[Federal Register Volume 87, Number 104 (Tuesday, May 31, 2022)]
[Rules and Regulations]
[Pages 32728-32824]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-10926]



[[Page 32727]]

Vol. 87

Tuesday,

No. 104

May 31, 2022

Part III





Department of Energy





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10 CFR Part 460





Energy Conservation Program: Energy Conservation Standards for 
Manufactured Housing; Final Rule

  Federal Register / Vol. 87 , No. 104 / Tuesday, May 31, 2022 / Rules 
and Regulations  

[[Page 32728]]


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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: Final rule.

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SUMMARY: The U.S. Department of Energy (``DOE'' or ``the Department'') 
is publishing a final rule to establish energy conservation standards 
for manufactured housing pursuant to the Energy Independence and 
Security Act of 2007. This document presents standards 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. The adopted standards would provide a set of ``tiered'' 
standards based on size that would apply the 2021 IECC-based standards 
to manufactured homes, except that single-section manufactured homes 
would be subject to less stringent building thermal envelope 
requirements compared to multi-section manufactured homes.

DATES: The effective date of this rule is August 1, 2022. Compliance 
with the adopted standards established for manufactured housing in this 
final rule is required on and after May 31, 2023.
    The incorporation by reference of certain publications listed in 
this rule is approved by the Director of the Federal Register on August 
1, 2022.

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; Telephone: 202-287-1692; Email: 
[email protected].
    Mr. Matthew Ring, U.S. Department of Energy, Office of the General 
Counsel (GC-33), 1000 Independence Avenue SW, Washington, DC 20585; 
Telephone: 202-586-2555; Email: [email protected].

SUPPLEMENTARY INFORMATION: This final rule incorporates by reference 
into 10 CFR part 460 the following industry standards:
    ANSI/ACCA 2 Manual J-2016 (ver 2.50) (``ACCA Manual J''), Manual 
J--Residential Load Calculations, Eight Edition, Version 2.50, 
Copyright 2016.
    ANSI/ACCA 3 Manual S-2014 (``ACCA Manual S''), Manual S--
Residential Equipment Selection, Second Edition, Version 1.00, 
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/.
    HUD User No. 0005945, Overall U-Values and Heating/Cooling Loads-
Manufactured Homes, February 1992.
    A copy of Overall U-Values and Heating/Cooling Loads-Manufactured 
Homes may be purchased from HUD User, 11491 Sunset Hills Road, Reston, 
VA 20190-5254 or 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 Final Rule
    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
    C. Abbreviations
III. Discussion of the Standards
    A. The Basis for the Standards
    1. Affordability
    2. Loan Qualification
    3. IECC
    B. Final Standards
    1. Size-Based Threshold
    2. Tiered Standard
    3. Comments on the August 2021 SNOPR Proposal and the October 
2021 NODA
    C. Rulemaking Process
    D. Test Procedure
    E. Certification, Compliance, and Enforcement
    F. Energy Conservation Standards Requirements
    1. Subpart A: General
    2. Subpart B: Building Thermal Envelope
    3. Subpart C: HVAC, Service Water Heating, and Equipment Sizing
    G. 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. Discussion of Comments and Analysis Updates
    2. Results
    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. 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
    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
    N. Congressional Notification
VI. Approval of the Office of the Secretary

I. Summary of the Final Rule

    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 (``MH'').\1\ (42

[[Page 32729]]

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 life-cycle 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: 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. In December 
2017, the Sierra Club filed a suit against DOE in the U.S. District 
Court for the District of Columbia, alleging that DOE had failed to 
meet its statutory deadlines for establishing energy efficiency 
standards for manufactured housing. On August 3, 2018, DOE published a 
Notice of Data Availability (``NODA''). 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. In November 2019, the 
court in the above-referenced litigation entered a consent decree in 
which DOE agreed to complete the rulemaking by stipulated dates.
    After evaluating the comments received in response to the June 2016 
NOPR and the August 2018 NODA, DOE published a supplemental NOPR 
(``SNOPR'') on August 26, 2021, in which DOE proposed energy 
conservation standards for manufactured homes based on the 2021 IECC. 
86 FR 47744 (``August 2021 SNOPR''). In the August 2021 SNOPR, DOE also 
proposed that the standards would be based on the current HUD zones. 
DOE's primary proposal in the August 2021 SNOPR was a ``tiered'' 
approach, based on the 2021 IECC, wherein a subset of the energy 
conservation standards (based on retail list price) would be less 
stringent for certain manufactured homes in light of the cost-
effectiveness considerations required by statute. DOE's alternate 
proposal was an ``untiered'' approach, wherein energy conservation 
standards for all manufactured homes would be based on certain thermal 
envelope components and specifications of the 2021 IECC. Both proposals 
replaced the June 2016 NOPR proposal. Id. DOE sought comment on these 
proposals, as well as alternate thresholds, including a size-based 
threshold (e.g., square footage, number of sections) and a region-based 
threshold, and alternative exterior wall insulation requirements (R-21) 
for certain HUD zones. Id.
    On October 26, 2021, DOE published a NODA regarding updated inputs 
and results of corresponding analyses presented in the August 2021 
SNOPR (both tiered and untiered approaches), including a sensitivity 
analysis regarding an alternate sized based tier threshold and an 
alternate exterior wall insulation requirement (R-21) for certain HUD 
zones. 86 FR 59042 (``October 2021 NODA'') In addition, DOE reopened 
the public comment period on the August 2021 SNOPR through November 26, 
2021. DOE explained that it would consider the updated inputs and 
corresponding analyses, as well as comments on the inputs and analyses, 
as part of the rulemaking. In addition, DOE stated it may further 
revise the analysis presented in this rulemaking based on any new or 
updated information or data it obtains and encouraged stakeholders to 
provide any additional data or information that may inform the 
analysis. Id
    On January 14, 2022, DOE published a draft environmental impact 
statement (``DEIS'') for proposed energy conservation standards for 
manufactured housing (DOE/EIS-0550D). (87 FR 2359) (``January 2022 
DEIS'') DOE prepared the January 2022 DEIS in support of the August 
2021 SNOPR and October 2021 NODA.
    DOE invited input on the January 2022 DEIS for 45 days (through 
February 28, 2022). In January 2022, DOE held two public meetings for 
the DEIS and invited oral comments. Upon issuance of the January 2022 
DEIS, DOE reopened the public comment period on the SNOPR through 
February 28, 2022, to invite public comments under the rulemaking 
process on how the January 2022 DEIS should inform the final energy 
conservation standards. January 14, 2022 (87 FR 2359) Relevant comments 
on the January 2022 DEIS and those submitted in the concurrent comment 
period for the SNOPR were considered by DOE in preparing the final 
Environmental Impact Statement (``FEIS''), to help inform DOE's 
decision-making process for establishing

[[Page 32730]]

energy conservation standards for manufactured housing. The Notice of 
Availability for the FEIS (DOE/EIS-0550) was published on April 8, 
2022.\4\ (87 FR 20852).
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    \4\ The draft and final EIS documents are available at www.ecs-mh.evs.anl.gov/.
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    In this final rule, DOE codifies the energy conservation standards 
in a new part of the Code of Federal Regulations (``CFR'') under 10 CFR 
part 460, subparts A, B, and C. Subpart A presents generally the scope 
of the rule and provides definitions of key terms. Subpart B would 
establish new requirements for manufactured homes that relate to 
climate zones, the building thermal envelope, air sealing, and 
installation of insulation, based on certain provisions of the 2021 
IECC. Subpart C would establish new requirements based on the 2021 IECC 
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 the energy conservation standards, the stringency of the 
requirements under subpart B would depend on the size of the 
manufactured home for the tiered approach. Accordingly, two sets of 
standards would be established in subpart B (i.e., Tier 1 and Tier 2). 
Both Tier 1 and Tier 2 incorporate building thermal envelope measures 
based on certain thermal envelope components subject to the 2021 IECC 
that DOE, over the course of this rulemaking, determined applicable and 
appropriate for manufactured homes. Tier 1 applies these building 
thermal envelope provisions to single-section manufactured homes, but, 
for the reasons discussed in section III of this document, only 
includes components at stringencies that would increase the incremental 
purchase price by less than $750. Tier 2 applies these same building 
thermal envelope provisions to multi-section manufactured homes but at 
higher stringencies specified for site built homes in the 2021 IECC, 
with alternate exterior wall insulation requirement (R-21) for climate 
zones 2 and 3 based on consideration of the design and factory 
construction techniques of manufactured homes, as presented in the 
August 2021 SNOPR and October 2021 NODA. Further, the energy 
conservation standards for both tiers also include duct and air 
sealing, insulation installation, HVAC and service hot water system 
specifications, mechanical ventilation fan efficacy, and heating and 
cooling equipment sizing provisions, based on the 2021 IECC.
    DOE is adopting 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. As discussed in 
sections I.F and III.A of this document, DOE has concluded that this 
approach is cost-effective based on the expected total life-cycle cost 
(``LCC'') savings for the lifetime of the home associated with 
implementation of the energy conservation standards.

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 final rule technical support document (``TSD''), 
DOE estimates that benefits to manufactured home homeowners--in terms 
of LCC savings--of the requirements outweighs 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. This does not include any potential testing or compliance 
costs.

  Table I.1--National Average Manufactured Housing Purchase Price (and
               Percentage) Increases Under Tier 1 Standard
                                 [2020$]
------------------------------------------------------------------------
                                                  Single-section
                                         -------------------------------
                                                 $               %
------------------------------------------------------------------------
Climate Zone 1..........................             627             1.1
Climate Zone 2..........................             627             1.1
Climate Zone 3..........................             719             1.3
National Average........................             660             1.2
------------------------------------------------------------------------


  Table I.2--National Average Manufactured Housing Purchase Price (and
               Percentage) Increases Under Tier 2 Standard
                                 [2020$]
------------------------------------------------------------------------
                                                   Multi-section
                                         -------------------------------
                                                 $               %
------------------------------------------------------------------------
Climate Zone 1..........................           4,131             3.8
Climate Zone 2..........................           4,438             4.1
Climate Zone 3..........................           4,111             3.8
National Average........................           4,222             3.9
------------------------------------------------------------------------

    Table I.3 presents the estimated national average LCC savings and 
energy savings for the compliance year that a manufactured homeowner 
would experience under the standards 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.3 and Figure I.1 present the 
nationwide average simple payback periods (purchase price increase 
divided by first year energy cost savings). The methods and information 
used for these analyses are discussed more in section IV.A. of this 
document.

           Table I.3--National Average Per-Home Cost Savings *
------------------------------------------------------------------------
                                     Tier 1 standard    Tier 2 standard
------------------------------------------------------------------------
Lifecycle Cost Savings (30-Year                $1,594             $3,573
 Lifetime)........................
Lifecycle Cost Savings (10-Year                  $720               $743
 Lifetime)........................
Annual Energy Cost Savings in                    $177               $475
 2020$............................
Simple Payback Period (Years).....                3.7                8.9
------------------------------------------------------------------------
* negative values in parenthesis.


[[Page 32731]]

[GRAPHIC] [TIFF OMITTED] TR31MY22.209

B. Impact on Manufacturers

    As discussed in more detail in section IV.B of this document and 
chapter 12 of the final rule TSD, the industry net present value 
(``INPV'') is the sum of the discounted cash flows to the industry from 
the reference year (2022) through the end of the analysis period 
(2052). Using a real discount rate of 9.2 percent, as discussed in 
section IV.B.2 of this document, DOE 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 
$15.0 billion. Under the updated standard, the change in INPV would 
range from -1.4 percent to 1.3 percent. Industry would incur total 
conversion costs of $29.5 million. Conversion costs are one-time 
investments, as described in section IV.B.1 of this section.

C. Nationwide Impacts

    As described in more detail in section IV.C of this document and 
chapter 11 of the final rule TSD, DOE's national impact analysis 
(``NIA'') projects a net benefit to the nation as a whole under the 
standard, 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.4 illustrates the cumulative NES over the 30-year analysis 
period under the 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 estimates that under the updated standards, 1.88 quads of FFC 
energy would be saved relative to the baseline over the 30-year 
analysis period.

 Table I.4--Cumulative Full-Fuel-Cycle National Energy Savings of Manufactured Homes Purchased 2023-2052 With a
                                                30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
                                                             Single-section
                                                             quadrillion Btu    Multi-section    Total  (quads)
                                                                 (quads)           (quads)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1............................................             0.123             0.542             0.665
Climate Zone 2............................................             0.100             0.463             0.563
Climate Zone 3............................................             0.239             0.408             0.648
                                                           -----------------------------------------------------
    Total.................................................             0.462             1.414             1.876
----------------------------------------------------------------------------------------------------------------

    Table I.5 and Table I.6 illustrate the NPV of consumer benefits 
over the 30-year analysis period for a discount rate of 7 percent and 3 
percent, respectively, the percentages are used in accordance with 
Office of Management and Budget guidance, as discussed in section 
IV.A.1.d of this document. 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.

[[Page 32732]]



   Table I.5--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    Total  (billion
                                                             (billion 2020$)   (billion 2020$)       2020$)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1............................................             $0.15             $0.31             $0.46
Climate Zone 2............................................             $0.13             $0.20             $0.33
Climate Zone 3............................................             $0.40             $0.32             $0.73
                                                           -----------------------------------------------------
    Total.................................................             $0.68             $0.84             $1.52
----------------------------------------------------------------------------------------------------------------


   Table I.6--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    Total  (billion
                                                             (billion 2020$)   (billion 2020$)       2020$)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1............................................             $0.40             $1.17             $1.58
Climate Zone 2............................................             $0.35             $0.89             $1.24
Climate Zone 3............................................             $1.10             $1.15             $2.25
                                                           -----------------------------------------------------
    Total.................................................             $1.85             $3.21             $5.06
----------------------------------------------------------------------------------------------------------------

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 final rule TSD, DOE's analyses indicate 
that the standards would reduce overall demand for energy in 
manufactured homes and other unquantified energy security benefits. 
Further, the standards would produce environmental benefits in the form 
of reduced emissions of air pollutants and greenhouse gases associated 
with electricity production.
    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.7 lists the emissions reductions under the rule for both 
single-section and multi-section manufactured homes. (In this table and 
elsewhere in this document, the ``E'' format notes a multiplier of a 
power of ten, e.g., ``2.92E-02'' means 2.9 x 10-02, which is 
0.029.)

  Table I.7--Emissions Reductions Associated With Electricity Production for Manufactured Homes Purchased 2023-
                                          2052 With a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
                            Pollutant                             Single-section   Multi-section       Total
----------------------------------------------------------------------------------------------------------------
                                            Site Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................            19.5            53.8            73.3
Hg (metric tons)................................................        2.92E-02        9.60E-02        1.25E-01
NOX (thousand metric tons)......................................            10.9            26.6            37.5
SO2 (thousand metric tons)......................................             7.2            20.4            27.6
CH4 (thousand metric tons)......................................            1.03            3.11            4.14
N2O (thousand metric tons)......................................            0.21            0.57            0.78
----------------------------------------------------------------------------------------------------------------
                                          Upstream Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................            2.01            5.05            7.06
Hg (metric tons)................................................        1.48E-04        4.45E-04        5.93E-04
NOX (thousand metric tons)......................................            25.4            64.8            90.2
SO2 (thousand metric tons)......................................            0.21            0.47            0.67
CH4 (thousand metric tons)......................................             127             354             481
N2O (thousand metric tons)......................................           0.011           0.026           0.037
----------------------------------------------------------------------------------------------------------------
                                           Total Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................            21.5            58.9            80.4
Hg (metric tons)................................................        2.93E-02        9.64E-02            0.13
NOX (thousand metric tons)......................................            36.3            91.4           127.7
SO2 (thousand metric tons)......................................            7.44            20.9            28.3
CH4 (thousand metric tons)......................................             128             357             485
N2O (thousand metric tons)......................................            0.23            0.59            0.82
----------------------------------------------------------------------------------------------------------------


[[Page 32733]]

    DOE estimates the value of climate benefits from a reduction in 
greenhouse gases using four different estimates of the social cost of 
CO2 (SC-CO2), the social cost of methane (SC-
CH4), and the social cost of nitrous oxide (SC-
N2O). Together these represent the social cost of greenhouse 
gases (SC-GHG). DOE used interim SC-GHG values developed by an 
Interagency Working Group on the Social Cost of Greenhouse Gases 
(IWG).\5\ The derivation of these values is discussed in section IV.D 
of this document. For presentational purposes, the climate benefits 
associated with the average SC-GHG at a 3-percent discount rate are 
estimated to be $3.3 billion. DOE does not have a single central SC-GHG 
point estimate and it emphasizes the importance and value of 
considering the benefits calculated using all four SC-GHG estimates.\6\ 
DOE estimated the monetary health benefits of NOX and 
SO2 emission reduction, also discussed in section IV.D of 
this document. Table I.8 provides the NPV of monetized climate and 
health benefits from reduction in emissions.
---------------------------------------------------------------------------

    \5\ 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. Available at: www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf 
(last accessed March 17, 2022).
    \6\ On March 16, 2022, the Fifth Circuit Court of Appeals (No. 
22-30087) granted the federal government's emergency motion for stay 
pending appeal of the February 11, 2022, preliminary injunction 
issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a 
result of the Fifth Circuit's order, the preliminary injunction is 
no longer in effect, pending resolution of the federal government's 
appeal of that injunction or a further court order. Among other 
things, the preliminary injunction enjoined the defendants in that 
case from ``adopting, employing, treating as binding, or relying 
upon'' the interim estimates of the social cost of greenhouse 
gases--which were issued by the Interagency Working Group on the 
Social Cost of Greenhouse Gases on February 26, 2021--to monetize 
the benefits of reducing greenhouse gas emissions. In the absence of 
further intervening court orders, DOE will revert to its approach 
prior to the injunction and presents monetized benefits where 
appropriate and permissible under law.

         Table I.8--Net Present Value of Monetized Climate and Health Benefits From Emissions Reductions
----------------------------------------------------------------------------------------------------------------
                                                                              Net present value  (million 2020$)
                    Monetary benefits *                       Discount rate  -----------------------------------
                                                                   (%)         Single-section     Multi-section
----------------------------------------------------------------------------------------------------------------
Climate Benefits **.......................................                 3             881.3           2,425.9
Health Benefits [dagger]..................................                 3           1,503.5           4,088.2
                                                                           7             508.1           1,386.3
----------------------------------------------------------------------------------------------------------------
* Monetized values do not include other important unquantified effects, including certain climate benefits and
  certain air quality benefits from the reduction of toxic air pollutants and other emissions
** Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
  (SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
  95th percentile at 3 percent discount rate), as in Table IV.22 through Table IV.24. Together these represent
  the global SC-GHG. For presentational purposes of this table, the climate benefits associated with the average
  SC-GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
  estimate. See section IV.D of this document for more details. On March 16, 2022, the Fifth Circuit Court of
  Appeals (No. 22-30087) granted the federal government's emergency motion for stay pending appeal of the
  February 11, 2022, preliminary injunction issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a
  result of the Fifth Circuit's order, the preliminary injunction is no longer in effect, pending resolution of
  the federal government's appeal of that injunction or a further court order. Among other things, the
  preliminary injunction enjoined the defendants in that case from ``adopting, employing, treating as binding,
  or relying upon'' the interim estimates of the social cost of greenhouse gases--which were issued by the
  Interagency Working Group on the Social Cost of Greenhouse Gases on February 26, 2021--to monetize the
  benefits of reducing greenhouse gas emissions. In the absence of further intervening court orders, DOE will
  revert to its approach prior to the injunction and presents monetized benefits where appropriate and
  permissible under law.
[dagger] Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only
  monetizing (for NOX and SO2) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits,
  but will continue to assess the ability to monetize other effects such as health benefits from reductions in
  direct PM2.5 emissions. See section IV.D.2 of this document for more details.

E. Total Benefits and Costs

    Table I.9 summarizes the monetized benefits and costs expected to 
result from the amended standards for manufactured homes. There are 
other important unquantified effects, including certain unquantified 
climate benefits, unquantified public health benefits from the 
reduction of toxic air pollutants and other emissions, unquantified 
energy security benefits, and distributional effects, among others.

 Table I.9--Summary of Monetized Benefits and Costs to the Nation Under
                          the Adopted Standards
------------------------------------------------------------------------
                                                       Net present value
                                                         (billion $2020)
------------------------------------------------------------------------
                            3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................               10.2
Climate Benefits *...................................                3.3
Health Benefits **...................................                5.6
Total Benefits.......................................               19.1
Consumer Incremental Product Costs [dagger]..........                5.1
    Net Benefits.....................................               14.0
------------------------------------------------------------------------
                            7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................                3.9
Climate Benefits *...................................                3.3
Health Benefits **...................................                1.9
Total Benefits [dagger]..............................                9.1

[[Page 32734]]

 
Consumer Incremental Product Costs [dagger][dagger]..                2.4
    Net Benefits.....................................                6.7
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with
  manufactured housing shipped in 2023-2052. These results include
  benefits to consumers which accrue after 2052 from the products
  shipped in 2023-2052.
* Climate benefits are calculated using four different estimates of the
  social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
  (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
  discount rates; 95th percentile at 3 percent discount rate), as shown
  in Table IV.22 through Table IV.24. Together these represent the
  global SC-GHG. For presentational purposes of this table, the climate
  benefits associated with the average SC-GHG at a 3 percent discount
  rate are shown, but the Department does not have a single central SC-
  GHG point estimate. See section. IV.D of this document for more
  details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-
  30087) granted the federal government's emergency motion for stay
  pending appeal of the February 11, 2022, preliminary injunction issued
  in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result
  of the Fifth Circuit's order, the preliminary injunction is no longer
  in effect, pending resolution of the federal government's appeal of
  that injunction or a further court order. Among other things, the
  preliminary injunction enjoined the defendants in that case from
  ``adopting, employing, treating as binding, or relying upon'' the
  interim estimates of the social cost of greenhouse gases--which were
  issued by the Interagency Working Group on the Social Cost of
  Greenhouse Gases on February 26, 2021--to monetize the benefits of
  reducing greenhouse gas emissions. In the absence of further
  intervening court orders, DOE will revert to its approach prior to the
  injunction and presents monetized benefits where appropriate and
  permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX
  and SO2. DOE is currently only monetizing (for NOX and SO2) PM2.5
  precursor health benefits and (for NOX) ozone precursor health
  benefits, but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5
  emissions. See section IV.D.2 of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
  health benefits that can be quantified and monetized. For presentation
  purposes, total and net benefits for both the 3-percent and 7-percent
  cases are presented using the average SC-GHG with 3-percent discount
  rate, but the Department does not have a single central SC-GHG point
  estimate. DOE emphasizes the importance and value of considering the
  benefits calculated using all four SC-GHG estimates.
[dagger][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.

    The benefits and costs of the 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 climate and health benefits 
of emission reductions, all annualized.\7\ 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. Total Benefits 
for both the 3-percent and 7-percent cases are presented using the 
average social costs with 3-percent discount rate. Estimates of SC-GHG 
values are presented for all four discount rates in section IV.D of 
this document. Table I.10 presents the total estimated monetized 
benefits and costs to manufactured housing homeowners associated with 
the standard, expressed in terms of annualized values.
---------------------------------------------------------------------------

    \7\ 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.

          Table I.10--Annualized Monetized Benefits and Costs to the Nation Under the Adopted Standard
----------------------------------------------------------------------------------------------------------------
                                                                                                    High-net-
                                                            Primary estimate  Low-net-benefits      benefits
                                                                                  estimate          estimate
----------------------------------------------------------------------------------------------------------------
(Million $2020)
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...........................               551               478               627
Climate Benefits *........................................               169               155               180
Health Benefits **........................................               285               263               303
Total Benefits [dagger]...................................             1,005               896              1110
Consumer Incremental Product Costs [dagger][dagger].......               277               255               294
    Net Benefits..........................................               728               641               816
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...........................               361               322               402
Climate Benefits *........................................               169               155               180
Health Benefits **........................................               153               143               161
Total Benefits [dagger]...................................               682               620               742
Consumer Incremental Product Costs [dagger][dagger].......               221               213               231

[[Page 32735]]

 
    Net Benefits..........................................               461               407               511
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with manufactured housing shipped in 2023-2052.
  These results include benefits to consumers which accrue after 2052 from the products shipped 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 sections IV.A and IV.C of this document. Note that the Benefits and
  Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the SC-GHG (see section IV.D of this
  document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
  at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
  estimate, and it emphasizes the importance of considering the benefits calculated using all four SC-GHG
  estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal
  government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued
  in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the
  preliminary injunction is no longer in effect, pending resolution of the federal government's appeal of that
  injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in
  that case from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the
  social cost of greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of
  Greenhouse Gases on February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. In the
  absence of further intervening court orders, DOE will revert to its approach prior to the injunction and
  presents monetized benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
  (for NOX and SO2) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
  continue to assess the ability to monetize other effects such as health benefits from reductions in direct
  PM2.5 emissions. See section IV.D.2 of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate.
[dagger][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.

    DOE's analysis of the national impacts of the standards is 
described in sections IV.C, IV.D, and IV.E of this document.

F. Conclusion

    DOE has determined that the conservation standards in this final 
rule are cost-effective when evaluating the impact of the standards on 
the purchase price of a manufactured home and on the total life-cycle 
construction and operating costs. As discussed in section III.A of this 
document, the tiered standards adopted in this final rule provide 
positive average LCC savings over the life of the manufactured home 
(i.e., 30-years) in every city for which the standards are analyzed, as 
well as nationally. Additionally, DOE has also determined that the 
benefits to the Nation of the standards (energy savings, consumer LCC 
savings, positive NPV of consumer benefit, energy security, 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 life-cycle 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 \8\ rather than the climate zones under the IECC; and
---------------------------------------------------------------------------

    \8\ 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 requires DOE to regulate energy conservation in 
manufactured housing, an area of the building construction industry

[[Page 32736]]

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 et seq.) 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 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 finalized 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 adopted in this final rule would not prevent a 
manufacturer from complying with the requirements, including energy 
conservation requirements, set forth in the HUD Code. Section III.G of 
this document provides a crosswalk of the energy conservation standards 
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 \9\ 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 \10\ in establishing minimum design 
and construction requirements for the energy efficiency of residential 
and commercial buildings, including site-built residential and modular 
homes.\11\ 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.
---------------------------------------------------------------------------

    \9\ The website of the IECC is https://shop.iccsafe.org/international-codes/iecc-references.html.
    \10\ The current status of the adoption of the IECC is provided 
at www.energycodes.gov/status-state-energy-code-adoption.
    \11\ 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, consistent 
with the considerations required by EISA (e.g., 42 U.S.C. 
17071(b)(2)(A)), these adopted standards utilize aspects of the IECC 
that are appropriate for manufactured housing as the basis for the 
standards, thereby accounting for the unique physical characteristics 
of manufactured housing.
3. Development of the Initial Proposal and Responses
    Based on the 2019 American Housing Survey (``2019 AHS''), 
manufactured housing accounts for approximately six percent of all 
homes in the United States.\12\ 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 lower

[[Page 32737]]

to median income families. However, using the data from the 2019 AHS, 
the median energy burden (median cost of electricity, gas, fuel oil and 
other fuel as a percentage of median household income) is approximately 
5 percent for manufactured home residents compared to 3 percent for all 
homes. Further, the same data suggests the per square foot utility cost 
for manufactured homes ($0.15 per square foot; median $178 for 1140 
square feet) is higher than single-family homes ($0.14 per square foot; 
median $249 for 1800 square feet). As such, the energy burden as 
measured on a square foot basis, is significantly higher for residents 
of manufactured homes.
---------------------------------------------------------------------------

    \12\ U.S. Census Bureau, American Housing Survey 2019--National 
Summary Tables. Available at www.census.gov/programs-surveys/ahs/data.html.
---------------------------------------------------------------------------

    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.\13\ 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.\14\ A summary of each meeting is 
available at 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)
---------------------------------------------------------------------------

    \13\ The ANOPR comments can be accessed at: www.regulations.gov/#!docketDetail;D=EERE-2009-BT-BC-0021.
    \14\ 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 working group (``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 for 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.\15\
---------------------------------------------------------------------------

    \15\ Available at www.regulations.gov/document?D=EERE-2009-BT-BC-0021-0069 and www.regulations.gov/document?D=EERE-2009-BT-BC-0021-0058.
---------------------------------------------------------------------------

    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.\16\ 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 standards 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. DOE received a number of responses to its June 2016 NOPR. 
Further, in December 2017, the Sierra Club filed a suit against DOE in 
the U.S. District Court for the District of Columbia, alleging that DOE 
had failed to meet its statutory deadlines for establishing energy 
efficiency standards for manufactured housing. Sierra Club v. Granholm, 
No. 1:17-cv-02700-EGS (D.D.C. filed Dec. 18, 2017).
---------------------------------------------------------------------------

    \16\ The NOPR analysis, NOPR TSD, and NOPR public meeting 
information are available at www.regulations.gov under docket number 
EERE-2009-BT-BC-0021.
---------------------------------------------------------------------------

    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. See 83 FR 38073, 38075. These discussions with HUD, along with 
a

[[Page 32738]]

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 set 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. In November 2019, the court in the above-referenced litigation 
entered a consent decree in which DOE agreed to complete the rulemaking 
by stipulated dates.
    On August 26, 2021, DOE published a supplemental NOPR (``SNOPR'') 
for the manufactured housing energy conservation standards rulemaking. 
86 FR 47744 (``August 2021 SNOPR''). In response to comments to the 
June 2016 NOPR and August 2018 NODA, DOE proposed two standards, one 
being the primary ``tiered'' proposal and the other being the alternate 
``untiered'' proposal. DOE's primary proposal was the ``tiered'' 
approach, based on the 2021 IECC, wherein a subset of the energy 
conservation standards would be less stringent for certain manufactured 
homes in light of the cost-effectiveness considerations required by 
EISA. DOE's alternate proposal was the ``untiered'' approach, wherein 
energy conservation standards based on the 2021 IECC would apply to all 
manufactured homes without a subset of less stringent standards for 
certain manufactured homes. Under the tiered proposal, two sets of 
standards would be established in proposed 10 CFR part 460, 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 
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 less than $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). 86 FR 47744, 47746. Both proposals replaced DOE's June 2016 
proposal. Additionally, DOE noted in the August 2021 SNOPR that it had 
considered, and was still considering, tiers based upon metrics other 
than manufacturer's retail list price such as size (e.g., square 
footage, number of sections) and regional variations, and requested 
feedback on the use of these other bases for the tier thresholds. Id. 
at 86 FR 47760-47761. Further, DOE also considered in the August 2021 
SNOPR the impacts on the LCC savings of requiring less stringent 
exterior wall insulation for Tier 2 climate zones 2 and 3 (at R-21 
instead of R-20+5) to remove the continuous insulation requirement. Id. 
at 86 FR 47802-47803. DOE held a public meeting on September 28, 2021, 
to present the August 2021 SNOPR.
    On October 26, 2021, DOE published a NODA regarding updated inputs 
to the August 2021 SNOPR and results of corresponding analyses, 
including certain sensitivity analyses. 86 FR 59042 (``October 2021 
NODA'') The updated inputs resulted, in part, in raising the threshold 
between Tiers 1 and 2 to $63,000. Also, as contemplated in the August 
2021 SNOPR and based on feedback from stakeholders and HUD, the 
additional analyses in the NODA included analysis and impacts of a 
sized-based tier threshold (based on number of sections) and analyses 
of alternative exterior wall insulation requirements (R-21) for climate 
zones 2 and 3. DOE reopened the public comment period on the SNOPR 
through November 26, 2021, and sought comment on the updated $63,000 
tier threshold, the size-based tier threshold, and alternate exterior 
wall insulations requirements. In response to the August 2021 SNOPR and 
the October 2021 NODA, DOE received public comments from a variety of 
stakeholders. DOE also received over 900 substantively similar mass 
mail campaign letters from organizations and individuals in response to 
the August 2021 SNOPR, and over 300 in response to the October 2021 
NODA. Further, DOE also received a number of comments from individual 
commenters.\17\ All of the comment submissions are available in the 
docket for this rulemaking.
---------------------------------------------------------------------------

    \17\ DOE has not identified each and every individual commenter 
in the Table II.2 of this document, but has included and addressed 
their comments in this final rule
---------------------------------------------------------------------------

    On January 14, 2022, DOE published the draft environmental impact 
statement for proposed energy conservation standards for manufactured 
housing (DOE/EIS-0550). 87 FR 2430 (``January 2022 DEIS'') DOE prepared 
the January 2022 DEIS in support of the August 2021 SNOPR. The January 
2022 DEIS analyzed price-based alternatives based around the $63,000 
threshold for manufacturer retail list price and different wall 
insulation requirements. It also analyzed the alternatives based on the 
size of the manufactured housing (single sections and multiple sections 
with differences in wall insulation requirements), untiered 
alternatives with only differences in wall insulation requirements, and 
a ``no action'' alternative (i.e., no DOE standard). Accordingly, DOE 
published a notice re-opening the comment period on the rulemaking 
proceeding to consider how the January 2022 DEIS should inform the 
final energy conservation standards for manufactured housing. January 
14, 2022 (87 FR 2359)
    In response to the January 2022 DEIS, DOE received additional 
public comments from a variety of stakeholders as to how the DEIS 
should inform the final rule. In this final rule, DOE is only including 
and addressing comments as the comments relate to the energy 
conservation standards. As such, DOE is not including or addressing 
comments on the discussion and analyses presented in the January 2022 
DEIS; those comments are addressed as part of the environmental impact 
assessment process. DOE also received over 300 substantively similar 
form letters from individuals in response to the January 2022 DEIS. 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.
    Table II.1 presents a summary of all the written comments received 
for the August 2021 SNOPR, October 2021 NODA, and the January 2022 
DEIS, as it relates to the energy conservation standards.

[[Page 32739]]



                                   Table II.1-- Summary of Written Comments *
----------------------------------------------------------------------------------------------------------------
                   Organization(s)                     Reference in this final rule       Organization type
----------------------------------------------------------------------------------------------------------------
Alliance to Save Energy, American Council for an       Joint Commenters............  Efficiency organization.
 Energy-Efficient Economy, E4TheFuture, Earth
 Advantage, Elevate Energy, Environmental and Energy
 Study Institute, Institute for Market
 Transformation, National Association of Energy
 Service Companies, National Association of State
 Energy Officials, Next Step Network, Natural
 Resources Defense Council.
Adventure Homes......................................  Adventure Homes.............  Manufacturer.
American Chemistry Council's Foam Sheathing Committee  ACC FSC.....................  Trade association.
American Council for an Energy-Efficient Economy.....  ACEEE.......................  Efficiency organization.
American Homestar....................................  American Homestar...........  Manufacturer.
American Public Gas Association, The Aluminum          APGA et. al.................  Trade association.
 Association, American Chemistry Council, American
 Exploration & Production Council, American Farm
 Bureau Federation, American Fuel & Petrochemical
 Manufacturers, American Gas Association, American
 Highway Users Alliance, American Iron and Steel
 Institute,.
American Petroleum Institute, American Public Gas
 Association, American Public Power Association,
 Associated Builders and Contractors, Associated
 General Contractors of America, Council of
 Industrial Boiler Owners, The Fertilizer Institute,
 Independent Petroleum Association of America,
 National Association of Manufacturers, National Lime
 Association, National Mining Association, National
 Rural Electric Cooperative Association, Portland
 Cement Association, U.S. Chamber of Commerce.
Arizona Department of Housing........................  ADOH........................  State Government.
American Society of Heating, Refrigerating and Air-    ASHRAE......................  Trade association.
 Conditioning Engineers.
Attorneys General of NY, IL, ME, MN, NV, NJ, NM, OR,   State Attorneys General.....  State Government--State
 VT, WA, MA, and NY.                                                                  Attorneys General.
Blount County Habitat for Humanity...................  Blount County Habitat for     Non-profit.
                                                        Humanity.
C2ES, Institute for Policy Integrity at NYU Law,       C2ES et. al.................  Environmental Non-profit.
 Sierra Club, Union of Concerned Scientists.
California Energy Commission.........................  CEC.........................  Efficiency Organization.
CASA of Oregon.......................................  CASA of Oregon..............  Non-profit.
Cavco Industries.....................................  Cavco.......................  Manufacturer.
Champion Home Builders Inc...........................  Champion Home Builders......  Manufacturer.
Clayton Home Building Group..........................  Clayton Homes...............  Manufacturer.
Connecticut Manufactured Home Owners Alliance........  CMHOA.......................  Non-profit.
Community Housing Partners...........................  CHP.........................  Affordable Housing and
                                                                                      Community Development Non-
                                                                                      profit.
E4TheFuture..........................................  E4TheFuture.................  Efficiency Organization.
Earthjustice & Prosperity Now........................  Earthjustice and Prosperity   Efficiency Non-profit.
                                                        Now.
Fahe.................................................  Fahe........................  Community Development
                                                                                      Financial Institution.
Habitat for Humanity of Greater Los Angeles..........  Habitat for Humanity of LA..  Non-profit.
Idaho Manufactured Housing Association...............  IMHA........................  Non-profit/Trade
                                                                                      association.
Indiana Manufactured Housing Association/Recreation    IMHA/RVIC...................  Trade association.
 Vehicle Indiana Council.
International Code Council...........................  ICC.........................  Codes organization.
Kansas Manufactured Housing Association..............  KMHA........................  Non-profit/Trade
                                                                                      association.
LifeStyle Factory Homes LLC..........................  LifeStyle...................  Manufacturer.
Local Initiatives Support Corporation................  LISC........................  Non-profit.
Manufactured & Modular Home Association of Minnesota.  MMHA........................  Trade association.
Manufactured Housing Association for Regulatory        MHARR.......................  Trade association.
 Reform.
Manufactured Housing Consensus Committee.............  MHCC........................  Advisory committee.
Manufactured Housing Institute.......................  MHI.........................  Trade association.
Michigan Manufactured Housing Association............  Michigan MHA................  Non-profit/Trade
                                                                                      association.
Mississippi Manufactured Housing Association.........  Mississippi MHA.............  Non-profit/Trade
                                                                                      association.
Modular Lifestyles, Inc..............................  Modular Lifestyles..........  Manufacturer.
National Association of Home Builders................  NAHB........................  Trade association.
National Association of State Energy Officials.......  NASEO.......................  Non-profit.
National Manufactured Home Owners Association........  NMHOA.......................  Non-profit.
National Rural Electric Cooperative Association......  NRECA.......................  Electric cooperative.
Natural Resources Defense Council....................  NRDC........................  Efficiency organization.
Network for Oregon Affordable Housing................  NOAH........................  Non-profit.
New Building Institute...............................  NBI.........................  Non-profit.
New Jersey Manufactured Housing Association..........  NJMHA.......................  Trade association.
New York State Energy Research and Development         NYSERDA.....................  State corporation.
 Authority.
Next Step Network, Inc...............................  Next Step...................  Efficiency organization.
North American Insulation Manufacturers Association..  NAIMA.......................  Trade association.
Northwest Energy Efficiency Alliance.................  NEEA........................  Efficiency organization.
Northwest Power and Conservation Council.............  NPCC........................  Interstate Compact Agency.
Ohio Manufactured Homes Association..................  OMHA........................  Non-profit.
Oliver Technologies Inc..............................  Oliver Technologies.........  Manufacturer.

[[Page 32740]]

 
PA Department of Community and Economic Development..  PA-DCED.....................  Government.
Pennsylvania Manufactured Housing Association........  PMHA........................  Trade association.
PathStone Corporation................................  PathStone...................  Not-for-profit
                                                                                      organization.
People's Self-Help Housing, Inc......................  People's Self-Help Housing..  Non-profit.
Pleasant Valley Homes, Inc...........................  Pleasant Valley.............  Manufacturer.
Redwood Energy.......................................  Redwood Energy..............  Designers.
ReFrame Foundation...................................  ReFrame Foundation..........  Non-profit.
Responsible Energy Codes Alliance....................  RECA........................  Efficiency organization.
Rural Community Assistance Corporation...............  RCAC........................  Non-profit.
Schulte, Philip......................................  Schulte.....................  Individual.
Skyline Champion Corporation.........................  Skyline Champion............  Manufacturer.
Texas Manufactured Housing Association...............  TMHA........................  Trade association.
Trellis..............................................  Trellis.....................  Non-profit.
Members of Congress of the United States (David        Select Representatives of     Government.
 Kustoff, Larry Bucshon, Bill Huizenga, Lance Gooden,   Congress.
 William Timmons, Bryan Steil, Gary Palmer, Bill
 Johnson, Tim Walberg, Greg Pence, Ann Wagner, John
 Rose, French Hill, Debbie Lesko, John Joyce, H.
 Morgan Griffith, Barry Loudermilk, Tom Emmer, Andy
 Barr).
University of Arizona and Arizona State University...  University of Arizona and     University.
                                                        Arizona State.
University of Colorado Boulder.......................  UCB.........................  University.
University of Colorado Denver........................  UCD.........................  University.
University of Colorado Law School....................  UC Law School...............  University.
Urban Habitat Initiatives Inc........................  UHI.........................  Sustainability Consultant.
Verde................................................  Verde.......................  Non-profit.
Vermont Energy Investment Corporation................  VEIC........................  Efficiency organization.
Vermont Law School...................................  Vermont Law School..........  University.
Virginia Manufactured and Modular Housing Association  VAMMHA......................  Trade association.
West Indianapolis Development Corporation............  WIDC........................  Trade association.
Western Manufactured Housing Communities Association.  WMA.........................  Trade association.
Westland Distributing................................  Westland....................  Distributor.
Wisconsin Housing Alliance...........................  WHA.........................  Trade association.
----------------------------------------------------------------------------------------------------------------
* DOE received a number of comments in response to the January 2022 DEIS that were almost identical in substance
  to comments submitted by the same commenters in response to the August 2021 SNOPR or October 2021 NODA.
  Accordingly, for the purposes of this notice, DOE is only referencing the submission ID of the first
  submission of comments with identical content.

    On April 8, 2022, DOE published the notice of availability for the 
final EIS (DOE/EIS-0550). 87 FR 20852. (``April 2022 FEIS'') The final 
EIS includes the information presented in the January 2022 DEIS as well 
as further analyses developed in response to public comments on the 
January 2022 DEIS. Elsewhere in this issue of the Federal Register, DOE 
has issued its record of decision (``ROD'') pursuant to its obligations 
under NEPA. The ROD finalizes DOE's considerations of the environmental 
impacts under the NEPA process and memorializes DOE's determinations 
and approach chosen consistent with this final rule. Further discussion 
of the final EIS, the ROD and the NEPA process may be found in section 
V.D. of this document.
    The comments and DOE's responses are discussed in sections III, IV, 
and V of this document.

C. Abbreviations

    The abbreviations used in this document, other than abbreviations 
of the names of commenters listed in Table II.1, Summary of Written 
Comments, are defined as follows:

    ACCA: Air Conditioning Contractors of America.
    ACH: Air changes per hour.
    ACH50: Air changes per hour at 50 Pascals pressure difference 
between the inside and outside of the home.
    AEO: Annual Energy Outlook.
    AFUE: Annual fuel utilization efficiency.
    AHS: American Housing Survey.
    AMI: Area median income.
    ANOPR: Advance notice of proposed rulemaking.
    BECP: Building Energy Codes Program.
    CCE: certification, compliance, and enforcement.
    CDFI: Community Development Financial Institutions.
    cfm: Cubic feet per minute.
    CFR: Code of Federal Regulations.
    DEIS: Draft environmental impact statement.
    DHP: Ductless heat pump.
    DOE or in context, ``the Department'': U.S. Department of 
Energy.
    DTI: Debt-to-income ratio.
    E.O.: Executive Order.
    EA: Environmental Assessment.
    EAP: Equity Action Plan.
    EEM: Energy efficiency measure.
    EGUs: Electric generating units.
    EIA: U.S. Energy Information Administration (within DOE).
    EIS: Environmental impact statement.
    EISA: Energy Independence and Security Act of 2007.
    EPA: U.S. Environmental Protection Agency.
    EPCA: Energy Policy and Conservation Act.
    ERI: Energy Rating Index.
    ERV: Energy recovery ventilator.
    FEIS: Final environmental impact statement.
    FFC: Full-fuel-cycle.
    FHA: Federal Housing Administration (within HUD).
    FRFA: Final regulatory flexibility analysis.
    GRIM: Government Regulatory Impact Model.
    GSE: Government-sponsored enterprise.
    HAP: Hazardous air pollutants.
    HoF: ASHRAE Handbook of Fundamentals.
    HRV: Heat recovery ventilator.
    HSPF: Heating seasonal performance factor.
    HUD Code: HUD Manufactured Home Construction and Safety 
Standards.
    HUD: U.S. Department of Housing and Urban Development.
    HVAC: Heating, ventilation, and air conditioning.
    IECC: International Energy Conservation Code.
    INPV: Industry net present value.
    IRFA: Initial regulatory flexibility analysis.
    IWG: Interagency Working Group on the Social Cost of Greenhouse 
Gases

[[Page 32741]]

    LCC: Life-cycle cost.
    MATS: Mercury and Air Toxics Standards.
    MH: Manufactured home or manufactured housing.
    MHCSS: Manufactured home construction and safety standards.
    MHI: Manufactured Housing Institute.
    MHS: Manufactured Housing Survey.
    MIA: Manufacturer impact analysis.
    NAAQS: National Ambient Air Quality Standards.
    NAICS: North American Industry Classification System.
    NEMS: National Energy Modeling System.
    NES: National energy savings.
    NIA: National impact analysis.
    NODA: Notice of Data Availability.
    NOPR: Notice of proposed rulemaking.
    NPV: Net present value.
    OIRA: Office of Information and Regulatory Affairs (within OMB).
    OMB: Office of Management and Budget.
    PBP: Payback period.
    PITI: Principal, interest, taxes, and insurance.
    PM2.5: Fine particulate matter (with an aerodynamic equivalent 
diameter of 2.5 micrometers (microns)).
    PUF: Public use file.
    RFI: Request for information.
    SBA: U.S. Small Business Administration.
    SC: Social cost.
    SEER: Seasonal energy efficiency ratio.
    sf: Square foot or square feet.
    SHGC: Solar heat gain coefficient.
    SNOPR: Supplemental notice of proposed rulemaking.
    TSD: Technical support document.
    UMRA: Unfunded Mandates Reform Act of 1995.
    Uo: Overall thermal transmittance.

III. Discussion of the Standards

A. The Basis for the 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. Additionally, EISA requires DOE to consult with 
HUD, which may seek further counsel from the MHCC, prior to 
establishing the standards. 42 U.S.C. 17071(a)(2)(B). EISA also allows 
DOE to base the standards on climate zones established by HUD, and to 
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)) As discussed more in section III.F, DOE has opted to base 
its standards on the climate zones established by HUD. Additionally, 
DOE's standards provide two methods by which to achieve compliance with 
the building thermal envelope requirements of Subpart B: A prescriptive 
pathway (which utilizes the components specified by DOE) and an overall 
Uo performance pathway (which allows for compliance based on the 
overall thermal performance of the manufactured home). The latter 
approach, i.e., the Uo method, gives manufacturers the flexibility to 
use any combination of energy efficiency measures as long as the 
minimum Uo is met. Manufacturers do not need to meet both the 
prescriptive and the performance method; rather they have the option to 
only meet one.
    The energy conservation standards in this final rule are based on 
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.
    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. Congress also provided that DOE has 
discretion to depart from the IECC to the extent it is not cost-
effective, or a more stringent standard could be more cost-effective. 
Finally, Congress required DOE to consult with HUD, the primary 
regulator of manufactured housing, for input prior to establishing the 
DOE standards.
    Pursuant to this discretion afforded by Congress, DOE is 
establishing tiered standards based on the 2021 IECC. Specifically, DOE 
is finalizing a tiered standard whereby single-section manufactured 
homes (``Tier 1'' manufactured homes) would be subject to different 
building thermal envelope requirements (subpart B of 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 consistent with the 2021 IECC. In light of the first-
cost concerns raised during the EISA-required consultation with HUD and 
the MHCC, and in comments from stakeholders, Tier 1 provides tailored 
improvements in efficiency with regard to building thermal envelope 
components based on the 2021 IECC, which are projected to result in an 
average incremental price increase of less than $750 for single-section 
homes. 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, at stringencies consistent with 
those for site-built homes in the 2021 IECC, and is estimated to result 
in an average incremental price increase of $4,100-$4,500 for multi-
section homes.

[[Page 32742]]

    Further, with regards to the aspects of manufactured housing design 
and construction, DOE considered the range of efficiency measures 
originally identified by the MH working group as appropriate for 
manufactured home design, which included the following: exterior 
ceiling R-22 to R-38; exterior wall R-11 to R-21+5; exterior floor R-11 
to R-30; window U-factor U-1.08 to U-0.30; and window SHGC 0.7 to 0.25. 
(See chapter 5 of the final rule TSD) Accordingly, based on the 
information provided by the MH working group, DOE did not include 
several of the 2021 IECC requirements, including the more stringent 
ceiling R-value requirements (greater than R-38) \18\ and requirement 
for the exterior ceiling insulation to be of uniform thickness or 
uniform density, given the space constraints of manufactured homes.
---------------------------------------------------------------------------

    \18\ Specifically, manufactured homes typically have a lower 
overall height compared to site-built homes, which leads to 
constrained space, and therefore limited ability to increase 
exterior ceiling insulation.
---------------------------------------------------------------------------

    DOE determined that the energy conservation standards in this final 
rule are cost-effective by evaluating the impact on the purchase price 
of a manufactured home and on the total lifecycle construction and 
operating costs. Both Tier 1 and Tier 2 are cost-effective for the 30-
year period that was analyzed. Specifically, section I.A presents the 
benefits and burdens to purchasers of manufactured homes, with Table 
I.1 and Table I.3 presenting the total incremental purchase price under 
the standards, and Table I.3 presenting the estimated national average 
LCC savings. The incremental purchase price was determined by 
calculating the difference in the energy efficiency measure (``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. The 
LCC savings accounts for the energy cost savings and purchase costs 
(including down payment, mortgage and taxes based on incremental 
purchase price) over the entire analysis period discounted to a present 
value. As presented in Table I.3, there are positive national average 
LCC savings over the life of the manufactured home (i.e., 30-years). In 
addition, the positive 30-year LCC savings carries through to every 
climate zone and city analyzed. (See Chapter 8 of the TSD for results.) 
Finally, Table I.3 presents the national average simple payback period 
to be 3.7 years and 8.9 years for single- and multi-section homes 
respectively.
    As noted previously, 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 concerns with the potential 
adverse impacts on manufactured housing affordability that could result 
from additional energy efficiency standards proposed for manufactured 
homes in the June 2016 NOPR and the August 2021 SNOPR. 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, DOE reviewed the 2021 Consumer Financial Protection 
Bureau report, ``Manufactured-Housing Finance: New Insights from the 
Home Mortgage Disclosure Act Data (HMDA),'' (hereinafter, ``2021 CFPB 
Report'') \19\, and in the October 2021 NODA, presented updated 
analyses based on this report and sought comment on the report and 
these updates. 86 FR 59042, 59044.
---------------------------------------------------------------------------

    \19\ CFPB report, 2021. https://files.consumerfinance.gov/f/documents/cfpb_manufactured-housing-finance-new-insights-hmda_report_2021-05.pdf.
---------------------------------------------------------------------------

    DOE's review of the 2021 CFPB Report'', presented the following key 
findings:
     Manufactured homes represent an affordable housing option 
for millions of Americans because they cost less on average than site-
built homes and are one of the least expensive forms of housing 
available without government subsidies.
     Manufactured home homeowners tend to have lower incomes 
(median is $52,000 for manufactured home homeowners with chattel (i.e., 
personal property) loans and $53,000 for those with mortgage loans) and 
less net worth than their counterparts who own site-built homes (median 
is $83,000);
     Borrowers who own their land can either finance their home 
purchase with a chattel loan or a mortgage, whereas those who do not 
own their land are typically only able to finance with a chattel loan.
     Manufactured home loan amounts for (1) chattel loans range 
from $40,500 (25th percentile) to $80,785 (75th percentile), with 
median at $58,672; (2) mortgage loans range from $90,330 (25th 
percentile) to $172,812 (75th percentile), with median at $127,056. 
Comparatively, site-built home loan amounts range from $162,011 (25th 
percentile) to $342,678 (75th percentile), with median at $236,624.
     Of the manufactured housing loans acquired, the percentage 
of chattel loans nationally is estimated to range from 42 percent (from 
the 2019 HMDA, which includes new and used homes) to 76 percent (from 
2019 Manufactured Housing Survey, which includes new homes only).
    Compared to mortgages for site-built homes, MH mortgages tend to 
have smaller loan amounts, higher interest rates, fewer refinances, and 
less of a secondary market, patterns that are even more acute for 
chattel loans. Additionally, chattel loans have shorter loan terms than 
mortgages for either MH or site-built homes. 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 homeowners. While most manufactured 
homeowners 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). 2021 
CFPB, pp. 33-34.
    In response to the affordability concerns raised by HUD and 
commenters regarding purchasers and renters who may live in these 
homes, and the general financial circumstances for manufactured housing 
occupants, DOE is finalizing a tiered standard in this final rule that 
would mitigate first-cost impacts for purchasers at the lower end of 
the manufactured home price

[[Page 32743]]

range. 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 are generally likely to be more sensitive to 
increases in purchase price. DOE's considerations of affordability and 
cost-effectiveness in establishing these standards, and associated 
responses to comments, are discussed more below in sections III.A.1 and 
III.B.
    Finally, the standards established in this final rule are based on 
the climate zones of the HUD Code. 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 
zones, as permitted under EISA, necessitates deviating from the IECC. 
DOE has determined that aligning the climate zones between the DOE 
requirements and the HUD Code would reduce the complexities and burden 
faced by manufacturers of compliance with the DOE standards. The 
updated standards 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. Use of the HUD zones in DOE's standards is discussed more in 
section III.F.2.a. of this document.
    As discussed more in sections III.C and D, DOE is not addressing a 
test procedure, or compliance and enforcement provisions for energy 
conservation standards for manufactured housing in this document. 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. DOE continues to 
consult with HUD about pathways to address testing, compliance and 
enforcement for these standards in a manner that may leverage the 
current HUD inspection and enforcement process so that such testing, 
compliance and enforcement procedures are not overly burdensome or 
duplicative for manufacturers, and are well understood by manufacturers 
and consumers alike.
    In response to the August 2021 SNOPR proposal and the October 2021 
NODA, DOE received a number of comments regarding the statute, IECC and 
the rulemaking in general, which are summarized and addressed in the 
following sections.
1. Affordability
    Multiple commenters stated that the proposed energy requirements 
fail the EISA statutory requirement of cost-effectiveness and the 
proposal will eliminate manufactured housing as an affordable housing 
option for families. Additionally, they commented that the proposal 
ignores the unique features of factory-built housing, to the point that 
many parts of the proposal are simply not feasible from a construction 
and transportation standpoint. Further, they stated that the 
development of the rule was not compliant in any meaningful way with 
the EISA requirement to consult with HUD or MHCC and does not follow an 
accurate cost-benefit analysis as the statute requires. (MMHA, No. 995 
at p. 4); (Michigan MHA, No. 1012 at p. 2-3); (WHA, No. 1025 at p. 2); 
(PMHA, No. 1165 at p. 3); (Westland, No. 1263 at p. 2); (Pleasant 
Valley, No. 1307 at p. 2); (American Homestar, No. 1337 at p. 2-3); 
(Oliver Technologies, No. 1350 at p. 3); (KMHA, No. 1368 at p. 2); 
(Adventure Homes, No. 1383 at p. 3); (NJMHA, No. 1451 at p. 3); (WMA, 
No. 1452 at p. 2); (IMHA/RVIC, No. 1466 at p. 2); (Cavco, No. 1497 at 
p. 3); (Skyline Champion, No. 1499 at p.2); (Mississippi MHA, No. 1588 
at p. 4); (Clayton Homes, No. 1589 at p. 3) The campaign form letter(s) 
stated that the proposed rule will eliminate a significant source of 
affordable housing for hundreds of thousands of American families and, 
in many cases, it would be simply impossible to construct and transport 
homes built with the requirements. Commenters stated that increased 
costs will never be recouped by the homeowner, and for many buyers the 
increased cost will pose a barrier to homeownership in the first place. 
In addition, commenters stated that DOE's energy conservation standards 
must balance affordability with energy efficiency, which commenters 
alleged the proposed rule did not. (Campaign Form Letter, Multiple 
submissions at p. 1) An individual commenter would not support the 
proposed rule unless modified because of affordability issues. 
(Wangelin, No. 975 at p. 1) Another individual commenter stated that 
the cost of the new energy standards might outweigh the effects it will 
have on the environment because manufactured homes are made to be 
affordable. (Heidbreder, No. 940 at p. 1) Another individual commenter 
suggested that either tier would be a big upgrade from current 
requirements. (Major, No. 1023 at p. 1)
    MHI commented that the higher home cost associated with the 
proposed standards will make manufactured housing far more expensive, 
excluding potential buyers and reducing total manufactured housing 
sales. MHI also commented that DOE's own analysis shows the proposal 
will increase costs for homebuyers without reciprocal energy savings, 
and many households will simply be priced out of homeownership due to 
this proposal. MHI's survey of manufacturers found that it is unlikely 
that a buyer purchasing a new home and financing 90 percent of the 
purchase price would recover these upfront costs at a future sale, and 
while there are several reasons contributing to this, the fact that 
homebuyers usually sell their homes within the first 7-10 years is the 
most relevant. (MHI, No. 1592 at p. 3, 4) Further, MHI stated that the 
proposal could jeopardize homeownership for millions of Americans at a 
time when there is an affordable housing shortage. MHI further stated 
that this increase will have a disproportionate impact on minority 
communities, who face the most significant burden in obtaining 
affordable homeownership, and that this would be in direct contrast to 
the Administration's goal of achieving racial equity in homeownership. 
(MHI, No. 1592 at p. 3, 23); (Clayton Homes, No. 1589 at p. 14)
    MHARR stated that it opposed the proposed standards because they 
are a baseless and useless burden on both moderate and lower-income 
consumers and will lead to a decrease in homeownership and higher 
levels of homelessness. (MHARR, No. 1388 at p. 2-3); (MHARR, No. 1974 
at p. 2) UCB stated that the rule will eliminate affordable housing for 
many low-income people. They stated that although DOE says the initial 
cost increase will be paid back over the life of the home from energy 
savings, most owners will not see this payback. (UCB, No. 1405 at p. 1) 
An individual commenter stated that the proposed changes would very 
likely eliminate hundreds of thousands of buyers from the market during 
a time when housing is in short supply, and

[[Page 32744]]

that, if adopted, the new energy standards would dramatically increase 
the cost of manufactured homes and likely eliminate many of the design 
features that make manufactured homes livable (high ceilings, overhead 
HVAC ducts, etc.). Moreover, this commenter stated that the upfront 
cost from higher down payments would disqualify many home buyers for a 
mortgage, and any future utility cost savings would take decades to 
recoup. (Individual Commenter, No. 1496 at p. 1)
    IMHA stated that the proposal is fundamentally flawed and will 
eliminate manufactured housing as an affordable housing option for 
families throughout Idaho. Further, they were concerned that DOE's cost 
analysis assumptions and the average tenure of a manufactured homeowner 
will result in a situation where the homeowner will never recoup the 
additional costs of these measures with energy savings. They stated 
that imposing these standards on manufactured homes built in Idaho (or 
elsewhere) will rob their industry of seeking out those amendments that 
make the energy code best fit the construction practices of a 
manufactured home, and that this will add to costs and complications 
that will certainly price homeowners out of the market. (IMHA, No. 1453 
at p. 1)
    NRECA commented that the proposed standards in the SNOPR could put 
home ownership out of reach for those who cannot afford site-built 
homes, thus denying them the potential opportunity to attain this 
milestone for themselves and their families. They stated that their 
members have explored and implemented many different initiatives to 
improve energy efficiency for their consumer-members and that they are 
doing so in a way that balances costs and benefits. Therefore, they 
urged DOE to reconsider the proposal in its SNOPR to balance 
affordability of manufactured housing with common-sense, proven methods 
at improving their energy efficiency. (NRECA, No. 1406 at p. 2) ADOH 
was concerned that the proposed changes will equate to a price point 
that is either out of reach for a potential purchaser of a manufactured 
home, or will eliminate or prevent a manufactured home from being an 
affordable housing option. ADOH recommended continued reliance on the 
existing standards in the National Manufactured Housing Construction 
and Safety Act. (ADOH, No. 1459 at p. 1)
    Select Representatives of Congress were concerned that the proposed 
rule would require manufacturers to redesign most (if not all) of their 
existing floorplans to comply with standards concerning thermal systems 
and air and duct sealing. Select Representatives of Congress stated 
that this would result in a significant price increase that would delay 
or prevent some potential manufactured homebuyers--whose median annual 
household income is around $33,000--from buying a home. They urged DOE 
to analyze closely the effective cost and impact of any proposed energy 
efficiency standards on those who are pursuing affordable 
homeownership. (Select Representatives of Congress, No. 1445 at p. 1)
    UC Law School stated that the purchase price for manufactured homes 
should not factor into the cost-benefit analysis because DOE did not 
deliver economic considerations and integrated efforts with other 
agencies to secure affordability to the manufactured homes. Instead, 
they suggested that only the social cost of carbon and GHG emissions 
should be factored into the cost-benefit analysis, based on the 
Interagency Working Group (IWG). (UC Law School, No. 1634 at p. 11, 13, 
14) UCB stated the SNOPR should consider the emissions costs associated 
with not implementing stricter energy efficiency standards for 
manufactured homes over a 30-year lifetime, which, in the commenter's 
view, would create a good comparison to show how much of a difference 
these standards would make. (UCB, No. 1618 at p. 17)
    NAHB urged DOE to continue to facilitate consumer choice by 
ensuring any new energy conservation standards and regulatory reform 
efforts do not favor manufactured homes over other types of residences, 
leading to consumer confusion and unfair competition in the 
marketplace. (NAHB, No. 1398 at p. 3) An individual commenter stated 
that a consumer should have the freedom to choose a less energy 
efficient, but less expensive, window, door, or construction method for 
the home they are building, and that absorbing the SNOPR proposed 
requirement expenditure is quite difficult. (Hoover, No. 1566 at p. 1)
    In light of the concerns it noted, MHARR stated that DOE must 
withdraw the proposed manufactured housing energy standards as being 
inappropriate for MH, excessively costly in violation of applicable 
law, destructive of the affordable MH market, not cost-justified and 
fundamentally arbitrary, capricious and an abuse of discretion in 
violation of the federal Administrative Procedure Act, federal MH law 
and the EISA of 2007. (MHARR, No. 1640 at p. 9) MHARR commented that 
the average MH energy costs for all fuel types tracked by the U.S. 
Census Bureau are already lower than those for much more costly site-
built homes, none of which are subject to the 2021 IECC. MHARR also 
stated that alleged climate benefits of the proposed standards would be 
miniscule in relation to the economic costs, and that newer data 
published in the 2019 AHS shows that manufactured homes have lower 
median monthly energy costs than site-built homes in all major fuel 
categories. MHARR also suggested that DOE should reject cost 
comparisons based on a ``per-square foot'' energy usage and should 
instead consider ``whole-house'' energy usage. (MHARR, No. 1388 at p. 
3, 5-6); (MHARR, No. 1974 at pp. 5-6; 11-12)
    Multiple commenters suggested that the most appropriate code to 
utilize to update energy standards for manufactured homes is the HUD 
Code, and to instead include new energy efficiency standards as part 
the HUD Code. (MMHA, No. 995 at p. 4); (Michigan MHA, No. 1012 at p. 
2); (WHA, No. 1025 at p. 2); (PMHA, No. 1165 at p. 3); (Westland, No. 
1263 at p. 2); (Pleasant Valley, No. 1307 at p. 2); (American Homestar, 
No. 1337 at p. 2); (Oliver Technologies, No. 1350 at p. 2); (KMHA, No. 
1368 at p. 2); (Adventure Homes, No. 1383 at p. 2); (NJMHA, No. 1451 at 
p. 2-3); (WMA, No. 1452 at p. 2); (IMHA/RVIC, No. 1466 at p. 2); 
(Cavco, No. 1497 at p. 2); (Skyline Champion, No. 1499 at p.2); 
(Mississippi MHA, No. 1588 at p. 2) ; (Skyline Champion, No. 1612 at p. 
3); (Cavco, No. 1622 at p. 2); (VAMMHA, No. 1624 at p. 2); (Champion 
Home Builders, No. 1639 at p. 4); (IMHA, No. 1453 at p. 2); (MHI, No. 
1592 at p. 4-6, 25) MHI believes the most appropriate code to utilize 
to update energy standards for manufactured homes is the HUD Code. 
(MHI, No. 1592 at p. 25)
    Alternatively, NASEO stated that failure to update the standards in 
a manner consistent with EISA will only increase the difficulty of 
meeting future standards and unnecessarily leaves manufactured home 
residents with homes built to decades-old standards and high energy 
bills. (NASEO, No. 1565 at p. 3) Another individual commenter commented 
that although the rule would incur some upfront costs, there is long-
term benefit in the rule related to reducing carbon emissions. 
(Anonymous, No. 593 at p. 1; (Anonymous, No. 781 at p. 1) Another 
individual commenter suggested that although the tiered system of cost 
implementation creates significantly more administrative 
responsibility, it is a more equitable and desirable means of 
accomplishing the aforementioned agency goals. They suggested that the

[[Page 32745]]

proposed rule by DOE seems adequately supported by reasonable inquiries 
into emission reduction, energy efficiency, and cost allocation for 
thermal requirements of manufactured homes. (Gustafson, No. 778 at p. 
1) NAIMA supported the updates recommended as a good faith attempt of 
the 2021 IECC while recognizing unique construction challenges. NAIMA 
also stated that a home's energy efficiency and affordability is not an 
either/or proposition. (NAIMA, No. 1017 at p. 1) NYSERDA supported 
DOE's two-tier approach to address the affordability concerns. 
(NYSERDA, No. 1620 at p. 1)
    In addition, Schulte stated that ENERGY STAR-certified homes 
represent a significant market share of home production especially in 
Zone 2 States and this fact would support that manufactured home 
purchasers are willing to purchase more expensive and energy efficient 
homes that save them money in the long run. Also, Schulte stated that 
there is no evidence from sales figures that enhanced thermal standards 
reduced the demand of manufactured homes from 1990-1999. Finally, 
Schulte stated that adopting Tier 1 standards would substantially 
reduce the price hike for additional energy investments. However, it 
would also mean that utility bills would remain high for many 
manufactured home purchasers who tend to have lower incomes than the 
median family income. (Schulte, No. 1028 at p. 14, 15, 18 & 22)
    ACEEE suggested that the impact on affordability should consider 
energy burden (i.e., energy cost as a percentage of income) and housing 
cost burden (i.e., total housing costs as a percentage of income). In 
their comment and analysis, they interpreted high energy burden to be 
energy bills exceeding 6 percent of the income and high housing burden 
to be total housing costs exceeding 30 percent of the income. They 
stated that based on the 2019 AHS, for residents of manufactured homes, 
the median energy burden (i.e., the energy cost as a percentage of 
income) is 5.3 percent compared to 2.9 percent for all homes, and 44 
percent of manufactured home residents face a high energy burden. They 
stated that setting stronger efficiency standards can improve the 
affordability of these homes by lowering their occupants' high energy 
burdens. (ACEEE, No. 1631 at pp. 2-3) NRDC recommended using a more 
reasonable cost effectiveness metric, such as a present value analysis 
using a defensible discount rate, such as the 3 percent real rate that 
DOE employs in appliance efficiency analysis, over the observed 
lifetime of the home. (NRDC, No. 1599 at p. 5, 7)
    Next Step commented that manufactured homes are a critical 
component of America's affordable housing stock, and the need for 
increased energy efficiency in housing is particularly acute for low-
income homebuyers. (Next Step, No. 1617 at p. 1) They commented that 
based on the median income of manufactured home owners and renters and 
the HUD definitions for what constitutes ``low-income,'' \20\ 
manufactured housing serves households below 60 percent median income 
for low-income owners and below 50 percent median income for very low-
income renters.\21\ (Next Step, No. 1617 at p. 2) Further, they 
commented that based on a 2020 Urban Institute study,\22\ the monthly 
housing costs for manufactured home occupants falls within 30 percent 
of monthly income, which is defined as ``cost-burdened'' based on HUD's 
housing cost burden metric.\23\ Accordingly, they supported increased 
energy efficiency standards, arguing that data suggest that the 
incremental costs for energy efficiency upgrades (added to other 
housing costs) keep manufactured housing affordable and accessible to 
low-income homeowners earning less than 60 percent of median income. 
(Next Step, No. 1617 at p. 1)
---------------------------------------------------------------------------

    \20\ Next Step cited the following HUD program definitions: 50% 
median income = $33,761 = Very Low Income; 80% Median Income = 
$54,017 = Low Income;
    \21\ In their review, they stated that manufactured homes are a 
portfolio of housing that serves a median income of $38,087 for 
owners and $28,280 for renters. Based on the federal low-income 
housing definitions, 60 percent median income (which is a 
multifamily tax subsidy income limit) amounts to $40,513 (in 2020 
dollars) and 50 percent median income (which is the very low income 
limit) amounts to $33,761.
    \22\ Choi, J.H., and Goodman, L. (2020, August). 22 Million 
Renters and Owners of Manufactured Homes Are Mostly Left Out of 
Pandemic Assistance. The Urban Institute. https://www.urban.org/urban-wire/22-million-renters-and-owners-manufactured-homes-are-mostly-left-out-pandemic-assistance.
    \23\ HUD defines spending more than 30 percent of income on 
housing costs as cost-burdened. Spending more than 50 percent of 
income on housing costs is considered severely cost-burdened.
---------------------------------------------------------------------------

    Finally, Next Step also commented that Freddie Mac's research 
analyzed energy efficient homes rated between 2013 and 2017 and found 
the following: (1) From the property value analysis, rated homes are 
sold for, on average, 2.7 percent more than comparable unrated homes; 
(2) Better-rated homes are sold for 3-5 percent more than lesser-rated 
homes; (3) From the loan performance analysis, the default risk of 
rated homes is not, on average, different from unrated homes (once 
borrower and underwriting characteristics are considered). Loans in the 
high debt-to-income (``DTI'') bucket (45 percent and above) that have 
ratings, however, appear to have a lower delinquency rate than unrated 
homes. (Next Step, No. 1617 at p. 6) Further, Next Step noted Freddie 
Mac's GreenCHOICE program, which weighs energy efficiency into its 
underwriting and covers manufactured housing. Id
    EISA directs DOE to establish energy conservation standards for 
manufactured housing. (42 U.S.C. 17071) Further, EISA directs that 
cost-effectiveness is determined 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(a) and (b)(1))
    In response to the affordability concerns raised by HUD and 
commenters on first cost impacts, and the general financial 
circumstances for manufactured housing owners, DOE is finalizing a 
tiered standard, based on the 2021 IECC, that would alleviate first-
cost impacts for purchasers at the lower end of the manufactured home 
price range. Tier 1 would apply to single-section manufactured homes, 
and incorporate building thermal envelope measures based on certain 
thermal envelope components subject to the 2021 IECC and would increase 
the incremental purchase price increase by less than $750 for single-
section homes. This lower incremental cost would allow those first-cost 
sensitive purchasers, assumed to be those with lower median income and 
net worth, to still purchase a new manufactured home with improved 
energy efficiency measures that will generate cost savings to the 
purchaser over time. Accordingly, Tier 1 limits the incremental 
purchase price such that a purchaser 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. See Table 
III.4 for results.
    Tier 2 would apply to multi-section manufactured homes, and 
incorporate building thermal envelope measures based on certain thermal 
envelope components and specifications of the 2021 IECC, with alternate 
exterior wall insulation requirement (R-21) for climate zones 2 and 3 
(see section III.F.2.b which includes further discussion on wall 
insulation). Otherwise, DOE notes that the adopted Tier 2 requirements 
in this final rule will only update the window U-factor requirements 
for all climate zones compared to the term sheet agreed upon by the MH 
working group (window U-

[[Page 32746]]

factor of 0.35 and 0.32; to 0.32 and 0.30, respectively), which is the 
same as what was proposed in the August 2021 SNOPR. The window U-
factors were updated consistent with the 2021 IECC. Adopting R-21 
instead of R-20+5 also resolves issues regarding shipping width that 
the stakeholders commented on, which is discussed in section III.F.2.b. 
of this document.
    The total life-cycle construction and operating costs of the home 
is calculated based on the total expected lifetime of the home, which 
is 30 years. Both Tier 1 and Tier 2 standards would provide benefits in 
energy savings to the consumer which, over the span of the payback 
period (``PBP''), would offset the increase in purchase price. Under 
the tiered proposal, manufactured homes that would be subject to the 
Tier 1 standards would, in all cases, have a PBP less than 10 years, 
with a range of 1.4 years to 7.4 years amongst all cities analyzed, and 
a national average of 3.7 years. This is well within the range 
suggested by MHI in which first homeowners often sell their 
manufactured homes. Further discussion on these results is provided in 
section IV.A.2. of this document.
    DOE estimates in this final rule 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). DOE estimates the final rule 
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. Price elasticity 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 \24\ and 
considered an additional price elasticity as part of a scenario 
analysis (See appendix 11A for further information).
---------------------------------------------------------------------------

    \24\ See Marshall, M.I. & Marsh, T.L. Consumer and investment 
demand for manufactured housing units. J. Hous. Econ. 16, 59-71 
(2007).
---------------------------------------------------------------------------

    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 percent of the cost of a site built home and low- and 
moderate-income families have few low-cost choices for home 
ownership.'' \22\ 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).\25\
---------------------------------------------------------------------------

    \25\ Manufactured Housing Institute. 2021 Manufactured Housing 
Facts: Industry Overview.
---------------------------------------------------------------------------

    As such, DOE estimated the final rule would result in a loss in 
demand and availability of about 31,975 homes (single section and 
multi-section combined) for the tiered standard using a price 
elasticity of demand of -0.48 for the 30-year analysis period (2023-
2052). Out of the 31,975 homes in the tiered standard, the majority of 
the reduction is in Tier 2 (80 percent) vs. Tier 1 (20 percent). Within 
Tier 1, DOE estimates a 0.55 percent reduction in demand and 
availability of single-section homes for low-income purchasers due to 
Tier 1 standards. DOE assumes that low-income consumers generally 
purchase lower priced manufactured homes (i.e., many single section 
homes) based on data that shows single-section homes, on average, have 
householders with lower to median incomes, as opposed to multi-section 
homes (see conclusions in section III.B.1). Accordingly, DOE concludes 
that low-income consumers would not be priced out by the Tier 1 
standards adopted in this final rule.
    Finally, for those manufactured home purchasers that buy new homes, 
even with the incremental costs, DOE notes that the median purchase 
price of a manufactured home would continue to be significantly lower 
than site-built homes (per 2019 AHS, the median purchase price of 
manufactured homes is $32,000 vs. a single-detached home is $158,000). 
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).\26\ Additionally, the 
2021 CFPB Report \27\ states that manufactured homes represent an 
affordable housing option for millions of Americans because they cost 
less on average than site-built homes and are one of the least 
expensive forms of housing available without government subsidies.
---------------------------------------------------------------------------

    \26\ Manufactured Housing Institute. 2021 Manufactured Housing 
Facts: Industry Overview.
    \22\ Consumer Financial Protection Bureau. Manufactured Housing 
Finance: New Insights from the Home Mortgage Disclosure Act Data 
(2021).
---------------------------------------------------------------------------

    In conclusion, based on the input received from HUD during 
consultation and input from commenters, DOE believes that access to 
affordable housing and reducing energy burdens of the purchasers are of 
the utmost importance in the manufactured housing market. The tiered 
standard adopted in this final rule addresses both of these concerns. 
Both tiers within the tiered standard reduce energy costs and provide 
positive LCC savings for homeowners over the life of the average 
manufactured home (i.e., 30-years). Further, Tier 1 of the tiered 
standard mitigates first-cost impacts for purchasers at the lower end 
of the manufactured home price range, and would provide, on average, a 
positive cash flow within Year 1 of the standard based on the down 
payment, incremental loan payment, and energy cost savings. 
Accordingly, as discussed further, DOE has adopted the tiered approach 
in this final rule.
2. Loan Qualification
    MHARR stated that neither the NODA nor the original DOE SNOPR 
considers, or accounts in any way, for the impact that regulatory-
driven purchase price increases, attributable both directly and 
indirectly to the proposed rule, would have on the ability of lower and 
moderate-income consumers to access financing for, and purchase, 
mainstream manufactured homes. (MHARR, No. 1640 at p. 4, 5) Several 
commenters stated that the proposed standards ignore the large number 
of homebuyers who will no longer be able to buy a MH because they no 
longer qualify for an FHA, Fannie Mae, or Freddie Mac mortgage loan due 
to the impact of increased mortgage payments on debt-to-income ratios. 
(Westland, No. 1263 at p. 2); (Pleasant Valley, No. 1307 at p. 3); 
(American Homestar, No. 1337 at p. 3); (Oliver Technologies, No. 1350 
at p. 3); (Adventure Homes, No. 1383 at p. 3); (Champion Home Builders, 
No. 1639 at p. 5); (MHI, No. 1592 at pp. 3, 11) MHI stated that FHA's 
customary DTI requirement is 43 percent, and therefore any homebuyer at 
the edge of this 43 percent DTI requirement will no longer qualify for 
an FHA loan because of the higher price caused by the new energy 
standards. (MHI, No. 1592 at p. 3, 11) MHARR stated that the higher 
level of loan rejection rates within the chattel or personal property 
loan sector will disproportionately impact and harm ``Hispanic white, 
Black and African-American and American Indian and Alaska Native 
borrowers'' and will have

[[Page 32747]]

a racially-disproportionate impact. (MHARR, No. 1640 at p. 5)
    Separately, NASEO stated that by failing to establish cost-
effective baselines of energy efficiency in the lowest-cost homes, DOE 
increases the likelihood that the residents of these homes will require 
federal and state public assistance from the Weatherization Assistance 
Program, Low-Income Home Energy Assistance Program, or other bill 
payment assistance programs in the future. (NASEO, No. 1565 at p. 2)
    LISC recommended the federal government ensure there is flexibility 
in federally insured and guaranteed home mortgage program regulations 
to permit an increase in debt to income ratios when paired with 
reductions in energy costs. In addition, they suggested that the 
federal government should proactively market these programs and other 
potential assistance to help with incremental cost increases, including 
ENERGY STAR tax credits and other financing vehicles that factor in 
future energy savings. (LISC, No. 1233 at p. 3) NRECA suggested DOE 
could incentivize dealers to showcase ENERGY STAR-qualified 
manufactured homes on their lots by providing rebates for the price 
difference to the dealers so that the price difference does not force 
the consumer to make a choice between affordability and home ownership. 
They commented that such action would improve the overall efficiency of 
new manufactured homes up front in such a way that would not jeopardize 
home ownership potential for consumers. (NRECA, No. 1406 at p. 1, 3)
    UCB stated that DOE should be working with HUD to come up with 
subsidies and offsets/ways to pay for extra insulation, and that the 
previous DOE claim that there is no authority to provide this is 
incorrect. (UCB, No. 1405 at p. 2) They recommended that for low-income 
purchasers, the DOE front the chattel loans in a government program 
similar to other federal agencies programs--HUD, the U.S. Department of 
Veteran Affairs, and the USDA's rural housing service--to provide lower 
interest rates and additional consumer protections that could cover the 
cost of better insulation. They also stated that, although the tiered 
standards are more cost-effective overall for homebuyers, the cost of 
these homes should still be subsidized, and loan programs should be 
created by the DOE in collaboration with HUD. Finally, they noted that 
DOE should consider providing a renter's tax credit targeted at certain 
MH buyers. (UCB, No. 1618 at p. 9-11) Schulte advised that in the 
coming years, DOE may want to work with EPA and other agencies to 
encourage more utilities to provide rebates for energy efficient 
manufactured homes, because these rebates can help offset part of the 
cost increases. (Schulte, No. 1028 at p. 16)
    UC Law School commented that DOE should subsidize the costs of low-
income participants who might be directly impacted by the Final Rule, 
including consideration of financing, tax credits, or other financial 
incentives or assistance for consumers of manufactured housing. (UC Law 
School, No. 1634 at pp. 5, 9, 10) UCB stated that DOE should consider 
policies that would reinforce anti-discrimination housing laws and 
support novel lending practices to involve people of color who may not 
otherwise be eligible for a traditional loan while making certain the 
sustainability of their loan protects the investment of equity. (UCB, 
No. 1618 at p. 9)
    Next Step commented that the incremental costs for energy-
efficiency upgrades do not price out manufactured home residents. They 
noted that manufactured housing is often considered a source of 
Naturally Occurring Affordable Housing (defined as unsubsidized housing 
that meets the affordability standard for households making 60-80 
percent of area median income, or AMI). They commented that two of the 
most prominent affordable housing, new construction programs (the HOME 
Program and the Low-Income Housing Tax Credit Program), are used for 
individual and family household incomes below 60 percent AMI. In their 
evaluation of Tier 2 of the proposed standard, they used CFPB's median 
loan data in conjunction with DOE's average incremental cost increase 
and concluded that loans will remain affordable to those at 60 percent 
of median income (``AMI''), even when accounting for increased energy 
efficiency upgrades. (Next Step, No. 1617 at pp. 5, 7-9) Finally, Next 
Step commented that the Federal Housing Administration (``FHA'') and 
other government-backed lenders, conventional lenders, and Community 
Development Financial Institutions (``CDFIs'') generally underwrite 
manufactured home loans to ensure affordability by using a housing 
ratio of 29 percent of gross monthly income applied to housing costs, 
which includes the principal, interest, taxes, and insurance 
(``PITI''). However, The FHA's Energy Efficient Mortgage absorbs energy 
savings for efficient homes and stretches the ratio to 31 percent, and 
Freddie Mac's GreenChoice Program weighs energy efficiency into its 
underwriting and includes manufactured housing. (Next Step, No. 1617 at 
p. 6)
    The State Attorneys General stated that analyses performed by Next 
Step, a member of the federal advisory MHCC with expertise in 
affordable housing, confirm that despite potential increases in 
purchase price due to incremental construction costs associated with 
improved efficiency requirements, a manufactured home built to DOE's 
proposed IECC-based standards would remain affordable to even the most 
price sensitive consumers due to the availability of federal and state 
tax incentives, and loan and down-payment assistance programs to assist 
low income home buyers. (State Attorneys General, No. 1625 at p. 5)
    The 2021 CFPB report provides some data on borrower characteristics 
for manufactured homes. As suggested by the commenters, DOE confirmed 
that the standard FHA guidelines allow for a DTI up to 43 percent on 
the back end, but allow for higher ratios based on compensating factors 
like residual income, cash reserves, good credit score, etc.\28\ The 
back-end DTI ratio refers to the ratio of the applicant's total monthly 
debt to the total monthly income. Table 7 of the 2021 CFPB summarizes 
that the median debt-to-income DTI ratio for chattel loans is 35.7 
percent, and for mortgage loans is 38.9 percent. DOE notes the DTI data 
presented are not separated for new manufactured homes, so DOE presumes 
the ratio is for all manufactured homes. Further, Table 3 of the 2021 
CFPB shows that chattel loans, despite being potentially eligible for 
FHA loans, are seldom FHA for manufactured housing; 0.7 percent of 
chattel loans are FHA loans and 39.4 percent of mortgage loans are FHA 
loans. The 2019 AHS also estimates that only 16 percent of all MH 
homeowners with at least one regular mortgage \29\ report having FHA 
insurance. Therefore, DOE concludes that FHA loans may not be as 
prevalent for consumers for manufactured homes because of the low 
percentage of borrowers presented in both the 2021 CFPB and the 2019 
AHS, and therefore amended energy conservation standards may not have 
as much of an impact as commenters are suggesting.
---------------------------------------------------------------------------

    \28\ https://fhalenders.com/fha-debt-to-income-ratio/.
    \29\ This figure includes home-equity lump sum mortgages, but 
excludes home-equity credit lines and reverse annuity mortgages.
---------------------------------------------------------------------------

    As discussed, Tier 1 in the final rule responds to concerns on 
first-cost impacts for low-income consumers. As presented in Table I.1, 
the national average incremental housing purchase

[[Page 32748]]

price for Tier 1 single-section homes is $660. As such, the Tier 1 
standard would slightly increase the monthly debt portion of the DTI 
ratio; assuming chattel rate at 9 percent with 23-year loan term and a 
down-payment of 10 percent (see chapter 8 of the final rule TSD for 
further discussion on these assumptions), this would increase monthly 
payments by approximately $6. Table 7 of the 2021 CFPB suggests a 
median income of $52,000 for chattel loans, which can be used to 
calculate the original median monthly debt of $1,547 (35.7 DTI * 
52,000/12). All else equal, with the increase in monthly payments of 
approximately $6 for single-section homes resulting from this final 
rule, DTI can be recalculated as 35.8 DTI, which increases the DTI by 
0.1 and is still under the standard 43 DTI limit for the small portion 
of consumers for manufactured homes that use FHA loans (although as 
noted previously, this ratio can be higher based on certain 
compensating factors). Considering average household income of single-
section homeowners (approximately $40,000 based on the 2019 AHS), the 
incremental monthly payments of approximately $6 would increase the DTI 
to 35.9, which is 0.2 above the median DTI ratio for chattel loans 
presented in the 2021 CFPB and well under the 43 DTI limit. Further, 
DTI does not take into account any reduction in energy costs from the 
standards established in this final rule. Finally, DOE only considered 
the effect of DTI on the Tier 1 standard because commenters were 
focused on how the energy conservation standards could affect DTI on 
low-income consumers who have higher DTIs and affordability concerns. 
Accordingly, DOE concludes that the final rule will not have the impact 
on loan qualification that the commenters suggest, and to the extent 
there are such impacts, Tier 1 of the final rule helps mitigate them 
because of the lower first-costs.
    Finally, as mentioned by Next Step, Freddie Mac has a GreenChoice 
Mortgage[supreg] program which facilitates the financing of energy 
efficient home improvements and energy efficient homes, including 
manufactured homes. This program is specifically also meant for 
borrowers who want to qualify for greater purchasing power despite 
their higher DTI and housing expense-to-income for manually 
underwritten loans. With respect to commenters' suggestions that DOE 
provide forms of financial assistance or other aid to assist 
manufactured home purchasers, EISA does not authorize DOE to provide 
such assistance in establishing the standards for manufactured housing. 
However, DOE will work with other Federal agencies within its statutory 
authorities to assist homeowners, including manufactured homeowners, in 
achieving energy burden reductions in an affordable and equitable 
manner.
3. IECC
    Multiple commenters stated that that the IECC does not take into 
consideration all the construction aspects unique to manufactured 
housing, and its application to manufactured housing would require the 
industry to comply with a building code that was developed for 
commercial and site-built residential buildings. (MMHA, No. 995 at p. 
3); (Michigan MHA, No. 1012 at p. 2); (WHA, No. 1025 at p. 2); (PMHA, 
No. 1165 at p. 3); (Westland, No. 1263 at p. 2); (Pleasant Valley, No. 
1307 at p. 2); (American Homestar, No. 1337 at p. 2); (Oliver 
Technologies, No. 1350 at p. 2); (KMHA, No. 1368 at p. 2); (Adventure 
Homes, No. 1383 at p. 2); (NJMHA, No. 1451 at p. 2); (WMA, No. 1452 at 
p. 2); (IMHA/RVIC, No. 1466 at p. 2); (Cavco, No. 1497 at p. 2); 
(Skyline Champion, No. 1499 at p. 2); (Mississippi MHA, No. 1588 at p. 
3); (Mississippi MHA, No. 1588 at p. 4); (Skyline Champion, No. 1627 at 
p. 2); (Campaign Form Letter, Multiple submissions at p. 1-2) NRECA 
commented that they are concerned that the 2021 IECC standard and the 
other features of the SNOPR could ultimately price many consumers out 
of the market and urged DOE to consider alternatives. (NRECA, No. 1406 
at p. 3) Accordingly, NRECA questioned the use of the 2021 IECC 
standard for manufactured housing in the SNOPR, while most states are 
still following the 2009 IECC standard for site-built homes. They 
suggested that DOE look to other iterations of the IECC standard which 
could better balance efficiency and affordability, while still 
including an efficient building envelope as part of the standard. 
(NRECA, No. 1406 at p. 4)
    Clayton Homes stated that they believe that requiring the industry 
to comply with the IECC is not an appropriate solution. (Clayton Homes, 
No. 1589 at p. 16) The MHCC stated that they believe the energy 
efficiency requirements from the 2021 IECC, as currently proposed, are 
not the appropriate resource to be used in updating manufactured 
housing energy requirements, as the 2021 IECC was not developed or 
intended for these homes. (MHCC, No. 1600 at p. 6) TMHA stated the IECC 
was never intended to apply to HUD-Code manufactured homes and as 
proven in Texas it poses significant issues to the factory-built home 
manufacturing process at affordable price points. TMHA stated that they 
believe that DOE, in concert with HUD and the MHCC, should reach an 
agreement on which elements from the Code deliver the most energy 
conservation gains while minimizing the increase in construction cost 
to protect low-income consumers and the supply of affordable housing. 
(TMHA, No. 1628 at p. 3) MHARR commented that manufactured homes have 
never previously been subject to any version of the IECC. Thus, for 
manufactured homes, the increase in costs entailed in implementing the 
2021 IECC would not be an ``incremental'' or marginal increase over and 
above the cost of the 2018 IECC, but the total, cumulative costs of 
implementing all elements of the IECC incorporated within its 2021 
iteration, dating back to the very first version of that code. (MHARR, 
No. 1640 at p. 8)
    Alternatively, Earthjustice and Prosperity Now stated that DOE must 
adopt standards based on the most recent version of the IECC, except as 
expressly permitted by EISA. They stated that the language of EISA 
makes clear that DOE must analyze the IECC's cost effectiveness on a 
provision-by-provision basis. (Earthjustice and Prosperity Now, No. 
1637 at p. 1, 2) Further, ASHRAE stated that the most recent edition of 
their standard ANSI/AHSRAE/IEC 90.2-2018 includes manufactured housing 
within scope and because Standard 90.2 is an industry-based standard, 
it allows manufacturers credit for energy savings from a wider variety 
of measures than are used in other model codes such as the IECC 
prescriptive standards, including the use of higher efficiency heating 
and cooling equipment, and also solar panels. Accordingly, they 
recommended that DOE evaluate whether ASHRAE 90.2-2018 would be more 
cost-effective than the proposed standard, and for DOE to consider 
Standard 90.2 alongside or in place of the 2021 IECC. (ASHRAE, No. 1373 
at p. 2) NRDC also recommended the use of ASHRAE 90.2-2018 as a 
starting point to set the standards at a higher level. NRDC stated that 
the one known method of reducing default risk is to increase energy 
efficiency and require disclosable energy ratings/quality assurance. 
NRDC stated that ASHRAE 90.2 accomplishes both goals, and urged DOE to 
evaluate this standard as well as the IECC 2021 code as the basis for 
its standards for manufactured housing, since ASHRAE 90.2 requirements 
have been demonstrated to be cost-effective. (NRDC, No. 1599 at p. 5-7)

[[Page 32749]]

    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 noted previously and discussed more 
below in section IV, DOE has found today's final rule, which is based 
on the 2021 IECC, to be cost-effective. Accordingly, DOE evaluated the 
requirements of the IECC along with the other considerations enumerated 
by EISA in establishing these standards. In DOE's view, the directive 
that these standards ``shall be based on'' the most recent version of 
the IECC indicates Congress' intent that DOE exercise discretion in 
establishing these standards and does not require these 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.).
    Additionally, DOE disagrees with Earthjustice and Prosperity Now's 
comment that DOE must analyze the cost-effectiveness of the IECC on a 
provision-by-provision basis. Nothing in section 413 of EISA suggests 
that Congress intended for DOE to conduct a provision-by-provision 
cost-effectiveness analysis of the IECC. If Congress wanted DOE to take 
such a granular approach, it would have specified such a requirement. 
Moreover, while DOE disagrees with the commenters' assertion, DOE 
nonetheless has engaged in an analysis to determine which IECC 
provisions are appropriately applied to manufactured housing and which 
impact first-cost and affordability considerations, consistent with the 
considerations enumerated in EISA. But, unlike the analysis commenters 
suggest, DOE's evaluations have been in the context of the whole home, 
rather than considering individual provisions in isolation, which is 
more consistent with the approach for which manufactured housing has 
met current HUD energy conservation requirements via a Uo for the 
entire home. Considerations regarding the design and construction of 
manufactured homes were 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) include a specification for vertical doors 
that provide access from conditioned to unconditioned spaces to meet 
certain fenestration insulation requirements. However, internal 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. Further, DOE did not incorporate requirements for uniform 
thickness or a uniform density for the exterior ceiling insulation 
given that the space between the roof and exterior ceiling is limited 
in a manufactured home as compared to a site-built home, particularly 
at the eaves, and as such uniformity of thickness may not be possible 
at the insulation levels established in this final rule. Because the 
IECC is specific to site-built structures, the approach finalized in 
this document would establish requirements using modified versions of 
those related IECC provisions that can be adapted for manufactured 
homes.
    With respect to ASHRAE Standard 90.2-2018, DOE notes that, while 
commenters provided some information regarding the cost-effectiveness 
of Standard 90.1-2018 to site-built homes, they did not provide 
information regarding the cost-effectiveness of 90.2-2018 as applied to 
manufactured homes. Moreover, the commenters did not provide 
information on how 90.2-2018 applies to manufactured homes relative to 
the 2021 IECC-based requirements DOE proposed in the August 2021 SNOPR 
and finalized in this rule. EISA does allow DOE to base its 
manufactured housing energy conservations standards on a code other 
than the IECC to the extent that the IECC is not cost-effective, or the 
alternate code is more stringent and more cost-effective. At this time, 
DOE is declining to make such determinations for Standard 90.2-2018. 
Instead, DOE has elected to maintain the 2021 IECC as the basis for 
this final rule, consistent with the considerations of EISA section 413 
and the recommendations of the MH working group and other stakeholders. 
DOE remains open to consideration of Standard 90.2-2018 or other 
building energy codes that may be appropriately applied to manufactured 
housing and meet the increased stringency and cost-effectiveness 
requirements of EISA section 413 in future rulemakings for these 
standards.

B. Final Standards

    DOE is finalizing tiered standards that would prescribe cost-
effective energy conservation requirements based on requirements in the 
2021 IECC. The Tier 1 standards would apply to single-section 
manufactured homes. The Tier 1 requirements incorporate IECC-based 
building thermal envelope component measures that result in an 
incremental purchase price increase less than $750 for single-section 
homes. In other words, the Tier 1 requirements address many of the same 
thermal envelope components of a home as the IECC (after accounting for 
the design and factory construction considerations under EISA discussed 
previously), but with lesser stringencies to address the affordability 
concerns raised by HUD during consultation and in stakeholder comments. 
The Tier 2 standards would apply to multi-section manufactured homes. 
The Tier 2 standards would be based on the most recent version of the 
IECC with similar stringencies for thermal envelope components, taking 
into consideration the design and factory construction techniques of 
manufactured homes. Tier 2 includes the alternate exterior wall 
insulation requirement (R-21) for climate zones 2 and 3, as presented 
in the August 2021 SNOPR and October 2021 NODA. Tier 2 is estimated to 
result in an average incremental price increase of $4,100-$4,500 for 
multi-section homes. Both Tier 1 and Tier 2 standards also include 
requirements that are applicable to manufactured homes related to 
ducts; HVAC; service hot water systems; mechanical ventilation fan 
efficacy; and heating and cooling equipment sizing. These requirements 
are also based on the 2021 IECC after accounting for the design and 
factory construction considerations under EISA, and are applicable to 
all manufactured homes (single-section and multi-section).
1. Size-Based Threshold
    In this final rule, DOE is finalizing standards based on home size 
instead of the August 2021 SNOPR proposed manufacturer's retail list 
price. DOE initially considered a retail-price threshold to address the 
affordability concerns expressed by HUD and other stakeholders. 86 FR 
47744, 47760. DOE received a number of comments against using 
manufacturer's retail list price, and alternate suggestions to use a 
size-based threshold instead, as discussed in section III.B.3 of this 
document. DOE noted in the August 2021 SNOPR that it had considered a 
size-based threshold

[[Page 32750]]

and requested comment on the use of a size-based threshold, or other 
alternate threshold, in place of the retail list price threshold. Id. 
at 47760-47762. DOE also performed a sensitivity analysis regarding an 
alternate sized-based tier threshold in the October 2021 NODA.\30\ 86 
FR 59042.
---------------------------------------------------------------------------

    \30\ DOE also evaluated a sized-based threshold among the 
alternatives for both the January 2022 DEIS and April 2022 FEIS. 87 
FR 2430; 87 FR 20852.
---------------------------------------------------------------------------

    The manufactured housing survey (``MHS'') 2020 public use file 
(``PUF'') data, provides estimates of average sales prices for new 
manufactured homes sold or intended for sale by geographical region and 
size of home.\31\ Table III.1 summarizes the average, minimum and 
maximum sales prices based on census region and section.
---------------------------------------------------------------------------

    \31\ Manufactured Housing Survey, Public Use File (PUF) 2020. 
www.census.gov/data/datasets/2020/econ/mhs/puf.html.

                                              Table III.1--MHS PUF 2020 Census Region and Sales Price Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Single-section sales price (2020$)               Dual-section sales price (2020$)
                     Census region                      ------------------------------------------------------------------------------------------------
                                                             Average         Minimum         Maximum          Average         Minimum         Maximum
--------------------------------------------------------------------------------------------------------------------------------------------------------
Northeast..............................................         $57,916         $35,600         $95,000         $107,951         $56,000        $233,000
Midwest................................................          56,983          33,200          79,000          104,987          54,000         184,000
South..................................................          56,798          31,400          79,000          106,942          58,000         170,000
West...................................................          61,748          34,100         117,000          118,282          64,000         236,000
                                                        ------------------------------------------------------------------------------------------------
    All................................................          57,233          31,400         117,000          108,583          54,000         236,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Further, the MHS also summarizes average manufactured home sales 
price by state.\32\ Table III.2 presents the average sales prices in 
2020 per HUD zone based on the MHS data discussed previously and 
manufactured home shipments published by Manufactured Housing 
Institute.\33\
---------------------------------------------------------------------------

    \32\ Manufactured Housing Survey, Annual Tables of New 
Manufactured Homes: 2014--2020; www.census.gov/data/tables/time-series/econ/mhs/annual-data.html.
    \33\ Manufactured Housing Institute, Annual Production and 
Shipment Data; www.manufacturedhousing.org/annual-production/ production/.

                              Table III.2--MHS Average Sales Price Data by HUD Zone
----------------------------------------------------------------------------------------------------------------
                                                      Single-section average sales   Dual-section average sales
                      HUD zone                               price (2020$)                  price (2020$)
----------------------------------------------------------------------------------------------------------------
1..................................................                       $57,124                       $107,003
2..................................................                        57,290                        111,208
3..................................................                        56,207                        109,147
----------------------------------------------------------------------------------------------------------------

    As presented in Table III.1 and Table III.2, the average, minimum 
and maximum sales price for single-section homes are significantly 
lower than the same for multi-section homes.
    The 2019 AHS separately provides data relating household income to 
manufactured housing size. On average, the household income for 
households in single-section homes ($39,331) is lower than that of 
multi-section homes ($51,358). The 2019 AHS also provides data relating 
the poverty status \34\ (using the federal poverty level thresholds 
\35\) to size of home. Table III.6 summarizes that a larger portion of 
single-section homes have residents at poverty levels less than 100 and 
200 percent of the Federal Poverty Level compared to multi-section 
homes.
---------------------------------------------------------------------------

    \34\ In the AHS tables, poverty status was determined by 
comparing the combined income of the individuals living in the 
household to the appropriate size-based poverty threshold (i.e., 
two-person poverty threshold, three-person poverty threshold, etc.). 
Further details on the definition for poverty status is found in the 
AHS definitions handbook (www2.census.gov/programs-surveys/ahs/2019/2019%20AHS%20Definitions.pdf).
    \35\ U.S. Census Bureau. Poverty Thresholds. www.census.gov/data/tables/time-series/demo/income-poverty/historical-poverty-thresholds.html.

                                Table III.3--2019 AHS Poverty Level Summary Data
----------------------------------------------------------------------------------------------------------------
                                          Number of units (thousands)              Percentage of units (%)
           Poverty level            ----------------------------------------------------------------------------
                                        Single-wide         Double-wide        Single-wide        Double-wide
----------------------------------------------------------------------------------------------------------------
Less than 100 percent..............               1109                506                  29                 17
Less than 200 percent..............               2278               1307                  60                 45
----------------------------------------------------------------------------------------------------------------

    Accordingly, DOE concludes that single-section homes, on average, 
have lower sales prices than multi-section homes. Further, DOE 
concludes that single-section homes, on average, have householders with 
lower to median incomes than multi-section homes. To the extent that 
manufactured home purchasers are cost-driven, in conjunction with the 
lower average income, consumers at the lower end of the manufactured 
home purchase price range generally would be more sensitive to 
increases in purchase price. Based on the relationship between home 
size and cost, DOE has determined that, similar to the retail list 
price-based threshold, the size-based threshold addresses affordability 
concerns. However, as noted by commenters, the size-based threshold 
would not be susceptible to fluctuations in pricing due to changing 
market conditions or consumer customization that could impact the 
applicability of standards (see the discussion in section III.B.3 of 
this document). The size-based threshold

[[Page 32751]]

therefore provides greater certainty for manufacturers and consumers as 
to the applicability of standards to individual manufactured homes and 
reduces opportunities for gaming. Accordingly, DOE is finalizing a 
tiered standard with the Tier 1 standard applicable to single-section 
homes and the Tier 2 standard applicable to multi-section homes.
2. Tiered Standard
    DOE developed the Tier 1 standard with the lower incremental 
purchase price in response to concerns from HUD and other commenters 
regarding the incremental purchase price of a manufactured home built 
to a DOE standard, and the current ability of the first homeowner/
purchaser of these homes to recoup the increase in purchase price and 
realize the savings offered by the greater energy efficiency of a Tier 
1 manufactured home. The Tier 1 standard includes requirements for 
thermal envelope components similar to those of the 2021 IECC, but at 
lesser stringencies than the 2021 IECC to lower the incremental 
purchase price in order to address the affordability concerns raised by 
HUD and other stakeholders.
    In determining the energy efficiency measure (``EEM'') combinations 
included in Tier 1, 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 
implementing efficiency improvements by which a low-income buyer 
purchasing a single-section home (using typical loan terms currently 
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. DOE believes this approach addresses 
the concerns raised by HUD and other stakeholders regarding 
affordability as low-income purchasers, whom DOE considered in 
developing Tier 1 standards, would begin to quickly realize the energy 
cost savings of the standards. As such, DOE determined that an 
incremental purchase price of less than $750 for a set of energy 
efficiency measures provided a beneficial financial outcome for these 
consumers given lifecycle cost savings and energy cost savings, while 
minimizing first cost impacts in the manner noted above. Specifically, 
for single-section manufactured homes, DOE determined the set of energy 
efficiency measures with an average incremental purchase price of $660 
(as presented in Table I.1) with a 10 percent down payment (using a 
chattel loan) would, on average, result in a positive cash flow within 
the first year, as presented in Table III.4. Further discussion on the 
LCC inputs to this subgroup calculation are presented in section 
Chapter 9 of the TSD.

           Table III.4--Tier 1 LCC Sub-Group National Results
------------------------------------------------------------------------
 Single-section only; 30-year analysis period; national
                         results                              Tier 1
------------------------------------------------------------------------
Incremental cost........................................            $660
Incremental down-payment (10%)..........................              66
Yearly Incremental Loan Payment.........................              67
First Year Incremental Payment (Down-payment + Loan)....             133
Yearly Energy Cost Savings..............................             177
First Year Savings (Energy Cost Savings--Incremental                  44
 Payment)...............................................
------------------------------------------------------------------------

    The Tier 2 standard would apply the same thermal envelope EEMs to 
multi-section homes, but at similar stringencies as the 2021 IECC, with 
consideration of cost-effectiveness and design and factory construction 
techniques of manufactured homes taken into account. (42 U.S.C. 
17071(b)(1); 42 U.S.C. 17071(b)(2)(A)) Tier 2 also incorporates the 
alternate exterior wall insulation requirement (R-21) for climate zones 
2 and 3, as presented in the August 2021 SNOPR and October 2021 NODA. 
DOE notes that Tier 2 requirements adopted in this final rule will 
update only the window U-factor requirements for all climate zones 
compared to the term sheet agreed upon by the MH working group (window 
U-factor: 0.35 and 0.32; to 0.32 and 0.30 respectively). The window U-
factors were updated consistent with the 2021 IECC, while the other 
updates were not included because of the design and factory 
construction of a manufactured home or cost-effectiveness 
considerations (see further discussion in section III.F.2.b of this 
document). Otherwise, the remaining Tier 2 EEMs are consistent with the 
recommendations from the MH working group, except based on the three 
HUD zones (as opposed to the four climate zones recommended in the Term 
sheet). Further discussion of the climate zones may be found in section 
III.F.2.a. of this document.
    The required building thermal envelope requirements for both tiers 
are presented in section III.F.2.b of this document.
3. Comments on the August 2021 SNOPR Proposal and the October 2021 NODA
    DOE received a number of comments regarding whether a tiered or the 
alternative untiered approach should be considered.
    Multiple commenters supported single-tier (i.e., untiered) 
standards for energy conservation based on the 2021 IECC standards. 
They stated that all manufactured homes should be as efficient as would 
be cost-effective, considering the construction costs, energy costs, 
and financing over the life-cycle of the homes. They also commented 
that homebuyers purchasing homes in Tier 1 should not be subjected to 
the pitfalls of lower-quality, inefficient homes, which would also 
reduce resale value. The commenters also noted that a two-tiered 
approach would further stratify the growing homeownership gap for 
underserved communities, depriving individuals and families from 
quality, energy-efficient housing choices. (CASA of Oregon, No. 925 at 
p. 1-2) (Verde, No. 928 at p. 1-2), (Trellis, No. 974 at p. 1-2), 
(NOAH, No. 976 at p. 1-2), (PathStone, No. 1013 at p. 1-2), (Habitat 
for Humanity of LA, No. 1015 at p. 1-2), (WIDC, No. 1016 at p. 1-2), 
(RCAC, No. 1183 at p. 1-2), (UCD, No. 1030 at p. 1-2), (LISC, No. 1233, 
at p. 2-3); (CHP, No. 1384 at p. 1-2); (Blount County Habitat for 
Humanity, No. 1417 at p. 1-2); (ReFrame Foundation, No. 1424 at p. 1-
2); (People's Self-Help Housing, No. 1591 at p. 1); (Fahe, No. 1572 at 
p. 1-2); (NBI, No. 1404 at p. 1-2); (NPCC, No. 1567 at p. 2); 
(E4TheFuture, No. 1374 at p. 1); (Next Step, No. 1617 at p. 10, 11); 
(UHI, No. 1026 at p. 1); (E4TheFuture, No. 1976 at p. 1); (ICC, No. 
1979 at p. 2); (NYSERDA, No. 1981 at p. 1); (Next Step, No. 1984 at p. 
1, 2) UHI stated that

[[Page 32752]]

lower-quality, less efficient homes will be less comfortable and 
subject residents to potential health and safety hazards from poor 
ventilation, poor insulation, and a lesser ability to withstand extreme 
weather conditions. (UHI, No. 1026 at p. 1) VEIC recommended that DOE 
pursue a single standard for all manufactured homes that is based on 
the 2021 IECC and incorporate all measures that are cost-effective 
based on total lifetime costs of the home, including energy costs. 
(VEIC, No. 1633 at p. 3) NMHOA stated that while establishing a tiered 
system may somewhat address the issue of the higher upfront costs 
associated with purchasing a home, doing so fails to address the core 
purpose of the proposed rule: addressing the ongoing costs of 
ownership. (NMHOA, No. 1635 at p. 3) UC Law School stated the untiered 
approach makes the most sense from a climate perspective, provided DOE 
could solve the affordability problem. (UC Law School, No. 1634 at p. 
6, 7, 10) NBI commented that proposed Tier 2 energy conservation 
standards missed significant energy savings by not applying the entire 
scope of the 2021 IECC to manufactured homes. (NBI, No. 1404 at p. 1-2)
    ACEEE commented that the proposed Tier 1 standards are illegal. The 
authorizing statute (42 U.S.C. 17071) requires DOE to set the standards 
based on the most recent version of the IECC (currently the 2021 IECC) 
except when that code is not cost-effective or a more stringent 
standard would be more cost-effective. It specifies that cost-
effectiveness is based on ``the purchase price . . . and on total life-
cycle construction and operating costs.'' Thus, they stated that DOE 
must base any change from the 2021 IECC on cost-effectiveness, 
including total life-cycle energy costs. (ACEEE, No. 1631 at p. 4) 
ACEEE also expressed concern that the proposed Tier 1 would not help 
low-income residents, that there may be cheaper savings not included in 
the draft standard. (ACEEE, No. 1498 at p. 1) ACEEE also commented that 
tiered standards will reinforce inequitable outcomes. Setting weaker 
standards for cheaper homes will result in inequitable access to the 
benefits of higher quality, more efficient construction, and will 
create a dangerous precedent by setting standards that are targeted 
according to consumer income level. (ACEEE, No. 1631 at p. 3) Instead, 
ACEEE commented that untiered standards will ensure that all residents 
benefit equitably from the same strong, cost-effective efficiency 
standards. They stated that the proposed threshold for Tier 2 is 
arbitrary and subject to gaming and the use of manufacturer's retail 
list price is a notional amount that can be manipulated. (ACEEE, No. 
1631 at p. 4-6) Further, ACEEE also stated that the untiered standards 
are justified based on legal requirements, cost-effectiveness, and 
environmental impacts without consideration of the economic or other 
impacts from greenhouse gas reduction, and thus, the recent injunction 
\36\ on the use of the social cost of carbon should not delay this 
standard. (ACEEE, No. 1988 at p. 3) Finally, ACEEE stated that the EIS 
confirms that the untiered standards deliver the highest 30-year LCC 
savings to residents and provides the greatest climate, environmental 
justice, socioeconomic, and health benefits. In addition, they stated 
the untiered standards deliver the largest reduction in ongoing energy 
costs, which is an essential part of preserving the affordability of 
manufactured housing and lowering high energy burdens for its 
residents. (ACEEE, No. 1988 at p. 1)
---------------------------------------------------------------------------

    \36\ Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.).
---------------------------------------------------------------------------

    Vermont Law School commented that DOE lacked the legal authority to 
adopt the proposed less energy efficient tiered standards based on a 
manufactured home's retail list price or number of sections because the 
2021 IECC does not base any of its provisions on a home's list price, 
number of sections, ``first cost impacts on purchasers,'' or 1-10 year 
payback periods, and DOE has not affirmatively found that the 2021 IECC 
standard is not cost effective. (Vermont Law School, No. 1638 at p. 2-
4) Vermont Law School reiterated their concern that the tiered approach 
was not cost-effective, nor consistent with the 2021 IECC, then went on 
to acknowledge that ``DOE has, however, explicitly and affirmatively 
found that the untiered approach, which is based on the IECC, is cost-
effective.'' Vermont Law School also commented that the untiered 
approach goes much further than the tiered approach in addressing the 
financial, health, and energy burdens faced by low-income residents, 
and will reduce the energy burden of all new residents of manufactured 
homes. (Vermont Law School, No. 1991 at p. 1-3)
    The CEC urged DOE to adopt the untiered approach that applies the 
2021 IECC to all manufactured housing, regardless of retail cost or 
size. They stated that adopting either tiered approach (retail cost-
based or size-based) would impede the nation's and individual states' 
efforts to address climate change in a just and equitable way. CEC also 
stated that, because DOE may not deviate from establishing standards 
based on the IECC for all manufactured housing unless it makes a 
finding that the code is not cost-effective, DOE must finalize the 
untiered approach. (CEC, No. 1629 at p. 2, 3) While CEC acknowledged 
that to make the standards meaningful, DOE has discretion to adopt 
standards based on the IECC rather than identical IECC standards, they 
disagreed with DOE's conclusion that this discretion extends to the 
bifurcated application of IECC standards based on cost or configuration 
in a way that reduces energy savings, utility savings, or greenhouse 
gas emissions. This interpretation would effectively render the 
statutory requirement meaningless. (CEC, No. 1629 at p. 3) Finally, CEC 
commented that they were concerned regarding equity considerations and 
the disproportionate impact the tiered proposals would have on low-
income residents. (CEC, No. 1629 at p. 4) Next Step commented that by 
sacrificing energy-efficiency features in lower-cost manufactured 
homes, the proposed DOE rule will adversely impact lower-income 
communities--including immigrant communities and communities of color, 
and that the rulemaking should be considered under President Biden's 
January 20, 2021, Executive Order on Advancing Racial Equity and 
Support for Underserved Communities Through the Federal Government. 
(Next Step, No. 1617 at p. 7, 11) In April 2022, DOE released its 
Equity Action Plan (EAP) to implement this Executive order: https://www.energy.gov/equity. As directed by the Executive order, the EAP lays 
out a roadmap for how DOE will incorporate equity considerations in 
procurement, financial assistance, and stakeholder engagement across 
DOE programs. In developing this rule, DOE has taken equity impacts 
into account and the Administration's comprehensive approach to 
advancing equity. Moreover, the FEIS provides a detailed analysis of 
socioeconomic and environmental justice considerations.
    Earthjustice, Prosperity Now, and Sierra Club urged DOE to abandon 
the proposed tiered approach and to apply a strengthened version of the 
proposed Tier 2 standards to all new homes. They stated that DOE has 
entirely failed to consider the beneficial impacts of stronger 
standards on renters of new homes, and therefore has ignored an 
important aspect of the affordability problem it claims to be 
addressing. (Earthjustice and Prosperity Now, No. 1637 at pp. 1, 5, 6, 
8); (Earthjustice, Prosperity Now, and Sierra Club, No.

[[Page 32753]]

1992 at p. 2) Further, they commented that (1) the Tier 1 standards are 
not based on 2021 IECC and DOE has not shown that standards based on 
the 2021 IECC are not cost-effective; and (2) the tiered approach 
raises significant equity concerns. (Earthjustice and Prosperity Now, 
No. 1637 at p. 3) In addition, they stated by prescribing weaker energy 
efficiency standards for the lowest cost homes as DOE has proposed, 
these commenters assert that DOE would limit access to the benefits of 
higher quality, more efficient construction, particularly for families 
renting a manufactured home and those who own a home and rent a lot in 
a manufactured housing community, in which a significant share of 
lower-cost homes are placed. (Earthjustice and Prosperity Now, No. 1637 
at p. 6) Finally, they noted that there is ample evidence in the record 
to support DOE's nationwide adoption of standards that are far stronger 
and more comprehensive than the requirements included in the proposed 
Tier 2 standards, even if the economic impacts of avoiding greenhouse 
gas emissions are completely ignored. (Earthjustice, Prosperity Now, 
and Sierra Club, No. 1992 at p. 9)
    RECA urged DOE to take the untiered approach proposed in the SNOPR 
because it is the only proposed alternative consistent with the 
relevant statute, and it is the most equitable long-term solution 
because it recognizes that reducing utility bills is just as important 
(and likely more important) for low-income households as it is for 
higher-income households. RECA stated that, unless DOE has specifically 
found a lack of cost-effectiveness or a more stringent cost-effective 
measure than what is contained in the IECC, the 2021 IECC should be the 
standard for energy conservation in manufactured housing. (RECA, No. 
1570 at pp. 1, 2, and 7)
    NASEO commented that DOE and HUD are proposing energy efficiency 
standards for Tier 1 homes which are or will soon be less efficient 
than the efficiency codes and standards in place in the various states, 
and which states are unable to supersede due to federal pre-emption. 
NASEO was particularly concerned that it has been nearly 30 years since 
the last update to MH standards. NASEO stated that establishing a two-
tiered standard that excludes the lowest cost homes from energy 
efficiency saddles those residents with high energy bills for the 30-40 
year average lifetime of a manufactured home. (NASEO, No. 1565 at p. 2)
    NEEA strongly opposed a two-tier approach for four reasons: (1) 
Those who buy a Tier 1 home may have a lower first cost, but future 
buyers will have to bear higher life-cycle and energy costs; (2) the 2-
tier approach based on retail list price will shift market pricing 
practices to keep advertised price low while adding higher priced 
dealer options at the point of sale; (3) park owners will continue to 
purchase less efficient Tier-1 homes since rent is set on market rates 
and energy bills will be paid by the tenants; and (4) a 2-tier approach 
introduces complexity into this code and sets a bad precedent for other 
product categories. NEEA commented that DOE must recognize the 
landlord-tenant relationship (where landlords are not incentivized to 
invest in energy efficiency because they are not paying the utility 
bills) and implement single tier, strong energy conservation standards 
for manufactured housing. (NEEA, No. 1601 at pp. 2, 3, 6, 8, and 9)
    The State Attorneys General urged DOE to prescribe the requirements 
set forth in DOE's untiered proposal. They commented that a tiered 
approach is inconsistent with the IECC. Were DOE to adopt a tiered 
approach, it would do so in violation of 42 U.S.C. 17071(b)(1), which 
provides that DOE's standards for manufactured housing ``shall be based 
on'' the IECC. Accordingly, they stated that DOE should adopt standards 
based on the 2021 IECC and make them applicable to all manufactured 
homes, regardless of home cost or size. They argued that DOE's untiered 
proposal is a significant improvement over the current HUD Code, but 
DOE should still adopt a more stringent set of requirements to fully 
comply with EISA. (State Attorneys General, No. 1625 at pp. 2, and 4-6) 
Further, they commented that the tiered approach would create a double 
standard that will perpetuate persistent poverty and inequality. (State 
Attorneys General, No. 1625 at p. 4) UC Law School stated that the 
untiered approach is the most cost-effective when the cost-benefit 
analysis factors in only the social cost of carbon and the emissions 
reductions into the equation. (UC Law School, No. 1634 at p. 11, 13, 
14).
    University of Arizona and Arizona State strongly endorsed the 
application of minimum standards for energy conservation based on the 
2021 IECC for all new manufactured homes sold (as in, did not endorse 
the tiered standards) in order to reduce future health and financial 
vulnerabilities among manufactured housing residents. They stated that 
manufactured homes also provide housing for high concentrations of 
heat-sensitive populations, including older adult, low-income and 
minority groups, and that new standards for manufactured housing 
energy-efficiency are long overdue and should be issued and implemented 
as soon as possible. (University of Arizona and Arizona State, No. 1379 
at p. 1-2)
    MHI also supported a single-tier standard, albeit not with the 
requirements that DOE proposed in the untiered approach. MHI 
recommended less stringent component and Uo requirements for 
the single-tier standards (which are discussed further in section 
III.F.2.b). (MHI, No. 1990 at p. 14-17)
    On the other hand, NAHB did not support the untiered standards and 
thus supports the adoption of a tiered approach to allow builders and 
manufacturers to have options when implementing building thermal 
envelope requirements. They stated that the ``tiered'' approach 
provides options for builders and manufacturers when implementing 
building thermal envelope requirements. However, they also stated that 
it is unclear if using the manufacturer's retail price is an 
appropriate metric for the two tiers. (NAHB, No. 1398 at p. 2) An 
anonymous commenter offered its support for the tiered standards as a 
way to strike a balance between increased energy efficiency and 
affordable housing. (Anonymous, No. 1446 at p. 1, 2) Clayton Homes 
commented that the untiered proposal is not cost-effective in general 
or for low-income consumers. (Clayton Homes, No. 1589 at p. 16)
    UC Law School stated that the untiered approach risks making 
manufactured homes unaffordable for low-income consumers. First, under 
the untiered standard, purchase price increases could represent a 
significant portion of the average consumer's annual income while those 
customers are likely already living paycheck to paycheck. Second, under 
the untiered approach, the dramatic increase in purchase price will 
increase the amount of chattel or real property loan taken out by the 
buyer to obtain a manufactured home. Third, DOE stated in the SNOPR 
that various factors contribute to consumers of manufactured homes 
being more price-sensitive to changes that would impact the cost of a 
manufactured home. Accordingly, they suggested that DOE should consider 
this when evaluating the tiered and untiered approaches for this 
proposed rule, as only the tiered approach considers the financial 
hardship the rule will pose to low-income consumers. (UC Law School, 
No. 1634 at p. 7, 8)
    An individual commenter stated that the proposed rule is a 
necessary step in reducing U.S. energy usage and increasing 
manufactured housing

[[Page 32754]]

efficiency, and that the ``tiered'' approach to regulating homes' 
thermal envelopes would help to reduce overall energy consumption while 
also keeping home costs relatively unchanged. (Kurfman, No. 941 at p. 
1) Another individual commenter suggested that although the tiered 
system of cost implementation creates significantly more administrative 
responsibility, it is a more equitable and desirable means of 
accomplishing the aforementioned agency goals. They suggested that the 
proposed rule by DOE seems adequately supported by reasonable inquiries 
into emission reduction, energy efficiency, and cost allocation for 
thermal requirements of manufactured homes. (Gustafson, No. 778 at p. 
1) NYSERDA supported DOE's two-tier approach to address the 
affordability concerns. (NYSERDA, No. 1620 at p. 1)
    Further, DOE also received a number of comments on the tiered 
approach, specifically as it relates to the proposed threshold (i.e., 
manufacturer's retail list price), which are summarized in the 
following paragraphs.
    Multiple commenters suggested that the $55,000 low-income threshold 
for the eligibility for streamlined energy efficiency requirements for 
the tiered standard should be eliminated (or significantly increased), 
and that it is incorrect that homes above $55,000 are not affordable to 
low-income homebuyers. (MMHA, No. 995 at p. 4); (Michigan MHA, No. 1012 
at p. 2); (WHA, No. 1025 at p. 2); (PMHA, No. 1165 at p. 3); (Westland, 
No. 1263 at p. 2); (Pleasant Valley, No. 1307 at p. 2); (American 
Homestar, No. 1337 at p. 2); (Oliver Technologies, No. 1350 at p. 2); 
(KMHA, No. 1368 at p. 2); (Adventure Homes, No. 1383 at p. 2); (NJMHA, 
No. 1451 at p. 2-3); (WMA, No. 1452 at p. 2); (IMHA/RVIC, No. 1466 at 
p. 2); (Cavco, No. 1497 at p. 2); (Skyline Champion, No. 1499 at p.2); 
(Mississippi MHA, No. 1588 at p. 2) ; (Skyline Champion, No. 1612 at 
p.2); (Cavco, No. 1622 at p. 2); (VAMMHA, No. 1624 at p. 2); (Champion 
Home Builders, No. 1639 at p. 4); (IMHA, No. 1453 at p. 2); (MHI, No. 
1592 at p. 4-6, 25)
    MHARR stated that the $55,000 dividing line between Tier 1 and Tier 
2 standards selected by DOE is fundamentally arbitrary and would limit 
the applicability of the proposed Tier 1 standards to a mere 17.3 
percent of the total HUD Code market notwithstanding the fact that all 
manufactured housing is identified and protected as affordable housing 
under applicable federal law. MHARR also objected to any threshold set 
so low, including the updated $63,000 price threshold, because it would 
subject a significant majority of all manufactured homes and all 
manufactured homeowners to prohibitively costly energy standards. MHARR 
further stated that the inflationary and supply chain pressures will 
increase the threshold amounts by the time of the implementation of any 
such standard. (MHARR, No. 1640 at p. 2-4) NBI stated that establishing 
a price threshold for manufactured homes that must meet lower energy 
efficiency requirements will no doubt risk gaming of the threshold by 
manufacturers and inadvertently shift more of the market to less 
efficient manufactured homes. (NBI, No. 1404 at p. 1-2)
    If DOE keeps the tiered proposal, multiple commenters commented 
that the $55,000 low-income price cap threshold for streamlined energy 
efficiency requirements should be eliminated or significantly increased 
to at least $110,260. (Westland, No. 1263 at p. 1); (Pleasant Valley, 
No. 1307 at p. 2); (American Homestar, No. 1337 at p. 2); (Oliver 
Technologies, No. 1350 at p. 2); (Adventure Homes, No. 1383 at p. 2); 
(NJMHA, No. 1451 at p. 3); (WMA, No. 1452 at p. 2); (IMHA/RVIC, No. 
1466 at p. 2); (Cavco, No. 1497 at p. 3); (Skyline Champion, No. 1499 
at p.2); (Mississippi MHA, No. 1588 at p. 4); (MHI, No. 1592 at p. 17); 
(Cavco, No. 1622 at p.3); (Champion Home Builders, No. 1639 at p. 4) 
Clayton Homes recommended that the $55,000 low-income price cap 
threshold should be either eliminated or increased to at least $110,000 
for a single section and $140,000 for a multi-section home to better 
reflect today's affordable housing market. (Clayton Homes, No. 1589 at 
p. 13, 15, 16, 18)
    MHI commented that if a tiered system based on price is used, the 
price point in Tier 1 must be significantly increased to at least 
$110,260, and must be updated annually to reflect actual costs, which 
can change dramatically. MHI says that as of now, the $55,000/$63,000 
threshold is arbitrary, and it excludes significant numbers of low 
income manufactured housing homebuyers. (MHI, No. 1592 at p. 2, 17) MHI 
stated that home price is determined by the retailer based on the home 
features selected by the consumer, and requiring approval of every 
floorplan after consumer choices are made (which would determine the 
retail price) would mean every house would have to be approved 
separately, adding astronomical costs and slowdowns to the process. 
(MHI, No. 1592 at p. 7, 22, 23, 25) In addition, MHI and Clayton Homes 
suggested that the Tier 2 definition should not have a threshold price; 
instead, a Tier 2 home should be defined as ``A manufactured home that 
is not qualified as a Tier 1 home.'' (MHI, No. 1592 at p. 30); (Clayton 
Homes, No. 1589 at p. 21)
    MHCC stated that they do not believe a tiered approach based on 
manufacturer's retail list price is appropriate. Using manufacturer's 
retail list price as a basis for thresholds could lead to situations 
where, for a single model, multiple plan sets may need to be generated 
leading to multiple plan review and approvals. (MHCC, No. 1600 at p. 3, 
4) Schulte recommended that if DOE wishes to use the Tier 1 method, the 
price limit should be closer to the anticipated average sales price in 
2022 (e.g., $75,000) to cover 68 percent of the single wide market as 
stated in the proposed value. However, they stated that the 
manufactured home production costs are very likely to increase due to 
rising component, construction labor, financing and transportation 
costs, and therefore the price baseline could rapidly become obsolete. 
(Schulte, No. 1028 at p. 5, 22) Further, they commented that the 
differing parts and components of the two tiers of homes will make 
compliance with the published designs and components of the quality 
assurance system even more challenging than it already is. (Schulte, 
No. 1028 at p. 21)
    Skyline Champion commented that the $55,000 low-income price cap 
threshold for streamlined energy efficiency requirements should be 
eliminated. Skyline Champion strongly disagreed with any tiered system. 
Skyline Champion stated that they believe a single set of requirements 
based on value and affordability that offers the customer a clear path 
to a cost benefit is the best solution. (Skyline Champion, No. 1612 at 
p. 3) They suggested for the untiered standard, adjusting the tier 1 
values slightly upward to improve requirements of ceiling insulation 
for thermal zones 2 and 3 along with floor insulation on thermal zone 
3. (Skyline Champion, No. 1612 at p. 3)
    TMHA stated that the price increase considerations that were 
appropriately made by DOE regarding the Tier 1 standards need to be 
applied to all HUD-Code homes regardless of their price. TMHA stated 
that they do not believe that a price threshold should be used at all, 
and the HMDA data for low-income manufactured home purchases provides 
evidence that HUD-Code homes across the price distribution deserve 
cost-effectiveness consideration as intended under 42 U.S.C. 
17071(b)(1), which makes no mention of segmenting manufactured housing 
by price and instead only states that HUD zones be

[[Page 32755]]

used for any differentiation. If DOE decides to use a price threshold 
still, TMHA recommended that DOE at least apply the 70th percentile 
calculation to the entire set of home prices as opposed to limiting the 
data used to only single-section homes. (TMHA, No. 1628 at p. 1, 2) 
TMHA stated that the entire range of manufactured housing property 
values that went to these low-income households is a better 
representation of affordable home values and should be considered for 
the same cost-effectiveness protection. (TMHA, No. 1628 at p. 2)
    While MHI does not believe a price threshold is at all appropriate, 
MHI suggested that if used there absolutely needs to be an index to 
increase the price over time. The proposed rule should establish the 
Federal agency tasked with providing the annually adjusted threshold 
values. Whether it is HUD or the DOE, MHI suggested that a single 
adjusted value must be provided to ensure consistency across the 
industry. Also, MHI stated the application of the AEO to the adjustment 
of home price needs to be standardized and established in the rule for 
the purposes of enforcement. (MHI, No. 1592 at p. 16, 23) UCB stated 
that DOE should use the untiered standards if they are to choose a 
price-based alternative, but otherwise consider other potentially 
effective options for determining energy efficiency thresholds. (UCB, 
No. 1618 at p. 3, 10-12)
    Alternatively, ACC FSC commented that DOE should consider 
thresholds based on square footage instead of retail price. They stated 
that a square footage threshold is more objective than a manufacturer's 
suggested retail price and should be more reliably implemented and 
enforced, and would still target the affordable housing market. They 
suggested that Tier 1 should only apply to single-section homes. (ACC 
FSC, No. 1364 at p. 1) UCB suggested using different monetary standards 
for tiers, size-based tiers, or location-based tiers. (UCB, No. 1405 at 
p. 3) Clayton Homes urged DOE to consider other thresholds such as 
square footage (recommending 1650 sq. ft. of living space) or a measure 
that differentiates based on location where the home will be sited, 
rather than price. (Clayton Homes, No. 1589 at p. 15) MHI stated DOE 
must seriously consider an alternative tier approach such as square 
footage or sections. (MHI, No. 1592 at p. 2, 17) MHCC stated that if 
DOE moves forward with a tiered approach, single- or multi-section 
would be the most appropriate metric. (MHCC, No. 1600 at p. 3, 4) ACEEE 
supported a metric that is harder to manipulate (such as home floor 
area) if DOE insisted on creating multiple tiers. ACEEE also stated 
that disclosure prior to initial sale or rental should clearly identify 
lower-tier homes and inform buyers and renters that they are likely to 
pay higher energy bills and may face other problems. (ACEEE, No. 1631 
at p. 4-6)
    As discussed previously, in response to feedback from stakeholders 
and based on the statutorily required consultation with HUD, DOE 
proposed the ``tiered'' approach in the August 2021 SNOPR to mitigate 
the potential adverse impacts of increased costs on manufactured 
housing affordability for low-income consumers that may arise from 
increasing the stringency of energy efficiency requirements applied to 
manufactured homes. In this final rule, DOE is finalizing a size-based 
tiered approach as it mitigates the potential adverse impacts of 
increased first-costs on manufactured housing affordability from 
increasing the stringency of energy efficiency requirements applied to 
manufactured homes.
    In response to comments opposing the tiered approach, the tiered 
approach is ``based on'' the 2021 IECC, as DOE interprets the statute. 
As noted previously in DOE's reading, the language Congress used in 
instructing DOE to set standards for these structures does not require 
the imposition of requirements for manufactured homes that are 
identical to those that IECC provides for site-built structures. 
Instead, DOE reads the language of the statute as readily indicating 
that Congress anticipated that DOE would need to use its discretion in 
adapting the IECC's provisions for manufactured housing use, including 
whether those elements would be appropriate in light of the design and 
factory construction techniques of manufactured homes and to the extent 
the IECC is not cost-effective. As noted previously, the IECC does not 
apply to manufactured homes, and the IECC's provisions could not be 
transferred verbatim to manufactured homes because of differences in 
these structures. Moreover, Congress directed DOE to ``establish 
standards for energy efficiency in manufactured housing'' that are 
``based on'' the IECC. Congress could have, but did not, require DOE to 
establish standards that are ``equivalent to'' those in the IECC, ``the 
same as'' those in the IECC, or similar such language that would 
indicate a lack of discretion. Therefore, it is DOE's reading of the 
statute that Congress provided DOE with ample discretion to adapt the 
IECC to the unique design, manufacturing, transportation, and cost 
characteristics of manufactured homes and the associated market.
    In addition, because DOE does not read ``based on'' as being 
``identical to,'' there is no reason to make a finding that the IECC is 
not cost-effective, which is required only when DOE is not basing its 
standards on the IECC (or, alternatively, utilizing more stringent 
standards than found in the IECC). Here, DOE is basing its standards on 
the IECC, but necessarily adapting these standards to the unique 
features of manufactured housing. If, in EISA, Congress did intend for 
``based on'' to be ``identical to'' (contrary to DOE's interpretation), 
then DOE would necessarily have to conclude that the IECC is not cost-
effective because it is impracticable to copy standards for site-built 
housing to manufactured housing. Thus, DOE still would adopt the 
standards adopted in this final rule because they promote the energy 
efficiency of manufactured housing based on the criteria set forth by 
Congress.
    The tiered approach in this final rule is ``based on'' the 2021 
IECC. As noted in the August 2021 SNOPR, 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 
consistent with those of the 2021 IECC. 86 FR 47757. In other words, 
both tiers in this final rule regulate the same components of a home as 
the 2021 IECC, with modifications made by DOE to account for the 
design, construction, transportation and cost-effectiveness 
considerations for manufactured homes required by EISA, and as agreed 
upon by the MH working group. Pursuant to the discretion afforded DOE 
by Congress, neither the tiered nor the untiered standard (i.e., Tier 
2) replicates the 2021 IECC as it would apply to site built homes. 
Rather, both tiers adopted in this final rule are ``based on'' the 2021 
IECC. Even if DOE had opted against tiering of standards in this rule, 
the standards adopted still would not be identical to the 2021 IECC (as 
alternatively proposed in the SNOPR), because, as repeatedly noted, it 
is not possible to impose standards developed for site-built structures 
to manufactured homes.
    DOE also disagrees with commenters suggestion that the Tier 1 
requirements are inconsistent with section 413 of EISA because DOE 
tentatively found the proposed untiered standard to be cost-effective, 
or otherwise did not show that the untiered standard was not cost-

[[Page 32756]]

effective. First, as noted previously, the tiered standard is based on 
the 2021 IECC and is cost-effective, and is therefore consistent with 
the statute. Second, the only differences between the tiered standard 
and the untiered standard are the lesser stringencies of the building 
thermal envelope components for Tier 1 homes that DOE incorporated in 
order to address the first-cost and affordability concerns raised by 
HUD in the EISA-required consultation, as well as other stakeholders 
throughout the rulemaking process. (See section III.C of this document 
for more discussion on DOE's consultation process with HUD) As the 
primary regulator of manufactured homes for nearly 50 years, HUD has 
significant expertise in the unique design, construction, 
transportation and cost characteristics of manufactured homes. In 
requiring consultation under EISA, Congress intended for DOE to benefit 
from this expertise. To ignore the advice and concerns voiced by HUD 
would render the statutory consultation requirement meaningless.
    Moreover, as noted previously, DOE estimates a 0.55 percent 
reduction (essentially no reduction) in demand and availability of 
single-section homes for low-income purchasers due to Tier 1 standards. 
Given that low-income consumers generally purchase lower priced 
manufactured homes (i.e., many single section homes), DOE concludes 
that low-income consumers would not be priced out by the Tier 1 
standards adopted in this final rule. In contrast, as noted in the 
October 2021 NODA, DOE estimated a 2.8 percent reduction in shipments 
due to the untiered standard (2.1 percent reduction for the untiered 
standard using the R-21 wall insulation in Climate Zones 2 and 3).\37\ 
See 86 FR 59060. DOE believes the tiered standard adopted in this final 
rule better addresses the affordability concerns raised by HUD during 
consultation, and other stakeholder comments, because it will ensure 
continued availability for the homes most often purchased by low-income 
purchasers (single-section homes) with little change to the current 
market, while providing energy cost savings that provide positive cash 
flow within 1 year of purchase. Accordingly, DOE incorporated the 
tiered structure into its rule in order to ensure that HUD's first-cost 
and affordability concerns were addressed.
---------------------------------------------------------------------------

    \37\ In the October 2021 NODA, DOE estimated that the untiered 
standard would result in a reduction in shipments of 70,203 homes 
(single and multi-section combined), and 53,185 homes for the 
untiered standard using the alternative R-21 wall insulation in 
Climate Zones 2 and 3. 86 FR 59060.
---------------------------------------------------------------------------

    With respect to comments regarding equity concerns related to the 
tiered approach, DOE understands and acknowledges that, under the 
tiered approach, purchasers of some single-section homes (which are 
more likely to be low-income individuals) will not obtain the same 
long-term energy savings benefits as purchasers of multi-section homes. 
However, the tiered standards adopted in today's final rule, in 
addition to increasing energy efficiency relative to the current HUD 
code, will help mitigate first-cost impacts to prospective manufactured 
home purchasers. With respect to comments that the standard--tiered or 
untiered--should not be based on the IECC, as described previously, 
EISA requires DOE to base the standards on the latest version of the 
IECC, which in this case is the 2021 IECC, unless the standards based 
on the IECC would not be cost-effective. 42 U.S.C. 17071(b)(1). As 
discussed previously, the tiered standards are based on the 2021 IECC, 
and DOE has found them cost-effective consistent with the other 
considerations contained in EISA. Thus, DOE is finalizing a tiered 
standard based on the 2021 IECC.
    With respect to comments regarding the threshold for the tiered 
standard, based on further review and consideration of the comments 
received, DOE is not establishing the tier threshold based on the 
proposed manufacturer's retail list price, and is instead finalizing 
tiers based threshold on manufactured home size (single-section and 
multi-section). DOE agrees with commenters that a price-based threshold 
may be difficult to implement. DOE notes that applicability of the 
size-based threshold, as compared to a retail-list-price based 
threshold, would be impacted less by variations within a specific model 
that may change the retail list price. Further, DOE notes that a 
manufacturer is able to determine the size of the home they are 
manufacturing prior to distribution in commerce for sale or 
installation in the field. As such, basing the tiers on size would 
provide greater certainty as to the applicability of standards for 
specific manufactured home models, reducing the potential for 
``gaming,'' as well as reduce the complexity of any potential 
enforcement of the standards.
    In addition, as discussed in III.B.1 of this document, DOE 
understands that affordability is directly tied with manufactured home 
size, in that single-section homes are consistently less expensive than 
multi-section homes. To the extent that manufactured home purchasers 
are cost-driven, in conjunction with the lower median income and net 
worth of these purchasers, these purchasers would tend to buy less 
expensive homes, and generally would also be more sensitive to 
increases in purchase price. Accordingly, given the relationship 
between home size and cost, basing the standards on the home size still 
responds to first-cost impact concerns, while allowing for a less 
burdensome and more objective mechanism for manufacturers to comply 
with standards and achieving significant energy savings relative to the 
HUD code. Therefore, DOE is finalizing a size-based tiered standard in 
this final rule.

C. Rulemaking Process

    As part of developing energy conservation standards for 
manufactured housing, DOE has undertaken 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. of this 
document, 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 August 2021 SNOPR, 
the October 2021 NODA and this final rule. 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 rule 
addresses comments submitted by the MHCC (MHCC, No. 1600), which 
mirrored comments from other individual stakeholders. A number of other 
stakeholders, including industry stakeholders, have also provided 
information, data, and opinions regarding the rule.
    In response to the August 2021 SNOPR and the October 2021 NODA, DOE 
received several comments regarding the rulemaking process used by DOE 
in developing these energy conservation standards.
    MHI commented that DOE's proposal failed to comply with the 
statutory requirement to consult with HUD. (MHI, No. 1592 at p. 10) MHI 
also stated that many of the changes conflict with current HUD Code 
requirements, and no

[[Page 32757]]

direction is given as to how the two differing standards should be 
integrated, which will result in complicated, overlapping requirements. 
(MHI, No. 1592 at pp. 6-7) MHARR commented that DOE should rescind the 
SNOPR and pursue a legitimate rulemaking based on the unique nature, 
construction and affordability of MH using the pre-existing Federal 
manufactured home construction and safety standards (``MHCSS'') and 
statutory HUD manufactured housing consensus process. (MHARR, No. 1388 
at p. 2-3) Select Representatives of Congress were concerned that the 
proposed rule may conflict with statutory obligations contained within 
the National Manufactured Home Construction and Safety Standards Act, 
which establishes HUD as the primary regulator of construction and 
safety standards for manufactured housing. To change energy efficiency 
standards for manufactured housing, they stated that DOE is required by 
EISA to consult with HUD, which in turn can seek further counsel from 
the MHCC. Select Representatives of Congress requested that DOE develop 
the proposed rule and a subsequent implementation strategy in 
consultation with HUD and MHCC, in line with statutory requirements. 
(Select Representatives of Congress, No. 1445 at p. 1, 2) PA-DCED 
stated that it would be more appropriate to review existing 
requirements within the MHCSS and to modify those standards through 
submissions to the MHCC for possible revisions rather than a separate 
agency implementing a totally new standard(s). (PA-DCED, No. 1485 at p. 
2) Clayton Homes also recommend that DOE work with HUD and MHCC to 
evaluate the energy standard improvements that will add the most value 
in energy savings and account for the cost impact to consumers. 
(Clayton Homes, No. 1589 at p. 4)
    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 of this document how the standards 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). Further, 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 final rule.\38\
---------------------------------------------------------------------------

    \38\ DOE presented to the MHCC on December 3, 2014, August 18, 
2015, and June 10, 2021. The minutes of these meetings can be found 
at www.hud.gov/program_offices/housing/rmra/mhs/mhccom.
---------------------------------------------------------------------------

D. 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. In response to the August 2021 SNOPR, DOE received some 
comments on the test procedure.
    MHI stated that testing requirements for each of the systems being 
modified in the proposal are not included and must be addressed before 
any rule is published. If testing is required to be performed by a 
third-party or in cases where the installer is not capable of 
performing the testing, the additional cost of testing could be $600 or 
more. For example, MHI questioned whether the duct testing will require 
every unit to be tested thus requiring each manufacturer to hire one 
individual to test the ducts in line. Further, if each multi-section 
home will need to be tested on-site, they stated it will cost around 
$1,000 per unit, assuming the duct system passes the first time. Also, 
although MHI supports efforts to limit duct leakage, they believe such 
tests should be limited to testing of duct systems in the factory only, 
where such testing provides the best value to consumers. (MHI, No. 1592 
at pp. 20, 22, and 28) Clayton Homes said DOE must not propose a rule 
without including the required testing requirements, so any analysis 
can include the true impact. (Clayton Homes, No. 1589 at pp. 3-5)
    ICC stated that testing and inspection should be conducted under 
the purview of either a state program or third-party entities with the 
requisite knowledge and procedures to assure the results. In states 
without state programs, third-party providers should be permitted to 
conduct testing and inspection. DOE should require third-party 
providers be accredited to ISO/IEC 17020, which ensures the competence 
of inspection bodies, their impartiality, and the consistency of their 
inspection activities. (ICC, No. 1621 at p. 3)
    As discussed previously, DOE is not addressing a test procedure in 
this rulemaking. DOE will consider the comments related to test 
procedures, including an analysis of any related costs, in any future 
action on test procedures.

E. Certification, Compliance, and Enforcement

    In the November 2016 test procedure NOPR and in the August 2021 
SNOPR, 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 a number of comments regarding CCE implementation and costs.
    UCB stated that compliance and implementation need to be included 
in the rule since it will make a large difference on how the standard 
is enforced, and suggested that DOE should work with HUD not only 
outside of the rulemaking, but also as part of the rulemaking. (UCB, 
No. 1405 at p. 1)

[[Page 32758]]

NEEA urged DOE to move quickly to address compliance and enforcement of 
the standards with opportunity for stakeholder input. (NEEA, No. 1601 
at p. 15) An anonymous commenter stated that DOE should expand the 
proposed rule to include the projected regulatory compliance and 
implementation of the proposed rule, because the current proposal does 
not consider additional regulatory costs that will occur with a change 
in the regulatory policy. (Anonymous, No. 1446 at p. 1, 2) Clayton 
Homes commented that the rule does not include energy testing or 
compliance costs, which would further exacerbate homeownership 
affordability challenges in the wake of the recent escalation of home 
prices, and could amount to $600 or more. (Clayton Homes, No. 1589 at 
p. 6) MHI stated that DOE's proposal is based on improper calculations 
and methodologies, including not considering the costs of testing 
procedures and compliance. (MHI, No. 1592 at pp. 4-6, 25) MHARR stated 
that the analysis does not include additional purchase price impacts 
due to costs related to enforcement, testing, and regulatory 
compliance. (MHARR, No. 1640 at pp. 2-4) Campaign Form Letter commented 
that failure to implement a comprehensive compliance path creates 
competing regulations (HUD and DOE) would both cause uncertainty in 
quality assurance processes, and cause delays in production, which in 
turn would harm the industry and consumers who are eagerly seeking the 
affordable housing the manufactured homes provide. (Campaign Form 
Letter, Multiple submissions at p. 2)
    Regarding compliance approach, Schulte stated that DOE staff should 
work directly with HUD so that both agencies can meet their separate 
statutory responsibilities. Initially, they stated that DOE may wish to 
visit the primary inspection agencies, manufacturing plants to see the 
factory inspection process in action along with the inspection process 
for the placement of the homes. In Schulte's view, doing this will give 
DOE the opportunity to evaluate the current HUD regulatory process and 
whether DOE wants to participate in the current enforcement system 
managed by HUD rather than instituting a separate compliance process 
under 10 CFR part 429. They suggested that HUD and DOE should publish 
amendments to 10 CFR part 460 and 24 CFR part 3280 to reflect the final 
standards issued by both agencies. (Schulte, No. 1028 at p. 28, 32) 
Schulte also stated that the HUD Code already contains a number of 
certification documents which can be modified to accommodate many 
different items and therefore the cost of updating these certifications 
will be negligible and have no real impact on the life-cycle cost 
analysis. (Schulte, No. 1028 at p. 31) Skyline Champion stated that HUD 
already has a well-established system for enforcement which is working 
effectively, and Skyline Champion strongly encouraged the use of this 
established system with any final rule created. (Skyline Champion, No. 
1627 at p. 3); (Champion Home Builders, No. 1639 at p. 3) MHI and 
Clayton Homes stated that it is unnecessary for DOE to develop a new 
enforcement mechanism because the HUD Code is an already-established 
enforcement mechanism that mandates a uniform standard for design, 
construction, and installation, including federal requirements for 
safety, durability, and energy efficiency. Accordingly, they urged DOE 
to work with HUD to utilize the compliance and enforcement provisions 
already in place today. (Clayton Homes, No. 1589 at p. 6, 7); (MHI, No. 
1592 at p. 10)
    ICC commented that DOE should coordinate any compliance 
verification processes it mandates with the existing program in place 
at HUD. Overlapping or disjointed requirements would create process 
inefficiencies for manufacturers and inspection agencies, potentially 
raising costs. Finally, ICC encouraged DOE to consider the 2021 IECC 
pathways to achieve compliance in the rulemaking. Should DOE consider 
options that require verification onsite, post transport, they stated 
that DOE should be mindful of the scope of local building officials' 
inspection authority with respect to manufactured housing. (ICC, No. 
1621 at p. 3) NMHOA stated that HUD should be the lead agency in 
implementing the new rules. They stated that compliance should be 
addressed in the final rule to ensure DOE and HUD efforts and 
coordinated, and that HUD's regulatory and inspections processes appear 
to be the most appropriate mechanism for ensuring compliance without 
creating a new, complicated system of two-party inspections. (NMHOA, 
No. 1635 at p. 4)
    Separately, NAIMA commented that new manufactured homes should 
carry a label that details all relevant information related to energy 
efficiency standard compliance, similar to the 2021 IECC permanent 
certificate which includes insulation R-values, U-factors of 
fenestration, duct leakage testing results, and types and efficiencies 
of heating, cooling and water heating equipment. They stated that 
requiring the same certification on manufactured housing will promote 
owner/occupant awareness and help ensure manufacturer compliance with 
the standard. (NAIMA, No. 1017 at p. 1) ACEEE stated that DOE should 
ensure that buyers, owners, and renters have understandable and usable 
information on the overall efficiency or energy use of each home and on 
its efficiency features, and recommended that disclosure in the sales 
process and a permanent label could provide the information. (ACEEE, 
No. 1631 at p. 16)
    DOE notes that many of the requirements in the standards would 
require minimal compliance efforts (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), and 
therefore such efforts would result in minimal additional costs to 
manufacturers. However, DOE acknowledges that it has not fully 
enumerated testing and enforcement costs at this time. DOE continues to 
work with HUD on potential approaches for compliance, enforcement and 
labeling that may leverage the existing HUD inspection and enforcement 
process to ensure manufacturer compliance with the standards in a 
manner that is not overly burdensome or costly to manufacturers. 
Accordingly, DOE has also not included any potential associated costs 
of testing, compliance or enforcement at this time. DOE will consider 
the comments related to CCE, testing and labeling received in this 
rulemaking and will continue to consult with HUD in any future actions.

F. Energy Conservation Standards Requirements

    This section discusses in detail the energy conservation standards 
in this final rule. DOE is codifying in a new part of the CFR under 10 
CFR part 460 subparts A, B, and C.
    Subpart A 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.
    Subpart B would include the energy conservation standards 
requirements associated with the building thermal envelope of a 
manufactured home according to the tier and climate zone in which the 
home is located. DOE bases its standards on the three HUD zones. 
Manufacturers would be able to 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

[[Page 32759]]

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.
    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
a. Sec.  460.1 Scope
    Section 413 of EISA directs DOE to establish energy conservation 
standards for manufactured housing. (42 U.S.C. 17071(a)(1)) In this 
final rule, Sec.  460.1 would (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 August 2021 SNOPR.
    In response to the August 2021 SNOPR, multiple commenters stated 
that these standards for manufactured housing energy-efficiency are 
long overdue and should be issued and implemented as soon as possible. 
(CASA of Oregon, No. 925 at p. 1); (Verde, No. 928 at p. 1), (Trellis, 
No. 974 at p. 1), (NOAH, No. 976 at p. 1), (PathStone, No. 1013 at p. 
1), (Habitat for Humanity of LA, No. 1015 at p. 1), (WIDC, No. 1016 at 
p. 1), (RCAC, No. 1183 at p. 1), (UCD, No. 1030 at p. 1), (LISC, No. 
1233, at p. 3); (CHP, No. 1384 at p. 1-2); (Blount County Habitat for 
Humanity, No. 1417 at p. 1-2); (ReFrame Foundation, No. 1424 at p. 2); 
(NPCC, No. 1567 at p.2); (Fahe, No. 1572 at p. 1); (People's Self-Help 
Housing, No. 1591 at p. 1) (Joint Commenters, No. 1630 at p. 1). UC Law 
School stated that DOE should consider a 1-year lead time as sufficient 
for compliance with the DOE standards for the purposes of the HUD 
certification process. (UC Law School, No. 1634 at p. 15) Next Step 
stated that HUD and the manufactured housing industry should implement 
the law within one to two years, with allowance for exceptions. 
(NextStep, No. 1617 at p. 12) ACEEE commented that a one-year lead time 
before compliance is required should be sufficient. They stated that if 
particular provisions of the standards cannot be met in that timeframe, 
then DOE could allow temporary exceptions or waivers (as for appliance 
standards) or could set a later compliance date for those provisions. 
(ACEEE, No. 1631 at p. 15) NYSERDA encouraged DOE to move as swiftly as 
possible to finalize the rulemaking. (NYSERDA, No. 1620 at p. 2); 
(NYSERDA, No. 1981 at p.2) Schulte commented that moving forward with a 
final rule in 2022 would give consumers, especially low- to moderate-
income Americans the benefits of lower energy bills and increased 
comfort. (Schulte, No. 1028 at p. 10) Further, they commented that due 
to HUD's performance-based code and the efficiencies inherent in 
factory production based on approved designs, manufactured home 
producers are nimble and can adjust relatively quickly to new 
standards. (Schulte, No. 1028 at p. 18)
    On the other hand, Clayton Homes stated that the proposed rule 
would impose more extreme changes than the industry can absorb in one 
code cycle, and recommended that the implementation period should be 5 
years. The ICC updates building codes such as the IECC in three-year 
cycles, and States normally consider adoption on similar three-to-five-
year cycles. The commenter believes the best first step should be to 
improve the minimum standards that are currently in place that are 
workable in the present market environment, and then continue to 
evaluate additional improvements to the standards over time. (Clayton 
Homes, No. 1589 at p. 3); (Clayton Homes, No. 1986 at p. 3-5) NAHB also 
supported allowing for a longer time than the proposed 1-year timeframe 
so that manufacturers have enough time to adjust procurement, design, 
and production practices while managing their limited resources. (NAHB, 
No. 1398 at p. 3) NMHOA commented that the proposed one-year lead time 
to implementation is not sufficient given the changes required to the 
production process, inspections process, and more than likely, the 
other public policy changes that would be required to make the higher 
upfront costs work for consumers and suggested that a three-year time 
frame seems more appropriate. (NMHOA, No. 1635 at p. 4) Champion Home 
Builders urged DOE to provide the industry with ample time of 3-5 years 
to properly implement the adopted energy conservation standards once 
they are finalized. (Champion Home Builders, No. 1983 at p. 3, 4) MHI 
stated that when DOE makes changes to appliance standards there is 
generally a five-year compliance period. Given that the process for 
manufacturing homes is at least as complex as appliances, the same time 
period should apply. (MHI, No. 1592 at p. 24); (MHI, No. 1990 at p. 4) 
MHCC commented that major changes to the manufacturer's process, 
facilities, home designs, and supply chains would be required to comply 
with the DOE standards and a more realistic time frame for 
implementation would be a minimum of 5 years. (MHCC, No. 1600 at p. 5) 
TMHA requested that any effective date consider having backlogs and 
supply-chains to have returned to normal. (TMHA, No. 1628 at p. 4)
    DOE notes that the industry has experience with the means to comply 
with the performance requirements (i.e., Uo), as they have had to 
comply with HUD Uo requirements previously. Further, many manufacturers 
have complied with ENERGY STAR Version 2 efficiency requirements for 
homes produced on or after June 1, 2020, which includes both component 
specific and overall Uo requirements. Finally, certain manufacturers 
have been complying with the NEEM program (i.e., NEEM+ certification), 
which also includes component specific and overall Uo requirements. 
Therefore, DOE believes that many manufacturers already have experience 
complying with efficiency requirements similar to what DOE is requiring 
in this final rule.
    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)) This one-year rule development time period 
provides DOE the time to evaluate industry compliance with the 
standards prior to DOE's consideration of updates to the IECC in 2024, 
as required by the statute. The one-year rule development time period 
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 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 of this document, while manufacturers may 
incur costs to update designs to meet the proposed standards, DOE's 
analysis indicates these costs are outweighed by the benefits gained in 
energy savings by

[[Page 32760]]

manufactured home purchasers as a result of the standards, as discussed 
in section III.A of this document.
b. Sec.  460.2 Definitions
    In this final rule, DOE is finalizing all definitions proposed in 
the August 2021 SNOPR, except DOE is modifying the definition for 
``whole-house mechanical ventilation system'' based on a comment 
received. Accordingly, DOE is finalizing the definitions for the 
following terms proposed in the August 2021 SNOPR in Sec.  460.2: 
``access (to),'' ``air barrier,'' ``automatic,'' ``building thermal 
envelope,'' ``ceiling,'' ``climate zone,'' ``conditioned space,'' 
``continuous air barrier,'' ``door,'' ``dropped ceiling,'' ``dropped 
soffit,'' ``duct,'' ``duct system,'' ``eave,'' ``equipment,'' 
``exterior ceiling,'' ``exterior floor,'' ``exterior wall,'' 
``fenestration,'' ``floor,'' ``glazed or glazing,'' ``insulation,'' 
``heated water circulation system,'' ``2021 IECC,'' ``manufactured 
home,'' ``manufacturer,'' ``manual,'' ``opaque door,'' ``R-value 
(thermal resistance),'' ``rough opening,'' ``service hot water,'' 
``skylight,'' ``skylight well,'' ``solar heat gain coefficient 
(SHGC),'' ``state,'' ``thermostat,'' ``U-factor (thermal 
transmittance),'' ``Uo (overall thermal transmittance),'' 
``ventilation,'' ``vertical fenestration,'' ``wall,'' ``window,'' and 
``zone.''
    In response to comments received to the August 2021 SNOPR, DOE is 
updating the definition for the term ``whole-house mechanical 
ventilation system'' as follows: 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 to satisfy the whole house 
ventilation rates.
    The following paragraphs summarize the comments received in 
response to the August 2021 SNOPR regarding the definitions and the 
discussion regarding the ``whole-house mechanical ventilation system'' 
definition update.
    MHI recommended that the definition of ``whole-house mechanical 
ventilation system'' must be revised to include ``to satisfy the whole 
house ventilation rates'' at the end of the definition. They stated 
that as proposed in the August 2021 SNOPR, the definition would include 
all exhaust fans including bath fans and range hoods, systems that MHI 
stated that they do not believe should be included. (MHI, No. 1592 at 
pp. 16, 21) In reviewing section R202 of 2021 IECC, DOE notes that the 
definition is in line with the MHI recommendation, in that it includes 
``to satisfy the whole house ventilation rates'' at the end of the 
definition. Further, the MH Working Group also recommended including 
the full definition of the term from the 2015 IECC, which included ``to 
satisfy the whole house ventilation rates'' at the end of the 
definition. Term Sheet, No. 107 at p. 11. DOE notes that the definition 
remained unchanged in the 2021 IECC update. Therefore, to be consistent 
with the 2021 IECC and the MH Working Group recommendation, DOE is 
updating the definition to be finalized as follows: 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 to satisfy 
the whole house ventilation rates.
    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. 1601 at p. 15) DOE received the same exact comment from NEEA in 
response to the June 2016 NOPR. In response to this comment, DOE 
recognized that there was an error regarding the ``conditioned space'' 
definition proposed in the June 2016 NOPR and instead, proposed in the 
August 2021 SNOPR that the definition be updated to match the 2021 IECC 
definition. DOE stated that under the proposed definition, the space 
under the floor but above the insulation is considered conditioned 
space, and because DOE is proposing the term as defined in the IECC, 
the term is appropriately understood by industry. 86 FR 47744, 47767. 
As such, in this final rule, DOE is finalizing the same proposed 
definition for ``conditioned space,'' consistent with the August 2021 
SNOPR and the 2021 IECC.
    NEEA also 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. 1601 at p. 16) Again, 
DOE received the same exact comment from NEEA in response to the June 
2016 NOPR. In response to this comment, DOE agreed with NEEA's 
suggestion to define skylight well and proposed the following 
definition: 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. DOE also 
proposed to specify that skylight wells are exterior walls by updating 
the definition of ``exterior wall'' to include skylight wells. 86 FR 
47744, 47767. DOE did not receive any other comments on this proposal. 
As such, in this final rule, DOE is finalizing the same proposed 
definition for ``skylight well,'' consistent with the August 2021 
SNOPR.
    NEEA also commented that a clearer definition of ``access'' should 
be included. (NEEA, No. 1601 at p. 15) In the August 2021 SNOPR, DOE 
discussed that the 2021 IECC replaced ``accessible'' with ``access 
(to)'' within the code. As the definition of the word ``access'' was 
found in the 2021 IECC, DOE proposed to include a definition for this 
term. Further, to prevent confusion, DOE proposed to revise the 
regulatory text to incorporate the use of the word ``access'' instead 
of ``accessible,'' similar to the updates in the 2021 IECC. 86 FR 
47744, 47767-47768. DOE did not receive any other comments on this 
proposal. As such, in this final rule, DOE is finalizing the same 
proposed definition for ``access (to),'' consistent with the August 
2021 SNOPR.
    ACC FSC commented that the prescriptive R-value requirement in the 
proposed standards includes a continuous insulation component that is 
not adequately described or explained in the currently proposed Tier 2 
provisions for HUD Zones 2 and 3. Therefore, they stated that 
continuous insulation is directly and indirectly a part of the proposed 
standards and a definition is needed together with a table footnote 
explaining the insulation components such as cavity insulation and 
continuous insulation where they are combined. Accordingly, they 
recommended DOE include the IECC definition for continuous insulation: 
insulating material that is continuous across all structural members 
without thermal bridges other than fasteners and service openings. It 
is installed on the interior or exterior, or is integral to any opaque 
surface, of the building envelope. (ACC FSC, No. 1364 at p. 4) In this 
final rule, DOE is no longer including the exterior wall continuous 
insulation requirement and instead is finalizing an R-21 exterior wall 
insulation for Tier 2 climate zones 2 and 3; comments and discussion 
related to this topic are provided in section III.E.2.b of this 
document. Therefore, because continuous insulation is no longer 
included as part of the requirements, a definition for the same is not 
necessary in this final rule.
    VEIC recommended that DOE adopt the IECC definition for ``high-
efficacy light sources''. (VEIC, No. 1633 at p. 6) Because the 
regulatory text adopted in this final rule does not use the term 
``high-efficacy light sources,'' DOE is not defining this term. Further 
discussion

[[Page 32761]]

on lighting is provided in section III.F.2 of this document.
    Finally, Clayton Homes recommended that DOE adopt a proposed 
definition for ``Manufacturer's retail list price.'' (Clayton Homes, 
No. 1986 at p. 9) In addition, Clayton Homes recommended language 
revisions toSec.  460.4(b) and (c) regarding the tiered system proposed 
in the August 2021 SNOPR. (Clayton Homes, No. 1986 at p. 10) In this 
final rule, DOE is adopting tiered energy conservation standards based 
on home size, and not based on manufacturer's retail list price. 
Because the threshold based on manufacturer's retail list price is no 
longer applicable, DOE is not including a definition for manufacturer's 
retail list price in this final rule.
c. Sec.  460.3 Materials Incorporated by Reference
    In this final rule, DOE is not incorporating 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 is incorporating 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 is incorporating by 
reference ACCA Manuals J and S in Sec.  460.205 of the regulatory text 
and would relate to the selection and sizing of heating and cooling 
equipment. In addition, PNL-8006 (``Overall U-values and Heating/
Cooling Loads-Manufactured Homes''), or 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 is incorporating by reference the Battelle Method to 
determine the same (Uo).
    DOE received a number of comments regarding the materials 
incorporated by reference. DOE also received technical comments 
regarding the application of ACCA Manuals S and J for manufactured 
housing, which are discussed in section III.F.3.e of this document.
    MHI recommended deleting the reference to the specific sections of 
the 2021 IECC in the proposed regulatory text Sec.  460.102 through 
Sec.  460.204. (MHI, No. 1592 at pp. 17 through 21) Conversely, the ICC 
requested that in referencing the IECC, DOE ensures it has respected 
the Code Council's rights as a copyright holder. Referencing Office of 
Management and Budget (``OMB'') Circular A-119, ``Federal Participation 
in the Development and Use of Voluntary Consensus Standards and in 
Conformity Assessment Activities, Revised,'' ICC commented that in 
order to meet the minimum requirements, 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.'' Accordingly, the ICC encouraged that DOE 
incorporate by reference the copywritten material from the IECC. (ICC, 
No. 1621 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 previously, 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 
manufactured housing 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, 
this final rule is (1) based directly on certain IECC sections, (2) 
based on other sections of the IECC with modification, and (3) does not 
include certain other sections as they were either not pertinent to 
manufactured housing or not needed to establish energy conservation 
standards.
2. Subpart B: Building Thermal Envelope
    The 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 August 2021 SNOPR and 
October 2021 NODA relevant to subpart B and responses to any such 
comments. As discussed previously, for the tiered standards, Tier 1 
manufactured homes (i.e., single-section homes) would be subject to 
different building thermal envelope requirements than all other 
manufactured homes (Tier 2 manufactured homes; i.e., multi-section 
homes). The requirements are discussed in the following sections.
a. 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 
climatic differences to affect energy consumption supports an approach 
in which energy conservation standards account for geographic 
differences in climate. In this final rule, DOE aligns with the HUD 
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

[[Page 32762]]

[GRAPHIC] [TIFF OMITTED] TR31MY22.210

[GRAPHIC] [TIFF OMITTED] TR31MY22.211

BILLING CODE 6450-01-C
    In the August 2021 SNOPR and October 2021 NODA, DOE proposed three 
climate zones consistent with the HUD zones. DOE received several 
comments regarding climate zones.
    UCB suggested that DOE should consider different climate zone maps 
that are more representative of actual U.S. climate variability. They 
commented that the zones do not accurately reflect areas of similar 
weather and climate for the country. Accordingly, they stated that a 
more complex climate zone map that accounts for different areas of 
climate variability would be more sufficient in determining these 
different levels of efficiency standards, and therefore DOE should 
create a new climate zone map based on the IECC zones. (UCB, No. 1618 
at p. 3, 12-14) On the other hand, MHI appreciated DOE's use of the HUD 
Code zones to match manufacturing practices more appropriately. (MHI, 
No. 1592 at p. 17) MHCC and Clayton Homes also strongly supported using 
the current HUD zones for the purpose of this standard. (MHCC, No. 1600 
at p. 6); (Clayton Homes, No. 1589 at p. 16) Schulte stated that while 
there are similarities in the proposed insulation requirements for 
components for zones 1 and 2 walls and floors, the climates of 
temperate zone states are sufficiently different from those of warm 
states to justify a separate thermal zone. (Schulte, No. 1028 at p. 12)
    As already discussed, EISA explicitly permits the use of HUD zones. 
(42 U.S.C. 17071(b)(2)(B)) 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. Aligning the climate zones 
between the DOE requirements and the HUD Code would reduce the 
complexities and burden faced by manufacturers of compliance with the

[[Page 32763]]

DOE standards. 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. As such, in this final rule, DOE maintains the three 
climate zones, consistent with the HUD zones. DOE understands that the 
HUD code may be updated in the future to adopt more representative HUD 
zones. Should HUD update those zones, DOE would move in a timely manner 
to consider adopting aligning changes in its own code in future 
rulemakings for manufactured housing as DOE understands the importance 
of harmonization and reducing complexities for manufacturers.
b. Sec.  460.102 Building Thermal Envelope Requirements
    For the standard, Tier 1 would incorporate building thermal 
envelope measures based on the 2021 IECC but would limit the 
incremental purchase price increase to an average of less than $750 for 
single-section homes. For Tier 2, the building thermal envelope 
measures are based on those proposed in the June 2016 NOPR, updated to 
reflect the HUD zones and cost-effective measures based on the 2021 
IECC requirements. Further, Tier 2 includes alternate exterior wall 
insulation requirement (R-21) for climate zones 2 and 3, as presented 
in the August 2021 SNOPR and October 2021 NODA.
    Consistent with the August 2021 SNOPR, DOE is including 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 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, DOE will 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 also 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 \39\ (R402.1.5).
---------------------------------------------------------------------------

    \39\ UA is the U-factor multiplied by area.
---------------------------------------------------------------------------

    Further, consistent with the August 2021 SNOPR and the October 2021 
NODA, DOE continues to include prescriptive requirements that would 
establish specific component minimum R-value, maximum U-factor, and 
SHGC requirements, providing a straightforward option for construction 
planning. The prescriptive requirements would be under Sec.  
460.102(b), with the building thermal envelope requirements 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 adopted 
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, 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 determined the optimal set of energy 
efficiency measures that would yield an incremental cost increase less 
than $750.
    In developing the set of Tier 2 energy efficiency measures, 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,\40\ 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.
---------------------------------------------------------------------------

    \40\ DOE used shipments for 2020 from the annual production and 
shipment data provided by MHI. See Manufactured Home Shipments by 
Product Mix, Manufactured Housing Institute (2020).
---------------------------------------------------------------------------

    As part of the energy efficiency measures, 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 and 
the August 2021 SNOPR. Accordingly, DOE similarly mapped the 2021 IECC 
updates to the corresponding climate zone.

[[Page 32764]]

    Therefore, for the standard, the Tier 1 prescriptive building 
thermal envelope requirements are presented in Table III.5 and the Tier 
2 prescriptive building thermal envelope requirements are presented in 
Table III.6. Further discussion on the requirements is provided in the 
forthcoming sections.

                                         Table III.5--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.6--Tier 2 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.......................................              21              30              19            0.30            0.55            0.40            0.25
3.......................................              21              38              30            0.30            0.55            0.40  Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As discussed, use of the HUD zones 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, DOE is finalizing the following proposals 
from the August 2021 SNOPR:
     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. (This would be applicable for Tier 2 only.)
     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.\41\ DOE performed these calculations based on typical wall, 
ceiling, and floor assemblies used by the manufactured home industry. 
Table III.7 provides the updated maximum U-factor values for Tier 1 
manufactured homes (which would be for single-section homes only).
---------------------------------------------------------------------------

    \41\ ``Overall U-Values and Heating/Cooling Loads--Manufactured 
Homes'' by Conner and Taylor.
---------------------------------------------------------------------------

     Table III.8 provides the updated maximum U-factor values 
for Tier 2 manufactured homes (which would be for multi-section homes 
only).

                      Table III.7--U-Factor Alternatives to the Tier 1 R-Value Requirements
----------------------------------------------------------------------------------------------------------------
                                                                     Exterior                        Exterior
                          Climate zone                              ceiling  U-    Exterior wall     floor  U-
                                                                      factor         U-factor         factor
----------------------------------------------------------------------------------------------------------------
1...............................................................           0.061           0.094           0.049
2...............................................................           0.061           0.094           0.056
3...............................................................           0.061           0.068           0.049
----------------------------------------------------------------------------------------------------------------


                      Table III.8--U-Factor Alternatives to the Tier 2 R-Value Requirements
----------------------------------------------------------------------------------------------------------------
                                                                     Exterior                        Exterior
                          Climate zone                              ceiling  U-    Exterior wall     floor  U-
                                                                      factor         U-factor         factor
----------------------------------------------------------------------------------------------------------------
1...............................................................           0.043           0.094           0.078
2...............................................................           0.043           0.063           0.056
3...............................................................           0.037           0.063           0.032
----------------------------------------------------------------------------------------------------------------

     Uo values using the Battelle Method for single- and multi-
section manufactured homes. Table III.9 provides the updated Uo values 
for Tier 1 manufactured homes. The Tier 1 standards provide energy 
efficiency standards more stringent than the HUD thermal protection 
standards required in 24 CFR 3280.506(a). Table III.10 provides the 
updated Uo values for Tier 2 manufactured homes.

[[Page 32765]]



 Table III.9--Tier 1 Building Thermal Envelope Performance Requirements
------------------------------------------------------------------------
                                                       Single-section Uo
                     Climate zone
------------------------------------------------------------------------
1....................................................              0.110
2....................................................              0.091
3....................................................              0.074
------------------------------------------------------------------------


 Table III.10--Tier 2 Building Thermal Envelope Performance Requirements
------------------------------------------------------------------------
                                                        Multi-section Uo
                     Climate zone
------------------------------------------------------------------------
1....................................................              0.082
2....................................................              0.066
3....................................................              0.055
------------------------------------------------------------------------

     Area-weighted average vertical fenestration U-factor 
requirements to not exceed 0.48 in Climate Zone 2 or 0.40 in Climate 
Zone 3.
     Area-weighted average skylight U-factor requirements to 
not exceed 0.75 in Climate Zone 2 and Climate Zone 3.
    The following sections discuss comments DOE received regarding the 
building thermal envelope requirements proposed in the August 2021 
SNOPR and presented in the October 2021 NODA. Further, the following 
sections also provides the reasoning for the amended final rule 
prescriptive and performance requirements.
Tier 1 Standard Requirements
    DOE received a number of comments regarding the proposed Tier 1 
standard requirements. Schulte stated that Tier 1 standards are only a 
minor improvement from the existing HUD standards issued nearly 30 
years ago, and that it is hard to see how approving these standards 
would accomplish the EISA goals. (Schulte, No. 1028 at p. 12) RECA 
stated that the Uo baseline should be improved by at least a similar 
percentage as the improvements in the IECC made since the 2007 EISA. 
RECA stated that, even if the efficiency requirements for specific 
components may not match the IECC perfectly, they would expect the 
percentage improvement in the Uo targets for both single- and multi-
section units to improve by as much as the IECC over the period since 
Congress included this requirement in the 2007 EISA, and likely even 
more, considering how far behind these standards were in 2007. RECA 
also mentioned that the proposed Uo targets for Tier 1 (for both 
single-section and multi-section units) are only moderately improved 
(5.17-9.38 percent) from the current targets in 24 CFR 3280.506(a), and 
capture only a fraction of the IECC improvements adopted since 2007. 
Because of this, RECA recommended that DOE eliminate Tier 1 Uo targets 
and instead use Tier 2 Uo targets for all buildings, consistent with 
the improvements in the IECC since the 2007 EISA. If different Tier 1 
targets are deemed absolutely necessary, they suggested that the 
standards should be set at least 20-25 percent more stringent than the 
current requirement. (RECA, No. 1570 at pp. 4-6)
    In response to August 2021 SNOPR and October 2021 NODA, Clayton 
Homes stated that proposed Tier 1 energy conservation standards are a 
reasonable first step in raising the energy standards for MH. (Clayton 
Homes, No. 1589 at p. 16) MHI stated that based on the calculations 
performed on prototypical homes, the proposed Zone 1 requirements 
should be able to be met with upgraded insulation and upgraded windows. 
MHI recommended the following changes for Table 460.102-5 of the 
regulatory text: Change Zone 1 total Uo to 0.098 for single and 0.096 
for multi-sectional, Zone 2 total Uo to 0.081 for single and 0.079 for 
multi-sectional, and the Zone 3 total Uo to 0.076 for single and 0.073 
for multi-sectional. (MHI, No. 1592 at p. 9, 18); (Clayton Homes, No. 
1589 at p. 9)
    However, in response to the January 2022 DEIS, both MHI and Clayton 
provided alternate recommendations. MHI recommended untiered standards 
with less stringent requirements than Tier 2. (MHI, No. 1990 at p. 14-
17) Clayton Homes separately recommended the following changes to Table 
460.102-1 of the regulatory text: Change Zone 1 exterior wall 
insulation requirements to R-11, exterior ceiling insulation to R-22, 
and exterior floor insulation requirements to R-13; Change zone 2 
exterior wall insulation requirements to R-11 and exterior ceiling 
insulation requirements to R-25; and change Zone 3 exterior wall 
insulation requirements to R-15, and exterior ceiling insulation 
requirements to R-25. In addition, Clayton Homes recommended the 
following changes to Table 460.102-3 of the regulatory text: Change 
Zone 1 exterior wall U-factor to 0.111 and exterior floor U-factor to 
0.078, and change Zone 2 exterior wall U-factor to 0.111. (Clayton 
Homes, No. 1986 at p. 11, 13)
    Regarding specific Tier 1 component requirements, RECA recommended 
that climate zone 2 be set at the same insulation R-value level as 
climate zones 1 and 3 for floor insulation, because they see no reason 
why climate zone 2 should be lower than climate zone 1 or 3. (RECA, No. 
1570 at pp. 4-6) RECA also commented that the fenestration requirements 
for Tier 1 are unreasonably weak given the ubiquity of reasonably 
efficient and cost-effective fenestration with U-factors at or below 
0.30 and SHGCs less than 0.25. Further, RECA stated that the proposed 
requirements for Tier 1 ceiling insulation, particularly in Climate 
Zone 3, are lower than the prescriptive requirements for any climate 
zone set by any version of the IECC published in the past 15 years. 
(RECA, No. 1570 at p. 3, 6) VEIC stated that they find it unacceptable 
that DOE would allow for single pane windows or single pane with storm 
windows in any climate zone. VEIC stated that if tiered standards are 
adopted, DOE should increase the prescriptive window efficiency 
standards for all zones. (VEIC, No. 1633 at p. 6, 7)
    As discussed previously, in developing the set of Tier 1 energy 
efficiency measures, DOE started with the 2021 IECC building components 
and then adjusted the requirements to meet a first cost target. As 
such, DOE compared the potential energy savings for each of the 
different combinations analyzed (those building components subject to 
the 2021 IECC, i.e., exterior floor, exterior walls, exterior ceiling, 
and fenestration) using the range of efficiency measures originally 
identified by the MH working group as appropriate for manufactured home 
design and determined the optimal set of energy efficiency measures 
that would yield an incremental cost increase less than $750.
    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. DOE considered positive cash flow within Year 1 to ensure 
manufactured homes would remain affordable for a low-income consumer. 
DOE believes this addresses the concerns raised by HUD and other 
stakeholders. As such, DOE determined that an incremental purchase 
price of less than $750 provided a beneficial financial outcome for 
these consumers given lifecycle cost savings and energy cost savings, 
while minimizing first cost impacts.
    Accordingly, because of the objective of the tier to develop an 
optimal set of measures, the analysis resulted in different insulation 
requirements depending on climate zone, and for

[[Page 32766]]

certain insulation requirements to be higher than others. Therefore, 
any changes in requirements would have negative effects on positive 
cash flow for low-income consumers, which is contrary to DOE's 
intentions regarding housing affordability. Any decrease in efficiency 
measures would not provide the original benefit of expected energy cost 
savings within Year 1 of the standard. Finally, DOE notes that the 
performance method, i.e., Uo method, provides manufacturers more 
flexibility with determining the component specific requirements, as 
long as the minimum Uo requirements are met. As such, DOE maintains the 
Tier 1 energy efficiency options proposed in the August 2021 SNOPR.
Additional Efficiency Packages
    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 systems. In developing recommendations, the MH working 
group evaluated the 2015 IECC, which did not include comparable 
provisions to sections R401.2.5 and R408.2 of the 2021 IECC. In the 
August 2021 SNOPR, DOE did not propose any of the additional efficiency 
packages either because of consideration of the design and factory 
construction of manufactured homes, or potential cost-effectiveness 
constraints. 86 FR 47744, 47773-47774.
    In response to the August 2021 SNOPR, DOE received a number of 
comments regarding these additional efficiency packages.
    NPCC stated that the standards should ensure additional savings 
through prescriptive requirements and an additional efficiency 
requirement with package options based on the model code. (NPCC, No. 
1567 at p. 2) The CEC recommended that DOE should incorporate the State 
Attorneys General's request to require manufacturers to include the 
additional efficiency packages consistent with IECC R401.2.5.1. (CEC, 
No. 1629 at p. 4) NBI stated that the 2021 IECC requires homes 
following the prescriptive pathway to choose among several efficiency 
packages, which they believe should apply to manufactured homes. (NBI, 
No. 1404 at p. 1-2) The Joint Commenters stated that neither DOE's 
tiered nor untiered standards require manufacturers to provide 
additional energy savings through efficiency package options such as 
those required by IECC R401.2.5.1. Therefore, to ensure compliance with 
EISA, they stated that DOE's final standards should include such a 
requirement. (Joint Commenters, No. 1630 at p. 1, 2) The Attorneys 
General urged DOE to consider additional energy savings through 
efficiency package options such as those required by IECC R401.2.5.1 to 
ensure compliance with EISA. (Attorneys General, No. 1625 at p. 2, 4, 
6)
    RECA stated that the final rule should incorporate the additional 
efficiency options of equivalent energy savings. RECA commented that 
the fact that specific requirements in the IECC are not already adapted 
for use in manufactured housing does not release DOE from its 
obligation to set energy conservation standards that are consistent 
with the model code, and RECA urged DOE to reconsider this decision and 
to require a 5 percent improvement and/or to find other alternatives to 
achieve similar energy savings. (RECA, No. 1570 at p. 1, 2, 7) 
Earthjustice and Prosperity Now suggested that DOE is required to 
evaluate provisions of sections R401.2.5 and R408 of the 2021 IECC. 
They stated that DOE has not yet determined whether this requirement 
would be cost-effective. Further, they suggested that HRV/ERVs (i.e., 
heat recovery and energy recovery ventilators) must be addressed. They 
commented that DOE is required to consider the statutorily-mandated 
analysis and must address this defect in the final rule. (Earthjustice 
and Prosperity Now, No. 1637 at p. 7) Major mentioned that furnaces in 
MH are always oversized and that there are no furnace standards 
mentioned in the document. (Major, No. 1023 at p. 1)
    NRECA stated that they have researched upgrading the ``shell'' or 
envelope of the manufactured home through rebates but doing so did not 
make sense once applying a cost-benefit analysis. Instead, they 
suggested focusing on upgrading the heating/cooling of the manufactured 
home made the most economic sense. NRECA stated that the most effective 
way to both improve efficiency in manufactured homes and lead to lower 
electricity bills for their consumer-members is by upgrading to high-
efficiency heat pumps in the heating systems of these homes up front, 
before the home is delivered. They suggested that providing rebates to 
install high-efficiency heat pumps in new or existing MH would be 
helpful. (NRECA, No. 1406 at p. 1, 3)
    NEEA recommended inclusion of the five IECC options plus a 
``limited house size'' option. For enhanced envelope performance, not 
only did NEEA encourage DOE to increase the attic insulation to align 
with the IECC 2021 prescriptive path, but also to insert an additional 
efficiency package focused on envelope improvements that could reward 
manufacturers who are already building efficient envelopes. (NEEA, No. 
1601 at p. 4) For more efficient HVAC, NEEA encouraged an additional 
efficiency package that requires air-source heat pumps instead of 
electric furnaces or electric baseboard heat will have significant 
energy and cost savings (NEEA found that 40 percent of MH use low 
efficiency electric furnaces). NEEA encouraged DOE to require 10 HSPF/
16 SEER air source heat pumps, which aligns with IECC 2021. For gas 
furnaces in manufactured homes, NEEA encouraged requiring a 95 percent 
AFUE condensing gas furnace plus 16 SEER air conditioning unit, which 
would be installed instead of a non-condensing gas furnace. NEEA 
referenced a study that suggested that there is an incremental cost of 
$217 for a 95 AFUE gas furnace compared to current practice baseline 
assumed at 92 AFUE. (NEEA, No. 1601 at pp. 4-5)
    For reduced energy use in service water heating, NEEA encouraged 
DOE to consider more efficient heat pump water heaters and tankless gas 
water heaters. Due to challenges in retrofitting heat pump water 
heaters into manufactured homes after initial construction, NEEA 
recommends encouraging their installation during initial construction. 
For distribution or ductwork, NEEA encouraged ductless heat pump 
(``DHP'') solutions that eliminate all energy losses due to ductwork. 
They suggested that allowing a 10 HSPF/16 SEER DHP option to satisfy 
the distribution criteria could lead to significant energy savings. 
Alternatively, NEEA suggested that bringing ducts inside the building 
shell to reduce the amount of heat loss external to the building. 
(NEEA, No. 1601 at p. 5) Regarding enhanced air sealing, NEEA stated 
that technology such as pressurized whole-building air sealing could be 
used in a warehouse and result in a very low-infiltration rate of the 
building shell. Further, they suggested an Energy Recovery Ventilator 
(``ERV'') or Heat Recovery Ventilator (``HRV'') for continuous 
mechanical ventilation could address poor air quality. Finally, NEEA 
encouraged a sixth additional efficiency option package based on 
limited house size.

[[Page 32767]]

They suggested that manufacturers could build a single wide home to the 
untiered standards and select the limited house size option (i.e., they 
would not need to choose one of the five additional energy package 
options). For multi-section homes, however, NEEA suggested these homes 
would still need to select from the five other options. (NEEA, No. 1601 
at p. 6)
    ACEEE stated that a heat pump for cooling and heating, a heat pump 
water heater, a better thermal distribution system, better air sealing 
and ventilation, and possibly a better envelope all may be cost-
effective options for additional savings. They stated that heat pumps 
can provide highly efficient heating (especially compared to electric 
resistance heat, the most common source in MH) and that heat pump water 
heaters also can provide large energy and carbon savings at a 
reasonable cost. ACEEE further provided a detailed study, with costs 
and energy savings, for including a heat pump option for manufactured 
homes.\42\ (ACEEE, No. 1631 at p. 6) VEIC strongly recommended DOE 
adopt the additional efficiency package options requirement and modify 
the package options as appropriate to manufactured housing. They stated 
that only one option needs to be selected to demonstrate cost-
effectiveness of the code overall, and provided an example of one 
potential package option, where ductwork was brought inside the thermal 
envelope by a factory located in New England. They stated that these 
duct designs could easily be integrated into a manufactured home 
assembly line. (VEIC, No. 1633 at p. 7, 8)
---------------------------------------------------------------------------

    \42\ Bell-Pasht, A., and L. Ungar. 2021. Strong Universal Energy 
Efficiency Standards Will Make Manufactured Homes More Affordable. 
Washington, DC: American Council for an Energy-Efficient Economy. 
aceee.org/white-paper/2022/01/strong-universal-energy-efficiencystandards-manufactured-homes.
---------------------------------------------------------------------------

    On the other hand, MHI stated that HRV and ERV provisions would add 
significantly to the cost (because of redesign and construction) of 
manufactured homes. (MHI, No. 1592 at p. 25) MHCC also stated that HRV 
and ERV systems are not cost effective for manufactured housing and 
have proven to be problematic in certain climate zones (without 
providing further details as to why). (MHCC, No. 1600 at p. 11)
    Regarding costs, Schulte stated that the costs and energy savings 
for the five additional efficiency packages in the IECC have been 
evaluated by several organizations. The first is the National 
Association of Home Builders Home Innovation Research Lab Report No. 
CR1391: 2021 IECC Residential Cost Effectiveness Analysis.\43\ The 
report covered the five additional efficiency options based on a 2,500 
square foot standard reference single family home and the changes from 
the 2018 to the 2021 IECC standards. The report concluded that the five 
optional efficiency packages would have very long simple paybacks 
ranging from 20 years for the water heater to as much as 90 years for 
the improved ventilation, electric house with improved air tightness. 
The enhanced water heater had substantially shorter payback periods 
than the HVAC or duct sealing options. Schulte stated that the water 
heater option might be cost efficient, but even that option has a 
payback period of 20 years. Further, they referenced the PNNL-31440 
Report \44\ which they stated confirms the other findings that optional 
efficiency measure R408.2.3 for water heaters is the most cost-
effective way to achieve the 5 percent additional reduction in energy 
usage. (Schulte, No. 1028 at p. 24-25)
---------------------------------------------------------------------------

    \43\ Home Innovation Research Labs. 2021. 2021 IECC Residential 
Cost Effectiveness Analysis; Report No. CR1391_06112021. https://www.nahb.org/-/media/NAHB/advocacy/docs/top-priorities/codes/code-adoption/2021-iecc-cost-effectiveness-analysis-hirl.pdf.
    \44\ PNNL-31440 prepared for U.S. DOE; July 2021; Energy Savings 
Analysis: 2021 IECC for Residential Buildings; https://www.energycodes.gov/sites/default/files/2021-07/2021_IECC_Final_Determination_AnalysisTSD.pdf.
---------------------------------------------------------------------------

    As discussed in the August 2021 SNOPR and further in this section, 
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, 
DOE did not consider the more efficient HVAC equipment performance and 
reduced energy use in service water heating options. 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. This option in the 
2021 IECC focuses 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, and therefore is not appropriate for this rule. (42 U.S.C. 
17071(b)(2)) Finally, for the enhanced envelope performance option, DOE 
was unable to incorporate this requirement given the building thermal 
envelope energy efficiency measure limitations based on the space 
constraints of manufactured homes. 86 FR 47744, 47773-47774
    For the remaining efficiency package option, i.e., improved air 
sealing and efficient ventilation system option, DOE acknowledges the 
possibility of achieving additional energy savings for manufactured 
homes, as suggested by commenters. In the August 2021 SNOPR, DOE 
presented the Building Energy Codes Program (``BECP'') analysis on HRVs 
and stated that that it had not yet determined whether including HRV or 
ERV would be cost-effective for manufactured homes. 86 FR 47744, 47774. 
Accordingly, DOE requested costs and savings data associated with this 
requirement (in addition to the other additional efficiency package 
options). Id. DOE did not receive any data regarding the cost-
effectiveness of the ERV/HRV requirement. At this time, DOE does not 
have sufficient data to provide a reasonable assessment of these 
measures when applied to manufactured homes as required by the EISA 
statute. In other words, DOE is unable to determine whether these 
measures are appropriate for manufactured homes when considering the 
unique design and construction techniques of these homes and whether 
such measures would be cost-effective when applied to them. 
Accordingly, DOE is not considering these additional efficiency package 
options in this final rule. However, DOE will continue to accept any 
data regarding these measures and may consider these options in any 
future rulemakings.
Tier 2 Exterior Wall Insulation Requirement
    In the August 2021 SNOPR, DOE proposed R-20+5 insulation for 
climate zone 2 and 3 for the Tier 2/Untiered standard to be consistent 
with the 2021 IECC. 86 FR 47744, 47772. DOE received a number of 
comments on the proposed Tier 2 Climate Zones 2 and 3 proposed R-20+5 
continuous exterior wall insulation requirement.
    VEIC applauded DOE's inclusion of a continuous insulation 
requirement for zones 2 and 3. VEIC recommended that DOE maintain the 
2021 IECC alternative prescriptive approaches to obtaining the intended 
exterior wall efficiency, by specifically including the additional 
prescriptive wall insulation options within the prescriptive 
requirements table, i.e., the 2021 IECC Table R402.1.3 minimum 
insulation R-value requirement for wood frame walls is written as 
follows: R-20+5 or 13+10 or 0+20. (VEIC, No. 1633 at p. 5) NEEA 
encouraged DOE not to revert to R-21 as explored in the NODA. They 
stated that continuous wall insulation reduces thermal bridging and 
increases occupant

[[Page 32768]]

comfort, and they stated that there is evidence of potential cost 
savings from stick-built practices. NEEA recommended keeping the 
continuous insulation provision to align with IECC in Climate Zones 2 
and 3, and that Climate Zone 1 better aligns with 2021 IECC currently. 
(NEEA, No. 1601 at pp. 4, 16)
    ACC FSC suggested that DOE consider alternatives to 2 x 6 R-20 
construction for Climate Zones 2 and 3 in the Tier 2 provisions.\45\ 
They stated that 2 x 4 construction is much more common and suitable 
for manufactured housing, and recommended that if a compromise to the 
IECC levels of wall performance is needed, the most practical and 
reasonable cost-effective solutions should turn to 2 x 4 wall assembly 
options which may include R-15+5, R-13+7.5, R-15+7.5, or similar 
prescriptive R-value solutions for HUD Zones 2 and 3. They stated that 
the alternatives (R-15+5, R-13+7.5, or R-15+7.5) will make use of and 
employ the mentioned economic and performance benefits of a 
continuously insulated wall assembly, will more closely maintain the 
basis of the 2021 IECC, and will make modifications to better 
accommodate the practical constraints of manufactured housing as the 
authority given to DOE in EISA allows. (ACC FSC, No. 1364 at p. 2)
---------------------------------------------------------------------------

    \45\ In the energy simulation analysis, DOE considered a 2 x 6 
stud for any R-values at or greater than R-19 and a 2 x 4 stud for 
any R-values less than R-19. Chapter 7, Section 7.4.2 of the August 
2021 SNOPR TSD.
---------------------------------------------------------------------------

    Further, ACC FSC commented that the R-20+5 analysis misses the 
benefits of foam plastic continuous insulation by protecting the wall 
assembly from moisture and condensation by providing an insulation 
ratio effect that is effective in HUD Zones 2 and 3. They commented 
that the benefits tend to result in better performing and more 
resilient manufactured homes, which will also tend to improve the 
economics of home-ownership by having extended life-expectancy 
(typically more than 40-years, not 30-years as assumed by DOE). ACC FSC 
also commented that vapor and moisture control strategies are 
inextricably linked to energy efficiency measures such as insulation 
properties, amount, and location on the assembly. (ACC FSC, No. 1364 at 
p. 2-3) Finally, ACC FSC stated that the R-20+5 vs. R-21 wall 
insulation analysis missed the economic benefit of having reduced 
heating/cooling load and equipment sizing with the R-20+5 option, and 
that this benefit would also apply to consideration of the above-
mentioned R-15+5, R-13+7.5, and R-15+7.5 alternatives. (ACC FSC, No. 
1364 at p. 3)
    On the other hand, Schulte stated it is not clear that the energy 
savings for R-20+5 will offset the added investment cost, and therefore 
DOE should defer imposition of the R-20+5 requirement until it can 
demonstrate its cost effectiveness. (Schulte, No. 1028 at p. 23) Cavco 
stated that homes built for thermal zones 2 and 3 will no longer allow 
for 2 x 4 wall construction but will require 2 x 6 walls with rigid 
foam insulation. They stated that this simple change increases the cost 
of materials, adds steps to the production process, decreases the 
available habitable space and requires floor plans to be redrawn and 
resubmitted. Cavco stated that this large jump is not cost justified, 
especially when considering the impact to the production process. 
(Cavco, No. 1497 at p. 2)
    In response to the August 2021 SNOPR and October 2021 NODA, Clayton 
Homes commented that insulated foam sheathing is not a good option for 
manufactured homes because it adds a layer of flexible foam product 
between rigid framing and sheathing materials, which adversely impacts 
homes transportation performance. (Clayton Homes, No. 1589 at p. 4, 6) 
Clayton Homes stated that R-21 wall insulation without a continuous 
insulation should be the benchmark requirement in Climate Zones 2 and 
3. (Clayton Homes, No. 1589 at p. 16) MHI stated that the requirement 
of R-20 in the exterior wall will force the sidewall to 2 x 6 
construction resulting in the following: (1) The installation of the 
exterior insulation will be more costly for manufacturers to install, 
stemming from the overall cost of the home being higher from the 
increased material and labor costs; (2) The exterior insulation will 
also require most plants to re-work their production stations to allow 
time for this installation; (3) The exterior insulation will also 
create an additional problem for fastening the exterior finish siding 
since the siding would now have to be fastened thru the exterior 
insulation--currently, there are no approved fasteners to penetrate 
through the 1-inch exterior insulation and the fasteners themselves 
would also have to support the siding during transportation; (4) 
Windows and doors will need to be installed on framed extensions to 
pack out nailing surfaces to the thickness of the continuous R-5 
insulation; (5) Continuous flashing may be required at the bottom edge 
of the rigid insulation layer to protect from exposure to weather and 
infestation; and (6) The extra thickness of insulation on the exterior 
wall would either increase the shipping width or decrease the habitable 
space on the interior. Accordingly, MHI stated that for houses 
currently designed to maximize the legal shipping width, there is no 
additional width available on the exterior, and therefore, the space 
for the exterior insulation on these homes would have to be taken from 
the interior of the home. (MHI, No. 1592 at p. 8) Further, MHI stated 
that the use of continuous insulation is problematic due to the 
required changes in design, associated costs, and need for products 
that do not exist. Additionally, they stated that the R-20 wall 
insulation listed in Tier 2 for zones 2 and 3 may not be readily 
available in roll form, as typically used in production. In addition, 
they commented that having a continuous insulation on the outside of 
the studs may become problematic for siding installation due to 
transportation. Accordingly, MHI recommended revising 20+5 wall R-
values to R-21 or R-13+5. Further, they stated it will be difficult to 
source a material to use as the R-5 continuous exterior insulation that 
will meet the requirements of the proposed changes as well as the 
current HUD Code.\46\ MHI stated that the perm ratings of the rigid 
foam may also lead to redundant vapor barriers and stud cavities that 
may not breathe properly, and therefore this may be a potential area 
where the proposed changes and the current HUD Code may have a 
conflict. (MHI, No. 1592 at p. 6, 17, 29); (Clayton Homes, No. 1589 at 
p. 9, 21)
---------------------------------------------------------------------------

    \46\ Section 3280.504 has requirements for the perm rating of 
the exterior wall assemblies.
---------------------------------------------------------------------------

    In response to the January 2022 DEIS, however, Clayton Homes and 
MHI provided alternative recommendations. They recommended that DOE 
change the exterior wall insulation R-value for Climate zone 2 to R-13, 
and for Climate Zone 3 to R-15. In addition, they recommended that DOE 
change the U-factor alternative for the exterior wall insulation to 
0.094 for Climate Zone 2, and 0.076 for Climate Zone 3. (Clayton Homes, 
No. 1986 at p. 13); (MHI, No. 1990 at p. 16)
    MHCC also stated that an R-20+5 exterior wall insulation is neither 
cost effective or feasible for MH, asserting that implementing 
continuous exterior wall insulation would negatively impact throughput 
rates of manufacturers and significantly increase overall costs. (MHCC, 
No. 1600 at p. 7, 12) Skyline Champion commented that the requirement 
of continuous R-5 insulation in thermal zones 2 and 3 not only adds 
significant direct material and labor expense but also adds indirect 
material and labor costs. Indirect costs

[[Page 32769]]

like flashing, window/door installations, jamb extensions, sliding 
installation changes, soffit and floor width impacts are some of the 
costs that Skyline Champion argued DOE's analysis may have not properly 
captured. Skyline Champion recommended holding prescriptive R-values in 
wall assemblies to R-19 for zones 2 and 3 for tier 2 and adjust overall 
U-values accordingly. (Skyline Champion, No. 1627 at p. 2); (Champion 
Home Builders, No. 1639 at p. 2)
    In this final rule, DOE is requiring R-21 insulation instead of the 
August 2021 SNOPR proposed R-20+5 for the prescriptive requirements for 
Tier 2 climate zone 2 and 3. As presented in the August 2021 SNOPR (and 
with updated inputs in the October 2021 NODA), both the R-20+5 and R-21 
Tier 2 30-year life-cycle cost savings results for the nation are 
positive. 86 FR 59042, 59048. However, San Francisco resulted in 
negative Tier 2 30-year LCC savings for R-20+5, which is not the case 
for R-21. 86 FR 47744, 47802; 86 FR 59042, 59055.
    EISA requires consideration of cost-effectiveness of the standards 
(42 U.S.C. 17071(a) and (b)(1)) and the design and factory construction 
techniques of manufactured homes (42 U.S.C. 17071(b)(2)). As discussed 
in section III.A of this document, DOE determined the cost-
effectiveness of the standards by considering the LCC savings over the 
life of the manufactured home not only for the nation, but also for 
each city analyzed. Therefore considering at least one city during the 
30-year analysis in Tier 2 resulted in negative LCC savings with R-20+5 
exterior wall insulation, in this final rule, DOE is adopting the next 
stringent insulation, R-21 for Tier 2. Further, DOE was unable to 
assess the other implications presented by the stakeholders at this 
time, including but not limited to the limitations on including R-20+5 
with the design of the home. DOE needs to conduct further study on the 
full implementation of the continuous insulation requirement on 
manufactured homes, and therefore is not including this requirement at 
this time. Finally, adopting R-21 instead of R-20+5 also resolves 
issues regarding shipping width that the stakeholders commented on, 
which is discussed in a following section. However, DOE is open to 
receiving further data to consider this requirement in future 
standards.
    DOE notes, however, that requiring R-21 for Tier 2 prescriptive 
standards does not preclude manufacturers in using R-20+5 to comply 
with Tier 2 prescriptive standards. Further, the performance method 
(i.e., Uo) allows manufacturers flexibility in using any combination of 
energy efficiency measures as long as the minimum Uo is met, including, 
but not limited to, R-20+5.
    DOE also received other comments regarding exterior wall 
insulation. NAIMA commented that the standards should include minimum 
mandatory wall insulation requirements under 460.102(c) of the 
regulatory text, consistent with the 2021 IECC, which includes minimum 
insulation requirements for performance path compliance. They 
recommended a mandatory minimum wall insulation requirement of R-13 in 
Tier 1 and Climate Zone 1 Tier 2 homes and R-21 in Climate Zones 2-3 
Tier 2 homes when a builder selects the performance path for standards 
compliance. (NAIMA, No. 1017 at p. 2) The 2021 IECC does not have a Uo-
based performance path. However, the 2021 IECC does include a ``Total 
UA alternative'' requirement in R402.1.5, which is similar in concept 
to Uo in that the calculation is done using the component U-factor and 
the component area. As such, R402.1.5 of the 2021 IECC only provides 
additional requirements for fenestration SHGC and maximum U-factors, 
and does not include additional requirements for exterior wall 
insulation. Accordingly, DOE is only including additional requirements 
for fenestration SHGC and maximum U-factors in 460.102(c)(2)-(4).
    ACC FSC requested that the wall U-factors (associated with the 
prescribed R-values) in Tables 460.102-3 and 460.102-4 be revised 
(decreased) to be consistent with a typical or ``default'' framing 
factor of 15 percent and that the Uo values in Tables 460.102-5 and 
460.102-6 be adjusted accordingly, as opposed to the 25 percent that 
was used for the baseline framing for walls. They stated that the Uo 
approach (and the referenced Battelle Method) provide a default value 
of 15 percent for typical manufactured housing walls (see also HUD Code 
Section 3280.509). (ACC FSC, No. 1364 at p. 4) DOE notes that the 
Battelle Method report cites the 1989 ASHRAE Handbook of Fundamentals 
(``HoF'') as the source of the 15 percent framing factor for exterior 
walls with 16'' on center (o.c.). The 1993 edition of the ASHRAE 
handbook, however, updated the framing factor for exterior walls 16'' 
o.c. to 25 percent and all successive editions through the 2021 edition 
of the HoF have included a 25 percent factor. In addition, a 25 percent 
framing factor was used during the MH working group negotiations. At 
this time, DOE has not found any data on whether framing factors should 
be lower for manufactured housing. Therefore, DOE continued to use 25 
percent framing factor as part of the analysis.
Tier 2 Exterior Ceiling Insulation Requirement
    In the August 2021 SNOPR, for the untiered/Tier 2 standard, DOE 
proposed R-30 for climate zone 1 and 2, and R-38 for climate zone 3. 
DOE proposed not to incorporate the minimum ceiling R-value updates 
from the 2021 IECC given the physical space constraints of manufactured 
homes. Accordingly, DOE proposed ceiling insulation requirements that 
were consistent with the June 2016 NOPR requirements (as recommended by 
the MH working group), updated from four climate zones to three climate 
zones. 86 FR 47744, 47772. DOE received multiple comments regarding the 
exterior ceiling insulation requirement.
    MHI stated that due to the thicker insulation of R-30 in the 
ceiling, the proposed standards state that a 5.5-inch truss heel height 
would be required. This change in the truss profile will affect the 
overall shipping height of the home unless other conciliatory changes 
are made. (MHI, No. 1592 at p. 6, 8) Further, MHI stated that for the 
exterior ceiling insulation as R-38, the depth of insulation will be 
difficult to achieve on lower sloped roofs and cathedral style truss 
profiles. (MHI, No. 1592 at p. 8) Skyline Champion stated that 
requirements for ceiling insulation and heel height will force 
significant truss re-designs to accommodate energy heels and shipping 
limitations in many circumstances. Popular design options may be 
severely limited or eliminated due to increased cavity volume 
requirements of the truss profiles. Regarding climate zone 3 floor 
insulation, they suggested that all homes will require increased floor 
joist sizes to create enough space in joist cavities for additional 
insulation requirements, leading to additional labor and materials that 
are likely not properly reflected in cost calculations. (Skyline 
Champion, No. 1627 at p. 2); (Champion Home Builders, No. 1639 at p. 3)
    On the other hand, VEIC stated that they have worked with factory 
partners that have demonstrated the ability to cost-effectively install 
insulation levels above R-38 in the ceiling/roof assembly and still 
maintain overall height requirements of MH. They presented an example 
of an MH design that allows for a ceiling insulation system that 
accommodated R-38 uncompressed and continuous insulation over the 
entire attic with 7.5-8.5' ceiling height and a 3/12 pitch roof system. 
They stated that blocking is utilized at the eaves to

[[Page 32770]]

ensure that full-height insulation can be a simple low-cost application 
such as a cardboard product. Accordingly, VEIC suggested that if DOE 
intends to maintain the R-38 ceiling insulation requirement for zone 3, 
they recommend the standards also require that R-38 is installed 
uncompressed at full height over 100 percent of the ceiling or attic 
area extended over the wall top plate at the eaves, as per 2021 IECC 
Section R402.2.1. Alternatively, DOE could set higher R-value standards 
with the allowance for a lower R-value when installed uncompressed over 
the entire ceiling area. (VEIC, No. 1633 at pp. 3-5)
    As discussed previously, DOE took into consideration the range of 
efficiency measures originally considered by the MH working group that 
was appropriate for manufactured home design, which included the 
following: Exterior ceiling R-22 to R-38. DOE notes that ceiling height 
constraints in manufactured homes limit the amount of ceiling 
insulation that can be installed without compression. While NEEM and 
NEEM+ homes require ceiling insulation of R-40 and R-44 respectively, 
DOE conducted the analysis up to ceiling insulation levels of R-38 
based on the recommendations of the MH working group. DOE notes that 
typical R-30 and R-38 insulation has thicknesses of approximately 9.7'' 
and 12.3'' respectively. A common MH home truss design is 17'' deep at 
the marriage line and can accommodate these levels of insulation, 
except the compression at the eaves. Accordingly, DOE understands that 
there is enough room in the truss to accommodate higher insulation 
without having to redesign. Further, DOE confirmed with an industry 
expert in the Pacific Northwest that almost all manufactured home 
trusses can accommodate ceiling insulation up to R-40. While DOE did 
not consider ceiling insulation levels beyond R-38, DOE notes that 
almost all roof truss designs can accommodate insulation up to R-40, 
but there is a very small incremental improvement in thermal 
performance between R-38 and R-40. The MH working group also did not 
consider the requirements regarding uncompressed insulation in R402.2.1 
of the 2015 IECC (which is also included in the 2021 IECC), and 
therefore did not assess the cost-effective impact as part of this 
rulemaking. DOE will plan to consider these updates in future 
rulemakings.
    Further, as stated by VEIC, homes are currently being built with 
insulations at the higher end of the range, with no issues with 
transportation. In addition, even current ENERGY STAR requirements, 
under the envelope-only package, require ceiling insulation at R-
38.\47\ DOE also confirmed that the Northwest Energy-Efficient 
Manufactured Housing Program (NEEM)+ homes,\48\ which go beyond ENERGY 
STAR and provide ceiling insulation up to R-44, do not deal with 
transportation issues because of the added insulation.
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    \47\ Further details on specification can be found here: 
www.energystar.gov/newhomes/energy_star_manufactured_homes.
    \48\ Further details on specification can be found here: https://www.neemhomes.com/efficiency-certified/#what-is-neem-plus.
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    Finally, DOE notes that manufacturers can also comply with the 
standards using the performance, Uo, method, which gives manufacturers 
the flexibility in using any combination of energy efficiency measures 
as long as the minimum Uo is met. Accordingly, DOE is unpersuaded that 
the Tier 2 ceiling insulation requirements will significantly limit 
design options, necessitate changes in truss profiles, or impact 
transportation of MH models, and therefore DOE maintains the August 
2021 SNOPR Tier 2 exterior ceiling insulation requirements in this 
final rule.
Tier 2 Exterior Floor Insulation Requirement
    In the August 2021 SNOPR, for the untiered/Tier 2 standard, DOE 
proposed R-13 for climate zone 1, R-19 for climate zone 2, and R-30 for 
climate zone 3. DOE did not identify any updated floor insulation 
requirements in the 2021 IECC applicable to manufactured homes. 
Accordingly, DOE proposed floor insulation requirements that were 
consistent with the June 2016 NOPR requirements (as recommended by the 
MH working group), updated from four climate zones to three climate 
zones. 86 FR 47744, 47772. DOE received multiple comments regarding the 
exterior floor insulation requirements.
    Several commenters suggested that for Climate Zone 3, most floors 
are constructed with 2 x 6 framing but with an R-30 insulation 
requirement, DOE analysis assumes 2 x 8 floor joist and insulation 
thicknesses that exceed 5.5-inches, which cannot reasonably be assumed 
in HUD home construction. Further, they stated that placing more than 
R-11 blankets under the floor joists cannot be done without offsetting 
outriggers and providing blocking between joists because compressing 
more than R-11 insulation between an outrigger and a joist results in 
noticeable humps in the floor at each outrigger location. (MMHA, No. 
995 at p. 2); (Michigan MHA, No. 1012 at p. 1-2); (WHA, No. 1025 at p. 
1-2); (PMHA, No. 1165 at p. 1-2); (Westland, No. 1263 at p. 1-2); 
(Pleasant Valley, No. 1307 at p. 1-2); (American Homestar, No. 1337 at 
p. 1-2); (Oliver Technologies, No. 1350 at p. 1-2); (KMHA, No. 1368 at 
p. 1-2); (Adventure Homes, No. 1383 at p. 1-2); (Clayton Homes, No. 
1589 at p. 22)
    MHI stated that DOE's analysis assumes that the floor joists are 2 
x 6 with insulation up to and including R-22, and 2 x 8 floor joists 
insulated to R-30 and above. They stated that currently, 90 percent of 
floors produced use 2 x 6 floor joists. They also stated that the 2'' 
floor joist change will also increase the shipping height. (MHI, No. 
1592 at p. 25-26); (Clayton Homes, No. 1589 at p. 16-18, 22); (MHCC, 
No. 1600 at p. 6) In response to the January 2022 DEIS, MHI recommended 
that DOE change the exterior floor insulation R-value for Climate zone 
3 to R-25. In addition, they recommended that DOE change the U-factor 
alternative for the exterior floor insulation to 0.036 for Climate Zone 
3. (Clayton Homes, No. 1986 at p. 11, 13); (MHI, No. 1990 at p. 15, 16)
    As previously stated, DOE did not update the Tier 2 exterior floor 
insulation requirements from those recommended by the MH working group 
in the term sheet, besides updating the June 2016 NOPR-proposed four 
climate zones to the August 2021 SNOPR-proposed three HUD zones. NEEM+ 
homes provide floor insulation at R-33, and do not deal with 
transportation issues because of the added insulation. Even though the 
analysis assumes 2 x 8 floor joists for floor insulation above R-30, 
DOE notes NEEM homes meet R-33 floor insulation by incorporating a 
combination of R-11 blankets and R-22 in 2 x 6 joists and R-33 belly 
insulation below joists.\49\ Finally, even current ENERGY STAR 
requirements, under the envelope-only package, require floor insulation 
in Climate Zone 3 at R-33. Accordingly, considering current techniques 
can still be implemented, DOE is unpersuaded that the Tier 2 floor 
insulation requirements will significantly impact shipping height and 
result in transportation issues.
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    \49\ See Figure 2 on page 10--https://static1.squarespace.com/static/5b10a91989c172d4391ab016/t/5b45160b2b6a286e299e4ba5/1531254288322/3157.pdf.
---------------------------------------------------------------------------

    Finally, DOE notes that manufacturers can also comply with the 
standards using the performance, Uo, method, which gives manufacturers 
the flexibility to use any combination of energy efficiency measures as 
long as

[[Page 32771]]

the minimum Uo is met. Accordingly, DOE maintains the August 2021 SNOPR 
Tier 2 exterior floor insulation requirements in this final rule.
Tier 2 Fenestration Requirements
    In the August 2021 SNOPR, for the untiered/Tier 2 standard, DOE 
proposed the following window U-factors: 0.32 for climate zone 1, 0.30 
for climate zone 2, and 0.30 for climate zone 3. In addition, DOE also 
proposed the following glazed fenestration SHGCs: 0.33 for climate zone 
1, 0.25 for climate zone 2, and ``not applicable'' for climate zone 3. 
DOE proposed window U-factors consistent with the 2021 IECC. For the 
SHGC, DOE proposed requirements based on the updated window U-factors, 
and the recommendations by the MH working group. 86 FR 47744, 47772. 
DOE received multiple comments regarding fenestration requirements.
    VEIC stated that the SHGC requirements of the Tier 2/untiered 
proposal run contrary to best practice, and to IECC requirements. They 
stated that lower SHGC should be required in warmer climate zones. At 
minimum, VEIC recommends reversing the SHGC requirements for zone 1 and 
zone 2. (VEIC, No. 1633 at p. 6, 7) ACEEE stated that the proposed 
standards have higher (less stringent) SHGC values in Climate Zone 1 
than in Climate Zone 2 and none in Climate Zone 3. They stated that 
this difference is counter to the IECC and to the logic of increased 
savings where there is increased sunlight and it should be corrected. 
(ACEEE, No. 1631 at p. 8) RECA also recommended that DOE set the 
maximum SHGC for both Climate Zones 1 and 2 at 0.25, which is 
consistent with the 2021 IECC requirement for IECC climate zones 1-3 
and has been in the IECC since the 2012 edition. RECA stated there is 
no reason why HUD Zone 1 should have a higher SHGC than Climate Zone 2. 
(RECA, No. 1570 at p. 6)
    During the MH working group negotiations, to determine the number 
of climate zones (which at the time was four climate zones), one of the 
building thermal requirements that DOE analyzed for cost-effectiveness 
was the window SHGC. For the June 2016 NOPR-proposed Climate Zone 1, 
DOE analyzed a range of window SHGC from 0.25 to 0.40. DOE proposed the 
most cost-effective SHGC requirement, which was 0.25. The MH working 
group agreed on the SHGC for Climate Zone 1 in the term sheet. See Term 
Sheet at 3. For the June 2016 NOPR-proposed Climate Zone 2, the MH 
working group recommended that DOE perform a sensitivity analysis of 
the total cost of ownership to determine the most cost-effective SHGC, 
rather than recommending a specific SHGC value in the term sheet. See 
Term Sheet at 3. DOE performed its SHGC sensitivity analysis using SHGC 
values of 0.25, 0.30, and 0.33. This analysis indicated an SHGC of 0.33 
had the greatest total cost of ownership savings; therefore, in the 
June 2016 NOPR, DOE proposed requiring a SHGC value of 0.33. Except for 
the SHGC, all other proposed building thermal requirements for the June 
2016 NOPR-proposed Climate Zones 1 and 2 were the same. 81 FR 39756, 
39772.
    In the August 2021 SNOPR, for the Tier 2 standards, DOE mapped the 
June 2016 NOPR climate zones (based on four climate zones) to the HUD 
zones (based on three climate zones). DOE used the manufactured home 
national shipment percentages for each of the cities analyzed,\50\ and 
the corresponding HUD zone and the June 2016 NOPR climate zone 
identifiers for each of the cities. For HUD 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 HUD Zone 1. The 
only difference between the June 2016 NOPR-proposed Climate Zone 1 and 
Climate Zone 2 energy efficiency measures was the glazed fenestration 
requirement. Therefore, in the August 2021 SNOPR, DOE proposed 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 HUD Zone 2. 86 FR 47744, 47772. This evaluation is consistent 
with the recommendations from the MH working group.
---------------------------------------------------------------------------

    \50\ 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 this final rule, DOE reassessed the cost-effectiveness of 0.33 
vs. 0.25 SHGC for Tier 2 Climate Zone 1. The new analysis continued to 
conclude that an SHGC of 0.33 is more cost-effective than 0.25. 
Therefore, consistent with the recommendation to require the more cost-
effective measure as part of the standards, DOE maintains the proposed 
0.33 SHGC for Tier 2 Climate Zone 1 in this final rule.
    DOE also received comments from MHI and Clayton Homes recommending 
that the prescriptive requirements for window U-factor be changed to 
0.5 for Climate Zone 1, 0.35 for Climate Zone 2, and 0.32 for Climate 
Zone 3, but did not provide any justification for these changes. (MHI, 
No. 1990 at p. 14, 15); (Clayton Homes, No. 1986 at p. 11) As 
previously noted, DOE proposed window U-factor requirements consistent 
with the 2021 IECC. Further, as discussed in section III.A of this 
document, DOE has determined the adopted Tier 2 requirements are cost-
effective based on the resulting positive 30-year LCC savings. 
Accordingly, DOE is adopting the August 2021 SNOPR proposal Tier 2 
window U-factors.
    MHI recommended adding the following language to section R402.3.4 
of the proposal: ``[R402.3.4] Opaque door exemption. One side-hinged 
opaque door assembly not greater than 24 square feet (2.22 m\2\) in 
area shall be exempt from the U-factor requirement in Section R402.1.2. 
This exemption shall not apply to the Total UA alternative in Section 
R402.1.5.'' (MHI, No. 1592 at p. 18) In the June 2016 NOPR, DOE did not 
propose adopting this requirement because excluding these types of 
doors from this proposed rulemaking also would represent the loss of a 
significant source of home energy conservation. 81 FR 39756, 39773. DOE 
carried this proposal forward with the August 2021 SNOPR. As such, in 
this final rule DOE continues to exclude this exemption for the same 
reason, consistent with what was proposed in the August 2021 SNOPR.
    Further, MHI recommended adding the following language to section 
R402.3.3 of the proposal: ``[R402.3.3] Glazed fenestration exemption. 
Not greater than 15 square feet (1.4 m\2\) of glazed fenestration per 
dwelling unit shall be exempt from the U-factor and SHGC requirements 
in Section R402.1.2. This exemption shall not apply to the Total UA 
alternative in Section R402.1.5.'' (MHI, No. 1592 at p. 26) MHCC also 
stated that the fenestration exemptions that exist in the 2021 IECC 
must also be included. (MHCC, No. 1600 at p. 7, 12) DOE notes that this 
specific requirement was deleted by the MH working group, and instead 
the recommendation was to supersede this requirement with the term 
sheet. See Term Sheet at 17. DOE discussed in the June 2016 NOPR that 
DOE did not propose to adopt this requirement because the prescriptive 
fenestration SHGC and U-factor requirements would apply to all 
fenestration. Given that 15 square feet represents a large portion of 
the overall fenestration area that comprises a manufactured home, DOE 
noted that the adoption of this requirement would potentially exclude 
from these requirements a significant source of energy conservation. 81 
FR 39756, 39773. DOE carried this proposal

[[Page 32772]]

forward with the August 2021 SNOPR. Therefore, in this final rule, DOE 
continues to exclude this exemption for the same reason consistent with 
what was proposed in the August 2021 SNOPR.
    As noted in the August 2021 SNOPR, based on comments and consistent 
with the 2015 and 2021 IECC, DOE proposed to remove the 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. MHI and MHCC agreed that DOE should not limit the amount 
of glazed fenestration. (MHI, No. 1592 at p. 26); (MHCC, No. 1600 at p. 
7, 12) As such, DOE is finalizing this proposal in this final rule.
Tier 2 Uo Performance Requirements
    MHI stated that the Untiered/Tier 2 standards requirements 
represent significant changes over the current HUD Code and will be 
more of a challenge to implement in a cost-effective manner. (MHI, No. 
1592 at pp. 7, 9) Clayton Homes and MHI commented that the proposed 
requirements should be significantly reduced (specifically, they 
encouraged DOE to lower proposed requirements within Climate Zone 3 to 
more closely align to IECC Climate Zone 3 requirements). (Clayton 
Homes, No. 1589 at p. 4, 6); (MHI, No. 1592 at p. 25)
    Schulte mentioned that there are already HUD-Code homes which have 
been designed and constructed to meet the 2009 IECC standards, and 
ENERGY STAR homes. However, the increase in home prices, especially in 
Zone 2 is significant and, in this zone, the life-cycle cost savings 
are relatively slight. Accordingly, they recommended adopting less 
stringent Uo values as a first action which would reduce the price 
increases and the impact on affordability, and suggested that the next 
version of the standards assess the level of state adoption of the 2021 
IECC code and address some of the other issues that have been deferred. 
(Schulte, No. 1028 at p. 19, 23, 26) Specifically, they recommended the 
following Uo: 0.081 for Climate Zone 1; 0.075 for Climate Zone 2, and 
0.060 for Climate Zone 3. (Schulte, No. 1028 at p. 13)
    MHI and Clayton Homes stated that in Climate Zone 2, based on the 
calculations MHI performed on the prototypical homes, the proposed Zone 
2 requirements would require many changes such as upgraded insulation, 
2 x 6 wall construction, upgraded windows, and taller truss heel. For 
Climate Zone 3, MHI was not able to satisfy the overall U factor 
requirements using common options that are available to most 
manufacturers. Upgrading insulation, 2 x 6 exterior walls, deeper 
trusses, deeper floor joists, and upgraded windows did not lower the 
overall U-factor enough to meet the proposed requirements. However, for 
the calculations that MHI performed, they did not evaluate the addition 
of continuous exterior insulation due to the installation and 
transportation issues involved with this product. Accordingly, MHI 
recommended the following changes for the Uo requirements: Change 
Climate Zone 1 total Uo to 0.093 for single-section and 0.090 for 
multi-section; change Climate Zone 2 total Uo to 0.081 for single-
section and 0.076 for multi-section and the Climate Zone 3 total Uo to 
0.065 for single-section and 0.061 for multi-section. (MHI, No. 1990 at 
p. 17); (Clayton Homes, No. 1986 at p. 13) Clayton Homes had the same 
recommendations, however instead elected to change the Climate Zone 3 
total Uo to 0.064 for multi-section.
    On the other hand, NEEA stated that more than half of the 
manufactured homes in the Northwest are built with a Uo equal to Tier 2 
of the August 2021 SNOPR. They stated that they have been applying 2 x 
6 frame walls to homes for the past 14 years. (NEEA, No. 1601 at p. 14) 
Further, NEEA commented that industry and others have made false claims 
that the incremental cost of a home should be based on internal floor 
area of the homes, suggesting that increasing framing in Climate Zone 3 
from 2 x 4 to 2 x 6 stud walls would increase the cost per square foot 
of the home. They stated that DOE should avoid this logic as it 
presumes homes are sold based on interior floor area when in fact the 
advertised area of a manufactured home is on the exterior frame 
dimensions of the house. (NEEA, No. 1601 at p. 10)
    As discussed previously, in developing the set of Tier 2 energy 
efficiency measures, DOE's objective was for it to be 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)) As such, in the 
analysis, DOE took into consideration the range of efficiency measures 
originally considered by the MH working group that was considered 
appropriate for manufactured home design, which included the following: 
exterior ceiling R-22 to R-38; exterior wall R-11 to R-21+5; exterior 
floor R-11 to R-30; window U-factor U-1.08 to U-0.30; and window SHGC 
0.7 to 0.25. (See chapter 5 of the final rule TSD) DOE did not consider 
any energy efficiency measures beyond the ranges considered by the MH 
working group.
    DOE notes that adopted Tier 2 requirements in this final rule will 
only update the window U-factor requirements for all climate zones 
compared to the term sheet agreed upon by the MH working group (window 
U-factor: 0.35 and 0.32; to 0.32 and 0.30 respectively). The window U-
factors were updated consistent with the 2021 IECC. Otherwise, the 
remaining Tier 2 EEMs are consistent with the recommendations from the 
MH working group, except based on three climate zones (as opposed to 
the four climate zones recommended in the Term sheet). As discussed in 
section III.A of this document, DOE has determined that the adopted 
Tier 2 requirements are cost-effective because of the positive LCC 
savings over the life of the manufactured home for both the nation, and 
every city analyzed. As such, Table III.6 presents the amended building 
thermal envelope prescriptive requirements. DOE used the Battelle 
Method to determine the associated Uo performance values, which are 
provided in Table III.9.
Construction and Transportation
    DOE received multiple comments that the Tier 2/untiered building 
thermal envelope requirements will make transportation of manufactured 
homes incredibly challenging, as many states have height restrictions 
that will be impossible to meet due to the new design requirements. 
(MMHA, No. 995 at p. 2); (Michigan MHA, No. 1012 at p. 1-2); (WHA, No. 
1025 at p. 1-2); (PMHA, No. 1165 at p. 1-2); (Westland, No. 1263 at p. 
1-2); (Pleasant Valley, No. 1307 at p. 1-2); (American Homestar, No. 
1337 at p. 1-2); (Oliver Technologies, No. 1350 at p. 1-2); (KMHA, No. 
1368 at p. 1-2); (Adventure Homes, No. 1383 at p. 1-2); (Clayton Homes, 
No. 1589 at p. 22); (IMHA, No. 1453 at p.1)
    PMHA commented that their factories are concerned that several of 
the proposed changes will change the building thermal systems, which in 
turn will affect the overall shipping height and width of a home. By 
increasing the truss heel height, increasing floor joist depth and 
adding insulation outside of the studs, the overall shipping envelope 
would change and in most cases be significant. They stated that homes 
built in Pennsylvania are sold throughout the Northeast and Mid-
Atlantic (70 percent of production is shipped outside of Pennsylvania) 
and that the Northeast relies heavily on the Pennsylvania factories for 
supply. They stated that the Northeast has the most restrictive laws

[[Page 32773]]

for transporting manufactured homes. (PMHA, No. 1165 at p. 2) PMHA 
commented that most of Pennsylvania's market region limits height to 
14'6'' when transporting homes, whereas several states such as 
Connecticut and Massachusetts limit height to 13'6''. They stated that 
the highways in Connecticut and Massachusetts are vital when shipping 
homes to homebuyers in Vermont, New Hampshire and Maine. PMHA commented 
that Pennsylvania would not entertain future efforts to increase the 
loads beyond 16 feet width. They stated that width restrictions take 
the body of the home in consideration, in addition to eave overhangs, 
doorknobs, windowsills, siding, exterior trims etc. (PMHA, No. 1165 at 
p. 3)
    Mississippi MHA stated that the Mississippi Department of 
Transportation allows width up to 16 feet and 15 feet and 6 inches for 
height for manufactured homes. Any home that exceeds these dimensions 
will require a special permit which will cost the customer more in 
transportation costs. Therefore, they stated that the proposed 
standards may even prohibit a customer in rural Mississippi from buying 
a home due to the transporting requirements on rural roads. 
(Mississippi MHA, No. 1588 at p. 3)
    NJMHA commented, having no manufacturers located in New Jersey, 
that the proposal will directly impact the transportation of 
manufactured homes and add additional cost for homes delivered to New 
Jersey. They stated that the added challenge of transporting a 
manufactured home into New Jersey, coupled with their supply issues, 
will decrease their ability to supply homes at an affordable price 
point. (NJMHA, No. 1451 at p. 2)
    Clayton Homes and MHI and multiple others stated that the proposed 
rule fails to take into consideration construction methods, 
transportation demands, and short on-site completion duration that are 
unique to manufactured housing. (Campaign Form Letter, Multiple 
Submissions at p. 1) Clayton Homes and MHI stated that several of the 
changes in the proposed rule would apply to the building thermal 
systems which may affect the overall shipping height and width of a 
home, and by changing various factors, the overall shipping envelope 
will change. For example, the additional height could prevent shipping 
a home into an area of the country with low bridges, resulting in 
consumers having to settle for a different style of home, or, more than 
likely, being forced out of the housing market due to a lack of 
affordable housing. Also, additional escorts could add thousands of 
dollars to the purchase price of the home. Essentially, they stated 
that by increasing the truss heel height, increasing floor joist depth, 
and adding insulation outside of the studs, the overall shipping 
envelope will change. (Clayton Homes, No. 1589 at p. 3, 6); (MHI, No. 
1592 at p. 2) MHI also stated that for houses currently designed to 
maximize the legal shipping width, there is no additional width 
available on the exterior, and therefore, the space for the exterior 
insulation (i.e., proposed R-20+5 continuous insulation) on these homes 
would have to be taken from the interior of the home. (MHI, No. 1592 at 
p. 8)
    On the other hand, NEEA stated that more than half of the 
manufactured homes in the Northwest are built with a Uo equal to Tier 2 
of the August 2021 SNOPR. They stated that they have been applying 2 x 
6 frame walls to homes for the past 14 years.\51\ (NEEA, No. 1601 at 
pp. 13-14)
---------------------------------------------------------------------------

    \51\ All frame and related dimensional descriptions (e.g., ``2 x 
6'') are denoted in inches.
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    DOE understands the construction and transportation issues that the 
stakeholders are commenting on relate specifically to the increased 
insulation for exterior wall, floor and ceiling insulation required by 
Tier 2 in this final rule. As discussed in the previous sections (which 
provides further detail, but is summarized here), for Tier 2 exterior 
wall insulation, DOE is finalizing an R-21 exterior wall insulation for 
climate zones 2 and 3, which should resolve a number of the width 
concerns. For Tier 2 exterior ceiling insulation, DOE notes that there 
is enough room in the truss to accommodate higher insulation without 
having to redesign. For Tier 2 exterior floor insulation, DOE confirmed 
that there are homes being built that meet R-33 floor insulation by 
incorporating a combination of R-11 blankets and R-22 in 2 x 6 joists, 
and R-33 belly insulation below joists (instead of only using 2 x 8 
joists). Accordingly, DOE is unpersuaded with the concerns that amended 
Tier 2 standards would require changes in exterior home dimensions and 
cause transportation issues beyond any transportation issues that 
currently exist.
    Additionally, as suggested by NEEA, DOE notes that there are homes 
that are currently being built with insulation levels at the Tier 2 
requirements, with no issues with transportation. Even current ENERGY 
STAR requirements, under the envelope-only package, require insulation 
similar to the Tier 2 standards. Finally, DOE confirmed that the 
Northwest Energy-Efficient Manufactured Housing Program (NEEM)+ homes, 
which go beyond ENERGY STAR, do not deal with transportation issues 
because of the added insulation. DOE is acknowledging that changes will 
be needed to accommodate higher insulation. However, DOE understands 
that around 53,400 NEEM homes have been transported over the last 20 
years without any issues. In addition, the northwest went through the 
transition in 1990s and Clayton Homes also has models meeting the 
higher insulation requirements.\52\
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    \52\ The NEEM website lists Clayton Homes in CA, ID, NV, OR, UT, 
and WA as retailers for NEEM-certified homes; https://www.neemhomes.com/where-to-buy. NEEM and NEEM+ require insulation 
levels greater than Tier 2 for ceilings and floors.
---------------------------------------------------------------------------

    Finally, DOE also notes that manufacturers can also comply with the 
standards using the performance, Uo, method, which gives manufacturers 
the flexibility to use any combination of energy efficiency measures as 
long as the minimum Uo is met.
Other Efficiency Improvements
    Greer suggested that DOE consider light pollution and recommended 
using downward positioning lighting for the outside of the buildings. 
(Greer, No. 1443 at p. 1) DOE's authority for this rule is only with 
regards to establishing energy conservation standards (42 U.S.C. 
17071(a) and (b)(1)), which does not encompass light pollution or the 
position of lighting, and therefore those topics are not addressed in 
this rule.
    VEIC recommends that DOE adopt the IECC R404 requirement for 100 
percent high efficacy lighting in permanently installed fixtures and 
controls. (VEIC, No. 1633 at p. 6) The NPCC stated that the standards 
should include additional cost-effective energy-saving measures, 
including equipment, because measures beyond the building shell, 
including efficient lighting, heating and cooling equipment, water 
heating equipment, appliances, and ducts could yield large cost-
effective energy savings. (NPCC, No. 1567 at p. 2) Next Step also 
stated the standards should include cost-effective energy-saving 
measures, including equipment. Next Step also stated the standards 
should include ventilation and moisture control measures, if needed, to 
ensure that air sealing improves the health of residents. (Next Step, 
No. 1617 at p. 10, 11) The Attorneys General urge DOE to include a 
requirement that manufacturers provide additional energy saving 
features such as high-efficiency appliances or heating and cooling 
systems using an ENERGY STAR[supreg]-certified heat pump. (Attorneys 
General, No. 1625 at p. 2, 4, 6)

[[Page 32774]]

    Earthjustice and Prosperity Now suggested that several important 
provisions of the 2021 IECC are absent from DOE's analysis of potential 
manufactured housing standards, including lighting efficacy 
requirements found in section R404 of the 2021 IECC. (Earthjustice and 
Prosperity Now, No. 1637 at p. 7) They stated that in DOE's previous 
response suggesting that ``the energy efficiency of those products is 
specifically governed by the comprehensive Appliance Standards program 
established under [the Energy Policy and Conservation Act (``EPCA'')] 
(42 U.S.C. 6291-6317)'' DOE cites no authority for the proposition that 
it can ignore IECC provisions applicable to covered appliances, nor 
does the Department make any attempt to explain why Congress would have 
intended to allow DOE to ignore IECC provisions that address the 
efficiency of regulated appliances. Id. In addition, Earthjustice, 
Prosperity Now, and Sierra Club commented saying that DOE's 
characterization of its appliance efficiency program as 
``comprehensive'' ignores that the Department has long refused to 
update the standards for some furnaces used in manufactured homes 
because such standards allegedly could not meet other requirements 
applicable under EPCA. (Earthjustice, Prosperity Now, and Sierra Club, 
No. 1992 at p. 8, 9)
    While the 2021 IECC does include certain efficiency requirements 
for HVAC, water heaters, lighting, furnaces, and appliances, DOE is not 
adopting energy conservation standards for these products in the 
manufactured home energy conservation standards. As discussed in 
section III.A of this document, section 413 of EISA requires DOE to 
base the manufactured housing energy conservation standards on the 
latest version of the IECC, except where not cost-effective or where a 
more stringent code would be more cost-effective (42 U.S.C. 
17071(b)(1)). 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. This language does not require the imposition of requirements for 
manufactured homes that are identical to those of the IECC.
    DOE also did not simply ignore the updated provisions of the 2021 
IECC related to appliance and product energy efficient requirements 
that were not included in the 2015 IECC, and therefore not considered 
by the working group. In the August 2021 SNOPR, DOE addressed the fact 
that the MH working group evaluated the 2015 IECC, which does not 
include updated sections of the 2021 IECC, such as comparable 
provisions to sections R401.2.5 and R408.2 of the 2021 IECC. 86 FR 
47773-47774. With respect to those provisions of the 2021 IECC, DOE 
noted that the MH working group generally did not recommend provisions 
addressing minimum appliance or equipment efficiencies for manufactured 
housing, and therefore, DOE declined to adopt such measures consistent 
with the approach of the working group. Id. Accordingly, the 
performance requirements in the energy conservation standards proposed 
in the August 2021 SNOPR and adopted in this document are specific to 
the building thermal envelope only, and do not incorporate any 
specifications on HVAC or appliance energy efficiency.\53\
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    \53\ Earthjustice and Prosperity Now also stated that DOE's 
refusal to consider lighting efficacy measures is inconsistent with 
its rationale for refusing to evaluate the HVAC and water heating 
equipment requirements in the 2021 IECC because the 2014 working 
group specifically recommended that DOE include the lighting 
efficacy provisions from the 2015 IECC in the negotiated 
manufactured housing standards. Earthjustice, Prosperity Now, and 
Sierra Club, No. 1992 at p. 7). However, in the June 2016 NOPR, DOE 
stated that it was not proposing the lighting efficacy requirements 
from the 2015 IECC recommended by the working group because of DOE's 
ongoing rulemaking efforts to establish nationwide minimum lamp 
efficacy standards under EPCA, and requested comment on the 
sufficiency of DOE's rulemaking efforts for lamp efficacy to achieve 
lighting efficiency in manufactured homes. See 81 FR 39780.
---------------------------------------------------------------------------

    The energy efficiency of those products is specifically governed by 
the comprehensive Appliance Standards program established under EPCA. 
(42 U.S.C. 6291-6317) Covered products going into newly built 
manufactured homes will still have to meet the minimum energy 
conservation standards set by the Appliance Standards program. DOE 
notes that under this final rule, manufacturers would not be prohibited 
from installing more efficient appliances than the minimum standards 
set by the Appliance Standards program into newly manufactured 
homes.\54\
---------------------------------------------------------------------------

    \54\ See http://energy.gov/eere/buildings/standards-and-test-procedures.
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Insulation Supply and Demand
    MHI stated that manufacturers are currently using R-11 for most of 
the insulation which is predominantly used in the walls and floors for 
Zones 1 and 2. Further, manufacturers typically prefer to use two 
layers of R-11 if they need more insulation in the floors. However, 
they are concerned that the proposed changes do not use R-11, but 
rather the lowest insulation value used is R-13. Therefore, MHI stated 
that this may cause a supply issue for the manufacturers that have 
ramped up to supply large quantities of R-11, and the same supply issue 
will be present for R-20 and R-19, which is currently not used in large 
quantities. Further, the availability of R-30 insulation in a blanket 
style may be an issue in meeting this requirement or force further 
production changes to accommodate other styles of insulation. (MHI, No. 
1592 at pp. 6, 8) Clayton Homes stated that the proposed standards 
would require manufactured homes to have significantly more insulation, 
which would cause the demand for fiberglass insulation to overwhelm a 
market that is already under substantial stress from the current 
insulation shortage, which is projected to continue for a few more 
years. (Clayton Homes, No. 1589 at p. 4, 6)
    DOE notes that the performance path, i.e., Uo method, gives 
manufacturers the flexibility in using any combination of energy 
efficiency measures as long as the minimum Uo is met. Manufacturers do 
not need to meet both the prescriptive and the performance method; 
rather they have the option to only meet one. As such, manufacturers 
can continue to use current insulation types and techniques to meet the 
energy conservation standards. DOE is not restricting the type of 
insulation being used, as long as the standards (either prescriptive or 
performance) are met.
Other Remaining Comments
    Redwood Energy suggested that DOE adopt an all-electric version of 
ENERGY STAR as the standards. They suggested that all-electric design 
is already roughly 50 percent of manufactured housing and produces less 
net GHGs than natural gas or propane on clean grids. They stated that 
ENERGY STAR yellow tags show the lowest utility bills only to ENERGY 
STAR heat pump for HVAC and DHW. They also commented that there was 
some support from the Director of Business Development of Champion 
Homes for a California Energy Commission grant, illustrating their 
willingness to build with a 2 x 6 framed walls, 14'' deep attic 
insulation and all-electric. (Redwood Energy, No. 1363 at p. 1) 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)) Accordingly, DOE developed the standards based on 
the requirements in the 2021 IECC.
    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

[[Page 32775]]

arrives at the site. (NEEA, No. 1601 at pp. 14-15) DOE's authority for 
this rulemaking is to establish energy conservation standards for 
manufactured housing as manufactured. (42 U.S.C. 17071(c)) The energy 
conservation standards are specific only to the building thermal 
requirements for a manufactured home. However, DOE notes that DOE's 
energy conservation standards would not prevent industry from pursuing 
this labeling practice suggested by NEEA.
    Schulte stated that setting the Uo values for the home and letting 
manufacturers decide how to meet these performance standards encourages 
innovation by allowing manufacturers to choose higher efficiency 
windows or other changes to achieve the required Uo values. (Schulte, 
No. 1028 at p. 23) VEIC recommended considering a compliance option 
using an Energy Rating Index (``ERI'') compliance alternative, which 
not only allows for prescriptive and total UA compliance approaches, 
but also provides performance-based compliance based on annual modeled 
energy costs of the whole-home. (VEIC, No. 1633 at p. 3) Consistent 
with the recommendations of the MH working group, the performance 
requirements in the 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 allow tradeoffs 
between the building thermal envelope components as long as the Uo is 
met through the performance path. This is similar to the Total UA path 
in the IECC. 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.
    NEEA recommended that the final rule be explicit about what needs 
to be included in an installation manual, specifically that the multi-
section marriage line air seal shall be installed at the factory with 
proper QA/QC. (NEEA, No. at p. 14, 15) All requirements in this final 
rule would apply to the manufactured home as manufactured, i.e., the 
manufacturer of the manufactured home is responsible for ensuring 
compliance with the requirements. (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. Therefore, DOE has included a 
clarification in Sec.  460.1 of the regulatory text that the 
requirements apply to the manufactured home as manufactured at the 
factory, prior to distribution in commerce for sale or installation in 
the field.
    ACC FSC stated that the proposed standards do not appear to 
address, amend, or prohibit use of Sec.  3280.508 of the HUD Code which 
provides for a so-called ``high efficiency heating and cooling 
equipment credit'', and requested that this loophole be removed to 
avoid erosion of durable envelope energy efficiency in trade-off for 
shorter-lived equipment that happens to exceed NAECA minimum efficiency 
requirements which, in some key cases, have not kept up with the 
market. They stated that while DOE indicated that equipment trade-offs 
are ``only allowed within the building thermal envelope, and not HVAC 
equipment or other appliances'', this issue still remains unclear in 
the proposed standards and in DOE's documentation. (ACC FSC, No. 1364 
at p. 4-5). EISA directs DOE to establish energy conservation standards 
for manufactured housing. 42 U.S.C. 17071. As such, Sec.  3280.508 is 
under HUD's authority and not DOE. However, DOE's energy conservation 
standards are more stringent than the HUD code in a number of key 
respects, and manufacturers must comply with both HUD and DOE's 
requirements. Nevertheless, DOE acknowledges this comment and will plan 
to coordinate with HUD, as needed, on the application of the DOE 
requirements in relation to the HUD heat loss/heat gain requirements.
    MHI and Clayton Homes recommended clarifying the language in Sec.  
460.102 paragraphs (b)(1) and (b)(5) of the proposed regulatory text as 
follows: adding that the applicable R-value for the prescriptive 
requirements is the ``nominal value of insulation'', specifying the 
maximum U-factor as ``glazing maximum U-factor'', and adding that 
compliance with the applicable requirements in paragraph (b)(1) may be 
determined using the ``maximum component U-factor'' values set forth in 
Sec.  460.102 of the proposed regulatory text. (Clayton Homes, No. 1986 
at p. 11-13); (MHI, No. 1990 at p. 14, 15) DOE views these additions as 
adding further specificity to the prescriptive requirements, and 
therefore has adopted the recommendations.
    Finally, MHI recommended that DOE delete the entirety of Sec.  
460.3 of the regulatory text, as well as paragraph (c)(2) of Sec.  
460.3. In addition, MHI also recommended deleting Tables 460.102-1 and 
460.102-3 of the regulatory text as proposed in the August 2021 SNOPR. 
(MHI, No. 1990 at p. 11, 12, 14, 16) DOE understands MHI's recommended 
deletion in the regulatory text to suggest that MHI does not recommend 
a tiered standard, but rather an untiered standard albeit with 
requirements less stringent than those proposed by DOE. As previously 
discussed in section III.A of this document, in light of affordability 
and cost-effectiveness concerns, DOE is adopting the tiered standards 
in this final rule. Therefore, DOE is maintaining the Tier 1 regulatory 
text requirements. Otherwise, responses to MHI's recommendations for 
the prescriptive and performance requirements for the tiered standards 
are already addressed in previous sections.
c. Sec.  460.103 Installation of Insulation
    Consistent with the August 2021 SNOPR, in this final rule, DOE is 
adopting in Sec.  460.103 of the regulatory text, the requirement for 
manufacturers to install insulation according to both the insulation 
manufacturer's installation instructions and the instructions set forth 
in proposed Table 460.103. Sec.  460.103 specifies requirements for the 
installation of insulation, which is based on the R402 of the 2021 
IECC. DOE is also adopting the requirement for 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 August 2021 SNOPR, DOE is adopting 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, narrow cavities, rim joists, shower 
or tub adjacent to exterior wall, and walls, and is removing 
installation requirements for eave vents.
    In addition, in response to comments received on the August 2021 
SNOPR proposal, DOE is adding clarifying language for the ``baffles'' 
component as it relates to air-permeable insulation in vented attics 
and eave venting, and to the ``Access hatches, panels, and doors'' 
component as it relates to doors. The installation of insulation 
requirements would apply to both Tier 1 and Tier 2 homes.
    The following paragraphs discuss comments DOE received regarding 
the installation of insulation requirements proposed in the August 2021 
SNOPR.
    DOE received comments on the August 2021 SNOPR regarding the 
language used in Table 460.103, particularly the ``baffles'' component. 
MHCC commented that DOE should clarify that the requirements for 
baffles in Table 460.103 should apply when the baffles are used in 
conjunction with eave venting. (MHCC, No. 1600 at p. 8) The 2021 IECC 
does not include specification that the installation requirements for 
baffles are only

[[Page 32776]]

applicable when the baffles are used in conjunction with eave venting. 
However, DOE notes that baffles are typically used in conjunction with 
eave venting. As such, DOE understands MHCC's recommended change to be 
more of a clarification specific to manufactured housing. Therefore, in 
this final rule, DOE is adding clarifying language for ``baffles'' to 
specify that the requirements apply when they are used in conjunction 
with eave venting, consistent with the recommendation by the MHCC.
    MHI commented that DOE should add a statement clarifying that 
baffles must extend over the top of the attic insulation ``where 
insulation is restrained from full depth in order to maintain 1-inch 
minimum air space between insulation and roof decking.'' (MHI, No. 1592 
at p. 26, 27); (Clayton Homes, No. 1589 at p. 10, 13, 16); (MHCC, No. 
1600 at p. 2, 3) DOE notes that the proposed August 2021 SNOPR 
requirement is stronger in terms of maintaining the clear path of 
airflow between the insulation and the eaves in all cases. 
Specifically, the baffles component in proposed Table 460.103 states 
that ``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'' ensuring that baffles are always 
properly installed, and that insulation does not fall into the vents 
and block the air path. Adding in MHI's recommended language would lead 
to ambiguity when determining where baffles must be installed over the 
top of the attic insulation. Therefore, DOE has chosen to maintain the 
August 2021 SNOPR requirements.
    VEIC commented that it is essential that the factories install 
solid baffles and venting at the eaves to ensure that compliant 
insulation levels extend to the outside of the exterior wall, and that 
there is ventilation along the roof sheathing to prevent moisture 
issues. (VEIC, No. 1633 at p. 4) DOE appreciates the comment and agrees 
that this is good building practice. This practice is covered in Table 
460.103 under the installation requirements for ``baffles'' and 
therefore DOE maintains the proposed language in the final rule.
    DOE received comments regarding the installation requirements for 
``eave vents'' in Table 460.103. MHI and MHCC suggested that the 
language regarding ``eave vents'' be removed, since it is not within 
the 2021 IECC and is not relevant to manufactured housing. MHI also 
said that it should be acceptable to use nonpermeable insulation 
adjacent to ventilated soffits as long as the required free air path is 
maintained. (MHI, No. 1592 at p. 18, 27); (MHCC, No. 1600 at p. 8) DOE 
notes that R402.2.3 of 2021 IECC discusses eave vents as it relates to 
baffles. Specifically, R402.2.3 includes language that ``for air-
permeable insulation in vented attics, a baffle shall be installed 
adjacent to soffit and eave vents.'' As such, consistent with the 2021 
IECC, DOE has removed the separate ``eave vents'' row in Table 460.103, 
and included the same requirements in the ``baffles'' row instead. 
Further, DOE notes that this requirement only clarifies insulation 
installation criteria as it relates to air permeable insulation; the 
requirement is not restricting use of other insulation products.
    DOE also requested comment in the August 2021 SNOPR on whether the 
2021 IECC updates on the installation criteria for baffles are 
applicable to manufactured housing and should be considered in this 
rulemaking. 86 FR 47744, 47781. DOE did not receive any comments 
regarding the applicability of these requirements to manufactured homes 
and is therefore not including them in the final rule.
    DOE received a comment regarding a language change for the ``Access 
hatches, panels, and doors'' component of Table 460.103. MHCC suggested 
that ``doors'' be deleted from Table 460.103 under ``Access hatches, 
panels, and doors.'' MHCC stated that doors are commonly used for 
exterior access of utility and water heater room in certain regions of 
the country, and they are specified by the U-factor requirements 
already established in Sec.  460.102. (MHCC, No. 1600 at p. 8, 9) In 
addition, MHI stated that the requirement that access hatches, panels, 
and doors between conditioned space and unconditioned space must be 
insulated to a level equivalent to the insulation of the surrounding 
surface does not seem to be consistent with the discussion around 
exterior doors in the earlier section of the proposed standards. (MHI, 
No. 1592 at p. 7)
    DOE understands that there is confusion regarding the door U-factor 
requirements specified in Table 460.102 compared to the door 
installation of insulation requirements in Table 460.103. In this final 
rule, DOE is clarifying the requirements in Table 460.102 specifically 
relate to attic or crawlspace access doors. External doors, which are 
used to block or allow access to an entrance of a manufactured home, 
would be required to meet the requirements in Table 460.102. As such, 
DOE is retaining the door insulation installation requirements and 
adding the clarification that it applies to attic and crawlspaces in 
Table 460.102.
    DOE received a comment on the August 2021 SNOPR regarding the 
language used in Table 460.103, particularly the ``walls'' component. 
ACC FSC commented that Table 460.103 appears to be restrictive of and 
only addresses ``air permeable'' insulation products, to the exclusion 
of many others. Specifically, they identified that the proposed 
installation requirements state that air-permeable insulation must 
completely fill cavities, and this potentially excludes or disfavors 
the use of other cavity insulation materials and methods, such as a 
combination of closed-cell spray foam and fibrous insulation. (ACC FSC, 
No. 1364 at p. 5) DOE notes that the wall component specifications only 
clarify the wall insulation installation criteria as it relates to air 
permeable insulation. The wall component specifications are not 
restricting use of other insulation products. The MH working group 
recommended that DOE modify the language of the 2015 IECC requirement 
with this clarification to account for the unique design of 
manufactured housing. See 9/23 Working Group Transcript, EERE-2009-BT-
BC-0021-0122 at p. 315. The 2021 IECC did not update the wall 
insulation installation criteria from the 2015 IECC. Accordingly, DOE 
continues to include this requirement, as recommended by the MH working 
group, to ensure that wall assemblies in manufactured homes achieve the 
thermal performance requirements set forth under Sec.  460.102.
    Regarding duct insulation, NEEA recommended that all crossover 
ducts should have R-8 insulation. (NEEA, No. 1601 at p. 14, 15) DOE's 
research indicates that HVAC ducts are generally located between the 
floor and the insulation and are therefore within the conditioned 
space. 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 adopting 
any additional insulation for ducts in this final rule.
    NEEA also commented that a clearer definition of how a proper air 
barrier should be designed was needed to make construction requirements 
more specific, and to establish a single meaning without ambiguity. 
(NEEA, No. 190 at p. 2). NEEA did not provide further explanation of 
how the proposed requirements for an air barrier were lacking or 
present 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 2021 IECC and related

[[Page 32777]]

recommendations from the MH working group. Further, DOE reviewed the 
2021 IECC to make any additional updates to the air barrier criteria 
(see Table III.14 in the August 2021 SNOPR).
    NEEA also recommended adding a clearer statement that, as 
installed, insulation should contain no voids or compression. (NEEA, 
No. 1601 at p. 15) DOE requires that insulation must be installed 
according to the insulation manufacturer's installation instructions. 
Certain insulation manufacturer's installation instructions 
specifically state that compression must be avoided when installing 
insulation, because compression will reduce the R-value. Therefore, DOE 
continues to find that the requirements proposed in Sec.  460.103 of 
the August 2021 SNOPR are sufficient to prohibit compression and voids, 
and will adopt these requirements without change, consistent with 
R303.2 of the 2021 IECC.
    In the August 2021 SNOPR, DOE also requested comment on removing 
the proposed 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. 86 FR 47744, 47780. Commenters supported exempting manufactured 
housing from the requirement that exterior floor insulation installed 
must maintain permanent contact with the underside of the rough floor 
decking. They stated that doing this will result in many design changes 
which will increase shipping height. (MHI, No. 1592 at p. 25-26); 
(Clayton Homes, No. 1589 at p. 16-18, 22); (MHCC, No. 1600 at p. 6) As 
such, DOE is finalizing the August 2021 SNOPR proposal in this final 
rule.
    In the August 2021 SNOPR, DOE also requested comment on the 
proposal to not require that exterior ceiling insulation must have 
uniform thickness or a uniform density. 86 FR 47744, 47778. NAHB 
supported DOE's proposal to not require exterior ceiling insulation to 
have uniform thickness or density. They also agreed that space 
constraints make several of the insulation requirements in the 2021 
IECC not applicable to manufactured housing. (NAHB, No. 1398 at p. 3) 
MHI, Clayton Homes and MHCC agreed that manufactured homes should not 
have a uniform thickness of installation requirement. Installing 
insulation with a non-uniform thickness is required to construct most 
manufactured homes due to shipping height restrictions and the need to 
minimize truss heel height. They provided further supporting 
information to remove this requirement. (MHI, No. 1592 at p. 25-26); 
(Clayton Homes, No. 1589 at p. 16-18, 22); (MHCC, No. 1600 at p. 6) As 
such, in this final rule, DOE is not requiring that exterior ceiling 
insulation must have uniform thickness or a uniform density.
d. Sec.  460.104 Building Thermal Envelope Air Leakage
    Consistent with the August 2021 SNOPR, DOE is adopting Sec.  
460.104 to require manufacturers to seal manufactured homes against air 
leakage. Air leakage sealing limits air infiltration through the 
building thermal envelope, which in turn reduces heating and cooling 
loads. Section 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 2021 IECC with 
modifications based on recommendations from the MH working group. Term 
Sheet No. 107 at p. 5. 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 general requirements in Sec.  460.104 would require that 
manufacturers 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 specific requirements in Table 
460.104 include air barrier criteria for 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 
response to comments, however, DOE is adjusting language for the air 
barrier installation criteria for ``rim joists'' in Table 460.104 based 
on a recommendation received from MHI, which is discussed below. The 
adopted building thermal envelope air leakage requirements would apply 
to both Tier 1 and Tier 2 homes.
    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) As 
such, DOE published the January 2022 DEIS to, in part, address the 
impacts of DOE's proposed standards on indoor air quality. As discussed 
more in section V.D, DOE received numerous comments on indoor air 
quality issues in the January 2022 DEIS, and DOE considered all of the 
information presented in the analyses and comments from the January 
2022 DEIS, and the analyses in the final EIS in constructing this final 
rule.
    The following paragraphs discuss comments DOE received regarding 
the building thermal envelope air leakage requirements proposed in the 
August 2021 SNOPR.
    DOE received a comment regarding a language change in Table 
460.104. MHI recommended removing ``to the sill plate and the rim 
board'' from Table 460.104 in the ``Rim Joists'' section. MHI stated 
that mud sill plates are not typically used in manufactured housing 
and, if used, would be installed on-site by others outside the scope of 
this rule. (MHI, No. 1592 at p. 19) As DOE understands this situation, 
a sill plate is the board laid directly on top of the foundation wall 
attached to the foundation wall with anchor bolts. DOE proposed the 
aforementioned requirements in the August 2021 SNOPR because the 2021 
IECC included the update. However, DOE also requested comment on 
whether the proposed update applies to manufactured home construction. 
86 FR 47744, 47784 Therefore, although the 2021 IECC included updates 
that the junctions of the rim board to the sill plate and the rim board 
and the subfloor shall be air sealed, based on MHI's comment, DOE has 
concluded that sill plates and their air leakage installation criteria 
are not directly applicable to manufactured housing construction in the 
factories. To be consistent with EISA in considering the design and 
factory construction techniques for manufactured homes (42 U.S.C. 
17071(b)(2)), DOE has removed ``to the sill plate and the rim board'' 
from the air barrier installation criteria of the ``Rim Joists'' 
component of Table 460.104 in the final rule.
    DOE received a comment regarding duct sealing methodologies. 
Schulte commented that the requirement that the duct sealing should be 
done in accordance with the duct manufacturer's instructions is 
consistent with the approach used for many manufactured housing 
systems. (Schulte, No. 1028 at p. 25) DOE notes that this is consistent 
with what was proposed in the August 2021 SNOPR; therefore, DOE 
maintains the requirement in the final rule.
    DOE received a comment regarding sealing exemptions. MHI 
recommended that holes in the floor, such as under bathtubs and 
showers, must be exempted from sealing to permit the

[[Page 32778]]

installation of p-traps in 2 x 6 floor systems, because these holes do 
not allow air intrusion from the exterior because the exterior floor 
air barrier is the bottom board and is not the floor itself. (MHI, No. 
1592 at p. 27-28) DOE understands this comment to mean that holes in 
the floor must not be sealed to allow future installation of plumbing 
pipe components. However, DOE's research confirms that the holes in the 
floor around bathtubs and showers are difficult to go back and fix, and 
need to be sealed correctly the first time. In addition, DOE's 
requirement is consistent with the air barrier criteria in Table 
R402.4.1.1 of the 2021 IECC which states that all holes created by 
wiring, plumbing or other obstructions in the air barrier assembly 
shall be air sealed. Therefore, DOE maintains the requirement in the 
final rule to ensure that efficiency standards are being met.
    DOE received several comments regarding the requirements for 
sealing of duct system register boots. MHI and Clayton Homes stated 
that in manufactured homes with heat ducts installed in the belly of 
the home, there is no need to seal the duct register and boots to the 
sub-floor because they are installed within the thermal envelope. (MHI, 
No. 1592 at p. 6, 7); (Clayton Homes, No. 1589 at p. 8, 10,11, 15, 20) 
DOE notes that the duct system register boots requirement is consistent 
with Table R402.4.1.1 of the 2021 IECC, and additionally states that 
only the HVAC supply and return register booths that penetrate building 
thermal envelope shall be sealed to the subfloor, wall covering, or 
ceiling penetrated by the boot. Therefore, this requirement only 
applies when the duct system penetrates the building thermal envelope. 
If the duct system does not penetrate the building thermal envelope, 
this requirement would not apply. Therefore, to ensure proper sealing 
for when HVAC supply and return register booths penetrate the building 
thermal envelope, DOE maintains the requirement in the final rule.
    DOE received several comments regarding a language clarification in 
Table 460.104. MHI, Clayton Homes and MHCC stated that the ``shower or 
tub adjacent to exterior wall'' component of Table 460.104 should be 
deleted or clarified to apply only when interior wall surface is used 
as an air barrier. (MHI, No. 1592 at p. 19); (Clayton Homes, No. 1589 
at p. 18); (MHCC, No. 1600 at p. 9, 10) Table R402.4.1.1 of the 2021 
IECC states, with regards to the shower/tub on exterior wall component, 
that the air barrier installed at exterior walls adjacent to showers 
and tubs shall separate the wall from the shower or tub, and that 
exterior walls adjacent to showers and tubs shall be insulated. This 
IECC requirement has been both accepted by the MH working group and has 
been implemented for years, as it was in the 2015 version of the IECC 
as well. In addition, having an air barrier between the showers/tubs 
and the exterior wall is necessary to prevent energy loss through these 
gaps and to prevent the shower or tub enclosures from getting too cold. 
Therefore, DOE maintains the requirement in the final rule.
    DOE received a comment regarding the air barrier criteria for 
electrical boxes or phone boxes on exterior walls. MHCC stated that the 
option to provide an air barrier behind junction boxes or seal around 
the junction boxes should remain as written in Table 460.104. (MHCC, 
No. 1600 at p. 9) As such, DOE is finalizing the proposed requirement 
as it relates to the air barrier installation criteria for electrical 
boxes or phone boxes on exterior walls.
    DOE received comments regarding the air leakage rate target. ACC 
FSC commented that for HUD zones 2 and 3, the air leakage rate target 
should be set at 3 air changes per hour at 50 Pascals pressure 
difference between the inside and outside of the home (ACH50). Further, 
they stated that the IECC requires whole building air leakage testing 
with the air barrier installation requirements providing minimum 
practices to achieve the required air leakage control and recommended 
that whole building air leakage testing be implemented in a manner that 
provides assurance of the intended performance on a model-by-model 
basis, not necessarily for every installation of a model. (ACC FSC, No. 
1364 at p. 6) VEIC recommended that the air leakage testing requirement 
as part of the third-party certification process be included in the HUD 
Code as follows: Maximum air leakage rate of 5 ACH50 for HUD zones 1 
and 2, and maximum air leakage rate of 3 ACH50 for HUD zone 3. (VEIC, 
No. 1633 at p. 6) MHCC stated that in the absence of building leakage 
testing criteria, it is unrealistic for the MHCC to provide proper 
feedback, and that there are current requirements and terminology in 
the proposed rule that do not apply to manufactured homes. (MHCC, No. 
1600 at p. 9)
    Conversely, DOE received a comment from MHI saying that there is 
substantial evidence that the prescriptive building thermal envelope 
air leakage standards incorporated within the rule are adequate to 
ensure homes achieve an air leakage rate of 5 ACH50. Further, MHI 
believes that whole house air leakage testing is unnecessary. (MHI, No. 
1592 at p. 27)
    The requirement of 5 ACH50 was evaluated by the MH working group. 
Specifically, the requirements set forth in the working group term 
sheet were intended to provide a prescriptive path for reaching 
envelope tightness of 5 ACH when pressurized to 50 Pascals. (Term 
Sheet, No. 107 at p. 5). Therefore, the rule would not establish 
maximum building thermal envelope air leakage rate requirements. 
Instead, the MH working group recommended sealing requirements that 
would ensure that a home can be tightly sealed with techniques that can 
be visually inspected, thus minimizing the compliance burden on 
manufacturers. Because the working group agreed upon the requirements 
to reach an air leakage rate target of 5 ACH50 to minimize burden, DOE 
is finalizing requirements that meet that leakage rate in this final 
rule. Further, as discussed previously, this rulemaking only specifies 
energy conservation standards for manufactured housing and is not 
addressing a test procedure in this rulemaking.
    In the August 2021 SNOPR, DOE requested comments on whether any 
other air barrier criteria language for recessed lighting, narrow 
cavities and plumbing from the 2021 IECC are applicable to manufactured 
housing. 86 FR 47744, 47784. MHI and MHCC stated that no additional 
language needs to be added for narrow cavities as any such activities 
are rare in manufactured housing and when they do occur, they generally 
do not disrupt the air barrier and are insulated or gasketed. 
Similarly, they stated that additional information does not need to be 
added for wiring and plumbing as most often these utilities are routed 
in the floor systems within the thermal envelope and larger vent piping 
is already caulked and sealed. (MHCC, No. 1600 at p. 10); (MHI, No. 
1592 at p. 27) In addition, MHCC stated that they did not find any 
additional 2021 IECC updates that would be relevant to manufactured 
housing. (MHCC, No. 1600 at p. 9) MHI and MHCC stated that recessed 
lighting housings do not need specification on air leakage rates, as 
these fixtures are usually insulated contact rated and significantly 
airtight especially when considering that they are buried in the attic 
and will be sealed at the ceiling penetration. (MHI, No. 1592 at p. 27-
28); (MHCC, No. 1600 at p. 9, 10) Therefore, DOE did not add any 
additional air barrier criteria language for recessed lighting, narrow 
cavities and plumbing and maintains the proposed language in the final 
rule.

[[Page 32779]]

    Finally, DOE received a comment from MHI recommending that DOE 
delete the recessed lighting requirements in Table 460.104 of the 
regulatory text without providing any further justification. (MHI, No. 
1990 at p. 19) The proposed recessed lighting air barrier criteria 
requirement is consistent with Section R402.4.5 of the 2021 IECC, 
therefore DOE has chosen to maintain this requirement in the final 
rule.
3. Subpart C: HVAC, Service Water Heating, and Equipment Sizing
    Subpart C adopts requirements that are applicable to manufactured 
homes related to ducts; HVAC; service hot water systems; mechanical 
ventilation fan efficacy; and heating and cooling equipment sizing. 
Subpart C requirements would be applicable to all manufactured homes. 
The following sections provide further details regarding Subpart C.
a. Sec.  460.201 Duct System
    In this final rule, DOE is adopting the August 2021 SNOPR proposed 
duct systems requirements, and is including 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 
when ducts are pressurized to 25 Pascals. DOE determined this 
requirement to be consistent with section R403 of the 2021 IECC. In 
addition, DOE also will 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 against 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 
adopted duct system requirements would apply to both Tier 1 and Tier 2 
homes.
    The following paragraphs discuss comments DOE received regarding 
the duct system requirements proposed in the August 2021 SNOPR.
    DOE received multiple comments regarding duct leakage testing. NEEA 
recommended that ductless heat pumps or other HVAC systems with all 
ductwork placed inside the conditioned space not be required to have 
duct leakage tested. In addition, NEEA recommended that DOE include 
language requiring pressure testing of supply ducts during 
construction. (NEEA, No. 1601 at p. 11, 16) MHCC commented that total 
duct leakage is not an appropriate test for a manufactured home because 
the majority of duct work in manufactured homes is within the thermal 
barrier. (MHCC, No. 1600 at p. 10) MHI also stated that with homes 
where the duct system is installed in the belly, any duct leakage that 
may occur is still within the thermal envelope of the home, and that 
the required testing for the duct leakage limitation is not included in 
the DOE cost analysis. In addition, MHI recommended DOE clarify the 
testing requirements to ensure supply duct systems maintain a leakage 
of less than 4 cfm per 100 square feet of conditioned floor area as 
installed and tested within the building facility. (MHI, No. 1592 at p. 
28) MHI also recommended that DOE add language to specify that ``multi-
section homes may have each home section isolated and tested 
separately'' (MHI, No. 1592 at p. 7, 19-20) Finally, Clayton Homes and 
MHI advocated for the use of a specific rough-in test method to 
determine the air leakage of the duct systems, where Clayton Homes 
elects to include the exception for the case where all ducts and air 
handlers are located entirely within the building (MHI, No. 1592 at p. 
19) (Clayton, No. 1986 at p. 15). DOE appreciates the information 
received regarding testing and compliance. As discussed previously, 
this rulemaking only specifies energy conservation standards for 
manufactured housing and is not addressing a test procedure at this 
time. However, DOE will consider these comments for any potential 
future rulemaking.
    DOE also received comments regarding language adjustments in Sec.  
460.201. MHI recommended specifying in the rule that only the supply 
ducts be sealed to limit total air leakage to less than or equal to 4 
cfm per 100 square feet of conditioned floor area. (MHI, No. 1592 at p. 
7, 19-20) MHI also recommended adding sealing provisions to this 
section regarding metal ducts and fittings, glass fiberboard ducts, 
connections of installed ductwork, and flexible ducts. (MHI, No. 1990 
at p. 20) The August 2021 SNOPR proposal did not specify that duct 
systems must have supply ducts be sealed to the limit total air leakage 
or any specific sealing provisions; rather, the proposal generally 
specified that a manufactured home equipped with a duct system be 
sealed to limit total air leakage. 86 FR 47744, 47784-47785 As such, 
DOE notes that the proposed requirements already apply to homes with 
supply ducts and cover all elements of an air distribution system. In 
addition, although DOE recognizes the extra provisions recommended by 
MHI as best practices for installation, in this final rule, DOE is 
being consistent with the 2021 IECC and allowing the manufacturers to 
use any appropriate sealing provisions as long as the duct leakage 
limits are met. Therefore, DOE is finalizing the August 2021 SNOPR 
proposed requirements.
    DOE received comments in support of the requirement to limit duct 
air leakage to 4 cfm per 100 square feet of conditioned floor area when 
ducts are pressurized to 25 Pascals. Schulte stated that duct leakage 
can be a source of energy loss and puts more strain on the HVAC 
equipment, and that this is a reasonable requirement. (Schulte, No. 
1028 at p. 25) NEEA strongly supported DOE's inclusion of limiting duct 
leakage to the exterior to not more than 4 cfm per 100 square feet and 
preventing the use of building cavities as ductwork. (NEEA, No. 1601 at 
p. 10) However, NEEA also recommended that ductless heat pumps or other 
HVAC systems with all ductwork placed inside the conditioned space not 
be required to comply with the 4 cfm per 100 square foot requirement. 
Id. DOE notes that the duct leakage requirement only applies to 
manufactured homes equipped with a duct system (not ductless systems). 
Further, for manufactured homes, DOE understands that it is not always 
the case that ducts and air handlers are located entirely within the 
building thermal envelope. As such, the proposed duct leakage 
specification applies to all manufactured homes and is consistent with 
the recommendations provided by the MH working group. See Term Sheet at 
p. 5. Therefore, DOE is adopting the proposed requirement in the final 
rule.
b. Sec.  460.202 Thermostats and Controls
    In this final rule, DOE is adopting the August 2021 SNOPR proposed 
specifications for thermostats in Sec.  460.202(a) of the regulatory 
text based on the IECC. Section R403.1 of the 2021 IECC specifies that 
at least one thermostat shall be provided for each separate heating and 
cooling system. DOE is also adopting specifications for programmable 
thermostats in Sec.  460.202(b), based on section R403.1.1 of the 2021 
IECC. Section R403.1.1 of the 2021 IECC 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

[[Page 32780]]

points at different times of the day. In addition, consistent with the 
August 2021 SNOPR, DOE is including in Sec.  460.202(c) specifications 
for heat pumps having supplementary heat, based on section R403.1.2 of 
the 2021 IECC, which identifies specific controls that prevent 
supplemental heat operation when the heat pump compressor can meet the 
heating load. The adopted thermostat and control requirements would 
apply to both Tier 1 and Tier 2 homes.
    The following paragraphs discuss comments DOE received regarding 
the thermostat and controls requirements proposed in the August 2021 
SNOPR.
    DOE requested comment on DOE's interpretation of section R403.1 of 
the 2021 IECC, and on whether there were any of the 2021 IECC updates 
relevant to manufactured housing that should be considered as part of 
this rulemaking. 86 FR 47744, 47786. Regarding thermostat control, MHI 
recommended that programmable thermostats should remain an option for 
the homebuyer, and any pre-program requirements should be part of 
regulation requirements on thermostat manufacturers if deemed 
appropriate rather than on home manufacturers. (MHI, No. 1592 at p. 28) 
MHI also stated they have observed that many of the current homeowners 
do not use these thermostats correctly or have replaced them with a 
simpler version, and that the programmable thermostat is not perceived 
as ``providing value'' to the current consumer and should not be 
mandated. (MHI, No. 1592 at p. 7) The proposed requirements for 
programmable thermostats are consistent with the requirements in 
Section R403.1.1 of the 2021 IECC. Further, these requirements were 
recommended to be included by the MH working group. See Term Sheet at 
1. Finally, DOE notes that programmable thermostats help consumers save 
energy by providing the capability to reduce energy use automatically 
during predetermined times (generally times the home is not occupied). 
Accordingly, DOE is adopting the August 2021 SNOPR language in this 
final rule without modifications.
    DOE also received recommendations regarding language adjustments in 
Sec.  460.202. MHI recommended revising Sec.  460.202(b)(3) to the 
following: ``Homeowner manuals should include recommendation that 
homeowners program thermostat 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).'' (MHI, No. 1592 at p. 20). The 
August 2021 SNOPR originally proposed that any thermostat installed by 
the manufacturer that controls the heating or cooling system must 
initially be programmed with the previously mentioned heating and 
cooling temperature set points, without any specification about the 
homeowner manuals. The initial heating and cooling temperature set 
points that DOE proposed are consistent with section R403.1.1 of the 
2021 IECC and recommendations from the working group. The 2021 IECC 
does not specify that it is the homeowner's responsibility for this 
setting; rather that temperatures are programmed initially by the 
manufacturer. Accordingly, DOE is adopting the August 2021 SNOPR 
language in this final rule without modifications.
    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. 1601 at p. 14, 15). While section R403.1.2 of the 2021 IECC 
provides requirements for the shutoff of heat pumps having 
supplementary electric-resistance heat under certain conditions, the 
2021 IECC does not provide any temperature specifications for this 
shutoff. Therefore, DOE did not consider this requirement in the energy 
conservation standards.
c. Sec.  460.203 Service Hot Water
    In this final rule, DOE is adopting the August 2021 SNOPR proposed 
specifications for service hot water in Sec.  460.203(a) that requires 
manufacturers to install service water heating systems according to the 
service water heating system manufacturer's installation instructions. 
Section 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 is adopting the requirement in Sec.  460.203(b) that 
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 requirement is consistent with the recommendation of the MH 
working group. Term Sheet, No. 107 at p. 1.
    DOE also is adopting specifications for heated water circulation 
systems in Sec.  460.203(c) based on section R403.5.1.1 of the 2021 
IECC, which provides information on heated water circulation and 
temperature maintenance systems. The specifications include: (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 is adopting the requirement 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 adopted service hot water 
requirements would apply to both Tier 1 and Tier 2 homes.
    The following paragraphs discuss comments DOE received regarding 
the service hot water requirements proposed in the August 2021 SNOPR.
    DOE requested comment in the August 2021 SNOPR on whether the 
circulating hot water system temperature limit should be included as a 
requirement due to the update in section R403.5.1.1 of the 2021 IECC 
which states that the controls of the heated water circulation systems 
shall limit the temperature of the water entering the cold-water piping 
to not greater than 104[deg]F (40[deg]C). 86 FR 47744, 47786. In 
response, MHI stated that circulating hot water systems are not 
typically used in manufactured homes, and that 24 CFR 3280 already has 
provisions for scald prevention that limit the temperature of hot 
water, so additional requirements would be redundant and unnecessary. 
(MHI, No. 1592 at p. 28) Therefore, DOE did not incorporate a 
circulating hot water system temperature limit into the final rule.
    DOE received a comment regarding water heater insulation. An 
individual commenter stated that water heater jackets have proven 
effective at reducing

[[Page 32781]]

heat loss and improving energy efficiency and believes that the final 
rule should incorporate water heater insulation provisions. (Individual 
commenter, No. 1563 at p. 1) DOE acknowledges that water heater jackets 
and insulating entire water heater systems would result in higher 
energy efficiency and more savings for homebuyers. However, water 
heater jackets were not discussed in the 2021 IECC and are not within 
the scope of this rulemaking. Specifically, DOE is not proposing energy 
conservation standards for HVAC, water heaters, lighting, and 
appliances because 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 for 
manufactured housing established in this final rule are met.
    DOE received a comment regarding further pipe insulation. 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. 1601 at p. 5, 16) DOE's requirement 
of a minimum R-value for all hot water pipes outside conditioned space, 
and from a service hot water system to a distribution manifold is 
consistent with the 2021 IECC and the MH working group recommendation. 
Term Sheet, No. 107 at p. 6. Therefore, DOE is adopting the hot water 
pipe insulation requirement from the August 2021 SNOPR. DOE notes that 
its energy conservation standards do not prohibit manufacturers from 
employing additional insulation beyond DOE's requirements.
    DOE also received a comment regarding language adjustments in Sec.  
460.203. MHI recommended deleting the proposed provision requiring 
that, when 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. (MHI, No. 1592 at p. 20); (MHI, No. 1990 at p. 21) 
DOE understands MHI's rationale for deleting this proposed requirement 
to be that typical water heater instructions do not include maintenance 
instructions because they are readily available online, and that this 
information is already accommodated in 24 CFR part 3280. As discussed 
in the August 2021 SNOPR, DOE included this requirement as it 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. 86 FR 47744, 47786. Considering the 
added instruction would ensure correct installation, DOE continues to 
include in the requirements that maintenance instructions provided by 
the service hot water manufacturer must be provided with the 
manufactured home.
d. Sec.  460.204 Mechanical Ventilation Fan Efficacy
    In this final rule, DOE is adopting the August 2021 SNOPR proposed 
mechanical ventilation fan efficacy requirements, based on Table 
R403.6.2 of the 2021 IECC. This includes minimum fan efficacy 
requirements for HRV and ERV, and air 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 cubic feet per minute (``CFM'') and >=90 CFM). The adopted 
mechanical ventilation fan efficacy requirements would apply to both 
Tier 1 and Tier 2 homes.
    The following paragraphs discuss comments DOE received regarding 
the mechanical ventilation fan efficacy requirements proposed in the 
August 2021 SNOPR.
    DOE received comments regarding current ventilation strategies. ACC 
FSC commented that DOE's intent to rely on a continuously operated 
whole-house exhaust fan could create issues with maintaining a healthy 
indoor environment and humidity control depending on the climate and 
season of the year. (ACC FSC, No. 1364 at p. 6) ACEEE suggested that it 
appears to be more typical for homes to use a furnace fan for 
ventilation and to meet the HUD code, the furnace supply system to be 
in continuous operation in fan-only mode. (ACEEE, No. 1631 at p. 12) On 
the other hand, MHCC commented that they agree with not including 
alternative ventilation strategies since the mitigation measures are 
already addressed in the HUD Manufactured Home Construction and Safety 
Standards in Sec.  3280.103(b)(1). (MHCC, No. 1600 at p. 11) In the 
August 2021 SNOPR, DOE estimated the energy use associated with 
ventilations by modeling a dedicated central exhaust fan for both the 
base case representing today's manufactured homes and the standards 
case representing manufactured homes that would comply with the 
proposed standards. DOE modeled the ventilation system in this manner 
because it represents the current requirements under the HUD Code as 
explained previously. The selection of the central exhaust fan for the 
energy use modeling was based on analysis from the MH Working Group. 
DOE acknowledges other ventilation strategies exist, and the 
requirements in this final rule do not preclude the use of other types 
of ventilation systems as long as the energy conservation standards 
requirements are met.
    DOE requested comment in the August 2021 SNOPR on the proposal to 
include the 2021 IECC fan efficacy standard requirements, and if any of 
the fan efficacy requirements were not applicable to manufactured 
homes. 86 FR 47744, 47787. MHI stated that DOE must clarify that the 
requirements of the whole-house mechanical ventilation system do not 
apply to bath fans and range hoods, which are systems MHI does not 
believe should be included. (MHI, No. 1592 at p. 21) Separately, MHCC 
stated that the applicability of the increased efficacy standards would 
be dependent upon the additional costs associated and return of 
investment of the increased mechanical ventilation requirements. (MHCC, 
No. 1600 at p. 11)
    As discussed in section III.F.1.b of this document, DOE is amending 
the definition to ``whole house ventilation system'' in response to 
MHI's comment and to be consistent with the 2021 IECC. As such, the 
updated definition now specifically includes the term ``to satisfy the 
whole house ventilation rates''. Otherwise, to maintain consistency 
with the 2021 IECC, DOE will not be incorporating extra language to 
exclude bath fans and range hoods from the definition of whole-house 
mechanical ventilation system.
    Schulte separately stated that consumers will prefer quieter rather 
than louder mechanical devices as they do with many household 
appliances, and therefore, it does not appear to be necessary to 
establish a maximum sound level for ventilation fans. (Schulte, No. 
1028 at p. 26) DOE did not propose sound level requirements in the 
August 2021 SNOPR and continues not to in this final rule.
e. Sec.  460.205 Equipment Sizing
    In this final rule, DOE is adopting the August 2021 SNOPR proposed 
specifications for equipment sizing, based on section R403.7 of the 
2021 IECC, which sets forth specifications on the appropriate sizing of 
heating and cooling equipment within a manufactured home. This section 
of the 2021 IECC requires the use of ACCA Manual S to select 
appropriately sized

[[Page 32782]]

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 final rule. Term Sheet, No. 107 at p. 1. The 
adopted equipment sizing requirements would apply to both Tier 1 and 
Tier 2 homes.
    The following paragraphs discuss comments DOE received regarding 
the heating and cooling equipment sizing specifications proposed in the 
August 2021 SNOPR.
    DOE received several comments on the August 2021 SNOPR regarding 
the removal of ACCA Manual J and ACCA Manual S references. MHI 
commented that the incorporation of these manuals is an example of 
trying to use a site-built code for manufactured homes and would 
restrict current sales practices in the industry especially for 
retailers located near the Zone boundaries, and that the use of Manual 
J or Manual S software, as proposed, will add additional time and cost 
for each model plan submission. (MHI, No. 1592 at p. 7, 21, 24); 
(Clayton Homes, No. 1589 at p. 8, 9, 12, 15-17, 19-20); (MHCC, No. 1600 
at p. 10, 11) MHCC commented that incorporating Manual J and Manual S 
references will complicate the manufacturing process and will also 
increase the overall cost of the units, approval time, and frequency of 
approval. (MHCC, No. 1600 at p. 5)
    Further, MHI also commented that ACCA Manual J analysis requires 
knowledge of the orientation of the home with respect to the sun for 
cooling load analysis, and that the proposed rule must establish a 
default orientation. MHI also said that the proposed rule must provide 
the required design parameters to perform an ACCA Manual J analysis 
within the context of the three thermal zones in the proposed rule, and 
that the rule must establish a threshold for requiring a revised Manual 
J or Manual S analysis. (MHI, No. 1592 at p. 7, 21, 24) In addition, 
MHCC commented that both Manual J and Manual S consider the orientation 
and site-specific weather for the home, which is unknown at the time of 
construction of manufactured homes. (MHCC, No. 1600 at p. 5) MHI and 
Clayton Homes also suggested that the proposed rule must establish 
alternate criteria for using ACCA Manual S where the design parameters 
vary within a thermal zone, because the variation in design parameters 
within a single thermal zone exceeds the sizing limits of ACCA Manual 
S. (MHI, No. 1592 at p. 7, 21, 24); (Clayton Homes, No. 1589 at p. 12) 
Alternatively, MHI and Clayton Homes suggested in their comments 
submitted in response to the January 2022 DEIS that the requirements to 
use ACCA Manual S and J in regulatory section 460.205 be deleted 
entirely. (MHI, No. 1990 at p. 22); (Clayton Homes, No. 1986 at p. 16) 
Clayton Homes also recommended deleting section 460.3 (b)(1) and 
(b)(2), which lists ACCA Manual J and Manual S as materials 
incorporated by reference. (Clayton Homes, No. 1986 at p. 9)
    On the other hand, Schulte commented that heating and cooling 
equipment sizing in accordance with ACCA Manuals J and S have been a 
part of the IECC for many years, and therefore, including these manuals 
would be consistent with the EISA. In addition, HUD has included the 
ACCA Manual J calculation for cooling loads for site installed air 
conditioners, so ACCA Manual J is already a part of the regulatory 
system in circumstances where the site of placement is known. (Schulte, 
No. 1028 at p. 11)
    Section R403.7 of the 2021 IECC requires the use of ACCA Manual S 
and J. Further, the same section states that ``Heating and cooling 
equipment shall be sized in accordance with ACCA Manual S based on 
building loads calculated in accordance with ACCA Manual J or other 
approved heating and cooling calculation methodologies.'' DOE notes 
that Manual J and Manual S calculations require details such as 
orientation of the building which are unknown for manufactured housing 
until placed on site, but that these calculations are an important part 
of the design process. DOE expects that manufacturers already conduct 
system sizing calculations using best practices based on the load 
calculation and system sizing methodology specified in the HUD 
code.\55\ Further, DOE understands that Manual J/S calculations are 
used in the field based on feedback received and also evidenced by 
plants which already use software to conduct these calculations. This 
is confirmed by the lookup tables developed by EnergyStar based on 
Manual J calculations conducted by the Manufactured Housing Research 
Alliance for typical home configurations and design conditions across 
the country.\56\ Accordingly, DOE is referencing ACCA Manual J and S as 
they would apply to manufactured housing design, and is allowing 
further requirements for ACCA Manual J and S to be consistent with 
current manufacturer specifications and best practices.
---------------------------------------------------------------------------

    \55\ See 24 CFR 3280.508.
    \56\ EnergyStar lookup tables https://www.energystar.gov/ia/partners/bldrs_lenders_raters/downloads/SizingGuidelines.pdf?59f6-4ecc.
---------------------------------------------------------------------------

G. Crosswalk of Standards With the HUD Code

    DOE compared the energy conservation standards in this final rule 
to the construction and safety standards for manufactured homes 
established by HUD to confirm that compliance with the requirements 
would not prohibit a manufacturer from complying with the HUD Code.
    Table III.11 lists the energy conservation standards and discusses 
their relationship to similar requirements contained in the HUD Code.

         Table III.11--Crosswalk of Final Rule With the HUD Code
------------------------------------------------------------------------
  DOE final rule  (10 CFR part     HUD code  (24 CFR
              460)                    part 3280)             Notes
------------------------------------------------------------------------
Section 460.101 would establish   Section 3280.506    ..................
 three climate zones, in line      establishes three
 with HUD, delineated by state     zones delineated
 boundaries. Further, there        by state
 would be different Uo             boundaries. The
 performance requirements for      HUD Code
 single- and multi-section homes.  establishes one
                                   standard for
                                   homes of all
                                   sizes within a
                                   zone.

[[Page 32783]]

 
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
 requirements.                                         U requirement per
                                                       zone for the
                                                       building thermal
                                                       envelope. DOE,
                                                       however,
                                                       established
                                                       separate Uo
                                                       requirements per
                                                       climate zone for
                                                       single- and multi-
                                                       section homes,
                                                       whereas HUD only
                                                       establishes one U
                                                       requirement,
                                                       regardless of
                                                       home size, per
                                                       zone.
Section 460.102(b) would set      Section 3280.506    The Battelle
 forth the prescriptive option     establishes a       Method is used to
 for compliance with the           performance         determine
 building thermal envelope         approach only.      performance
 requirements.                                         standards (in
                                                       terms of U) from
                                                       prescriptive
                                                       standards. The
                                                       DOE performance
                                                       standards would
                                                       be prescribed in
                                                       Sec.
                                                       460.102(c)(1).
Section 460.102(b)(2) would       No corresponding
 establish a minimum truss heel    requirement.
 height.
Section 460.102(b)(3) would       No corresponding
 establish an acceptable batt      requirement.
 and blanket insulation
 combination for compliance with
 the floor insulation
 requirement in Tier 2 Climate
 Zone 3.
Section 460.102(b)(4) would       No corresponding    ..................
 identify certain skylights not    requirements.
 subject to SHGC requirements.
Section 460.102(b)(5) would       No corresponding    ..................
 establish U-factor alternatives   requirements.
 for the R-value requirements
 under 460.102(b)(1).
Section 460.102(c)(1) would       Section             DOE's maximum
 establish maximum building        3280.506(a)         building thermal
 thermal envelope Uo               establishes         envelope U
 requirements.                     maximum building    requirements are
                                   thermal envelope    lower than the
                                   Uo requirements     corresponding
                                   by zone.            maximum U
                                                       requirements
                                                       under Sec.
                                                       3280.506(a).
                                                       Compliance with
                                                       the DOE U
                                                       requirements
                                                       achieve
                                                       compliance with
                                                       the U
                                                       requirements
                                                       under the HUD
                                                       Code.
Section 460.102(c)(2) would       No corresponding    ..................
 establish maximum area-weighted   requirements.
 vertical fenestration U-factor
 requirements in climate zones 2
 and 3.
Section 460.102(c)(3) would       No corresponding    ..................
 establish maximum area-weighted   requirements.
 average skylight U-factor
 requirements in climate zones 2
 and 3.
Section 460.102(c)(4) would       No corresponding    ..................
 authorize windows, skylights      requirements.
 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             ..................
 establish a method of             3280.508(a) and
 determining Uo using the          (b) reference the
 Overall U-values and Heating/     Overall U-values
 Cooling Loads--Manufactured       and Heating/
 Homes, or the Battelle Method.    Cooling Loads--
                                   Manufactured
                                   Homes, or the
                                   Battelle Method.
Section 460.103 would require     No corresponding
 insulating materials to be        requirements.
 installed according to the
 manufacturer installation
 instructions and the
 prescriptive requirements of
 Table 460.103.
Section 460.103 would establish   No corresponding
 requirements for the              requirements.
 installation of batt, blanket,
 loose fill, and sprayed
 insulation materials.
Section 460.104 would require     Section 3280.505    ..................
 manufactured homes to be sealed   establishes air
 against air leakage at all        sealing
 joints, seams, and penetrations   requirements of
 associated with the building      building thermal
 thermal envelope in accordance    envelope
 with the manufacturer's           penetrations and
 installation instructions and     joints.
 the requirements set forth in
 Table 460.104.
Section 460.201(a) would require  Section             ..................
 each manufactured home to be      3280.715(a)(4)
 equipped with a duct system       establishes
 that must be sealed to limit      requirements for
 total air leakage to less than    airtightness of
 or equal to 4 cfm per 100         supply air duct
 square feet of floor area and     systems.
 specify that building framing
 cavities are not to be used as
 ducts or plenums when directly
 connected to mechanical systems.

[[Page 32784]]

 
Section 460.202(a) would require  Section             Both DOE's rule
 at least one thermostat to be     3280.707(e)         and the HUD Code
 provided for each separate        requires that       require the
 heating and cooling system        each space          installation of
 installed by the manufacturer.    heating, cooling,   at least one
                                   or combination      thermostat that
                                   heating and         is capable of
                                   cooling system be   maintaining zone
                                   provided with at    temperatures.
                                   least one
                                   adjustable
                                   automatic control
                                   for regulation of
                                   living space
                                   temperature.
Section 460.202(b) would require  No corresponding    ..................
 that installed thermostats        requirements.
 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 require  Section             Both DOE's rule
 heat pumps with supplementary     3280.714(a)(1)(ii   and the HUD Code
 electric resistance heat to be    ) requires heat     require heat
 provided with controls that,      pumps to be         pumps with
 except during defrost, prevent    certified to        supplemental
 supplemental heat operation       comply with ARI     electric
 when the pump compressor can      Standard 210/240-   resistance heat
 meet the heating load.            89, heat pumps      to prevent
                                   with supplemental   supplemental heat
                                   electrical          operation when
                                   resistance heat     the heat pump
                                   to be sized to      compressor can
                                   provide by          meet the heating
                                   compression at      load of the
                                   least 60 percent    manufactured
                                   of 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 the    requirements.
 installation of service hot
 water systems.
Section 460.203(b) would require  No corresponding
 any automatic and manual          requirement.
 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 the     requirements.
 insulation of hot water pipes.
Section 460.204 would establish   Section             HUD requirements
 requirements for mechanical       3280.103(b)         at Sec.
 ventilation system fan efficacy.  establishes whole-  3280.103(b) do
                                   house ventilation   not overlap with
                                   requirements.       DOE's rule. DOE's
                                                       requirement is
                                                       for fan
                                                       electrical
                                                       efficiency, while
                                                       HUD requirements
                                                       specify minimum
                                                       and maximum air
                                                       flow rates.
Section 460.205 would establish   No corresponding    ..................
 requirements for heating and      requirements.
 cooling equipment sizing.
------------------------------------------------------------------------

IV. Discussion and Results of the Economic Impact and Energy Savings

A. Economic Impacts on Individual Purchasers of Manufactured Homes

    DOE conducted 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 used 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.
    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 analyzing this 
rulemaking. A 10-year LCC was also calculated to reflect the cost of 
ownership over the tenure of the first homebuyer based on 
recommendations from the MH working group. First homebuyer tenancy is 
estimated to be 13 years; however, DOE did not do a 13-year analysis, 
and instead approximates first tenancy with the 10-year analysis at the 
recommendation of the MH working group. DOE calculated the PBP by 
dividing the incremental increase in purchase cost by the reduction in 
average annual operating costs that would result from this rule.
    In the August 2021 SNOPR and the October 2021 NODA, the LCC 
analysis demonstrated that increased purchase prices due to the 
proposed 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. 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

[[Page 32785]]

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).\57\ 86 FR 47744, 47790-47805; 86 FR 59042, 59043.
---------------------------------------------------------------------------

    \57\ 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.
---------------------------------------------------------------------------

    DOE received a number of comments regarding several aspects of the 
economic impacts on individual consumers described in the August 2021 
SNOPR and October 2021 NODA. DOE also received comments pertaining to 
the methodology and assumptions used in the economic analysis 
conducted. For this final rule, DOE conducted similar LCC and PBP 
analyses for the requirements adopted in this final rule. The changes 
made from the analyses performed for the August 2021 SNOPR and October 
2021 NODA 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.
1. Discussion of Comments and Analysis Updates
a. General
    UC Law School stated that DOE failed to analyze the findings and 
relevant information from the 2021 CFPB report and the 2020 U.S. Census 
Manufactured Housing Survey, thereby risking a finding that its action 
was arbitrary and capricious. They stated that these documents have 
relevant information that should be taken into account for the 
rulemaking process, especially for the financial implications of the 
proposed rule. (UC Law School, No. 1634 at p. 6, 7, 10) DOE reviewed 
the updates to the 2021 CFPB and the 2020 MHS in the October 2021 NODA 
and provided updated analysis results. 86 FR 59042. DOE is 
incorporating the same updates in this final rule.
    Schulte stated that loans made for used homes are likely to be much 
smaller than for new home loans. Table 4 of the 2021 CPFB report shows 
a median chattel loan amount is $58,672. Schulte also mentioned that 
there is currently no government-sponsored enterprise (``GSE'') 
secondary market for the purchase of chattel manufactured home loans, 
and that, until private financing sources decide to purchase chattel 
loan pools or the GSE's move into the chattel loan market, limited 
lender choice and higher loan rates are likely to persist with regards 
to purchasing new manufactured homes. (Schulte, No. 1028 at pp. 6, 20) 
DOE appreciates the comment. As previously mentioned, DOE has updated 
the analysis to consider the 2021 CFPB. As such, the loan interest 
rates DOE is using (5 percent for consumers using real estate loans, 9 
percent for consumers using chattel or personal property loans) is 
consistent with the rates used in the 2021 CFPB report (4.6 percent for 
mortgage/real estate loans and 8.6 percent for chattel loans).
b. Analysis Period for LCC
    In the August 2021 SNOPR and the October 2021 NODA, DOE analyzed a 
10-year LCC to represent the first ownership period and cost to 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. DOE assumed that the energy efficiency measures 
(e.g., thicker insulation) had a lifetime of 30 years before requiring 
replacement. In addition, DOE assumed that the monetary value of those 
energy efficiency measures depreciated linearly over time to having no 
value at the end of its lifetime; however, DOE assumed that the 
effectiveness of these measures does not decrease over time. As noted 
in the TSD, EEMs may have a shorter lifespan than the home if the 
measures reduce in efficacy over the 30-year lifetime; to the extent 
that this is the case, the energy savings presented in IV.D may be 
reduced. At the end of this 30-year lifetime, the EEMs would have no 
monetary value. DOE received comments on the analysis period used.
    Based on MHI's industry data, they stated that buyers usually sell 
their homes within seven to ten years of purchase, and therefore it is 
unlikely that a manufactured homebuyer financing the purchase of a new 
manufactured home being proposed would even recover these upfront costs 
at a future sale. (MHI, No. 1592 at p. 4) They stated that at the 
efficiency levels proposed by DOE, MHI's survey of manufacturers found 
that it is unlikely that a buyer purchasing a new home and financing 90 
percent of the purchase price would even recover these upfront costs at 
a future sale. Id
    On the other hand, Schulte stated that the average tenancy for a 
manufactured home is 14 years, which supports a longer period for the 
LCC analysis. (Schulte, No. 1028 at pp. 6, 20) NASEO stated that DOE 
should not consider the benefits of only 10 years for determining cost 
effectiveness, because it is inconsistent with DOE's previous positions 
on the average 30 to 40-year lifetime of manufactured homes and an 
average ownership period of 13 years. They stated that the lifetime of 
a manufactured home averages 30 years as found by DOE in the June 2016 
NOPR, and corroborated by DOE's own findings which indicate that many 
manufactured homeowners live in their homes for 40 or more years. 
Furthermore, they commented that DOE's proposed benefit analysis 
indicates an ``average ownership period of 13 years'' for new homes and 
states ``62 percent of all homeowners anticipate living in their homes 
for more than 10 years and that 38 percent of homeowners do not 
anticipate ever selling their home.'' Accordingly, they stated that DOE 
should account for the ``total life-cycle construction and operating 
costs'', as required by EISA. (NASEO, No. 1565 at p. 2)
    Next Step commented that HUD's affordability compliance 
requirements for new housing production are up to 30 years. (Next Step, 
No. 1617 at p. 7-9) They also stated that two of the most prominent 
affordable housing, new construction programs (the HOME Program and the 
Low-Income Housing Tax Credit Program), require affordability 
compliance periods for 30 years for rental new construction. 
Accordingly, they recommended that the federal government considers the 
long-term affordability of this housing stock, and the same principles 
should be applied to manufactured housing. (Next Step, No. 1617 at p. 
5) Further, they stated that the consideration for LCC costs for 
manufactured homes should be based on 30 years. (Next Step, No. 1617 at 
p. 6) Schulte also stated that the current HUD thermal standards were 
based on the useful life of the home (33 years). Manufactured homes 
once sited are not often moved unless required to do because of a loan 
default or for other reasons. (Schulte, No. 1028 at p. 17)
    DOE appreciates the information provided by these organizations 
regarding the potential tenure period for the occupants of manufactured 
homes. Based on a review of the 2019 AHS, the mean year that the 
householder (owner and renter) moved to a manufactured home is 2008, 
which equates to 11 years living in the home in 2019. When separating 
owner and renter, the mean year was 2006 for the owner (equating to 13 
years living in the home in 2019) and 2014 for the renter (equating to 
5

[[Page 32786]]

years living in the home in 2019). Further, based on the nationally 
representative housing sample data in the 2019 AHS, the maximum 
duration for a householder living in the home is 49 years. Separately, 
a 2012 study conducted by Foremost Insurance Group found that 40 
percent of manufactured home homeowners do not anticipate ever selling 
their manufactured home.\58\ 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 do not anticipate ever selling 
their home.\59\ Therefore, there are many factors that may affect the 
duration of time that a manufactured home remains under a given 
homeowner and similarly many factors that DOE must consider in 
developing its analysis. Considering the MH working group agreed on the 
30-year and 10-year analysis periods, and analysis conducted by other 
organizations, including HUD, and the Low-Income Housing Tax Credit 
Program also conduct their analyses based on a 30-year analysis period, 
DOE is maintaining both the 30-year and the 10-year analyses.
---------------------------------------------------------------------------

    \58\ Foremost Insurance Group. 2012 Mobile Home Market Facts.
    \59\ Manufactured Housing Institute. 2021 Manufactured Housing 
Facts: Industry Overview.
---------------------------------------------------------------------------

    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)) Therefore, 
based on DOE's reasoning and the comments discussed previously, DOE 
continued to perform the 30-year analysis to determine the economic 
impacts, as well as the cumulative benefits over the lifetime of the 
manufactured home. As such, DOE is considering the total life-cycle 
costs and operating costs of the standards over a 30-year period in 
this final rule. Separately, for the purposes of this analysis and 
based on the range of time periods provided in the comments discussed 
previously, 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 falls 
within the middle ground of the ranges described in the 2019 AHS and 
the comments provided.
c. LCC Methodology
    DOE received a number of comments regarding the LCC methodology to 
capture potential savings related to the rulemaking.
    Several commenters stated that using DOE's cost analysis 
assumptions and the average tenure of a manufactured homeowner, the 
changes recommended by DOE will actually cost homebuyers money that 
they will never recoup with energy savings. (MMHA, No. 995 at p. 1-2); 
(Michigan MHA, No. 1012 at p. 1-2); (WHA, No. 1025 at p. 1-2); (PMHA, 
No. 1165 at p. 1-2); (Westland, No. 1263 at p. 1-2); (Pleasant Valley, 
No. 1307 at p. 1); (American Homestar, No. 1337 at p. 1); (Oliver 
Technologies, No. 1350 at p. 1); (KMHA, No. 1368 at p. 1); (Adventure 
Homes, No. 1383 at p. 1-2); (NJMHA, No. 1451 at p. 2); (WMA, No. 1452 
at p. 1-2); (IMHA/RVIC, No. 1466 at p. 2); (Cavco, No. 1497 at p. 2); 
(Skyline Champion, No. 1499 at p.1); (Mississippi MHA, No. 1588 at p. 
2) ; (Skyline Champion, No. 1612 at p.2); (Cavco, No. 1622 at p. 2); 
(VAMMHA, No. 1624 at p. 2)
    MHI stated that DOE's analysis uses improper calculations and 
methodologies. They stated that the proper way to do the cost-benefit 
analysis is by examining each incremental improvement in efficiency, 
individually, which DOE did not do, even though DOE developed and 
promotes a Building Energy Optimization Tool that uses this incremental 
approach to find the optimum investment. MHI stated that, by combining 
all the energy measures together into a single figure, the slim 
benefits of adding the last, least cost-efficient measures, is subsumed 
in and masked by the benefits of adding the first, most cost-effective 
measures. (MHI, No. 1592 at p. 4) Further, MHI also commented that many 
of the locations selected by the DOE for its analysis are not locations 
where manufactured housing is prevalent. (MHI, No. 1592 at p. 5) 
Accordingly, MHI performed their own analysis using a down-payment of 
10 percent, an interest rate of 9 percent--which MHI stated is at the 
high end of mortgage rates today--a loan term of 20 years, and a 
tenancy period of 10 years, MHI's cost-benefit analysis found that the 
DOE's proposal would result in a net loss for single- and multi-section 
homes depending on location. (MHI, No. 1592 at p. 4) Cavco commented 
that the cost benefit analysis should begin at the HUD Code minimum 
requirements and increase incrementally, taking into account the actual 
cost and potential savings until the elements are found to produce 
negative paybacks over a reasonable time period. (Cavco, No. 1622 at p. 
3)
    Generally, NRDC stated that while the costs of energy efficiency 
improvements are borne by the first-time owner, the value is reaped by 
all residents of the product, including renters and the purchasers of 
existing homes. They stated that neither of these actors has any say in 
determining energy efficiency unless they choose to perform retrofits, 
which are much less cost effective than building in the efficiency from 
the factory. (NRDC, No. 1599 at p. 2)
    ACEEE recommended that DOE update the LCC analyses to also include 
renters. Based on their analysis, they stated that 25 percent of 
residents in manufactured homes are renters and 29 percent of residents 
are in homes less than ten years old. For low-income residents, 29 
percent are renters (33 percent of those in homes less than ten years 
old). ACEEE also commented that the analyses should fully include 
owners with no debt--the percentage of owners (not including renters) 
with no home loan increases from 30 percent of owners of homes less 
than 4 years old to 38 percent of homes up to 10 years, 57 percent of 
homes 11-20 years, 76 percent of homes 21-30 years, and 87 percent of 
those 31-70 years old. They stated that 82 percent of low-income owners 
have no debt so, assuming low-income owners disproportionately purchase 
homes for under $63,000, the percentage of owners with no debt is 
likely higher for the cheapest homes. (ACEEE, No. 1631 at p. 8-10)
    Accordingly, ACEEE referenced a separate white paper they 
conducted,\60\ which suggested the following updates to the DOE LCC 
analysis. First, ACEEE noted that affordability concerns are greatest 
for low-income households, only 3 percent of whom own homes that are 
less than ten years old; these residents tend to rent or to own older 
homes. If DOE chooses also to do 10-year LCC analyses, ACEEE 
recommended looking at all types of residents in years 1-10, 11-20, and 
21-30 of a home to gain a better understanding of the impact on all 
residents. They stated that while these residents are roughly included 
in the 30-year LCC analyses, DOE should either blend these residents 
into the 10-year LCC analyses or do additional 10-year analyses to 
consider the impacts on these residents. Second, although income data 
are limited, ACEEE stated that there is no evidence that taking out

[[Page 32787]]

chattel loans varies significantly by income level. They stated that 
median income of borrowers is almost the same for mortgages and chattel 
loans, per the 2021 CFPB Report. Therefore, ACEEE recommended that 
residents of single-section (or Tier 1) homes and lower-income 
residents have the same mix of financing as other residents and that 
they did not all pay higher interest rates. Third, ACEEE stressed that 
the EEM costs were too high and so it recommended updating cost 
estimates for what they claim are ``more recent'' estimates. Finally, 
ACEEE noted that incorporation of a heat pump water heater as an 
``additional efficiency package'' option should be included. In 
addition, ACEEE performed some modifications to the LCC spreadsheet, 
including the following: (1) Correcting the property cash flow payments 
to be in nominal dollars, such that the discounting used for the LCC 
calculation is consistent; (2) adjusting the incremental property tax 
payments to decline annually consistent with the residual value 
assumptions; and (3) adjusting the assumed chattel loan term from 15 to 
23 years.
---------------------------------------------------------------------------

    \60\ Bell-Pasht, A., and L. Ungar. 2021. Strong Universal Energy 
Efficiency Standards Will Make Manufactured Homes More Affordable. 
Washington, DC: American Council for an Energy-Efficient Economy. 
https://www.aceee.org/white-paper/2022/01/strong-universal-energy-efficiency-standards-manufactured-homes.
---------------------------------------------------------------------------

    With the updates suggested, ACEEE's study found that a standard at 
the untiered/Tier 2 level would generate about $900 more in net life-
cycle cost savings in the average single-section home than would the 
weaker standard. Their projected savings are significant in each 
climate zone, but they are especially striking in the South (Climate 
Zone 1), which has been the center of affordability concerns. Further, 
they estimated significantly higher LCC savings than DOE predicted 
because of the updated financing assumptions and updated cost 
assumptions. They also performed a 10-year LCC analysis, which 
suggested that while the first 10 years provides modest savings for the 
untiered/Tier 2 standards (consistent with DOE's analysis), the net 
savings from the untiered/Tier 2 standards surpass Tier 1 in the second 
and especially the third decade, as the energy cost savings continue 
and the cost (residual value) of the measures decreases. (See A. Bell-
Pasht and L. Ungar study).
    NEEA also stated that DOE's assumption that Tier 1 MH are only 
purchased by low-income households and financed by chattel loans is not 
accurate. (NEEA, No. 1601 at p. 6-9) Joint commenters also stated that 
the standards and analysis should take into account both the 
construction costs and the full energy costs for those who can buy new 
homes, for renters, and for owners of older homes. They commented that 
only 3 percent of low-income residents of manufactured homes own homes 
that are less than ten years old, and only 13 percent of low-income 
residents owe loan debt for their homes (including mortgages and 
chattel loans). (Joint Comments, No. 1630 at p. 1) Next Step 
recommended DOE consider that the energy savings should not be 
calculated based on a simple payback for the first home buyer, but also 
subsequent purchasers who will benefit over the 40-year life expectancy 
of the home. (Next Step, No. 1617 at p. 7)
    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 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). Further, the LCC analysis focuses primarily on 
the effects of the rule on the individual consumers of manufactured 
homes. Finally, the LCC analysis applies to all consumers, regardless 
of whether they purchase the home from a commercial retailer or an 
onsite community operator.
    DOE used the LCC and PBP analyses developed during the MH working 
group negotiations to inform the development of the rule based on the 
economic impacts on individual purchasers of manufactured homes. This 
includes the locations identified in the analysis--the MH working group 
selected nineteen cities located throughout each of the IECC climate 
zones. DOE updated the inputs to the LCC and PBP analyses based on 
updated references, including Annual Energy Outlook 2021 (``AEO 
2021''), 2021 CFPB and the latest U.S. Energy Information 
Administration (``EIA'') prices. In performing this analysis, DOE 
analyzed the costs and benefits to consumers over a 10-year analysis 
period and a 30-year analysis period. The 10-year analysis period 
represented the cost of ownership over the tenure of the first 
homebuyer, and the 30-year analysis period reflected the total cost of 
ownership over the lifetime of the manufactured home. Further 
discussion on analysis period is provided in IV.A.1.b.
    In reviewing the general comments regarding the LCC methodology, 
DOE agrees with ACEEE and has made the following updates: (1) 
Correcting all property cash flow payments to be in nominal dollars, 
such that the discounting used for the LCC calculation is consistent; 
and (2) adjusting the assumed chattel loan term from 15 to 23 years 
(per the 2021 CFPB Report). DOE notes that the chattel loan term was 
adjusted in the October 2021 NODA. 86 FR 59042, 59044. DOE is 
maintaining the conservative assumption that incremental property tax 
payments should be held constant, as this was an assumption used by the 
MH working group, and because property tax is not just based on the 
value of the home, but also on the home location. Further, DOE is not 
including any requirements for the additional energy efficiency 
packages in this final rule, including heat pumps, as discussed in 
section III.F.2.b of this document. Finally, section IV.A.1.e addresses 
all comments regarding updating the incremental costs.
    As acknowledged by ACEEE, the 30-year LCC analysis roughly includes 
all residents of manufactured homes, regardless of whether they are a 
homeowner or a renter. DOE believes the likely effect to renters is 
that the landlord would pass on their added purchase costs, financing 
costs and property taxes to the renters, but the renters would reap the 
same energy savings benefits as already presented in the 10- and 30-
year analyses. In addition, as discussed in section IV.A.1.b of this 
document, DOE is maintaining the 30-year analysis period as a 
reasonable representation of the total cost of ownership over the 
lifetime of the manufactured home.
    Regarding the 10-year analysis, DOE acknowledges comments that 
there are all types of residents of manufactured homes, not just the 
homeowners. Further, DOE acknowledges that including other residents 
could show additional savings than what was presented in the August 
2021 SNOPR and October 2021 NODA. However, the 10-year analysis was 
included in addition to the 30-year analysis specifically to represent 
the cost of ownership period over the tenure of the first homebuyer, 
per the MH Working Group (See page 343 at EERE-2009-BT-BC-0021-0120). 
To address affordability and the potential adverse impacts on price-
sensitive, low-income purchasers of manufactured homes from the 
imposition of energy conservation standards, DOE maintains the 10-year 
analysis to continue to represent the first homebuyer only, consistent 
with the analysis conducted by the MH Working Group.
    Further, DOE analyzed Tier 1 considering only personal property 
(i.e., chattel) loans. 86 FR 47744, 47798. Although the 2021 CFPB 
presents that

[[Page 32788]]

the median income of borrowers of chattel loans is not significantly 
different than that of mortgage loans ($52,000 vs. $53,000; See Table 7 
of the 2021 CFPB), it also notes that borrowers who own their land can 
either finance their home purchase with a chattel loan or a mortgage, 
whereas those who do not own their land are typically only able to 
finance with a chattel loan (see page 33). Therefore, DOE understands 
that the chattel loan median income in Table 7 of the 2021 CFPB could 
include both borrowers who own their land and borrowers who do not. 
However, DOE notes that the Tier 1 analysis represents price-sensitive 
low-income purchasers, most if not all of whom would be unable to own 
land. DOE also notes that data presented in 2021 CFPB show that the 
median chattel loan amount for MH is $58,672 (versus a median amount of 
$127,056 for MH mortgages). These median loan amounts reflect the price 
differential between the median single-section and multi-section MH as 
reported in the MHS PUF 2020 ($57,233 and $108,583, respectively), 
which supports DOE's choice to use chattel loan rates for all Tier 1 
homes (i.e., single-section homes). See Table III.1. Further, as 
acknowledged by ACEEE, income data as it relates to chattel vs. 
mortgage loans is limited. As such, DOE maintains the conservative 
consideration that the Tier 1 analysis would apply only to personal 
property or chattel loans.
    Separately, MHARR stated that the October 2021 NODA assumes a lower 
inflation rate going forward than the August 2021 SNOPR. However, they 
suggested that current inflation easily exceeds both numbers cited by 
DOE and is increasing at a rapid pace. They stated that actual 
inflation is more than two times the rate estimated by DOE and has 
increased drastically since the beginning of 2021. They suggested that 
the latest cost data show that the purchase price impact of the DOE 
proposed rule would be even greater going forward than projected by the 
August 2021 SNOPR, and would undermine the inherent affordability of 
manufactured housing contrary to law. (MHARR, No. 1640 at p. 6, 7)
    DOE understands that there may be uncertainties regarding inflation 
rates and future prices of energy. In the August 2021 SNOPR, the inputs 
used in the LCC analysis, including inflation rates, energy prices and 
their escalation rates, were based on the AEO 2020 and Short-Term 
Energy Outlook studies, prepared by the U.S. EIA. In the October 2021 
NODA, DOE updated the AEO source to the latest version, which is AEO 
2021.\61\ Further, DOE updated the electricity prices from the EIA 
Short-Term Energy Outlook.\62\
---------------------------------------------------------------------------

    \61\ Energy Information Administration. Annual Energy Outlook 
2021 with Projections to 2050. (2021).
    \62\ Energy Information Administration. Short-Term Energy 
Outlook: Real Prices Viewer. Available at: www.eia.gov/forecasts/steo/realprices/.
---------------------------------------------------------------------------

    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 has determined these studies are 
the best current and future estimates of inflation, energy prices and 
escalation rates and uses these studies in support of all of its energy 
conservation standard rulemakings. In the final rule, DOE proposes to 
maintain the same source for establishing inflation rates, energy 
prices and escalation rates as the October 2021 NODA, which was AEO 
2021.
d. Payback Periods
    DOE also received several comments regarding PBP results relating 
to the LCC and homeownership periods.
    NAHB supported a 10-year simple payback as a primary standard for 
evaluating the cost effectiveness of energy saving measures. They 
stated that their policy of a 10-year simple payback for mandatory 
energy measures is based on consumer preferences as determined and 
confirmed over many years through consumer surveys conducted by its 
Economics Department and suggested that regulations that exceed a 10-
year simple payback should be supported by incentives and voluntary 
programs. NAHB also identified that 12 out of 19 cities would see 
paybacks over 10 years for single-section and multi-section homes. 
Accordingly, they strongly encouraged that DOE re-consider the impact 
that the Tier 2 and an untiered approach would have on the ability for 
hundreds of thousands of Americans to be able to afford these homes. 
(NAHB, No. 1398 at p. 2)
    TMHA believed that payback periods across the climate zones should 
be no longer than four years for all homes. (TMHA, No. 1628 at p. 3) 
NRECA commented that the payback period in the SNOPR for adhering to 
the 2021 IECC standard is over 10 years, which is too long for price-
sensitive consumers. (NRECA, No. 1406 at p. 5) Further, NRECA commented 
that any new costs added to the manufactured home will impact the 
monthly financing payment for the home and thus will impact what the 
consumer chooses. Therefore, they suggested increasing that cost per 
month because of efficiency upgrades must have a quick payback to 
appropriately balance affordability issues. (NRECA, No. 1406 at p. 4)
    On the other hand, Schulte stated because the current HUD thermal 
standards were based on the useful life of the home (33 years), a 
payback period of 6-8 years would substantially understate the benefits 
of the proposed energy standards and is inconsistent with life-cycle 
methodologies adopted by DOE and HUD. (Schulte, No. 1028 at p. 17, 18) 
Next Step stated that according to the National Association of 
Realtors, as of 2018, the median duration of homeownership in the U.S. 
is 13 years. In addition, they stated that according to MHI, 62 percent 
of all residents anticipate living in their homes for more than 10 
years, and 38 percent do not expect to sell their homes. (Next Step, 
No. 1617 at p. 7)
    Table IV.7 provides the results for DOE's simple payback period 
analysis for the rule, broken out by climate zone for Tier 1 (single-
section) and Tier 2 (multi-section) homes. These resulting simple 
payback periods indicate that the first homeowner would gain a net 
benefit and would realize positive net savings from the proposed energy 
standards prior to the 10-year mark. As previously discussed, based on 
the 2019 AHS, the mean homeowner duration is 13 years. The national 
average simple payback period of a Tier 1 standard is 3.7 years for 
single-section homes, and for a Tier 2 standard is 8.9 years for multi-
section homes, although these results vary by location. The Tier 2 
standard simple PBP exceeds 13 years for one city, San Francisco.
e. Incremental Cost
    In the August 2021 SNOPR, DOE determined the incremental cost to 
the consumer (i.e., incremental purchase price) 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 based the incremental costs on those costs provided and 
agreed to by the MH working group. ASRAC Cost Analysis Data, EERE-2009-
BT-BC-0021-0091.
    DOE received a comment indicating that the cost of labor, overhead, 
and profit has been underestimated in DOE's cost analysis. MMHA 
suggested that DOE should be accounting for the costs of additional 
labor or the additional

[[Page 32789]]

overhead and profit that would be associated with the higher home cost. 
In addition, MMHA stated that they conducted an independent cost-
benefit analysis using DOE's assumptions of cost and location and 
concluded that the proposal would add at a minimum of almost $1,000 to 
the cost of a new single-section home and up to $5,500 to the cost of a 
multi-section home depending on location. (MMHA, No. 995 at p. 3) MHI 
stated that DOE's proposal is based on improper calculations and 
methodologies, including underestimating the current cost of homes and 
the costs of the new materials to construct them. (MHI, No. 1592 at p. 
4-6, 25) Earthjustice and Prosperity Now commented that the costs used 
in the analysis are no longer relevant but did not provide any updated 
costs. (Earthjustice and Prosperity Now, No. 1637 at p. 8) MHARR stated 
that DOE failed to consider the most recent cost data. (MHARR, No. 1640 
at p. 2-4) TMHA commented that the pricing data that DOE uses has a 
tremendous amount of lag. (TMHA, No. 1628 at p. 2) RECA also comments 
that Tier 1 appears to be based on cost information submitted by one or 
more manufacturers with no real connection to the model energy codes. 
(RECA, No. 1570 at p. 2, 7)
    DOE also received several comments about additional construction 
costs. Multiple organizations commented that the DOE analysis assumes 
that the floor joists are 2 x 6 with insulation up to and including R-
22, and 2 x 8 floor joists insulated to R-30 and above. However, 
according to these commenters, currently, 90 percent of floors produced 
use 2 x 6 floor joists. Therefore, the commenters stated that the 
increased joists depth (i.e., going to 2 x 8 floor joists) will add 
approximately a 33 percent material cost increase which will be around 
$200 per 14 x 76 floor. The commenters also stated that this 2-inch 
floor joist change will also increase the shipping height. (MHI, No. 
1592 at p. 25-26); (Clayton Homes, No. 1589 at p. 16-18, 22); (MHCC, 
No. 1600 at p. 6) MMHA and many other organizations raised similar 
concerns, questioning if DOE considered the cost of changing from 2 x 6 
to 2 x 8 floor joists. They also stated that placing more than R-11 
blankets under the floor joists cannot be done without offsetting 
outriggers and providing blocking between joists because compressing 
more than R-11 insulation between an outrigger and a joist results in 
noticeable humps in the floor at each outrigger location, and 
questioned whether DOE accounted for these additional costs in the 
analysis. (MMHA, No. 995 at p. 2); (Michigan MHA, No. 1012 at p. 1-2); 
(WHA, No. 1025 at p. 1-2); (PMHA, No. 1165 at p. 1-2); (Westland, No. 
1263 at p. 1-2); (Pleasant Valley, No. 1307 at p. 1-2); (American 
Homestar, No. 1337 at p. 1-2); (Oliver Technologies, No. 1350 at p. 1-
2); (KMHA, No. 1368 at p. 1-2); (Adventure Homes, No. 1383 at p. 1-2); 
(Clayton Homes, No. 1589 at p. 22). Additionally, NAHB encouraged DOE 
to work directly with the producers of manufactured homes to validate 
the construction cost numbers used in the cost effectiveness analysis 
because costs have increased substantially over the last two years. 
(NAHB, No. 1398 at p. 2)
    DOE also received multiple comments on the cost of testing and 
compliance. Multiple commenters stated that DOE underestimated the 
costs of new materials to construct homes and did not consider the cost 
of testing and compliance in the analysis. (MMHA, No. 995 at p. 1-2); 
(Michigan MHA, No. 1012 at p. 1-2); (WHA, No. 1025 at p. 1-2); (PMHA, 
No. 1165 at p. 1-2); (Westland, No. 1263 at p. 1-2); (Pleasant Valley, 
No. 1307 at p. 1); (American Homestar, No. 1337 at p. 1); (Oliver 
Technologies, No. 1350 at p. 1); (KMHA, No. 1368 at p. 1); (Adventure 
Homes, No. 1383 at p. 1-2); (NJMHA, No. 1451 at p. 2); (WMA, No. 1452 
at p. 1-2); (IMHA/RVIC, No. 1466 at p. 2); (Cavco, No. 1497 at p. 2); 
(Skyline Champion, No. 1499 at p.1); (Mississippi MHA, No. 1588 at p. 
2); (Skyline Champion, No. 1612 at p.2); (Cavco, No. 1622 at p. 2); 
(VAMMHA, No. 1624 at p. 2) MHARR claimed that, in DOE's cost-benefit 
analysis, DOE does not include estimated costs for testing, 
enforcement, regulatory compliance, or costs related to regular changes 
to the IECC, therefore making DOE's cost analysis invalid. (MHARR, No. 
1640 at pp. 7, 8) In addition, NAHB stated that the insulation 
requirements in the 2021 IECC greatly increase the cost compared to the 
2018 IECC, specifically mentioning the ceiling insulation. (NAHB, No. 
1398 at p. 3) In addition, Skyline Champion suggested that expenses 
associated with design package updates, truss re-designs, structural 
and thermal calculation revisions, quality process updates, 
manufacturing process changes, and procurement modifications will 
contribute significantly to costs associated with implementation and 
compliance requirements. (Skyline Champion, No. 1612 at p. 2)
    Conversely, ACEEE conducted its own research and concluded that DOE 
overestimated the material and incremental costs in its cost analysis. 
ACEEE recommended that DOE reconsider the cost of continuous insulation 
since there is evidence the price at scale will be lower than what DOE 
estimated, and suggested that DOE should estimate the costs for 
widespread implementation under a standard. DOE used an installed cost 
of $0.98/sf from RS Means 2020 construction cost estimating software. 
With an opaque wall area of 1,053 square feet (``sf'') for single-
section homes and 1,036 sf for double-section homes, as in DOE's SNOPR 
analysis, ACEEE suggested that this would correspond to a price of 
about $1,000. They stated that this is confirmed in the previously 
mentioned study by E. Levy et al.,\63\ which for adding foam sheathing 
(wall insulation from House B to House C in Table 39) found a cost of 
$936. (ACEEE, No. 1631 at p. 10-11) In addition, ACEEE recommended 
reconsidering the cost of windows. ACEEE stated the Environmental 
Protection Agency conducted field research on current prices for 
windows (for a 12-window replacement project in site-built homes) and 
estimated that the price difference per 15 sf window from low-e (U-
factor 0.32-0.35) to add argon (0.28-0.31) is $6, to lower SHGC is 
$7.5, and for two coatings with argon (0.24-0.26) is $29 per window 
(with much lower component costs), which corresponded to a total price 
difference of roughly $44 for a single-section home or $75 for a 
double-section home to add argon, and $214 or $363 for windows (based 
on 111 and 188 sf of windows respectively). They stated that Faithful + 
Gould's 2012 report to PNNL \64\ estimated a $4.18/sf difference for 
0.50 vs 1.2, $0.89/sf difference for 0.35 vs 0.5, $0.18/sf for 0.32 vs 
0.35, and $1.15/sf for 0.3 vs 0.32, and this corresponded to a single-
section cost for Tier 2 of $583 in Climate Zone 1 and $99 in Climate 
Zone 2 in 2011 dollars (not including the cost of adding argon and 
improving SHGC in Climate Zone 2, which per ENERGY STAR data might add 
$100). They stated that the E. Levy et al. study found a cost for a 
single-section home of $1,382 for single-pane +storm (U-value 0.47/SHGC 
0.73), $218 more for double-pane low-e (0.31/0.33), and $600 for 
advanced argon-filled (0.30/0.23). ACEEE stated that, while not 
consistent, these costs are all much lower than in DOE's current 
analysis, and after adjusting to 2023 dollars, ACEEE found that with 
the EPA report, estimates

[[Page 32790]]

would reduce the estimated initial cost of Tier 2 by $900 to $1,500 for 
single-section homes and $1,500 to $2,100 for multi-section homes, 
depending on climate zone. (ACEEE, No. 1631 at p. 11-12)
---------------------------------------------------------------------------

    \63\ See, e.g., costs and savings in E. Levy, et al., Field 
Evaluation of Advances in Energy Efficiency Practices for 
Manufactured Homes (DOE, 2016), https://www.nrel.gov/docs/fy16osti/65436.pdf.
    \64\ Faithful+Gould, Residential Energy Efficiency Measures: 
Prototype Estimate and Cost Data, Revision 6.0 (2012), Tables 5.2.1 
and 2.5.
---------------------------------------------------------------------------

    Separately, NEEA also commented that the cost considerations used 
in the SNOPR analysis should be revaluated because they are too high, 
resulting in an underestimation of cost effectiveness of a more 
stringent energy code. NEEA provided information based on factory 
experience in the Northwest reflecting fully operationalized cost, 
claiming that if DOE uses these values, payback periods would be 
reduced by up to 42 percent. NEEA elaborated, stating that 
manufacturers will have lower cost at scale, especially if DOE employs 
an options table that enables trade-offs with house size and mechanical 
equipment. (NEEA, No. 1601 at p. 6-9) NEEA also states that the 
incremental costs experienced in the Northwest are substantially lower 
than the values DOE used because manufactured homes are value 
engineered to cut costs. They stated factories find ways to achieve Uo 
values using building science to reduce heat transfer paths. (NEEA, No. 
1601 at p. 7-8) Further, NEEA stated that in the Northwest housing 
market, manufactured homes built to HUD Code use 2x6 frame construction 
rather than 2x4 construction, and if cost per square foot was based on 
interior floor area, then homes built to the HUD Code in the Northwest 
would logically use 2x4 frame construction. Id. NRDC recommended that 
DOE take note that the ASHRAE standard allows manufacturers to take 
credit for compliance for several other measures, such as higher HVAC 
and water efficiency, ductless heat pumps, high-efficiency appliances 
and plumbing fixtures, etc. NRDC stated that these new options will 
decrease costs of various energy efficiency measures. (NRDC, No. 1599 
at p. 5-6)
    In the August 2021 SNOPR, DOE discussed that the incremental costs 
used were based on those provided by the MH working group, which 
represented small, medium and large manufacturers. Further, to 
corroborate that the costs were still relevant, DOE reviewed the RS 
Means 2020 and concluded that the estimates by the MH working group 
continued to remain mostly relevant. 86 FR 47744, 47794. For this final 
rule, DOE conducted another review of the cost analysis of the 
different energy efficiency measures to be employed as a result of this 
rule (ceiling, wall, floor, and window insulation). For this 
evaluation, DOE used the costs provided by the stakeholders in response 
to the August 2021 SNOPR and the October 2021 NODA, as summarized 
previously, in addition to costs available through RS Means 2020, the 
2021 IECC,\65\ ASHRAE,\66\ and costs provided in response to the June 
2016 NOPR that DOE evaluated in the August 2021 SNOPR. From this 
analysis, DOE again concluded that the cost data DOE used in the 
analysis relating to wall, floor, and window insulation are all within 
the range of values from the different sources reviewed. For the cost 
of ceiling insulation, however, DOE notes that the cost data DOE used 
is slightly higher than the information provided by the stakeholders, 
although not unreasonable. Accordingly, DOE concludes that the 
incremental costs evaluated for the rule are reasonable when compared 
to the range of cost values provided by stakeholders and determined 
through other references, as previously discussed. With regards to 
labor costs, DOE notes that the incremental costs provided by the MH 
working group were costs relative to the purchase prices made available 
to the home buyer, which includes labor costs as well as markups to 
account for manufacturer overhead and profits. As such, the incremental 
costs should already accommodate costs beyond just the manufacturer 
production cost. Further, DOE discusses in section III.F.2.b of this 
document that the amended standards would not require changes in 
exterior home dimensions and can be accommodated using current home 
construction techniques. Therefore, the amended standards would 
primarily require choosing the appropriate EEMs to meet the adopted 
prescriptive or performance requirements. Finally, DOE performed an MIA 
to estimate the potential financial impact of energy conservation 
standards on manufacturers of manufactured homes, which is discussed 
further in section IV.B. of this document.
---------------------------------------------------------------------------

    \65\ National Cost Effectiveness of the Residential Provisions 
of the 2021 IECC: Available at https://www.energycodes.gov/sites/default/files/2021-07/2021IECC_CostEffectiveness_Final_Residential.pdf.
    \66\ Available at https://www.ashrae.org/file%20library/technical%20resources/research/ashrae-d-rp1481-20090630.pdf.
---------------------------------------------------------------------------

    As discussed in sections III.D and III.E of this document, DOE is 
not addressing test procedure or compliance issues in this rulemaking, 
and therefore has not incorporated any of those attendant costs in the 
analysis at this time. As noted previously, many of the requirements in 
the standards would require minimal compliance efforts (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), and therefore such efforts would result in 
minimal additional costs to manufacturers. Moreover, DOE continues to 
work with HUD on potential approaches for testing, compliance, 
enforcement and labeling that may leverage the existing HUD inspection 
and enforcement process to ensure manufacturer compliance with the 
standards in a manner that is not overly burdensome or costly to 
manufacturers.
    DOE also received a comment mentioning the costs of truss redesign, 
testing, and approval. MHCC stated that getting a truss tested and 
approved for use in accordance with the HUD standard could cost upwards 
of $2,500 per design. In addition, any modifications to the heel height 
would create additional cost and transportation issues that were not 
considered by DOE, and any increase in the shipping height of a home 
would lead to additional costs such as rerouting units, pilot vehicles, 
and/or redesign of units. (MHCC, No. 1600 at pp. 7, 12-13) As discussed 
in section III.F.2.b of this document, DOE remains unconvinced that 
truss redesigns are needed to comply with the amended energy 
conservation standards. Further, DOE is no longer including the 
exterior wall continuous insulation requirement, which should resolve a 
number of issues related to shipping width of the home. In addition, 
DOE notes that the standards developed take into consideration the 
dimensional limitations of the home and consider the design and factory 
construction techniques of manufactured homes, as well as the 
associated incremental costs. As noted previously in section III.F.2.b, 
DOE has concluded that the amended standards would not require changes 
in exterior home dimensions and cause transportation issues. Finally, 
to the extent redesigns are necessary, DOE addresses the costs 
associated with model plan updates for the standards as part of the 
MIA.
    DOE also received a comment regarding the cost of insulation 
installation practices. Schulte said that there appears to be a lack of 
current research about the individual costs and benefits of the items 
noted in Table 460.103 and their application to manufactured homes. 
(Schulte, No. 1038 at pp. 6, 12, 23) DOE does not anticipate any 
incremental costs associated with the proper building practices of 
correctly installing insulation as listed in Table 460.103, as these 
installation practices have been

[[Page 32791]]

widely accepted by industry for many years.
2. Results
    This section provides the results for the projected economic 
impacts on individuals, including the LCC and PBP.
    DOE also used different loan parameters for the tiered standard. 
This is because the Tier 1 and Tier 2 standards each would apply to a 
portion of all manufactured homes. Specifically, the Tier 1 standard 
would apply to single-section manufactured homes and would be 
applicable to price-sensitive, low-income purchasers. This is 
consistent with data presented in 2021 CFPB, which show that the median 
chattel loan amount for MH is $58,672 (versus a median amount of 
$127,056 for MH mortgages).\67\ These median loan amounts reflect the 
price differential between the median single-section and multi-section 
MH as reported in the MHS PUF 2020 ($57,233 and $108,583, 
respectively). See Table III.1. Further, the 2021 CFPB notes that those 
who do not own their land are typically only able to finance with a 
chattel loan. 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 agreed upon by the MH working group. See Table IV.1 for 
details on the loan parameter percentages used for the analyses.
---------------------------------------------------------------------------

    \67\ CFPB report, 2021. https://files.consumerfinance.gov/f/documents/cfpb_manufactured-housing-finance-new-insights-hmda_report_2021-05.pdf.

                                     Table IV.1--Loan Parameter Percentages
----------------------------------------------------------------------------------------------------------------
                                                                Personal
                                                              property  (%)   Real estate  (%)      Cash  (%)
----------------------------------------------------------------------------------------------------------------
Tier 1 Standard...........................................             100.0               0.0               0.0
Tier 2 Standard...........................................              39.5              20.5              40.0
Overall...................................................              54.6              15.4              30.0
----------------------------------------------------------------------------------------------------------------

    The LCC analysis allowed DOE to analyze the effects of the energy 
conservation standards on both the individual consumer, as well as the 
aggregate benefits at the national level. Table IV.2 and Table IV.3 
provide the average purchase price increases to manufactured homes 
associated with the HUD zones.

  Table IV.2--National Average Manufactured Housing Purchase Price (and
               Percentage) Increases Under Tier 1 Standard
                                 [2020$]
------------------------------------------------------------------------
                                                Tier 1 standard
                                     -----------------------------------
                                              $                 %
------------------------------------------------------------------------
Climate Zone 1......................              $627               1.1
Climate Zone 2......................               627               1.1
Climate Zone 3......................               719               1.3
National Average....................               660               1.2
------------------------------------------------------------------------


  Table IV.3--National Average Manufactured Housing Purchase Price (and
               Percentage) Increases Under Tier 2 Standard
                                 [2020$]
------------------------------------------------------------------------
                                                Tier 2 standard
                                     -----------------------------------
                                              $                 %
------------------------------------------------------------------------
Climate Zone 1......................            $4,131               3.8
Climate Zone 2......................             4,438               4.1
Climate Zone 3......................             4,111               3.8
National Average....................             4,222               3.9
------------------------------------------------------------------------

    Figure IV.1 illustrates the average annual energy cost savings for 
space heating and air conditioning for the first year of occupation by 
geographic location under the standards based on the estimated fuel 
costs provided in chapter 8 of the Final rule TSD.
BILLING CODE 6450-01-P

[[Page 32792]]

[GRAPHIC] [TIFF OMITTED] TR31MY22.212

    Table IV.4, and Figure IV.2 illustrate the average 30-year LCC 
savings by geographic location (averaged across the five different 
heating fuel/system types) associated with both single-section and 
multi-section manufactured homes. As discussed in detail in chapter 8 
of the final rule 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 final rule TSD.

 Table IV.4--Average Manufactured Home LCC Savings (30 years) Under the
               Tier 1 and Tier 2 Standards by Climate Zone
                                 [2020$]
------------------------------------------------------------------------
                                       Single-section     Multi-section
                                          (Tier 1)          (Tier 2)
------------------------------------------------------------------------
Climate Zone 1......................            $1,020            $3,698
Climate Zone 2......................             1,123             3,060
Climate Zone 3......................             2,565             3,960
National Average....................             1,594             3,573
------------------------------------------------------------------------

                                                        [GRAPHIC] [TIFF OMITTED] TR31MY22.213
                                                        

[[Page 32793]]

    Table IV.5, and Figure IV.3 illustrate the average 10-year LCC 
savings by geographic location (averaged across the five different 
heating fuel/system types) associated with both single-section and 
multi-section manufactured homes.\68\
---------------------------------------------------------------------------

    \68\ Although Tier 2 homes (multi-section) in climate zone 2 and 
3 on average show positive LCC savings, San Francisco (in climate 
zone 2) and Salem (in climate zone 3) result in negative LCC 
savings.

 Table IV.5--Average Manufactured Home LCC Savings (10 years) Under the
               Tier 1 and Tier 2 Standards by Climate Zone
                                 [2020$]
------------------------------------------------------------------------
                                       Single-section     Multi-section
                                          (Tier 1)          (Tier 2)
------------------------------------------------------------------------
Climate Zone 1......................              $427              $863
Climate Zone 2......................               480               477
Climate Zone 3......................             1,217               873
National Average....................               720               743
------------------------------------------------------------------------

                                                        [GRAPHIC] [TIFF OMITTED] TR31MY22.214
                                                        
    The estimated LCC impacts under Figure IV 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 final rule TSD, DOE 
has accounted for regional differences in heating systems and fuel 
types commonly installed in manufactured housing.
    Table IV.6 provides the national average LCC savings and annual 
energy cost savings associated with the standards for space heating and 
air conditioning (and percentage 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 8 of the final rule TSD, each geographic location has 
been determined to result in positive 30-year LCC savings and energy 
savings.

 Table IV.6--National Average Per-Home Cost Savings Under the Final Rule
------------------------------------------------------------------------
                                       Tier 1 standard   Tier 2 standard
                                      (single-section)   (multi-section)
------------------------------------------------------------------------
Life-Cycle Cost Savings (30 Years)..            $1,594            $3,573
Annual Energy Cost Savings (2020$)..               177               475
------------------------------------------------------------------------

    Table IV.7, and Figure IV.3 illustrate the nationwide average 
simple payback period (purchase price increase divided by first year 
energy cost savings) under the energy conservation standards. 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.

[[Page 32794]]



  Table IV.7--Average Manufactured Home Simple Payback Period Under the
               Tier 1 and Tier 2 Standards by Climate Zone
------------------------------------------------------------------------
                                       Single-section     Multi-section
                                          (Tier 1)          (Tier 2)
------------------------------------------------------------------------
Climate Zone 1......................               4.7               8.5
Climate Zone 2......................               4.5               9.6
Climate Zone 3......................               2.9               8.6
National Average....................               3.7               8.9
------------------------------------------------------------------------

                                                        [GRAPHIC] [TIFF OMITTED] TR31MY22.215
                                                        
BILLING CODE 645-01-C

B. Manufacturer Impacts

    DOE performed an 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 
(2022-2052), 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 standards and the compliance date of the standards, 
because manufacturers may need to make upfront investments to bring 
their manufactured homes into compliance ahead of the standards going 
into effect. DOE used an industry average discount rate of 9.2 percent 
for the final rule analysis, which is consistent with the discount rate 
in the August 2021 SNOPR. This rate was based on SEC filings for public 
manufacturers of manufactured homes.
    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 final rule TSD.
1. Discussion of Comments and Analysis Updates
a. Conversion Costs
    DOE received a number of comments regarding the potential 
conversion costs necessitated by the adopted standard. Conversion costs 
are the one-time, upfront investments manufacturers would need to make 
to comply with 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.
    MHCC raised concerns about the cost on industry to update model 
plans. MHCC estimated engineering and third-party review time required 
for each model plan would be 10-12 hours. MHCC suggest that the number 
of model plans could range from 300 to 3,000, depending on the size of 
manufacturer and number of production plants. Skyline Champion noted 
that the company has thousands of model plans. Skyline Champion went on 
to note that design choices could lead to assembly changes and capital 
expenditures, such as jig and station adjustments. (MHCC, No. 1600 at 
pp. 12, 14); (Skyline Champion, No. 1612 at pp. 2-3)
    For the final rule, DOE attempted to take into account stakeholder 
comments on conversion costs by integrating numeric values, where 
provided. Specifically, DOE updated its conversion costs to include an 
average of 10 hours to review each model plan; updated its wage 
calculation to reflect

[[Page 32795]]

2020 fully burdened rates for mechanical engineering time; increased 
its estimate of the number of model plans in the industry to 
approximately 40,800 based on 136 production plants in the industry 
\69\ and 300 plans per plant; and incorporated expenditures 
manufacturing lines adjustments at all production plants. Industry 
conversion costs total $29.5 million for the final rule. As discussed 
in detail in section III.E.2.b of this document, DOE remains 
unconvinced that truss profile updates are necessitated by the 
standards and truss redesign costs have not been incorporated into the 
estimate of manufacturer impacts. Additional detail can be found in 
Chapter 12 of the final rule TSD.
---------------------------------------------------------------------------

    \69\ MHI reports there are 136 manufacturing plants in the 
Unites States for manufactured housing in 2021. 
www.manufacturedhousing.org/wp-content/uploads/2021/05/2021-MHI-
Quick-Facts-updated-05_2021.pdf.
---------------------------------------------------------------------------

b. Higher Standards
    Schulte suggested that adopting higher Uo standards based on 
currently approved designs for ENERGY STAR homes already in production 
may prevent manufacturing disruptions due to the unavailability of 
higher energy efficiency components. (Schulte, No. 1028 at p. 14).
    The structure of the DOE energy conservation standards for 
manufactured homes enables manufacturers to choose either prescriptive 
or performance options for compliance, thereby providing the industry 
with flexibility for compliance. If manufacturers have established 
supply chains for ENERGY STAR-certified designs or find it more cost 
effective to streamline designs around a higher Uo value, this final 
rule does not prevent manufacturers from pursuing those options. 
Accordingly, DOE did not adopt higher Uo values as suggested by the 
commenter for this final rule or the accompanying analyses.
2. Results
a. Manufacturer Production Costs and Markups
    DOE analyzed the effect the 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 data 
from the U.S. Census Bureau to obtain HUD minimum purchase price data 
by state for single-section and multi-section manufactured homes in 
2020.\70\ 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.
---------------------------------------------------------------------------

    \70\ U.S. Census Bureau. Manufactured Housing Survey. (2020). 
Available at: www.census.gov/data/datasets/2020/econ/mhs/puf.html 
(Last accessed March 1, 2022).
---------------------------------------------------------------------------

    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.e. of this document.
    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. 
Consistent with the August 2021 SNOPR, DOE used a baseline manufacturer 
markup of 1.72, a retail markup of 1.30, and a sales tax factor of 1.03 
in its modeling of impacts of manufacturers.
b. 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 percentage 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 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 manufacturer markup scenario is that 
the industry can only maintain its existing per-unit operating profit 
in absolute dollars after compliance with the new standards 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.
c. Cash-Flow and INPV Results
    DOE compares the INPV of the no-standards case to that of the 
standards 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.8--INPV Results: Preservation of Gross Margin Percentage
                               Scenario *
------------------------------------------------------------------------
                                       Single-section     Multi-section
------------------------------------------------------------------------
No-standards case INPV million 2020$           4,489.2          10,492.0
Standards Case INPV million 2020$...           4,506.9          10,671.7
Change in INPV million 2020$........              17.7             179.8
Change in INPV %....................               0.4               1.7
Total Conversion Costs million 2020$               9.1              20.4
------------------------------------------------------------------------
* Values in parentheses are negative values.


[[Page 32796]]


    Table IV.9--INPV Results: Preservation of Operating Profit Markup
                               Scenario *
------------------------------------------------------------------------
                                       Single-section     Multi-section
------------------------------------------------------------------------
No-standards case INPV million 2020$           4,489.2          10,492.0
Standards Case INPV million 2020$...             4,459          10,313.4
Change in INPV million 2020$........            (29.3)           (178.5)
Change in INPV %....................             (0.7)             (1.7)
Total Conversion Costs million 2020$               9.1              20.4
------------------------------------------------------------------------
* Values in parentheses are negative values.

    For single-section homes, the no-standards case INPV is $4.5 
billion. The standards level could result in a change of industry value 
ranging from -0.7 percent to 0.4 percent, or a change of -$29.3 million 
to $17.7 million, for single-section units. For multi-section units, 
the no-standards case INPV is $10.5 billion. The standards level could 
result in a change of industry value ranging from -1.7 percent to 1.7 
percent, or a change of -$178.5 million to $179.8 million. For the 
entire industry, the no-standards case INPV is $15.0 billion. The 
standards level could result in a change in INPV of -1.4 percent to 1.3 
percent, or a change of -$207.8 million to $197.5 million. Industry 
conversion costs total $29.5 million. In the lower-bound INPV scenario, 
the potential decrease in INPV is less than 2%, which suggests adopted 
standards will not significantly alter the valuation and structure of 
the manufactured housing industry.

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 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 August 2021 SNOPR and October 2021 NODA, 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 standards in comparison 
with the minimum requirements of the HUD Code. DOE presented national 
savings to only accrue to projected no-standards case shipments that 
are not ENERGY STAR-certified. DOE calculated the NES and NPV based on 
annual energy consumption and total construction and life-cycle 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 2023 through 2052. The 
analysis also accounted for costs and savings for a manufactured home 
lifetime of 30 years. 86 FR 47744, 47808-47814; 86 FR 59042, 59043.
    In the October 2021 NODA, DOE updated the inputs to the August 2021 
SNOPR and developed a shipments model to forecast the shipments of 
manufactured homes during the analysis period. DOE first gathered 
historical shipments spanning 1990-2020 from a report developed and 
written by the Institute for Building Technology and Safety and 
published by the Manufactured Housing Institute.\71\ Then, using the 
growth rate (0.42 percent) in new residential housing starts from the 
AEO 2021, DOE projected the number of manufactured housing shipments 
from 2023 through 2052 in the no-standards case (no new standards 
adopted by DOE). For the standards case shipments, DOE used this same 
growth rate estimate (0.42 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.\72\ 86 FR 59042, 59045-
59047.
---------------------------------------------------------------------------

    \71\ See Manufactured Home Shipments by Product Mix (1990-2020), 
Manufactured Housing Institute.
    \72\ See Marshall, M.I. & Marsh, T.L. Consumer and investment 
demand for manufactured housing units. J. Hous. Econ. 16, 59-71 
(2007).
---------------------------------------------------------------------------

    DOE developed shipments for each of the tiers using the MHS 2020 
PUF data.\73\ 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 standards are finalized. For 
the analysis, DOE applied a ``substitution effect'' of 20 percent to 
homes within $1,000 of the price threshold ($63,001-$64,000 in the 
October 2021 NODA). DOE chose a higher-end estimate of 20 percent based 
on reports that were reviewed for the energy conservation standards 
rulemaking for residential furnaces. 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. 86 FR 59042, 59045.
---------------------------------------------------------------------------

    \73\ Manufactured Housing Survey, Public Use File (PUF) 2020. 
https://www.census.gov/data/datasets/2019/econ/mhs/puf.html.
---------------------------------------------------------------------------

    DOE received a number of comments regarding several aspects of the 
nationwide impacts described in the August 2021 SNOPR and October 2021 
NODA. The following sections provide a discussion of each of the 
submitted comments as well as updates to the NIA conducted for this 
final rule.
1. Discussion of Comments and Analysis Updates
a. Shipments Analysis
    ACEEE stated that the Tier 2 standards are well above ENERGY STAR 
levels. In addition, ENERGY STAR will revise its criteria to exceed the 
new standard. Thus, they stated that one can expect similar savings for 
those homes, and they should be included in the analysis. (ACEEE, No. 
1631 at p. 13)

[[Page 32797]]

    As discussed previously, DOE's national impact analysis calculates 
savings in comparison with the minimum requirements of the HUD Code. In 
response to the June 2016 NOPR, NEEA had commented about how a portion 
of the Pacific Northwest homes are already built to meet ENERGY STAR 
levels. 86 FR 47744, 47808. Because ENERGY STAR-certified manufactured 
homes are more efficient than minimally HUD Code-compliant homes, DOE 
did not account for ENERGY STAR-certified homes in the no-standard 
shipments and national impact analyses, so as to avoid overestimating 
energy savings and NPV benefits to the consumer. As a result, the 
national savings in the August 2021 SNOPR and October 2021 NODA only 
accrue to projected no-standards case shipments that are not ENERGY 
STAR-certified.
    In reviewing the ENERGY STAR envelope-only package Uo requirements 
(see Table IV.10), DOE notes that depending on the climate zone, ENERGY 
STAR-certified homes either meet the Tier 2 DOE Uo requirements or are 
slightly below that level. While DOE does acknowledge there are some 
possible energy savings associated with ENERGY STAR-certified homes 
having to now meet the DOE standard, which includes other requirements 
beyond Uo, DOE considers these estimated savings to be minimal compared 
to the energy savings associated with HUD Code-compliant homes having 
to meet the Tier 2 DOE requirements. As such, in this final rule, DOE 
continues to not account for ENERGY STAR-certified homes in the 
national impact analyses, so as to avoid overestimating energy savings 
and benefits to the consumer.

                        Table IV.10--U Comparison
------------------------------------------------------------------------
                                       Energy Star (U)     Tier 2  (U)
                                                       -----------------
            Climate zone             ------------------
                                        Multi-section     Multi-section
------------------------------------------------------------------------
1...................................             0.071             0.082
2...................................             0.064             0.066
3...................................             0.056             0.055
------------------------------------------------------------------------

    ACEEE also suggested that the assumption that only 20 percent of 
homes within $1,000 of the price threshold will shift to Tier 1 seems 
highly optimistic. They stated that the list price could be cut without 
changing actual prices by adding on fees or by pricing a stripped-down 
home to which customers add options. Therefore, they suggested that 
such pricing adjustments could shift the list price by thousands of 
dollars with no physical changes to most homes, and manufacturers could 
redesign others with cheaper components to avoid the first cost of the 
standard. Accordingly, ACEEE emphasized this is another reason why DOE 
should not set tiers. (ACEEE, No. 1631 at p. 5) ACEEE stated that 
manufacturers may shift an even larger fraction of homes within perhaps 
$10,000 of the threshold to Tier 1 with little change in the actual 
homes. (ACEEE, No. 1631 at p. 13) As discussed in section III.B of this 
document, DOE is finalizing a size-based tier threshold in this final 
rule. Specifically, the Tier 1 standard would apply to all single-
section homes, and the Tier 2 standard would apply to all multi-section 
homes. As such, DOE is no longer considering the retail list price 
threshold shift. Table IV.11 presents the updated shipments breakdown 
using the MHS 2020 PUF data set, which DOE had also presented in the 
October 2021 NODA. 86 FR 59042, 59052-59053.

                                  Table IV.11--Shipment Breakdown Based on Tier
----------------------------------------------------------------------------------------------------------------
                                                                              All climate zones
                                                           -----------------------------------------------------
                                                             Single-section     Multi-section
                                                                   (%)               (%)           Total  (%)
----------------------------------------------------------------------------------------------------------------
Tier 1 Standard...........................................               100                 0                45
Tier 2 Standard...........................................                 0               100                55
                                                           -----------------------------------------------------
    Total.................................................               100               100               100
----------------------------------------------------------------------------------------------------------------

    MHARR noted that for potential purchasers excluded from the HUD-
code manufactured home market, there would be no ``savings'' because 
they wouldn't be able to buy a home in the first place. As a result, 
they commented that the January 2022 DEIS is materially skewed toward 
showing alleged benefits attributable to the proposed standards. 
(MHARR, No. 1974 at p. 10, 11) 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 (using 
price elasticity of demand discussion in the next section). 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 (using 
price elasticity of demand) such that there are no energy savings 
attributed to less homes purchased.
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 August 2021 SNOPR and the October 2021 
NODA, 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

[[Page 32798]]

Marsh.\74\ DOE received several comments regarding the price elasticity 
that was used.
---------------------------------------------------------------------------

    \74\ See Marshall, M.I. & Marsh, T.L. Consumer and investment 
demand for manufactured housing units. J. Hous. Econ. 16, 59-71 
(2007).
---------------------------------------------------------------------------

    TMHA stated that it is inappropriate for the finalized rule to have 
any projected decrease in the number of MH's that will ultimately be 
produced. Many TMHA manufacturers had previously built modular homes in 
Texas, but after the Texas Department of Licensing and Regulation 
adopted the 2015 IECC in August of 2017 the number of homes built in 
the state dropped by 35 percent in the subsequent 2018 fiscal year due 
to the cost of compliance and the inability to source the materials 
necessary to meet the new standards from upstream suppliers. TMHA asked 
that DOE do everything they can to ensure that any new rule does not 
decrease production. (TMHA, No. 1628 at pp. 3, 4) Clayton Homes 
commented that very few homes are produced at the Tier 1 level and it 
is unlikely that additional homes will be manufactured at that level. 
Instead, Clayton Homes expects an overall reduction in the 
manufacturing and purchase of manufactured homes across the board. 
(Clayton Homes, No. 1589 at p. 21)
    On the other hand, ACEEE stated that the shipment estimates likely 
overstate the sales impact of the standard. ACEEE stated that the price 
elasticity used for the analysis (-0.48 and -2.4) are based on data 
before a significant decline in shipments of manufactured homes after 
2007, and thus reflect volatility of a different market. In addition, 
ACEEE stated that the price elasticity only predicts changes in demand 
in response to changes in initial purchase price, and not to changes in 
the underlying value and quality of the home, including reduced energy 
bills, increased comfort and health, and improved longevity. They 
stated that under these assumptions any improvement to the homes 
reduces sales. (ACEEE, No. 1631 at p. 13) NEEA stated that manufactured 
homes purchased by park owners for rent-to-own or rental will not be 
impacted by the increase in cost because rental prices are based on 
market rates, not the purchase price of the home. NEEA stated that 
rental rates are higher than mortgage rates that a landlord would pay 
and therefore price elasticity will be near zero for the fraction of 
the manufactured homes sold to park owners. NEEA stated that 
manufactured homes remain the low-cost affordable housing option in the 
Northwest and there is no evidence that higher efficiency has 
negatively impacted homeownership. (NEEA, No. 1601 at pp. 8, 13)
    The Marshall and Marsh study,\75\ which DOE used to analyze the -
0.48 price elasticity, uses 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 previous studies to 
determine the inputs into their model. They used national level data 
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. The paper claimed that this 
is especially true because the cost of a manufactured home is still 
significantly lower than the cost of a site-built home and low- and 
moderate-income families have few low-cost choices for home ownership. 
Accordingly, for the NIA, DOE determined the Marshall and Marsh study 
is still the most recent and accurate estimate of consumer demand based 
on price changes for manufactured housing and therefore, DOE maintains 
use of the -0.48 elasticity value. DOE notes that for the tiered 
standard, DOE estimates that Tier 1 would have 0.55 percent reduction 
in demand and availability, which is essentially no reduction.
---------------------------------------------------------------------------

    \75\ See Marshall, M.I. & Marsh, T.L. Consumer and investment 
demand for manufactured housing units. J. Hous. Econ. 16, 59-71 
(2007).
---------------------------------------------------------------------------

c. Deadweight Loss
    In the August 2021 SNOPR, 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 energy conservation standards 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 did not have data on the supply curve elasticity but estimated 
the deadweight loss for the proposed standards using a price elasticity 
of -0.48. DOE tentatively estimated that the discounted total 
deadweight loss for the standards based on Tier 1 would 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 estimated 
that the discounted total deadweight loss for the standards based on 
Tier 2 would range 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 estimated that the discounted total deadweight loss for 
the untiered standards would range from $103.1 to $206.2 million 
(2020$, discounted at 3 percent) and $60 to $120 million (2020$, 
discounted at 7 percent). 86 FR 47744, 47813.
    MHCC stated that deadweight loss would be significantly higher than 
DOE's estimate as many potential consumers will be priced out of the 
market. For example, they referenced an NAHB published study in 2021 
(NAHB Priced-Out Estimates for 2021), which estimated that a $1,000 
increase in the median new home price ($346,757) would price 153,967 
households out of the market. The MHCC stated that an increase of 
$1,000 would have a more significant impact on manufactured housing. 
(MHCC, No. 1600 at p. 13); (NAHB, No. 1398 at p. 3) MHI stated that 
deadweight loss will increase as a result of the proposal, as many 
potential consumers will be priced out of purchasing a manufactured 
home. (MHI, No. 1592 at p. 30)
    On the other hand, ACEEE stated that the use of deadweight loss is 
misapplied and not appropriate in this context. They commented that 
textbook treatments of deadweight loss are limited to analyzing the 
effects of taxes, trade tariffs, monopoly market power, or other price 
distortions on demand, all else equal. However, implementing up-to-date 
efficiency standards for manufactured homes is not tantamount to a 
price distortion, but instead materially alters the quality and value 
of the home. They stated that revised standards will reduce energy 
bills, improve resident comfort, and likely increase the longevity and 
residual value of the home, none of which are incorporated into DOE's 
analysis of the deadweight loss (nor captured in its price scenario 
analysis). ACEEE argued that there could be a possible substitution 
toward newer homes that

[[Page 32799]]

become more attractive compared to homes subject to codes nearly 30 
years out of date. Further, they commented that even if updated 
standards were to be considered as a price distortion, estimating 
deadweight loss requires a complex general equilibrium model, including 
both a supply and demand curve, which DOE did not have appropriate data 
to develop. ACEEE commented that estimating deadweight loss is 
unprecedented and inappropriate for the evaluation of the societal 
impacts of efficiency standards. (ACEEE, No. 1631 at pp. 13-14)
    DOE agrees with ACEEE that the application of deadweight loss for 
this rulemaking is complex and DOE does not have sufficient data to 
provide a thorough analysis. Further, the 2021 NAHB report estimates 
reduction in buyers assuming all American households intend to buy a 
home, whereas the DOE analysis considers 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). Finally, as discussed in 
section IV.C.1.b of this document, the Marshall and Marsh study 
concludes that manufactured home consumers are not as price sensitive 
because the cost of a manufactured home is still significantly lower 
than the cost of a site-built home. Therefore, at this time, DOE is not 
estimating deadweight loss for this rule. However, DOE continues to 
accept any data regarding this analysis and may consider deadweight 
loss in future iterations of this rule.
d. Net Present Value
    DOE received a comment concerning the discount rates used to 
calculate the NPV. MHI stated that DOE's analysis is incorrect in using 
a discount rate ranging from three to seven percent for computation of 
future projected energy savings. Using that discount rate, they 
commented that DOE significantly overstates the net savings. They 
recommended that DOE should use much higher discount rates, around 10 
percent, for personal property/chattel loans. (MHI, No. 1592 at p. 11) 
On the other hand, UCB stated that the discount rates used in the DOE's 
analysis are much too high compared to historical and projected values. 
They commented that the Institute for Policy Integrity found the median 
value of proposed constant discount rates, excluding outliers, was 2%. 
They also found that many experts do not agree that a constant discount 
rate should even be used, and that either a declining rate or a rate 
calibrated with ``ethical parameters'' should be used instead. (UCB, 
No. 1618 at pp. 15-16) They also mentioned that high discount rates 
mean that future costs and benefits are undervalued. (UCB, No. 1405 at 
p. 2)
    DOE generally uses real discount rates of 3 percent and 7 percent 
to discount future costs and savings to present values.\76\ 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.\77\ The 7-percent rate is the established estimate of the 
average rate of return, before taxes, 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.\78\ 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. For these reasons, in the final rule, DOE maintains discount 
rates of 3 percent and 7 percent for the NPV and the annualized 
benefits and costs. Additionally, DOE uses a discount rate based on the 
chattel loan interest rate in the LCC analysis.
---------------------------------------------------------------------------

    \76\ DOE relies on a range of discount rates in monetizing 
emission reductions as discussed in section IV.D.2 of this document.
    \77\ https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf.
    \78\ Office of Management and Budget, Circular A-4, September 
2003.
---------------------------------------------------------------------------

2. Results
    This section provides the results for the projected nationwide 
impact analyses, including the NES and NPV. In this final rule, DOE 
based all inputs to the NES and NPV using AEO 2021. This includes the 
housing starts growth rate, inflation rates, energy prices, energy 
prices growth rates, and full-fuel cycle energy factors, consistent 
with what was presented in the October 2021 NODA. In addition, DOE's 
shipment analysis includes the latest 2020 MHI shipments and excludes 
any ENERGY STAR shipments to avoid overestimating energy savings. 
Further details on the inputs are discussed in chapters 8, 10, and 11 
of the final rule TSD.
    DOE notes that the NES does not account for the energy savings for 
those individuals 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 individuals who are able and who 
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.12 reflects the NES results over a 30-year analysis period 
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.12--Cumulative National Energy Savings of Manufactured Homes Purchased 2023-2052 With a 30-Year
                                                    Lifetime
----------------------------------------------------------------------------------------------------------------
                                                                  Single-section   Multi-section
                                                                      (quads)         (quads)      Total (quads)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1..................................................           0.118           0.522           0.640
Climate Zone 2..................................................           0.096           0.443           0.538
Climate Zone 3..................................................           0.222           0.381           0.603
                                                                 -----------------------------------------------
    Total.......................................................           0.436           1.346           1.782
----------------------------------------------------------------------------------------------------------------

    Table IV.13 illustrates the cumulative NES over the 30-year 
analysis period on an FFC energy savings basis. FFC energy savings 
apply a factor to account for losses associated with generation, 
transmission, and distribution of

[[Page 32800]]

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.13--Cumulative National Energy Savings, Including Full-Fuel-Cycle of Manufactured Homes Purchased 2023-
                                          2052 With a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
                                                                  Single-section   Multi-section
                                                                      (quads)         (quads)      Total (quads)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1..................................................           0.123           0.542           0.665
Climate Zone 2..................................................           0.100           0.463           0.563
Climate Zone 3..................................................           0.239           0.408           0.648
                                                                 -----------------------------------------------
    Total.......................................................           0.462           1.414           1.876
----------------------------------------------------------------------------------------------------------------

    Table IV.14 and Table IV.15 illustrate the NPV of consumer benefits 
over the 30-year analysis period for a discount rate of 7 percent and 3 
percent, respectively. The consumer 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 standard being adopted in this final rule, all climate zones 
have a positive consumer NPV for both discount rates.

 Table IV.14--Consumer Net Present Value of Manufactured Homes Purchased 2023-2052 With a 30-Year Lifetime at a
                                                7% Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                                  Single-section   Multi-section
                                                                     (billion        (billion     Total (billion
                                                                      2020$)          2020$)          2020$)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1..................................................           $0.15           $0.31           $0.46
Climate Zone 2..................................................            0.13            0.20            0.33
Climate Zone 3..................................................            0.40            0.32            0.73
                                                                 -----------------------------------------------
    Total.......................................................            0.68            0.84            1.52
----------------------------------------------------------------------------------------------------------------


 Table IV.15--Consumer Net Present Value of Manufactured Homes Purchased 2023-2052 With a 30-Year Lifetime at a
                                                3% Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                                  Single-section   Multi-section
                                                                     (billion        (billion     Total (billion
                                                                      2020$)          2020$)          2020$)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1..................................................           $0.40           $1.17           $1.58
Climate Zone 2..................................................            0.35            0.89            1.24
Climate Zone 3..................................................            1.10            1.15            2.25
                                                                 -----------------------------------------------
    Total.......................................................            1.85            3.21            5.06
----------------------------------------------------------------------------------------------------------------

    Table IV.16 shows the projected benefits and costs to the 
manufactured homeowner associated with the final rule, expressed in 
terms of annualized values.

                   Table IV.16--Annualized Benefits and Costs to Manufactured Home Homeowners
----------------------------------------------------------------------------------------------------------------
                                                                          Monetized  (million 2020$/year)
                                                   Discount rate -----------------------------------------------
                                                        (%)           Primary      Low estimate    High estimate
                                                                    estimate **         **              **
----------------------------------------------------------------------------------------------------------------
Benefits: *
    Operating (Energy) Cost.....................               7             361             322             402
    Savings.....................................               3             551             478             627
Costs: *
    Incremental Purchase........................               7             221             213             231
    Price Increase..............................               3             277             255             294
Net Benefits/Costs: *
                                                               7             140             109             171
                                                               3             274             223             333
----------------------------------------------------------------------------------------------------------------
* 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 2021 Reference case, Low
  Economic Growth case, and High Economic Growth case, respectively.


[[Page 32801]]

    Further, DOE considered two sensitivity analyses relating to 
shipments, consistent with the August 2021 SNOPR. First, DOE considered 
a shipment scenario in which the growth rate is 6.5 percent (instead of 
0.42 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 2021. The sensitivity 
analysis calculates the increase in NES and NPV associated with a much 
larger future market for manufactured homes. Table IV.17 summarizes the 
results of the sensitivity analysis. A detailed description of the 
scenario analysis is provided in appendix 11A of the final rule TSD.

                   Table IV.17--Shipments Growth Rate Sensitivity Analysis NES and NPV Results
----------------------------------------------------------------------------------------------------------------
                                                             National energy     Net present       Net present
                                                              savings (full       value 3%          value 7%
                                                               fuel cycle       discount rate     discount rate
                                                                 quads)        (billion 2020$)   (billion 2020$)
----------------------------------------------------------------------------------------------------------------
0.42% Shipment Growth (primary scenario)..................              1.88             $5.06             $1.52
6.5% Shipment Growth......................................              6.05             14.59              3.73
----------------------------------------------------------------------------------------------------------------

    In a second scenario 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 \79\ promulgated at 24 CFR part 3282 based on a 1992 paper 
written by Carol Meeks.\80\ (See further discussion of this estimate in 
Appendix 11A.) DOE's primary scenario is based on a study published in 
2007 in the Journal of Housing Economics. The scenario analysis 
calculates the decrease in NES and NPV associated with a larger 
decrease in shipments resulting from a more elastic value. See Table 
IV.18 for results of the sensitivity analysis. A description of the 
scenario analysis is provided in appendix 11A of the final rule TSD. 
Further, a detailed discussion on the corresponding change in shipments 
is provided in section 10.4 of chapter 10 of the final rule TSD.
---------------------------------------------------------------------------

    \79\ For example, see http://www.regulations.gov/#!documentDetail;D=HUD-2014-0033-0001.
    \80\ Meeks, C., 1992, Price Elasticity of Demand for 
Manufactured Homes: 1961 to 1989.

                  Table IV.18--Price Elasticity of Demand Scenario Analysis NES and NPV Results
----------------------------------------------------------------------------------------------------------------
                                                             National energy     Net present       Net present
                                                             savings (full-       value 3%          value 7%
                                                               fuel cycle       discount rate     discount rate
                                                                 quads)        (billion 2020$)   (billion 2020$)
----------------------------------------------------------------------------------------------------------------
-0.48 Price Elasticity (primary scenario).................              1.88             $5.06             $1.52
-2.4 Price Elasticity.....................................              1.76              4.77              1.44
----------------------------------------------------------------------------------------------------------------

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 August 2021 SNOPR and October 2021 NODA, 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 for the August 2021 SNOPR, updated to AEO 
2021 for the October 2021 NODA. Full details of this methodology are 
described in chapter 13 of the final rule TSD.
    Because the on-site 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.\81\ 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 of this document, 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

[[Page 32802]]

discussed in section IV.D.2 of this document.
---------------------------------------------------------------------------

    \81\ 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 final rule, DOE 
considered the estimated monetary climate and health benefits from the 
reduced emissions of CO2, CH4, N2O, 
NOX and SO2 that are expected to result from the 
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 
final rule.
    C2ES et al. stated that DOE operates from the premise that the 
manufactured homes purchased after the proposed standards go into 
effect have 30-year lifetimes, which means that any manufactured 
housing purchased later than 2023 would exist--and provide value--past 
2052. However, DOE's cost-benefit analysis only presents costs and 
benefits for the initial 30-year period, thus failing to clearly 
identify future costs and benefits beyond that timeframe. Instead, C2ES 
et al. recommended that DOE should project and disclose all costs and 
benefits, including benefits from avoided climate damages, out beyond 
the year 2052. DOE should identify how far into the future it believes 
the proposed manufactured housing energy conversation standards will 
continue to generate significant costs or benefits. If the standards 
will have significant effects after 2052, DOE should either extend its 
timeframe or else state its reasons for not doing so. If DOE lacks 
sufficient data to fully project costs and benefits beyond 2052, it 
should explain the data limitations. (C2ES et al., No. 1399 at p. 35) 
As previously described, DOE projected the energy savings, operating 
cost savings, equipment costs, and NPV of consumer benefits sold in a 
30-year period from 2023 through 2052, in addition to accounting for 
costs and savings for a manufactured home lifetime of 30 years. 
Further, in order to make the emissions reduction 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 (through 2082).
    DOE notes that the analysis of the monetized climate and health 
benefits 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 final rule. The 
monetized climate and health benefits were not factored into DOE's 
determination of whether the final rule is cost-effective under section 
413 of EISA 2007.
a. Monetization of Greenhouse Gas Emissions
    In the August 2021 SNOPR and October 2021 NODA DOE presented 
estimates of 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). 86 FR 47744, 
47814--47122; 86 FR 59042. DOE relied on SC-GHG estimates developed by 
an interagency working group (IWG) that included DOE, the EPA and other 
executive branch agencies and offices using three integrated assessment 
models to develop the SC-CO2 estimates. 86 FR 47744, 47815. 
For purposes of reflecting a range of modeling assumptions and 
capturing the uncertainties involved in estimating climate risks, 
including the risk of greater-than-expected damages, DOE determined it 
was appropriate to include the four sets of SC-CO2 values as 
recommended by the IWG. Id. DOE emphasized that the SC-GHG analysis 
presented in the August 2021 SNOPR was performed in support of the 
cost-benefit analyses required by Executive Order 12866, and was 
provided to inform the public of the impacts of emissions reductions 
resulting from this proposed rule. 86 FR 47744, 47817. DOE further 
emphasized that 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. Id.
    The APGA commented that the interim SC-GHG values developed by the 
IWG still require additional modifications before they are appropriate 
for use in federal agency rulemakings or policy decisions and provided 
a copy of comments previously submitted in response to a NODA published 
by the Office of Management and Budget on May 7, 2021, requesting 
comment on the ``Technical Support Document: Social Cost of Carbon, 
Methane, and Nitrous Oxide Interim Estimates Under Executive Order 
13990'' (86 FR 24669). (APGA, No. 1636 at p. 2) C2ES et al. recommended 
that DOE expand upon its rationale for adopting a global damages 
valuation and for the range of discount rates it applied to climate 
effects, and presented potential legal, economic, and policy 
justifications for the methodological approach presented in the August 
2021 SNOPR. (See generally, C2ES et al., No. 1399) MHARR called on DOE 
to withdraw the proposed standards entirely as a result of the 
preliminary injunction issued on February 11, 2022, in Louisiana v. 
Biden, No. 21-cv-1074-JDC-KK (W.D. La.), saying that DOE is prohibited 
from adopting, employing, treating as binding, or relying upon any 
Social Cost of Greenhouse Gas estimates based on global effects or that 
otherwise fails to comply with applicable law. (MHARR, No. 1848 at p. 
2); (MHARR, No. 1974 at p. 2-5)
    On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-
30087) granted the federal government's emergency motion for stay 
pending appeal of the February 11, 2022, preliminary injunction issued 
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of 
the Fifth Circuit's order, the preliminary injunction is no longer in 
effect, pending resolution of the federal government's appeal of that 
injunction or a further court order. Among other things, the 
preliminary injunction enjoined the defendants in that case from 
``adopting, employing, treating as binding, or relying upon'' the 
interim estimates of the social cost of greenhouse gases--which were 
issued by the Interagency Working Group on the Social Cost of 
Greenhouse Gases on February 26, 2021--to monetize the benefits of 
reducing greenhouse gas emissions. In the absence of further 
intervening court orders, DOE will revert to its approach prior to the 
injunction and presents monetized benefits where appropriate and 
permissible under law.
    DOE estimates the monetized benefits of the reductions in emissions 
of CO2, CH4, and N2O by using a 
measure of the 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, environmental migration, and the value of ecosystem 
services.
    DOE exercises its own judgment in presenting monetized climate 
benefits as recommended by applicable Executive orders, and DOE would 
reach the same conclusion presented in this document in the absence of 
the social cost of greenhouse gases, including the February 2021 
Interim Estimates presented by the Interagency Working Group on the 
Social Cost of Greenhouse

[[Page 32803]]

Gases. DOE estimated the global social benefits of CO2, 
CH4, and N2O reductions (i.e., SC-GHGs) using the 
estimates presented in the Technical Support Document: Social Cost of 
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive 
Order 13990 published in February 2021 by the Interagency Working Group 
on the Social Cost of Greenhouse Gases (IWG) (IWG, 2021). The SC-GHGs 
is the monetary value of the net harm to society associated with a 
marginal increase in emissions in a given year, or the benefit of 
avoiding that increase. In principle, SC-GHGs includes the value of all 
climate change impacts, including (but not limited to) changes in net 
agricultural productivity, human health effects, property damage from 
increased flood risk and natural disasters, disruption of energy 
systems, risk of conflict, environmental migration, and the value of 
ecosystem services. The SC-GHGs therefore, reflects the societal value 
of reducing emissions of the gas in question by one metric ton. The SC-
GHGs is the theoretically appropriate value to use in conducting 
benefit-cost analyses of policies that affect CO2, 
N2O and CH4 emissions. As a member of the IWG 
involved in the development of the February 2021 SC-GHG TSD), DOE 
agrees that the interim SC-GHG estimates represent the most appropriate 
estimate of the SC-GHG until revised estimates have been developed 
reflecting the latest, peer-reviewed science.
    The SC-GHGs estimates presented here were developed over many 
years, using 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 IWG that included the 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 social cost of carbon (SC-CO2) values used across 
agencies. The IWG published SC-CO2 estimates in 2010 that 
were developed from an ensemble of three widely cited integrated 
assessment models (IAMs) that estimate global climate damages using 
highly aggregated representations of climate processes and the global 
economy combined into a single modeling framework. The three IAMs were 
run using a common set of input assumptions in each model for future 
population, economic, and CO2 emissions growth, as well as 
equilibrium climate sensitivity (ECS)--a measure of the globally 
averaged temperature response to increased atmospheric CO2 
concentrations. These estimates were updated in 2013 based on new 
versions of each IAM. In August 2016 the IWG published estimates of the 
social cost of methane (SC-CH4) and nitrous oxide (SC-
N2O) using methodologies that are consistent with the 
methodology underlying the SC- CO2 estimates. The modeling 
approach that extends the IWG SC-CO2 methodology to non-
CO2 GHGs has undergone multiple stages of peer review. The 
SC-CH4 and SC-N2O estimates were developed by 
Marten et al. (2015) and underwent a standard double-blind peer review 
process prior to journal publication. 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). Shortly thereafter, in 
March 2017, President Trump issued Executive Order 13783, which 
disbanded the IWG, withdrew the previous TSDs, and directed agencies to 
ensure SC-CO2 estimates used in regulatory analyses are 
consistent with the guidance contained in OMB's Circular A-4, 
``including with respect to the consideration of domestic versus 
international impacts and the consideration of appropriate discount 
rates'' (E.O. 13783, Section 5(c)). Benefit-cost analyses following 
E.O. 13783 used SC-GHG estimates that attempted to focus on the U.S.-
specific share of climate change damages as estimated by the models and 
were calculated using two discount rates recommended by Circular A-4, 3 
percent and 7 percent. All other methodological decisions and model 
versions used in SC-GHG calculations remained the same as those used by 
the IWG in 2010 and 2013, respectively.
    On January 20, 2021, President Biden issued Executive Order 13990, 
which reestablished the IWG and directed it to ensure that the U.S. 
Government's 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 SC-GHG estimates currently used in Federal 
analyses and publishing interim estimates within 30 days of the E.O. 
that reflect the full impact of GHG emissions, including by taking 
global damages into account. The interim SC- GHG estimates published in 
February 2021 are used here to estimate the climate benefits for this 
final rule. The E.O. instructs the IWG to undertake a fuller update of 
the SC- GHG estimates by January 2022 that takes into consideration the 
advice of the National Academies (2017) and other recent scientific 
literature. The February 2021 SC-GHG TSD provides a complete discussion 
of the IWG's initial review conducted under E.O. 13990. In particular, 
the IWG found that the SC-GHG estimates used under E.O. 13783 fail to 
reflect the full impact of GHG emissions in multiple ways.
    First, the IWG found that the SC-GHG estimates used under E.O. 
13783 fail to fully capture many climate impacts that affect the 
welfare of U.S. citizens and residents, and those impacts are better 
reflected by global measures of the SC-GHG. Examples of effects omitted 
from the E.O. 13783 estimates include direct effects on U.S. citizens, 
assets, and investments located abroad, supply chains, U.S. military 
assets and interests abroad, and tourism, and spillover pathways such 
as economic and political destabilization and global migration that can 
lead to adverse impacts on U.S. national security, public health, and 
humanitarian concerns. In addition, assessing the benefits of U.S. GHG 
mitigation activities requires consideration of how those actions may 
affect mitigation activities by other countries, as those international 
mitigation actions will provide a benefit to U.S. citizens and 
residents by mitigating climate impacts that affect U.S. citizens and 
residents. A wide range of scientific and economic experts have 
emphasized the issue of reciprocity as support for considering global 
damages of GHG emissions. If the United States does not consider 
impacts on other countries, it is difficult to convince other countries 
to consider the impacts of their emissions on the United States. The 
only way to achieve an efficient allocation of resources for emissions 
reduction on a global basis--and so benefit the U.S. and its citizens--
is for all countries to base their policies on global estimates of 
damages. As a member of the IWG involved in the

[[Page 32804]]

development of the February 2021 SC-GHG TSD, DOE agrees with this 
assessment and, therefore, in this final rule, DOE centers attention on 
a global measure of SC-GHG. This approach is the same as that taken in 
DOE regulatory analyses from 2012 through 2016. A robust estimate of 
climate damages to U.S. citizens and residents does not currently exist 
in the literature. As explained in the February 2021 TSD, existing 
estimates are both incomplete and an underestimate of total damages 
that accrue to the citizens and residents of the U.S. because they do 
not fully capture the regional interactions and spillovers discussed 
above, nor do they include all of the important physical, ecological, 
and economic impacts of climate change recognized in the climate change 
literature. As noted in the February 2021 SC-GHG TSD, the IWG will 
continue to review developments in the literature, including more 
robust methodologies for estimating a U.S.-specific SC-GHG value, and 
explore ways to better inform the public of the full range of carbon 
impacts. As a member of the IWG, DOE will continue to follow 
developments in the literature pertaining to this issue.
    Second, the IWG found that 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.
    Furthermore, the damage estimates developed for use in the SC-GHG 
are estimated in consumption-equivalent terms, and so an application of 
OMB Circular A-4's guidance for regulatory analysis would then use the 
consumption discount rate to calculate the SC-GHG. DOE agrees with this 
assessment and will continue to follow developments in the literature 
pertaining to this issue. DOE also notes that while OMB Circular A-4, 
as published in 2003, recommends using 3% and 7% discount rates as 
``default'' values, Circular A-4 also reminds agencies that ``different 
regulations may call for different emphases in the analysis, depending 
on the nature and complexity of the regulatory issues and the 
sensitivity of the benefit and cost estimates to the key assumptions.'' 
On discounting, Circular A-4 recognizes that ``special ethical 
considerations arise when comparing benefits and costs across 
generations,'' and Circular A-4 acknowledges that analyses may 
appropriately ``discount future costs and consumption benefits . . . at 
a lower rate than for intragenerational analysis.'' In the 2015 
Response to Comments on the Social Cost of Carbon for Regulatory Impact 
Analysis, OMB, DOE, and the other IWG members recognized that 
``Circular A-4 is a living document'' and ``the use of 7 percent is not 
considered appropriate for intergenerational discounting. There is wide 
support for this view in the academic literature, and it is recognized 
in Circular A-4 itself.'' Thus, DOE concludes that a 7% discount rate 
is not appropriate to apply to value the social cost of greenhouse 
gases in the analysis presented in this analysis. In this analysis, to 
calculate the present and annualized values of climate benefits, DOE 
uses the same discount rate as the rate used to discount the value of 
damages from future GHG emissions, for internal consistency. That 
approach to discounting follows the same approach that the February 
2021 TSD recommends ``to ensure internal consistency--i.e., future 
damages from climate change using the SC-GHG at 2.5 percent should be 
discounted to the base year of the analysis using the same 2.5 percent 
rate.'' DOE has also consulted the National Academies' 2017 
recommendations on how SC-GHG estimates can ``be combined in RIAs with 
other cost and benefits estimates that may use different discount 
rates.'' The National Academies reviewed ``several options,'' including 
``presenting all discount rate combinations of other costs and benefits 
with [SC-GHG] estimates.''
    As a member of the IWG involved in the development of the February 
2021 SC-GHG TSD, DOE agrees with this assessment and will continue to 
follow developments in the literature pertaining to this issue. 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 SC-GHG TSD, the 
IWG has recommended that agencies 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. For each discount rate, the IWG combined the 
distributions across models and socioeconomic emissions scenarios 
(applying equal weight to each) and then selected a set of four values 
recommended for use in benefit-cost analyses: An average value 
resulting from the model runs for each of three discount rates (2.5 
percent, 3 percent, and 5 percent), plus a fourth value, selected as 
the 95th percentile of estimates based on a 3 percent discount rate. 
The fourth value was included to provide information on potentially 
higher-than-expected economic impacts from climate change. As explained 
in the February 2021 SC-GHG TSD, and DOE agrees, 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.
    There are a number of limitations and uncertainties associated with 
the SC-GHG estimates. First, the current scientific and economic 
understanding of discounting approaches suggests discount rates 
appropriate for intergenerational analysis in the context of climate 
change are likely to be less than 3 percent, near 2 percent or 
lower.\82\ Second, the IAMs used to produce these interim estimates do 
not include all of the important physical, ecological, and economic 
impacts of climate change recognized in the climate change literature 
and the science underlying their ``damage functions''--i.e., the core 
parts of the IAMs that map global mean temperature changes and other 
physical impacts of climate change into economic (both market and 
nonmarket) damages--lags behind the most recent research. For example, 
limitations include the incomplete treatment of catastrophic and non-
catastrophic impacts in the integrated assessment models, their

[[Page 32805]]

incomplete treatment of adaptation and technological change, the 
incomplete way in which inter-regional and intersectoral linkages are 
modeled, uncertainty in the extrapolation of damages to high 
temperatures, and inadequate representation of the relationship between 
the discount rate and uncertainty in economic growth over long time 
horizons. Likewise, the socioeconomic and emissions scenarios used as 
inputs to the models do not reflect new information from the last 
decade of scenario generation or the full range of projections. The 
modeling limitations do not all work in the same direction in terms of 
their influence on the SC-CO2 estimates. However, as 
discussed in the February 2021 TSD, the IWG has recommended that, taken 
together, the limitations suggest that the interim SC-GHG estimates 
used in this final rule likely underestimate the damages from GHG 
emissions. DOE concurs with this assessment.
---------------------------------------------------------------------------

    \82\ Interagency Working Group on Social Cost of Greenhouse 
Gases (IWG). 2021. Technical Support Document: Social Cost of 
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive 
Order 13990. February. United States Government. Available at: 
<https://www.whitehouse.gov/briefing-room/blog/2021/02/26/a-return-to-science-evidence-based-estimates-of-the-benefits-of-reducing-climate-pollution/.
---------------------------------------------------------------------------

    DOE's derivations of the SC-CO2, SC-N2O, and 
SC-CH4 values used for this final rule are discussed in the 
following paragraphs, and the results of DOE's analyses estimating the 
benefits of the reductions in emissions of these pollutants are 
presented in section IV.D.3.b of this document.
Social Cost of Carbon
    The SC-CO2 values used for this final rule were 
generated using the values presented in the 2021 update from the IWG. 
Table IV.19 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 
final rule 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.\83\
---------------------------------------------------------------------------

    \83\ 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.19--Annual SC-CO2 Values From 2021 Interagency Update, 2020-2050
                                           [2020$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                           Discount rate
                                                 ---------------------------------------------------------------
                                                        5%              3%             2.5%             3%
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         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 February 2021 
TSD, adjusted to 2020$ using the implicit price deflator for gross 
domestic product (GDP) from the Bureau of Economic Analysis. DOE 
derived values from 2051 to 2070 based on estimates published by 
EPA.\84\ These estimates are based on methods, assumptions, and 
parameters identical to the 2020-2050 estimates published by the IWG. 
DOE derived values after 2070 based on the trend in 2060-2070 in each 
of the four cases (see appendix 14A).
---------------------------------------------------------------------------

    \84\ See EPA, Revised 2023 and Later Model Year Light-Duty 
Vehicle GHG Emissions Standards: Regulatory Impact Analysis, 
Washington, DC, December 2021. Available at: www.epa.gov/system/files/documents/2021-12/420r21028.pdf (last accessed January 13, 
2022).
---------------------------------------------------------------------------

    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 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 
final rule were generated using the values presented in the February 
2021 TSD. Table IV.20 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 final rule 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. 
DOE derived values after 2050 using the approach described above for 
the SC-CO2.

                                                      Table IV.20--Annual SC-CH4 and SC-N2O Values from 2021 Interagency Update, 2020-2050
                                                                                     [2020$ per metric ton]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              SC-CH4                                                          SC-N2O
                                                                 -------------------------------------------------------------------------------------------------------------------------------
                                                                                    Discount rate and statistic                                     Discount rate and statistic
                                                                 -------------------------------------------------------------------------------------------------------------------------------
                              Year                                      5%              3%             2.5%             3%              5%              3%             2.5%             3%
                                                                 -------------------------------------------------------------------------------------------------------------------------------
                                                                                                                       95th                                                            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

[[Page 32806]]

 
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 this final rule, DOE also 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 values for PM2.5-related benefits 
associated with NOX and SO2 and for ozone-related 
benefits for 2025, 2030, 2035 and 2040, calculated with discount rates 
of 3 percent and 7 percent. For this analysis DOE used linear 
interpolation to define values for the years not given in the 2025 to 
2040 range; for years beyond 2040 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. Results
a. Emissions Analysis
    In this final rule, DOE utilized emission factors derived from data 
in the AEO 2021.\85\ The AEO incorporates the projected impacts of 
existing air quality regulations on emissions. AEO 2021 generally 
represents current legislation and environmental regulations, including 
recent government actions, for which implementing regulations were 
available at the time of preparation of AEO 2021, including the 
emissions control programs discussed in the following paragraphs.\86\
---------------------------------------------------------------------------

    \85\ See Energy Information Administration, Annual Energy 
Outlook 2020 with Projections to 2050 (2021).
    \86\ For further information, see the Assumptions to AEO2021 
report that sets forth the major assumptions used to generate the 
projections in the Annual Energy Outlook. Available at 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.\87\ AEO 2021 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).\88\ Compliance with 
CSAPR is flexible among EGUs and is enforced through the use of 
tradable emissions allowances. Under existing EPA regulations, for 
states subject to SO2 emissions limits under CSAPR, any 
excess SO2 emissions allowances resulting from the lower 
electricity demand caused by the adoption of efficiency standards could 
be used to permit offsetting increases in SO2 emissions by 
another regulated EGU.
---------------------------------------------------------------------------

    \87\ CSAPR requires states to address annual emissions of 
SO2 and NOX, precursors to the formation of 
fine particulate matter (``PM2.5'') pollution, in order 
to address the interstate transport of pollution with respect to the 
1997 and 2006 PM2.5 National Ambient Air Quality 
Standards (``NAAQS''). CSAPR also requires certain states to address 
the ozone season (May-September) emissions of NOX, a 
precursor to the formation of ozone pollution, in order to address 
the interstate transport of ozone pollution with respect to the 1997 
ozone NAAQS. 76 FR 48208 (Aug. 8, 2011). EPA subsequently issued a 
supplemental rule that included an additional five states in the 
CSAPR ozone season program; 76 FR 80760 (Dec. 27, 2011) 
(Supplemental Rule), and EPA issued the CSAPR Update for the 2008 
ozone NAAQS. 81 FR 74504 (Oct. 26, 2016).
    \88\ In Sept. 2019, the DC Court of Appeals remanded the 2016 
CSAPR Update to EPA. In April 2021, EPA finalized the 2021 CSAPR 
Update which resolved the interstate transport obligations of 21 
states for the 2008 ozone NAAQS. 86 FR 23054 (April 30, 2021); see 
also, 86 FR 29948 (June 4, 2021) (correction to preamble). The 2021 
CSAPR Update became effective on June 29, 2021. The release of 
AEO2021 in February 2021 predated the 2021 CSAPR Update.
---------------------------------------------------------------------------

    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 
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

[[Page 32807]]

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 2021 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 2021, 
which incorporates the MATS.\89\
---------------------------------------------------------------------------

    \89\ DOE has not included the monetary impacts of the reduction 
of Hg for this rule. DOE is evaluating the appropriate monetization 
of these emissions for energy conservation standards rulemakings.
---------------------------------------------------------------------------

    Combustion emissions of CH4 and N2O are 
estimated using emissions intensity factors published by the EPA.\90\ 
The FFC upstream emissions are estimated based on the methodology 
described in chapter 13 of the final rule 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.
---------------------------------------------------------------------------

    \90\ Available at www2.epa.gov/climateleadership/centeR-corporate-climate-leadership-ghg-emission-factors-hub.
---------------------------------------------------------------------------

    Table IV.21 reflects the emissions reductions for both single-
section and multi-section manufactured homes.

                         Table IV.21--Emissions Reductions as a Result of the Final Rule
----------------------------------------------------------------------------------------------------------------
                            Pollutant                             Single-section   Multi-section       Total
----------------------------------------------------------------------------------------------------------------
                                            Site Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................            19.5            53.8            73.3
Hg (metric tons)................................................        2.92E-02        9.60E-02        1.25E-01
NOX (thousand metric tons)......................................            10.9            26.6            37.5
SO2 (thousand metric tons)......................................             7.2            20.4            27.6
CH4 (thousand metric tons)......................................            1.03            3.11            4.14
N2O (thousand metric tons)......................................            0.21            0.57            0.78
----------------------------------------------------------------------------------------------------------------
                                          Upstream Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................            2.01            5.05            7.06
Hg (metric tons)................................................        1.48E-04        4.45E-04        5.93E-04
NOX (thousand metric tons)......................................            25.4            64.8            90.2
SO2 (thousand metric tons)......................................            0.21            0.47            0.67
CH4 (thousand metric tons)......................................             127             354             481
N2O (thousand metric tons)......................................           0.011           0.026           0.037
----------------------------------------------------------------------------------------------------------------
                                           Total Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................            21.5            58.9            80.4
Hg (metric tons)................................................        2.93E-02        9.64E-02            0.13
NOX (thousand metric tons)......................................            36.3            91.4           127.7
SO2 (thousand metric tons)......................................            7.44            20.9            28.3
CH4 (thousand metric tons)......................................             128             357             485
N2O (thousand metric tons)......................................            0.23            0.59            0.82
----------------------------------------------------------------------------------------------------------------

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 final rule 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 final rule. Table IV.22 presents the 
global values of the CO2 emissions reduction.

[[Page 32808]]



 Table IV.22--Present Monetized Value of CO2 Emissions Reduction for Manufactured Homes Purchased 2023-2052 With
                                               a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
                                                                            SC-CO2 case
                                                 ---------------------------------------------------------------
                                                                                                    3% discount
                                                    5% discount     3% discount    2.5% discount    rate, 95th
                                                   rate, average   rate, average   rate, average    percentile
----------------------------------------------------------------------------------------------------------------
                                                                           million 2020$
                                                 ---------------------------------------------------------------
Single Section..................................           160.1           723.4         1,211.5         2,228.5
Multi Section...................................           439.8         1,985.3         3,323.0         6,115.3
                                                 ---------------------------------------------------------------
    Total.......................................           599.9         2,708.7         4,534.4         8,343.7
----------------------------------------------------------------------------------------------------------------

    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.23 presents the value of the CH4 emissions 
reduction, and Table IV.24 presents the value of the N2O 
emissions reduction.

 Table IV.23--Present Monetized Value of Methane Emissions Reduction for Manufactured Homes Purchased 2023-2052
                                             With a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
                                                                            SC-CH4 case
                                                 ---------------------------------------------------------------
                                                                                                    3% discount
                                                    5% discount     3% discount    2.5% discount    rate, 95th
                                                   rate, average   rate, average   rate, average    percentile
----------------------------------------------------------------------------------------------------------------
                                                                           million 2020$
----------------------------------------------------------------------------------------------------------------
Single Section..................................            47.7           154.9           230.1           412.5
Multi Section...................................           133.3           432.8           643.0         1,152.6
                                                 ---------------------------------------------------------------
    Total.......................................           181.0           587.6           873.2         1,565.1
----------------------------------------------------------------------------------------------------------------


Table IV.24--Present Monetized Value of Nitrous Oxide Emissions Reduction for Manufactured Homes Purchased 2023-
                                          2052 With a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
                                                                            SC-N2O case
                                                 ---------------------------------------------------------------
                                                                                                    3% discount
                                                    5% discount     3% discount    2.5% discount    rate, 95th
                                                   rate, average   rate, average   rate, average    percentile
----------------------------------------------------------------------------------------------------------------
                                                                           million 2020$
                                                 ---------------------------------------------------------------
Single Section..................................            0.68            3.00            4.95            7.99
Multi Section...................................            1.80            7.89           13.01           21.03
                                                 ---------------------------------------------------------------
    Total.......................................            2.48           10.89           17.97           29.02
----------------------------------------------------------------------------------------------------------------

    DOE 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 not given in the 2025 to 
2040 range; for years beyond 2040 the value is held constant. Full 
details of this methodology are described in chapter 14 of the final 
rule 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.25 and Table IV.26 
presents the results.

[[Page 32809]]



 Table IV.25--Present Monetized Value of NOX Emissions Reduction for Manufactured Homes Purchased 2023-2052 With
                                               a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
                                                    3% discount     7% discount     3% discount     7% discount
                                                   rate  (high)    rate  (high)     rate  (low)     rate  (low)
----------------------------------------------------------------------------------------------------------------
                                                                           million 2020$
                                                 ---------------------------------------------------------------
Single Section..................................         1,220.1           410.2         1,170.8           393.5
Multi Section...................................         3,208.7         1,082.0         3,110.6         1,048.9
                                                 ---------------------------------------------------------------
    Total.......................................         4,428.8         1,492.2         4,281.4         1,442.4
----------------------------------------------------------------------------------------------------------------


 Table IV.26--Present Monetized Value of SO2 Emissions Reduction for Manufactured Homes Purchased 2023-2052 With
                                               a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
                                                    3% discount     7% discount     3% discount     7% discount
                                                   rate  (high)    rate  (high)     rate  (low)     rate  (low)
----------------------------------------------------------------------------------------------------------------
                                                                           million 2020$
                                                 ---------------------------------------------------------------
Single Section..................................           452.9           152.4           332.7           114.6
Multi Section...................................         1,227.2           416.0           977.6           337.4
                                                 ---------------------------------------------------------------
    Total.......................................         1,680.1           568.3         1,310.3           452.0
----------------------------------------------------------------------------------------------------------------

    DOE has not considered the monetary benefits of the reduction of Hg 
for this final rule. Not all the public health and environmental 
benefits from the reduction of greenhouse gases, NOx, and 
SO2 are captured in the values above, and additional 
unquantified benefits from the reductions of those pollutants as well 
as from the reduction of Hg, direct PM, and other co-pollutants may be 
significant.
    DOE emphasizes that the emissions analysis, including the SC-GHG 
analysis, presented in this final rule 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 final rule. The emissions estimates were not 
factored into DOE's determination of whether the final rule is cost-
effective under section 413 of EISA 2007.

E. Total Benefits and Costs

    DOE has determined that under the standards the benefits to the 
Nation of the standards (energy savings, consumer LCC savings, positive 
NPV of consumer benefit, energy security benefits, and emission 
reductions) outweigh the burdens (loss of INPV, and LCC increases for 
some homeowners of manufactured housing). The projected total benefits 
and costs (from the manufactured homeowner's perspective) associated 
with the standard, expressed in terms of annualized values, is 
presented in Table I.10 (See section I.E of this document).\91\
---------------------------------------------------------------------------

    \91\ 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

    Executive Order (``E.O.'') 12866, ``Regulatory Planning and 
Review,'' as supplemented and reaffirmed by E.O. 13563, ``Improving 
Regulation and Regulatory Review, 76 FR 3821 (Jan. 21, 2011), requires 
agencies, to the extent permitted by law, 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, the 
Office of Information and Regulatory Affairs (``OIRA'') in the Office 
of Management and Budget (``OMB'') 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/final regulatory 
action is consistent with these principles.
    Section 6(a) of E.O. 12866 also requires agencies to submit 
``significant regulatory actions'' to OIRA for review. OIRA has 
determined that this final regulatory action constitutes an 
economically significant regulatory action under section 3(f) of E.O. 
12866. Accordingly, pursuant to section 6(a)(3)(C) of E.O. 12866, DOE 
has provided to OIRA an assessment,

[[Page 32810]]

including the underlying analysis, of benefits and costs anticipated 
from the proposed/final 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 are summarized in 
the tables below, as well as elsewhere in this preamble. Further detail 
on alternatives can be found in chapter 15 of the final rule TSD for 
this rulemaking.

Table V.1--Summary of Total Monetized Benefits and Costs to Manufactured
               Home Homeowners Under the Adopted Standards
------------------------------------------------------------------------
                                                            Net present
                                                          value (billion
                                                              $2020)
------------------------------------------------------------------------
                            3% Discount Rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................            10.2
Climate Benefits *......................................             3.3
Health Benefits **......................................             5.6
Total Benefits..........................................            19.1
Consumer Incremental Product Costs [dagger].............             5.1
Net Benefits............................................            14.0
------------------------------------------------------------------------
                            7% Discount Rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................             3.9
Climate Benefits *......................................             3.3
Health Benefits **......................................             1.9
Total Benefits [dagger].................................             9.1
Consumer Incremental Product Costs [dagger][dagger].....             2.4
Net Benefits............................................             6.7
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with
  manufactured housing shipped in 2023-2052. These results include
  benefits to consumers which accrue after 2052 from the products
  shipped in 2023-2052.
* Climate benefits are calculated using four different estimates of the
  social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
  (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
  discount rates; 95th percentile at 3 percent discount rate), as shown
  in Table IV.22 through Table IV.24. Together these represent the
  global SC-GHG. For presentational purposes of this table, the climate
  benefits associated with the average SC-GHG at a 3 percent discount
  rate are shown, but the Department does not have a single central SC-
  GHG point estimate. See section. IV.D of this document for more
  details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-
  30087) granted the federal government's emergency motion for stay
  pending appeal of the February 11, 2022, preliminary injunction issued
  in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result
  of the Fifth Circuit's order, the preliminary injunction is no longer
  in effect, pending resolution of the federal government's appeal of
  that injunction or a further court order. Among other things, the
  preliminary injunction enjoined the defendants in that case from
  ``adopting, employing, treating as binding, or relying upon'' the
  interim estimates of the social cost of greenhouse gases--which were
  issued by the Interagency Working Group on the Social Cost of
  Greenhouse Gases on February 26, 2021--to monetize the benefits of
  reducing greenhouse gas emissions. In the absence of further
  intervening court orders, DOE will revert to its approach prior to the
  injunction and presents monetized benefits where appropriate and
  permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX
  and SO2. DOE is currently only monetizing (for NOX and SO2) PM2.5
  precursor health benefits and (for NOX) ozone precursor health
  benefits, but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5
  emissions. See section IV.D.2 of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
  health benefits that can be quantified and monetized. For presentation
  purposes, total and net benefits for both the 3-percent and 7-percent
  cases are presented using the average SC-GHG with 3-percent discount
  rate, but the Department does not have a single central SC-GHG point
  estimate. DOE emphasizes the importance and value of considering the
  benefits calculated using all four SC-GHG estimates.
[dagger][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.


 Table V.2--Annualized Monetized Benefits and Costs to Manufactured Home
                     Homeowners Under the Standards
------------------------------------------------------------------------
                                                           Million $2020
------------------------------------------------------------------------
                            3% Discount Rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................             551
Climate Benefits *......................................             169
Health Benefits **......................................             285
Total Benefits..........................................            1005
Consumer Incremental Product Costs [dagger].............             277
Net Benefits............................................             728
------------------------------------------------------------------------
                            7% Discount Rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.........................             361
Climate Benefits *......................................             169
Health Benefits **......................................             153
Total Benefits..........................................             682
Consumer Incremental Product Costs [dagger].............             221

[[Page 32811]]

 
Net Benefits............................................             461
------------------------------------------------------------------------
* Climate benefits are calculated using four different estimates of the
  social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
  (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
  discount rates; 95th percentile at 3 percent discount rate). Together
  these represent the global social cost of greenhouse gases (SC-GHG).
  For presentational purposes of this table, the climate benefits
  associated with the average SC-GHG at a 3 percent discount rate are
  shown, but the Department does not have a single central SC-GHG point
  estimate, and it emphasizes the importance and value of considering
  the benefits calculated using all four SC-GHG estimates. On March 16,
  2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the
  federal government's emergency motion for stay pending appeal of the
  February 11, 2022, preliminary injunction issued in Louisiana v.
  Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth
  Circuit's order, the preliminary injunction is no longer in effect,
  pending resolution of the federal government's appeal of that
  injunction or a further court order. Among other things, the
  preliminary injunction enjoined the defendants in that case from
  ``adopting, employing, treating as binding, or relying upon'' the
  interim estimates of the social cost of greenhouse gases--which were
  issued by the Interagency Working Group on the Social Cost of
  Greenhouse Gases on February 26, 2021--to monetize the benefits of
  reducing greenhouse gas emissions. In the absence of further
  intervening court orders, DOE will revert to its approach prior to the
  injunction and presents monetized benefits where appropriate and
  permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX
  and SO2. DOE is currently only monetizing (for NOX and SO2) PM2.5
  precursor health benefits and (for NOX) ozone precursor health
  benefits, but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5
  emissions. The health benefits are presented at real discount rates of
  3 and 7 percent.

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 (www.energy.gov/gc/office-general-counsel).
    DOE prepared an IRFA as part of the August 2021 supplemental notice 
of proposed rulemaking (``SNOPR''). 86 FR 47825. In the IRFA, DOE 
identified 29 domestic small businesses impacted by the energy 
conservation standards for manufactured housing. DOE determined that 
the costs imposed on domestic small businesses as a result of this 
rulemaking would be small relative to the size of the average small 
manufacturer. DOE sought comment from stakeholders on the cost and 
number of model plans manufacturers must update as a result of the 
rule, the types of capital expenditures necessitated by the proposal, 
and the total cost of updating product offerings and manufacturing 
facilities. DOE also sought comment on how these values would differ 
for small manufacturers, and DOE's estimate of average annual revenues 
for small manufacturers of manufactured housing. In light of DOE's 
analysis in the IRFA and input from stakeholders, DOE has prepared the 
following FRFA as part of this final rule.
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 International Energy Conservation Code 
(``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 life-cycle construction and operating costs. (42 U.S.C. 
17071)
2. Significant Issues Raised
    DOE received comments from the Manufactured Housing Association for 
Regulatory Reform (``MHARR''), the Manufactured Housing Institute 
(``MHI''), and the MHCC related to small businesses and the regulatory 
flexibility analysis presented in the manufactured housing August 2021 
SNOPR. These comments are addressed in this section.
    In written comments, MHARR cited a U.S. Small Business 
Administration (``SBA'') study to conclude that the cost burdens of 
Federal regulation fall disproportionately on smaller businesses. MHARR 
made a general request that DOE evaluate potential impacts on smaller 
manufactured housing producers, retailers and communities and on the 
future viability and market share of those smaller, independent 
manufactured housing manufacturers.
    DOE notes that its Regulatory Flexibility Analysis is scoped to the 
parties that have a direct compliance burden resulting from the rule, 
specifically the manufacturers that are subject to the energy 
conservation standard. DOE's rule requires only manufacturers of 
manufactured housing to comply with the rule's requirements. Analysis 
of retailers and communities is therefore outside the scope of DOE's 
FRFAs. For this final rule, DOE has further revised its analysis of 
small manufacturer impacts based on additional data submitted in 
written comments from industry stakeholders.
    In response to the August 2021 SNOPR's IRFA, MHI raised concerns 
about the retail list price threshold used in the tiered proposal. MHI 
noted that the cost to update model plans would be a recurring annual 
cost rather than a one-time cost due to recurring retail price changes. 
(MHI, No. 1592 at p. 30) For the final rule, DOE is adopting a tiered 
approach wherein the standard levels are dependent on a size-based 
threshold instead of retail list prices. As such, the cost of updating 
the industry's current model plans to comply with the standards is 
expected to be a one-time conversion cost and not a recurring cost.
    MHCC provided comments on DOE's August 2021 SNOPR and stated that 
smaller manufacturers may not always have the ability to make model 
plan changes in-house and must rely on external experts, which results 
in higher costs. The MHCC noted that the estimated engineering and 
third-party review time of 3 hours estimated in DOE's August 2021 SNOPR 
analysis is

[[Page 32812]]

too conservative. MHCC estimated the actual time required would be 10-
12 hours. As an example of changes needed, MHCC noted model plans must 
be revised for physical space impacts, evaluated through calculation 
for compliance to new thermal envelope requirements, analyzed for 
structural load path impacts, evaluated for procurement and material 
changes, and a third-party plan review and approval. MHCC gave the 
example that one large manufacturer on the MHCC has upwards of 3,000 
model plans while data received from a single facility manufacturer 
estimates 300 model plans.
    For the final rule analysis, DOE revised its estimates of 
conversion costs based on feedback from stakeholders. Specifically, DOE 
revised upward its estimates of the number of model plans and the cost 
to update model plans, in line with MHCC's comments. Additional detail 
is in section 4 ``Description and Estimate of Compliance Requirements'' 
of the Review Under the Regulatory Flexibility Act.
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 www.sba.gov/document/support--table-size-standards. Manufacturing of manufactured 
housing is classified under NAICS code 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 IRFA in the June 2016 NOPR was 
based on an employee threshold of 500 employees. 81 FR 42576. The 
updated threshold of 1,250 employees in the IRFA in the August 2021 
SNOPR and today's FRFA 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 \92\) and individual company websites. DOE used 
market research tools such as Dun & Bradstreet reports,\93\ 
Glassdoor,\94\ and LinkedIn \95\ 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 final 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.
---------------------------------------------------------------------------

    \92\ Manufactured Housing Institute. MHI Company Members. 
(2019). www.manufacturedhousing.org/wp-content/uploads/2019/07/Current-Member-List-USE-7-18-19-3.pdf (Last accessed March 10, 
2022).
    \93\ Dun & Bradstreet Hoovers. Subscription login accessible at: 
app.dnbhoovers.com/ (Last accessed March 10, 2022).
    \94\ Glassdoor, Inc. Available at: www.glassdoor.com/index.htm 
(Last accessed March 10, 2022).
    \95\ LinkedIn. Available at: www.linkedin.com/ (Last accessed 
March 10, 2022).
---------------------------------------------------------------------------

    DOE identified 31 manufacturers of manufactured housing affected by 
this rulemaking. Of these, DOE identified 27 manufacturers that qualify 
as domestic small businesses.
4. Description and Estimate of Compliance Requirements
    To evaluate impacts facing manufacturers of manufactured housing, 
DOE estimated both the product conversion costs (e.g., expenditures on 
R&D, testing, marketing, and other non-depreciable expenses) and 
capital conversion costs (e.g., investments in property, plant, and 
equipment) manufacturers would incur to bring their product designs and 
manufacturing facilities into compliance with the standards.
    To calculate product conversion costs, DOE estimated the number of 
model-plans manufacturers would need to redesign. MHI reports there are 
136 production plants for manufactured housing in the United 
States.\96\ Three large manufacturers in the industry account for 100 
of those production plants, based on production plant counts in the 
companies' annual reports. The remaining 36 plants are associated with 
small manufacturers. MHCC's comments indicate that individual 
production plants have approximately 300 model plans. (MHCC, No. 1600 
at pp. 14) DOE estimated there are 10,800 model plans associated with 
the small manufacturers. Based on stakeholder input from written 
comments, DOE estimated that each plan would require 10 hours of 
engineering time to update. DOE chose to use the lower end of MHCC's 
10-12 hour estimate because of revisions to the adopted standards, 
specifically removal of R-5 continuous insulation from the prescriptive 
requirements, addresses some of the more complex design concerns of 
manufacturers raised in response to the August 2021 SNOPR. Using data 
from the U.S. Bureau of Labor Statistics, DOE calculated a fully 
burdened mean hourly wage for a mechanical engineer at $65.53/hour in 
2020.\97\ Based on these inputs, DOE estimated total small business 
product conversion costs of approximately $7.1 million. For this FRFA, 
DOE assumed the $7.1 million in product conversion costs were evenly 
spread across the 27 small businesses identified. DOE believes that 
particularly small, low-volume manufacturers would offer fewer model 
plans, however there was insufficient information to determine the 
exact number of plans each small business offered. Furthermore, DOE 
believes this even allocation avoids underestimating the investment 
needed for particularly small, low-volume manufacturers. Using these 
assumptions, DOE estimates product conversion costs of approximately 
$262,000 per small manufacturer.
---------------------------------------------------------------------------

    \96\ Manufactured Housing Institute. 2021 Manufactured Housing 
Facts. Available at: www.manufacturedhousing.org/wp-content/uploads/2021/05/2021-MHI-Quick-Facts-updated-05-2021.pdf (Last accessed 
March 10, 2022).
    \97\ U.S. Bureau of Labor Statistics. Occupational Employment 
and Wage Statistics. Available at: www.bls.gov/oes/current/oes172141.htm (Last accessed March 10, 2022).
---------------------------------------------------------------------------

    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 $20,000 per production plant to cover tooling and 
work station adjustments that may be needed to support compliance with 
the standard. Accounting for 36 production plants, DOE estimates 
capital conversion costs of approximately $27,000 per small 
manufacturer.
    DOE estimated the average small manufacturer would incur $289,000 
in conversion costs. Based on data from business databases (i.e., Dun & 
Bradstreet and Manta), DOE estimated that small manufacturers of 
manufactured housing have an average annual revenue of $52.3 million. 
Per manufacturer conversion costs are less than one percent of average 
small business annual revenue.

[[Page 32813]]

    While DOE's analysis indicated that conversion costs are small 
relative to the annual revenue of most small manufacturers, DOE 
recognized that there is a range of company sizes within the set of 27 
small manufacturers. DOE evaluated the impacts of the standard of 
different groupings of small manufacturers based on revenue. See Table 
V.3 for the grouping of small manufacturers by revenue.

  Table V.3--Annual Revenue Distribution of Manufactured Housing Small
                               Businesses
------------------------------------------------------------------------
                                             Number of      Conversion
    Annual company revenue (millions)          small        cost/annual
                                           manufacturers    revenue (%)
------------------------------------------------------------------------
Less than $10...........................               4               5
$10 to $20..............................               6               2
$20 to $30..............................               5               1
$30 to $40..............................               2               1
$40 to $50..............................               4               1
$50 or more.............................               6               0
                                         -------------------------------
    Total...............................              27
------------------------------------------------------------------------

    For the small manufacturer groupings with revenue over $10 million, 
DOE finds the conversion costs to be small relative to company revenue. 
However, the impacts could be more severe for the grouping with annual 
revenue less than $10 million. For this grouping of manufacturers, 
which accounts for less than 0.5 percent of industry shipments, the 
estimated conversion costs could reach 5 percent of annual revenue over 
the conversion period.
    DOE expects the four manufacturers with less than $10 million in 
annual revenue to have one production location each. If these small 
manufacturers maintain fewer than 300 model plans or if these 
manufacturers have existing high efficiency models that meet the 
standard today, then the conversion costs would be lower. However, 
there is insufficient publicly available information to allow DOE to 
determine the exact number of model plans requiring redesign for just 
these four specific companies.
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 proposals in the June 2016 NOPR, 
proposals the August 2021 SNOPR, and sensitivities in the October 2021 
NODA. The June 2016 NOPR was adopted by the MH working group, which 
consisted of 22 representatives of stakeholders,\98\ 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, DOE considered multiple alternatives.
---------------------------------------------------------------------------

    \98\ 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 tiered standards with 
tiers based on retail pricing. In the August 2021 SNOPR, Tier 1 applied 
to manufactured home 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 August 2021 SNOPR also set 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 would increase purchase prices by more than $750.
    DOE is adopting energy conservation standards based on the tiered 
approach presented in the August 2021 SNOPR and October 2021 NODA with 
some revisions. Tier 1 will apply to single-section manufactured homes 
and Tier 2 will apply to multi-section manufactured homes. The removal 
of tiers based on retail price eliminates the possibility that 
manufacturers would need to revise models plans frequently due to 
fluctuations in production costs or changes in retail pricing strategy. 
Additionally, DOE is adopting alternate exterior wall insulation 
prescriptive requirements to reduce burden on manufacturers, including 
small manufacturers. Specifically, for manufacturers choosing to follow 
the prescriptive requirements, eliminating the continuous insulation 
requirement in exterior wall insulation reduces product conversion 
costs by reducing the complexity and the extent of plan redesign. 
Without this change, DOE would expect product conversion costs for 
manufacturers, including small manufacturers, to be at least 20 percent 
higher.
    The adopted energy conservation standards incorporate building 
thermal envelope measures based on specifications of the 2021 IECC, 
with consideration of the design and factory construction techniques of 
manufactured homes. Further, the energy conservation standards also 
include 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. Additionally, the energy conservation standard 
incorporates feedback from manufacturers and takes steps to mitigate 
the burdens on small manufacturers, such as removing prescriptive 
requirements requiring continuous insulation. The tiered energy 
conservation standards provide

[[Page 32814]]

positive national average lifecycle cost savings over the life of the 
manufactured home (i.e., 30-years). Additionally, this adopted standard 
is expected to save 1.88 quads of FFC savings over the 30-year analysis 
period.

C. Review Under the Paperwork Reduction Act

    This rulemaking does 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

    On January 14, 2022, DOE published the draft environmental impact 
statement for proposed energy conservation standards for manufactured 
housing (DOE/EIS-0550D). (``January 2022 DEIS''). The January 2022 DEIS 
was published 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). In response to the August 2021 SNOPR and 
October 2021 NODA, DOE received a number of comments regarding the 
January 2022 DEIS, as follows.
    Schulte commented that there may be difficulty in establishing 
national standards because evaluating the impact of tightening the air 
envelope of the home on indoor air quality would be influenced by 
regional differences in ambient climate. (Schulte, No. 1028 at p. 23) 
UCB commented that they were concerned that there is not an EIS 
available, and that they cannot make an informed comment without the 
EIS, especially when looking at alternatives to this rule. (UCB, No. 
1405 at p. 1) UC Law School stated that by failing to publish a Draft 
Environmental Impact Statement, the DOE has compromised the ability of 
the public to offer meaningful comments. Under NEPA, ``NEPA procedures 
must ensure that environmental information is available to public 
officials and citizens before decisions are made and before actions are 
taken.'' 40 CFR 1500.1(b). They stated that this provision indicates 
that a DEIS should have been prepared before the DOE decided on this 
proposed rule and certainly should be available for public comment 
before the proposed rule is promulgated. (UC Law School, No. 1634 at p. 
2, 3, 5, 6) They also stated that DOE must incorporate the cost-benefit 
analysis into the EIS. The CEQ rules do not require a formal CBA, but 
if the agency prepares one, it must be presented in the EIS, according 
to 40 CFR 1502.22. (UC Law School, No. 1634 at p. 10) Further, UC Law 
School commented that the CBA does not comply with the directives of 
Executive Order 12866. Executive Order 12866 directs agencies, in the 
rulemaking process, to ``assess all costs and benefits of available 
regulatory alternatives. . . .''. The Executive order mandates that 
agencies shall: Identify the problem to be addressed and its 
significance; consider the need to fix existing regulations; assess 
alternatives to direct regulation; design regulations to maximize cost-
efficiency; confirm that the benefits of new rules justify the costs, 
use the best reasonably obtainable information; tailor regulations to 
minimize burdens; and write rules clearly to minimize uncertainty and 
litigation. UC Law School stated that the alternatives were not 
entirely assessed, a third approach was not examined, the regulation 
was not designed to maximize cost-efficiency, and the proposed rule was 
not written to minimize uncertainty and litigation since the EIS has 
not been published. (UC Law School, No. 1634 at p. 11)
    ACEEE stated that the analysis presented in the EIS supports a 
strong untiered standard to provide the greatest environmental, 
socioeconomic, and health benefits. ACEEE says that air sealing 
requirements have mixed but acceptable impacts on IAQ. ACEEE stated 
that its analysis shows that the air sealing requirements of the 
proposed standards may increase concentrations of certain indoor air 
pollutants but that does not change the overall hazard status of these 
pollutants. ACEEE also stated that analysis also shows that the 
proposed air sealing requirements reduce indoor exposure to pollutants 
from outdoor sources (by reducing uncontrolled air flow). Thus, the 
proposed efficiency standards should not be rejected based on the 
potential impacts to IAQ. ACEEE stated that it is worth noting that all 
options considered in the SNOPR and in the EIS have the same air 
sealing requirements and thus the same IAQ impacts. ACEEE stated that 
requiring effective mechanical ventilation and reducing use of off-
gassing materials in manufactured homes, regardless of the efficiency 
standard, is the best way to ensure healthy indoor air quality by 
reducing exposure to air pollutants from indoor sources, and referred 
to ASHRAE Standard 62.2, Ventilation and Acceptable Indoor Air Quality 
in Residential Buildings, as an option for meeting the HUD Code. ACEEE 
concluded that the EIS confirms that the untiered standard delivers the 
highest 30-year LCC savings to residents, and delivers strong climate 
and environmental justice benefits. ACEEE said the untiered standard 
delivers the largest reduction in ongoing energy costs, which is an 
essential part of preserving the affordability of MH and lowering high 
energy burdens for its residents. (ACEEE, No. 1988 at p. 1-2)
    Earthjustice and Prosperity Now stated that there is no need to 
view energy-saving requirements that reduce air infiltration in MH as 
establishing a zero sum game between different groups or air 
pollutants, and that DOE should follow through on the draft EIS 
recommendations that to promote installation of energy efficient fans 
for ventilation. Earthjustice and Prosperity Now stated that, at the 
absolute minimum, DOE needs to fulfill its statutory obligation to 
evaluate the requirements for improved ventilation contained in the 
IECC, and concluded that the substantial economic, environmental, and 
health benefits of improving air sealing practices in MH construction 
should not come at the cost of creating environments where air 
pollutants generated indoors linger until concentrations reach 
potentially harmful levels, and that it is essential that these risks 
be mitigated, and DOE must not pass up any opportunities to use its 
legal authority to ensure the safety of the MH residents.
    As previously mentioned, DOE has published the January 2022 DEIS 
and the Final EIS in April of 2022 which informs this final rule. 
Although DOE was unable to issue the DEIS simultaneously with the 
August 2021 SNOPR, the agency reopened the energy conservation 
standards rule docket for public comment in January 2022, when it 
issued the January 2022 DEIS, to ensure an opportunity to comment on 
how the January 2022 DEIS should inform the standards final rule. 
Comments received in the rulemaking docket during the January 2022 
comment period have been considered in the previous sections, though 
some are discussed more below; comments received on the DEIS 
specifically are considered in the FEIS.
    The January 2022 DEIS analyzed a range of alternatives and impacts 
for the standards considered in the August 2021 SNOPR and October 2021 
NODA (i.e., tiered--using manufacturer's list price or home size; 
untiered; alternate exterior wall insulation for certain climate 
zones), as well as the no action alternative. The final EIS further 
analyzed these alternatives, and incorporated and addressed feedback

[[Page 32815]]

from stakeholder comments on the DEIS. DOE utilized the analyses in the 
DEIS, the comments received on the DEIS, and the analyses in the final 
EIS to inform this final rule, particularly in regards to the issues of 
indoor air quality and socioeconomics.
    With respect to indoor air quality, the final EIS provides a 
discussion of potential environmental impacts to indoor air quality 
related to the alternatives analyzed, as well as potential mitigation 
measures, which informed this rulemaking. See sections 4.2.3 and 4.3 of 
the Final EIS. As noted in the EIS, all the action alternatives 
analyzed would result in more airtight homes, which would have higher 
indoor air concentrations of pollutants emitted indoors, increasing the 
existing potential for health effects, particularly when ventilation is 
not routinely used. Conversely, all the action alternatives would 
result in better indoor protection from outdoor air pollutants, 
including wildfire smoke. Additionally, DOE expects a lower risk of 
moisture problems (e.g., mold) in the belly and attic of manufactured 
homes. As noted in section 4.11 of the final EIS, DOE identified 
potential mitigation measures to address increased indoor air 
pollutants resulting from better sealing of homes, such as promotion of 
installation of energy-efficient ventilation systems, advanced research 
and stakeholder engagement to increase implementation of efficient 
ventilation in manufactured housing, and promoting indoor air quality 
and environmental justice through informational resources and labeling. 
DOE considered all of this information in constructing this final rule.
    With respect to socioeconomics, the final EIS provides a discussion 
of impacts to indoor socioeconomics, which informed this rulemaking of 
the reasonable alternatives that could avoid or minimize adverse 
impacts. See section 4.4 of the Final EIS. DOE received numerous 
comments from a variety of stakeholders about the impacts of the 
alternatives analyzed in the DEIS on socioeconomics, particularly on 
low-income consumers. Accordingly, DOE has finalized the tiered 
standard based on home size in this final rule.
    With respect to the comments at the beginning of this section, as 
discussed in section III.B of this document, DOE is adopting a tiered 
standard in this final rule to mitigate the affordability and cost-
effectiveness concerns raised by HUD during and consultation, and in 
other stakeholder comments. DOE acknowledges that the untiered standard 
provided greater long-term energy savings benefits. However, for the 
reasons stated in section III.B of this document, DOE has determined to 
adopt the tiered standard in today's final rule. As ACEEE noted, DOE 
considered similar sealing requirements across the analyzed action 
alternatives, and they had similar indoor air quality impacts. 
Therefore, these impacts would be similar regardless of the alternative 
chosen. With respect to Earthjustice and Prosperity Now's comments, as 
discussed in section III.A.3 of this document, DOE disagrees with the 
commenter that a provision-by-provision analysis of the IECC is 
necessary for this final rule. Moreover, HUD is the Federal authority 
that regulates safety standards, including ventilation, in manufactured 
homes. Additional ventilation requirements to improve indoor air 
quality are better addressed by HUD. DOE notes that the standards 
adopted in this final rule are similar to those already required by the 
HUD Code. Additionally, as discussed in section 4.11 of the final EIS, 
DOE identified potential mitigation measures to address increased 
indoor air pollutants resulting from better sealing of homes, such as 
promotion of installation of energy-efficient ventilation systems, 
advanced research and stakeholder engagement to increase implementation 
of efficient ventilation in manufactured housing, and through 
informational resources and labeling. DOE intends to pursue these 
potential mitigation measures to promote indoor air quality and 
environmental justice in manufactured homes.
    Elsewhere in this issue of the Federal Register, DOE is publishing 
its record of decision (``ROD'') pursuant to its obligations under 
NEPA. The ROD finalizes DOE's considerations of the environmental 
impacts under the NEPA process and memorializes DOE's determinations 
and approach chosen consistent with this final rule. In addition, to 
remain compliant with Executive Order 12866, DOE is submitting this 
final rule for review to the Office of Information and Regulatory 
Affairs to ensure that the final rule, including the assessments of 
cost-effectiveness and benefits, meet the requirements of Executive 
Order 12866. DOE is statutorily required by EISA to base these energy 
conservation standards on the most recent version of the IECC except 
where it is not cost-effective, and as such, DOE followed that 
statutory direction for this final rule. DOE strived to incorporate 
feedback from stakeholders to maximize clarity and minimize the burden 
placed on manufacturers, while also following its statutory obligations 
and ensuring energy and cost savings for consumers of manufactured 
housing. With regards to difficulties establishing national standards 
based on regional differences in ambient climate, DOE has based the 
adopted standards on the established HUD zones to account for 
differences in regional climates consistent with section 413 of EISA 
(42 U.S.C. 17071(b)(2)(B)).

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 
final rulemaking 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

[[Page 32816]]

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 concluded that this 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. This SUPPLEMENTARY INFORMATION section and chapter 15 
of the TSD for this final rule respond to those requirements.
    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 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)) As discussed previously, DOE found the 2021 IECC-based 
adopted final rule cost-effective consistent with section 413 of EISA. 
A discussion of the alternatives considered by DOE is presented in 
chapter 15 of the TSD for this final rule.

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. 
These standards 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 these standards 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 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,

[[Page 32817]]

distribution, or use, and of reasonable alternatives to the action and 
their expected benefits on energy supply, distribution, and use.
    DOE has concluded that this regulatory action, which establishes 
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 final 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.\99\ 
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. Because 
available data, models, and technological understanding have changed 
since 2007, DOE has engaged with the National Academy of Sciences to 
review DOE's analytical methodologies to ascertain whether 
modifications are needed to improve the Department's analyses. DOE is 
in the process of evaluating the resulting report.\100\
---------------------------------------------------------------------------

    \99\ The 2007 ``Energy Conservation Standards Rulemaking Peer 
Review Report'' is available at the following website: http://energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peeR-review-report-0.
    \100\ The report is available at www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards.
---------------------------------------------------------------------------

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 incorporating by reference the industry standard published 
by ACCA, titled Manual J-2016 (ver 2.50), Manual J--Residential Load 
Calculations, Eight Edition, Version 2.50.. ACCA Manual J is an 
industry accepted standard for calculating the heating and cooling load 
associated with a building. DOE is requiring 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 incorporating by reference the industry standard published 
by ACCA, titled Manual S-2014, Manual S--Residential Equipment 
Selection, Second Edition, Version 1.00. ACCA Manual S is an industry 
accepted standard for calculating the appropriate heating and cooling 
equipment size for a building. DOE is requiring 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 incorporating 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 requiring 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 has consulted with 
both the Attorney General and the Chairman of the FTC about the impact 
on competition of using the methods contained in these standards and 
has received no comments objecting to their use.

N. Congressional Notification

    As required by 5 U.S.C. 801, DOE will report to Congress on the 
promulgation of this rule prior to its effective date. The report will 
state that it has been determined that the rule is a ``major rule'' as 
defined by 5 U.S.C. 804(2).

VI. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this final 
rule.

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 May 16, 
2022, by Kelly J. Speakes-Backman, Principal Deputy 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

[[Page 32818]]

the legal effect of this document upon publication in the Federal 
Register.

    Signed in Washington, DC, on May 17, 2022.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
    For the reasons stated in the preamble, DOE adds 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 the May 31, 2023 
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--
    2021 IECC means the 2021 version of the International Energy 
Conservation Code, issued by the International Code Council.
    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.
    Insulation means material deemed to be insulation under 16 CFR 
460.2.
    Manual means capable of being operated by personal intervention.
    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

[[Page 32819]]

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.
    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 to satisfy the whole house 
ventilation rates.
    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 part 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, the U.S. Department of Energy (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 DOE and at the National Archives and Records 
Administration (NARA). Contact DOE 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) 586-9127, [email protected], https://www.energy.gov/eere/buildings/building-technologies-office. 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. The 
material may be obtained from the following sources:
    (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 (ver 2.50) (``ACCA Manual J''), 
Manual J-Residential Load Calculations, Eight Edition, Version 2.50, 
Copyright 2016; IBR approved for Sec.  460.205.
    (2) ANSI/ACCA 3 Manual S-2014 (``ACCA Manual S''), Manual S- 
Residential Equipment Selection, Second Edition, Version 1.00, 
Copyright 2014; IBR approved for Sec.  460.205.
    (b) HUD User, 11491 Sunset Hills Road, Reston, VA 20190-5254; 
www.huduser.gov/portal/publications/pdrpubli.html.
    (1) HUD User No. 0005945, Overall U-Values and Heating/Cooling 
Loads--Manufactured Homes, February 1, 1992 (available from 
www.huduser.org/portal/publications/manufhsg/uvalue.html); IBR approved 
for Sec.  460.102(e).
    (2) [Reserved].


Sec.  460.4   Energy conservation standards.

    (a) General. A manufactured home must comply with the energy 
conservation standards specified for the applicable tier as presented 
in paragraphs (b) and (c) of this section.
    (b) Tier 1. A single-section manufactured home (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 multi-section manufactured home (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 1 to Sec.  460.101 and table 1 to Sec.  
460.101.

[[Page 32820]]

[GRAPHIC] [TIFF OMITTED] TR31MY22.216


 Table 1 to Sec.   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 Puerto Rico                       Maryland
U.S. Virgin Islands                                   Massachusetts
                                                      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
                                                      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 (nominal value of insulation), 
and the glazing maximum U-factor and SHGC, requirements set forth in 
table 1 to Sec.  460.102(b)(1) and table 2 to Sec.  460.102(b)(2) or 
component U-values set forth in table 3 to Sec.  460.102(b)(5) and 
table 4 to Sec.  460.102(b)(5).

[[Page 32821]]



                               Table 1 to Sec.   460.102(b)(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      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 2 to Sec.   460.102(b)(1)--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.......................................              21              30              19            0.30            0.55            0.40            0.25
3.......................................              21              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 2 to Sec.  460.102(b)(1), 
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 applicable maximum U-factor values set forth in 
table 3 to Sec.  460.102(b)(5) and table 4 to Sec.  460.102(b)(5), 
which reflect the thermal transmittance of the component, excluding 
fenestration, and not just the insulation of that component, as an 
alternative to the minimum nominal R-value requirements set forth in 
table 1 to Sec.  460.102(b)(1) and table 2 to Sec.  460.102(b)(1), 
respectively.

              Table 3 to Sec.   460.102(b)(5)--U-Factor Alternatives to Tier 1 R-Value Requirements
----------------------------------------------------------------------------------------------------------------
                                                            Exterior ceiling  Exterior wall  U-  Exterior floor
                       Climate zone                              U-factor          factor           U-factor
----------------------------------------------------------------------------------------------------------------
1.........................................................             0.061             0.094             0.049
2.........................................................             0.061             0.094             0.056
3.........................................................             0.061             0.068             0.049
----------------------------------------------------------------------------------------------------------------


              Table 4 to Sec.   460.102(b)(5)--U-Factor Alternatives to Tier 2 R-Value Requirements
----------------------------------------------------------------------------------------------------------------
                                                            Exterior ceiling  Exterior wall  U-  Exterior floor
                       Climate zone                              U-factor          factor           U-factor
----------------------------------------------------------------------------------------------------------------
1.........................................................             0.043             0.094             0.078
2.........................................................             0.043             0.063             0.056
3.........................................................             0.037             0.063             0.032
----------------------------------------------------------------------------------------------------------------

    (c) Performance requirements. (1) The building thermal envelope 
must have a Uo that is less than or equal to the applicable 
value specified in table 5 to Sec.  460.102(c)(1) and table 6 to Sec.  
460.102(c)(1).

    Table 5 to Sec.   460.102(c)(1)--Tier 1 Building Thermal Envelope
                        Performance Requirements
------------------------------------------------------------------------
                                                        Single-section U
                     Climate zone
------------------------------------------------------------------------
1.....................................................             0.110
2.....................................................             0.091
3.....................................................             0.074
------------------------------------------------------------------------


    Table 6 to Sec.   460.102(c)(1)--Tier 2 Building Thermal Envelope
                        Performance Requirements
------------------------------------------------------------------------
                                                         Multi-section U
                     Climate zone
------------------------------------------------------------------------
1.....................................................             0.082

[[Page 32822]]

 
2.....................................................             0.066
3.....................................................             0.055
------------------------------------------------------------------------

    (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) [Reserved].
    (e) 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 1 to 460.103, which is adapted from section R402 of the 2021 
IECC.

          Table 1 to Sec.   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, such as attics and crawlspaces,
                                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......................  For air-permeable insulations in vented
                                attics, a baffle must be installed
                                adjacent to soffit and eave vents.
                                Baffles, when used in conjunction with
                                eave venting, 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.
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 1 to 460.104. 
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 are adapted 
from section R402 of the 2021 IECC.

      Table 1 to Sec.   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.
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.

[[Page 32823]]

 
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
                                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 system.

    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 at a pressure differential of 
0.1 inch w.g. (25 Pascals) across the system. 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) Any programmable 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 1 to 460.204(a), 
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 1 to Sec.   460.204(a)--Mechanical Ventilation System Fan Efficacy
------------------------------------------------------------------------
                                                             Minimum
     Fan type description        Airflow rate  minimum   efficacy (cfm/
                                         (cfm)                watt)
------------------------------------------------------------------------
Heat recovery ventilator or     Any...................               1.2
 energy recovery ventilator.
In-line supply or exhaust fans  Any...................               3.8
Other exhaust fan.............  <90...................               2.8
Other exhaust fan.............  >=90..................               3.5
------------------------------------------------------------------------

    (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 subchapter, are not subject to the 
efficiency requirements in paragraph (a) of this section.

[[Page 32824]]

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. 2022-10926 Filed 5-27-22; 8:45 am]
BILLING CODE 6450-01-P