Chairman Allard, Ranking Member Kerry and members of the Subcommittee, my name is William Apgar and I am the Assistant Secretary for Housing and the Federal Housing Commissioner. I am pleased to be here today on behalf of HUD Secretary Andrew M. Cuomo, and would like to thank you for the opportunity to testify on the Manufactured Housing Improvement Act, S. 1452.
As you know Mr. Chairman, since legislation establishing federal oversight of safety and standards was enacted in 1974, manufactured housing has emerged as an important source of affordable housing. Manufactured housing today accounts for more than a quarter of all new single-family homes built, and an even higher share of homes affordable to the low- and moderate-income families. Throughout the nation, but especially in the South, manufactured housing dominates the first-time homebuyer market and makes an important contribution to meeting the retirement housing needs of our nation's seniors.
Unfortunately, recent efforts to update and to streamline the regulatory process governing this important industry have languished. For over a decade, HUD has worked with industry representatives, consumer groups, and other interested parties to develop procedures for the periodic update of manufactured housing safety and soundness codes that reflect the changes in technology that are transforming the industry and fundamentally changing how manufactured homes look and perform. After several years of work in the early 1990s, the Manufactured Housing Commission disbanded without producing a consensus on these matters. Since then, numerous legislative initiatives have failed as consumers and manufacturers wrangle over how best to regulate this industry.
Last year, I worked with a bipartisan group in the House of Representatives to craft a bill establishing a more effective and inclusive process for setting manufactured housing codes and standards. This effort to pass manufactured housing reform legislation was successful, in large measure, because the House Bill set aside several of the most thorny issues that continue to divide industry and consumer groups, and instead focused on the more narrow question of how best to update manufactured housing codes and standards through the creation of a Consensus Committee and through provision of important resources to the Department to help ensure effective industry oversight.
As the Senate continues its own deliberations on manufactured housing, I believe it is important to recognize some significant differences between the Senate and House manufactured housing bills. These include:
· The Senate Bill Does Not Provide Technical Assistance to All Consensus Committee Members: To avoid the potential for the Consensus Committee to be dominated by well-funded and knowledgeable industry representatives, I believe it is imperative to provide technical assistance to all Consensus Committee members as proposed in the House Bill. It is in everyone's interest for the Consensus Committee to have maximum participation of all the groups represented and to ensure that no Committee members are disadvantaged by lack of information. Providing technical assistance would, for example, encourage consumers living in a manufactured home in West Texas or the Eastern Shore of Maryland, to not only attend meetings, but to use technical support to more fully participate in the process. Whether it is by visiting a manufactured housing plant to better understand the construction process, or by receiving in plain English a technical explanation often only privy to engineers, those unfamiliar with technical details may become more informed. Armed with technical information, such members can use their unique vantage point to offer insights to the Consensus Committee to enhance the consensus process.
· The Senate Bill May Limit Competition for the Administering Organization Contract: I am concerned that language in S. 1452 may unnecessarily limit the number of organizations that could qualify to carry out the important work of providing day to day management of the Consensus Committee. Rather than potentially limiting competition, I believe Congress and the Department should encourage several qualified organizations to compete for this important contract. It would be a mistake to so narrowly define contractor requirements that only a limited number of organizations, or in the worst case only one organization, could qualify to play this important role. The administering organization plays a key role in the overall establishment of standards. HUD would want any and all groups that could compete for this contract to do so, to better ensure that the Department and Consensus Committee members would gain the best experience possible in creating this new process.
· The Senate Bill Fails to Distinguish Between Consensus Committee Members' Role in Setting Standards and Participating in Enforcement Actions: In developing the House Bill, HUD worked hard to strike the proper balance between standards setting and enforcement activities. I believe enforcement is an inherently governmental function. It would not be appropriate to delegate the rulemaking function for enforcement to any non-governmental entity. The House Bill does provide the Consensus Committee the opportunity to make recommendations to the Secretary concerning enforcement matters, but retains the authority of the Secretary to make all final decisions concerning any enforcement regulations proposed by the Committee. While the Department welcomes suggestions on the general approach to enforcing the standards to assure safe and durable homes, HUD insists that any reform legislation reaffirms the Secretary's authority to take appropriate and effective enforcement actions against violations. Furthermore, the Bill is not clear as to the employment status of Consensus Committee members. We would like to work with the Committee to make necessary changes to the Bill to clarify that Consensus Committee members are not federal employees.
· The Senate Bill Would Give States the Authority to Establish Installation Standards: The Department agrees that it is important to develop comprehensive installation standards and we recognize that many States already are taking a lead in the development and enforcement of such standards. However, I also believe it is important to recognize that there is a direct correlation between the installation of a manufactured home and the home's compliance with the Federal Standards. A home that is incorrectly installed may not comply with the Standards. I believe the key to any approach to developing installation standards is to craft a system that acknowledges the role States play in developing installation standards for specific homes and environments, while also guaranteeing a minimum installation standard in every State. While it is preferable that the States take the lead in developing installation standards, the Federal government also should play a role in setting minimum national standards.
· The Senate Bill's Requirement of a two-thirds majority vote on the Committee May Produce Stalemate: The Secretary supports the proposal to use ANSI procedures in the administration of the Consensus Committee (to develop consensus in recommendations to be made to the Secretary). The Bill proposes a requirement of a two-thirds majority vote before the Committee can submit proposed standards and regulations to the Secretary. On some controversial issues, however, the requirement for a two-thirds majority may thwart the Committee from forwarding a recommendation for a standard or regulation quickly. HUD intends on complying with the procedures and timetables set forth in the Bill. Should any important issue be unable to get through the consensus process, Secretary Cuomo will move forward in the face of a such a stalemate, by recommending standards that will be consistent with the goals of this Act. HUD will commit to help break any logjam, whether it is through the Department's recommendation to the Committee, or through the regular rulemaking procedures. Essentially, if the committee doesn't get it done, the Department will.
Finally, Mr. Chairman, I would like to say that the Department believes it would be counterproductive to add mandatory warranty provisions to this Bill. With many private companies already developing new warranty products, I believe it is preferable to let the market drive innovations in this area, rather than attempt to mandate specific warranties through government regulation. The Senate should follow the House's lead and set aside this thorny issue that continues to divide industry and consumer groups, and instead focus on the more narrow question of how best to update manufactured housing codes and standards through the creation of a Consensus Committee and through provision of important resources to the Department to help ensure effective industry oversight.
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