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Manufactured Housing Program Fee
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[Federal Register: August 13, 2002 (Volume 67, Number 156)]
[Rules and Regulations]
[Page 52831-52835]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13au02-11]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 3284
[Docket No. FR-4665-F-02]
RIN 2502-AH62
Manufactured Housing Program Fee
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Final rule.
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SUMMARY: In accordance with recent statutory direction, the Department
is publishing this rule to modify the amount of the fee that is
collected from manufacturers of manufactured homes to fund HUD's
responsibilities under the National Manufactured Housing Construction
and Safety Standards Act of 1974. The rule also sets minimum payments
to States participating in the program as State Administrative
Agencies. This final rule follows publication of an April 15, 2002,
proposed rule and takes into consideration public comments received on
the proposed rule. This final rule adopts the proposed rule without
substantive change.
DATES: Effective Date: September 12, 2002.
FOR FURTHER INFORMATION CONTACT: William W. Matchneer III,
Administrator, Manufactured Housing Program, Department of Housing and
Urban Development, 451 Seventh Street, SW., Washington, DC 20410-8000;
telephone (202) 708-6401 (this is not a toll-free number). Hearing- or
speech-impaired individuals may access this number via TTY by calling
the toll-free Federal Information Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
On April 15, 2002, the Department published a proposed rule (67 FR
18398) to modify the amount of the fee to be collected from
manufactured home manufacturers in accordance with section 620(d) (42
U.S.C. 5419(d)) of the National Manufactured Housing Construction and
Safety Standards Act of 1974 (the Act). These fees are used to offset
HUD's expenses for carrying out its responsibilities under the Act and
have not been increased for over 12 years. Section 620(d) of the Act,
added by the Manufactured Housing Improvement Act of 2000 (Pub. L. 106-
569, 114 Stat. 2944, approved December 27, 2000) (the MHI Act),
provides that the amount of any fee ``may only be modified: (1) as
specifically authorized in advance in an annual appropriations Act; and
(2) pursuant to rulemaking in accordance with section 553 of title 5,
United States Code.'' (Section 553 of title 5, United States Code
contains the ``informal'' rulemaking requirements of the Administrative
Procedure Act.) Section 620(e) of the Act (unless otherwise noted in
this preamble, references to a section of the Act include the
amendments made to that section by the MHI Act) further provides that
amounts from any fee shall be available for expenditure only to the
extent approved in advance in an annual appropriations Act.
The fee that HUD collects under the Act is levied upon the
transportable sections of each new manufactured housing unit, and the
total amount of the fees that HUD collects annually is dependent upon
the number of transportable sections produced per year. The amendments
made by the MHI Act in section 620(d) of the Act, which make the
modification of the amount of the fee subject to implementation only
pursuant to rulemaking in accordance with section 553 of title 5,
United States Code, prompt this rulemaking.
II. This Final Rule
This rule establishes a new part 3284, under which the amount of
the fee is codified. This final rule adopts the proposed rule with only
minor changes.
The amount established in this rule is unchanged from the final
rule and has been determined by dividing $13,566,000, the amount
appropriated for Fiscal Year (FY) 2002, by 350,000, the number of
manufactured housing transportable units projected to be produced in
the FY. This calculation results in a revised fee of $39. The
explanation of this calculation of the amount of the fee has been
removed from the final rule as unnecessary.
The final rule also clarifies in Sec. 3284.5 that the manufacturer
that must pay the fee of $39 is the ``manufacturer'' as defined in
Sec. 3282.7.
In accordance with section 620(e)(3) of the Act, which was also
added by the MHI Act, this rule also provides (as it did at the
proposed rule stage) that HUD will continue to fund States that have
approved State plans in amounts not less than the allocated amounts,
based on the fee distribution system in effect on December 26, 2000.
The yearly payment to a State would be set by this rule as not less
than the amount paid to that State for the 12 months ending on December
26, 2000. As a conforming matter, this final rule adds a specific
reference to States having approved plans to Sec. 3284.1,
Applicability.
III. Public Comments
HUD specifically invited comment on the projected number of
transportable sections. None of the commenters suggested that a
different production projection should be used in the final calculation
of the amount of the fee. Therefore, the projected production level
announced in the proposed rule has been used in the final calculation
of the fee.
HUD received comments from 15 commenters on other aspects of the
fee. These comments resulted in the issues set out in the numbered
comments that follow, together with HUD's responses.
Comment 1: HUD's proposed fee modification was not specifically
authorized in advance in an annual appropriations Act. Congress has not
specifically authorized an increase in the amount of the label fee.
Response: Section 620(d) of the Act states that the ``amount of any
fee . . . may only be modified'' when two conditions are met: (1) in
advance of HUD's modification, Congress specifically authorizes in an
appropriations Act that the amount of the fee be modified; and (2) the
modification is made through notice-and-comment rulemaking. In HUD's FY
2002 Appropriations Act (Pub. L. 107-73, 115 Stat. 651, 669, approved
November 26, 2001), Congress appropriated $13,566,000 for the
manufactured housing program, and specifically directed that the fee
established and collected pursuant to section 620 of the Act ``shall be
modified as necessary'' to ensure that the general fund of the Treasury
could be reimbursed by fee collections received up to the amount of the
appropriation (emphasis added). Therefore, through this rule, HUD is
modifying the amount of the fee as specifically authorized by Congress,
i.e., HUD is modifying the amount of the fee based on the amount
necessary to collect $13,566,000. HUD, therefore, both has satisfied
the requirement in section 620(d)(1) and is complying with the
subsequent congressional enactment in the FY 2002 Appropriations Act.
Comment 2: Establishment of a specific level of appropriation by
Congress does not satisfy the requirement that a modification of the
amount of the fee be specifically authorized. Rather, specific advance
authorization in an annual appropriations Act is required for both
program expenditures (section 620(e)) and fee changes (section 620(d)).
Response: Congress authorized HUD, in its FY 2002 Appropriations
Act, to spend up to $13,566,000 for the
[[Page 52833]]
manufactured housing program for the fiscal year. In addition, as
discussed in the response to Comment 1, Congress mandated that fees be
modified as necessary to ensure that the general fund of the Treasury
could be reimbursed for that amount. Therefore, Congress has authorized
program expenditures, as contemplated in section 620(e), and has
authorized modification of the amount of the fee, as contemplated in
section 620(d).
Comment 3: If specific authorization of a level of program
expenditures, as required under section 620(e), also authorizes a fee
increase, the provision in section 620(d) is surplusage.
Response: As discussed above, HUD does not base its authority to
issue this rule on the fact that Congress established a level of
program expenditures, as referenced in section 620(e), but on the fact
that Congress mandated in the FY 2002 Appropriations Act that fees be
modified to ensure a level of collections that is defined by the amount
of the appropriations for the program. This mandate comports with the
requirements in section 620(d).
Comment 4: The opportunity for HUD to receive and consider evidence
of projected production levels through a proposed rule are limited at
best, so HUD should ask Congress for a specific fee modification.
Congress can thoroughly test and evaluate the relevant information.
Response: If Congress is to analyze such information and make a
determination of a specific fee amount, there is little justification
for the other statutory requirement that the amount be subject to
notice-and-comment rulemaking. Congress does not ordinarily involve
itself with this level of management of such regulatory programs, and
the mandate in the FY 2002 Appropriations Act that HUD modify fees as
necessary to ensure the level of appropriations reflects authorization
by Congress for HUD to pursue a fee modification within certain limits.
The requirement in the Act for notice-and-comment rulemaking in
accordance with the Administrative Procedure Act satisfies the interest
of Congress in establishing appropriate safeguards for HUD's
modification of the amount of the fee.
Comment 5: The formula used by HUD to determine the fee level is
appropriate, but should only be applied after HUD follows the processes
and procedures in the Act.
Response: As discussed previously, HUD believes that it has
followed the required procedures. HUD agrees with the commenter that
the formula used to establish the new level of the fee is appropriate,
and notes that none of the commenters suggested changes to the
production levels used by HUD to calculate the final fee.
Comment 6: One of the stated purposes of the Act is ``to 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.'' This statement of purpose
mandates a specific analysis of the impact of the increased fee on the
affordability of manufactured housing. Further, the Conferees on the FY
2002 HUD Appropriations Act directed HUD ``to identify the use of all
program fees as part of the fiscal year 2003 HUD Budget
Justification.''
Response: HUD has always believed that it was required to consider
the potential effect of its actions in the manufactured housing program
on the cost of this affordable housing alternative. HUD has considered
the potential effect on cost of raising the fee to $39. It is HUD's
position that the $15 increase would have a negligible effect on the
cost of manufactured housing. While the amount of the fee has been
increased in comparison to the earlier fee, the $39 fee still
represents a very small proportion of the overall cost of a
manufactured home. However, cost is not the only important
consideration. The first purpose stated in the Act is ``to protect the
quality, durability, safety, and affordability of manufactured homes.''
The Conferees also directed HUD ``to place a priority on monitoring
safety inspection of homes and the issuance of inspection labels when
determining the funding requirements for this program during fiscal
year 2002.'' H.R. Conf. Rep. No. 107-272, p. 112 (2001). HUD has done
everything required to meet the various mandates established by
Congress in the authorizing statute for the manufactured housing
program, the appropriations process, and other relevant legislation, as
well as various Executive Branch issuances.
Comment 7: Before the final rule, HUD should publish specific
information with line-by-line details about its proposed program
expenditures.
Response: HUD is not required to publish such information. Choosing
the most appropriate management of a Federal program is a governmental
function. While the public has the right and a responsibility to
observe government operations, the public is represented in the
management of individual programs through elected officials and the
structure of the powers accorded to the branches of the Federal
government. The Secretary has the statutory responsibility to
administer an effective program that ensures the quality, durability,
safety, and affordability of manufactured homes. In order to meet that
responsibility efficiently, the Secretary has concomitant authority to
manage the resources dedicated to the program, subject to the law and
the direction of the President.
On the other hand, Congress has the authority and responsibility to
establish appropriations levels for government operations, and HUD has
provided, and will continue to provide, Congress with the information
it needs to review HUD's operating budget for this program. Through
this process, the public will be assured that their representatives
have determined the level of Federal oversight that is appropriate in
exchange for the benefit of Federal preemption of multiple State and
local construction and safety requirements as applied to manufactured
housing.
Comment 8: HUD has used program fees to engage in unauthorized
activities.
Response: HUD strongly disagrees with this comment. In fact,
although legal challenges to HUD's actions are rare, no court has ever
found that HUD has acted outside of its authority or responsibility in
this program. HUD has always been careful to ensure that its actions
are legal and appropriate. In addition, HUD has tried to be responsive,
in proportion to its program responsibilities, when consumers or
industry participants present questions about the authority for, or
effectiveness of, HUD's actions within the manufactured housing
program.
Comment 9: It is unfair to manufacturers and consumers and a
violation of the Act for HUD to increase the label fee by 62.5 percent.
HUD should phase in the fee increase over several years to be more in
line with inflation indices.
Response: As noted in the preamble of the proposed rule, the
regulatory fee assessed for each section of manufactured housing to
assure the public that such housing meets a minimum level of
performance and safety has not been increased for over 12 years. In
addition, Congress amended the statute in December 2000 to require the
Secretary to exercise significant new responsibilities for nationwide
programs for installation and dispute resolution and for a consensus
rulemaking procedure, and to authorize the Secretary to use fee
collections to fund a new program administrator. Although
[[Page 52834]]
the amount of increase of the fee appears large as a percentage change,
the percent-increase statistic mostly reflects a very small initial fee
and a substantial increase in the program responsibilities.
Further, in recent years fee revenue has not covered program
expenses, even though HUD has significantly reduced ``monitoring safety
inspections'' and other oversight activities performed by HUD staff
with the assistance of HUD contractors. As discussed in the response to
Comment #6, the Conferees on HUD's FY 2002 Appropriations Act had
directed HUD to place a priority on monitoring safety inspections of
homes when determining the funding requirements for the program during
FY 2002. In addition, certain regulatory functions that do not depend
on the level of production must continue to be performed, such as
monitoring Design Approval Primary Inspection Agencies (DAPIA's),
Production Inspection Primary Inspection Agencies (IPIA's), and State
Administrative Agencies (SAA's) and training. These functions are
necessary to protect consumers and the public, and to maintain
confidence in the industry's product. Nevertheless, as fee revenues
have fallen corresponding to diminished production levels, the program
has reduced monitoring inspections and has exhausted reserve operating
funds that had been available in the program account. Therefore, the
$15-per-section fee increase at this time is reasonable and necessary.
Comment 10: OMB has determined that the rule is a ``significant
regulatory action.'' As such, the proposed rule carries a significant
risk of harming small manufacturing businesses, especially at a time
when production levels are down.
Response: The OMB designation is dictated by Executive Order 12866
and does not necessarily establish a risk of harm. Most rules that
receive this designation are deemed significant because they either
have an annual economic effect of at least $100 million, or adversely
affect in a material way a sector of the economy or public health or
safety. The proposed rule noted that OMB did not determine that the
proposal was economically significant. Rather, the designation resulted
from another criterion: it ``raise(s) novel legal or policy issues
arising out of legal mandates.* * *'' The comments, as presented and
responded to in this preamble, reflect such ``novel'' issues, and
validate the OMB designation of the rule as a significant regulatory
action. As noted in the response to Comment 6, HUD has undertaken all
of the required analyses and met all of its responsibilities in issuing
this rule.
Comment 11: The State's cost to carry out the required functions of
an SAA is much higher than the funding provided by HUD, and will
increase as the State takes on additional responsibilities related to
retailer alterations and inspections and installation. Proposed
Sec. 3284.10 should be modified to guarantee a State payment of at
least $50,000.
Response: The rule ensures that HUD's payments to the States will
comply with the statutory minimum requirement. HUD appreciates that a
higher payment may permit some States to participate more consistently
in the manufactured housing program, and HUD would like to encourage
such participation. In the past, HUD has considered whether
establishment of a minimum payment such as $50,000 would be feasible,
and in the future, such payments may be possible. This rule merely
establishes a minimum payment to the States; it does not prevent HUD
from taking action in the future to seek higher payments to States, if
such payments are found to be feasible, and it does not affect the per-
section payments to be made to the States under current regulations.
Because the demands on the program funds are so great at this time,
however, HUD has not proposed the change suggested by the commenter.
Comment 12: Based on HUD's stated intent in the final rule that
established the current fee distribution system (56 FR 65183, December
16, 1991), proposed Sec. 3284.10 should be modified to provide that 38
percent of each label fee be paid to the State in which a new
manufactured home is sited, and 8 percent of each label fee be paid to
the State in which a new home is produced. This would help the States
to meet the costs associated with the new requirements for dispute
resolution and installation programs.
Response: HUD believes that Sec. 3284.10 in today's final rule is a
reasonable interpretation of the intent of Congress, especially in
light of the December 1991 rule cited by the commenter (56 FR 65183).
In the December 1991 rule, HUD changed the method of payments to States
from a formula focused solely on the State of siting to a formula based
on both the States of production and siting. HUD expressly rejected
utilization of a fixed percentage to define the payments to States,
stating that ``a more equitable method of distribution of funds to SAAs
is one based on a fixed fee dollar amount.'' (56 FR 65184-5) HUD noted
that utilization of a percentage formula could have the effect of
requiring HUD to seek unnecessarily high fee increases in the future,
in order to cover HUD's needs but maintain the percentages specified
for distribution to the States. (See 56 FR 65184.)
However, HUD understands that the States may need funding beyond
what is provided by HUD pursuant to new Sec. 3284.10 and 24 CFR
3282.307(b) to implement optional new State programs for dispute
resolution and installation. In the December 1991 rule, HUD also noted
that States could assess their own fees to defray expenses in excess of
funding received from HUD. (See 56 FR 65185) The law relating to this
power of the States has not changed; nor has the requirement that a
State participating as an SAA must provide satisfactory assurance that
it will devote adequate funds to the administration and enforcement of
the standards.
As discussed in the response to Comment 11, this rule merely
establishes a minimum payment to the States that complies with the
requirements of the Act and does not foreclose future actions regarding
payments to the States. The provision is not intended to minimize the
States' importance to the program, or to limit the amount of funding
that could eventually be made available to the States from fee
collections. HUD and the Consensus Committee can consider increasing
the amounts available to the States for carrying out their approved
State plans as part of future rulemaking.
Comment 13: HUD's FY 2002 appropriation request of $13,566,000 did
not consider the States' costs to implement the Act. However, this
amount was intended to cover HUD's costs for services that are no
longer necessary because of lower production levels, and the difference
could be used for additional funding to the States.
Response: In its budget request, HUD considered the moneys that
would need to be paid to the States for activities conducted under
approved State plans, which the Act authorizes to be offset from the
fee. Congress did not appropriate the full amount initially requested
by HUD for the manufactured housing program in FY 2002. Even with lower
production levels, HUD does not expect to be able to perform all of its
program activities at optimal levels during the fiscal year. As
discussed in the response to Comment 9, certain of HUD's regulatory
functions must continue to be performed, regardless of the level of
production. Therefore, HUD's regulatory responsibilities are not
reduced in direct correlation to reduced production levels. HUD does
not have any reserves available to fund
[[Page 52835]]
program activity, but if such reserves are available in the future, HUD
agrees that increased funding for approved State activities should be
given priority consideration.
IV. Findings and Certifications
Paperwork Reduction Act Statement
Although there are no information collection requirements in this
rule, which establishes the fee to be collected from manufacturers of
manufactured homes to fund HUD's responsibilities under the National
Manufactured Housing Construction and Safety Standards Act of 1974, the
collection of the fee is related to a form that has been reviewed and
approved by the Office of Management and Budget (OMB) under the
Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35). The form has
been assigned OMB control number 2502-0233. However, the form will be
modified to reflect the cost data as modified by this rule, and a
modification has been submitted to OMB with a request for approval. An
agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless the collection displays
a valid control number.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538) (UMRA) establishes requirements for Federal agencies to
assess the effects of their regulatory actions on State, local, and
tribal governments and the private sector. This rule does not impose
any Federal mandates on any State, local, or tribal governments or the
private sector within the meaning of the UMRA.
Environmental Impact
In accordance with 24 CFR 50.19(c)(6) of the HUD regulations, this
rule sets forth fiscal requirements which do not constitute a
development decision that affects the physical condition of specific
project areas or building sites, and therefore is categorically
excluded from the requirements of the National Environmental Policy Act
and related Federal laws and authorities.
Impact on Small Entities
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed and approved this rule and in so doing
certifies that this rule will not have a significant economic impact on
a substantial number of small entities. This rule will have a total
economic impact this Federal Fiscal Year of no more than $13,566,000,
the amount approved by Congress in HUD's FY 2002 Appropriations Act.
Congress further requires HUD to collect this amount in fees from
manufacturers of manufactured housing. The rule will implement this
mandate by establishing a per unit fee on transportable sections of
manufactured housing that is proportional in its impact, with a greater
impact on larger manufacturers and a lesser impact on smaller
manufacturers.
Federalism Impact
Executive Order 13132 (entitled ``Federalism'') prohibits, to the
extent practicable and permitted by law, an agency from promulgating a
regulation that has federalism implications and either imposes
substantial direct compliance costs on State and local governments and
is not required by statute, or preempts State law, unless the relevant
requirements of section 6 of the Executive Order are met. This rule
does not have federalism implications and does not impose substantial
direct compliance costs on State and local governments or preempt State
law within the meaning of the Executive Order.
Executive Order 12866, Regulatory Planning and Review
The Office of Management and Budget (OMB) reviewed this rule under
Executive Order 12866 (entitled ``Regulatory Planning and Review'').
OMB determined that this rule is a ``significant regulatory action,''
as defined in section 3(f) of the Order (although not economically
significant, as provided in section 3(f)(1) of the Order). Any changes
made to the rule subsequent to its submission to OMB are identified in
the docket file, which is available for public inspection in the office
of the Rules Docket Clerk, Office of General Counsel, Room 10276, U.S.
Department of Housing and Urban Development, 451 Seventh Street, SW.,
Washington, DC 20410-0500.
List of Subjects in 24 CFR Part 3284
Consumer protection, Manufactured homes.
Accordingly, for the reasons discussed in this preamble, HUD adds
24 CFR part 3284, as follows:
PART 3284--MANUFACTURED HOUSING PROGRAM FEE
Sec.
3284.1 Applicability.
3284.5 Amount of fee.
3284.10 Payments to States.
Authority: 42 U.S.C. 3535(d), 5419 and 5424.
Sec. 3284.1 Applicability.
This part applies to manufacturers that are subject to the
requirements of the National Manufactured Housing Construction and
Safety Standards Act of 1974 (the Act), and to States having State
plans approved in accordance with the Act. The amounts established
under this part for any fee collected from manufacturers will be used,
to the extent approved in advance in an annual appropriations Act, to
offset the expenses incurred by HUD in connection with the manufactured
housing program authorized by the Act.
Sec. 3284.5 Amount of fee.
Each manufacturer, as defined in Sec. 3282.7 of this chapter, must
pay a fee of $39 per transportable section of each manufactured housing
unit that it manufactures under the requirements of part 3280 of this
chapter.
Sec. 3284.10 Payments to States.
Each calendar year HUD will pay each State that, on December 27,
2000, had a State plan approved pursuant to subpart G of part 3282 of
this chapter a total amount that is not less than the amount paid to
that State for the 12 months ending at the close of business on
December 26, 2000.
Dated: August 6, 2002.
John C. Weicher,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 02-20526 Filed 8-8-02; 4:49 pm]
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