p. 2). Modular Lifestyle gave information regarding
their NetZero manufactured home, built in Ojai, California. (Modular
Lifestyle, No. 141 at p. 2) DOE acknowledges that there are homes in
the market that are already at the top end of energy efficiency. This
SNOPR proposes minimum energy efficiency requirements applicable to all
manufactured homes, and nothing in this SNOPR would prohibit
manufacturers from producing models that exceed these requirements.
WECC stated that the manufactured home's crawl area temperature is
warmer than outside ambient temperature during winter, and if the
ambient air temperature is used for calculations, then the associated
savings are overestimated. (WECC, No. 150 at p. 2) The manufactured
homes modeled in the energy simulations in the analyses conducted for
the June 2016 NOPR and in this SNOPR are modeled with a vented crawl
space below the floors. Thus, the floors are not exposed to ambient
air, but to air temperatures within the vented crawlspace (which fall
between the ambient outdoor air temperature and the conditioned indoor
air temperature); this prevents the energy savings from being
overestimated.
F. Crosswalk of Standards With the HUD Code
DOE compared the energy conservation standards proposed in this
SNOPR to the construction and safety standards for manufactured homes
established by HUD to confirm that compliance with the proposed
requirements would not prohibit a manufacturer from complying with the
HUD Code.
Table III.15 lists the energy conservation standards and discusses
their relationship to similar requirements contained in the HUD Code.
[[Page 47789]]
Table III.15--Crosswalk of SNOPR Standards With the HUD Code
------------------------------------------------------------------------
HUD Code (24 CFR
DOE SNOPR (10 CFR part 460) part 3280) Notes
------------------------------------------------------------------------
Section 460.101 would Section 3280.506
establish three climate establishes three
zones, in line with HUD, zones delineated by
delineated by state state boundaries.
boundaries. The DOE SNOPR The HUD Code
proposes different Uo establishes one
performance requirements standard for homes
for single- and multi- of all sizes within
section homes. a zone.
Section 460.102(a) would Section 3280.506 Both DOE and HUD
establish building thermal establishes a performance
envelope prescriptive and performance requirements are
performance compliance approach. based on maximum Uo
requirements. requirement per
zone for the
building thermal
envelope. DOE,
however, would
establish separate
Uo requirements per
climate zone for
single- and multi-
section homes,
whereas HUD only
establishes one Uo
requirement,
regardless of home
size, per zone.
Section 460.102(b) would set Section 3280.506 The Battelle method
forth the prescriptive establishes a is used to
option for compliance with performance determine
the building thermal approach only. performance
envelope requirements. standards (in terms
of Uo) from
prescriptive
standards. The DOE
proposed
performance
standards would be
prescribed in Sec.
460.102(c)(1).
Section 460.102(b)(2) would No corresponding
establish a minimum truss requirement.
heel height.
Section 460.102(b)(3) would No corresponding
establish an acceptable requirement.
batt and blanket insulation
combination for compliance
with the floor insulation
requirement in climate zone
3.
Section 460.102(b)(4) would No corresponding
identify certain skylights requirements.
not subject to SHGC
requirements.
Section 460.102(b)(5) would No corresponding
establish U-factor requirements.
alternatives for the R-
value requirements under
section 460.102(b)(1).
Section 460.102(c)(1) would Section 3280.506(a) DOE's proposed
establish maximum building establishes maximum maximum building
thermal envelope Uo building thermal thermal envelope Uo
requirements. envelope Uo requirements are
requirements by lower than the
zone. corresponding
maximum Uo
requirements under
Sec. 3280.506(a).
Compliance with the
DOE proposed Uo
requirements
achieve compliance
with the Uo
requirements under
the HUD Code.
Section 460.102(c)(2) would No corresponding
establish maximum area- requirements.
weighted vertical
fenestration U-factor
requirements in climate
zones 2 and 3.
Section 460.102(c)(3) would No corresponding
establish maximum area- requirements.
weighted average skylight U-
factor requirements in
climate zones 2 and 3.
Section 460.102(c)(4) would No corresponding
authorize windows, requirements.
skylights and doors
containing more than 50
percent glazing by area to
satisfy the SHGC
requirements of Sec.
460.102(a) on the basis of
an area-weighted average.
Section 460.102(e)(1) would Section 3280.508(a)
establish a method of and (b) reference
determining Uo using the the Overall U-
Overall U-values and values and Heating/
Heating/Cooling Loads-- Cooling Loads--
Manufactured Homes, or the Manufactured Homes,
Battelle method. or the Battelle
method.
Section 460.103 would No corresponding
require insulating requirements.
materials to be installed
according to the
manufacturer installation
instructions and the
prescriptive requirements
of Table 460.103.
Section 460.103 would No corresponding
establish requirements for requirements.
the installation of batt,
blanket, loose fill, and
sprayed insulation
materials.
Section 460.104 would Section 3280.505
require manufactured homes establishes air
to be sealed against air sealing
leakage at all joints, requirements of
seams, and penetrations building thermal
associated with the envelope
building thermal envelope penetrations and
in accordance with the joints.
manufacturer's installation
instructions and the
requirements set forth in
Table 460.104.
[[Page 47790]]
Section 460.201(a) would No corresponding
require each manufactured requirements.
home to be equipped with a
duct system that must be
sealed to limit total air
leakage to less than or
equal to 4 cfm per 100
square feet of floor area
and specify that building
framing cavities are not to
be used as ducts or plenums
when directly connected to
mechanical systems.
Section 460.202(a) would Section 3280.707(e) Both DOE's proposed
require at least one requires that each rule and the HUD
thermostat to be provided space heating, Code require the
for each separate heating cooling, or installation of at
and cooling system combination heating least one
installed by the and cooling system thermostat that is
manufacturer. be provided with at capable of
least one maintaining zone
adjustable temperatures.
automatic control
for regulation of
living space
temperature.
Section 460.202(b) would No corresponding
require that installed requirements.
thermostats controlling the
primary heating or cooling
system be capable of
maintaining different set
temperatures at different
times of day and different
days of the week.
Section 460.202(c) would Section Both DOE's proposed
require heat pumps with 3280.714(a)(1)(ii) rule and the HUD
supplementary electric requires heat pumps Code require heat
resistance heat to be to be certified to pumps with
provided with controls comply with ARI supplemental
that, except during Standard 210/240- electric resistance
defrost, prevent 89, heat pumps with heat to prevent
supplemental heat operation supplemental supplemental heat
when the pump compressor electrical operation when the
can meet the heating load. resistance heat to heat pump
be sized to provide compressor can meet
by compression at the heating load of
least 60 percent of the manufactured
the calculated home.
annual heating
requirements of the
manufactured home,
and that a control
be provided and set
to prevent
operation of
supplemental
electrical
resistance heat at
outdoor
temperatures above
40 [deg]F.
Section 460.203(a) would No corresponding
establish requirements for requirements.
the installation of service
hot water systems.
Section 460.203(b) would No corresponding
require any automatic and requirement.
manual controls,
temperature sensors, pumps
associated with service hot
water systems to be
accessible.
Section 460.203(c) would No corresponding
establish requirements for requirements.
heated water circulation
systems.
Section 460.203(d) would No corresponding
establish requirement for requirements.
the insulation of hot water
pipes.
Section 460.204 would Section 3280.103(b) HUD requirements at
establish requirements for establishes whole- Sec. 3280.103(b)
mechanical ventilation house ventilation do not overlap with
system fan efficacy. requirements. DOE's proposed
rule. DOE's
proposed
requirement is for
fan electrical
efficiency, while
HUD requirements
specify minimum and
maximum air flow
rates.
Section 460.205 would No corresponding
establish requirements for requirements.
heating and cooling
equipment sizing.
------------------------------------------------------------------------
IV. Discussion and Results of the Economic Impact and Energy Savings
A. Economic Impacts on Individual Purchasers of Manufactured Homes
DOE conducts LCC and PBP analyses to evaluate the economic impacts
on individual consumers of energy conservation standards for
manufactured housing. The effect of new or amended energy conservation
standards on individual consumers usually involves a reduction in
operating cost and an increase in purchase cost. DOE uses the following
two metrics to measure consumer impacts:
The LCC is the total consumer expense of a manufactured
home over the life of that home, consisting of total installed cost
plus total operating costs. To compute the total operating costs, DOE
discounts future operating costs to the time of purchase and sums them
over the lifetime of the product (or another specified period).
The PBP is the estimated amount of time (in years) it
takes consumers to recover the increased purchase cost (including
installation) of a more-efficient manufactured home through lower
operating costs.
For the June 2016 NOPR, DOE used the LCC and PBP analyses developed
during the MH working group negotiations to inform the development of
the proposed rule based on the economic impacts on individual
purchasers of manufactured homes. The LCC of a manufactured home refers
to the total homeowner expense over the life of the manufactured home
(30 years), consisting of purchase expenses (e.g., loan or cash
purchase) and operating costs (e.g., energy costs). To compute the
operating costs, DOE discounted future operating costs to the time of
purchase and summed them over the 30-year lifetime of the home used for
the purpose of analysis in this rulemaking. A 10-year LCC was also
calculated to reflect the cost of ownership over the tenure of the
first homebuyer. DOE calculated the PBP by dividing the incremental
increase in purchase cost by the reduction in
[[Page 47791]]
average annual operating costs that would result from this rule.
In the June 2016 NOPR, the LCC analysis demonstrated that increased
purchase prices due to the proposed energy efficiency measures
(``EEMs'') would be offset by the benefits manufactured home homeowners
would experience via operating cost savings. DOE evaluated these
projected impacts on individual manufactured home homeowners by
analyzing the potential impacts to LCC, energy savings, and purchase
price of manufactured homes under the proposed rule. For the purpose of
the June 2016 NOPR economic analysis, DOE compared the purchase price
and LCC for manufactured homes built in accordance with the proposed
rule relative to a baseline manufactured home built in compliance with
the minimum requirements of the HUD Code. Specifically, DOE performed
energy simulations on manufactured homes located in 19 geographically
diverse locations across the United States, accounting for five common
heating fuel/system types and two typical industry sizes of
manufactured homes (single-section and double-section manufactured
homes).\42\ DOE received a number of comments regarding several aspects
of the economic impacts on individual consumers described in the June
2016 NOPR. DOE also received comments pertaining to the methodology and
assumptions used in the economic analysis conducted for the June 2016
NOPR. For this SNOPR, DOE conducted similar LCC and PBP analyses for
the requirements as proposed in this document. The changes made from
the analyses performed for the June 2016 NOPR are discussed in the
following sections, including any changes that DOE has made in the
methodology and assumptions, along with a discussion of the submitted
comments.
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\42\ Double-section manufactured homes were used to represent
all multi-section homes. Double-section manufactured homes have the
largest market share by shipments (about 98 percent) of all multi-
section homes.
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1. Discussion of Comments and Analysis Updates
a. Analysis Period for LCC
In the June 2016 NOPR, DOE analyzed a 10-year LCC to represent the
first ownership period and cost of the first homebuyer, and a 30-year
LCC to represent the lifetime of the manufactured home and associated
costs, which would represent the total costs and benefits for all
occupants over the life of the manufactured home. The 30-year lifetime
was selected as a typical length that EEMs last in the aggregate. The
monetary value of these EEMs was considered to depreciate linearly over
the 30-year lifetime. At the end of this 30-year lifetime, the EEMs
would have no monetary value.
DOE received comments on the June 2016 NOPR discussing the time
period that a consumer owns a manufactured home. COBA commented that in
its experience, consumers generally stay in their manufactured home 2
to 3 years. (COBA, Public Meeting Transcript, No. 148 at p. 97) SBRA
also stated that on average, the first homeowner of a manufactured home
sells their home within 7 years of purchase and is unlikely to realize
any incremental value from the EEMs. (SBRA, No. 163 at p. 2) MHI stated
that manufactured homes change ownership within 7 to 10 years. (MHI,
No. 182 at p. 6)
DOE appreciates the information provided by these organizations
regarding the potential ownership period of manufactured homes. DOE
researched the ownership period of manufactured home homeowners and
found that a study by the Consumer Financial Protection Bureau (CFPB)
indicated an average ownership period of 13 years. This study also
found that based on 50,000 manufactured homesites in 161 communities in
2014, manufactured homes resided in their community for an average of
40 years, an indication of manufactured home lifetime.\43\ A 2012 study
conducted by Foremost Insurance Group found that 40 percent of
manufactured home homeowners do not anticipate ever selling their
manufactured home.\44\ Furthermore, a 2021 manufactured housing
industry overview fact sheet developed by MHI suggests that 62 percent
of all homeowners anticipate living in their homes for more than 10
years and that 38 percent of homeowners don't anticipate ever selling
their home.\45\ Therefore, there are many factors that may affect the
duration of time that a manufactured home remains under a given
homeowner. For purposes of this analysis, DOE continues to rely on the
10-year time period as a reasonable representation of the ownership
period of the first homebuyer for the overall manufactured housing
market as it is between the values suggested COBA and SBRA and the high
value reported by the CFPB, and consistent with the value reported by
MHI.
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\43\ Consumer Financial Protection Bureau. Manufactured-housing
Consumer Finance in the United States. September 2014.
\44\ Foremost Insurance Group. 2012 Mobile Home Market Facts.
\45\ Manufactured Housing Institute. 2021 Manufactured Housing
Facts: Industry Overview.
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Additionally, due to concerns about incremental cost for low-income
families, DOE is proposing the Tier 1 standard for manufactured homes
with manufacturer's retail list price of $55,000 or less. As discussed
below, manufactured homes complying with the Tier 1 standard would have
an average PBP of 3.7 and 3.5 years for single-section and multi-
section homes, respectively, while achieving a positive cash flow in
the first year of occupancy. Further discussion of these concerns is
addressed in section IV.A.1.i.
MHARR commented that the PBP found in the analysis will be longer
once the costs of compliance are included and passed onto the consumer
(MHARR, No. 154 at p. 27). As discussed above, DOE is not addressing a
compliance, certification, and enforcement program in this rulemaking,
but may do so in the future. However, DOE will consider comments and
information on compliance and enforcement matters provided by
stakeholders, including costs.
DOE also received comments regarding the longer term LCC period
(i.e., 30 years). MHI expressed concern with using a 30-year time
period to justify energy efficiency investments because most
manufactured homes change ownership within 7 to 10 years and may not
see the savings from the increased upfront cost. (MHI, No. 182 at p. 6)
GWU stated that the 10-year LCC analysis represents a much more
accurate reflection of the manufactured housing consumers' benefits
rather than the 30-year LCC analysis because the 30-year analysis is
not representative of the timespan that owners live in manufactured
homes. (GWU, No. 175 at pp. 3-4) Conversely, VEIC commented that the
30-year LCC should be used instead of the 10-year LCC analysis because
the 30 years is more representative of the timespan in which the
manufactured home will be in service. (VEIC, No. 187 at p. 2)
EISA directs DOE to base the standards on the most recent version
of the IECC considering, among other things, the total life-cycle
construction and operating costs. (42 U.S.C. 17071(b)(1)) As such, DOE
is considering the total life-cycle costs and operating costs of the
standards proposed in this document.
As discussed previously, DOE determined that the average tenure of
a manufactured homeowner is 13 years, and the lifetime of a home can
average 40 years. However, DOE understands that there are constraints
in the secondary market for manufactured
[[Page 47792]]
homes, as outlined in the 2014 CFPB report. Accordingly, DOE performed
the 10-year analysis to determine the economic impacts of the proposed
rule on the first homeowner. DOE also performed the 30-year analysis to
determine the economic impacts, as well as the cumulative benefits over
the lifetime of the manufactured home. In this SNOPR, DOE continues to
use both the 10-year and 30-year LCC analyses from the June 2016 NOPR.
DOE received several comments regarding PBP results relating to the
LCC and homeownership periods. In the June 2016 NOPR, DOE reported
national average PBP values of 7.1 years for single-section homes and
6.9 for multi-section homes. MHARR stated that the projected consumer
PBP is longer than consumers live in a particular manufactured home.
(MHARR, No. 154 at p. 27) AGA and APGA commented that the PBP should be
less than 5 years for the resident to truly gain a benefit. (AGA &
APGA, No. 172 at p. 1)
As previously stated, a study by the CFPB indicated that the
average ownership period of 13 years. DOE assumes a 10-year ownership
period for the first owner of the manufactured home in its 10-year LCC
analysis. Table IV.17, Table IV.10, and Table IV.11 provide the results
for DOE's simple PBP analysis for the rule as proposed in this SNOPR,
broken out by tiers and climate zone for single-section and multi-
section homes. These resulting simple PBPs indicate that the first
owner of a Tier 1 manufactured home would gain a net benefit and would
realize positive net savings from the proposed energy standards. The
simple PBP of a Tier 1 standard manufactured home is 3.7 years for
single-section and 3.5 years for multi-section homes, and the simple
PBP of a Tier 2 standard manufactured home is 10.9 years for single-
section and 10.6 years for multi-section. Although the simple PBPs for
Tier 2 homes exceed the 10-year ownership period for the first owner,
they still fall within the 13-year average ownership period. In
addition, DOE considered a sensitivity analysis for an alternative
insulation requirement for Tier 2 homes, R-21, wherein the PBP is 8.5
for single-section and 8.9 years for multi-section homes.
b. Interest Rate
In the June 2016 NOPR LCC analysis, DOE estimated an interest rate
of 5 percent for consumers using real estate loans, 9 percent for
consumers using chattel (personal property) loans, and 5 percent for
consumers paying for the manufactured home outright with cash. These
were conservative figures based on ranges provided by the MH working
group. According to data provided by the MH working group, real estate
loans typically have interest rates ranging from approximately 4.0 to
4.3 percent and chattel loans typically have interest rates ranging
from 6.3 percent to 9.5 percent. EERE-2009-BT-BC-0021-0074. In the June
2016 NOPR analysis, DOE used a 5-percent real estate loan interest rate
and a 9-percent chattel loan interest rate as a conservative estimate.
Regarding the different interest rates used for the LCC analysis,
GWU commented that interest rates on chattel loans range from 7 percent
to 13 percent and that DOE's use of 9 percent may be too low. (GWU, No.
175 at p. 5) DOE conducted research on interest rates for real estate
and chattel loans to confirm the discount rates determined by the MH
working group. DOE's research showed that chattel loans often range
from 0.5 to 5 percent more than real estate loans according to a CFPB
study released in September 2014.\46\ This difference between real
estate loan and chattel loan rates supports DOE's assumptions from the
June 2016 NOPR, which used a chattel loan rate of 9 percent, which is 4
percent higher than the real estate loan interest rate of 5 percent.
DOE did not find a more recent CFPB study of the same. For the SNOPR
LCC analysis, DOE maintains the interest rate values used in the June
2016 NOPR.
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\46\ Consumer Financial Protection Bureau. Manufactured-housing
Consumer Finance in the United States. September 2014. Available at:
https://www.consumerfinance.gov/data-research/research-reports/manufactured-housing-consumeR-finance-in-the-U-s/.
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c. Discount Rate for LCC
In the June 2016 NOPR LCC analysis, DOE used a discount rate of 5
percent for consumers using real estate loans, 9 percent for consumers
using chattel (personal property) loans, and 5 percent for consumers
paying for the manufactured home outright with cash. The discount rate
was set equal to the loan interest rate because this rate represents a
primary ``investment'' available to a homeowner (that is, the homeowner
can pay down the loan early, avoiding interest payments at the rate
associated with the loan). Therefore, DOE discounted cash flows in the
LCC analysis using a discount rate equal to this alternative investment
rate (the loan interest rate).
Regarding the discount rates used in the June 2016 NOPR LCC
analysis, ACEEE supported the June 2016 NOPR, stating that an LCC
analysis using a discount rate similar to the rate low-income
homeowners would pay for a mortgage should be reasonable. (ACEEE, No.
178 at p. 3) Alternatively, GWU stated it also conducted its own LCC
analysis based on discount rates of 5, 9, and 13 percent. GWU's LCC
results using these inputs found that consumers in certain cities are
anticipated to bear net costs and summing the percentage of national
shipments of each of these cities would result in 28.5 percent of all
shipments of single-section manufactured homes and 35.1 percent of all
shipments of multi-section manufactured homes anticipated to bear net
costs. GWU stated that these studies indicate that DOE's proposed rule
does not fit the statutory cost-effectiveness requirement given in
EISA. (GWU, No. 175 at p. 6)
DOE appreciates ACEEE's comment supporting the June 2016 NOPR LCC
discount rates. Regarding the LCC analysis conducted by GWU, DOE's
understanding is that the results were based on a discount rate of 13
percent, which was the upper bound of the 7-percent to 13-percent range
of chattel rates GWU presented and is higher than DOE's estimate of 9
percent. In addition, it is not clear what analysis period GWU relied
on (DOE uses 10 and 30 years). However, the discount rate values used
by GWU diminish the value of the benefits of reduced energy use
relative to the values used in the June 2016 NOPR. As described
previously, the June 2016 NOPR analysis was based on the real estate
and chattel loan rates of 5 percent and 9 percent, respectively, as
well as a 30-year analysis period reflecting the lifespan of a
manufactured home. For the reasons already discussed, for this SNOPR,
DOE continues to find these values more appropriate than those used by
GWU. Using the discount rates equal to the corresponding interest rate,
in this SNOPR, DOE's 30-year and 10-year analyses indicate that the
national average results show positive LCC savings compared to the
baseline.\47\
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\47\ For Tier 1 standards, all cities (except for Miami in the
10-year analysis) indicate positive LCC savings. For Tier 2
standards, all cities in HUD climate zones 1 and 2 indicate positive
LCC savings for 30-year and 10-year analyses. Certain cities in HUD
climate zone 3, however, do not indicate positive LCC savings.
Details can be found in chapter 8 and 9 of the SNOPR TSD.
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d. Down Payment and Loan Term
In the June 2016 NOPR, DOE assumed a down payment of 20 percent for
both real estate and chattel loans. DOE received several comments on
the June 2016 NOPR suggesting alternatives to the down payment
assumptions used in the NOPR.
[[Page 47793]]
MHI and COBA indicated that DOE may be overestimating the LCC
savings by using a down payment assumption of 20 percent for chattel
loans. According to MHI and COBA, chattel loan down payments are rarely
20 percent, and a more common range representative of the industry is
5-10 percent. (MHI, No. 182 at p. 6; COBA, Public Meeting Transcript,
No. 148 at p. 92) After researching the matter, DOE tentatively agrees
that a lower down payment assumption (relative to the June 2016 NOPR)
is appropriate. MHI's ``Trends and Information About the Manufactured
Housing Industry 2016'' indicates that down payments for all loans used
for manufactured homes range from 10 to 20 percent.\48\ Although some
commenters stated that a 5 percent down payment can occur, a 5 percent
down payment is below the lower boundary of what lenders accept for a
chattel loan, as reported by MHI. DOE also notes that the impact of
down payment percentage is limited in an LCC calculation because
reductions in upfront down payment costs are mostly offset by increases
in monthly principal and interest payments (and vice versa). Based on
the comments and new information on typical down payments for chattel
loans, for the SNOPR, DOE assumes a down payment of 10 percent for
chattel loans and maintained a down payment of 20 percent for real
estate loans.
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\48\ Manufactured Housing Institute, Trends and Information
about the Manufactured Housing Industry 2016. https://www.manufacturedhousing.org/wp-content/uploads/2016/11/1836temp.pdf.
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Regarding the loan term for chattel loans, MHI recommended that DOE
use an estimate of 10 to 15 years. (MHI, Public Meeting Transcript, No.
148 at p. 91; MHI, No. 182 at p. 7) In the June 2016 NOPR, DOE used a
15-year loan term for chattel loans for the LCC analysis based on
suggestions from the MH working group. DOE's NOPR estimate of 15 years
falls within the range recommended by MHI. No comments were received
suggesting that the 15-year assumption was inappropriate. For the
SNOPR, DOE maintains the chattel loan term of 15 years.
e. Resale Value of Manufactured Homes
DOE received several comments on the June 2016 NOPR regarding the
resale value of manufactured homes and how that may affect the LCC
analysis. GWU commented that DOE's LCC analysis did not take into
account the difficulty in recouping high upfront costs via resale. It
stated that secondhand buyers have difficulty obtaining adequate
financing for resold manufactured homes because lenders often charge
higher interest rates on used manufactured homes. (GWU, No. 175 at p.
3) Lippert Components and MHI also expressed concern that it will be
unlikely that first-time homeowners will be able to recapture the cost
of EEMs in the event of a resale. (Lippert Components, No. 152 at p. 1;
MHI, No. 182 at p. 6) Conversely, WSU Energy Program commented that
resale values of manufactured homes with energy efficiency measures are
often higher than those without these measures. (WSU Energy Program,
Public Meeting Transcript, No. 148 at p. 93) Further, WSU Energy
Program stated that this higher resale value of the manufactured home
must be considered when calculating payback period. (WSU Energy
Program, Public Meeting Transcript, No. 148 at p. 93)
For the SNOPR, as with the June 2016 NOPR, DOE conducted the LCC
analysis based on the total homeowner expense over the life of the
manufactured home and operating costs. A 30-year lifetime was selected
as a typical length that energy efficiency measures last in a
manufactured home. In addition, DOE also performed a 10-year LCC
analysis, which represents the cost of ownership over the tenure of the
first homeowner. Both analyses assume that the incremental cost of the
DOE-compliant home depreciates on a linear basis over the 30-year
lifetime. Therefore, DOE's analysis assumes that not all of the
incremental cost of EEMs is recouped at resale.
Increases in resale value can offset upfront costs when considering
life cycle costs over a period of time. However, the PBP metric is a
``simple PBP'' based on dividing the incremental increase in purchase
cost by the average annual savings in operating costs that would result
from the rule. Therefore, resale value is not included in the PBP
calculation. DOE maintains this methodology in the SNOPR, as the resale
value of the home does not have any direct input into the calculation
of a simple PBP.
f. Tax Rate
Property taxes vary widely within and among states. In the June
2016 NOPR, DOE assumed a property tax rate of 0.9 percent, which was
agreed upon by the MH working group. DOE also separately determined the
median tax rate and found that the 2013 American Housing (AHS) Survey
for manufactured homes reported a $10 per $1,000 in home value,
indicating a 1-percent tax rate.\49\ The later AHS reports (2015, 2017
or 2019) did not provide an updated estimate; thus, DOE continues to
consider the estimate from the 2013 AHS Survey. The reported AHS
estimate substantiated the MH working group recommendation.
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\49\ U.S. Census Bureau, American Housing Survey, 2013 http://www.census.gov/programs-surveys/ahs/data.2013.html.
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DOE received one comment regarding the property tax rate used in
the June 2016 NOPR. COBA commented that the property tax rate data used
in the June 2016 NOPR analysis for the LCC was incorrect, without
further elaborating on a better estimate. (COBA, No. 158 at p. 3) As no
alternative estimates were offered, for this SNOPR, DOE continues to
assume a property tax rate of 0.9 percent based on the MH working group
recommendation and the AHS Survey.
g. Incremental Cost
In the June 2016 NOPR, DOE arrived at the incremental cost to the
consumer by calculating the difference in the EEM costs of DOE-
compliant and minimally compliant HUD homes. These incremental costs
correspond to the purchase prices seen by the homeowner, and thus
account for manufacturer and retail markups. DOE used incremental
component costs (retail costs) provided and agreed to by the MH working
group. ASRAC Cost Analysis Data, EERE-2009-BT-BC-0021-0091.
Regarding the incremental costs, MHARR stated that the cost figures
used for the June 2016 NOPR analysis were obtained primarily from large
manufacturers, and therefore the cost is understated for smaller
manufacturers who do not benefit from large volume supply orders. MHARR
conducted a study based on higher supply costs associated with small
manufacturers and concluded that the price increase will be $4,600 and
$5,825 above the HUD Code for single- and multi-section manufactured
homes, respectively. (MHARR, No. 154 at p. 30; MHARR, No. 143 at p. 4)
Conversely, NEEA and VEIC stated that the incremental costs found
and used in DOE's analysis may be overstating the cost increases. NEEA
commented that the real-world incremental costs would be lower than DOE
estimates. NEEA cited data (from the Pacific Northwest region) that
shows current incremental purchase prices for ENERGY STAR homes (which
NEEA stated are more stringent than the proposed rule) are between
$2,000 and $3,000 more than a manufactured home minimally compliant
with the HUD
[[Page 47794]]
Code. NEEA indicated that DOE's incremental costs do not incorporate
economies of scale, good engineering practice, and improved technology,
which would result (once all MH manufacturers meet the DOE standard) in
much lower realized incremental costs. (NEEA, No. 190 at p. 4; NEEA,
Public Meeting Transcript, No. 148 at p.72) VEIC commented that the
estimated incremental costs are inflated. (VEIC, No. 187 at p. 2)
In the June 2016 NOPR, DOE used incremental component costs
provided and agreed to by the MH working group. MHI stated that these
costs represent small, medium, and large manufacturers, commenting that
for the cost analysis conducted by MHI and SBRA, small, medium, and
large manufacturers were all consulted during the MH working group
process. (MHI, Public Meeting Transcript, No. 148 at p. 85) DOE
analyzed MHARR's incremental costs and identified a number of
differences in the inputs between DOE's and MHARR's calculations.
Specifically, DOE found that for certain components, such as exterior
floor insulation, MHARR's incremental costs were based on baseline
thermal requirements that were different than what was used by the MH
Working Group. In another case, MHARR's calculations also included
costs for exterior doors. However, DOE expects no incremental cost
associated with doors because the insulation level (U-factor) for a
baseline home was assumed to already meet the U-factor requirement in
the proposed rule. In addition, MHARR did not provide the sources for
the costs identified. In summary, MHARR's comment provided insufficient
detail to verify that the incremental costs corresponded to the same
home construction parameters and the same EEMs as DOE used in its
analysis. As a result of these inconsistencies, DOE did not revise the
component incremental costs from the June 2016 NOPR based on the data
provided by MHARR. Furthermore, DOE reviewed the 2020 RSMeans
construction cost estimating software to corroborate the cost data used
in the June 2016 NOPR and concluded that the estimates provided by the
MH working group continues to remain mostly relevant. Therefore, for
the SNOPR, DOE proposes to maintain the component incremental costs
used in the June 2016 NOPR and established by the MH working group, as
these values are representative of manufacturers of all sizes.
Regarding incremental cost impacts on retailers, MHARR stated that
smaller retailers will feel the full brunt of the increased costs.
(MHARR, No. 143 at p. 4) DOE notes that retailers will experience
increased costs. However, DOE's analysis anticipates that the full
incremental cost of the EEMs necessary to comply with the SNOPR will be
passed through to the consumer, bypassing the manufacturer and
retailer. While DOE agrees retailers (both large and small) will see
higher prices when purchasing manufactured homes from MH manufacturers,
these same manufactured homes will be sold at a correspondingly higher
price to the consumer.
For this SNOPR, DOE updated the total incremental costs for the
tiered standards--i.e., Tier 1 energy efficiency requirements based on
the set of energy efficiency measures that provide energy savings under
at a set upfront incremental purchase price (i.e., approximately $750)
and Tier 2 energy efficiency requirements that specify more stringent
building thermal envelope requirements. The proposed tiered approach
addresses concerns regarding potential impacts of first-cost increases
on price-sensitive, low-income purchasers of manufactured homes. Table
I.1 and Table I.2 provide the updated total incremental costs,
depending on the tiered standard being analyzed. Table I.3 provides the
updated total incremental costs under the proposed untiered standard.
h. Reliability of the LCC
DOE received a comment regarding the overall reliability of the LCC
analysis to capture potential savings related to the rulemaking. MHI
stated that the LCC analysis is too uncertain to justify the projected
upfront purchase price, and specifically stated that small errors in
energy cost escalation rates can turn a long-term benefit into a long-
term loss. (MHI, No. 182 at p. 6)
DOE understands that there may be uncertainties regarding the
future prices of energy. In the June 2016 NOPR, the energy cost inputs
used in the LCC analysis, including energy prices and their escalation
rates, were based on the Annual Energy Outlook 2015 (AEO 2015) and
Short-Term Energy Outlook studies, prepared by the U.S. Energy
Information Administration (``EIA''). The AEO presents long-term annual
projections of energy supply, demand, and prices. The projections,
focused on U.S. energy markets, are based on results from EIA's
National Energy Modeling System (``NEMS''). NEMS enables EIA to make
projections under internally consistent sets of assumptions. DOE
believes these studies are the best current and future estimates of
energy prices and escalation rates and uses these studies in support of
all of its energy conservation standard rulemakings. In the SNOPR, DOE
proposes to maintain the same source for establishing energy prices and
escalation rates and updated the AEO source to the latest version at
the time of the SNOPR analysis, which was AEO 2020.
Lastly, EISA requires that DOE establish energy conservation
standards for manufactured housing with consideration of the cost-
effectiveness as related to the purchase price and total life-cycle
construction and operating costs generally. (42 U.S.C. 17071(b)(1)) As
such, the LCC analysis in this SNOPR addresses this requirement by
incorporating the total homeowner expense over the life of the
manufactured home, consisting of purchase expenses (e.g., loan or cash
purchase) and operating costs (e.g., energy costs).
i. Affordability
Consistent with concerns raised in DOE's consultation with HUD,
commenters raised concerns regarding the impact of energy conservation
standards on the affordability of manufactured homes. DOE received
comments from organizations that stated that manufactured homes are an
important aspect of unsubsidized affordable housing across the country
and that the average income of a manufactured homeowner is half the
national average. Commenters indicated that any changes in the cost of
manufactured homes will price some consumers out of homeownership and
expressed concern that the proposed rule did not offer any assistance
to offset the predicted cost increase and resulting decrease in
manufactured home production. (Pleasant Valley Homes, No. 153 at p. 1;
Skyline Corporation, No. 165 at p. 1; Clayton Homes, No. 185 at p. 2;
MHIM, No. 155 at p. 1; NMMHA, No. 157 at p. 1; MHIA, No. 161 at p. 1;
MHISC, No. 191 at p. 1; OMHA, No. 166 at p. 1; MMHA, No. 170 at p. 2;
AMHA, No. 173 at p. 2; PMHA, No. 164 at p. 1; Commodore Corporation,
No. 195 at p. 1) Cavco commented that the industry must maintain
affordability in order to increase home ownership and stated that if
the cost to produce a home increases, the costs will be passed onto the
consumer. They also expressed concern that the manufactured housing
market has extended too much credit to homeowners. (Cavco, Public
Meeting Transcript, No. 148 at p. 87) SBRA suggested that DOE analyze
how this standard affects home ownership affordability for consumers
once the
[[Page 47795]]
rule is implemented. (SBRA, Public Meeting Transcript, No. 148 at p.
19)
DOE recognizes the role of manufactured homes in the U.S. housing
market and their ability to provide affordable housing. As already
discussed in section II.B.4 and in several other sections in this
document, concern over the initial first-cost impacts that the June
2016 NOPR energy efficiency requirements would have on low-income
buyers led DOE to contemplate cost-effective approaches that would also
mitigate first-cost impacts for purchasers at the lower end of the
manufactured home price range, and to examine and propose the tiered-
approach presented in this SNOPR. In consideration of the first-cost
impacts and cost-effectiveness for low-income purchasers, the tiered
approach would subject those manufactured homes with a manufacturer's
retail list price of $55,000 or less (i.e., Tier 1) to a set of energy
efficiency measures that have an upfront incremental purchase price of
approximately $750 (for a single-section home). Table I.1 provides the
updated total incremental costs. Under the proposed tiered approach,
manufactured homes with a manufacturer's retail list price greater than
$55,000 (in real 2019$) (i.e., Tier 2) would generally be subject to
the same set of requirements as applicable to Tier 1 manufactured
homes, but with more stringent U-factor and R-value requirements. The
Tier 2 energy conservation standards are the same as those that would
apply to all manufactured homes under the proposed untiered standard.
While both proposals presented in the SNOPR (i.e., the tiered
approach and the single set of standards) would result in incremental
cost increases for manufactured homes that may be passed to the
consumer, the full incremental cost is not paid by the consumer on the
purchase date because consumers (particularly low-income consumers)
purchase manufactured homes with a down payment and other financing
(either through a personal property loan, often referred to as a
``chattel loan,'' or a real estate loan). A consumer would typically
only pay a 10-percent down payment for a chattel loan, and the
remainder of the incremental cost increase passed to the consumer would
be spread through increases in payments throughout the loan term (15 to
30 years). DOE's current LCC analysis tentatively finds that these loan
payment increases would be offset by the energy cost savings for all
cities except one (with San Francisco being the only exception) in the
tiered standards, providing a net benefit and cost-effectiveness to the
consumer. San Francisco represents 1.2 percent of all single-section
home shipments (Tier 1 + Tier 2) analyzed. Further, DOE notes that Tier
2 single-section homes would be a portion (approximately 0.5 percent)
of the all single-section homes shipments. While increases in purchase
price as a result of either proposed standard are tentatively projected
to be offset by the benefits derived from the projected energy cost
savings, DOE requests comment regarding the cost-effectiveness of both
options to inform its final decision.
Relating to the general affordability of manufactured homes, SBRA
recommended that DOE work with the industry in establishing an economic
basis for energy efficiency standard development that would serve as
the benchmark for setting requirements that improve home affordability.
(SBRA, No. 163 at p. 2) DOE used the LCC and PBP analyses developed
during the MH working group negotiations to inform the development of
the proposed rule based on the economic impacts on individual
purchasers of manufactured homes. As such, DOE has initially concluded
that the national economic benefits outweigh the increased purchase
price, indicating that under both proposals the applicable energy
conservation standards would improve the economic status of consumers
in most regions relative to the status quo.
DOE also received comments regarding affordability and the cost-
effective provision of EISA. MHARR stated that the cost-effective
provision of EISA must be applied to ensure that energy standards do
not result in purchase price increases that would impair manufactured
housing affordability, availability, or accessibility. (MHARR, No. 154
at p. 24) DOE performed an LCC analysis in this SNOPR that calculated
the total homeowner expense over a period of 30 years, consisting of
purchase expenses (e.g., chattel loan, conventional mortgage or cash
purchase) and operating costs (e.g., energy costs). The national
average results of the LCC analysis show positive LCC savings for a 30-
year analysis period and annual energy cost savings for the homeowner
in each climate zone (see section IV.A.2). The cost-benefit analysis
shows that the increased purchase cost to the consumer would be offset
by energy cost savings. In addition to these results, DOE presents a
sensitivity analysis for an alternative insulation requirement for Tier
2 homes in zones 2 and 3, which would increase life-cycle cost savings
and decrease the simple PBP for affected homes relative to the R-20+5
insulation requirement based on the 2021 IECC.
Regarding the availability of manufactured homes, for this SNOPR
(and in the June 2016 NOPR), DOE addressed the reduction of shipments
based on the projected increase in home upfront costs using a price
elasticity of demand (price elasticity) calculation. Price elasticity
is an economic concept that describes the change of the quantity
demanded in response to a change in price. Price elasticity is
typically represented as a ratio of the percentage change in quantity
relative to a percentage change in price. Sections IV.C.1.a and
IV.C.1.b provide more details on how DOE incorporated price elasticity
in the shipments analysis and the magnitude of people who do not buy
because they are price-sensitive.
DOE also received many comments from groups concerned with a
potential 3-10 percent increase in purchase price of manufactured home
as a result of the proposed standards. Because of the affordable
housing crisis in the U.S., they stated that the final rule should
avoid any increases in cost for consumers by providing programs for
consumers to obtain financing or aid in purchasing their homes. These
commenters urged DOE to improve energy efficiency while preserving
affordability and to work with lenders, federal regulators, and HUD to
mitigate the upfront costs of these regulations before the rule is
finalized. (Pleasant Valley Homes, No. 153 at p. 1; Skyline
Corporation, No. 165 at p. 1; Clayton Homes, No. 185 at p. 2; MHIM, No.
155 at p. 2; NMMHA, No. 157 at p. 2; MHIA, No. 161 at p. 2; MHISC, No.
191 at p. 1; OMHA, No. 166 at p. 1; MMHA, No. 10 at p. 2; AMHA, No. 173
at p. 2; PMHA, No. 164 at p. 2; Form Letter, No. 192 at p. 1; COBA, No.
158 at p. 5; Commodore Corporation, No. 195 at p. 2)
Specifically, several commenters recommended that DOE also consult
with the CFPB and Federal Housing Finance Agency (``FHFA'') to ensure
that there is enough flexibility in qualified mortgage regulations to
permit an increase in debt-to-income ratios when paired with reductions
in energy costs. (Better Homes, No. 168 at p. 1, Next Step, No. 174 at
p. 2, MHI, No. 182 at p. 7) Next Step also commented that DOE should
collaborate with HUD, FHFA, and the U. S. Department of Agriculture
(``USDA'') to ensure flexibility in underwriting guidelines. (Next
Step, No. 174 p. 2) WECC recommended the use of low-income
weatherization funds, Property Assessed Clean Energy (PACE) financing,
carbon offsets, and Environmental Protection
[[Page 47796]]
Agency's (EPA) Home Performance with ENERGY STAR program to help offset
the increased price. (WECC, No. 150 at p. 3) Lastly, MHI recommended
that DOE work with HUD, USDA, U.S. Department of Veterans Affairs (VA),
and the U.S. Department of the Treasury to explore whether manufactured
homes that meet DOE's standard would be eligible for ENERGY STAR tax
credits, thereby providing more incentive and relief to the consumers
despite the increase in purchase price. (MHI, No. 182 at p. 7)
DOE appreciates these comments and understands that affordability
and cost-effectiveness for low-income purchasers is an important issue
when discussing manufactured housing. However, DOE's authority for this
rulemaking is limited to energy conservation standards for manufactured
housing. While DOE has considered the cost-effectiveness and
affordability concerns described throughout this document, matters
related to financing, tax credits, or other financial incentives or
assistance for manufactured housing are outside the scope of this
rulemaking, which is being conducted only to establish an energy
conservation standard for manufactured housing. As already discussed,
to help mitigate the potential impacts of a price increase, DOE is
proposing a tiered proposal in this SNOPR that would establish a
pricing tier to address those manufactured homes likely to be purchased
by more price-sensitive consumers, and by limiting the impact to the
first-cost for Tier 1 manufactured homes. The Tier 1 energy
conservation standards, as proposed, are estimated to result in a 0.7-
1.4 percent increase in first cost, depending on climate zone. These
incremental costs would be offset by the energy savings provided from
the energy efficiency measures and the incremental increase in upfront
costs and monthly loan payments is recouped in less than one year.
Furthermore, the PBP associated with the Tier 1 standard is only 3.7
years for single-section homes and 3.5 years for multi-section homes.
Along with consumer financing, Next Step and Lippert Components
both recommended the implementation of consumer education for potential
homeowners, to properly inform them of the benefits and paybacks of
more efficient homes. (Next Step, No. 174 at p. 3; Lippert Components,
No. 152 at p. 1) Next Step also commented that it currently has a
system called Manufactured Housing Done Right, which connects
comprehensive homebuyer education with responsible financing so
potential buyers can purchase ENERGY STAR compliant, factory-built
homes. (Next Step, No. 174 at p. 1) DOE agrees that consumer education
is important aspect to ensuring the effectiveness of any standards that
may be adopted. To this end, DOE has described this proposed regulation
in detail in this document and can respond to questions from the
public. While a consumer education program is not an element of the
statutory mandate of EISA, DOE provides a number of resources to
educate homeowners on the energy efficiency, including those applicable
to manufactured housing.\50\
---------------------------------------------------------------------------
\50\ E.g., https://www.energy.gov/energysaver/types-homes/energy-efficient-manufactured-homes.
---------------------------------------------------------------------------
MHI also commented that DOE must engage with HUD to revisit the
economic assumptions and revise consumer impact estimates. MHI stated
that any new regulation must avoid reducing the availability of
affordable homeownership options. (MHI, No. 182 at p. 1) GWU stated
that DOE should revisit the effect of the proposed standards on the
Federal Government's goal to increase the availability of affordable
housing. (GWU, No. 175 at p. 12) In this SNOPR, DOE has reviewed the
economic assumptions relied upon in the June 2016 NOPR and made changes
where appropriate. As explained, DOE is proposing a tiered approach in
this SNOPR in response to concerns raised regarding affordability and
cost-effectiveness. In addition, DOE changed the down payment
assumptions from 20 percent to 10 percent for chattel loans (see
section IV.A.1.d). Furthermore, DOE made updates to energy costs,
energy escalation rates, and inflation rates based on the updates to
AEO 2020. DOE also updated the distribution of heating type in the 19
cities analyzed in the LCC analysis based on the 2019 MHI shipments.
DOE discusses its price elasticity calculation in the shipment analysis
(see section IV.C.1.a).
j. Priced-Out Consumers
DOE received comments on the June 2016 NOPR indicating concern that
the proposed rule's incremental cost relative to the existing HUD Code
would eliminate the ability of some low-income consumers to obtain the
financing necessary to purchase a new home, resulting in consumers
being priced out of the manufactured housing market. (Advocacy, No. 177
at p. 3; GWU, No. 175 at p. 8; Form Letter, No. 192 at p. 1; Pleasant
Valley Homes, No. 153 at p. 1; Skyline Corporation, No. 165 at p. 1;
Clayton Homes, No. 185 at p. 2; MHIM, No. 155 at p. 1; NMMHA, No. 157
at p. 1; MHIA, No. 161 at p. 1; MHISC, No. 191 at p. 1; OMHA, No. 166
at p. 1; MMHA, No. 170 at p. 2; AMHA, No. 173 at p. 2; PMHA, No. 164 at
p. 1; MHI, No. 182 at p. 1, SBRA, No. 163 at p. 2; MHARR, No. 143 at p.
4) Specifically, MHARR cited a 2014 National Association of Home
Builders (``NAHB'') study that MHARR asserted indicates that more than
1 million households would be priced out of the market for a single-
unit manufactured home and over an additional one million households
would be priced out of the multi-section market as a result of DOE's
proposed standards. (MHARR, No. 154 at p. 25) Similarly, AMHA stated a
recent NAHB study indicated each $1,000 increase over the median-home
price results in 200,000 prospective households being excluded from the
market. (AMHA, No. 173 at p. 1)
As discussed in section IV.A.1.i, DOE is proposing a tiered
approach for which energy conservation standards for manufactured home
with a manufacturer's retail list price of $55,000 or less would be
established, in part, on a defined upfront manufacturer's retail list
price increase (i.e., $750). DOE is proposing this approach in
consideration of concerns related to potential adverse impacts on
price-sensitive, low-income purchasers of manufactured homes from the
imposition of energy conservation standards. Under the tiered proposal,
incremental cost increases for Tier 1 manufactured homes would be 0.7-
1.4 percent.
DOE reviewed the 2014 NAHB study referenced by MHARR and AMHA and
found the values cited by MHARR and AMHA from that study are not
representative of the manufactured housing market's prospective buyers.
The NAHB study estimates the reduction in buyers assuming all American
households intend to buy a home. The NAHB study stated that an increase
of $1,000 would exclude approximately 350,000 households from
purchasing a single-section home, and the same $1,000 would exclude
315,000 households from purchasing a multi-section home. MHARR
extrapolated that the incremental costs of the standards would exclude
more than 1 million households from each of the single- and multi-unit
markets.
Rather than analyzing all American households, DOE's estimate in
this SNOPR calculates the number of households no longer able to
purchase a manufactured home from the pool of households planning to
purchase a manufactured home (which is much smaller than the total
number of American households). As a result of
[[Page 47797]]
the tiered standards, first, DOE considered that a percentage of
manufactured homes placed/sold would shift to less stringent standards,
i.e., a percentage of homes from Tier 2 would shift to Tier 1. The
inclusion of this shift in the market is to more accurately estimate
energy savings (and other downstream results) if the proposed tiered
standard approach is finalized. Second, with the inclusion of this
shift, DOE estimates the SNOPR would result in a loss in demand and
availability because of the increase in upfront home price for each
tier. Therefore, DOE includes in the analysis a price elasticity of
demand, which is typically represented as a ratio of the percentage
change in quantity relative to a percentage change in price. DOE
considered a price elasticity of -0.48 based on a study by Marshall and
Marsh.\51\ Further discussion on the substitution effect is provided in
section IV.C.1.a and price elasticity is provided in section IV.A.1.j.
---------------------------------------------------------------------------
\51\ See Marshall, M.I. & Marsh, T.L. Consumer and investment
demand for manufactured housing units. J. Hous. Econ. 16, 59-71
(2007).
---------------------------------------------------------------------------
Accordingly, DOE estimates the SNOPR would result in a loss in
demand and availability of about 53,329 homes (single section and
multi-section combined) for the tiered standard using a price
elasticity of demand of -0.48 for the analysis period (2023-2052). Out
of the 53,329 homes in the tiered standard, the majority of the
reduction is in Tier 2 (93 percent) vs. Tier 1 (7 percent). Within Tier
1, DOE estimates a 0.52 percent reduction (essentially no reduction) in
availability due to Tier 1 standards for low income purchasers. Given
that low-income consumers generally purchase lower priced manufactured
homes, DOE concludes that low-income consumers would not be priced out
by the Tier 1 standards proposed in this SNOPR.
As a sensitivity, DOE also considered a price elasticity of demand
of -2.4 instead of -0.48. Further discussion on this sensitivity is
provided in Section 10.4 of Chapter 10 of the TSD. Table IV.1 provides
a summary of the change in shipments from baseline for the tiered
standards for a price elasticity of -0.48 and -2.4.
Table IV.1--Change in Shipments Compared to Baseline, -0.48 and -2.4 Price Elasticity
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in shipments, -0.48 price elasticity Change in shipments, -2.4 price elasticity
-----------------------------------------------------------------------------------------------
Tier 1 Tier 2 Total Tier 1 Tier 2 Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
30-year analysis........................................ (3,693) (49,636) (53,329) (18,375) (247,692) (266,067)
Annual.................................................. (123) (1,655) (1,778) (613) (8,256) (8,869)
--------------------------------------------------------------------------------------------------------------------------------------------------------
In the study published in the Journal of Housing Economics by
Marshall and Marsh, the authors conclude that national and local
programs that cause small price increases in manufactured housing units
(e.g., increasing energy efficiency) will not necessarily deter
thousands of low-income families from purchasing manufactured homes and
that such consumers are likely to be willing to accept incrementally
higher prices from improvements in energy use and cost efficiency.
Specifically, the study states that these consumers are not nearly as
price-sensitive because ``the cost of a manufactured home still ranges
from 21% to 65% of the cost of a site built home and low- and moderate-
income families have few low-cost choices for home ownership.'' \52\
Costs provided by a 2021 manufactured housing industry overview fact
sheet developed by MHI suggests that in 2019, on average, the average
sales price of a manufactured home compared to a new single-family site
built home is about 27 percent (without land).\53\ There is additional
discussion in section IV.c.1.b on the decrease in manufactured housing
shipments that results from people who do not buy because they are
price-sensitive.
---------------------------------------------------------------------------
\52\ See Marshall, M.I. & Marsh, T.L. Consumer and investment
demand for manufactured housing units. J. Hous. Econ. 16, 59-71
(2007).
\53\ Manufactured Housing Institute. 2021 Manufactured Housing
Facts: Industry Overview.
---------------------------------------------------------------------------
DOE requests comment on the price elasticity values used in DOE's
analysis and in the sensitivity analysis as well as any data or
research available with respect to the demand sensitivity in the
manufactured housing market.
DOE also received comments stating that it was necessary to capture
the costs and economic impact associated with the exclusion of some
consumers from the manufactured housing market as a result of this
standard. (MHARR, Public Meeting Transcript, No. 148 at p. 80; MHARR,
No. 154 at p. 29) COBA commented that if a consumer is priced out of
the market for manufactured homes, there are no energy savings that the
consumer can encounter. (COBA, Public Meeting Transcript, No. 148 at p.
82) Lippert Components stated that it doubted that the benefits of the
increases in energy efficiency will outweigh the negative impacts
caused by the elimination of choice and reduction of affordability of
manufactured homes due to the proposed standards. (Lippert Components,
No. 152 at p. 1)
The cost savings estimates for the proposals in this SNOPR are
based on manufactured housing sales in response to the incremental
increase in housing costs. A discussion of the projected future
shipments is provided at section III.C.1.a of this docment.
DOE also received comments regarding the issue of consumers being
priced out of the manufactured housing market within specific regions.
GWU suggested that DOE specifically consider the distributive economic
impact on climate zones 1 and 2, as they account for roughly 40 percent
of all manufactured housing shipments. GWU stated that under the
standard as proposed in the June 2016 NOPR, climate zones 1 and 2 will
bear higher costs from the increased standards, which is especially
problematic as these zones have higher poverty rates. GWU recommended
that DOE analyze the impact of the proposed rule on low-income
consumers in high-poverty regions. (GWU, No. 175 at p. 8)
The energy standards in the proposals presented in this SNOPR would
provide benefits in energy savings to the consumer (including those in
climate zones 1 and 2) which, over the span of the PBP, would offset
the increase in purchase price. Under the tiered proposal, manufactured
homes that would be subject to the Tier 1 standards would have a PBP
less than 10 years for all climate zones and recoup any additional
upfront and monthly payments in less than one year.
k. Other Comments
DOE also received numerous other comments that were not specific to
the above sections or could not be placed in only one of the above
sections. WECC stated that consumers' trust and confidence must be
secured if these higher costs are to be received favorably.
[[Page 47798]]
WECC stated that the environment associated with manufactured housing
is found to be fraught with deceptive loan practices, which is an issue
that needs to be addressed. (WECC, No. 150 at p. 1) NCJC commented that
the industry has been noted for predatory sales and lending practices.
NCJC commented that DOE's analysis of the rule's economic impact and
energy savings demonstrates the benefits of the rule to homebuyers,
especially low-income ones. (NCJC, No. 184 at p. 2) DOE appreciates
these comments. As noted, EISA directs DOE to establish energy
conservation standards for manufactured housing while accounting for
certain criteria and considerations. (42 U.S.C. 17071(a)-(b)) Comments
regarding loan practices are beyond the scope of this rulemaking.
2. Results
This section provides the tentative results for the projected
economic impacts on individuals, including the LCC and PBP. In this
SNOPR, DOE has included two options: A two-tiered set of standards and
a single untiered standard, as described in section III.E.2.b. DOE also
updated all inputs to the LCC and PBP based on the updated AEO 2020.
This includes updates to the inflation rates, energy prices, and energy
pricing growth rates. DOE adjusted the down payment percentage for
personal property (chattel) loans to 10 percent based on comments
received on the June 2016 NOPR and maintained a 20 percent down payment
for real estate loans. Lastly, the analyses include updates to the fuel
type distributions based on 2019 MHI shipments.
Further, as discussed in section I.A, DOE also used different loan
parameters for the analysis for the untiered standard and the alternate
tiered standard. This is because the Tier 1 and Tier 2 standards each
would apply to a portion of all manufactured homes, whereas the
untiered standard would apply to all manufactured homes. Specifically,
the Tier 1 standard would apply to manufactured homes with a
manufacturer's retail list price of $55,000 or less, and would be
applicable to price-sensitive, low-income purchasers. Therefore, DOE
considered only personal property loans for the Tier 1 standard
analysis. For the Tier 2 standard, DOE recalculated the loan
percentages such that the sales-weighted Tier 1 and Tier 2 standard
loan percentages would equate to the overall loan percentages for the
untiered standard. See Table IV.2 for details on the loan parameter
percentages used for the analyses.
Table IV.2--Loan Parameter Percentages
----------------------------------------------------------------------------------------------------------------
Personal Real estate
property (%) (%) Cash (%)
----------------------------------------------------------------------------------------------------------------
Tier 1 Standard................................................. 100.0 0.0 0.0
Tier 2 Standard................................................. 39.5 20.5 40.0
Untiered Standard............................................... 54.6 15.4 30.0
----------------------------------------------------------------------------------------------------------------
The LCC analysis allowed DOE to analyze the effects of the energy
conservation standard on both the individual consumer, as well as the
aggregate benefits at the national level. Table IV.3, Table IV.4, and
Table IV.5 provide the average purchase price increases to manufactured
homes associated with the HUD climate zones, under the proposals. These
costs are based on estimates for the increased costs associated with
more energy efficient components, as provided by the MH working group.
ASRAC Cost Analysis Data, EERE-2009-BT-BC-0021-0091. These costs are
discussed in further detail in chapter 5 and chapter 9 of the SNOPR
TSD.
Table IV.3--National Average Manufactured Housing Purchase Price (and Percentage) Increases Under the Tier 1
Standard
[2020$]
----------------------------------------------------------------------------------------------------------------
Single-section Multi-section
---------------------------------------------------------------
$ % $ %
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................. $629 1.2 $900 0.9
Climate Zone 2.................................. 629 1.2 900 0.9
Climate Zone 3.................................. 721 1.4 702 0.7
National Average................................ 663 1.2 839 0.8
----------------------------------------------------------------------------------------------------------------
Table IV.4--National Average Manufactured Housing Purchase Price (and Percentage) Increases Under Tier 2
Standard
[2020$]
----------------------------------------------------------------------------------------------------------------
Single-section Multi-section
---------------------------------------------------------------
$ % $ %
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................. $2,574 4.8 $4,143 4.0
Climate Zone 2.................................. 4,820 9.1 6,167 5.9
Climate Zone 3.................................. 4,659 8.8 5,839 5.6
National Average................................ 3,914 7.4 5,289 5.1
----------------------------------------------------------------------------------------------------------------
[[Page 47799]]
Table IV.5--National Average Manufactured Housing Purchase Price (and Percentage) Increases Under Untiered
Standard
[2020$]
----------------------------------------------------------------------------------------------------------------
Single-section Multi-section
---------------------------------------------------------------
$ % $ %
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................. $2,574 4.8 $4,143 4.0
Climate Zone 2.................................. 4,820 9.1 6,167 5.9
Climate Zone 3.................................. 4,659 8.8 5,839 5.6
National Average................................ 3,914 7.4 5,289 5.1
----------------------------------------------------------------------------------------------------------------
Figure IV.1, Figure IV.2, and Figure IV.3 illustrate the average
annual energy cost savings for space heating and air conditioning for
the first year of occupation by geographic location under the proposed
tiered approach based on the estimated fuel costs provided in chapter 8
of the SNOPR TSD.
BILLING CODE 6450-01-P
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[[Page 47800]]
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BILLING CODE 6450-01-C
Table IV.6 through Table IV.8 and Figure IV.4 through Figure IV.6
illustrate the average 30-year LCC savings by geographic location
(averaged across the five different heating fuel/system types)
associated with the proposals for both single-section and multi-section
manufactured homes. As discussed in detail in chapter 8 of the SNOPR
TSD, the results presented account for LCC savings and impacts over a
30-year period of analysis, including energy cost savings and chattel
loans or conventional mortgage payment increases discounted to a
present value using the discount rates discussed in chapter 4 of the
SNOPR TSD. These tentative results also are based on the costs
associated with the proposed energy conservation improvements, as
discussed in chapter 5 of the SNOPR TSD.
Table IV.6--Average Manufactured Home LCC Savings (30 Years) Under the
Tier 1 Standard
by Climate Zone
[2020$]
------------------------------------------------------------------------
Single-section Multi-section
------------------------------------------------------------------------
Climate Zone 1.......................... $988 $1,505
Climate Zone 2.......................... 1,114 1,612
Climate Zone 3.......................... 2,691 3,763
National Average........................ 1,643 2,235
------------------------------------------------------------------------
Table IV.7--Average Manufactured Home LCC Savings (30 Years) Under the
Tier 2 Standards
by Climate Zone
[2020$]
------------------------------------------------------------------------
Single-section Multi-section
------------------------------------------------------------------------
Climate Zone 1.......................... $2,351 $3,686
Climate Zone 2.......................... 1,073 1,808
Climate Zone 3.......................... 2,579 3,444
National Average........................ 2,105 3,033
------------------------------------------------------------------------
Table IV.8--Average Manufactured Home LCC Savings (30 Years) Under the
Untiered Standards
by Climate Zone
[2020$]
------------------------------------------------------------------------
Single-section Multi-section
------------------------------------------------------------------------
Climate Zone 1.......................... $2,043 $3,196
Climate Zone 2.......................... 711 1,314
Climate Zone 3.......................... 2,117 2,851
National Average........................ 1,727 2,511
------------------------------------------------------------------------
BILLING CODE 6450-01-P
[[Page 47801]]
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[[Page 47802]]
BILLING CODE 6450-01-C
As shown, the national average savings for the untiered standard
and the tiered standards (i.e., Tier 1 and Tier 2) are net positive,
though not every geographic region experiences a net savings in the
proposed standards (i.e., San Francisco in Climate Zone 2). DOE notes
that for the prescriptive method, Tier 2 and Untiered manufactured
homes in climate zone 2 (including San Francisco) and climate zone 3
would require a R-20+5 exterior wall insulation to be consistent with
the 2021 IECC without modification. The ``+5'' involves using
``continuous insulation,'' which is insulation that runs continuously
over structural members and is free of significant thermal bridging. As
a sensitivity analysis, DOE considered the impacts on the LCC savings
of instead requiring less stringent exterior wall insulation (at R-21
instead of R-20+5) to remove the continuous insulation requirement if
complying with the prescriptive requirements presented in Table III.8.
At R-20+5, the incremental cost per unit relative to the baseline is
$2,500, versus $850 for R-21. DOE considered this alternative
insulation requirement for zones 2 and 3 to address potential equity
impacts in the regional distribution of benefits and costs and to
ensure that each metro area analyzed could experience a positive LCC at
Tier 2. Table IV.9 through Table IV.12 present the LCC savings results
and Table IV.13 presents the simple payback periods for the sensitivity
analysis. Chapter 8 of the TSD presents the same results per city. With
this update, all cities, including San Francisco, show positive LCC
savings for the 30-year analysis for both the tiered and untiered
standards. Prior to the final rule stage, DOE is considering additional
analysis to further explore the impacts of R-21 for homes in zones 2
and 3 under Tier 2 and the untiered proposal.
Table IV.9--Average Manufactured Home LCC Savings (30 Years) Under the Tier 2 Standards
by Climate Zone
[2020$]
----------------------------------------------------------------------------------------------------------------
With R-20+5 wall insulation With R-21 wall insulation for
for climate zones 2 and 3 climate zones 2 and 3
---------------------------------------------------------------
Single-section Multi-section Single-section Multi-section
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................. $2,351 $3,686 $2,351 $3,686
Climate Zone 2.................................. 1,073 1,808 2,373 3,124
Climate Zone 3.................................. 2,579 3,444 3,618 4,511
National Average................................ 2,105 3,033 2,820 3,768
----------------------------------------------------------------------------------------------------------------
Table IV.10--Average Manufactured Home LCC Savings (30 Years) Under the Untiered Standards
by Climate Zone
[2020$]
----------------------------------------------------------------------------------------------------------------
With R-20+5 wall insulation With R-21 wall insulation for
for climate zones 2 and 3 climate zones 2 and 3
---------------------------------------------------------------
Single-section Multi-section Single-section Multi-section
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................. $2,043 $3,196 $2,043 $3,196
Climate Zone 2.................................. 711 1,314 2,031 2,648
Climate Zone 3.................................. 2,117 2,851 3,194 3,954
National Average................................ 1,727 2,511 2,461 3,262
----------------------------------------------------------------------------------------------------------------
Table IV.11--Average Manufactured Home LCC Savings (10 Years) Under the Tier 2 Standards
by Climate Zone
[2020$]
----------------------------------------------------------------------------------------------------------------
With R-20+5 wall insulation With R-21 wall insulation for
for climate zones 2 and 3 climate zones 2 and 3
---------------------------------------------------------------
Single-section Multi-section Single-section Multi-section
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................. $563 $862 $563 $862
Climate Zone 2.................................. (496) (454) 452 501
Climate Zone 3.................................. 108 235 949 1,086
National Average................................ 124 264 675 820
----------------------------------------------------------------------------------------------------------------
Table IV.12--Average Manufactured Home LCC Savings (10 Years) Under the Untiered Standards
by Climate Zone
[2020$]
----------------------------------------------------------------------------------------------------------------
With R-20+5 wall insulation With R-21 wall insulation for
for climate zones 2 and 3 climate zones 2 and 3
---------------------------------------------------------------
Single-section Multi-section Single-section Multi-section
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................. $460 $698 $460 $698
[[Page 47803]]
Climate Zone 2.................................. (645) (650) 334 337
Climate Zone 3.................................. (53) 30 822 915
National Average................................ (12) 77 560 654
----------------------------------------------------------------------------------------------------------------
Table IV.13--Average Manufactured Home Simple Payback Period Under the Tier 2/Untiered Standards
----------------------------------------------------------------------------------------------------------------
With R-20+5 wall insulation With R-21 wall insulation for
for climate zones 2 and 3 climate zones 2 and 3
---------------------------------------------------------------
Single-section Multi-section Single-section Multi-section
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................. 8.6 8.7 8.6 8.7
Climate Zone 2.................................. 13.3 12.7 9.3 9.7
Climate Zone 3.................................. 11.1 10.9 7.8 8.3
National Average................................ 10.9 10.6 8.5 8.9
----------------------------------------------------------------------------------------------------------------
DOE requests comment on the cost-effectiveness and feasibility of
requiring R-20+5 for the exterior wall insulation for climate zone 2
and 3 Tier 2/Untiered manufactured homes. DOE also requests comment on
the sensitivity analysis for R-21 that would result in positive LCC
savings for all cities.
The estimated LCC impacts under Figure IV.4, Figure IV.5, and
Figure IV.6 vary by location for three primary reasons. First, each
geographic location analyzed is situated in one of three climate zones
and therefore would be subject to different energy conservation
requirements. Second, geographic locations within the same climate zone
would experience different levels of energy savings. Finally, the level
of energy cost savings depends on the type of heating system installed
and fuel type used in a manufactured home. As discussed in chapter 8 of
the SNOPR TSD, DOE has accounted for regional differences in heating
systems and fuel types commonly installed in manufactured housing.
Table IV.14 provides the national average LCC savings and annual
energy cost savings associated with the proposals in the SNOPR for
space heating and air conditioning (and percent reduction in space
heating and cooling costs), both of which are measured against a
baseline manufactured home constructed in accordance with the HUD Code.
As discussed in further detail in chapter 9 of the SNOPR TSD, each
geographic location has been determined to result in LCC savings and
energy savings, on average.
Table IV.14--National Average Per-Home Cost Savings Under the SNOPR
------------------------------------------------------------------------
Single-section Multi-section
------------------------------------------------------------------------
Tiered Standards
------------------------------------------------------------------------
Lifecycle Cost Savings (30 Years)....... $1,852 $3,033
Annual Energy Cost Savings (2020$)...... 261 499
------------------------------------------------------------------------
Untiered Standard
------------------------------------------------------------------------
Lifecycle Cost Savings (30 Years)....... 1,727 2,511
Annual Energy Cost Savings (2020$)...... 359 499
------------------------------------------------------------------------
Table IV.15 through Table IV.17 and Figure IV.7 through Figure IV.9
illustrate the nationwide average simple payback period (purchase price
increase divided by first year energy cost savings) under the SNOPR.
The estimated simple payback periods vary by geographic location based
on the different climate zone requirements for manufactured housing,
geographic climatic differences within climate zones, type of heating
system installed, and fuel type used in a manufactured home.
Table IV.15--Average Manufactured Home Simple Payback Period Under the
Tier 1 Standard
by Climate Zone
------------------------------------------------------------------------
Single-section Multi-section
------------------------------------------------------------------------
Climate Zone 1.......................... 4.8 4.6
Climate Zone 2.......................... 4.5 4.5
[[Page 47804]]
Climate Zone 3.......................... 2.8 2.1
National Average........................ 3.7 3.5
------------------------------------------------------------------------
Table IV.16--Average Manufactured Home Simple Payback Period Under Tier
2 Standard by Climate Zone
------------------------------------------------------------------------
Single-section Multi-section
------------------------------------------------------------------------
Climate Zone 1.......................... 8.6 8.7
Climate Zone 2.......................... 13.3 12.7
Climate Zone 3.......................... 11.1 10.9
National Average........................ 10.9 10.6
------------------------------------------------------------------------
Table IV.17--Average Manufactured Home Simple Payback Period Under
Untiered Standard by Climate Zone
------------------------------------------------------------------------
Single-section Multi-section
------------------------------------------------------------------------
Climate Zone 1.......................... 8.6 8.7
Climate Zone 2.......................... 13.3 12.7
Climate Zone 3.......................... 11.1 10.9
National Average........................ 10.9 10.6
------------------------------------------------------------------------
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BILLING CODE 6450-01-C
B. Manufacturer Impacts
DOE performed a manufacturer impact analysis (``MIA'') to estimate
the potential financial impact of energy conservation standards on
manufacturers of manufactured homes. The MIA relied on the Government
Regulatory Impact Model (``GRIM''), an industry cash-flow model used to
estimate changes in industry value as a result of energy conservation
standards. The key GRIM inputs are: Industry financial metrics,
manufacturer production cost estimates, shipments forecasts, conversion
costs, and manufacturer markups. The primary output of the GRIM is
industry net present value (``INPV''), which is the sum of industry
annual cash flows over the analysis period (2021-2052), discounted
using the industry average discount rate. The GRIM has a slightly
different analysis period than the NIA and LCC since it accounts for
the conversion period, the time between the announcement of the
standard and the compliance date of the standard, because manufacturers
may need to make upfront investments to bring their manufactured homes
into compliance ahead of the standard going into effect. The GRIM
estimates the impacts of more-stringent energy conservation standards
on a given industry by comparing changes in INPV between the no-
standards case and the standards cases. The GRIM estimates a range of
possible impacts under different manufacturer markup scenarios to
capture the uncertainty relating to manufacturer pricing strategy
following new standards. Additional detail on the GRIM can be found in
chapter 12 of the SNOPR TSD.
1. Conversion Costs
DOE analyzed the upfront investments manufacturers would need to
make to bring their products into compliance with the proposed energy
conservation standards. These upfront investments include product
conversion costs and capital conversion costs. Product conversion costs
are one-time expenses in research, development, engineering time, and
other costs necessary to make product designs comply with energy
conservation standards. Capital conversion costs are one-time
investments in property, plant, and equipment to adapt or change
existing production lines to fabricate and assemble new product designs
that comply with the energy conservation standards.
DOE received comments regarding the conversion costs used for the
cost-benefit analysis. MHARR commented that the June 2016 NOPR cost-
benefit analysis failed to include costs for testing, certification,
inspections, and other compliance related activities, including new
testing that is not currently included in the HUD Code. It stated that
there are enforcement costs as well as ongoing regulatory compliance
costs. MHARR expressed concern that these costs were not included in
calculating the manufacturer impact as well as incremental cost
increases since compliance costs will inevitably be passed onto the
consumer (MHARR, No. 154 at p. 27; MHARR, No. 143 at p. 4). MHCC also
commented that the cost analysis does not include compliance costs and
stated that the enforcement of the proposed rule significantly affects
the costs, planning, and implementation (MHCC, No. 162 at p. 2).
As stated in the November 2016 test procedure NOPR, for the R-value
of insulation, U-factor and SHGC of fenestration, and mechanical
ventilation fan efficacy, DOE anticipates that MH manufacturers will
not incur testing costs because they would be able to use values
currently provided by component manufacturers as part of the component
specification sheets. 81 FR 78733, 78742. As discussed in section
II.B.3, DOE is not proposing any testing, compliance or enforcement
provisions at this time. Therefore, DOE has not included any potential
associated costs of testing, compliance or enforcement in this SNOPR.
RECA, Next Step Network, and Modular Lifestyles commented that many
manufacturers produce higher efficiency homes that already meet the
proposed standards, and thus the impacts for those manufacturers will
be significantly reduced. (RECA, No. 188 at p. 2; Next Step, No. 174 at
p. 1; Modular Lifestyles, No. 141 at p. 2).
DOE recognizes that some manufacturers already produce higher
efficiency homes that meet the proposed standard level. DOE received
data on the number of ENERGY STAR manufactured homes but lacked
information on the number of manufactured homes that already meet or
exceed the standard levels proposed in this SNOPR. Therefore, DOE
conservatively assumed that all shipments are minimally compliant with
the current HUD level and all models for which standards would be
applicable would need design updates as a result of this proposed rule
for the purposes of the MIA analysis. This prevents underestimation of
negative impacts on manufacturers. As such, DOE's conversion costs are
the same for the tiered and untiered proposals, as DOE models the
maximum potential conversion costs.
In contrast, the NIA assumes conservatively that all ENERGY STAR
manufactured homes would not provide additional national benefits as a
result of this proposed rule, if made final. More information about the
shipments analysis used for the NIA can be found in section IV.C.1.a of
this document.
DOE estimated conversion costs to be $52,000 per manufacturer. This
figure included approximately $49,000 per manufacturer for product
conversion
[[Page 47806]]
costs, and approximately $3,000 per manufacturer for capital conversion
costs for investments in equipment. The difference in product
conversion costs from the June 2016 NOPR to the SNOPR are due to
increased wage rates for mechanical engineers and taking into account
fully burdened wages. DOE based its product conversion costs on the
engineering time required to update model plans. DOE calculates
industry conversion costs to be approximately $1.8 million. Those costs
consist of $0.1 million in capital conversion costs and $1.7 million in
product conversion costs.
DOE requests comment on the inputs to the conversion cost
estimates.
2. Manufacturer Production Costs and Markups
DOE analyzed the effect the proposed standards would have on
manufacturer production costs. DOE derived these costs from purchase
price information and the markup factor, which is the product of the
manufacturer markup, the retail markup, and sales tax. DOE used census
data to obtain HUD minimum purchase price data by state for single-
section and multi-section manufactured homes in 2019.\54\ DOE used a
shipment-weighted average to convert the average purchase price by
state to an average purchase price for each of 19 representative
cities.
---------------------------------------------------------------------------
\54\ https://www2.census.gov/programs-surveys/mhs/tables/2017/stavg17.xls.
---------------------------------------------------------------------------
DOE added incremental purchase prices to the HUD minimum purchase
prices to calculate the purchase price for manufactured homes built in
compliance with the proposed standard levels. The incremental purchase
prices were negotiated during MH working group meetings and discussed
further in section IV.A.1.g.
To calculate MPCs from purchase prices for homes at the baseline
level and at the proposed standard levels, DOE divided the purchase
prices by the markup factor. The markup factor is the product of the
manufacturer markup, retail markup and the sales tax factor. In the
June 2016 NOPR, DOE used public sources, including company SEC 10-K
filings \55\ and corporate annual reports, to estimate a manufacturer
markup of 1.25. DOE used legislative analysis,\56\ research reports
from the Encyclopedia of Business,\57\ and Highbeam Business \58\ to
estimate a retail markup of 1.30, and a sales tax of 1.03. This
resulted in a combined cost markup factor of 1.67.
---------------------------------------------------------------------------
\55\ U.S. Securities and Exchange Commission. Annual 10-K
Reports. Various Years. http://sec.gov.
\56\ Cook. State Board of Equalization, Staff Legislation Bill
Analysis, Assembly Bill 1474 (2009).
\57\ SIC 6515 Operators of Residential Mobile Home Site.
Encyclopedia of Business.
\58\ Highbeam Business. Operators of Residential Mobile Homes
Sites.
---------------------------------------------------------------------------
MHCC recommended that an industry projected cost markup factor of
2.30 be used, as opposed to the factor of 1.67 used by DOE in the June
2016 NOPR analysis (MHCC, No. 162 at p. 2). MHI expressed concern that
the DOE markup factor of 1.67 is too low. It stated that HUD typically
uses a markup factor of 2.30 and MHI's own study found a cost markup
factor of 2.23. By using a lower markup factor, it expressed concern
that DOE may be underestimating the impact of price increases passed
onto the consumer (MHI, No. 182 at p. 5).
DOE investigated the research quoted by MHI and MHCC regarding the
markup factor and found a supporting paper developed by Pacific
Northwest National Laboratory (``PNNL'') on behalf of National Fire
Protection Association, MHCC, and HUD that referenced their methodology
for the distribution chain markups. The research paper indicates that
DOE's estimated retail markup in the June 2016 NOPR of 1.30 is
representative of the MH industry, whereas DOE's estimated manufacturer
markup of 1.25 is too low.\59\ Based on the comments received and the
PNNL research, DOE increased the manufacturer markup from 1.25 to 1.72
in this SNOPR. Applying a manufacturer markup of 1.72, a retail markup
of 1.30, and a sales tax factor of 1.03 results in a markup factor of
2.30, which is in-line with stakeholder comments.
---------------------------------------------------------------------------
\59\ http://aceee.org/files/proceedings/2004/data/papers/SS04_Panel1_Paper05.pdf.
---------------------------------------------------------------------------
COBA commented that the retail markup varies greatly depending on
the nature of the distribution process. Independent MH retailers, who
sell on a deal-by-deal and commission-only basis, will seek to maximize
profitability. COBA said Land-Lease-Lifestyle Communities (LLL)
Community operators will minimize the retail markup for HUD Code homes
to get homeowners or site lessees to sign a rental agreement (COBA, No.
158 at p. 5). COBA stated that this change in the manufactured home
distribution system leads to several different scenarios for markup.
(COBA, Public Meeting Transcript, No. 148 at p. 124). DOE acknowledges
that retail markups can vary based on the distribution channel.
However, based on public information and comments received from
interested parties, a retail markup of 1.30 is the industry average.
COBA also commented on the topic of sales tax assumptions used in
DOE's MIA. COBA stated that sales tax is a state matter that varies
depending on whether a manufactured home is new or used (COBA, No. 158
at p. 5). DOE agrees that sales taxes vary by state. To account for
variations in sales taxes, DOE took the shipment-weighted average sales
tax by state to estimate a national average sales tax of three percent.
The MH working group reviewed the sales tax assumptions used in the
DOE's analysis during the negotiated consensus process. The MH working
group agreed to a national average sales tax of three percent for the
purposes of DOE's analyses. This is consistent across the June 2016
NOPR and the SNOPR analyses. Additional information can be found in
section 8.2.6 of the SNOPR TSD.
3. Manufacturer Markup Scenarios
DOE modeled two standard case manufacturer markup scenarios that
reflect changes in the manufacturer's ability to pass on their upfront
investments and increases in production costs to the consumer. The
manufacturer markup scenarios represent the uncertainty regarding
prices and profitability for manufactured home manufacturers following
the implementation of the rule. DOE modeled a high and a low scenario
for manufacturers' ability to pass on their increased costs to the
consumer: (1) A preservation of gross margin percentage markup
scenario; and (2) a preservation of operating profit markup scenario.
These scenarios lead to different manufacturer markup values that
result in varying revenue and cash flow impacts to the manufacturer
when applied to the inputted manufacturer production costs.
Under the preservation of gross margin scenario, manufacturers
maintain their current average markup of 1.72 even as production costs
increase. Manufacturers are able to maintain the same amount of profit
as a percentage of revenues, suggesting that they are able to recover
conversion costs and pass the costs of compliance to their consumers.
DOE considers this scenario the upper bound to industry profitability.
In the preservation of per-unit operating profit scenario,
manufacturer markups are set so that the per-unit operating profit in
the standards case equals the per-unit operating profit in the no-
standards case one year after the compliance date of the new energy
conservation standard. Under this scenario, as the costs of production
increase under a standards case, manufacturers are required to reduce
their markups. The implicit assumption behind this markup scenario is
that the
[[Page 47807]]
industry can only maintain its existing per-unit operating profit in
absolute dollars after compliance with the new standard is required.
Therefore, the operating margin is reduced between the no-standards
case and standards case. Under this scenario, manufacturers are not
able to recover the conversion period investments made to comply with
the standard. This manufacturer markup scenario represents a lower
bound to industry profitability under a new energy conservation
standard.
4. Cash-Flow and INPV Results
DOE calculated an industry average discount rate of 9.2 percent
based on SEC filings for public manufacturers of manufactured homes.
The INPV is the sum of the discounted cash flows over the analysis
period, which begins in 2021 and ends in 2052, using the industry
average discount rate. DOE compares the INPV of the no-standards case
to that of the standard level. The difference between INPV in the no-
standards case and INPV in the standards case is an estimate of the
economic impacts on the industry.
Table IV.18--INPV Results: Preservation of Gross Margin Percentage Scenario *
----------------------------------------------------------------------------------------------------------------
Tiered proposal Untiered proposal
---------------------------------------------------------------
Single-section Multi-section Single-section Multi-section
----------------------------------------------------------------------------------------------------------------
No-standards case INPV (billion 2020$).......... 4.87 11.36 4.87 11.36
Standards Case INPV (billion 2020$)............. 4.98 11.58 5.02 11.61
Change in INPV (billion 2020$).................. 0.10 0.22 0.15 0.25
Change in INPV (%).............................. 2.1 1.9 3.0 2.2
Total Conversion Costs (billion 2020$).......... 0.0005 .0012 0.0005 .0012
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
Table IV.19--INPV Results: Preservation of Operating Profit Markup Scenario *
----------------------------------------------------------------------------------------------------------------
Tiered proposal Untiered proposal
---------------------------------------------------------------
Single-section Multi-section Single-section Multi-section
----------------------------------------------------------------------------------------------------------------
No-standards case INPV (billion 2020$).......... 4.87 11.36 4.87 11.36
Standards Case INP (billion 2020$).............. 4.80 11.16 4.74 11.15
Change in INPV (billion 2020$).................. (0.07) (0.20) (0.13) (0.21)
Change in INPV (%).............................. (1.5) (1.8) (2.7) (1.8)
Total Conversion Costs (billion 2020$).......... 0.0005 0.0012 0.0005 .0012
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
For single-section units, the no-standards case INPV is $4.87
billion. The tiered proposal standard level could result in a change of
industry value ranging from -1.5 percent to 2.1 percent, or a change of
-$0.07 billion to $0.10 billion, for single-section units. For multi-
section units, the no-standards case INPV is $11.36 billion. The tiered
proposal standard level could result in a change of industry value
ranging from -1.8 percent to 1.9 percent, or a change of -$0.20 billion
to $0.22 billion. For the entire industry, the no-standards case INPV
is $16.23 billion. The tiered proposal standard level could result in a
change in INPV of -1.7 percent to 2.0 percent, or a change of -$0.28
billion to $0.32 billion. Industry conversion costs total $0.0018
billion.
For single-section units, the no-standards case INPV is $4.87
billion. The untiered proposal's standard level could result in a
change of industry value ranging from -2.7 percent to 3.0 percent, or a
change of -$0.13 billion to $0.15 billion for single-section units. For
multi-section units, the no-standards case INPV is $11.36 billion. The
untiered proposal's standard level could result in a change of industry
value ranging from -1.8 percent to 2.2 percent, or a change of -$0.21
billion to $0.25 billion. For the entire industry, the no-standards
case INPV is $16.23 billion. The untiered proposal's standard level
could result in a change in INPV of -2.1 percent to 2.4 percent, or a
change of -$0.34 billion to $0.39 billion. Industry conversion costs
total $0.0018 billion.
5. Impact of Any Lessening of Competition
DOE also received comments regarding competition within the
manufactured housing industry. GWU stated that DOE should pay
particular attention to the prospective effects of the proposed rule on
competition within the MH market. It commented that it was unable to
find any analyses by the DOJ on market competition regarding the rule
(GWU, No. 175 at p. 11). MHARR also asserted that the June 2016 NOPR
would have anti-competitive effects and result in highly negative
impacts on the industry's small manufacturers. MHARR stated that the
June 2016 NOPR would lead to further consolidation in the industry.
(MHARR, No. 154 at p. 33, 34)
The authority for the rule proposed in this document is section 413
of EISA (42 U.S.C. 17071), which is a separate authority from that
governing appliance standards, i.e., EPCA, as amended (42 U.S.C. 6291-
6317). Section 413 of EISA does not require consultation with the DOJ
regarding potential anticompetitive effects of the rule, as would be
required for an appliance standard rulemaking. As such, DOE did not
consult with the DOJ regarding potential anticompetitive impacts of
this proposed rule.
DOE considered the impacts of this rulemaking on small
manufacturers. In response to concerns related to potential adverse
impacts on price-sensitive, low-income purchasers of manufactured
homes, DOE is proposing updated standard levels that are different from
the June 2016 NOPR levels, upon which MHARR's comment are based. In the
updated proposed standards, described in detail in section III.A.2, DOE
structured the tiered standard to address affordability concerns for
low-income home buyers and for the small manufacturers that serve that
segment of the market. Furthermore, DOE conducted additional analysis,
found in section V.B.4, to understand the magnitude of upfront cost
impacts of
[[Page 47808]]
small manufacturers. DOE expects conversion costs to be less than 0.1
percent of average small manufacturer annual revenue. DOE finds this
level of investment unlikely to be the driver of industry consolidation
or to affect market concentration.
C. Nationwide Impacts
The national impact analysis (NIA) assesses the national energy
savings (NES) and the national net present value (NPV) from a national
perspective of total consumer costs and savings that would be expected
to result from new or amended standards. ``Consumer'' in this context
refers to consumers of the product being regulated. DOE calculates the
NES and NPV based on projections of annual product shipments, along
with the annual energy consumption and total incremental cost data from
the LCC analyses.
In the June 2016 NOPR, DOE's NIA projected a net benefit to the
nation as a whole as a result of the proposed rule in terms of NES and
the NPV of total consumer costs and savings that would be expected as a
result of the proposed rule in comparison with the minimum requirements
of the HUD Code. DOE calculated the NES and NPV based on annual energy
consumption and total construction and lifecycle cost data from the LCC
analysis (developed during the MH working group negotiation process),
and shipment projections. DOE projected the energy savings, operating
cost savings, equipment costs, and NPV of consumer benefits sold in a
30-year period from 2017 through 2046. The analysis also accounted for
costs and savings for a manufactured home lifetime of 30 years.
In addition, for the June 2016 NOPR, DOE developed a shipments
model to forecast the shipments of manufactured homes during the
analysis period. DOE first gathered historical shipments spanning 1990-
2013 from a report developed and written by the Institute for Building
Technology and Safety and published by the Manufactured Housing
Institute.\60\ Then, using the growth rate (1.8 percent) in new
residential housing starts from the AEO 2015, DOE projected the number
of manufactured housing shipments from 2014 through 2046 in the no-
standards case (no new standards adopted by DOE). For the standards
case shipments, DOE used this same growth rate estimate (1.8 percent),
but also applied an estimate for price elasticity of demand. Price
elasticity of demand (price elasticity) is an economic concept that
describes the change of the quantity demanded in response to a change
in price. DOE used the price elasticity value of -0.48 (a 10-percent
price increase would translate to a 4.8-percent reduction in
manufactured home shipments) based on a study published in the Journal
of Housing Economics by Marshall and Marsh for estimating standards
case shipments.\61\
---------------------------------------------------------------------------
\60\ See Manufactured Home Shipments by Product Mix (1990-2013),
Manufactured Housing Institute (2014).
\61\ See Marshall, M. I. & Marsh, T. L. Consumer and investment
demand for manufactured housing units. J. Hous. Econ. 16, 59-71
(2007).
---------------------------------------------------------------------------
DOE conducted sensitivity analyses in order to account for the
ranges of estimates available for shipment assumptions. The analysis
focused on changes to two parameters: The shipment growth rate and the
price elasticity of demand. In the first sensitivity analysis, the
shipment growth rate was changed to 6.5 percent instead of 1.8 percent
based on the trend in actual manufactured home shipments from 2011 to
2014. This growth rate applies to both the no-standards case and
standards case shipments. In a second sensitivity analysis, DOE
considered a standards case shipment scenario in which the price
elasticity is -2.4 (instead of -0.48). This would project a 2.4 percent
reduction in shipments based on the projected cost increases in the
June 2016 NOPR. DOE based this sensitivity case on previous HUD
estimates of -2.4 price elasticity based on a 1992 paper written by
Carol Meeks.\11\ This would translate to a 12 percent reduction in
shipments based on a 5 percent increase in price.
DOE received a number of comments regarding several aspects of the
nationwide impacts described in the June 2016 NOPR. The following
sections provide a discussion of each of the submitted comments as well
as updates to the NIA conducted for this SNOPR.
1. Discussion of Comments and Analysis Updates
a. Shipments Analysis
DOE received numerous comments on the June 2016 NOPR regarding the
methodology and assumptions used in the shipments analysis. In the June
2016 NOPR, for the no-standards case shipments, DOE assumed that all
current manufactured home shipments reported by MHI are for
manufactured homes that are minimally compliant with the HUD Code. NEEA
commented that 54 percent of the manufactured homes built in the
Pacific Northwest are built to the EPA's ENERGY STAR program
specifications (NEEA, No. 190 at p. 4).
Because ENERGY STAR-certified manufactured homes are more efficient
than minimally HUD Code-compliant homes, DOE agrees that ENERGY STAR
homes should not be accounted for in the no-standard shipments and
national impact analyses, so as to avoid overestimating energy savings
and NPV benefits to the consumer. In this SNOPR, DOE's NIA analysis is
based on the assumption that ENERGY STAR-certified manufactured homes
would not provide additional national benefits as a result of this
proposed rule, if made final.\62\ As a result, the national savings in
the SNOPR only accrue to projected no-standards case shipments that are
not ENERGY STAR-certified. Further details on this shipment update is
discussed in chapter 10 of the SNOPR TSD.
---------------------------------------------------------------------------
\62\ ENERGY STAR version 2 requirements for manufactured homes
can be found at: https://www.energystar.gov/partner_resources/residential_new/homes_prog_reqs/national_page.
---------------------------------------------------------------------------
DOE also received comments regarding the volume of manufactured
housing shipments in the future. NEEA commented that the manufactured
housing market has risen in recent years and it predicts the volume of
homes built will be 20-40 percent higher than estimates used in DOE's
NOPR analysis. (NEEA, No. 190 at p. 4) Southern Company commented that
it believes that the shipment analysis should include a ``spike'' or
large increase in shipments in the 2030s to serve as replacements for
homes built in the late 1990s and early 2000s, during which time a
similar large spike in shipments was observed. (Southern Company,
Public Meeting Transcript, No. 148 at p. 104)
DOE acknowledges that there are a variety of factors that could
affect future manufactured home shipments. For the June 2016 NOPR, DOE
determined the shipment growth rate from the AEO 2015 projections of
new housing starts. The AEO projections, focused on U.S. energy
markets, are based on results from NEMS, which enables EIA to make
projections under internally consistent sets of assumptions. Since the
June 2016 NOPR, DOE reviewed the new AEO 2020 projections, and
determined an updated housing start growth rate of 0.3 percent. DOE
continues to use the housing start growth rate from AEO 2020 in the
absence of any growth rate information specific to manufactured
housing. In addition, DOE has updated the shipment analysis to include
the 2015-2019 shipment data provided through MHI, which was the latest
data available at the time of the SNOPR analysis. Furthermore, DOE also
[[Page 47809]]
performed a sensitivity analysis where the shipment growth rate was
changed to 6.5 percent based on the trend in actual manufactured home
shipments from 2011 to 2014. The results of this analysis are provided
in section IV.C.2 of this document.
DOE also recognizes that manufactured homes that reach the end of
their useful life may eventually need to be replaced, and DOE agrees
with Southern Company that replacement of old manufactured homes does
indeed occur in the market and can cause an upshift in shipments.
However, the ownership period of a manufactured home may vary
drastically between different consumers and different manufactured
homes. Furthermore, there may be homeowners who do not purchase a
second manufactured home. Therefore, DOE bases future shipments on
historical trends and residential housing start growth rates rather
than replacements.
Regarding the source of the manufactured housing shipment data,
COBA commented that the Institute for Building Technology and Safety
(``IBTS'') is the primary source for HUD Code housing data and
suggested that DOE contact IBTS directly to guarantee the most accurate
data. (COBA, No. 158 at p. 5) DOE determined shipments from the annual
production and shipment data provided by MHI.\63\ The data source for
the shipments provided by MHI is IBTS. Since the June 2016 NOPR, DOE
has updated the shipment analysis to include the 2015-2019 shipment
data provided through MHI, which was the latest data available at the
time of the SNOPR analysis.
---------------------------------------------------------------------------
\63\ See Manufactured Home Shipments by Product Mix,
Manufactured Housing Institute (2019).
---------------------------------------------------------------------------
DOE also received comments on the June 2016 NOPR regarding the
changes currently taking place within the manufactured housing market.
COBA commented that the overall distribution of manufactured homes has
undergone a paradigm change, where roughly 500 portfolio operators of
LLL Communities own the majority of new HUD Code homes. It said this
change was not addressed by the MH working group and will greatly
affect the cost of implementing the new DOE energy conservation
standards. (COBA, No. 158 at p. 3) COBA commented that the sales of HUD
Code homes through traditional distribution (via independent MH
retailers and other manufacturers) have plummeted in the 21st century
with loss of easy access to chattel capital. However, portfolio LLL
Community operators have since realized that selling new homes on-site
is the best method for success. COBA stated that in 2009, 25 percent of
new HUD Code homes were shipped to LLL Communities; in 2015, it was
closer to 40 percent, and is predicted to be 75 percent of new homes by
2020. (COBA, No. 158 at p. 7) COBA also stated that these newer large
portfolios are very susceptible to price adjustments and are going to
be hurt by the increase in price. (COBA, Public Meeting Transcript, No.
148 at p. 14, 27)
DOE appreciates the information regarding shipment distribution
provided by COBA. However, DOE's LCC analysis focuses primarily on the
effects of the rule on the individual consumers of manufactured homes.
This proposed standard provides for a balanced approach regarding
increased purchase price of the manufactured home in view of energy
cost savings over time for a consumer. DOE's LCC analysis tentative
results are provided in section IV.A.2. The LCC analysis applies to all
consumers, regardless of whether they purchase the home from a
commercial retailer or an onsite community operator.
In addition, DOE's shipment analysis studies the effect of the
incremental price increases of the energy conservation standard on the
total amount of manufacturer shipments in the United States and does
not differentiate on who actually sells the home to consumers. The no-
standards case shipments include shipments that are minimally compliant
to the HUD Code. Furthermore, DOE's analysis for the standards-case
shipments includes a price elasticity factor describing the change in
future shipments in response to the energy conservation standards.
Section IV.C.1.b provides more details regarding the price elasticity
used in the analysis.
In this SNOPR, DOE also had to determine the percentage of the
total shipments that would be applicable to each of the tiers analyzed
based on HUD zone under the tiered proposal. Accordingly, DOE developed
shipments for each of the tiers using the MHS 2019 PUF data discussed
in III.A.2.\64\ First, DOE estimated that manufactured homes in Census
regions (the U.S. Census Bureau divides the country into four census
regions) 1, 2 and 4 combined were representative of HUD zone 3 and
manufactured homes in Census region 3 were representative of HUD zones
1 and 2. Second, DOE considered that a percentage of manufactured homes
placed/sold would shift to less stringent standards, i.e., a percentage
of homes from Tier 2 would shift to Tier 1. The inclusion of this shift
in the market is to more accurately estimate energy savings (and other
downstream results) if the proposed tiered standard approach is
finalized. For this analysis, DOE applied a ``substitution effect'' of
20 percent to homes within $1000 of the price threshold ($55,001-
$56,000). For example, 20 percent of homes placed/sold in the $55,001-
$56,000 range (as provided by the MHS 2019 PUF dataset) would move to
Tier 1 and would be subject to less stringent thermal envelope
standards. DOE chose a higher-end estimate of 20 percent based on
reports that were reviewed for the energy conservation standards
rulemaking for residential furnaces. 81 FR 65720, 65772. The reports
reviewed included estimates for direct rebound effects of household
heating as it relates to more efficient products used more intensively.
While the concept of ``rebound effect'' for the residential furnaces
rulemaking is different than the ``substitution effect'' that is being
considered in this rulemaking, with the lack of any data specific to
the rebound effect for manufactured homes, DOE determined that 20
percent is a reasonable proxy for the substitution effect analysis
being performed in this SNOPR.
---------------------------------------------------------------------------
\64\ Manufactured Housing Survey, Public Use File (PUF) 2019.
https://www.census.gov/data/datasets/2019/econ/mhs/puf.html.
---------------------------------------------------------------------------
As a result, Table IV.23 provides the corresponding percentage of
total manufactured homes placed/sold applicable to each tier based on
HUD zone and size. These percentages were applied to the total
shipments to determine the shipments for each tier. Further discussion
on this analysis is provided in the Chapter 10 of the SNOPR TSD.
Without the substitution effect applied, there would be more shipments
in the Tier 2 standard for all climate zones, which would increase the
national energy savings from the tiered standard.
[[Page 47810]]
Table IV.20--Shipment Breakdown Based on Tier and Proposed Climate Zone
----------------------------------------------------------------------------------------------------------------
Climate zone 1 or 2 Climate zone 3
---------------------------------------------------------------
SS (%) MS (%) SS (%) MS (%)
----------------------------------------------------------------------------------------------------------------
Tier 1 Standard................................. 53.58 0 57.32 0
Tier 2 Standard................................. 46.42 100.00 42.68 100.00
---------------------------------------------------------------
Total....................................... 100.00 100.00 100.00 100.00
----------------------------------------------------------------------------------------------------------------
DOE requests comment on the shipment breakdown per tier and using a
substitution effect of 20 percent on shipments to account for the shift
in homes sold to the lower tiered standard. DOE requests comment on
whether it should use a different substitution effect value for this
analysis--and if so, why. (Please provide data in support of an
alternative substitution effect value.)
b. Price Elasticity of Demand
Price elasticity of demand (price elasticity) is an economic
concept that describes the change of the quantity demanded in response
to a change in price. Price elasticity is typically represented as a
ratio of the percentage change in quantity relative to a percentage
change in price. It allows DOE to assess the extent to which consumers
and retailers are unable or unwilling to purchase new homes as a result
of the increased costs. In the June 2016 NOPR, DOE used a price
elasticity value of -0.48 to estimate the effect of the proposed rule
on manufactured home shipments. This value was sourced from a study by
Marshall and Marsh.\65\
---------------------------------------------------------------------------
\65\ See Marshall, M.I. & Marsh, T.L. Consumer and investment
demand for manufactured housing units. J. Hous. Econ. 16, 59-71
(2007).
---------------------------------------------------------------------------
DOE received several comments on the June 2016 NOPR regarding the
price elasticity that was used in the NOPR. MHARR stated that the -0.48
value was published in 2007 prior to the collapse of the housing market
in 2008-2009. (MHARR, Public Meeting Transcript, No. 148 at p. 112)
Southern Company and MHI expressed that the elasticity value of -0.48
seemed too low, particularly considering that a large part of the
manufactured housing market is low-income households. Southern Company
indicated that an elasticity value of -1 would be more intuitive.
(Southern Company, Public Meeting Transcript, No. 148 at p. 110) MHI
stated that HUD uses an elasticity value of -2.4 instead, which would
yield a much greater decrease in production as a result of this
standard. MHI indicated that both values are outdated, and that DOE may
be underestimating the impact of the proposed rule. MHI suggested that
DOE and HUD develop a new elasticity measure that is more up to date
and accurately measures price sensitivity from manufacturers and
retailers. (MHI, No. 182 at p. 5) MHCC also stated that the June 2016
NOPR analysis underestimates the reduction in production levels due to
the proposed rule by using -0.48, which they deemed too low. (MHCC, No.
162 at p. 2)
DOE reviewed the Meeks study cited by HUD, as well as various
others, and concluded that the Marshall and Marsh elasticity value of -
0.48 was the most reliable figure. The Meeks study was published in
1993 and is based on manufactured housing shipments as a proxy for
consumer demand.\66\ The data from the study ranges from 1961 to 1989
and found an overall price elasticity of -2.4. The Meeks study used a
one-stage regression model, similar to a study by Gates in 1984 which
found elasticities from -3.0 to -2.5.\67\ A study in 1994 by Kavanaugh
re-evaluated the methods behind the Gates study, using a two-stage
regression instead of one stage. Using shipment data from 1972 to 1989,
the Kavanaugh study reported a price elasticity estimate of -0.7.\68\
---------------------------------------------------------------------------
\66\ See Meeks, C., 1992, Price Elasticity of Demand for
Manufactured Homes: 1961-1989.
\67\ See Gates, H., 1984. Price Elasticity of Demand for
Manufactured Homes. Manufactured Housing Institute.
\68\ See Kavanaugh, DC, Anderson, D.M., Marsh, T.L., Lee, A.D.,
Onisko, S., 1994. Key Elements Affecting Manufactured Home Household
Investments in Energy-Efficiency: An Empirical Analysis.
---------------------------------------------------------------------------
Marshall and Marsh used the number of new manufactured homes placed
for residential use as a proxy for consumer demand and also separated
short-term consumer behavior from long-term influences. As part of
their paper, Marshall and Marsh reviewed all the aforementioned studies
(including Meeks', Gates', and Kavanaugh's studies) to determine the
inputs into their model. They used national level data from similar
sources to the Meeks, Gates, and Kavanaugh studies for their consumer
demand model. Marshall and Marsh estimated the price elasticity of
demand for manufactured homes at -0.48 using a two-stage regression
model and concluded that consumers in general are not so price
sensitive and are likely willing to accept incremental higher prices
for improvements in cost efficiency. For the NIA, DOE determined the
Marshall and Marsh study is still the most recent estimate of consumer
demand based on price changes for manufactured housing and maintains
the proposed usage of the -0.48 elasticity value. In recognition of the
range of estimates in the housing literature, DOE also retained -2.4 as
a sensitivity analysis. As discussed previously, DOE is proposing Tier
1 of the tiered standard to address concerns about affordability for
low-income consumers. DOE estimates that based on a price elasticity of
-0.48, the SNOPR would result in a loss in demand and availability of
about 53,329 homes (single section and multi-section combined) for the
tiered standard. Out of the 53,329 homes in the tiered standard, the
majority of the reduction is in Tier 2 (93 percent) vs. Tier 1 (7
percent). Within Tier 1, DOE estimates a 0.52 percent reduction
(essentially no reduction) in availability due to Tier 1 standards for
low income purchasers. As a sensitivity, DOE also considered a price
elasticity of demand of -2.4 instead of -0.48. Further discussion on
this sensitivity is provided in Section 10.4 of Chapter 10 of the TSD.
Table IV.1 provides a summary of the change in shipments from baseline
for the tiered standards for a price elasticity of -0.48 and -2.4 to
reflect the people who do not buy a manufactured home under the
standards case because they are price-sensitive.
c. Net Present Value
DOE received a comment concerning the discount rates used to
calculate the NPV. GWU commented that it has concerns regarding the 3-
percent and 7-percent discount rate used by DOE in the annualized
benefits and costs calculation in the June 2016 NOPR. GWU stated that
DOE's 3-percent and 7-percent discount rates were too low and that a
more realistic discount rate, such as chattel loan rates, would reflect
a much lower benefit to consumers. (GWU, No. 175 at p. 5)
[[Page 47811]]
DOE generally uses real discount rates of 3 percent and 7 percent
to discount future costs and savings to present values.\69\ The 3- and
7-percent discount rates are based on Circular A-4 issued by the Office
of Management and Budget (OMB) as guidance on the development of
regulatory analysis as required by Executive Order (E.O.) 12866.\70\
The 7-percent rate is the established estimate of the average rate of
return, before tax, to private capital in the U.S. economy. The 3-
percent rate is called the ``social rate of time preference,'' which is
the rate at which society discounts future consumption flows to their
present value.\71\ These real discount rates are used to calculate
annualized benefits and costs in DOE rulemakings in order to perform
cross-industry comparisons in a standardized manner. In the SNOPR, DOE
maintains discount rates of 3 percent and 7 percent for the NPV and the
annualized benefits and costs. Additionally, as discussed in section
IV.A.1.c, DOE uses a discount rate based on the chattel loan interest
rate in the LCC analysis.
---------------------------------------------------------------------------
\69\ DOE relies on a range of discount rates in monetizing
emission reductions as discussed in section IV.D.2 of this document.
\70\ https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf.
\71\ Office of Management and Budget, Circular A-4, September
2003.
---------------------------------------------------------------------------
d. Other Comments
DOE also received another comment that was not specific to any of
the previous topics regarding nationwide impacts. NPGA commented that
it appreciated DOE's use of full-fuel cycle analysis. It also supported
the estimated reduction of pollutants and greenhouse gases for both
site and upstream emissions. (NPGA, No. 171 at p.1) DOE appreciates
NPGA's comment, and continues to use the full-fuel cycle analysis in
this SNOPR.
2. Results
This section provides the tentative results for the projected
nationwide impact analyses, including the NES and NPV. In this SNOPR,
DOE updated the energy efficiency measures analyzed as described in
section III.E.2.b. DOE also updated all inputs to the NES and NPV based
on the updated AEO 2020. This includes updates to the housing starts
growth rate, inflation rates, energy prices, energy prices growth
rates, and full-fuel cycle energy factors. In addition, DOE also
updated the shipment analysis to include the 2015-2019 MHI shipments
and exclude any ENERGY STAR shipments to avoid overestimating energy
savings. Furthermore, for the tiered proposal, DOE had to determine
shipments per tier, as described in section IV.C.1.a, by implementing a
substitution effect of shifting Tier 2 shipments to Tier 1 for the
tiered proposal. Lastly, the analyses include updates to the average
price of a manufactured home, and fuel type distributions. Further
details on the updated inputs are discussed in chapters 8, 10, and 11
of the SNOPR TSD.
DOE notes that the NES does not account for the energy savings for
the people who do not buy a manufactured home under the standards case
because they are price-sensitive. As such, NES only accounts for
savings for those that are able to purchase a manufactured home. The
NES is calculated based on the same number of homes purchased under
both the standards and no standards case such that there are no energy
savings attributed to less homes purchased.
Table IV. reflects the NES results over a 30-year analysis period
under the SNOPR on a primary energy savings basis. Primary energy
savings apply a factor to account for losses associated with
generation, transmission, and distribution of electricity. Primary
energy savings differ among the different climate zones because of
differing energy conservation requirements in each climate zone and
different shipment projections in each climate zone.
Table IV.20--Cumulative National Energy Savings of Manufactured Homes Purchased 2023-2052 With a
30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
Tiered standards Untiered standard
---------------------------------------------------------------
Single-section Multi-section Single-section Multi-section
(quads) (quads) (quads) (quads)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................. 0.213 0.591 0.303 0.591
Climate Zone 2.................................. 0.164 0.467 0.243 0.467
Climate Zone 3.................................. 0.300 0.463 0.376 0.463
---------------------------------------------------------------
Total....................................... 0.677 1.521 0.921 1.521
----------------------------------------------------------------------------------------------------------------
Table IV.21 illustrates the cumulative NES over the 30-year
analysis period for the tiered proposals on an FFC energy savings
basis. FFC energy savings apply a factor to account for losses
associated with generation, transmission, and distribution of
electricity, and the energy consumed in extracting, processing, and
transporting or distributing primary fuels. NES values differ among the
different climate zones because of differing energy efficiency
requirements in each climate zone and different shipment projections in
each climate zone.
Table IV.21--Cumulative National Energy Savings, Including Full-Fuel-Cycle of Manufactured Homes Purchased 2023-
2052 With a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
Tiered standards Untiered standard
---------------------------------------------------------------
Single-section Multi-section Single-section Multi-section
(quads) (quads) (quads) (quads)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................. 0.222 0.616 0.316 0.616
Climate Zone 2.................................. 0.172 0.491 0.254 0.491
Climate Zone 3.................................. 0.324 0.499 0.405 0.499
---------------------------------------------------------------
[[Page 47812]]
Total....................................... 0.718 1.606 0.976 1.606
----------------------------------------------------------------------------------------------------------------
Without the substitution effect applied, the total cumulative FFC
energy savings for the tiered standards would increase by 0.2 percent.
Table IV.22 and Table IV.23 illustrate the NPV of consumer benefits
over the 30-year analysis period under the tiered proposals for a
discount rate of 7 percent and 3 percent, respectively. The NPV of
manufactured homeowner benefits differ among the different climate
zones because there are different upfront costs and operating cost
savings associated with each climate zone and different shipment
projections in each climate zone. For the primary tiered proposal, all
climate zones have a positive NPV for both discount rates under this
SNOPR.
Table IV.22--Net Present Value of Manufactured Homes Purchased 2023-2052 With a 30-Year Lifetime at a 7%
Discount Rate
----------------------------------------------------------------------------------------------------------------
Tiered standards Untiered standard
---------------------------------------------------------------
Single-section Multi-section Single-section Multi-section
(billion (billion (billion (billion
2020$) 2020$) 2020$) 2020$)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................. $0.22 $0.47 $0.24 $0.46
Climate Zone 2.................................. 0.08 0.08 0.00 0.06
Climate Zone 3.................................. 0.42 0.36 0.26 0.35
---------------------------------------------------------------
Total....................................... 0.72 0.90 0.49 0.87
----------------------------------------------------------------------------------------------------------------
Table IV.23--Net Present Value of Manufactured Homes Purchased 2023-2052 With a 30-Year Lifetime at a 3%
Discount Rate
----------------------------------------------------------------------------------------------------------------
Tiered standards Untiered standard
---------------------------------------------------------------
Single-section Multi-section Single-section Multi-section
(billion (billion (billion (billion
2020$) 2020$) 2020$) 2020$)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................. $0.70 $1.69 $0.85 $1.63
Climate Zone 2.................................. 0.38 0.79 0.29 0.73
Climate Zone 3.................................. 1.34 1.50 1.12 1.44
---------------------------------------------------------------
Total....................................... 2.42 3.98 2.26 3.80
----------------------------------------------------------------------------------------------------------------
Table IV.24 shows the tentative projected benefits and costs to the
manufactured homeowner associated with the SNOPR, expressed in terms of
annualized values.
Table IV.24--Annualized Benefits and Costs to Manufactured Home Homeowners Under the SNOPR
----------------------------------------------------------------------------------------------------------------
Monetized (million 2020$/year)
Discount rate -----------------------------------------------
(%) Primary Low estimate High estimate
estimate ** ** **
----------------------------------------------------------------------------------------------------------------
Tiered Standards
----------------------------------------------------------------------------------------------------------------
Benefits *
Operating (Energy) Cost Savings............. 7 $509 $471 $554
3 774 701 858
Costs *
Incremental Purchase Price Increase......... 7 359 352 385
3 427 407 464
Net Benefits/Costs *
7 150 119 169
3 347 294 394
[[Page 47813]]
Untiered Standard
----------------------------------------------------------------------------------------------------------------
Benefits *
Operating (Energy) Cost Savings............. 7 565 523 615
3 859 778 951
Costs *
Incremental Purchase Price Increase......... 7 440 429 471
3 530 503 576
Net Benefits/Costs *
7 125 94 144
3 329 275 375
----------------------------------------------------------------------------------------------------------------
* The benefits and costs are calculated for homes shipped in 2023-2052.
** The Primary, Low, and High Estimates utilize forecasts of energy prices from the AEO 2020 Reference case, Low
Economic Growth case, and High Economic Growth case, respectively.
DOE also estimated the deadweight loss associated with the proposed
rule stemming from the reduced shipments in the standards case
scenario. Deadweight loss is a cost to society as a whole generated by
shifting the market away from the no-standards case equilibrium. If the
supply curve is perfectly elastic, then the deadweight loss of an
energy conservation standard is entirely borne by consumers and not
producers. The deadweight loss is equivalent to one-half the
incremental price multiplied by the reduction in total shipments,
discounted over the 30-year analysis. If, however, the supply curve's
slope near equilibrium is similar in magnitude to the demand curve,
then the deadweight loss is equivalent to the incremental price
multiplied by the reduction in total shipments, discounted over the 30-
year analysis.
DOE does not have data on the supply curve elasticity, therefore
DOE estimated the deadweight loss for the proposed standards using a
price elasticity of -0.48.
DOE tentatively estimates that the discounted total deadweight loss
for the standards based on Tier 1 range from $0.8 to $1.5 million
(2020$, discounted at 3 percent) and $0.4 to $0.9 million (2020$,
discounted at 7 percent). DOE tentatively estimates that the discounted
total deadweight loss for the standards based on Tier 2 from $75.4 to
$150.9 million (2020$, discounted at 3 percent) and $43.9 to $87.8
million (2020$, discounted at 7 percent). DOE tentatively estimates
that the discounted total deadweight loss for the untiered standard
range from $103.1 to $206.2 million (2020$, discounted at 3 percent)
and $60 to $120 million (2020$, discounted at 7 percent).
DOE requests comment on the calculation of deadweight loss
presented above and the extent to which there are market failures in
the no-standards case.
DOE considered two sensitivity analyses relating to shipments.
First, DOE considered a shipment scenario in which the growth rate is
6.5 percent (instead of 0.3 percent) based on the trend in actual
manufactured home shipments from 2011 to 2014. This growth rate applies
to both the no-standards case and standards case shipments. DOE's
primary scenario is based on the residential housing start data from
AEO 2020. The sensitivity analysis calculates the increase in NES and
NPV associated with a much larger future market for manufactured homes.
Table IV.25 summarizes the results of the sensitivity analysis. A
detailed description of the sensitivity analysis is provided in
appendix 11A of the SNOPR TSD.
Table IV.25--Shipments Growth Rate Sensitivity Analysis NES and NPV Results
----------------------------------------------------------------------------------------------------------------
Net present Net present
National value 3% value 7%
energy savings discount rate discount rate
(full fuel (billion (billion
cycle quads) 2020$) 2020$)
----------------------------------------------------------------------------------------------------------------
Tiered Standard
----------------------------------------------------------------------------------------------------------------
0.3% Shipment Growth (primary scenario)......................... 2.32 $6.40 $1.62
6.5% Shipment Growth............................................ 8.13 20.12 4.35
----------------------------------------------------------------------------------------------------------------
Untiered Standards
----------------------------------------------------------------------------------------------------------------
0.3% Shipment Growth (primary scenario)......................... 2.58 6.07 1.36
6.5% Shipment Growth............................................ 9.04 19.10 3.66
----------------------------------------------------------------------------------------------------------------
[[Page 47814]]
In a second sensitivity analysis, DOE considered a standards case
shipment scenario in which the price elasticity is -2.4 (instead of -
0.48). HUD has used an estimate of -2.4 in analyses of revisions to its
regulations \72\ promulgated at 24 CFR part 3282 based on a 1992 paper
written by Carol Meeks.\73\ DOE's primary scenario is based on a study
published in 2007 in the Journal of Housing Economics. The sensitivity
analysis calculates the decrease in NES and NPV associated with a
larger decrease in shipments resulting from the more negative price
elasticity value. See Table IV.26 for results of the sensitivity
analysis. A detailed description of the sensitivity analysis is
provided in appendix 11A of the SNOPR TSD.
---------------------------------------------------------------------------
\72\ For example, see http://www.regulations.gov/#!documentDetail;D=HUD-2014-0033-0001.
\73\ Meeks, C., 1992, Price Elasticity of Demand for
Manufactured Homes: 1961 to 1989.
Table IV.26--Price Elasticity of Demand Sensitivity Analysis NES and NPV Results
----------------------------------------------------------------------------------------------------------------
Net present Net present
National value 3% value 7%
energy savings discount rate discount rate
(full-fuel (billion (billion
cycle quads) 2020$) 2020$)
----------------------------------------------------------------------------------------------------------------
Tiered Standards
----------------------------------------------------------------------------------------------------------------
-0.48 Price Elasticity (primary scenario)....................... 2.32 $6.40 $1.62
-2.4 Price Elasticity........................................... 2.12 5.90 1.51
Untiered Standard
----------------------------------------------------------------------------------------------------------------
-0.48 Price Elasticity (primary scenario)....................... 2.58 6.07 1.36
-2.4 Price Elasticity........................................... 2.31 5.46 1.23
----------------------------------------------------------------------------------------------------------------
D. Nationwide Energy Savings and Emissions Benefits
1. Emissions Analysis
DOE estimates environmental benefits in the form of reduced
emissions of air pollutants and greenhouse gases associated with
electricity production. DOE bases these estimates on a 30-year analysis
period of manufactured home shipments, accounting for a 30-year home
lifetime. DOE's analysis estimates reductions in emissions of six
pollutants associated with energy savings: Carbon dioxide
(CO2), mercury (Hg), nitric oxide and nitrogen dioxide
(NOX), sulfur dioxide (SO2), methane
(CH4), and nitrous oxide (N2O). These reductions
are referred to as ``site'' emissions reductions. Furthermore, DOE
estimates reductions due to ``upstream'' activities in the fuel
production chain. These upstream activities comprise extraction,
processing, and transporting fuels to the site of combustion. Together,
site emissions reductions and upstream emissions reductions account for
the FFC.
As in the June 2016 NOPR, DOE estimated emissions reductions based
on emission factors for each pollutant, which depend on the type of
fuel associated with energy savings (electricity, natural gas,
liquefied petroleum gas, fuel oil). The analysis of power sector
emissions of CO2, NOX, SO2, and Hg
uses marginal emissions factors that were derived from data in AEO
2020.\74\ Full details of this methodology are described in chapter 13
of the SNOPR TSD.
---------------------------------------------------------------------------
\74\ See Energy Information Administration, Annual Energy
Outlook 2019 with Projections to 2050 (2019), available at https://www.eia.gov/outlooks/aeo/pdf/AEO2019.pdf.
---------------------------------------------------------------------------
Because the onsite operation of manufactured homes may require
combustion of fossil fuels and results in emissions of CO2,
NOX, and SO2 at the manufactured home sites where
this combustion occurs, DOE also accounted for the reduction in these
site emissions and the associated upstream emissions due to the
standards. Site emissions of the above gases were estimated using
emissions intensity factors from an EPA publication.\75\ The emissions
intensity factors are expressed in terms of physical units per MWh or
MMBtu of site energy savings. Total emissions reductions are estimated
using the energy savings calculated in the national impact analysis. As
discussed previously in section IV.C.2, the energy savings calculated
does not account for the energy savings for the people who do not buy a
manufactured home under the standards case because they are price-
sensitive, but only accounts for savings for those that are able to
purchase a manufactured home. The energy savings is calculated based on
the same number of homes purchased under both the standards and no
standards case such that there are no energy savings attributed to less
homes purchased. After calculating the total reduction of emissions,
DOE estimated the monetized value associated with the reduction of
these emissions, as discussed in section IV.D.2 of this document.
---------------------------------------------------------------------------
\75\ U.S. Environmental Protection Agency. External Combustion
Sources. In Compilation of Air Pollutant Emission Factors. AP-42.
Fifth Edition. Volume I: Stationary Point and Area Sources. Chapter
1. Available at https://www.epa.gov/aiR-emissions-factors-and-quantification/ap-42-compilation-aiR-emissions-factors.
---------------------------------------------------------------------------
2. Monetizing Emissions Impacts
As part of the analysis of the impacts of this proposed rule, DOE
considered the estimated monetary benefits from the reduced emissions
of CO2, CH4, N2O, NOX and
SO2 that are expected to result from the proposed energy
standards. In order to make this calculation analogous to the
calculation of the NPV of consumer benefit, DOE considered the reduced
emissions expected to result over the lifetime of products shipped in
the projection period for the standards. This section summarizes the
basis for the values used for monetizing the emissions benefits in this
SNOPR.
a. Monetization of Greenhouse Gas Emissions
DOE estimates the monetized benefits of the reductions in emissions
of CO2, CH4, and N2O by using a
measure of the social cost (``SC'') of each pollutant (e.g., SC-
CO2). These estimates represent the monetary value of the
net harm to society associated with a marginal increase in emissions of
these pollutants in a given year, or the benefit of avoiding that
increase. These estimates are intended to include (but are not limited
to) climate-change-related changes in net agricultural productivity,
human health, property damages from increased flood risk, disruption of
energy systems, risk of conflict,
[[Page 47815]]
environmental migration, and the value of ecosystem services.
DOE used the estimates for the social cost of greenhouse gases
(``SC-GHG'') from the most recent update of the Interagency Working
Group on Social Cost of Greenhouse Gases, United States Government
(IWG) working group, from ``Technical Support Document: Social Cost of
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive
Order 13990.'' (February 2021 TSD). DOE has determined that the
estimates from the February 2021 TSD, as described more below, are
based upon sound analysis and provide well founded estimates for DOE's
analysis of the impacts of the reductions of emissions anticipated from
the proposed rule.
The SC-GHG estimates in the February 2021 TSD are interim values
developed under Executive Order (E.O.) 13990 for use until an improved
estimate of the impacts of climate change can be developed based on the
best available science and economics. The SC-GHG estimates used in this
analysis were developed over many years, using a transparent process,
peer-reviewed methodologies, the best science available at the time of
that process, and with input from the public. Specifically, an
interagency working group (IWG) that included DOE, the EPA and other
executive branch agencies and offices used three integrated assessment
models (IAMs) to develop the SC-CO2 estimates and
recommended four global values for use in regulatory analyses. Those
estimates were subject to public comment in the context of dozens of
proposed rulemakings as well as in a dedicated public comment period in
2013.
The SC-CO2 estimates were first released in February
2010 and updated in 2013 using new versions of each IAM. In 2015, as
part of the response to public comments received to a 2013 solicitation
for comments on the SC-CO2 estimates, the IWG announced a
National Academies of Sciences, Engineering, and Medicine review of the
SC-CO2 estimates to offer advice on how to approach future
updates to ensure that the estimates continue to reflect the best
available science and methodologies. In January 2017, the National
Academies released their final report, Valuing Climate Damages:
Updating Estimation of the Social Cost of Carbon Dioxide, and
recommended specific criteria for future updates to the SC-
CO2 estimates, a modeling framework to satisfy the specified
criteria, and both near-term updates and longer-term research needs
pertaining to various components of the estimation process (National
Academies 2017). On January 20, 2021, President Biden issued Executive
Order 13990, which directed the IWG to ensure that the U.S.
Government's (USG) estimates of the social cost of carbon and other
greenhouse gases reflect the best available science and the
recommendations of the National Academies (2017). The IWG was tasked
with first reviewing the estimates currently used by the USG and
publishing interim estimates within 30 days of E.O. 13990 that reflect
the full impact of GHG emissions, including taking global damages into
account, which resulted in the issuance of the February 2021 TSD. More
information on the basis for the IWG's interim values may be found in
the IWG's Technical Support Document.\76\
---------------------------------------------------------------------------
\76\ See Interagency Working Group on Social Cost of Greenhouse
Gases, Technical Support Document: Social Cost of Carbon, Methane,
and Nitrous Oxide. Interim Estimates Under Executive Order 13990,
Washington, DC, February 2021. (https://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf?so
urce=email).
---------------------------------------------------------------------------
DOE's derivations of the SC-CO2, SC-N2O, and
SC-CH4 values used for this SNOPR are discussed in the
following sections, and the results of DOE's analyses estimating the
benefits of the reductions in emissions of these pollutants are
presented in section IV.3.b of this document.
Social Cost of Carbon
The SC-CO2 values used for this NOPR were generated
using the values presented in the 2021 update from the IWG. Table IV.27
shows the updated sets of SC-CO2 estimates from the latest
interagency update in 5-year increments from 2020 to 2050. The full set
of annual values used is presented in Appendix 14-A of the SNOPR TSD.
For purposes of capturing the uncertainties involved in regulatory
impact analysis, DOE has determined it is appropriate to include all
four sets of SC-CO2 values, as recommended by the IWG.\77\
These SC-CO2 estimates are the same as those used in the
June 2016 NOPR except adjusted for inflation to 2020 dollars. The June
2016 NOPR provides further detail of DOE's SC-CO2 analysis
for the June 2016 NOPR. See 81 FR 39791.
---------------------------------------------------------------------------
\77\ For example, the TSD discusses how the understanding of
discounting approaches suggests that discount rates appropriate for
intergenerational analysis in the context of climate change may be
lower than 3 percent.
Table IV.27--Annual SC-CO2 Values From 2021 Interagency Update, 2020-2050
[2020$ per Metric Ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate
---------------------------------------------------------------------------
Year 3% (95th
5% (average) 3% (average) 2.5% (average) percentile)
----------------------------------------------------------------------------------------------------------------
2020................................ 14 51 76 152
2025................................ 17 56 83 169
2030................................ 19 62 89 187
2035................................ 22 67 96 206
2040................................ 25 73 103 225
2045................................ 28 79 110 242
2050................................ 32 85 116 260
----------------------------------------------------------------------------------------------------------------
In calculating the potential global benefits resulting from reduced
CO2 emissions, DOE used the values from the 2021 interagency
report, adjusted to 2020$ using the implicit price deflator for gross
domestic product (GDP) from the Bureau of Economic Analysis. For each
of the four sets of SC-CO2 cases specified, the values for
emissions in 2020 were $14, $51, $76, and $152 per metric ton avoided
(values expressed in 2020$). DOE derived values after 2050 based on the
trend in 2010-2050 in each of the four cases in the IWG update.
DOE multiplied the CO2 emissions reduction estimated for
each year by the SC-CO2 value for that year in each of the
four cases. To calculate a present value
[[Page 47816]]
of the stream of monetary values, DOE discounted the values in each of
the four cases using the specific discount rate that had been used to
obtain the SC-CO2 values in each case.
Social Cost of Methane and Nitrous Oxide
The SC-CH4 and SC-N2O values used for this
SNOPR were generated using the values presented in the 2021 update from
the IWG.\78\ Table IV.28 shows the updated sets of SC-CH4
and SC-N2O estimates from the latest interagency update in
5-year increments from 2020 to 2050. The full set of annual values used
is presented in Appendix 14-A of the SNOPR TSD. To capture the
uncertainties involved in regulatory impact analysis, DOE has
determined it is appropriate to include all four sets of SC-
CH4 and SC-N2O values, as recommended by the IWG.
---------------------------------------------------------------------------
\78\ See Interagency Working Group on Social Cost of Greenhouse
Gases, Technical Support Document: Social Cost of Carbon, Methane,
and Nitrous Oxide. Interim Estimates Under Executive Order 13990,
Washington, DC, February 2021. https://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf.
Table IV.28--Annual SC-CH4 and SC-N2O Values From 2021 Interagency Update, 2020-2050
[2020$ per metric ton]
--------------------------------------------------------------------------------------------------------------------------------------------------------
SC-CH4 (discount rate and statistic) SC-N2O (discount rate and statistic)
------------------------------------------------------------------------------------------------------------
Year 5% 3% 2.5% 3% (95th 5% 3% 2.5% 3% (95th
(Average) (Average) (Average) percentile) (Average) (Average) (Average) percentile)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020....................................... 670 1500 2000 3900 5800 18000 27000 48000
2025....................................... 800 1700 2200 4500 6800 21000 30000 54000
2030....................................... 940 2000 2500 5200 7800 23000 33000 60000
2035....................................... 1100 2200 2800 6000 9000 25000 36000 67000
2040....................................... 1300 2500 3100 6700 10000 28000 39000 74000
2045....................................... 1500 2800 3500 7500 12000 30000 42000 81000
2050....................................... 1700 3100 3800 8200 13000 33000 45000 88000
--------------------------------------------------------------------------------------------------------------------------------------------------------
DOE multiplied the CH4 and N2O emissions
reduction estimated for each year by the SC-CH4 and SC-
N2O estimates for that year in each of the cases. To
calculate a present value of the stream of monetary values, DOE
discounted the values in each of the cases using the specific discount
rate that had been used to obtain the SC-CH4 and SC-
N2O estimates in each case.
b. Monetization of Other Air Pollutants
For the SNOPR, DOE estimated the monetized value of NOX
and SO2 emissions reductions from electricity generation
using benefit per ton estimates based on air quality modeling and
concentration-response functions conducted for the Clean Power Plan
final rule. EPA reported values for NOX (as
PM2.5) and SO2 for 2020, 2025, and 2030 using
discount rates of 3 percent and 7 percent. DOE developed values
specific to the sector for manufactured housing using a method
described in appendix 14B of the SNOPR TSD. For this analysis DOE used
linear interpolation to define values for the years between 2020 and
2025 and between 2025 and 2030; for years beyond 2030 the value is held
constant.
DOE estimated the monetized value of NOX and
SO2 emissions reductions from site use of gas in
manufactured homes using benefit per ton estimates from the EPA's
``Technical Support Document Estimating the Benefit per Ton of Reducing
PM2.5 Precursors from 17 Sectors'' (``EPA TSD''). Although
none of the sectors refers specifically to residential and commercial
buildings, the sector called ``area sources'' would be a reasonable
proxy for residential and commercial buildings. ``Area sources''
represents all emission sources for which states do not have exact
(point) locations in their emissions inventories. Because exact
locations would tend to be associated with larger sources, ``area
sources'' would be fairly representative of small dispersed sources
like homes and businesses. The EPA TSD provides high and low estimates
for 2016, 2020, 2025, and 2030 at 3- and 7-percent discount rates. DOE
primarily relied on the low estimates to be conservative.
DOE multiplied the emissions reduction (in tons) in each year by
the associated $/ton values, and then discounted each series using
discount rates of 3 percent and 7 percent as appropriate.
3. Discussion of Comments
DOE received a number of comments regarding several aspects of the
nationwide environmental benefits described in the June 2016 NOPR. The
following sections provide a discussion of each of the submitted
comments, including the changes that DOE has made in the methodology
and assumptions.
a. Social Cost of Carbon
DOE received several comments on the development of, and the use of
the SC-CO2 values in DOE's analysis in the June 2016 NOPR. A
group of trade associations led by the U.S. Chamber of Commerce
objected to DOE's continued use of the SC-CO2 in the cost-
benefit analysis and stated that the SC-CO2 calculation
should not be used in any rulemaking until it undergoes a more rigorous
notice, review, and comment process. (U.S. Chamber of Commerce., No.
181 at p. 4) The Cato Institute also criticized DOE's use of SC-
CO2 estimates on the basis that they are subject to
considerable uncertainty. The Cato Institute criticized several aspects
of the determination of the SC-CO2 values by the IWG as
being discordant with the best climate science, highly sensitive to
input parameters and scope of the models, and not reflective of climate
change impacts. The Cato Institute stated that until integrated
assessment models (IAMs) are made consistent with what it stated is
mainstream climate science, the SC-CO2 should be barred from
use in this and all other Federal rulemakings. (Cato Institute, No. 180
at pp. 1-4, 15-16). MHARR stated that the global benefits calculated
via the SC-CO2 in the analysis are not only unreliable and
arbitrary, but also compare the monetary benefits to the world to a
rule affecting less than 10 percent of the domestic
[[Page 47817]]
housing market. (MHARR, No. 154 at p. 32).
In contrast, the Joint Advocates stated that only a partial
accounting of the costs of climate change (those most easily monetized)
can be provided, which inevitably involves incorporating elements of
uncertainty. The Joint Advocates commented that accounting for the
economic harms caused by climate change is a critical component of
sound cost--benefit analyses of regulations that directly or indirectly
limit greenhouse gases. The Joint Advocates stated that several
executive orders direct Federal agencies to consider non-economic costs
and benefits, such as environmental and public health impacts. (Joint
Advocates, No. 147 at pp. 2-3) Furthermore, the Joint Advocates argued
that without an SC-CO2 estimate, regulators would by default
be using a value of zero for the benefits of reducing carbon pollution,
thereby implying that carbon pollution has no costs. The Joint
Advocates stated that it would be arbitrary for a Federal agency to
weigh the societal benefits and costs of a rule with significant carbon
pollution effects but to assign no value at all to the considerable
benefits of reducing carbon pollution. (Joint Advocates, No. 147 at p.
3).
The Joint Advocates stated that assessment and use of the IAMs in
developing the SC-CO2 values has been transparent. The Joint
Advocates further noted that the Government Accountability Office found
that the IWG's processes and methods used consensus-based decision
making, relied on existing academic literature and models, and took
steps to disclose limitations and incorporate new information. The
Joint Advocates stated that repeated opportunities for public comment
demonstrate that the IWG's SC-CO2 estimates were developed
and are being used transparently. (Joint Advocates, No. 147 at p. 4)
The Joint Advocates stated that (1) the IAMs used reflect the best
available, peeR-reviewed science to quantify the benefits of carbon
emission reductions; (2) uncertainty is not a valid reason for
rejecting the SC-CO2 analysis, and (3) the IWG was rigorous
in addressing uncertainty inherent in estimating the economic cost of
pollution. (Joint Advocates, No. 147 at pp. 5, 17-18, 18-19) The Joint
Advocates added that the increase in the SC-CO2 estimate in
the 2013 update reflects the growing scientific and economic research
on the risks and costs of climate change, but is still very likely an
underestimate of the SC-CO2. (Joint Advocates, No. 147 at p.
4) The Joint Advocates stated that recent research suggests that
CO2 fertilization is overestimated and may be canceled out
by negative impacts on agriculture. (Joint Advocates, No. 147 at p.
16).
DOE emphasizes that the SC-GHG analysis presented in this SNOPR and
TSD was performed in support of the cost-benefit analyses required by
Executive Order 12866, and is provided to inform the public of the
impacts of emissions reductions resulting from this proposed rule. The
SC-GHG estimates were not factored into DOE's determination of whether
the proposed rule could be cost-effective under section 413 of EISA
2007.
As noted previously, DOE has updated the SC-CO2 analysis
in this SNOPR using interim estimated values issued by the IWG
established under Executive Order 13990. DOE has determined that the
estimates from the February 2021 TSD are based upon sound analysis and
provide well founded estimates for DOE's analysis of the impacts of
CO2 related to the reductions of emissions resulting from
this proposed rule. The SC-CO2 estimates used in this
analysis were developed over many years, using a transparent process,
peer-reviewed methodologies, the best science available at the time of
that process, and with input from the public. Specifically, in 2009, an
interagency working group (IWG) that included DOE and other executive
branch agencies and offices was established to ensure that agencies
were using the best available science and to promote consistency in the
SC-CO2 values used across agencies. The February 2021 TSD
provides a complete discussion of the IWG's initial review conducted
under E.O. 13990.
First, as the IWG affirmed, a global perspective is essential for
social cost of greenhouse gases (SC-GHG) estimates because climate
impacts occurring outside U.S. borders can directly and indirectly
affect the welfare of U.S. citizens and residents. Thus, U.S. interests
are affected by the climate impacts that occur outside U.S. borders.
Examples of affected interests include: Direct effects on U.S. citizens
and assets located abroad, international trade, tourism, and spillover
pathways such as economic and political destabilization and global
migration. In addition, assessing the benefits of U.S. GHG emissions
reductions requires consideration of how those actions may affect
emissions reductions by other countries, as those international actions
will provide a benefit to U.S. citizens and residents by mitigating
climate impacts that affect U.S. citizens and residents. Therefore, in
analyzing the potential impacts of this proposed rule DOE focuses on a
global measure of SC-GHG. As noted in the February 2021 TSD, the IWG
will continue to review developments in the literature, including more
robust methodologies for estimating SC-GHG values based on purely
domestic damages, and explore ways to better inform the public of the
full range of carbon impacts, both global and domestic. As a member of
the IWG, DOE will likewise continue to follow developments in the
literature pertaining to this issue.
Second, as the IWG found, the use of the social rate of return on
capital (7 percent under current OMB Circular A-4 guidance) to discount
the future benefits of reducing GHG emissions inappropriately
underestimates the impacts of climate change for the purposes of
estimating the SC-GHG. Consistent with the findings of the National
Academies (2017) and the economic literature, the IWG continued to
conclude that the consumption rate of interest is the theoretically
appropriate discount rate in an intergenerational context (IWG 2010,
2013, 2016a, 2016b), and recommended that discount rate uncertainty and
relevant aspects of intergenerational ethical considerations be
accounted for in selecting future discount rates.
While the IWG works to assess how best to incorporate the latest,
peer reviewed science to develop an updated set of SC-GHG estimates, it
set the interim estimates to be the most recent estimates developed by
the IWG prior to the group being disbanded in 2017. The estimates rely
on the same models and harmonized inputs and are calculated using a
range of discount rates. As explained in the February 2021 TSD, the IWG
has determined that it is appropriate to revert to the same set of four
values drawn from the SC-GHG distributions based on three discount
rates as were used in regulatory analyses between 2010 and 2016 and
subject to public comment. As explained in the February 2021 TSD, this
update reflects the immediate need to have an operational SC-GHG for
use in regulatory benefit-cost analyses and other applications that was
developed using a transparent process, peer-reviewed methodologies, and
the science available at the time of that process. Those estimates were
subject to public comment in the context of dozens of proposed
rulemakings as well as in a dedicated public comment period in 2013.
DOE acknowledges that there are a number of challenges in
attempting to assess the incremental economic impacts of CO2
emissions. Some uncertainties are captured within the analysis, while
other areas of
[[Page 47818]]
uncertainty have not yet been quantified in a way that can be modeled.
The February 2021 TSD presents the quantified sources of uncertainty in
the form of frequency distributions, and discusses the sources of
uncertainty that have not yet been quantified and are thus not
reflected in these estimates. The modeling limitations do not all work
in the same direction in terms of their influence on the SC-
CO2 estimates. However, the IWG has recommended that, taken
together, the limitations suggest that the interim SC-CO2
estimates used in this proposed rule likely underestimate the damages
from CO2 emissions. DOE agrees with the IWG's approach.
Despite the limits of both quantification and monetization, SC-
CO2 estimates can be useful in estimating the social
benefits of reducing CO2 emissions. Although any numerical
estimate of the benefits of reducing carbon dioxide emissions is
subject to some uncertainty, that does not relieve DOE of its
obligation under E.O. 12866 to attempt to factor those benefits into
its cost-benefit analysis. Moreover, the IWG's SC-CO2
estimates are well supported by the existing scientific and economic
literature. As a result, DOE used the IWG's SC-CO2 estimates
in quantifying the social benefits of reducing CO2
emissions. Specifically, DOE estimated the benefits from reduced (or
costs from increased) emissions in any future year by multiplying the
change in emissions in that year by the SC-CO2 values
appropriate for that year. The NPV of the benefits can then be
calculated by multiplying each of these future benefits by an
appropriate discount factor and summing across all affected years.
b. Monetization of Methane and Nitrous Oxide
In the June 2016 NOPR, DOE also estimated monetary benefits for
NOX emissions under the proposed rule. Estimates of the
monetary value of reducing NOX from stationary sources
ranged from $489 to $5,023 per metric ton (2015$). DOE calculated
monetary benefits using an intermediate value for NOX
emissions of $2,755 per metric ton (in 2015$), and real discount rates
of 3 and 7 percent. DOE received several comments on emissions
monetization.
The Joint Advocates commented that DOE acknowledges that its
proposed standards will reduce significant quantities of non-carbon
dioxide greenhouse gases, including methane, and has estimated monetary
benefits for NOX emissions under the proposed rule. The
Joint Advocates commented that DOE should include the Social Cost of
Methane in the estimated monetary benefits. (Joint Advocates, No. 147
at pp. 19-21) The Joint Advocates stated that the EPA and other
agencies have begun using a methodology developed to specifically
measure the Social Cost of Methane--namely, the Marten et al. approach
\79\--in recent proposed rulemakings. This approach builds on the
methodology and assumptions used by the IWG to develop the SC-
CO2, but also accounts for other factors that are unique to
methane. Overall, the Joint Advocates commented that the Marten et al.
methodology provides reasonable, direct estimates that reflect updated
evidence and provide consistency with the Government's accepted
methodology for estimating the SC-CO2. The Joint Advocates
commented that DOE should use the Social Cost of Methane to more
accurately reflect the true benefits of the standards and to enhance
the rigor and defensibility of the final rule.
---------------------------------------------------------------------------
\79\ Marten, A.L., Kopits, E.A., Griffiths, C.W., Newbold, S.C.,
and A. Wolverton. 2015. Incremental CH4 and
N2O Mitigation Benefits Consistent with the U.S.
Government's SC-CO2 Estimates. Climate Policy. 15(2): 272-298
(published online, 2014).
---------------------------------------------------------------------------
As noted previously, DOE has updated its analysis to account for
the social cost of methane and nitrous oxide consistent with the SC-
CH4 and SC-N2O estimates presented in the
February 2021 TSD. DOE has determined that the estimates from the
February 2021 TSD are based upon sound analysis and provide well
founded estimates for DOE's analysis of the impacts of CH4
and NO2 related to the reductions of emissions resulting
from this proposed rule.. The SC-CH4 and SC-N2O
values used for this SNOPR are presented in Table IV.28.\80\ DOE
multiplied the CH4 and N2O emissions reduction
estimated for each year by the SC-CH4 and SC-N2O
estimates for that year in each of the cases. To calculate a present
value of the stream of monetary values, DOE discounted the values in
each of the cases using the specific discount rate that had been used
to obtain the SC-CH4 and SC-N2O estimates in each
case. See chapter 14 of the TSD for further discussion.
---------------------------------------------------------------------------
\80\ See Interagency Working Group on Social Cost of Greenhouse
Gases, Technical Support Document: Social Cost of Carbon, Methane,
and Nitrous Oxide. Interim Estimates Under Executive Order 13990,
Washington, DC, February 2021. https://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf.
---------------------------------------------------------------------------
4. Results
a. Emissions Analysis
In this SNOPR DOE updated its analysis from the 2016 NOPR based on
the results of the national energy savings discussed in section IV.C.2.
DOE also updated its analysis to utilize emission factors derived from
data in the AEO 2020.\81\ The AEO incorporates the projected impacts of
existing air quality regulations on emissions. AEO 2020 generally
represents current legislation and environmental regulations, including
recent government actions, for which implementing regulations were
available at the time of preparation of AEO 2020, including the
emissions control programs discussed in the following paragraphs.\82\
---------------------------------------------------------------------------
\81\ See Energy Information Administration, Annual Energy
Outlook 2020 with Projections to 2050 (2020), available at https://www.eia.gov/outlooks/aeo/pdf/AEO2020%20Full%20Report.pdf.
\82\ For further information, see the Assumptions to AEO2020
report that sets forth the major assumptions used to generate the
projections in the Annual Energy Outlook. Available at https://www.eia.gov/outlooks/aeo/assumptions/ (last accessed July 6, 2020).
---------------------------------------------------------------------------
SO2 emissions from affected electric generating units
(``EGUs'') are subject to nationwide and regional emissions cap-and-
trade programs. Title IV of the Clean Air Act sets an annual emissions
cap on SO2 for affected EGUs in the 48 contiguous States and
the District of Columbia (DC). (42 U.S.C. 7651 et seq.) SO2
emissions from numerous eastern States and DC are also limited under
the Cross-State Air Pollution Rule (``CSAPR''), which created an
allowance-based trading program that operates along with the Title IV
program in those States and DC. 76 FR 48208 (Aug. 8, 2011). CSAPR
requires these States to reduce certain emissions, including annual
SO2 emissions, and went into effect as of January 1, 2015.
AEO 2020 incorporates implementation of CSAPR, including the update to
the CSAPR ozone season program emission budgets and target dates issued
in 2016, 81 FR 74504 (Oct. 26, 2016). Compliance with CSAPR is flexible
among EGUs and is enforced through the use of tradable emissions
allowances. Under existing EPA regulations, any excess SO2
emissions allowances resulting from the lower electricity demand caused
by the adoption of an efficiency standard could be used to permit
offsetting increases in SO2 emissions by another regulated
EGU.
However, beginning in 2016, SO2 emissions began to fall
as a result of implementation of the Mercury and Air Toxics Standards
(``MATS'') for power plants. 77 FR 9304 (Feb. 16, 2012). In the MATS
final rule, EPA established a standard for hydrogen chloride as a
surrogate for acid gas hazardous air pollutants (``HAP''), and also
[[Page 47819]]
established a standard for SO2 (a non-HAP acid gas) as an
alternative equivalent surrogate standard for acid gas HAP. The same
controls are used to reduce HAP and non-HAP acid gas; thus,
SO2 emissions are being reduced as a result of the control
technologies installed on coal-fired power plants to comply with the
MATS requirements for acid gas. To continue operating, coal plants must
have either flue gas desulfurization or dry sorbent injection systems
installed. Both technologies, which are used to reduce acid gas
emissions, also reduce SO2 emissions. Because of the
emissions reductions under the MATS, it is unlikely that excess
SO2 emissions allowances resulting from the lower
electricity demand would be needed or used to permit offsetting
increases in SO2 emissions by another regulated EGU.
Therefore, energy conservation standards that decrease electricity
generation will generally reduce SO2 emissions.
CSAPR also established limits on NOX emissions for
numerous States in the eastern half of the United States. Energy
conservation standards would have little effect on NOX
emissions in those States covered by CSAPR emissions limits if excess
NOX emissions allowances resulting from the lower
electricity demand could be used to permit offsetting increases in
NOX emissions from other EGUs. In such a case,
NOX emissions would remain near the limit even if
electricity generation goes down. A different case could possibly
result, depending on the configuration of the power sector in the
different regions and the need for allowances, such that NOX
emissions might not remain at the limit in the case of lower
electricity demand. In this case, energy conservation standards might
reduce NOX emissions in covered States. Despite this
possibility, DOE has chosen to be conservative in its analysis and has
maintained the assumption that energy conservation standards will not
reduce NOX emissions in States covered by CSAPR. Energy
conservation standards would be expected to reduce NOX
emissions in the States not covered by CSAPR. DOE used AEO 2020 data to
derive NOX emissions factors for the group of States not
covered by CSAPR.
The MATS limit mercury emissions from power plants, but they do not
include emissions caps and as such, DOE's energy conservation standards
would be expected to slightly reduce Hg emissions. DOE estimated
mercury emissions reduction using emissions factors based on AEO 2020,
which incorporates the MATS.
Combustion emissions of CH4 and N2O are
estimated using emissions intensity factors published by the EPA.\83\
The FFC upstream emissions are estimated based on the methodology
described in chapter 13 of the SNOPR TSD. The upstream emissions
include both emissions from fuel combustion during extraction,
processing, and transportation of fuel, and ``fugitive'' emissions
(direct leakage to the atmosphere) of CH4 and
CO2.
---------------------------------------------------------------------------
\83\ Available at www2.epa.gov/climateleadership/centeR-corporate-climate-leadership-ghg-emission-factors-hub.
---------------------------------------------------------------------------
Table IV.29 reflects the emissions reductions for both single-
section and multi-section manufactured homes.
Table IV.29--Emissions Reductions as a Result of the SNOPR
------------------------------------------------------------------------
Pollutant Single-section Multi-section
------------------------------------------------------------------------
Tiered Standards
Site Emissions Reductions
------------------------------------------------------------------------
CO2 (million metric tons)............... 31.7 67.7
Hg (metric tons)........................ 0.063 0.146
NOX (thousand metric tons).............. 18.3 37.3
SO2 (thousand metric tons).............. 12.8 27.7
CH4 (thousand metric tons).............. 1.86 4.14
N2O (thousand metric tons).............. 0.35 0.74
------------------------------------------------------------------------
Upstream Emissions Reductions
------------------------------------------------------------------------
CO2 (million metric tons)............... 3.1 6.32
Hg (metric tons)........................ 3.42E-4 7.67E-04
NOX (thousand metric tons).............. 39.7 81.7
SO2 (thousand metric tons).............. 0.32 0.64
CH4 (thousand metric tons).............. 221 463
N2O (thousand metric tons).............. 0.016 0.033
------------------------------------------------------------------------
Total Emissions Reductions
------------------------------------------------------------------------
CO2 (million metric tons)............... 34.8 74.0
Hg (metric tons)........................ 0.064 0.147
NOX (thousand metric tons).............. 58 119
SO2 (thousand metric tons).............. 13.1 28.3
CH4 (thousand metric tons).............. 223 467
N2O (thousand metric tons).............. 0.37 0.78
------------------------------------------------------------------------
Untiered Standard
Site Emissions Reductions
------------------------------------------------------------------------
CO2 (million metric tons)............... 42.4 67.7
Hg (metric tons)........................ 0.087 0.146
NOX (thousand metric tons).............. 24.0 37.3
SO2 (thousand metric tons).............. 17.2 27.7
CH4 (thousand metric tons).............. 2.51 4.14
[[Page 47820]]
N2O (thousand metric tons).............. 0.47 0.74
------------------------------------------------------------------------
Upstream Emissions Reductions
------------------------------------------------------------------------
CO2 (million metric tons)............... 4.09 6.32
Hg (metric tons)........................ 4.65E-04 7.67E-04
NOX (thousand metric tons).............. 52.5 81.7
SO2 (thousand metric tons).............. 0.42 0.64
CH4 (thousand metric tons).............. 293 463
N2O (thousand metric tons).............. 0.021 0.033
------------------------------------------------------------------------
Total Emissions Reductions
------------------------------------------------------------------------
CO2 (million metric tons)............... 46.4 74.0
Hg (metric tons)........................ 0.087 0.147
NOX (thousand metric tons).............. 76.5 119
SO2 (thousand metric tons).............. 17.6 28.3
CH4 (thousand metric tons).............. 296 467
N2O (thousand metric tons).............. 0.49 0.78
------------------------------------------------------------------------
b. Monetization of Emissions
DOE estimated the global social benefits of GHG emission reductions
expected from this final rule using the SC-GHG estimates presented in
the Technical Support Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates under Executive Order 13990 (IWG 2021)
that would be expected to result from the SNOPR as discussed in IV.D.2
DOE has determined that the estimates from the February 2021 TSD are
based upon sound analysis and provide well founded estimates for DOE's
analysis of the impacts of GHG related to the reductions of emissions
resulting from this proposed rule. These SC-GHG estimates are the same
as those used in the June 2016 NOPR except adjusted for inflation to
2020 dollars. Table IV. presents the global values of the CO2 emissions
reduction.
Table IV.30--Present Value of CO2 Emissions Reduction for Manufactured Homes Purchased 2023-2052 With a 30-Year
Lifetime
----------------------------------------------------------------------------------------------------------------
SC-CO2 Case (million 2020$)
---------------------------------------------------------------------------
5% discount rate, 3% discount rate, 2.5% discount 3% discount rate,
average average rate, average 95th percentile
----------------------------------------------------------------------------------------------------------------
Tiered Standards
----------------------------------------------------------------------------------------------------------------
Single Section...................... $259.8 $1,173.3 $1,963.4 $3,614.2
Multi Section....................... 553.6 2,498.8 4,180.3 7,696.9
---------------------------------------------------------------------------
Total........................... 813.4 3,672.1 6,143.6 11,311.1
----------------------------------------------------------------------------------------------------------------
Untiered Standard
----------------------------------------------------------------------------------------------------------------
Single Section...................... $347.1 $1,567.0 $2,621.9 $4,826.8
Multi Section....................... 553.6 2,498.8 4,180.3 7,696.9
---------------------------------------------------------------------------
Total........................... 900.7 4,065.8 6,802.1 12,523.7
----------------------------------------------------------------------------------------------------------------
Similarly, DOE has updated the quantified total climate benefits to
estimate monetary benefits likely to result from the reduced emissions
of CH4 and N2O, consistent with the interim
estimates in the February 2021 TSD. DOE multiplied the CH4
and N2O emissions reduction estimated for each year by the
SC-CH4 and SC-N2O estimates for that year in each
of the two cases. Table IV.30 presents the value of the CH4
emissions reduction, and Table IV.31 presents the value of the
N2O emissions reduction.
[[Page 47821]]
Table IV.30--Present Value of Methane Emissions Reduction for Manufactured Homes Purchased
2023-2052 With a 30-Year Lifetime
[Million 2020$]
----------------------------------------------------------------------------------------------------------------
SC-CH4 case
---------------------------------------------------------------------------
5% discount rate, 3% discount rate, 2.5% discount 3% discount rate,
average average rate, average 95th percentile
----------------------------------------------------------------------------------------------------------------
Tiered Standards
----------------------------------------------------------------------------------------------------------------
Single Section...................... $83.4 $270.4 $401.4 $720.2
Multi Section....................... 175.1 567.3 842.0 1,511.0
---------------------------------------------------------------------------
Total........................... 258.5 837.7 1,243.4 2,231.2
----------------------------------------------------------------------------------------------------------------
Untiered Standard
----------------------------------------------------------------------------------------------------------------
Single Section...................... 110.9 359.4 533.5 957.4
Multi Section....................... 175.1 567.3 842.0 1,511.0
---------------------------------------------------------------------------
Total........................... 286.0 926.7 1,375.6 2,468.4
----------------------------------------------------------------------------------------------------------------
Table IV.31--Present Value of Nitrous Oxide Emissions Reduction for Manufactured Homes Purchased 2023-2052 With
a 30-Year Lifetime
[Million 2020$]
----------------------------------------------------------------------------------------------------------------
SC-N2O case
---------------------------------------------------------------------------
5% discount rate, 3% discount rate, 2.5% discount 3% discount rate,
average average rate, average 95th percentile
----------------------------------------------------------------------------------------------------------------
Tiered Standards
----------------------------------------------------------------------------------------------------------------
Single Section...................... $1.12 $4.94 $8.15 $13.16
Multi Section....................... 2.35 10.33 17.04 27.52
---------------------------------------------------------------------------
Total........................... 3.48 15.27 25.19 40.68
----------------------------------------------------------------------------------------------------------------
Untiered Standard
----------------------------------------------------------------------------------------------------------------
Single Section...................... 1.49 6.55 10.81 17.45
Multi Section....................... 2.35 10.33 17.04 27.52
---------------------------------------------------------------------------
Total........................... 3.85 16.88 27.85 44.97
----------------------------------------------------------------------------------------------------------------
In this SNOPR, DOE also updated the monetization of NOX
and SO2 emissions reductions from both electricity
generation and direct use from manufactured homes. For this analysis,
DOE used linear interpolation to define values for the years between
2020 and 2025 and between 2025 and 2030; for years beyond 2030 the
value is held constant. Full details of this methodology are described
in chapter 14 of the SNOPR TSD. DOE multiplied the NOX and
SO2 emissions reduction (in tons) in each year by the
associated $/ton values, and then discounted each series using discount
rates of 3 percent and 7 percent as appropriate. Table IV.32 and Table
IV.33 presents the results.
Table IV.32--Present Value of NOX Emissions Reduction for Manufactured Homes Purchased 2023-2052 With a 30-Year
Lifetime
[Million 2020$]
----------------------------------------------------------------------------------------------------------------
3% discount rate 7% discount rate 3% discount rate 7% discount rate
(high) (high) (low) (low)
----------------------------------------------------------------------------------------------------------------
Tiered Standards
----------------------------------------------------------------------------------------------------------------
Single Section...................... $338.9 $117.9 $149.0 $52.4
Multi Section....................... 676.5 235.6 297.1 104.8
---------------------------------------------------------------------------
Total........................... 1,015.4 353.4 446.0 157.2
----------------------------------------------------------------------------------------------------------------
Untiered Standard
----------------------------------------------------------------------------------------------------------------
Single Section...................... 442.9 154.1 194.6 68.6
[[Page 47822]]
Multi Section....................... 676.5 235.6 297.1 104.8
---------------------------------------------------------------------------
Total........................... 1,119.4 389.7 491.7 173.3
----------------------------------------------------------------------------------------------------------------
Table IV.33--Present Value of SO2 Emissions Reduction for Manufactured Homes Purchased 2023-2052 With a 30-Year
Lifetime
[Million 2020$]
----------------------------------------------------------------------------------------------------------------
3% discount rate 7% discount rate 3% discount rate 7% discount rate
(high) (high) (low) (low)
----------------------------------------------------------------------------------------------------------------
Tiered Standards
----------------------------------------------------------------------------------------------------------------
Single Section...................... $549.3 $189.3 $240.9 $84.8
Multi Section....................... 1,128.6 387.8 493.8 174.5
---------------------------------------------------------------------------
Total........................... 1,677.9 577.0 734.7 259.3
----------------------------------------------------------------------------------------------------------------
Untiered Standard
----------------------------------------------------------------------------------------------------------------
Single Section...................... 723.9 249.2 317.2 111.8
Multi Section....................... 1,128.6 387.8 493.8 174.5
---------------------------------------------------------------------------
Total........................... 1,852.5 637.0 811.0 286.3
----------------------------------------------------------------------------------------------------------------
DOE has not considered the monetary benefits of the reduction of Hg
for this SNOPR.
E. Total Benefits and Costs
DOE has tentatively determined that under either proposal the
benefits to the Nation of the standards (energy savings, consumer LCC
savings, positive NPV of consumer benefit, and emission reductions)
outweigh the burdens (loss of INPV, LCC increases for some homeowners
of manufactured housing, and price-sensitive consumers who do not
purchase manufactured homes). The tentative projected total benefits
and costs (from the manufactured homeowner's perspective) associated
with the SNOPR, expressed in terms of annualized values, is presented
in Table I.9 (See Section I.E), and is explained in greater detail in
section IV and in chapter 15 of the SNOPR TSD.\84\
---------------------------------------------------------------------------
\84\ DOE used a two-step calculation process to convert the
time-series of costs and benefits into annualized values. First, DOE
calculated a present value in 2016, the year used for discounting
the net present value of total consumer costs and savings, for the
time-series of costs and benefits using discount rates of three and
seven percent for all costs and benefits except for the value of
CO2 reductions. From the present value, DOE then
calculated the fixed annual payment over a 30-year period, starting
in 2020 that yields the same present value. The fixed annual payment
is the annualized value. Although DOE calculated annualized values,
this does not imply that the time-series of cost and benefits from
which the annualized values were determined would be a steady stream
of payments.
---------------------------------------------------------------------------
V. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
Section 1(b)(1) of Executive Order (E.O.) 12866, ``Regulatory
Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency
to identify the problem that it intends to address, including, where
applicable, the failures of private markets or public institutions that
warrant new agency action, as well as to assess the significance of
that problem. The problems that the proposed standards for manufactured
housing are intended to address are as follows:
(1) Under current federal standards, manufactured homes typically
conserve less energy than comparably built site-built and modular
homes,
(2) Insufficient information and the high costs of gathering and
analyzing relevant information leads some consumers to miss
opportunities to make cost-effective investments in energy efficiency.
(3) In some cases, the benefits of more efficient equipment are not
realized due to misaligned incentives between purchasers and users. An
example of such a case is when a product or design decision is made by
a building contractor or building owner who does not pay the energy
costs.
(4) There are external benefits resulting from improved energy
efficiency of products or equipment that are not captured by the users
of such equipment. These benefits include externalities related to
public health, environmental protection and national energy security
that are not reflected in energy prices, such as reduced emissions of
air pollutants and greenhouse gases that impact human health and global
warming.
The Administrator of the Office of Information and Regulatory
Affairs (``OIRA'') in the OMB has determined that the regulatory action
in this document is a significant regulatory action under section
(3)(f) of E.O. 12866. Accordingly, pursuant to section 6(a)(3)(B) of
the E.O., DOE has provided to OIRA: (1) The text of the draft
regulatory action, together with a reasonably detailed description of
the need for the regulatory action and an explanation of how the
regulatory action will meet that need; and (2) an assessment of the
potential costs and benefits of the regulatory action, including an
explanation of the manner in which the regulatory action is consistent
with a statutory mandate. DOE has included these documents in the
rulemaking record.
In addition, the Administrator of OIRA has determined that the
regulatory action is an ``economically'' significant
[[Page 47823]]
regulatory action under section (3)(f)(1) of E.O. 12866. Accordingly,
pursuant to section 6(a)(3)(C) of the E.O., DOE has provided to OIRA an
assessment, including the underlying analysis, of benefits and costs
anticipated from the regulatory action, together with, to the extent
feasible, a quantification of those costs; and an assessment, including
the underlying analysis, of costs and benefits of potentially effective
and reasonably feasible alternatives to the planned regulation, and an
explanation why the planned regulatory action is preferable to the
identified potential alternatives. These assessments can be found in
the technical support document for this rulemaking and are summarized
in the tables below.
Table V.1--Summary of Economic Benefits and Costs to Manufactured Home Homeowners Under the Proposed Standards
----------------------------------------------------------------------------------------------------------------
Net present value (billion 2020$)
Benefits ------------------------------------------------------- Discount rate (%)
Tiered Untiered
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost $5.5...................... $6.1..................... 7.
Savings.
14.3...................... 15.9..................... 3.
GHG Reduction (using avg. 1.1....................... 1.2...................... 5.
social costs at 5% discount
rate) *.
GHG Reduction (using avg. 4.5....................... 5.0...................... 3.
social costs at 3% discount
rate) *.
GHG Reduction (using avg. 7.4....................... 8.2...................... 2.5.
social costs at 2.5% discount
rate) *.
GHG Reduction (using 95th 13.6...................... 15.0..................... 3.
percentile social costs at 3%
discount rate) *.
NOX Reduction................. 0.2....................... 0.2...................... 7.
0.4....................... 0.5...................... 3.
SO2 Reduction................. 0.3....................... 0.3...................... 7.
0.7....................... 0.8...................... 3.
Total Benefits................ 7 to 19.5................. 7.8 to 21.6.............. 7 plus GHG range.
10.5...................... 11.6..................... 7.
20.0...................... 22.2..................... 3.
16.6 to 29.1.............. 18.4 to 32.2............. 3 plus GHG range.
----------------------------------------------------------------------------------------------------------------
Costs
Consumer Incremental Product 3.9....................... 4.7...................... 7.3
Costs [dagger].
7.9....................... 9.6...................... 3.
----------------------------------------------------------------------------------------------------------------
Total Net Benefits
----------------------------------------------------------------------------------------------------------------
Including GHG and Emissions 3.1 to 15.6............... 3 to 16.9................ 7 plus GHG range.
Reduction Monetized Value.
6.6....................... 6.9...................... 7.
12.1...................... 12.6..................... 3.
8.7 to 21.2............... 8.7 to 22.6.............. 3 plus GHG range.
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with manufactured homes shipped in 2023-2052.
* The benefits from GHG reduction were calculated using global benefit-per-ton values. See section IV.D.2 of
this document for more details.
** Total Benefits for both the 3-percent and 7-percent cases are presented using the average GHG social costs
with 3-percent discount rate. In the rows labeled ``7% plus GHG range'' and ``3% plus GHG range,'' the
consumer benefits and NOX and SO2 benefits are calculated using the labeled discount rate, and those values
are added to the GHG reduction using each of the four GHG social cost cases.
[dagger] The incremental costs include incremental costs associated with principal and interest, mortgage and
property tax for the analyzed loan types.
Table V.2--Annualized Benefits and Costs to Manufactured Home Homeowners Under the Proposed Standards
----------------------------------------------------------------------------------------------------------------
Net present value (billion 2020$)
Benefits ------------------------------------------------------- Discount rate (%)
Tiered Untiered
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost 509....................... 565...................... 7.
Savings.
774....................... 859...................... 3.
GHG Reduction (using avg. 70........................ 77....................... 5.
social costs at 5% discount
rate)*.
GHG Reduction (using avg. 231....................... 256...................... 3.
social costs at 3% discount
rate)*.
GHG Reduction (using avg. 354....................... 392...................... 2.5.
social costs at 2.5% discount
rate)*.
GHG Reduction (using 95th 693....................... 767...................... 3.
percentile social costs at 3%
discount rate)*.
NOX Reduction................. 13........................ 14....................... 7.
23........................ 25....................... 3.
SO2 Reduction................. 21........................ 23....................... 7.
37........................ 41....................... 3.
----------------------------------------------------------------------------------------------------------------
Total Benefits................ 613 to 1,236.............. 679 to 1,369............. 7 plus GHG range.
773....................... 858...................... 7.
1,065..................... 1,181.................... 3.
904 to 1,527.............. 1,003 to 1,693........... 3 plus GHG range.
----------------------------------------------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------------------------------------------
Consumer Incremental Product 359....................... 440...................... 7.
Costs [dagger].
[[Page 47824]]
427....................... 530...................... 3.
----------------------------------------------------------------------------------------------------------------
Total Net Benefits
----------------------------------------------------------------------------------------------------------------
Including GHG and Emissions 254 to 877................ 239 to 929............... 7 plus GHG range.
Reduction Monetized Value.
414....................... 418...................... 7.
638....................... 651...................... 3.
477 to 1,100.............. 473 to 1,163............. 3 plus GHG range.
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with manufactured homes shipped in 2023-2052.
* The benefits from GHG reduction were calculated using global benefit-per-ton values. See section IV.D of this
document for more details.
** Total Benefits for both the 3-percent and 7-percent cases are presented using the average GHG social costs
with 3-percent discount rate. In the rows labeled ``7% plus GHG range'' and ``3% plus GHG range,'' the
consumer benefits and NOX and SO2 benefits are calculated using the labeled discount rate, and those values
are added to the GHG reduction using each of the four GHG social cost cases.
[dagger] The incremental costs include incremental costs associated with principal and interest, mortgage and
property tax for the analyzed loan types.
DOE has also reviewed this proposed regulation pursuant to E.O.
13563, issued on January 18, 2011. 76 FR 3281 (Jan. 21, 2011). E.O.
13563 is supplemental to and explicitly reaffirms the principles,
structures, and definitions governing regulatory review established in
E.O. 12866. To the extent permitted by law, agencies are required by
E.O. 13563 to: (1) Propose or adopt a regulation only upon a reasoned
determination that its benefits justify its costs (recognizing that
some benefits and costs are difficult to quantify); (2) tailor
regulations to impose the least burden on society, consistent with
obtaining regulatory objectives, taking into account, among other
things, and to the extent practicable, the costs of cumulative
regulations; (3) select, in choosing among alternative regulatory
approaches, those approaches that maximize net benefits (including
potential economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity); (4) to the extent
feasible, specify performance objectives, rather than specifying the
behavior or manner of compliance that regulated entities must adopt;
and (5) identify and assess available alternatives to direct
regulation, including providing economic incentives to encourage the
desired behavior, such as user fees or marketable permits, or providing
information upon which choices can be made by the public.
DOE emphasizes as well that E.O. 13563 requires agencies to use the
best available techniques to quantify anticipated present and future
benefits and costs as accurately as possible. In its guidance, OIRA has
emphasized that such techniques may include identifying changing future
compliance costs that might result from technological innovation or
anticipated behavioral changes. For the reasons stated in the preamble,
this proposed rule is consistent with these principles, including the
requirement that, to the extent permitted by law, benefits justify
costs and that net benefits are maximized.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (``IRFA'')
and a final regulatory flexibility analysis (``FRFA'') for any rule
that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. As required
by E.O. 13272, ``Proper Consideration of Small Entities in Agency
Rulemaking,'' 67 FR 53461 (Aug. 16, 2002), DOE published procedures and
policies on February 19, 2003, to ensure that the potential impacts of
its rules on small entities are properly considered during the
rulemaking process. 68 FR 7990 (Feb. 9, 2003) DOE has made its
procedures and policies available on the Office of the General
Counsel's website (https://energy.gov/gc/office-general-counsel). DOE
has prepared the following updated IRFA for the products that are the
subject of this rulemaking.
1. Need for, and Objectives of, the Rule
EISA requires DOE to regulate energy conservation in manufactured
housing, an area of the building construction industry traditionally
regulated by HUD. HUD has regulated the manufactured housing industry
since 1976, when it first promulgated the HUD Code. Among other
provisions, EISA directs DOE to consult with the Secretary of HUD, who
may seek further counsel from the Manufactured Housing Consensus
Committee (MHCC); and to base the energy conservation standards on the
most recent version of the IECC, except where DOE finds that the IECC
is not cost effective or where a more stringent standard would be more
cost effective, based on the impact of the IECC on the purchase price
of manufactured housing and on total lifecycle construction and
operating costs. (42 U.S.C. 17071).
2. Significant Issues Raised in Response to the IRFA
DOE received comments from the Office of Advocacy at the U.S. Small
Business Administration (``Advocacy'') and other interested parties on
the manufactured housing June 2016 NOPR regarding small businesses.
These comments are addressed in this section.
Advocacy stated that DOE published an IRFA that did not comply with
the RFA's requirement to quantify or describe the economic impact that
the proposed regulation might have on small entities. (Advocacy, No.
177 at p. 2) Advocacy stated that DOE failed to include large costs
such as conversion costs and test procedure compliance costs. Advocacy
also stated that compliance and enforcement costs (redesign costs,
plant modifications, re-costing and sourcing new materials,
inspections, approvals, consulting fees, and employee training) are
major costs to small businesses and should be included and analyzed in
the proposed rule (Advocacy, No. 177 at p. 3).
In the June 2016 NOPR IRFA DOE estimated the impacts on small
[[Page 47825]]
manufacturers based on the general industry analysis. In this updated
IRFA, DOE expands its analysis to include a more detailed review of the
burdens and compares costs to small manufacturer revenue to determine
whether those costs are significant. DOE included product conversion
costs, based on the expected number of model plans that need to be
redesigned as a result of this proposed rule, and capital conversion
costs, based on the cost of additional equipment needed to produce
compliant homes. In the June 2016 NOPR, DOE estimated costs
manufacturers would incur from test procedures as proposed in a
separate rulemaking. As discussed, this SNOPR does not include cost
estimates related to test procedures, as any such costs will be
addressed separately. The test procedure NOPR for manufactured housing
was published on November 9, 2016. 81 FR 78733.
Advocacy requested that DOE present and analyze significant
alternatives, and adopt a regulatory alternative to the proposed
standard that will minimize the economic impact to small manufacturers
(Advocacy, No. 177 at pp. 2-4). Further, Advocacy expressed concern
that the proposed rule would have a significant impact on small
manufacturers. Advocacy stated it takes longer for small manufacturers
to recover investments, because they must spread similar redesign
investments over a lower volume of units than larger competitors.
(Advocacy, No. 177 at p. 2) Additionally, MHARR commented that the
proposed rule will have a particularly negative impact on the smaller
producers in terms of regulatory cost burdens. (MHARR, Public Meeting
Transcript, No. 148 at p. 13) The MHCC commented that DOE has not
adequately addressed the impact of the proposed rule on small
manufacturers, stating that small manufacturers may not be able to
compete in the marketplace due to economies of scale afforded to large
manufacturers that are able to purchase materials in volume at
discounted rates not available to smaller manufacturers. The MHCC noted
that DOE did not certify that the proposed rule would not have a
significant impact on small manufacturers. (MHCC, No. 162 at p. 2).
In the June 2016 NOPR, DOE quantified the number of small
businesses that have a direct compliance burden and estimated the
magnitude of the compliance burden based on industry average conversion
costs. In this updated IRFA, DOE expands its analysis to include a more
detailed review of the burdens, an analysis of the costs specific to
small manufacturers, and a comparison of these costs to small
manufacturer revenue to determine whether those costs are significant.
This analysis can be found in section V.B.4 of the updated IRFA.
Additionally, DOE includes a review of alternatives to this proposal in
section V.B.5 of the IRFA. DOE recognizes that new standards can create
cost uncertainty for small businesses, but the updated analysis finds
that the expected investments are less than 0.1 percent of revenues for
small manufacturers (see section V.C.4). While small manufacturers may
need to spread these costs over a lower volume of shipments than larger
competitors, DOE finds this level of investment unlikely to change the
level of industry competition or be a driver of industry consolidation.
Advocacy commented that DOE's estimate of $2,423 and $3,745 price
increases for single- and multi-section manufactured homes is extremely
low and does not accurately reflect the baseline cost, nor the dealer
and retail markups. Advocacy expressed that even a modest increase in
the price of manufactured housing will prevent many potential consumers
from obtaining financing, which would severely impact small
manufacturers' consumer base. Further, Advocacy stated that dominant
businesses in the manufactured home industry can sell manufactured
homes at cost or offer energy rebates to their consumers to offset the
increased price of energy efficient homes. Advocacy stated that small
businesses cannot absorb the added cost to comply with the proposed
regulation. (Advocacy, No. 177 at p. 3).
In response to the June 2016 NOPR, certain parties commented that
DOE's estimated incremental cost to the consumer were too low, whereas
other interested parties stated that the estimates were too high (see
section IV.A.1.g for a full discussion). During the June 2016 NOPR
public meeting, MHI stated that it represents small manufacturers and
that the cost analysis used by the MH working group included small,
medium, and large manufacturers. (MHI, Public Meeting Transcript, No.
148 at pp. 85-86). DOE confirmed MHI represented multiple small
manufacturers through its publicly-available manufacturer membership
list.\85\ Additionally, as described in section IV.A.1.g of the SNOPR,
DOE took steps to validate incremental costs of production materials
through published data. As a result, the incremental cost figures
provided by the MH working group in the course of the negotiated
consensus process are understood to be representative for manufacturers
of all sizes.
---------------------------------------------------------------------------
\85\ MHI Manufacturer Members. https://www.manufacturedhousing.org/find-a-manufacturer/.
---------------------------------------------------------------------------
MHARR stated that DOE's analysis contains financial information
from 10-K filings that are likely from larger industry corporations.
(MHARR, No. 154 at p. 33) Table 12.1 of the SNOPR Technical Support
Document (TSD) summarizes the financial parameters DOE used in its
analysis of manufacturer impacts. The Department makes uses of all
public and private financial information made available. DOE invites
stakeholders to provide additional financial data to be considered in
the analysis.
MHARR referenced a SBA report to make the case that federal
regulation generally has a disproportionately negative impact on
smaller businesses in any industry. (MHARR, No. 154 at pp. 33). As
noted in the NOPR, DOE recognizes that the rulemaking will have costs
to small manufacturers. In this SNOPR, DOE includes a tiered proposal
which is based on a tiered structure that would minimize impacts on the
most cost-sensitive segment of manufactured home buyers and on the
small manufacturers that serve that market segment. In the updated IRFA
(see the ``Description and Estimate of Compliance Requirements''
section below), DOE estimates conversion costs of the updated proposed
standard level to be $43,000 per small manufacturer, an amount that is
less than 0.1% of average annual revenues.
Lastly, Advocacy recommended that DOE adopt delayed compliance
schedules for small manufacturers, stating that more time to comply
will allow them to spread costs and manage their limited resources in a
way that will minimize the economic impact on their business.
(Advocacy, No. 177 at p. 4) In this SNOPR, DOE has proposed a one-year
lead time for compliance. As discussed in previous sections, a one-year
lead time would allow for coordination of compliance with the DOE
requirements and the HUD Code and provide manufacturers flexibility in
allocating and managing the resources needed to bring their
manufactured homes into compliance. Additionally, a one-year lead-time
would allow for the evaluation of industry compliance under the DOE
standards before DOE is required to evaluate potential updates based on
the next version of the IECC.
[[Page 47826]]
3. Description and Estimate of the Number of Small Entities Affected
The SBA has set a size threshold for manufacturers of manufactured
homes, which defines those entities classified as ``small businesses''
for the purposes of the statute. DOE used the SBA's small business size
standards to determine whether any small entities would be subject to
the requirements of the rule. (13 CFR part 121) The size standards are
listed by North American Industry Classification System (NAICS) code
and industry description and are available at https://www.sba.gov/document/support--table-size-standards. Manufacturing of manufactured
housing is classified under NAICS 321991, ``Manufactured Home (Mobile
Home) Manufacturing.'' The SBA sets a threshold of 1,250 employees or
fewer for an entity to be considered as a small business for this
category. DOE notes that the initial regulatory flexibility analysis
(IRFA) in the 2016 NOPR was based on an employee threshold of 500
employees. 81 FR 42576. The updated IRFA threshold of 1,250 employee
reflects the SBA's most recent guidance on the employee threshold for
small businesses.
To estimate the number of companies that manufacture manufactured
housing covered by this rulemaking, DOE conducted a market survey using
publicly available information. DOE first attempted to identify all
manufactured housing manufacturers by researching industry trade
associations (e.g., MHI \86\) and individual company websites. DOE used
market research tools such as Hoovers reports,\87\ Glassdoor,\88\ and
LinkedIn \89\ to gather information about the number of employees and
manufacturing locations. DOE also asked stakeholders and industry
representatives if they were aware of any other small manufacturers.
After a comprehensive list of businesses was created, DOE screened out
companies that do not offer manufactured homes affected by this
proposed rule, do not meet the definition of a ``small business,'' are
foreign owned and operated, or do not manufacture manufactured homes in
the United States.
---------------------------------------------------------------------------
\86\ https://www.manufacturedhousing.org/admin/template/brochures/949temp.pdf.
\87\ Hoovers. https://www.hoovers.com/.
\88\ https://www.glassdoor.com/index.htm.
\89\ https://www.linkedin.com/.
---------------------------------------------------------------------------
DOE identified 34 manufacturers of manufactured housing affected by
this rulemaking. Of these, DOE identified 29 as domestic small
businesses.
DOE requests comment on the number of manufacturers of manufactured
housing producing home covered by this rulemaking.
4. Description and Estimate of Compliance Requirements
To evaluate impacts facing manufacturers of manufactured housing,
DOE estimated both the capital conversion costs (e.g., investments in
property, plant, and equipment) and product conversion costs (e.g.,
expenditures on R&D, testing, marketing, and other non-depreciable
expenses) manufacturers would incur to bring their manufacturing
facilities and product designs into compliance with the standards as
proposed.
To calculate product conversion costs, DOE estimated the number of
model-plans manufacturers would need to redesign. Based on input from
subject matter experts in the industry, manufacturers would need to
update between 200 and 250 plans as a result of the standard.
Consulting with subject matter experts in the industry, DOE estimated
that each plan would require 3 hours of engineering time to update.
Based on data from the Bureau of Labor Statistics, DOE calculated a
fully burdened mean hourly wage for a mechanical engineer at $65.63/
hour in 2020.\90\ Based on these inputs, DOE estimated product
conversion costs of approximately $49,000 per manufacturer.
---------------------------------------------------------------------------
\90\ https://www.bls.gov/oes/current/oes172141.htm.
---------------------------------------------------------------------------
While DOE understands most manufacturers have the necessary
equipment to produce manufactured homes that are compliant with the
standards as proposed in this document, DOE incorporated capital
conversion costs of approximately $3,000 per manufacturer to cover
additional work stations, equipment, and tooling that may be needed to
support compliance with the standard.
In aggregate, DOE estimates the average small manufacturer would
incur $52,000 in conversion costs. Based on data from business
databases (i.e., Dunn & Bradstreet and Manta), DOE estimated that small
manufacturers of manufactured housing have an average annual revenue of
$43.3 million. Per manufacturer conversion costs are less than 0.1
percent of average small business annual revenue. While the proposed
standards would require investments on the part of small manufacturers,
DOE's calculations show that the conversion costs are small relative to
the size of the average small manufacturer.
DOE requests comment on the cost to update model plans and the
number of model plans to update as a result of the proposed rule; on
the types of equipment and capital expenditures that would be
necessitated by the proposal; and the total cost of updating product
offerings and manufacturing facilities. DOE requests comment on how
these values would differ for small manufacturers. DOE requests comment
on its estimate of average annual revenues for small manufacturers of
manufactured housing.
5. Significant Alternatives Considered and Steps Taken To Minimize
Significant Economic Impacts on Small Entities
In reviewing alternatives to the proposed standards, DOE examined
energy conservation standards proposed in the June 2016 NOPR. The June
2016 NOPR was adopted by the MH working group, which consisted of 22
representatives of stakeholders,\91\ including representatives of
manufacturer trade groups that included small manufacturers. However,
in response to concerns related to potential adverse impacts on price-
sensitive, low-income purchasers of manufactured homes from the
imposition of energy conservation standards on manufactured housing, in
this SNOPR DOE is proposing the tiered standard. In the alternative,
DOE is also proposing the untiered standard.
---------------------------------------------------------------------------
\91\ Selected member of the MH working group were: Bert Kessler,
Palm Harbor Homes, Inc.; David Tompos, NTA, Inc.; Emanuel Levy,
Systems Building Research Alliance; Eric Lacey, Responsible Energy
Codes Alliance; Ishbel Dickens, National Manufactured Home Owners
Association (NMHOA); Keith Dennis, National Rural Electric
Cooperative Association; Lois Starkey, Manufactured Housing
Institute; Lowell Ungar, American Council for an Energy-Efficient
Economy; Manuel Santana, Cavco Industries; Mark Ezzo, Clayton Homes,
Inc.; Mark Weiss, Manufactured Housing Association for Regulatory
Reform; Michael Lubliner, Washington State University Extension
Energy Program; Michael Wade, Cavalier Home Builders; Peter
Schneider, Efficiency Vermont; Richard Hanger, Housing Technology
and Standards; Richard Potts, Virginia Department of Housing and
Community Development; Rob Luter, Lippert Components, Inc.; Robin
Roy, Natural Resources Defense Council; Scott Drake, East Kentucky
Power Cooperative; Stacey Epperson, Next Step Network. DOE and ASRAC
members were: Joseph Hagerman (DOE); and John Caskey (ASRAC,
National Electrical Manufacturers Association).
---------------------------------------------------------------------------
DOE evaluated the alternative of adopting a single, untiered
standard for manufactured homes that focuses on the building thermal
envelope, duct and air sealing, insulation installation, HVAC
specifications, service hot water systems, mechanical ventilation fan
efficacy, and heating and cooling equipment sizing provisions, based on
the 2021 IECC. The untiered standard would apply all manufactured
homes,
[[Page 47827]]
regardless of manufacturer retail price. The untiered proposal is
expected to result in 2.58 quads of energy savings over the 30-year
analysis period.
However, DOE's primary proposal in this SNOPR is the tiered
standard. DOE structured this proposal to minimize impacts on the most
price-sensitive consumers and manufacturers that sell to those
consumers. In the proposal, Tier 1 would apply to manufactured homes
with a manufacturer's retail list price of $55,000 or less, and would
incorporate building thermal envelope measures based on certain thermal
envelope components subject to the 2021 IECC but would limit the
incremental purchase price increase to $750 or less. The proposal also
sets up a Tier 2 that would apply to manufactured homes with a
manufacturer's retail list price greater than $55,000. The Tier 2
standards would be set to stringencies based on the 2021 IECC and
likely increase purchase prices by more than $750. The tiered proposal
is expected to result in 2.32 quads of energy savings over the 30-year
analysis period. The tiered proposal balances the benefits of the
energy savings with the potential burdens placed on low-income
consumers and on manufacturers that serve those consumers.
C. Review Under the Paperwork Reduction Act
This rulemaking would not include any information collection
requirements subject to the Paperwork Reduction Act of 1995 (44 U.S.C.
3501 et seq.).
D. Review Under the National Environmental Policy Act of 1969
DOE is preparing a draft Environmental Impact Statement (EIS) (DOE/
EIS-0550) entitled, ``Environmental Impact Statement: Energy
Conservation Standards for Manufactured Housing'', pursuant to the
National Environmental Policy Act of 1969 (NEPA), the Council on
Environmental Quality's Regulations for implementing the procedural
provisions of the National Environmental Policy Act (40 CFR parts 1500-
1508), and DOE's NEPA Implementing Procedures (10 CFR part 1021).
E. Review Under Executive Order 13132
Executive Order 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999)
imposes certain requirements on Federal agencies formulating and
implementing policies or regulations that preempt State law or that
have federalism implications. The Executive order requires agencies to
examine the constitutional and statutory authority supporting any
action that would limit the policymaking discretion of the States and
to carefully assess the necessity for such actions. The Executive order
also requires agencies to have an accountable process to ensure
meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.
On March 14, 2000, DOE published a statement of policy describing the
intergovernmental consultation process it will follow in the
development of such regulations. 65 FR 13735. DOE has examined this
proposed rule and has determined that it would not have a substantial
direct effect on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.
DOE has examined this action and has determined that it will not
pre-empt State law. This action impacts energy efficiency requirements
for manufacturers of manufactured homes. Therefore, no further action
is required by E.O. 13132.
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of E.O. 12988, ``Civil
Justice Reform,'' imposes on Federal agencies the general duty to
adhere to the following requirements: (1) Eliminate drafting errors and
ambiguity; (2) write regulations to minimize litigation; (3) provide a
clear legal standard for affected conduct rather than a general
standard; and (4) promote simplification and burden reduction. 61 FR
4729 (Feb. 7, 1996). Regarding the review required by section 3(a),
section 3(b) of E.O. 12988 specifically requires that Executive
agencies make every reasonable effort to ensure that the regulation:
(1) Clearly specifies the preemptive effect, if any; (2) clearly
specifies any effect on existing Federal law or regulation; (3)
provides a clear legal standard for affected conduct while promoting
simplification and burden reduction; (4) specifies the retroactive
effect, if any; (5) adequately defines key terms; and (6) addresses
other important issues affecting clarity and general draftsmanship
under any guidelines issued by the Attorney General. Section 3(c) of
E.O. 12988 requires Executive agencies to review regulations in light
of applicable standards in section 3(a) and section 3(b) to determine
whether they are met, or it is unreasonable to meet one or more of
them. DOE has completed the required review and determined that, to the
extent permitted by law, this proposed rule meets the relevant
standards of E.O. 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'')
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, section 201 (codified at 2 U.S.C.
1531). For a regulatory action likely to result in a rule that may
cause the expenditure by State, local, and Tribal governments, in the
aggregate, or by the private sector of $100 million or more in any one
year (adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect them. On March 18, 1997, DOE published
a statement of policy on its process for intergovernmental consultation
under UMRA. 62 FR 12820. DOE's policy statement is also available at
https://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
DOE has tentatively concluded that this proposed rule may require
expenditures of $100 million or more in one year by the private sector.
Such expenditures may include: (1) Updates to product plans and
investment in capital expenditures by manufactured home manufacturers
in the years between the final rule and the compliance date of the new
standards, and (2) incremental additional expenditures by consumers to
purchase higher-efficiency manufactured homes, starting at the
compliance date for the standards.
Section 202 of UMRA authorizes a Federal agency to respond to the
content requirements of UMRA in any other statement or analysis that
accompanies the rule. (2 U.S.C. 1532(c)) The content requirements of
section 202(b) of UMRA relevant to a private sector mandate
substantially overlap the economic analysis requirements that apply
under E.O. 12866. The SUPPLEMENTARY INFORMATION section of this
document and chapter 15 of the TSD for this SNOPR respond to those
requirements.
[[Page 47828]]
Under section 205 of UMRA, the Department is obligated to identify
and consider a reasonable number of regulatory alternatives before
promulgating a rule for which a written statement under section 202 is
required. (2 U.S.C. 1535(a)) DOE is required to select from those
alternatives the most cost-effective and least burdensome alternative
that achieves the objectives of the rule unless DOE publishes an
explanation for doing otherwise, or the selection of such an
alternative is inconsistent with law.
In accordance with the statutory provisions discussed in this
document, this proposed rule would establish energy conservation
standards for manufactured homes based on the most recent IECC, except
in cases in which DOE finds that the IECC is not cost-effective, or a
more stringent standard would be more cost-effective, based on the
impact of the code on the purchase price of manufactured housing and on
total life-cycle construction and operating costs, and taking into
consideration the design and factory construction techniques of
manufactured homes. (42 U.S.C. 17071(b)(1) and 42 U.S.C.
17071(b)(2)(A)) A discussion of the alternatives considered by DOE is
presented in chapter 15 of the TSD for this SNOPR.
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
This proposal, if finalized as proposed, would not have any impact on
the autonomy or integrity of the family as an institution. Accordingly,
DOE has concluded that it is not necessary to prepare a Family
Policymaking Assessment.
I. Review Under Executive Order 12630
Pursuant to E.O. 12630, ``Governmental Actions and Interference
with Constitutionally Protected Property Rights,'' 53 FR 8859 (Mar. 18,
1988), DOE has determined that this proposal, if finalized as proposed,
would not result in any takings that might require compensation under
the Fifth Amendment to the U.S. Constitution.
J. Review Under the Treasury and General Government Appropriations Act,
2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to
review most disseminations of information to the public under
information quality guidelines established by each agency pursuant to
general guidelines issued by OMB. OMB's guidelines were published at 67
FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR
62446 (Oct. 7, 2002). Pursuant to OMB Memorandum M-19-15, Improving
Implementation of the Information Quality Act (April 24, 2019), DOE
published updated guidelines which are available at https://www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has
reviewed this proposed rule under the OMB and DOE guidelines and has
concluded that it is consistent with applicable policies in those
guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA
at OMB, a Statement of Energy Effects for any significant energy
action. A ``significant energy action'' is defined as any action by an
agency that promulgates or is expected to lead to promulgation of a
final rule, and that: (1) Is a significant regulatory action under E.O.
12866, or any successor order; and (2) is likely to have a significant
adverse effect on the supply, distribution, or use of energy; or (3) is
designated by the Administrator of OIRA as a significant energy action.
For any significant energy action, the agency must give a detailed
statement of any adverse effects on energy supply, distribution, or use
should the proposal be implemented, and of reasonable alternatives to
the action and their expected benefits on energy supply, distribution,
and use.
DOE has tentatively concluded that this regulatory action, which
proposes new energy conservation standards for manufactured housing, is
not a significant energy action because the standards are not likely to
have a significant adverse effect on the supply, distribution, or use
of energy, nor has it been designated as such by the Administrator at
OIRA. Accordingly, DOE has not prepared a Statement of Energy Effects
on this proposed rule.
L. Information Quality
On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (OSTP), issued its Final Information
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14,
2005). The Bulletin establishes that certain scientific information
shall be peer-reviewed by qualified specialists before it is
disseminated by the Federal Government, including influential
scientific information related to agency regulatory actions. The
purpose of the Bulletin is to enhance the quality and credibility of
the Government's scientific information. Under the Bulletin, the energy
conservation standards rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines as ``scientific information
the agency reasonably can determine will have, or does have, a clear
and substantial impact on important public policies or private sector
decisions.'' 70 FR 2664, 2667.
In response to OMB's Bulletin, DOE conducted formal peer reviews of
the energy conservation standards development process for consumer
products and industrial equipment under EPCA and the analyses that are
typically used and prepared a report describing that peer review.\92\
Generation of this report involved a rigorous, formal, and documented
evaluation using objective criteria and qualified and independent
reviewers to make a judgment as to the technical, scientific, and
business merit; the actual or anticipated results; and the productivity
and management effectiveness of programs and/or projects. While the
energy conservation standards for manufactured housing in this document
have been proposed pursuant to section 413 of EISA (42 U.S.C. 17071) as
compared to the appliance standards authority in EPCA (42 U.S.C. 6291-
6317), DOE relied on the general analytical process developed and peer-
reviewed for the appliance standards. DOE conducted formal in-progress
peer reviews of the energy conservation standards development process
and analyses under the Appliance Standards Program and has prepared a
Peer Review Report pertaining to the energy conservation standards
rulemaking analyses. Generation of this report involved a rigorous,
formal, and documented evaluation using objective criteria and
qualified and independent reviewers to make a judgment as to the
technical/scientific/business merit, the actual or anticipated results,
and the productivity and management effectiveness of
[[Page 47829]]
programs and/or projects. The ``Energy Conservation Standards
Rulemaking Peer Review Report'' dated February 2007 has been
disseminated and is available at the following website: https://www.energy.gov/eere/buildings/peer-review. DOE also has a peer review
in process with the National Academy of Sciences and will review any
recommendations made therein when the report is available.
---------------------------------------------------------------------------
\92\ The 2007 ``Energy Conservation Standards Rulemaking Peer
Review Report'' is available at the following website: https://energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peeR-review-report-0.
---------------------------------------------------------------------------
M. Materials Incorporated by Reference
Under section 301 of the Department of Energy Organization Act
(Pub. L. 95-91; 42 U.S.C. 7101), DOE must comply with section 32 of the
Federal Energy Administration Act of 1974, as amended by the Federal
Energy Administration Authorization Act of 1977. (15 U.S.C. 788; FEAA)
Section 32 essentially provides in relevant part that, where a proposed
rule authorizes or requires use of commercial standards, the notice of
proposed rulemaking must inform the public of the use and background of
such standards. In addition, section 32(c) requires DOE to consult with
the Attorney General and the FTC Chairman concerning the impact of the
commercial or industry standards on competition.
DOE is proposing to incorporate by reference the industry standard
published by ACCA, titled Manual J--Residential Load Calculation (8th
Edition). ACCA Manual J is an industry accepted standard for
calculating the heating and cooling load associated with a building.
DOE is proposing to require building heating and cooling loads to be
calculated (for purposes of equipment sizing) in accordance with ACCA
Manual J. ACCA Manual J is readily available on ACCA's website at
www.acca.org/.
DOE is proposing to incorporate by reference the industry standard
published by ACCA, titled Manual S--Residential Equipment Selection
(2nd Edition). ACCA Manual S is an industry accepted standard for
calculating the appropriate heating and cooling equipment size for a
building. DOE is proposing to require building heating and cooling
equipment to be sized in accordance with ACCA Manual S. ACCA Manual S
is readily available on ACCA's website at www.acca.org/.
DOE is proposing to incorporate by reference the industry standard
written by C.C Conner and Z.T. Taylor of Pacific Northwest Laboratory,
titled Overall U-Values and Heating/Cooling Loads--Manufactured Homes.
This industry standard (referred to as the ``Battelle Method'') is an
industry accepted method for calculating the overall thermal
transmittance of a manufactured home. In instances in which
manufacturers demonstrate compliance with the overall thermal
transmittance requirement, DOE is proposing to require manufactured
housing manufacturers to calculate the overall thermal transmittance of
a manufactured home in accordance with this industry standard. This
standard is readily available on the U.S. Department of Housing and
Urban Development's website at www.huduser.org/portal/publications/manufhsg/uvalue.html.
DOE has evaluated these standards and was unable to conclude
whether they fully comply with the requirements of section 32(b) of the
FEAA (i.e., whether they were developed in a manner that fully provides
for public participation, comment, and review). DOE will consult with
both the Attorney General and the Chairman of the FTC concerning the
impact of these standards on competition, prior to prescribing a final
rule.
VI. Public Participation
A. Participation in the Webinar
The time and date of the webinar meeting are listed in the DATES
section at the beginning of this document. Webinar registration
information, participant instructions, and information about the
capabilities available to webinar participants will be published on
DOE's website: https://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=64. Participants are
responsible for ensuring their systems are compatible with the webinar
software.
B. Procedure for Submitting Prepared General Statements for
Distribution
Any person who has an interest in the topics addressed in this
SNOPR, or who is representative of a group or class of persons that has
an interest in these issues, may request an opportunity to make an oral
presentation at the webinar. Requests should be sent by email to:
[email protected]. Persons who wish to speak
should include with their request a computer file in WordPerfect,
Microsoft Word, PDF, or text (ASCII) file format that briefly describes
the nature of their interest in this rulemaking and the topics they
wish to discuss. Such persons should also provide a daytime telephone
number where they can be reached.
Persons requesting to speak should briefly describe the nature of
their interest in this rulemaking and provide a telephone number for
contact. DOE requests persons selected to make an oral presentation to
submit an advance copy of their statements at least two weeks before
the webinar. At its discretion, DOE may permit persons who cannot
supply an advance copy of their statement to participate, if those
persons have made advance alternative arrangements with the Building
Technologies Office. As necessary, requests to give an oral
presentation should ask for such alternative arrangements.
C. Conduct of the Webinar
DOE will designate a DOE official to preside at the webinar and may
also use a professional facilitator to aid discussion. The meeting will
not be a judicial or evidentiary-type public hearing, but DOE will
conduct it in accordance with section 336 of EPCA (42 U.S.C. 6306). A
court reporter will be present to record the proceedings and prepare a
transcript. DOE reserves the right to schedule the order of
presentations and to establish the procedures governing the conduct of
the webinar. There shall not be discussion of proprietary information,
costs or prices, market share, or other commercial matters regulated by
U.S. anti-trust laws. After the webinar and until the end of the
comment period, interested parties may submit further comments on the
proceedings and any aspect of the rulemaking.
The webinar will be conducted in an informal, conference style. DOE
will present summaries of comments received before the webinar, allow
time for prepared general statements by participants, and encourage all
interested parties to share their views on issues affecting this
rulemaking. Each participant will be allowed to make a general
statement (within time limits determined by DOE), before the discussion
of specific topics. DOE will permit, as time permits, other
participants to comment briefly on any general statements.
At the end of all prepared statements on a topic, DOE will permit
participants to clarify their statements briefly. Participants should
be prepared to answer questions by DOE and by other participants
concerning these issues. DOE representatives may also ask questions of
participants concerning other matters relevant to this rulemaking. The
official conducting the webinar will accept additional comments or
questions from those attending, as time permits. The presiding official
will announce any further procedural rules or modification of the above
procedures that may be
[[Page 47830]]
needed for the proper conduct of the webinar.
A transcript of the webinar will be included in the docket, which
can be viewed as described in the Docket section at the beginning of
this SNOPR. In addition, any person may buy a copy of the transcript
from the transcribing reporter.
D. Submission of Comments
DOE will accept comments, data, and information regarding this
proposed rule no later than the date provided in the DATES section at
the beginning of this proposed rule. Interested parties may submit
comments, data, and other information using any of the methods
described in the ADDRESSES section at the beginning of this document.
Submitting comments via https://www.regulations.gov. The https://www.regulations.gov web page will require you to provide your name and
contact information. Your contact information will be viewable to DOE
Building Technologies staff only. Your contact information will not be
publicly viewable except for your first and last names, organization
name (if any), and submitter representative name (if any). If your
comment is not processed properly because of technical difficulties,
DOE will use this information to contact you. If DOE cannot read your
comment due to technical difficulties and cannot contact you for
clarification, DOE may not be able to consider your comment.
However, your contact information will be publicly viewable if you
include it in the comment itself or in any documents attached to your
comment. Any information that you do not want to be publicly viewable
should not be included in your comment, nor in any document attached to
your comment. Otherwise, persons viewing comments will see only first
and last names, organization names, correspondence containing comments,
and any documents submitted with the comments.
Do not submit to https://www.regulations.gov information for which
disclosure is restricted by statute, such as trade secrets and
commercial or financial information (hereinafter referred to as
Confidential Business Information (CBI)). Comments submitted through
https://www.regulations.gov cannot be claimed as CBI. Comments received
through the website will waive any CBI claims for the information
submitted. For information on submitting CBI, see the Confidential
Business Information section.
DOE processes submissions made through https://www.regulations.gov
before posting. Normally, comments will be posted within a few days of
being submitted. However, if large volumes of comments are being
processed simultaneously, your comment may not be viewable for up to
several weeks. Please keep the comment tracking number that https://www.regulations.gov provides after you have successfully uploaded your
comment.
Submitting comments via email. Comments and documents submitted via
email also will be posted to https://www.regulations.gov. If you do not
want your personal contact information to be publicly viewable, do not
include it in your comment or any accompanying documents. Instead,
provide your contact information in a cover letter. Include your first
and last names, email address, telephone number, and optional mailing
address. The cover letter will not be publicly viewable as long as it
does not include any comments.
Include contact information each time you submit comments, data,
documents, and other information to DOE. No telefacsimiles (faxes) will
be accepted.
Comments, data, and other information submitted to DOE
electronically should be provided in PDF (preferred), Microsoft Word or
Excel, WordPerfect, or text (ASCII) file format. Provide documents that
are not secured, that are written in English, and that are free of any
defects or viruses. Documents should not contain special characters or
any form of encryption and, if possible, they should carry the
electronic signature of the author.
Campaign form letters. Please submit campaign form letters by the
originating organization in batches of between 50 to 500 form letters
per PDF or as one form letter with a list of supporters' names compiled
into one or more PDFs. This reduces comment processing and posting
time.
Confidential Business Information. Pursuant to 10 CFR 1004.11, any
person submitting information that he or she believes to be
confidential and exempt by law from public disclosure should submit via
email two well-marked copies: One copy of the document marked
``confidential'' including all the information believed to be
confidential, and one copy of the document marked ``non-confidential''
with the information believed to be confidential deleted. DOE will make
its own determination about the confidential status of the information
and treat it according to its determination.
It is DOE's policy that all comments may be included in the public
docket, without change and as received, including any personal
information provided in the comments (except information deemed to be
exempt from public disclosure).
E. Issues on Which DOE Requests Comment
Although DOE welcomes comments on any aspect of this proposal, DOE
is particularly interested in receiving comments and views of
interested parties concerning the following issues:
1. DOE invites comment on whether (1) the manufacturer's retail
list price threshold for Tier 1 under the tiered proposal is
appropriate, (2) the untiered proposal in this SNOPR is cost-effective,
generally, and (3) the untiered proposal is cost-effective for low-
income consumers.
2. DOE welcomes comment on approaches for testing, compliance and
enforcement provisions for the proposed standards and alternative
proposal. DOE also welcomes comments and information related to
potential testing, compliance and enforcement under the current HUD
inspection and enforcement process, and potential costs of testing,
compliance and enforcement of the proposed standards and alternative
proposal in this document.
3. DOE requests comment on the use of a tiered approach to address
affordability and PBP concerns from HUD, other stakeholders, and the
policies outlined in Executive Order 13985. DOE also requests comment
regarding whether the price point boundary between the proposed tiers
is appropriate, and if not, at what price point should it be set and
the basis for any alternative price points. DOE also requests comment
on its assumptions regarding the use of high-priced loans (e.g.,
chattel loans) by low-income purchasers, or other purchasers, of
manufactured housing.
4. DOE also requests comment on alternate thresholds (besides price
point) to consider for the tiered approach, including a size-based
threshold (e.g., square footage or whether a home is single- or multi-
section). DOE requests comment on the square footage and region versus
sales price data provided in the notice (from MHS PUF 2019) and how
that data (or more recent versions of that data) could be used to
create either a size-based or region-based threshold instead. DOE
further requests input on whether there should be single national
threshold as proposed, or whether it should vary based on geography or
other factors, and if so, what factors should be considered.
[[Page 47831]]
5. DOE requests comment on using the AEO GDP deflator series to
adjust the manufacturer's retail list price threshold for inflation.
DOE requests comment on whether other time series, including those that
account for regional variability, should be used to adjust
manufacturer's retail list price.
6. DOE requests comment on whether a one-year lead time would be
sufficient given potential constraints that compliance with the DOE
standards may initially place on the HUD certification process, and
whether a longer lead time (e.g., a three-year lead time) or some other
alternative lead-time for this first set of standards (e.g., phased-in
over three years, with one-year lead-times thereafter) should be
provided.
7. DOE requests comment on its understanding of the definitional
changes in the 2018 IECC and the 2021 IECC. DOE also requests comments
on its changes to the proposed definitions as compared to those
proposed in the June 2016 NOPR.
8. DOE requests comment on incorporating by reference ACCA Manual
J, ACCA Manual S, and ``Overall U-Values and Heating/Cooling Loads--
Manufactured Homes'' by Conner and Taylor.
9. DOE requests comment on basing the climate zones on the three
HUD zones instead of the June 2016 NOPR-proposed four climate zones, or
other configuration of climate zones. DOE further requests input on
whether energy efficiency requirements should be based on smaller
geographic areas than provided with the 3 or 4 zone model.
10. DOE requests comment on the Tier 1 energy conservation
standards, which would be applicable to manufactured homes with a
manufacturer's retail list price of $55,000 or less. DOE also requests
comment on the proposed energy conservation standards based on the most
recent version of the IECC for the Tier 2 and untiered standards and
the consideration of R-21 sensitivity for exterior wall insulation for
climate zones 2 and 3.
11. DOE requests comment on the additional energy efficiency
requirements from the 2021 IECC and whether they should apply to
manufactured homes, including those that DOE has initially considered
as not applicable to manufactured homes. If so, DOE requests comment on
how these requirements would apply and the costs and savings associated
with these requirements.
12. DOE requests comment on the proposal to not require that
exterior ceiling insulation must have uniform thickness or a uniform
density.
13. DOE requests comment on the proposal not to limit the total
area of glazed fenestration.
14. DOE requests comment on removing the proposed requirement that
exterior floor insulation installed must maintain permanent contact
with the underside of the rough floor decking.
15. DOE requests comment on the proposed updates to the
installation of insulation criteria as it applies to manufactured homes
construction only.
16. DOE requests comments on whether there are any of the 2021 IECC
updates relevant to manufactured housing that should be considered as
part of this rulemaking. Specifically, DOE requests comment on whether
the 2021 IECC updates for installation criteria for access hatches and
doors, baffles and shafts are applicable to manufactured housing and
should be considered in this rulemaking.
17. DOE requests comment on the proposed updates to the air barrier
criteria as it applies to manufactured homes construction only.
Further, DOE requests comment whether the SNOPR proposal continues to
be designed to achieve air leakage sealing requirements of 5 ACH.
18. DOE requests comments on whether there are any of the 2021 IECC
updates relevant to manufactured housing that should be considered as
part of this rulemaking. Specifically, DOE requests comment on whether
the 2021 IECC updates for air barrier criteria for recessed lighting,
narrow cavities and plumbing are applicable to manufactured housing and
should be considered in this rulemaking. If so, DOE requests comment on
whether the requirements would alter the 5 ACH designation.
19. DOE requests comment on the proposal to require that total air
leakage of duct systems for all manufactured homes is to be less than
or equal to 4 cfm per 100 square feet of conditioned floor area.
20. DOE requests comment on DOE's interpretation of R403.1 and the
proposed updates to the thermostat and controls requirements. In
addition, DOE requests comments on whether there are any of the 2021
IECC updates relevant to manufactured housing that should be considered
as part of this rulemaking.
21. DOE requests comment on DOE's interpretation of R403.5 and the
proposed updates to the service hot water requirements. In addition,
DOE requests comments on whether there are any of the 2021 IECC updates
relevant to manufactured housing that should be considered as part of
this rulemaking. Specifically, DOE requests comment on whether the
circulating hot water system temperature limit should be included as a
requirement.
22. DOE requests comment on the proposal to include the 2021 IECC
fan efficacy standard requirements. DOE requests comment on whether any
of the fan efficacy requirements are not applicable to manufactured
homes.
23. DOE requests comment on whether the HRV and ERV provisions
under 2021 IECC for site-built homes are applicable to manufactured
homes and whether they would be cost-effective. Specifically, DOE
requests comment on costs for the HRV and ERV requirements as it
applies to manufactured homes in all climate zones.
24. DOE requests comment on the above ventilation strategies,
including (but not limited to) cost, performance, noise, and any other
important attributes that DOE should consider, including those related
to mitigation measures. While the alternate ventilation approaches are
not integrated into the analysis presented as part of this proposal,
DOE is giving serious consideration as to whether it should incorporate
one or more of these options as part of its final rule based on any
additional data and public comments it receives.
25. DOE requests comment on the cost-effectiveness and feasibility
of requiring R-20+5 for the exterior wall insulation for climate zone 2
and 3 Tier 2/Untiered manufactured homes. DOE also requests comment on
the sensitivity analysis for R-21 that would result in positive LCC
savings for all cities.
26. DOE requests comment on the inputs to the conversion cost
estimates.
27. DOE requests comment on the shipment breakdown per tier and
using a substitution effect of 20 percent on shipments to account for
the shift in homes sold to the lower tiered standard. DOE requests
comment on whether it should use a different substitution effect value
for this analysis--and if so, why. (Please provide data in support of
an alternative substitution effect value.)
28. DOE requests comment on the calculation of deadweight loss
presented above and the extent to which there are market failures in
the no-standards case.
29. DOE requests comment on the number of manufacturers of
manufactured housing producing home covered by this rulemaking.
30. DOE requests comment on the cost to update model plans and the
number of model plans to update as a result of the proposed rule; on
the types of equipment and capital expenditures that would be
necessitated by the proposal;
[[Page 47832]]
and the total cost of updating product offerings and manufacturing
facilities. DOE requests comment on how these values would differ for
small manufacturers. DOE requests comment on its estimate of average
annual revenues for small manufacturers of manufactured housing.
VII. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this notice of
proposed rulemaking.
List of Subjects in 10 CFR Part 460
Administrative practice and procedure, Buildings and facilities,
Energy conservation, Housing standards, Incorporation by reference,
Reporting and recordkeeping requirements.
Signing Authority
This document of the Department of Energy was signed on August 12,
2021, by Kelly Speakes-Backman, Principal Deputy Assistant Secretary
and Acting Assistant Secretary for Energy Efficiency and Renewable
Energy, pursuant to delegated authority from the Secretary of Energy.
That document with the original signature and date is maintained by
DOE. For administrative purposes only, and in compliance with
requirements of the Office of the Federal Register, the undersigned DOE
Federal Register Liaison Officer has been authorized to sign and submit
the document in electronic format for publication, as an official
document of the Department of Energy. This administrative process in no
way alters the legal effect of this document upon publication in the
Federal Register.
Signed in Washington, DC, on August 13, 2021.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
For the reasons stated in the preamble, DOE proposes to add part
460 of chapter II of title 10, Code of Federal Regulations as set forth
below:
PART 460--ENERGY CONSERVATION STANDARDS FOR MANUFACTURED HOMES
Subpart A--General
Sec.
460.1 Scope.
460.2 Definitions.
460.3 Materials incorporated by reference.
460.4 Energy conservation standards.
Subpart B--Building Thermal Envelope
460.101 Climate zones.
460.102 Building thermal envelope requirements.
460.103 Installation of insulation.
460.104 Building thermal envelope air leakage.
Subpart C--HVAC, Service Hot Water, and Equipment Sizing
460.201 Duct systems.
460.202 Thermostats and controls.
460.203 Service hot water.
460.204 Mechanical ventilation fan efficacy.
460.205 Equipment sizing.
Authority: 42 U.S.C. 17071; 42 U.S.C. 7101 et seq.
Subpart A--General
Sec. 460.1 Scope.
This subpart establishes energy conservation standards for
manufactured homes as manufactured at the factory, prior to
distribution in commerce for sale or installation in the field. A
manufactured home that is manufactured on or after (date 1 year after
the publication date of the final rule amending standards for
manufactured homes) must comply with all applicable requirements of
this part.
Sec. 460.2 Definitions.
Adapted from Section R202 of the 2021 IECC and as used in this
part--
Access (to) means that which enables a device, appliance or
equipment to be reached by ready access or by a means that first
requires the removal or movement of a panel or similar obstruction.
Air barrier means one or more materials joined together in a
continuous manner to restrict or prevent the passage of air through the
building thermal envelope and its assemblies.
Automatic means self-acting or operating by its own mechanism when
actuated by some impersonal influence.
Building thermal envelope means exterior walls, exterior floors,
exterior ceiling, or roofs, and any other building element assemblies
that enclose conditioned space or provide a boundary between
conditioned space and unconditioned space.
Ceiling means an assembly that supports and forms the overhead
interior surface of a building or room that covers its upper limit and
is horizontal or tilted at an angle less than 60 degrees (1.05 rad)
from horizontal.
Climate zone means a geographical region identified in Sec.
460.101.
Conditioned space means an area, room, or space that is enclosed
within the building thermal envelope and that is directly or indirectly
heated or cooled. Spaces are indirectly heated or cooled where they
communicate through openings with conditioned space, where they are
separated from conditioned spaces by uninsulated walls, floors or
ceilings, or where they contain uninsulated ducts, piping, or other
sources of heating or cooling.
Continuous air barrier means a combination of materials and
assemblies that restrict or prevent the passage of air from conditioned
space to unconditioned space.
Door means an operable barrier used to block or allow access to an
entrance of a manufactured home.
Dropped ceiling means a secondary nonstructural ceiling, hung below
the exterior ceiling.
Dropped soffit means a secondary nonstructural ceiling that is hung
below the exterior ceiling and that covers only a portion of the
ceiling.
Duct means a tube or conduit, except an air passage within a self-
contained system, utilized for conveying air to or from heating,
cooling, or ventilating equipment.
Duct system means a continuous passageway for the transmission of
air that, in addition to ducts, includes duct fittings, dampers,
plenums, fans, and accessory air-handling equipment and appliances.
Eave means the edge of the roof that overhangs the face of an
exterior wall and normally projects beyond the side of the manufactured
home.
Equipment includes material, devices, fixtures, fittings, or
accessories both in the construction of, and in the plumbing, heating,
cooling, and electrical systems of a manufactured home.
Exterior ceiling means a ceiling that separates conditioned space
from unconditioned space.
Exterior floor means a floor that separates conditioned space from
unconditioned space.
Exterior wall means a wall, including a skylight well, that
separates conditioned space from unconditioned space.
Fenestration means vertical fenestration and skylights.
Floor means a horizontal assembly that supports and forms the lower
interior surface of a building or room upon which occupants can walk.
Glazed or glazing means an infill material, including glass,
plastic, or other transparent or translucent material used in
fenestration.
Heated water circulation system means a water distribution system
in which one or more pumps are operated in the service hot water piping
to circulate heated water from the water heating equipment to fixtures
and back to the water heating equipment.
2021 IECC means the 2021 version of the International Energy
Conservation
[[Page 47833]]
Code, issued by the International Code Council.
Insulation means material deemed to be insulation under 16 CFR
460.2.
Manufactured home means a structure, transportable in one or more
sections, which in the traveling mode is 8 body feet or more in width
or 40 body feet or more in length or which when erected onsite is 320
or more square feet, and which is built on a permanent chassis and
designed to be used as a dwelling with or without a permanent
foundation when connected to the required utilities, and includes the
plumbing, heating, air conditioning, and electrical systems contained
in the structure. This term includes all structures that meet the above
requirements except the size requirements and with respect to which the
manufacturer voluntarily files a certification pursuant to 24 CFR
3282.13 and complies with the construction and safety standards set
forth in 24 CFR part 3280. The term does not include any self-propelled
recreational vehicle. Calculations used to determine the number of
square feet in a structure will be based on the structure's exterior
dimensions, measured at the largest horizontal projections when erected
on site. These dimensions will include all expandable rooms, cabinets,
and other projections containing interior space, but do not include bay
windows. Nothing in this definition should be interpreted to mean that
a manufactured home necessarily meets the requirements of the U.S.
Department of Housing and Urban Development Minimum Property Standards
(HUD Handbook 4900.1) or that it is automatically eligible for
financing under 12 U.S.C. 1709(b).
Manufacturer means any person engaged in the factory construction
or assembly of a manufactured home, including any person engaged in
importing manufactured homes for resale.
Manual means capable of being operated by personal intervention.
Opaque door means a door that is not less than 50 percent opaque in
surface area.
R-value (thermal resistance) means the inverse of the time rate of
heat flow through a body from one of its bounding surfaces to the other
surface for a unit temperature difference between the two surfaces,
under steady state conditions, per unit area (h x ft\2\ x [deg]F/Btu).
Rough opening means an opening in the exterior wall or roof, sized
for installation of fenestration.
Service hot water means supply of hot water for purposes other than
comfort heating.
Skylight means glass or other transparent or translucent glazing
material, including framing materials, installed at an angle less than
60 degrees (1.05 rad) from horizontal, including unit skylights,
tubular daylighting devices, and glazing materials in solariums,
sunrooms, roofs and sloped walls.
Skylight well means the exterior walls underneath a skylight that
extend from the interior finished surface of the exterior ceiling to
the exterior surface of the location to which the skylight is attached.
Solar heat gain coefficient (SHGC) means the ratio of the solar
heat gain entering a space through a fenestration assembly to the
incident solar radiation. Solar heat gain includes directly transmitted
solar heat and absorbed solar radiation that is then reradiated,
conducted, or convected into the space.
State means each of the 50 states, the District of Columbia, the
Commonwealth of Puerto Rico, Guam, the U.S. Virgin Islands, and
American Samoa.
Thermostat means an automatic control device used to maintain
temperature at a fixed or adjustable set point.
U-factor (thermal transmittance) means the coefficient of heat
transmission (air to air) through a building component or assembly,
equal to the time rate of heat flow per unit area and unit temperature
difference between the warm side and cold side air films (Btu/h x ft\2\
x [deg]F).
Uo (overall thermal transmittance) means the coefficient of heat
transmission (air to air) through the building thermal envelope, equal
to the time rate of heat flow per unit area and unit temperature
difference between the warm side and cold side air films (Btu/h x ft\2\
x [deg]F).
Ventilation means the natural or mechanical process of supplying
conditioned or unconditioned air to, or removing such air from, any
space.
Vertical fenestration means windows (fixed or moveable), opaque
doors, glazed doors, glazed block and combination opaque and glazed
doors composed of glass or other transparent or translucent glazing
materials and installed at a slope of greater than or equal to 60
degrees (1.05 rad) from horizontal.
Wall means an assembly that is vertical or tilted at an angle equal
to greater than 60 degrees (1.05 rad) from horizontal that encloses or
divides an area of a building or room.
Whole-house mechanical ventilation system means an exhaust system,
supply system, or combination thereof that is designed to mechanically
exchange indoor air with outdoor air when operating continuously or
through a programmed intermittent schedule.
Window means glass or other transparent or translucent glazing
material, including framing materials, installed at an angle greater
than 60 degrees (1.05 rad) from horizontal.
Zone means a space or group of spaces within a manufactured home
with heating or cooling requirements that are sufficiently similar so
that desired conditions can be maintained using a single controlling
device.
Sec. 460.3 Materials incorporated by reference.
Certain material is incorporated by reference into this subpart
with the approval of the Director of the Federal Register in accordance
with 5 U.S.C. 552(a) and 1 CFR part 51. To enforce any edition other
than that specified in this section, DOE must publish a document in the
Federal Register and the material must be available to the public. All
approved material is available for inspection at the U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Program, Sixth Floor, 950 L'Enfant Plaza SW, Washington,
DC 20024, (202) 586-2945, https://www.energy.gov/eere/buildings/appliance-and-equipment-standards-program, and may be obtained from the
other sources in this section. It is also available for inspection at
the National Archives and Records Administration (NARA). For
information on the availability of this material at NARA, email:
[email protected], or go to: www.archives.gov/federal-register/cfr/ibr-locations.html.
(a) ACCA. Air Conditioning Contractors of America, Inc., 2800 S.
Shirlington Road, Suite 300, Arlington, VA 22206, 703-575-4477,
www.acca.org/.
(1) ANSI/ACCA 2 Manual J-2016 (``ACCA Manual J''), Manual J-
Residential Load Calculation (8th edition), Copyright 2016. IBR
approved for Sec. 460.205.
(2) ANSI/ACCA 3 Manual S-2014 (``ACCA Manual S''), Manual S-
Residential Equipment Selection (2nd Edition), Copyright 2014. IBR
approved for Sec. 460.205.
(b) PNL. Pacific Northwest Laboratory, Richland, WA 99352, 800-245-
2691, www.huduser.org/portal/publications/manufhsg/uvalue.html.
(1) PNL-8006, (``Overall U-values and Heating/Cooling Loads--
Manufactured Homes''), Overall U-Values and Heating/Cooling Loads--
Manufactured Homes, C.C. Conner and Z.T. Taylor,
[[Page 47834]]
February 1, 1992. IBR approved for Sec. 460.102(d)(1).
(2) [Reserved].
Sec. 460.4 Energy conservation standards.
(a) General. Energy conservation standard tier thresholds presented
in paragraphs (b) and (c) of this section must be adjusted to the most
recently available Annual Energy Outlook (AEO) gross domestic product
(GDP) time series.
(b) Tier 1. A manufactured home for which the manufacturer's retail
list price is $55,000 or less in real 2019$ (i.e., a Tier 1
manufactured home) must comply with all applicable requirements in
subparts B and C of this part.
(c) Tier 2. A manufactured home for which the manufacturer retail
list price is greater than $55,000 in real 2019$ (i.e., a Tier 2
manufactured home) must comply with all applicable requirements in
subparts B and C of this part.
Subpart B--Building Thermal Envelope
Sec. 460.101 Climate zones.
Manufactured homes subject to the requirements of this subpart must
comply with the requirements applicable to one or more of the climate
zones set forth in Figure 460.101 and Table 460.101 of this section.
[GRAPHIC] [TIFF OMITTED] TP26AU21.015
Table 460.101--U.S. States and Territories per Climate Zone
----------------------------------------------------------------------------------------------------------------
Zone 1 Zone 2 Zone 3
----------------------------------------------------------------------------------------------------------------
Alabama Arkansas Alaska
American Samoa Arizona Colorado
Florida California Connecticut
Georgia Kansas Delaware
Guam Kentucky District of Columbia
Hawaii Missouri Idaho
Louisiana New Mexico Illinois
Mississippi North Carolina Indiana
South Carolina Oklahoma Iowa
Texas Tennessee Maine
The Commonwealth of ............................. Maryland
Puerto Rico ............................. Massachusetts
U.S. Virgin Islands ............................. Michigan
............................. Minnesota
............................. Montana
............................. Nebraska
............................. Nevada
............................. New Hampshire
............................. New Jersey
............................. New York
............................. North Dakota
............................. Ohio
............................. Oregon
............................. Pennsylvania
............................. Rhode Island
............................. South Dakota
............................. Utah
............................. Vermont
............................. Virginia
............................. Washington
............................. West Virginia
[[Page 47835]]
............................. Wisconsin
............................. Wyoming
----------------------------------------------------------------------------------------------------------------
Sec. 460.102 Building thermal envelope requirements.
(a) Compliance options. The building thermal envelope must meet
either the prescriptive requirements of paragraph (b) of this section
or the performance requirements of paragraph (c) of this section.
(b) Prescriptive requirements. (1) The building thermal envelope
must meet the applicable minimum R-value, and the maximum U-factor and
SHGC, requirements set forth in Tables 460.102-1 and 460.102-2 of this
section.
Table 460.102-1--Tier 1 Building Thermal Envelope Prescriptive Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Exterior
Exterior wall ceiling Exterior floor Window U- Skylight U- Glazed
Climate zone insulation R- insulation R- insulation R- factor factor DoorU-factor fenestration
value value value SHGC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................... 13 22 22 1.08 0.75 0.40 0.7
2....................................... 13 22 19 0.5 0.55 0.40 0.6
3....................................... 19 22 22 0.35 0.55 0.40 Not
applicable.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 460.102-2--Tier 2 Building Thermal Envelope Prescriptive Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Exterior
Exterior wall ceiling Exterior floor Window U- Skylight U- Glazed
Climate zone insulation R- insulation R- insulation R- factor factor Door U-factor fenestration
value value value SHGC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................... 13 30 13 0.32 0.75 0.40 0.33
2....................................... 20+5 30 19 0.30 0.55 0.40 0.25
3....................................... 20+5 38 30 0.30 0.55 0.40 Not
applicable.
--------------------------------------------------------------------------------------------------------------------------------------------------------
(2) For the purpose of compliance with the exterior ceiling
insulation R-value requirement of paragraph (b)(1) of this section, the
truss heel height must be a minimum of 5.5 inches at the outside face
of each exterior wall.
(3) A combination of R-21 batt insulation and R-14 blanket
insulation may be used for the purpose of compliance with the floor
insulation R-value requirement of Table 460.102-2, climate zone 3.
(4) An individual skylight that has an SHGC that is less than or
equal to 0.30 is not subject to the glazed fenestration SHGC
requirements established in paragraph (b)(1) of this section. Adapted
from section R402 of the 2021 IECC.
(5) U-factor alternatives to R-value requirements. Compliance with
the applicable requirements in paragraph (b)(1) of this section may be
determined using the maximum U-factor values set forth in Tables
460.102-3 and 460.102-4, which reflect the thermal transmittance of the
component, excluding fenestration, and not just the insulation of that
component, as an alternative to the minimum R-value requirements set
forth in Tables 460.102-1 and 460.102-2, respectively.
Table 460.102-3--U-factor Alternatives to Tier 1 R-value Requirements
----------------------------------------------------------------------------------------------------------------
Exterior ceiling U-factor
Climate zone -------------------------------- Exterior wall Exterior floor
Single-section Multi-section U-factor U-factor
----------------------------------------------------------------------------------------------------------------
1............................................... 0.061 0.057 0.094 0.049
2............................................... 0.061 0.057 0.094 0.056
3............................................... 0.061 0.057 0.068 0.049
----------------------------------------------------------------------------------------------------------------
Table 460.102-4--U-factor Alternatives to Tier 2 R-value Requirements
----------------------------------------------------------------------------------------------------------------
Exterior ceiling U-factor
Climate zone -------------------------------- Exterior wall Exterior floor
Single-section Multi-section U-factor U-factor
----------------------------------------------------------------------------------------------------------------
1............................................... 0.045 0.043 0.094 0.078
2............................................... 0.045 0.043 0.047 0.056
3............................................... 0.038 0.037 0.047 0.032
----------------------------------------------------------------------------------------------------------------
[[Page 47836]]
(c) Performance requirements. (1) The building thermal envelope
must have a Uo that is less than or equal to the applicable value
specified in Tables 460.102-5 and 460.102-6 of this section.
Table 460.102-5--Tier 1 Building Thermal Envelope Performance
Requirements
------------------------------------------------------------------------
Single-section Multi-section
Climate zone Uo Uo
------------------------------------------------------------------------
1....................................... 0.110 0.109
2....................................... 0.091 0.087
3....................................... 0.074 0.072
------------------------------------------------------------------------
Table 460.102-6--Tier 2 Building Thermal Envelope Performance
Requirements
------------------------------------------------------------------------
Single-section Multi-section
Climate zone Uo Uo
------------------------------------------------------------------------
1....................................... 0.086 0.082
2....................................... 0.062 0.063
3....................................... 0.053 0.052
------------------------------------------------------------------------
(2) Area-weighted average vertical fenestration U-factor must not
exceed 0.48 in climate zone 2 or 0.40 in climate zone 3. Adapted from
section R402 of the 2021 IECC.
(3) Area-weighted average skylight U-factor must not exceed 0.75 in
climate zone 2 and climate zone 3. Adapted from section R402 of the
2021 IECC.
(4) Windows, skylights and doors containing more than 50 percent
glazing by area must satisfy the SHGC requirements established in
paragraph (b)(1) of this section on the basis of an area-weighted
average. Adapted from section R402 of the 2021 IECC.
(d) Determination of compliance with paragraph (c) of this section.
(1) Uo must be determined in accordance with Overall U-Values and
Heating/Cooling Loads--Manufactured Homes (incorporated by reference;
see Sec. 460.3)
(2) [Reserved]
Sec. 460.103 Installation of insulation.
Insulating materials must be installed according to the insulation
manufacturer's installation instructions and the requirements set forth
in Table 460.103 of this section, which is adapted from section R402 of
the 2021 IECC.
Table 460.103--Installation of Insulation
------------------------------------------------------------------------
Component Installation requirements
------------------------------------------------------------------------
General...................... Air-permeable insulation must not be used
as a material to establish the air
barrier.
Access hatches, panels, and Access hatches, panels, and doors between
doors. conditioned space and unconditioned
space must be insulated to a level
equivalent to the insulation of the
surrounding surface, must provide access
to all equipment that prevents damaging
or compressing the insulation, and must
provide a wood-framed or equivalent
baffle or retainer when loose fill
insulation is installed within an
exterior ceiling assembly to retain the
insulation both on the access hatch,
panel, or door and within the building
thermal envelope.
Baffles...................... Baffles must be constructed using a solid
material, maintain an opening equal or
greater than the size of the vents, and
extend over the top of the attic
insulation.
Ceiling or attic............. The insulation in any dropped ceiling or
dropped soffit must be aligned with the
air barrier.
Eave vents................... Air-permeable insulations in vented
attics within the building thermal
envelope must be installed adjacent to
eave vents.
Narrow cavities.............. Batts to be installed in narrow cavities
must be cut to fit or narrow cavities
must be filled with insulation that upon
installation readily conforms to the
available cavity space.
Rim joists................... Rim joists must be insulated such that
the insulation maintain permanent
contact with the exterior rim board.
Shower or tub adjacent to Exterior walls adjacent to showers and
exterior wall. tubs must be insulated.
Walls........................ Air permeable exterior building thermal
envelope insulation for framed exterior
walls must completely fill the cavity,
including within stud bays caused by
blocking lay flats or headers.
------------------------------------------------------------------------
Sec. 460.104 Building thermal envelope air leakage.
Manufactured homes must be sealed against air leakage at all
joints, seams, and penetrations associated with the building thermal
envelope in accordance with the component manufacturer's installation
instructions and the requirements set forth in Table 460.104 of this
section. Sealing methods between dissimilar materials must allow for
differential expansion, contraction and mechanical vibration, and must
establish a continuous air barrier upon installation of all opaque
components of the building thermal envelope. All gaps and penetrations
in the exterior ceiling, exterior floor, and exterior walls, including
ducts, flue shafts, plumbing, piping, electrical wiring, utility
penetrations, bathroom and kitchen exhaust fans, recessed lighting
fixtures adjacent to unconditioned space, and light tubes adjacent to
unconditioned space, must be sealed with caulk, foam, gasket or other
suitable material. The air barrier installation criteria is adapted
from section R402 of the 2021 IECC.
Table 460.104--Air Barrier Installation Criteria
------------------------------------------------------------------------
Component Air barrier criteria
------------------------------------------------------------------------
Ceiling or attic............. The air barrier in any dropped ceiling or
dropped soffit must be aligned with the
insulation and any gaps in the air
barrier must be sealed with caulk, foam,
gasket, or other suitable material.
Access hatches, panels, and doors, drop-
down stairs, or knee wall doors to
unconditioned attic spaces must be
weather-stripped or equipped with a
gasket to produce a continuous air
barrier.
Duct system register boots... Duct system register boots that penetrate
the building thermal envelope or the air
barrier must be sealed to the subfloor,
wall covering or ceiling penetrated by
the boot, air barrier, or the interior
finish materials with caulk, foam,
gasket, or other suitable material.
[[Page 47837]]
Electrical box or phone box The air barrier must be installed behind
on exterior walls. electrical and communication boxes or
the air barrier must be sealed around
the box penetration with caulk, foam,
gasket, or other suitable material.
Floors....................... The air barrier must be installed at any
exposed edge of insulation. The bottom
board may serve as the air barrier.
Mating line surfaces......... Mating line surfaces must be equipped
with a continuous and durable gasket.
Recessed lighting............ Recessed light fixtures installed in the
building thermal envelope must be sealed
to the drywall with caulk, foam, gasket,
or other suitable material.
Rim joists................... The air barrier must enclose the rim
joists. The junctions of the rim board
to the sill plate and the rim board and
the subfloor must be air sealed.
Shower or tub adjacent to The air barrier must separate showers and
exterior wall. tubs from exterior walls.
Walls........................ The junction of the top plate and the
exterior ceiling, and the junction of
the bottom plate and the exterior floor,
along exterior walls must be sealed with
caulk, foam, gasket, or other suitable
material.
Windows, skylights, and The rough openings around windows,
exterior doors. exterior doors, and skylights must be
sealed with caulk or foam.
------------------------------------------------------------------------
Subpart C--HVAC, Service Hot Water, and Equipment Sizing
Sec. 460.201 Duct systems.
Each manufactured home equipped with a duct system, which may
include air handlers and filter boxes, must be sealed to limit total
air leakage to less than or equal to four (4) cubic feet per minute per
100 square feet of conditioned floor area. Building framing cavities
must not be used as ducts or plenums when directly connected to
mechanical systems. The duct total air leakage requirements are adapted
from section R403 of the 2021 IECC.
Sec. 460.202 Thermostats and controls.
(a) At least one thermostat must be provided for each separate
heating and cooling system installed by the manufacturer. The
thermostat and controls requirements are adapted from section R403 of
the 2021 IECC.
(b) Programmable thermostat. Any thermostat installed by the
manufacturer that controls the heating or cooling system must--
(1) Be capable of controlling the heating and cooling system on a
daily schedule to maintain different temperature set points at
different times of the day and different days of the week;
(2) Include the capability to set back or temporarily operate the
system to maintain zone temperatures down to 55 [deg]F (13 [deg]C) or
up to 85 [deg]F (29 [deg]C); and
(3) Initially be programmed with a heating temperature set point no
higher than 70 [deg]F (21 [deg]C) and a cooling temperature set point
no lower than 78 [deg]F (26 [deg]C).
(c) Heat pumps with supplementary electric-resistance heat must be
provided with controls that, except during defrost, prevent
supplemental heat operation when the heat pump compressor can meet the
heating load.
Sec. 460.203 Service hot water.
(a) Service hot water systems installed by the manufacturer must be
installed according to the service hot water manufacturer's
installation instructions. Where service hot water systems are
installed by the manufacturer, the manufacturer must ensure that any
maintenance instructions received from the service hot water system
manufacturer are provided with the manufactured home. The service hot
water requirements are adapted from section R403 of the 2021 IECC.
(b) Any automatic and manual controls, temperature sensors, pumps
associated with service hot water systems must provide access.
(c) Heated water circulation systems must--
(1) Be provided with a circulation pump;
(2) Ensure that the system return pipe is a dedicated return pipe
or a cold water supply pipe;
(3) Not include any gravity or thermosyphon circulation systems;
(4) Ensure that controls for circulating heated water circulation
pumps start the pump based on the identification of a demand for hot
water within the occupancy; and
(5) Ensure that the controls automatically turn off the pump when
the water in the circulation loop is at the desired temperature and
when there is no demand for hot water.
(d) All hot water pipes--
(1) Outside conditioned space must be insulated to a minimum R-
value of R-3; and
(2) From a service hot water system to a distribution manifold must
be insulated to a minimum R-value of R-3.
Sec. 460.204 Mechanical ventilation fan efficacy.
(a) Whole-house mechanical ventilation system fans must meet the
minimum efficacy requirements set forth in Table 460.204 of this
section, except as provided in paragraph (b) of this section. The
mechanical ventilation fan efficacy requirements are adapted from
section R403 of the 2021 IECC.
Table 460.204--Mechanical Ventilation System Fan Efficacy
------------------------------------------------------------------------
Minimum
Fan type description Airflow rate efficacy (cfm/
minimum (cfm) watt)
------------------------------------------------------------------------
Heat recovery ventilator or energy Any 1.2
recovery ventilator....................
In-line supply or exhaust fans.......... Any 3.8
Other exhaust fan....................... <90 2.8
Other exhaust fan....................... >=90 3.5
------------------------------------------------------------------------
[[Page 47838]]
(b) Mechanical ventilation fans that are integral to heating,
ventilating, and air conditioning equipment, including furnace fans as
defined in Sec. 430.2 of this title, are not subject to the efficiency
requirements in paragraph (a) of this section.
Sec. 460.205 Equipment sizing.
Sizing of heating and cooling equipment installed by the
manufacturer must be determined in accordance with ACCA Manual S
(incorporated by reference; see Sec. 460.3) based on building loads
calculated in accordance with ACCA Manual J (incorporated by reference;
see Sec. 460.3). The equipment sizing criteria are adapted from
section R403 of the 2021 IECC.
[FR Doc. 2021-17684 Filed 8-25-21; 8:45 am]
BILLING CODE 6450-01-P