24 Cfr 3284

Tuesday,
August 13, 2002

Part IV

Department of
Housing and Urban
Development
24 CFR Part 3284
Manufactured Housing Program Fee; Final
Rule

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Federal Register / Vol. 67, No. 156 / Tuesday, August 13, 2002 / Rules and Regulations

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.
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 speechimpaired 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

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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 § 3284.5
that the manufacturer that must pay the
fee of $39 is the ‘‘manufacturer’’ as
defined in § 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 § 3284.1, Applicability.

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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 noticeand-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

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Federal Register / Vol. 67, No. 156 / Tuesday, August 13, 2002 / Rules and Regulations
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

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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

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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

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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

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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
§ 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 persection 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 § 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
§ 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

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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
§ 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

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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.

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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

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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.
§ 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.
§ 3284.5

Amount of fee.

Each manufacturer, as defined in
§ 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.
§ 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]
BILLING CODE 4210–27–P

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