Fire Sprinkler, In-plant Regulation and MHCC-Related issues -- Status Report

As was explained and detailed at the November 4, 2011 MHARR Board of Directors meeting, MHARR is continuing to target and aggressively press three key pending regulatory and program-related issues administratively with HUD -- (1) the HUD-Manufactured Housing Institute (MHI) fire sprinkler standard accepted by the Manufactured Housing Consensus Committee (MHCC) at its October 2011 meeting; (2) HUD’s program of expanded in-plant regulation; and (3) the appointment of collective national industry representatives to the MHCC and -- aside from such appointments -- issues concerning the composition of the MHCC and HUD efforts to limit its role, independence and authority. MHARR recently addressed all of these issues in a December 7, 2011 meeting with acting HUD program manager Henry S. Czauski and Robert Malech of HUD’s Office of General Counsel. Relevant details from that discussion are summarized below.

FIRE SPRINKLER STANDARD: At its October 2011 meeting, the MHCC voted to accept and recommend for inclusion in the HUD Code a first-ever fire sprinkler standard for manufactured housing based on proposals submitted by HUD and MHI. Meeting with the program manager, MHARR stressed and reiterated the key reason why the MHCC should never have accepted such a proposal and why HUD cannot now proceed with rulemaking to adopt such a standard, which, very simply, is that HUD has no authority to adopt a safety standard absent an “unreasonable risk” of death or injury and all the evidence presented to the MHCC, including data from the National Fire Safety Association – the primary national advocate for residential sprinklers – shows that there is no such risk in present-day manufactured homes. In response, the program manager indicated that the Department has not initiated rulemaking on this issue and that no action is currently impending or imminent.

While this is certainly no guarantee that the Department will not proceed with rulemaking on the fire sprinkler proposal in the future, itdoes mean that there will be more time for industry members -- and particularly the post-production sector – who were blind-sided by MHCC acceptance of this HUD-MHI proposal, to digest, consider and realistically re-evaluate its potentially disastrous impacts.

Indeed, based on inquiries and input to MHARR from the post-production sector since the October 2011 MHCC meeting, it is evident those industry members, especially community owners and operators, are just now beginning to realize and fully apprehend the extremely negative ramifications that such a standard will have when and if it fully implemented, and the degree to which they have been misinformed and misled regarding key aspects of the proposal. For example:

(1) The claim that the proposed rule expressly preempts local sprinkler requirements which, as explained by MHARR, is not true. The proposal says nothing about preemption and, in fact, undermines any prospect for the full preemption of state and local sprinkler mandates for HUD Code homes.

(2) The claim that this is a “conditional” or “voluntary” standard. Again, as explained by MHARR, not true. There is no such thing as a conditional or voluntary standard under the federal law that governs the HUD program and HUD Code.

(3) The claim this proposal is somehow not a ticking time-bomb that if and when it goes off, will ultimately harm the industry and its consumers.

All of this highlights two critical points. First, because there is no independent, national post-production industry association, MHARR, by itself, has had fill the breach on this matter, combat the rampant misinformation that has been spread on this proposal, and fully explain the likely negative consequences of this exercise for the post-production sector. Normally, with an independent national post-production association, such functions would have been performed by that organization. More importantly, if there were such an independent national post-production association today, it is inconceivable that such an ill-advised and ill-considered proposal would have ever been brought forward or accepted by the MHCC.

Second, all of this highlights the fact that important, accurate information regarding post-production issues is not fully reaching the industry’s grassroots. While MHARR continues to advance such post-production matters and provides related factual and accurate information directly to the industry’s grassroots through its expanding mailing list (as well as through state associations and the trade press), the rapid multiplication and development of such issues, as well as their complexity (e.g., the fire sprinkler issue), is making this more and more difficult. And, even though MHARR continues to fill this role, inquiries from the post-production sector nevertheless continue to grow and expand.

Returning to the sprinkler issue, MHARR will continue to monitor and report on HUD activity concerning this matter. In the best case, nothing further will occur in the near future, so that this entire matter can be re-visited at the March 2012 MHARR Board of Directors meetingto target other and additional actions to slow or halt this proposal at HUD.

EXPANDED IN-PLANT REGULATION: MHARR also addressed statements by a HUD engineer during an August 2011 meeting of the MHCC Regulatory Enforcement Subcommittee, that HUD planned to proceed with rulemaking on regulatory changes that would effectively institutionalize its program of expanded in-plant regulation, and that HUD would not bring any such proposed rule to the MHCC for review despite the lack of an MHCC consensus on a similar proposal in 2009.

In response to MHARR’s position that any such rule must be brought to the MHCC for review with proper justification and cost-benefit information, the HUD program manager indicated that he was not aware of any such statement or position by HUD and that rulemaking on this matter is not pending, impending or imminent.

Given this information and based on detailed reports from the field regarding this matter, MHARR will continue to press HUD not to further expand such in-plant regulatory activity and to bring any proposal relating to this issue back to the MHCC for full and proper consideration.

MHCC ISSUES: MHARR reiterated the thanks to the FHA Commissioner/Assistant Secretary for her willingness to consider the appointment of collective national industry representatives (via individual staff members from MHARR and MHI) to the MHCC. Such appointments, as MHARR has noted before, would help to alleviate many of the pending problems with the MHCC, by allowing the industry’s collective representation – and especially the representation of its smaller businesses -- to fully utilize its institutional memory, knowledge and expertise to address both substantive issues pending before the MHCC and its compliance with applicable law.

In addition, MHARR opened a frank dialogue with the program manager regarding other key issues involving the MHCC, including the way that previous HUD management has stacked its membership against the industry, specific appointments of single-issue advocates, representatives of narrow special interests, and former HUD employees and consultants, and specific unreasonable and improper limitations that have been placed on the MHCC, including limitations on public participation, HUD selection (as opposed to MHCC election) of the MHCC Chairman and subcommittee chairmen, HUD selection of subcommittee members and HUD control of the MHCC and subcommittee agendas.

As an aside, in connection with these issues, it is notable that on December 16, 2011, HUD published a notice in the Federal Register seeking nominations for MHCC members, while stating in the notice that the deadline for applications for terms expiring at the end of 2011 is December 15, 2011. One can only wonder how serious HUD is regarding the proper operation of the MHCC when the application deadline expires prior to the notice.

MHARR will continue to keep you apprised as new developments unfold.

Manufactured Housing Association for Regulatory Reform