Issue link: http://read.dmtmag.com/i/620649
JANUARY 2016 10 THE JOURNAL Combating Discriminatory Exclusion – Part Two MHARR VIEWPOINT BY MARK WEISS The December 2015 MHARR Viewpoint began an examination of HUD's failure to implement the twin "facilitation" directives of the Manufactured Housing Improvement Act of 2000 and the im- pact of that failure on homebuyers and the indus- try, with particular emphasis on discriminatory local exclusion of HUD Code homes and resi- dents. Part Two of this analysis will address the legal bases – and urgent need -- for a modified HUD policy on the preemption of discriminatory exclusion mandates, while deconstructing HUD excuses for refusing, thus far, to adopt such a modified policy under the 2000 reform law. As originally enacted, the preemption section of the National Manufactured Housing Construc- tion and Safety Standards Act of 1974 referred specifically to the preemption of state and local construction and safety "standards" that were not identical to the federal manufactured housing con- struction and safety standards promulgated by HUD, stating: "Whenever a federal manufactured home construction and safety standard … is in ef- fect, no State or political subdivision … shall have any authority … to establish … any standard re- garding construction or safety applicable to the same aspect of performance of such manufactured home which is not identical to the federal … stan- dard." (Emphasis added). Not surprisingly, the central and most often lit- igated issue under this standard-to-standard pre- emption was whether a state or local standard addressed the "same aspect" of manufactured home "performance" as a federal standard. For example, in Liberty Homes, Inc. v. Department of Industry, Labor and Human Relations, the Wisconsin Court of Appeals, in a decision upheld by the Wisconsin Supreme Court, ruled that a state ambient-air formaldehyde standard for man- ufactured homes was preempted by the then-newly adopted federal "product" standard for formalde- hyde emissions, as both standards addressed the "same aspect" of manufactured home perform- ance, albeit in different ways. Even within the confines of standard-to-standard preemption, though, HUD rarely exercised its preemptive au- thority, based on an extremely narrow interpreta- tion of the key phrase "same aspect of performance," as admitted in HUD legal memo- randa obtained by MHARR under the Freedom of Information Act. Then, in 1997, HUD published two preemp- tion-related policy documents in the Federal Reg- ister – a January 23, 1997 "Notice of Staff Guidance" and a May 5, 1997 "Statement of Pol- icy" (collectively, "HUD 1997 rulings"). Taken together, these documents, formulated prior to the preemption amendments of the 2000 reform law, establish three central tenets of what has been -- and still remains -- HUD dogma regarding federal preemp- tion and discriminatory exclusion: (1) that federal manufactured housing law imposes no duty on HUD to "enforce" federal pre- emption; (2) that the exclusion of manufactured housing "fall[s] outside the scope of preemption" under the Act, unless that exclu- sion is based "solely on a con- struction and safety code different than that prescribed" by HUD under federal law; and (3) that "federal preemption cannot be based on a general purpose of the [manufactured housing] Act." Because of consistent and aggressive actions taken by MHARR since its inception to educate Washington, D.C. decision-makers regarding this crucial issue (preemption), Congress was well aware of this microscopic HUD approach to federal preemption when it enacted the Manufactured Housing Improvement Act of 2000. As a result, it made two key changes to preemption in that law which – together with the 2000 reform law's twin "facilitation" directives – legislatively overrule HUD's entire pre-2000 approach to preemption, including its interpretation of the original preemp- tion provision and the HUD 1997 rulings that rest on those interpretations. The first and most obvious change in the 2000 law – targeted at the heart of HUD's historically narrow application of federal preemption -- is the directive to HUD to "broadly and liberally" con- strue the scope of preemption. Such an express statutory directive from Congress is, in itself, ex- traordinary, and stands as a direct rebuke -- and congressional rejection of – HUD's historical po- sition on the scope of preemption under the Act. For purposes of discriminatory exclusion, how- ever, the even more important change is the one that added state and local "requirements" -- of any kind -- to the category of state or local actions that can be preempted under the Act. Because every word in a statute must be given its ordinary and customary meaning, the 2000 reform law thus extended the standard-to-standard preemption of the 1974 law to the preemption of any state or local "requirements or standards" that could neg- atively impact "federal superin- tendence of the manufactured housing industry" as defined by Congress, including the national policy purposes of the law. None of this, however, stopped HUD, in July 2003, from rejecting the very first recommen- dation from the Manufactured Housing Consensus Committee – a proposed regulation to prevent "landowner … restrictions … prohibiting homes built to the federal manufactured home … stan- dards" -- and exploiting that occasion to disin- genuously minimize and dismiss the preemption amendments of the 2000 reform law. In its pub- lished rejection, HUD stated: "HUD has long in- terpreted its authority under the Act to exclude involvement in local land use issues. *** There is nothing in the Act or [its] legislative history that would suggest a directive by Congress to change HUD's long-held legal position." (Em- phasis added). It went on to state (ironically, in light of its recent "Affirmatively Furthering Fair Housing" rule, discussed below) that "for HUD to promulgate and enforce a regulation of such mas- sive impact upon … local jurisdictions nationwide and to assert federal involvement in areas tradi- tionally reserved to the states, the Department would need a more specific statement from Con- gress of its intent." Consider, for a moment, the sheer audacity of these pronouncements. According to HUD, Congress' total rejection of the premises, logic, and legal foundation of its "long-held" approach to preemption, meant – and still means (again, according to HUD) – exactly noth- ing. Needless to say, this backhanded effort to overturn Congress' rejection of the De- \ 13