MHARR Steps Up Effort on Regulatory Coercion

MHARR has taken a further step in its effort to slow and reverse intensifying pressure by HUD and its monitoring and inspection agents for manufacturers -- under the guise of "voluntary" cooperation -- to adopt costly changes to their in-plant production oversight procedures that are not required by existing HUD regulations. The focus of this MHARR activity, as you are aware, is on ensuring that, unless and until there is proper rulemaking, any such changes are initiated -- if at all -- on a truly voluntary basis by individual manufacturers and not by regulatory authorities. This is because any "request" by regulators within a comprehensive regulatory system for "voluntary" action above and beyond existing regulations, without a specific document that has gone through the rigors of rulemaking, is accurately perceived as pressure and coercion by the regulated party.

As reported earlier, MHARR, on October 26, 2009, filed a wide-ranging Freedom of Information Act (FOIA) request with HUD seeking the disclosure of an array of documents relating to the genesis of this coercion. Among other things, the filing asks for materials dating back to 2008 showing the substance of closed-door meetings on this subject involving HUD regulators, the program monitoring contractor and third-party Primary Inspection Agencies (PIAs). It also seeks any and all documents used at -- or resulting from those meetings -- as well as materials showing the identity and role of specific participants.

MHARR broadened and expanded this effort on December 1, 2009, with a letter to HUD's new General Counsel (copy attached)asking for a review of this activity and a halt to such regulatory pressure. Please be sure to review this letter carefully, and feel free to share it with your company's technical, regulatory and legal executives.

MHARR's position, as set forth in that letter, is that manufacturers (given all the information currently available) cannot be compelled to implement production oversight changes that are not required by current regulations or standards. Furthermore, any changes that have not been subjected to the rigors of the rulemaking process required by the 2000 reform law should not be forced on manufacturers through regulatory pressure and coercion. While any manufacturer with an interest in making changes to its production oversight practices on a truly voluntary basis, can make appropriate arrangements with HUD regulators and its third-party PIA to do so, any such initiative should come from the individual manufacturer, not as a result of pressure or threats -- real or implied -- from regulators.

Another concern that HUD Code manufacturers should be aware of, is that -- as MHARR has learned -- the industry's other Washington, D.C.-based association (representing the industry's larger producers) has effectively accepted this de facto regulation, under the guise of "voluntary" cooperation, and has been meeting and negotiating with HUD regulators and the program monitoring contractor over its content. These negotiations are apparently designed to "improve" this "process," even though the process itself is fundamentally flawed, as is explained above and in greater detail in the attached letter to HUD's General Counsel. Years of experience with the HUD program have demonstrated, however, that "go-along-to-get-along" negotiations on important matters such as this, only encourages more of the same from regulators while, at the same time, it discourages them from complying with the procedural safeguards that are designed to officially protect regulated parties, such as those contained in the 2000 reform law. In fact, this sort of back-door negotiation on regulatory matters was one of the reasons that led Congress, in the 2000 reform law, to bring regulatory procedures into the open through the transparent MHCC consensus process. And, as the industry is aware, the MHCC has not given its consensus support to HUD's proposed expansion of the existing enforcement regulations.

MHARR will continue with its efforts to bring this HUD activity into the open and to ensure that there is proper rulemaking on any such changes -- if, in fact, they are needed and justified at a time when industry production is below 50,000 homes annually. We will keep you apprised as new developments unfold.

Manufactured Housing Association for Regulatory Reform
1331 Pennsylvania Ave N.W., Suite 508
Washington, D.C. 20004
Phone: 202/783-4087
Fax: 202/783-4075
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