New Manufactured Housing Bill Challenges the Independence of Standards Development and Regulation

Pending legislation sets an undesirable precedent for government regulators and private sector standards development organizations, according to ASME International’s Nelson Milder.

We may soon long for the halcyon days of yesteryear, when standards development in the United States was a collegial activity among like minds, or at least among minds that fully understood the process as practiced for many decades. Standards development organizations, fully private enterprises, structured into open and transparent committees, boards, or technical groups, reach consensus on the best way to standardize products, processes and operations so as to ensure public safety and consumer protection. In the United States, these standards are voluntarily incorporated into manufacturing or operations and maintenance activities by industry. Sometimes these standards are adopted into regulations issued by state or federal government agencies, thereby becoming legally binding requirements.

In the United States, development and promulgation of these private sector, voluntary consensus standards has been closely linked to, but independent of, the regulatory process. Regulation, a legislatively mandated activity assigned to state or federal government entities, is under the control of government. Standards development and conformity assessment have been activities under the purview of private sector functions—at least as these functions relate to commercial enterprises. As is well known, government agencies often incorporate these private sector standards into their regulations. In fact, legislation signed into law in 1996(1) and subsequent guidelines to federal agencies issued by the Office of Management and Budget(2) have established ground rules for the federal government’s use of private sector standards. As a result, there is a highly successful cooperative relationship developing among government agencies and the private sector.(3)

But this may all change as a result of legislation now moving through the U.S. Congress.

The American Homeownership and Economic Opportunity Act of 2000 (HR 1776) passed in the U.S. House of Representatives on April 6 and has been referred to the Senate. A related bill in the U.S. Senate, The Manufactured Housing Improvement Act, (S 1452) has passed the Senate Banking, Housing, and Urban Affairs Committee. Title XI of the House bill incorporates many of the features of the Senate bill with some notable exceptions.(4) The House bill, which is broad in scope and has bipartisan support, is intended to facilitate the ability of all citizens to acquire adequate, affordable housing—a truly admirable and essential goal.

The implication of these developments to the standards community is embodied in Title XI of this major legislation—the provision associated with the manufactured housing industry. A short review of the story behind Title XI will put this into perspective.

Manufactured Housing Standards

The term “manufactured housing” has undergone an evolutionary change. A quarter of a century ago, the first code governing this industry was issued by the U.S. Housing and Urban Development (HUD) agency, and applied specifically to trailer homes. Subsequent developments in technology, building materials and construction methods expanded manufactured housing to predominantly encompass “permanent structures that contain most of the amenities found in site-built homes,” according to the Manufactured Housing Institute. That is, manufactured housing includes homes and dwellings that are not “stick-built” (i.e., constructed at the site), but which are built off-site—usually in a factory—and trucked to the building lot where they are installed.

The statistics are impressive. According to the Manufactured Housing Resource Center and the Manufactured Housing Institute, approximately 18 million people—over 7 percent of the U.S. population—are permanent residents in 7.3 million manufactured homes. Manufactured homes now account for more than a third of all new single-family homes. In 1995, retail sales in this industry were estimated at $11.9 billion. Last October, the American Association of Retired Persons (AARP) testified before a congressional committee that over two million seniors live in manufactured homes. The average cost of these homes in 1994 was $33,500, clearly a bargain in today’s real estate market.

The law governing standards for this industry dates back to the National Housing Construction and Safety Standards Act of 1974, when the industry primarily manufactured trailers and mobile homes. HUD issued its code governing this industry at that time and, of necessity, this code primarily covered the mobile home industry. But as noted, the industry has expanded to include more than trailers and mobile homes. Construction and safety needs have changed, and technologies in construction and safety associated with this industry growth have advanced. Clearly these changes all argue for a complete upgrade of the 1974 code. And indeed, a National Commission on Manufactured Housing has for several years recommended revisions; but as yet HUD has been slow to act upon these recommendations. Thus a frustrated alliance of manufacturers, consumer advocates, suppliers and others has sought a political remedy to this problem, resulting in an aggressive legislative approach. HR 1776 and S 1452 are the embodiment of their efforts.

So we have a situation not unlike that many in the standards development community are facing in their efforts to work with federal agencies to upgrade code references to outdated standards. But here the similarity ends. The SDO community seeks to resolve the disparity in federal code references through the implementation of Office of Management and Budget (OMB) Circular A-119 and the provisions outlined in Section 12 of the National Technology Transfer and Advancement Act of 1995 (P.L. 104-113). The manufactured housing community and their congressional supporters, however, have introduced Title XI of the American Housing and Economic Development Act of 2000 that promotes a different, and potentially conflicting, tactic.

Now let’s examine the provisions of Title XI that in my opinion are cause for concern in the standards development community.

Title XI (HR 1776): Manufactured Housing Improvement Act

A stated purpose of this provision is to amend the 1974 law to “establish a balanced consensus process for the development, revision, and interpretation of Federal construction and safety standards for manufactured homes and related regulations for the enforcement of such standards.” To accomplish this task, the bill would vest in the Secretary of HUD authority to “establish, by order, appropriate Federal manufactured home construction and safety standards… in accordance with the consensus standards development process.”

Although no direct reference is made to the private sector consensus standards process, other provisions refer to the procedures approved by the American National Standards Institute. The Secretary can exempt this requirement in cases of emergency as described in the bill.

Paragraph 2 of Title XI, Consensus Standards and Regulatory Development Process, establishes the framework for an “administering organization” to be contracted by HUD to manage the establishment and functions of a “consensus committee.” This administering organization is defined as “the recognized, voluntary, private sector, consensus standards body with specific experience in developing model residential building codes and standards.” The consensus committee is prescribed in a separate section of Title XI. It is given unprecedented authority to develop, recommend, and review the process of incorporating standards into Federal regulations issued by HUD. The legislation vests in the administering organization and the consensus committee extensive influence over the regulatory process. These include selecting committee members (21), subject to HUD approval. The administering organization would recommend to HUD the organizations to be represented (in accordance with prescribed guidelines for balanced representation by producers, users, public officials and other stakeholders); and sets a one-year time limit for the secretary to accept or reject the consensus committee’s recommended code changes. Should HUD fail to meet this time limit requirement, the consensus committee’s recommendations would be adopted into regulation.

This brief summary should be sufficient to provide a sense of where this is heading, so I shall stop here and refer the reader to the complete legislation. Now the question facing the standards community is, are there long-term implications of this bill to the private sector standards development process, perhaps beyond the specific application of this legislation to HUD and the manufactured housing constituency?

I believe there are, and I will summarize my thoughts on the issues of concern.

Why We Should Care

Although the manufactured housing community’s motivation for promulgating this legislation can be well understood by SDOs who have labored to keep current the references to their standards in federal regulations, there are indeed some ominous threads woven into the fabric of this legislation that could profoundly alter the long-standing cooperative, but separate, relationship among government regulators and private sector SDOs. Some of the contentious issues facing both groups emanating from Title XI of HR 1776 are listed here.
-- The commingling of the activities of the consensus committee and the government in the language of the
bill has blurred the boundary between the processes of standardization and regulation.
-- The legislation would simultaneously diminish the private sector’s independence and effectiveness as standards developers, and HUD’s role as regulator. From the SDO perspective, the law would: 1) interject federal control over the selection of consensus committee participants, 2) limit interested groups’ participation to 21 members (presumably for balance; but it could be argued that, the proposed committee membership structure would not ensure a balanced representation), and 3) limit participation of a multiplicity of standards developers in offering standards options by contracting one SDO as an administrative organization. HUD would be required to: 1) seek confirmation from a non-government operated
entity to implement regulatory actions, and 2) fund the agency’s operation of a standard promulgation and regulatory organization through cost off-setting fees from the manufactured housing industry, thereby providing a fiscal link between regulators and the industry being regulated.
-- Providing federal support for the participation of certain Consensus Committee members opens to question the independence and bias of these members.
-- The bill ignores existing Public Law 104-113 that provides for the cooperative interface among federal agencies and the private sector standards development community.
-- The legislation fails to acknowledge that the private sector standards development community is already structured to address the concerns of the manufactured housing community. This structure and the procedures embodied in this structure have successfully operated for decades, and in some cases, for over a century.
-- Finally, the bill sets a precedent that could result in similar legislation being proffered to Congress by other industries or interest groups for imposition on other federal agencies.

In Conclusion…

A letter jointly endorsed by ASTM, ASME, and other SDOs has been sent to Congressional leaders7 expressing the group’s concerns regarding the bill’s provisions. The letter prompted the leadership of the House Science Committee to send a letter(5) to the House Banking and Financial Services Committee, noting the bill’s inconsistency with Section 12 of P.L. 104-113. They requested that the Committee “strike…or amend the legislation in a manner that conforms with (the law).” No matter what the final outcome, it is essential that the standards development community be aware of the contentious implications of this manufactured housing reform initiative. The community must continue to work within the guidelines set by the National Technology Transfer and Advancement Act and OMB Circular A-119. We must encourage federal agencies to update their regulations in accordance with private sector voluntary consensus standards protocols, consistent with the needs of industry and the general public. //

References
1 The National Technology Transfer and
Advancement Act of 1995 (P.L. 104-113),
Section 12
2 Office of Management and Budget, Executive Office of the President, Federal Participation in the Development and Use of Voluntary Consensus Standards and Conformity Assessment Activities (OMB Circular A-119, February 10, 1998)
3 Subcommittee on Technology, Committee on Science, U.S. House of Representatives, Hearing on “Standards Conformity and the Federal Government: A Review of Section 12 of Public Law 104-113,” March 15, 2000.
4 Congressional analysis, Comparison of House and Senate Bills-Manufactured Housing Reform (April, 2000)
5 Committee on Science letter dated Feb. 14, 2000.