Manufactured Housing Program: Minimum Payments to the States, 91083-91086 [2016-30153]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 81, Number 242 (Friday, December 16, 2016)]
[Proposed Rules]
[Pages 91083-91086]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30153]



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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 3282 and 3284

[Docket No. FR-5848-P-01]
RIN 2502-AJ37


Manufactured Housing Program: Minimum Payments to the States

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the minimum payments to states 
approved as State Administrative Agencies (SAAs) under the National 
Manufactured Housing Construction and Safety Standards Act of 1974 in 
order to provide for a more equitable guarantee of minimum funding from 
HUD's appropriation for this program and to avoid the differing per 
unit payments to the states that have occurred under the present rule. 
This rule would base the minimum payments to states upon their 
participation in the production or siting of new manufactured homes, 
including for new manufactured homes both produced and sited in the 
same state.

DATES: Comment Due Date: February 14, 2017.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Regulations Division, Office of General 
Counsel, Department of Housing and Urban Development, 451 7th Street 
SW., Room 10276, Washington, DC 20410-0500. Communications must refer 
to the above docket number and title. There are two methods for 
submitting public comments. All submissions must refer to the above 
docket number and title.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW., Room 10276, 
Washington, DC 20410-0500.
    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
https://www.regulations.gov. HUD strongly encourages commenters to 
submit comments electronically. Electronic submission of comments 
allows the commenter maximum time to prepare and submit a comment, 
ensures timely receipt by HUD, and enables HUD to make them immediately 
available to the public. Comments submitted electronically through the 
https://www.regulations.gov Web site can be viewed by other commenters 
and interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.
    Note: To receive consideration as public comments, comments must be 
submitted through one of the two methods specified above. Again, all 
submissions must refer to the docket number and title of the rule.
    No Facsimile Comments. Facsimile (fax) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m., weekdays, at 
the above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the public comments must be 
scheduled by calling the Regulations Division at (202) 402-3055 (this 
is not a toll-free number). Individuals with speech or hearing 
impairments may access this number via TTY by calling the Federal Relay 
Service, toll-free, at (800) 877-8339. Copies of all comments submitted 
are available for inspection and downloading at https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Pamela Beck Danner, Administrator, 
Office of Manufactured Housing Programs, Department of Housing and 
Urban Development, 451 Seventh Street SW., Room 9168, Washington, DC 
20410; telephone 202-708-6423. (This is not a toll-free number.) 
Individuals with speech or hearing impairments may access this number 
through TTY by calling the toll free Federal Information Relay Service 
at 1-800-877-8389.

SUPPLEMENTARY INFORMATION: 

I. Background

    On August 13, 2002 (67 FR 52832), HUD published a final rule that, 
among other things, established minimum payments to the states 
participating in the Manufactured Housing Program as an SAA. HUD's 
August 13, 2002, final rule was issued in accordance with section 
620(e)(3) of the National Manufactured Housing Construction and Safety 
Standards Act of 1974 (42 U.S.C. 5401-5426) (the Act), as amended.\1\ 
In that rule, HUD determined to pay each state that, on December 27, 
2000, had a fully approved state plan an amount not less than the 
amount paid to that state for the 12 months ending on December 26, 
2000. HUD codified this rule at 24 CFR 3284.10.
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    \1\ Section 620(e)(3) of the Act provides, ``On or after the 
effective date of the Manufactured Housing Improvement Act of 2000 
(December 27, 2000), the Secretary shall continue to fund the States 
having approved State plans in the amounts which are not less than 
the allocated amounts, based on the fee distribution system in 
effect on the day before such effective date.''
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    On March 1, 2004 (69 FR 9740), HUD published a proposed rule to 
revise the minimum payments to SAAs in order to provide for a more 
equitable guarantee of minimum funding from HUD's appropriation for 
this program. Specifically, HUD proposed basing minimum payment to 
states on their participation in the production or siting of new 
manufactured homes. In explaining the reasons for its March 2004, rule, 
HUD stated that the August 13, 2002, rule resulted in inequitable 
payments between states fully approved as of December 27, 2000, and 
states that were not fully approved (including conditionally approved 
states) as of that date, and resulted in some states receiving more 
funding than other states for each unit of manufactured housing 
produced or sited in the state. In this regard, HUD explained that 
State A, a fully approved state in which the production and siting 
level had decreased by 30 percent since the rule's base year of 2000, 
would effectively receive a total of $16.50 (1,000 units received in 
2000 x $11.50 divided by 700 units based on 30 percent reduction) per 
unit sited and produced in the state because that payment represented a 
pro rata portion of the inflated base year amount. State B, on the 
other hand, in which production and siting had remained steady or had 
increased, but which was not a fully approved state, would only be paid 
a total of $11.50 per unit sited and produced in State B (with no 
adjustment for reduced production levels) as provided by Sec.  
3282.307. HUD concluded that while it expected some inequity in 
payments under the August 2002 rule, it believed that the minimum fee 
was based on production levels that were low enough to establish a 
reasonable minimum payment to each approved state. HUD was not 
expecting, however, the extent of the imbalances that resulted from the 
rule. Nevertheless, HUD did not finalize the March 2004 proposed rule.
    On May 2, 2014 (79 FR 25035), HUD published a proposed rule to 
revise the amount of the fee collected from manufacturers in accordance 
with section 620 of the Act. In response to HUD's proposed rule, 
several commenters stated that the fees paid to SAAs are not reflective 
of current production and shipment levels. HUD responded to these 
comments by stating

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that it would review revisions to the current fee distribution formula 
to ensure that states are provided with adequate funding to perform the 
required SAA function. (See, 79 FR 47373, August 13, 2014).
    HUD agrees that it should establish a more equitable distribution 
of funds. As a result, HUD is proposing to implement section 620 of the 
Act by establishing a formula that bases the amount paid to a state on 
the state's participation in the production or siting of new 
manufactured homes while ensuring a cumulative payment based on the 
amount a state received in Fiscal Year (FY) 2014, which is at least the 
same amount that each fully approved state received as of December 27, 
2000, the date of enactment of the statute.

II. HUD Consultation With SAAs and Manufactured Housing Consensus 
Committee (MHCC)

    HUD has worked with its partner SAAs and the MHCC to develop this 
proposal. In 2015, HUD elicited comments from both its partner SAAs and 
the MHCC on how to more equitably distribute fees among the states. At 
its August 2015 meeting, the MHCC considered a formula of $9.00 per 
transportable section located in a state, and $14.00 per transportable 
section manufactured in a state. Under this formula, whether a state 
was fully or conditionally approved would cease to affect funding. 
Additionally, the formula would provide that amounts states receive 
would not decrease below that received during FY 2014.
    The MHCC unanimously referred that proposal to its Regulatory 
Subcommittee. At the January 2016 MHCC meeting, the Regulatory 
Subcommittee recommended approval of this proposal to the full MHCC. 
Subsequently, the entire MHCC recommended adoption of the above 
mentioned proposal. As a result, HUD proposes revising payments to 
states consistent with that proposal through this rule.

III. This Proposed Rule

    HUD proposes to amend Sec.  3282.307(b) to increase the amount paid 
to both fully approved and conditionally approved states for each 
transportable section of new manufactured housing that is produced in 
that state. Under HUD's proposal, Sec.  3282.307(b) would be revised to 
allow for payments to states of (1) $9.00 for each transportable 
section of new manufactured housing that is located in that state, and 
(2) $14.00 for each transportable section of new manufactured housing 
that is produced in that state. These increased levels reflect the 
respective levels of responsibility of states.
    HUD is also proposing to revise Sec.  3284.10 to ensure 
participating states (regardless of approval status before December 27, 
2000) receive a funding level no less than the cumulative amount that 
state received in FY 2014. HUD's approach in revising Sec.  3284.10 
builds on Sec.  3282.307(b) which provides for distribution of a 
portion of the monitoring inspection fees among both fully approved and 
conditionally approved states. These payments have been in effect for 
over 20 years and are currently paid to all participating states. As a 
result, under HUD's proposed rule, all states receiving amounts 
allocated from the fees collected from manufacturers will continue to 
be paid amounts at least equivalent to those received in FY 2014. These 
proposed funding levels would also meet or exceed the allocated 
amounts, paid to fully approved states, based on the fee distribution 
system in effect on December 27, 2000, in accordance with 620(e)(3) of 
the Act.
    In addition to being more equitable for the participating states, 
HUD believes that this proposed method of implementing the statutory 
requirement concerning minimum payments to the states would simplify 
the related administrative burdens of HUD and the states. For many 
years, HUD and the states have been making and receiving payments based 
on whether that state's program was fully or conditionally approved on 
December 27, 2000. Under this proposal, payments would continue to be 
made to all participating states, regardless of whether they are fully 
or conditionally approved, using a similar system under which HUD and 
the states have been operating for years. The proposed revised 
implementation of the statutory provision on minimum payments is 
similar to the same methodology used for compliance with Sec.  
3282.307. As a result, the revised approach should not require any new 
payment or accounting structures and states should be able to 
seamlessly implement the statutory requirement.
    This new method of determining state payments would also largely 
eliminate the need for a year-end supplemental payment to states. Based 
on current production levels, most states would meet or exceed their FY 
14 manufacturing and location levels. As a result, HUD believes that 
funding to states under this proposal would be more consistent, and 
more closely linked to their production and location levels.
    As stated in this preamble, whether a state was fully or 
conditionally approved on December 27, 2000 would cease to be a factor 
in determining SAA funding. Rather, all states, including states with 
fully approved state plans as of December 27, 2000, would continue to 
receive at least the same cumulative payment they received for FY 2014. 
That cumulative payment is at least the same amount that each fully 
approved state received as of December 27, 2000, the date of enactment 
of the statute.
    HUD developed this proposal while conservatively estimating 
manufactured housing production growth of 5 percent per annum. In 
recent years, manufactured housing growth has exceeded this 5 percent 
threshold.\2\ Based on these projections, HUD estimates that states 
that have levels of production above their 2000 levels will receive 
more funding reflecting both their higher production and the greater 
responsibilities of SAAs in manufacturing states. However, based on the 
fee distribution formula being proposed in this rulemaking, no state 
which was approved prior to December 27, 2000, will see a decrease in 
funding, even if production levels remain below those from 2000. Based 
on a conservative estimate of 5 percent annual growth, and given this 
rule's guarantee of FY14 funding levels, no state, even those not fully 
approved prior to December 27, 2000, would see a decrease in funding.
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    \2\ More information on Manufactured Housing production levels 
may be obtained via the Web site of the Manufactured Housing 
Institute, available at https://www.manufacturedhousing.org/reports/.
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IV. Specific Issues for Comment

    To assist in HUD's development of this proposed rule, HUD is 
soliciting comments on certain features of its proposed rule. 
Therefore, in addition to commenting on the specific provisions of this 
proposed rule, HUD invites comment on the following questions and any 
other related matters or suggestions:
    1. In determining a revised equitable fee distribution formula, 
what methods and data should HUD consider to increase the amounts paid 
to the states? For example, should HUD rely on the past three years or 
more of fee income data received by both fully approved and 
conditionally approved states in assessing the amount of the increase 
of the payment to each SAA?
    2. Should fully approved states be entitled to higher levels of 
payments than conditionally approved SAAs? In addition to the number of 
home placements and production levels in each state, should the 
increase in payment consider the number of

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complaints handled by each SAA for the past three years in determining 
the amount of the increase (HUD would need each SAA to provide a list 
of all complaints handled over the past three years)?
    3. Should HUD revise 24 CFR 3282.307(b) to allow the amount of the 
distribution of fees among the states to be established by Notice in 
order to more timely address changes or fluctuations in production 
levels, in order to assure that the states are adequately funded for 
the inspections and work they perform?

V. Findings and Certifications

Executive Order 12866 and Executive Order 13563

    Under Executive Order 12866 (Regulatory Planning and Review), a 
determination must be made whether a regulatory action is significant 
and, therefore, subject to review by the Office of Management and 
Budget (OMB) in accordance with the requirements of the order. 
Executive Order 13563 (Improving Regulations and Regulatory Review) 
directs executive agencies to analyze regulations that are ``outmoded, 
ineffective, insufficient, or excessively burdensome, and to modify, 
streamline, expand, or repeal them in accordance with what has been 
learned. Executive Order 13563 also directs that, where relevant, 
feasible, and consistent with regulatory objectives, and to the extent 
permitted by law, agencies are to identify and consider regulatory 
approaches that reduce burdens and maintain flexibility and freedom of 
choice for the public. This proposed rule was determined to not be a 
significant regulatory action under section 3(f) of Executive Order 
12866, Regulatory Planning and Review, and therefore was not reviewed 
by OMB.

Impact on Small Entities

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
This rule will affect only states that participate in the manufactured 
housing program, and will have a negligible economic impact. 
Notwithstanding HUD's determination that this rule will not have a 
significant economic impact on a substantial number of small entities, 
HUD specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's program 
responsibilities.

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 proposed 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.

Federalism Impact

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either (1) imposes substantial direct compliance costs on state and 
local governments and is not required by statute, or (2) the rule 
preempts state law, unless the agency meets the consultation and 
funding requirements of section 6 of the Executive Order. 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.

List of Subjects

24 CFR Part 3282

    Manufactured home procedural and enforcement regulations, 
Administrative practice and procedure, Consumer protection, 
Intergovernmental relations, Investigations, Manufactured homes, 
Reporting and recordkeeping requirements.

24 CFR Part 3284

    Consumer protection, Intergovernmental relations, Manufactured 
homes.

    Accordingly, for the reasons discussed in this preamble, HUD 
proposes to amend 24 CFR parts 3282 and 3284 as follows:

PART 3282--MANUFACTURED HOME PROCEDURAL AND ENFORCEMENT REGULATIONS

0
1. The authority citation for part 3282 continues to read as follows:

    Authority: 28 U.S.C. 2461 note; 42 U.S.C. 3535(d) and 5424.

0
2. Revise Sec.  3282.307(b) to read as follows:


Sec.  3282.307  Monitoring inspection fee establishment and 
distribution.

* * * * *
    (b) The monitoring inspection fee shall be paid by the manufacturer 
to the Secretary or to the Secretary's Agent, who shall distribute a 
portion of the fees collected from all manufactured home manufacturers 
among the approved and conditionally-approved States in accordance with 
an agreement between the Secretary and the States and based upon the 
following formula:
    (1) $9.00 of the monitoring inspection fee collected for each 
transportable section of each new manufactured housing unit that, after 
leaving the manufacturing plant in another State, is first located on 
the premises of a retailer, distributor, or purchaser in that state; 
plus
    (2) $14.00 of the monitoring inspection fee collected for each 
transportable section of each new manufactured housing unit produced in 
a manufacturing plant in that State.
* * * * *

PART 3284--MANUFACTURED HOUSING PROGRAM FEE

0
3. The authority citation for 24 CFR Part 3284 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d), 5419, and 5424.

0
4. Revise Sec.  3284.10 to read as follows:


Sec.  3284.10  Minimum payments to states.

    For every State that has a State plan fully or conditionally 
approved pursuant to Sec.  3282.302 of this chapter, HUD will pay such 
State annually a total amount that is the greater of either the amount 
of cumulative payments that State received between October 1, 2013 and 
September 30, 2014; or the total amount determined by adding:
    (a) $9.00, if after leaving the manufacturing plant, for every 
transportable section that is first located on the premises of a 
retailer, distributor, or purchaser in that State after leaving the 
manufacturing plant (or $0, if it is not) during the year for which 
payment is received; and
    (b) 14.00 for every transportable section that is produced in a 
manufacturing plant in that State (or $0,

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if it is not) during the year for which payment is received.

    Dated: November 17, 2016.
Edward L. Golding,
Principal Deputy Assistant Secretary for Housing.
[FR Doc. 2016-30153 Filed 12-15-16; 8:45 am]
 BILLING CODE 4210-67-P