Issue link: https://read.dmtmag.com/i/90145
MHARR VIEWPOINT MHARR's Next Challenge To HUD BY DANNY GHORBANI According to the old saying (attributed to U.S. Supreme Court Justice Louis Brandeis), "sunlight is the best disinfectant." The underly- ing philosophy of that saying – that open, trans- parent and accountable government is essential in a free society – lies at the heart of the Freedom of Information Act (FOIA) and other similar federal laws. It's also a key component of the Manufactured Housing Improvement Act of 2000 for sound historical reasons. The HUD manufactured housing program has never been big on transparency -- or accounta- bility for that matter. For decades, while it ig- nored the Manufactured Housing Advisory Council, it developed layer-upon-layer of costly de facto regulations behind closed doors and then implemented them as "interpretations," bypass- ing statutory rulemaking requirements. One particularly brazen example -- ofmany under the original 1974 federal law -- was HUD's 1985 is- suance of new requirements for increased plant inspections through "memoranda" developed with no program stakeholder or public input. The newly-formed MHARR (then the Asso- ciation for Regulatory Reform -- ARR), as one of its first actions, opposed this step on the grounds that any such change would require no- tice and comment rulemaking – and HUD's Of- fice of General Counsel agreed. HUD regulators responded by ignoring their own attorneys, deeming the memoranda mere "recommenda- tions" and simultaneously threatening dire con- sequences for any third-party inspectors that failed to comply. This led MHARR and HUD intomajor legal and regulatory battle, leading ul- timately to the comprehensive program reforms of the Manufactured Housing Improvement Act of 2000. In fact, one of the main reasons that Congress reformed the original 1974 law was to reduce number of regulatory disputes and lawsuits arising from such abuses. NOVEMBER 2012 12 THE JOURNAL The 2000 law, therefore, was supposed to end this type of closed-door pseudo-regulation and the litigation it triggered by – (1) establishing a mandatory, open, broad-based consensus process designed to ensure a voice for all program stakeholders; and (2) by requiring that all changes to the standards and regulations, all "in- terpretations" of the standards and regulations, and all changes to programpoli- cies and practices concerning inspections and monitoring go through the consensus process and rulemaking, to prevent program regulators from relying on technicalities and word games to once again go behind closed doors. At least that was the plan -- and the plain intent of Congress if one reads the law objectively. But, in keeping with the history of the program, HUD regulators have twisted the words of the 2000 reform law itself to deprive them of any meaning. The process started in 2004, when HUD purported to curtail the authority of the Manufactured Housing Consensus Committee (MHCC) to construction and safety standards themselves and only certain regulations designed to "assur[e] compliance" with the standards. It reached its culmination on February 5, 2010, whenHUD issued its now infamous "Interpretive Rule" on "HUD Statements that are Subject to Consensus Committee Processes." That rule, is- sued with no opportunity for comment by pro- gram stakeholders, members of the MHCC, or the general public, simply swept aside – and ef- fectively read out of the law – section 604(b)(6), requiring, among other things, consensus committee review of any change in program policies or practices concerning inspec- tions and/or monitoring. With these two actions, HUD presumed to have cleared the way for what stands as its most audacious attempt to bypass the 2000 law and once again pull the core of the federal program back behind closed doors – its intrusive and costly expansion of in-plant regulation through a sys- temof "enhanced checklists," "internal operating procedures" and other subjective non-regulatory criteria that are neverthe- less being enforced against manufacturers as manda- tory requirements, creating an uneven regulatory play- ing field among regulated parties, with ever-chang- ing, subjective, elusive and costly mandates. Although these changes to inspection andmonitor- ing practices altered the entire focus of the in-plant regulatory system from – in HUD's words – the production of a "golden" home to instead assuring a "golden" quality control process, no aspect of their devel- opment, justification, source, validity or cost impact was ever brought to the MHCC or sub- jected to rulemaking, despite the plain language of section 604(b)(6) declaring any such changes "void" if not presented to the MHCC for review and recommendations. Put differently, the single most sweeping at- tempted change to the in-plant regulatory process since its inception 36 years ago was deemed by HUD to be outside the legitimate role and au- thority of the MHCC. This stands the 2000 law on its head and cannot be accepted by the industry as a correct or valid application of that law. HUD, though, notwithstanding congres- sional inquiries, a specific congressional oversight hearing on its implementation of the 2000 law and a parallel (ongoing) Government Account-