Washington Update - MHCC Meeting - Exclusive Report

1. MEETING OVERVIEW AND ANALYSIS
2. MHCC DISAPPROVES HUD-IMPOSED CHARTER AND BYLAWS
3. MHCC URGES HUD TO RE-ASSESS ENHANCED PREEMPTION
4. MHCC DEFERS ACTION ON HUD-MHI SPRINKLER PROPOSALS
5. HUD STILL BYPASSING MHCC ON EXPANDED REGULATION
6. MHCC TO FURTHER EXPLORE CRAWLSPACE INLETS
7. MHCC ACTION ON ENERGY/FORMALDEHYDE PROPOSALS

MHARR POSITIONS GAIN SUPPORT FROM MHCC

MHARR positions on critical HUD program regulatory matters have gained the support of the Manufactured Housing Consensus Committee (MHCC) at a meeting held on October 27-28, 2010.  In its comments to the MHCC -- both verbal and in writing -- MHARR stressed three major issues: (1) the continuing degradation of the role, independence and authority of the MHCC by HUD and its General Services Administration (GSA) advisors on the operation of federal advisory committees; (2) the need to press for the federal preemption of state and local fire sprinkler standards based on the current HUD fire safety standards; and (3) HUD’s failure to consult with the MHCC on its continuing effort to expand in-plant regulation.   (See, MHARR position papers included with this report).  

  As is reported in greater detail under the relevant topic headings below, the MHCC expressed support for many of these positions and, more importantly, took specific action on a number of key matters based on the points presented by MHARR.  In particular, the MHCC adopted motions: (1) disapproving of HUD/GSA changes to its Charter and bylaws that improperly restrict its role, authority, procedures and independence; (2) calling on HUD to completely reevaluate its stance on federal preemption -- including the preemption of state and local fire sprinkler requirements based upon the enhanced preemption language of the Manufactured Housing Improvement Act of 2000; and (3) deferred action on “as needed” federal fire sprinklers as proposed by HUD and MHI. 

Just as importantly, the tone and conduct of the meeting was markedly improved from the last MHCC face-to-face meeting in Tulsa, Oklahoma.  HUD officials, urged by members of the MHCC, respected the right of Committee members -- acknowledged at Tulsa -- to call on non-MHCC members during full MHCC sessions.  This allowed the collective representation of the industry, including MHARR, acting on behalf of the industry’s smaller businesses, to participate as needed in all deliberations of both the full MHCC and MHCC subcommittees, rather than being restricted to presentations during brief “public” comment periods, as was the case at Tulsa.  Indeed, at the conclusion of the meeting, the MHCC members noted that ready access to the information provided by non-MHCC members in attendance at the meeting had been quite helpful to them in addressing the issues before them. 

MHARR, following its upcoming Board of Directors meeting, will act to follow-up on these positive developments with the Administration, the new Congress (as needed)    and on a continuing basis with the members of the MHCC.  

MHCC RESISTS HUD EFFORTS TO RESTRICT ITS ROLE

Urged by MHARR, the MHCC began to actively resist efforts by HUD (based on erroneous advice from GSA) to restrict its role, authority and independence.  (See,  attached MHARR paper submitted to the MHCC on October 27, 2010, entitled “The MHCC Should Oppose HUD Actions that Undermine its Role, Authority and Independence as Provided by Law).  Specifically, the MHCC adopted a resolution disapproving of changes to its Charter and Bylaws, made unilaterally by HUD without MHCC input or an MHCC vote, which seek to restrict the role and authority of the MHCC and subject its procedures to near-total control by HUD, thereby undermining its independence.  

While HUD, based on advice from GSA, takes the position that the MHCC, as a federal advisory committee, is subject to the constraints and limitations of the Federal Advisory Committee Act (FACA) and that the changes it has made to those documents are required by FACA, MHARR pointed out during its public presentation that various restrictions contained in the new Charter and Bylaws -- such as a requirement that MHCC meeting agendas be “prepared” by HUD, giving the Department control over the subjects considered by the MHCC -- are not authorized or even supported by anything contained in FACA.  Moreover, as pointed out by a Committee member, and as MHARR has noted previously, the MHCC is not a run-of-the-mill FACA committee, and FACA itself recognizes that its provisions can be superseded by other law, such as the 2000 reform law that created the MHCC.

MHARR, following its upcoming Board of Directors meeting, will act to follow-up on these positive developments with the Administration, the new Congress (as needed)    and on a continuing basis with the members of the MHCC.      

MHCC RECOMMENDS THAT HUD REASSESS ENHANCED PREEMPTION  

In the wake of MHARR comments to the MHCC that HUD has not properly asserted or implemented the enhanced federal preemption of the Manufactured Housing Improvement Act of 2000, particularly with respect to state and local fire sprinkler requirements (see, attached MHARR paper submitted to the MHCC on October 27, 2010, entitled “The MHCC Should Reject the HUD-MHI Proposed Fire Sprinkler Standard for Manufactured Housing), the full MHCC unanimously passed a resolution recommending that HUD revisit and reassess its approach to federal preemption both generally and with respect to fire sprinklers, based on the enhanced preemption of the 2000 law.  HUD’s representatives at the meeting indicated that the Department will conduct such a review and reassessment, and will have further input for the MHCC at its next in-person meeting.

Based on this motion, and HUD’s anticipated review and reassessment of preemption based upon the enhanced preemption of the 2000 reform law, the Department agreed to withdraw its proposed “as needed” federal fire sprinkler standard presented to the MHCC at its Tulsa, Oklahoma meeting (see article below) and the MHCC voted to table consideration of a recently-submitted MHI “as needed” fire sprinkler standard which further develops the HUD proposed standard.

MHARR, following its upcoming Board of Directors meeting, will act to follow-up on these positive developments with the Administration, the new Congress (as needed)    and on a continuing basis with the members of the MHCC.      

HUD-MHI PRESSURE FOR SPRINKLERS DEFERRED BY MHCC

MHARR, in its public comments (reflecting its long-standing position),  urged the MHCC to either preempt fire sprinklers outright based on the current HUD fire safety standards, or leave the issue to be addressed by the industry, in conjunction with other sectors of the housing industry, on a state-by-state or jurisdiction by jurisdiction basis.  (See, attached MHARR paper submitted to the MHCC on October 27, 2010, entitled “The MHCC Should Reject the HUD-MHI Proposed Fire Sprinkler Standard for Manufactured Housing).

As previously reported by MHARR, though, HUD submitted a proposed fire sprinkler standard to the MHCC at its Tulsa meeting that would have required compliance with the National Fire Protection Association 13D standard when fire sprinklers are voluntarily installed by a manufacturer or required by state or local law for all homes.  More recently, MHI submitted a more detailed and prescriptive version of the same approach for consideration by the MHCC.  Both proposals were assigned for consideration at the meeting by the MHCC Technical Structures and Design Committee.

Immediately, however, questions were raised: (a) as to whether state and local sprinkler requirements are -- or should -- be preempted by the existing HUD fire safety standards; (2) whether there is any need whatsoever for fire sprinklers in manufactured housing; and (3) whether the NFPA 13D standard or the International Residential Code-approach offered by MHI are appropriate for manufactured homes.  Following a discussion of these issues, the subcommittee, by a 5-2 vote, accepted a proposal that would have amended the current HUD fire safety regulations to state that “fire sprinkler systems are not required by this subpart,” but then provide uniform criteria for fire sprinkler systems (as proposed by MHI) “when a manufacturer elects to install a fire sprinkler system…”

MHARR urged the subcommittee not to take such an approach based on the concern that HUD would likely strip the “not needed” language from any such proposal and simply proceed to rulemaking with the sprinkler standard portion, which, ultimately, would be expanded to apply to all manufactured homes.  Significantly, this concern was validated when HUD’s representatives indicated that sprinkler preemption (i.e., the “not needed” language) was a major policy issue that would likely cause “problems” for the proposal -- as approved by the subcommittee -- within the Department.  This vindicates, as well, MHARR’s longstanding assertion that once a fire sprinkler standard is included in the HUD Code, it will become mandatory for all manufactured homes produced, sooner rather than later.

As a result, MHARR suggested that consideration of the HUD and MHI proposals be deferred pending a response from HUD on its review and reconsideration of the scope of federal preemption based upon the enhanced preemption language of the 2000 reform law.  Based on this suggestion, HUD agreed to withdraw its proposed federal sprinkler standard pending its review of federal preemption.  Similarly, the full MHCC voted to table consideration of MHI’s expanded prescriptive sprinkler proposal, although the Technical Structures and Design Committee will continue to gather data and information relevant to the sprinkler issue.  

MHARR, following its upcoming Board of Directors meeting, will act to follow-up on these positive developments with the Administration, the new Congress (as needed)    and on a continuing basis with the members of the MHCC.      

HUD TAKING EXPANDED ENFORCEMENT BEHIND CLOSED DOORS 

While HUD officials acknowledged at the meeting that they would continue to bring regulatory issues to the MHCC and would work with the Administering Organization (AO) to develop a “code cycle” plan, similar to that for HUD Code standards, for MHCC consideration of regulatory changes, HUD representatives at the meeting did not comment on MHARR’s continuing position that the ongoing expansion of in-plant regulation must be brought to the MHCC and followed by rulemaking in accordance with the 2000 reform law.   See, attached MHARR paper submitted to the MHCC on October 27, 2010, entitled “The MHCC Should Assert its Statutory Right to Review and Comment on HUD’s Expansion of its Regulations.”

Moreover, HUD’s representative revealed for the first time that the upcoming November 2010 “auditors meeting” -- first mentioned at the recent HUD-COSAA conference -- which will involve further development and refinement of the ongoing expansion of in-plant regulation, will be closed to the public and the collective representation of the industry and HUD Code manufacturers.  While MHARR has consistently maintained that this entire matter should have been brought to the MHCC, a closed meeting on the development of changes to a fundamental function such as enforcement, reflects a drastic u-turn back to the closed-door proceedings and abuses of the 1980’s and 1990’s, which led to the adoption of the 2000 reform law in the first place thus, once again, vindicating MHARR’s assertion that HUD regulators and the program monitoring contractor are taking the federal program back to the past.   Furthermore, HUD’s action is totally inconsistent with a “primary” priority of the Obama Administration -- ironically raised by HUD at the meeting in another context -- of openness and transparency in government.  It is also inconsistent, as pointed out by MHARR, with the last discussion of this program in July 2009, in Herndon, Virginia, which was open to the public. 

MHARR, following its upcoming Board of Directors meeting, will act to follow-up on these developments with the Administration, the new Congress (as needed) and on a continuing basis with the members of the MHCC.      

MHCC TO ADDRESS CONFLICTING HUD AIR INLET REQUIREMENTS

The MHCC will be addressing an issue that MHARR initially raised in 2009 with the former Administrator of the HUD program -- specifically, conflicting requirements in the HUD Code and installation standards regarding air intakes for combustion appliance such as fireplaces.

While the revised HUD standards, in part, require that such intakes enter from outside the home skirting, installation instructions from the manufacturers of such devices, in some cases, direct that the intake be from the open area underneath the home.  This conflict, as pointed out by MHARR at the meeting and in previous correspondence with HUD, creates a liability trap for manufacturers -- requiring them, in some cases to ignore the device manufacturer’s instructions in order to comply with the HUD standard.  

An amendment proposed to the MHCC would resolve this conflict by allowing an exception to the HUD outside intake requirement where the device manufacturer’s instructions specify intake from underneath the home.

Based on discussion at the meeting, an MHCC subcommittee will look into various device manufacturers’ instructions, to see if there are minimum open space requirements for crawlspace inlets, and will then proceed based on that review.

MHCC REJECTS OR DEFERS ENERGY AND FORMALDEHYDE PROPOSALS

To clear its backlog of proposals, the MHCC voted to reject long-pending formaldehyde-related proposals, insofar as the Environmental Protection Agency (EPA), under a statute passed recently by Congress, will be proposing formaldehyde standards for pressed wood products based on existing rules of the California Air Resources Board (CARB).

Similarly, the MHCC voted to defer any consideration of pending energy conservation proposals insofar as the U.S. Department of Energy (DOE), under the 2007 Energy Independence and Security Act (EISA) will be proposing energy conservation rules for manufactured homes some time during 2011.  Of course, as MHARR has previously reported, it will oppose the imposition of any such costly rules at a time when manufactured housing consumers face an unprecedented scarcity of available financing.

Finally, as MHARR continues to maintain, manufacturers and retailers routinely offer enhanced energy packages for manufactured home buyers who seek such features.

MHARR is a Washington D.C.-based national trade association representing the views and interests of producers of federally-regulated manufactured housing.