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Rule2022-10926

Energy Conservation Program: Energy Conservation Standards for Manufactured Housing

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Published

May 31, 2022

Effective

August 1, 2022

Issuing agencies

Energy Department

Abstract

The U.S. Department of Energy ("DOE" or "the Department") is publishing a final rule to establish energy conservation standards for manufactured housing pursuant to the Energy Independence and Security Act of 2007. This document presents standards based on the 2021 version of the International Energy Conservation Code ("IECC") and comments received during interagency consultation with the U.S. Department of Housing and Urban Development, as well as from stakeholders. The adopted standards would provide a set of "tiered" standards based on size that would apply the 2021 IECC-based standards to manufactured homes, except that single-section manufactured homes would be subject to less stringent building thermal envelope requirements compared to multi-section manufactured homes.

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<title>Federal Register, Volume 87 Issue 104 (Tuesday, May 31, 2022)</title>
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[Federal Register Volume 87, Number 104 (Tuesday, May 31, 2022)]
[Rules and Regulations]
[Pages 32728-32824]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-10926]

[[Page 32727]]

Vol. 87

Tuesday,

No. 104

May 31, 2022

Part III

Department of Energy

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10 CFR Part 460

Energy Conservation Program: Energy Conservation Standards for
Manufactured Housing; Final Rule

Federal Register / Vol. 87 , No. 104 / Tuesday, May 31, 2022 / Rules
and Regulations

[[Page 32728]]

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DEPARTMENT OF ENERGY

10 CFR Part 460

[EERE-2009-BT-BC-0021]
RIN 1904-AC11

Energy Conservation Program: Energy Conservation Standards for
Manufactured Housing

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.

ACTION: Final rule.

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SUMMARY: The U.S. Department of Energy (``DOE'' or ``the Department'')
is publishing a final rule to establish energy conservation standards
for manufactured housing pursuant to the Energy Independence and
Security Act of 2007. This document presents standards based on the
2021 version of the International Energy Conservation Code (``IECC'')
and comments received during interagency consultation with the U.S.
Department of Housing and Urban Development, as well as from
stakeholders. The adopted standards would provide a set of ``tiered''
standards based on size that would apply the 2021 IECC-based standards
to manufactured homes, except that single-section manufactured homes
would be subject to less stringent building thermal envelope
requirements compared to multi-section manufactured homes.

DATES: The effective date of this rule is August 1, 2022. Compliance
with the adopted standards established for manufactured housing in this
final rule is required on and after May 31, 2023.
The incorporation by reference of certain publications listed in
this rule is approved by the Director of the Federal Register on August
1, 2022.

FOR FURTHER INFORMATION CONTACT: Mr. John Cymbalsky, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Program (EE-2J), 1000 Independence Avenue SW, Washington,
DC 20585; Telephone: 202-287-1692; Email:
<a href="/cdn-cgi/l/email-protection#e4859494888d858a87819790858a808596809795918197908d8b8a97a48181ca808b81ca838b92">[email&#160;protected]</a>.
Mr. Matthew Ring, U.S. Department of Energy, Office of the General
Counsel (GC-33), 1000 Independence Avenue SW, Washington, DC 20585;
Telephone: 202-586-2555; Email: <a href="/cdn-cgi/l/email-protection#81ece0f5f5e9e4f6aff3e8efe6c1e9f0afe5eee4afe6eef7">[email&#160;protected]</a>.

SUPPLEMENTARY INFORMATION: This final rule incorporates by reference
into 10 CFR part 460 the following industry standards:
ANSI/ACCA 2 Manual J-2016 (ver 2.50) (``ACCA Manual J''), Manual
J--Residential Load Calculations, Eight Edition, Version 2.50,
Copyright 2016.
ANSI/ACCA 3 Manual S-2014 (``ACCA Manual S''), Manual S--
Residential Equipment Selection, Second Edition, Version 1.00,
Copyright 2014.
Copies of Manual J and Manual S may be purchased from Air
Conditioning Contractors of America Inc., (ACCA), 2800 S. Shirlington
Road, Suite 300, Arlington, VA 22206, Telephone: 703-575-4477.
<a href="http://www.acca.org/">www.acca.org/</a>.
HUD User No. 0005945, Overall U-Values and Heating/Cooling Loads-
Manufactured Homes, February 1992.
A copy of Overall U-Values and Heating/Cooling Loads-Manufactured
Homes may be purchased from HUD User, 11491 Sunset Hills Road, Reston,
VA 20190-5254 or <a href="http://www.huduser.org/portal/publications/manufhsg/uvalue.html">www.huduser.org/portal/publications/manufhsg/uvalue.html</a>. Telephone: 800-245-2691.
See section V.M of this document for further discussion of these
standards.

Table of Contents

I. Summary of the Final Rule
A. Benefits and Costs to Purchasers of Manufactured Housing
B. Impact on Manufacturers
C. Nationwide Impacts
D. Nationwide Energy Savings and Emissions Benefits
E. Total Benefits and Costs
F. Conclusion
II. Introduction
A. Authority
B. Background
1. Current Standards
2. The International Energy Conservation Code (IECC)
3. Development of the Initial Proposal and Responses
C. Abbreviations
III. Discussion of the Standards
A. The Basis for the Standards
1. Affordability
2. Loan Qualification
3. IECC
B. Final Standards
1. Size-Based Threshold
2. Tiered Standard
3. Comments on the August 2021 SNOPR Proposal and the October
2021 NODA
C. Rulemaking Process
D. Test Procedure
E. Certification, Compliance, and Enforcement
F. Energy Conservation Standards Requirements
1. Subpart A: General
2. Subpart B: Building Thermal Envelope
3. Subpart C: HVAC, Service Water Heating, and Equipment Sizing
G. Crosswalk of Standards With the HUD Code
IV. Discussion and Results of the Economic Impact and Energy Savings
A. Economic Impacts on Individual Purchasers of Manufactured
Homes
1. Discussion of Comments and Analysis Updates
2. Results
B. Manufacturer Impacts
1. Discussion of Comments and Analysis Updates
2. Results
C. Nationwide Impacts
1. Discussion of Comments and Analysis Updates
2. Results
D. Nationwide Energy Savings and Emissions Benefits
1. Emissions Analysis
2. Monetizing Emissions Impacts
3. Results
E. Total Benefits and Costs
V. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
B. Review Under the Regulatory Flexibility Act
1. Need for, and Objectives of, the Rule
2. Significant Issues Raised
3. Description and Estimate of the Number of Small Entities
Affected
4. Description and Estimate of Compliance Requirements
5. Significant Alternatives Considered and Steps Taken To
Minimize Significant Economic Impacts on Small Entities
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act of 1969
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Information Quality
M. Materials Incorporated by Reference
N. Congressional Notification
VI. Approval of the Office of the Secretary

I. Summary of the Final Rule

The Energy Independence and Security Act of 2007 (``EISA,'' Pub. L.
110-140) directs the U.S. Department of Energy (``DOE'' or in context,
``the Department'') to establish energy conservation standards for
manufactured housing (``MH'').\1\ (42

[[Page 32729]]

U.S.C. 17071) Manufactured homes are constructed according to a code
administered by the U.S. Department of Housing and Urban Development
(``HUD Code''). 24 CFR part 3280. See also generally 42 U.S.C. 5401-
5426. Structures, such as site-built and modular homes that are
constructed to the state, local or regional building codes are excluded
from the coverage of the HUD Code.\2\
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\1\ The National Manufactured Housing Construction and Safety
Standards Act of 1974, as amended, defines ``manufactured home'' as
``a structure, transportable in one or more sections, which in the
traveling mode is 8 body feet or more in width or 40 body feet or
more in length or which when erected on-site is 320 or more square
feet, and which is built on a permanent chassis and designed to be
used as a dwelling with or without a permanent foundation when
connected to the required utilities, and includes the plumbing,
heating, air-conditioning, and electrical systems contained therein;
except that such term shall include any structure that meets all the
requirements of this paragraph except the size requirements and with
respect to which the manufacturer voluntarily files a certification
required by the Secretary [pursuant to 24 CFR 3282.13] and complies
with the standards established under this title [24 CFR part 3280];
and except that such term shall not include any self-propelled
recreational vehicle.'' 42 U.S.C. 5402(6).
\2\ See 42 U.S.C. 5403(f). See also 24 CFR 3282.12.
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EISA directs DOE to base the standards on the most recent version
of the International Energy Conservation Code (``IECC'') and any
supplements to that document, except in cases where DOE finds that the
IECC is not cost-effective or where a more stringent standard would be
more cost-effective, based on the impact of the IECC on the purchase
price of manufactured housing and on total life-cycle construction and
operating costs. (See 42 U.S.C. 17071(b)(1)) Standards shall be
established after notice and an opportunity to comment by manufacturers
of manufactured housing and other interested parties, and consultation
with the Secretary of Housing and Urban Development (``HUD''), who may
seek further counsel from the Manufactured Housing Consensus Committee.
(42 U.S.C. 17071(a)(2)) The energy conservation standards established
by DOE may: (1) Take into consideration the design and factory
construction techniques of manufactured homes, (2) be based on the
climate zones established by HUD rather than the climate zones of the
IECC, and (3) provide for alternative practices that result in net
estimated energy consumption equal to or less than the specified
standards. (42 U.S.C. 17071(b)(2)).
On June 17, 2016, DOE published in the Federal Register a notice of
proposed rulemaking (``NOPR''), including proposals recommended by the
negotiated rulemaking working group for manufactured housing. 81 FR
39756 (``June 2016 NOPR''). DOE also issued a comprehensive technical
support document. See Document ID EERE-2009-BT-BC-0021-0136.\3\ The
agency also issued for public review and comment a draft Environmental
Assessment (``EA'') pursuant to the National Environmental Policy Act.
In conjunction with the draft EA, DOE issued a request for information
that would help it analyze potential impacts of the proposed standards
on the indoor air quality of manufactured homes. See Draft
Environmental Assessment for Notice of Proposed Rulemaking, ``Energy
Conservation Standards for Manufactured Housing'' With Request for
Information on Impacts to Indoor Air Quality, 81 FR 42576 (June 30,
2016) (``2016 EA-RFI''). DOE received nearly 50 comments on the
proposed rule during the comment period. In addition, DOE also received
over 700 substantively similar form letters from individuals. DOE also
received 7 comments to the 2016 EA-RFI during its comment period.
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\3\ Available at: <a href="http://www.regulations.gov/document?D=EERE-2009-BT-BC-0021-0136">www.regulations.gov/document?D=EERE-2009-BT-BC-0021-0136</a>.
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During DOE's interagency consultation with HUD, HUD expressed
concerns about the adverse impacts on manufactured housing
affordability that would likely follow if DOE were to adopt the
approach laid out in its June 2016 NOPR. A variety of commenters also
expressed concerns over the potentially negative impacts on the
affordability of manufactured housing flowing from increased consumer
costs resulting from DOE's approach in the June 2016 NOPR. In December
2017, the Sierra Club filed a suit against DOE in the U.S. District
Court for the District of Columbia, alleging that DOE had failed to
meet its statutory deadlines for establishing energy efficiency
standards for manufactured housing. On August 3, 2018, DOE published a
Notice of Data Availability (``NODA''). 83 FR 38073 (``August 2018
NODA''). In the August 2018 NODA, DOE stated it was examining a number
of possible alternatives to those proposed in the June 2016 NOPR on
which it sought further input from the public, including the first-time
costs related to the purchase of these homes. In November 2019, the
court in the above-referenced litigation entered a consent decree in
which DOE agreed to complete the rulemaking by stipulated dates.
After evaluating the comments received in response to the June 2016
NOPR and the August 2018 NODA, DOE published a supplemental NOPR
(``SNOPR'') on August 26, 2021, in which DOE proposed energy
conservation standards for manufactured homes based on the 2021 IECC.
86 FR 47744 (``August 2021 SNOPR''). In the August 2021 SNOPR, DOE also
proposed that the standards would be based on the current HUD zones.
DOE's primary proposal in the August 2021 SNOPR was a ``tiered''
approach, based on the 2021 IECC, wherein a subset of the energy
conservation standards (based on retail list price) would be less
stringent for certain manufactured homes in light of the cost-
effectiveness considerations required by statute. DOE's alternate
proposal was an ``untiered'' approach, wherein energy conservation
standards for all manufactured homes would be based on certain thermal
envelope components and specifications of the 2021 IECC. Both proposals
replaced the June 2016 NOPR proposal. Id. DOE sought comment on these
proposals, as well as alternate thresholds, including a size-based
threshold (e.g., square footage, number of sections) and a region-based
threshold, and alternative exterior wall insulation requirements (R-21)
for certain HUD zones. Id.
On October 26, 2021, DOE published a NODA regarding updated inputs
and results of corresponding analyses presented in the August 2021
SNOPR (both tiered and untiered approaches), including a sensitivity
analysis regarding an alternate sized based tier threshold and an
alternate exterior wall insulation requirement (R-21) for certain HUD
zones. 86 FR 59042 (``October 2021 NODA'') In addition, DOE reopened
the public comment period on the August 2021 SNOPR through November 26,
2021. DOE explained that it would consider the updated inputs and
corresponding analyses, as well as comments on the inputs and analyses,
as part of the rulemaking. In addition, DOE stated it may further
revise the analysis presented in this rulemaking based on any new or
updated information or data it obtains and encouraged stakeholders to
provide any additional data or information that may inform the
analysis. Id
On January 14, 2022, DOE published a draft environmental impact
statement (``DEIS'') for proposed energy conservation standards for
manufactured housing (DOE/EIS-0550D). (87 FR 2359) (``January 2022
DEIS'') DOE prepared the January 2022 DEIS in support of the August
2021 SNOPR and October 2021 NODA.
DOE invited input on the January 2022 DEIS for 45 days (through
February 28, 2022). In January 2022, DOE held two public meetings for
the DEIS and invited oral comments. Upon issuance of the January 2022
DEIS, DOE reopened the public comment period on the SNOPR through
February 28, 2022, to invite public comments under the rulemaking
process on how the January 2022 DEIS should inform the final energy
conservation standards. January 14, 2022 (87 FR 2359) Relevant comments
on the January 2022 DEIS and those submitted in the concurrent comment
period for the SNOPR were considered by DOE in preparing the final
Environmental Impact Statement (``FEIS''), to help inform DOE's
decision-making process for establishing

[[Page 32730]]

energy conservation standards for manufactured housing. The Notice of
Availability for the FEIS (DOE/EIS-0550) was published on April 8,
2022.\4\ (87 FR 20852).
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\4\ The draft and final EIS documents are available at <a href="http://www.ecs-mh.evs.anl.gov/">www.ecs-mh.evs.anl.gov/</a>.
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In this final rule, DOE codifies the energy conservation standards
in a new part of the Code of Federal Regulations (``CFR'') under 10 CFR
part 460, subparts A, B, and C. Subpart A presents generally the scope
of the rule and provides definitions of key terms. Subpart B would
establish new requirements for manufactured homes that relate to
climate zones, the building thermal envelope, air sealing, and
installation of insulation, based on certain provisions of the 2021
IECC. Subpart C would establish new requirements based on the 2021 IECC
related to duct sealing, heating, ventilation, and air conditioning
(``HVAC''); service hot water systems; mechanical ventilation fan
efficacy; and heating and cooling equipment sizing.
Under the energy conservation standards, the stringency of the
requirements under subpart B would depend on the size of the
manufactured home for the tiered approach. Accordingly, two sets of
standards would be established in subpart B (i.e., Tier 1 and Tier 2).
Both Tier 1 and Tier 2 incorporate building thermal envelope measures
based on certain thermal envelope components subject to the 2021 IECC
that DOE, over the course of this rulemaking, determined applicable and
appropriate for manufactured homes. Tier 1 applies these building
thermal envelope provisions to single-section manufactured homes, but,
for the reasons discussed in section III of this document, only
includes components at stringencies that would increase the incremental
purchase price by less than $750. Tier 2 applies these same building
thermal envelope provisions to multi-section manufactured homes but at
higher stringencies specified for site built homes in the 2021 IECC,
with alternate exterior wall insulation requirement (R-21) for climate
zones 2 and 3 based on consideration of the design and factory
construction techniques of manufactured homes, as presented in the
August 2021 SNOPR and October 2021 NODA. Further, the energy
conservation standards for both tiers also include duct and air
sealing, insulation installation, HVAC and service hot water system
specifications, mechanical ventilation fan efficacy, and heating and
cooling equipment sizing provisions, based on the 2021 IECC.
DOE is adopting a compliance date such that the standards would
apply to manufactured homes starting one year after the publication
date of the final rule in the Federal Register. As discussed in
sections I.F and III.A of this document, DOE has concluded that this
approach is cost-effective based on the expected total life-cycle cost
(``LCC'') savings for the lifetime of the home associated with
implementation of the energy conservation standards.

A. Benefits and Costs to Purchasers of Manufactured Housing

As explained in greater detail in section IV.A of this document and
in chapter 9 of the final rule technical support document (``TSD''),
DOE estimates that benefits to manufactured home homeowners--in terms
of LCC savings--of the requirements outweighs the potential increase in
purchase price for manufactured homes.
Table I.1 and Table I.2 present the average purchase price increase
of a manufactured home as a result of the energy conservation
standards. This does not include any potential testing or compliance
costs.

Table I.1--National Average Manufactured Housing Purchase Price (and
Percentage) Increases Under Tier 1 Standard
[2020$]
------------------------------------------------------------------------
Single-section
-------------------------------
$ %
------------------------------------------------------------------------
Climate Zone 1.......................... 627 1.1
Climate Zone 2.......................... 627 1.1
Climate Zone 3.......................... 719 1.3
National Average........................ 660 1.2
------------------------------------------------------------------------

Table I.2--National Average Manufactured Housing Purchase Price (and
Percentage) Increases Under Tier 2 Standard
[2020$]
------------------------------------------------------------------------
Multi-section
-------------------------------
$ %
------------------------------------------------------------------------
Climate Zone 1.......................... 4,131 3.8
Climate Zone 2.......................... 4,438 4.1
Climate Zone 3.......................... 4,111 3.8
National Average........................ 4,222 3.9
------------------------------------------------------------------------

Table I.3 presents the estimated national average LCC savings and
energy savings for the compliance year that a manufactured homeowner
would experience under the standards compared to a manufactured home
constructed in accordance with the minimum requirements of existing HUD
Manufactured Home Construction and Safety Standards (``HUD Code'') at
24 CFR part 3280 et. seq. Table I.3 and Figure I.1 present the
nationwide average simple payback periods (purchase price increase
divided by first year energy cost savings). The methods and information
used for these analyses are discussed more in section IV.A. of this
document.

Table I.3--National Average Per-Home Cost Savings *
------------------------------------------------------------------------
Tier 1 standard Tier 2 standard
------------------------------------------------------------------------
Lifecycle Cost Savings (30-Year $1,594 $3,573
Lifetime)........................
Lifecycle Cost Savings (10-Year $720 $743
Lifetime)........................
Annual Energy Cost Savings in $177 $475
2020$............................
Simple Payback Period (Years)..... 3.7 8.9
------------------------------------------------------------------------
* negative values in parenthesis.

[[Page 32731]]

[GRAPHIC] [TIFF OMITTED] TR31MY22.209

B. Impact on Manufacturers

As discussed in more detail in section IV.B of this document and
chapter 12 of the final rule TSD, the industry net present value
(``INPV'') is the sum of the discounted cash flows to the industry from
the reference year (2022) through the end of the analysis period
(2052). Using a real discount rate of 9.2 percent, as discussed in
section IV.B.2 of this document, DOE estimates the INPV under a no-
regulatory-action alternative, which would maintain energy conservation
requirements at the levels established in the existing HUD Code, to be
$15.0 billion. Under the updated standard, the change in INPV would
range from -1.4 percent to 1.3 percent. Industry would incur total
conversion costs of $29.5 million. Conversion costs are one-time
investments, as described in section IV.B.1 of this section.

C. Nationwide Impacts

As described in more detail in section IV.C of this document and
chapter 11 of the final rule TSD, DOE's national impact analysis
(``NIA'') projects a net benefit to the nation as a whole under the
standard, in terms of national energy savings (``NES'') and the net
present value (``NPV'') of expected total manufactured homeowner costs
and savings compared with the baseline. In this case, the baseline is
manufactured homes built to the minimum standards established in the
HUD Code. As part of its NIA, DOE has projected the energy savings,
operating cost savings, incremental costs, and NPV of manufactured
homeowner benefits for manufactured homes sold in a 30-year period from
the compliance year of 2023 through 2052. The NIA builds off the LCC
analysis by aggregating results for all affected shipments over a 30-
year period. All NES and percentage energy savings calculations are
relative to a no-regulatory-action alternative, which would maintain
energy conservation requirements at the levels established in the
existing HUD Code.
Table I.4 illustrates the cumulative NES over the 30-year analysis
period under the standards on a full-fuel-cycle (``FFC'') energy
savings basis. FFC energy savings apply a factor to account for losses
associated with generation, transmission, and distribution of
electricity, and the energy consumed in extracting, processing, and
transporting or distributing primary fuels. NES differ among the
different climate zones because of varying energy conservation
requirements and varying shipment projections in each climate zone. All
NES and percentage energy savings calculations are relative to a no-
regulatory-action alternative, which as discussed would maintain energy
conservation requirements at the levels established in the existing HUD
Code. DOE estimates that under the updated standards, 1.88 quads of FFC
energy would be saved relative to the baseline over the 30-year
analysis period.

Table I.4--Cumulative Full-Fuel-Cycle National Energy Savings of Manufactured Homes Purchased 2023-2052 With a
30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
Single-section
quadrillion Btu Multi-section Total (quads)
(quads) (quads)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1............................................ 0.123 0.542 0.665
Climate Zone 2............................................ 0.100 0.463 0.563
Climate Zone 3............................................ 0.239 0.408 0.648
-----------------------------------------------------
Total................................................. 0.462 1.414 1.876
----------------------------------------------------------------------------------------------------------------

Table I.5 and Table I.6 illustrate the NPV of consumer benefits
over the 30-year analysis period for a discount rate of 7 percent and 3
percent, respectively, the percentages are used in accordance with
Office of Management and Budget guidance, as discussed in section
IV.A.1.d of this document. The NPV of consumer benefits differ among
the three climate zones because of differing initial costs and
corresponding operating cost savings, as well as differing shipment
projections in each climate zone.

[[Page 32732]]

Table I.5--Net Present Value of Consumer Benefits for Manufactured Homes Purchased 2023-2052 With a 30-Year
Lifetime at a 7% Discount Rate
----------------------------------------------------------------------------------------------------------------
Single-section Multi-section Total (billion
(billion 2020$) (billion 2020$) 2020$)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1............................................ $0.15 $0.31 $0.46
Climate Zone 2............................................ $0.13 $0.20 $0.33
Climate Zone 3............................................ $0.40 $0.32 $0.73
-----------------------------------------------------
Total................................................. $0.68 $0.84 $1.52
----------------------------------------------------------------------------------------------------------------

Table I.6--Net Present Value of Consumer Benefits for Manufactured Homes Purchased 2023-2052 With a 30-Year
Lifetime at a 3% Discount Rate
----------------------------------------------------------------------------------------------------------------
Single-section Multi-section Total (billion
(billion 2020$) (billion 2020$) 2020$)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1............................................ $0.40 $1.17 $1.58
Climate Zone 2............................................ $0.35 $0.89 $1.24
Climate Zone 3............................................ $1.10 $1.15 $2.25
-----------------------------------------------------
Total................................................. $1.85 $3.21 $5.06
----------------------------------------------------------------------------------------------------------------

D. Nationwide Energy Savings and Emissions Benefits

As discussed in section IV.C of this document and in the NIA
included in chapter 11 of the final rule TSD, DOE's analyses indicate
that the standards would reduce overall demand for energy in
manufactured homes and other unquantified energy security benefits.
Further, the standards would produce environmental benefits in the form
of reduced emissions of air pollutants and greenhouse gases associated
with electricity production.
DOE estimates reductions in emissions of six pollutants associated
with energy savings: Carbon dioxide (CO<INF>2</INF>), mercury (Hg),
nitric oxide and nitrogen dioxide (NO<INF>X</INF>), sulfur dioxide
(SO<INF>2</INF>), methane (CH<INF>4</INF>), and nitrous oxide
(N<INF>2</INF>O). These emissions reductions are referred to as
``site'' emissions reductions. Furthermore, DOE estimates reductions in
emissions associated with the production of these fuels (including
extracting, processing, and transporting these fuels to power plants or
manufactured homes). These emissions reductions are referred to as
``upstream'' emissions reductions. Together, site emissions reductions
and upstream emissions reductions account for the FFC.
Table I.7 lists the emissions reductions under the rule for both
single-section and multi-section manufactured homes. (In this table and
elsewhere in this document, the ``E'' format notes a multiplier of a
power of ten, e.g., ``2.92E-02'' means 2.9 x 10-02, which is
0.029.)

Table I.7--Emissions Reductions Associated With Electricity Production for Manufactured Homes Purchased 2023-
2052 With a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
Pollutant Single-section Multi-section Total
----------------------------------------------------------------------------------------------------------------
Site Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................................... 19.5 53.8 73.3
Hg (metric tons)................................................ 2.92E-02 9.60E-02 1.25E-01
NOX (thousand metric tons)...................................... 10.9 26.6 37.5
SO2 (thousand metric tons)...................................... 7.2 20.4 27.6
CH4 (thousand metric tons)...................................... 1.03 3.11 4.14
N2O (thousand metric tons)...................................... 0.21 0.57 0.78
----------------------------------------------------------------------------------------------------------------
Upstream Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................................... 2.01 5.05 7.06
Hg (metric tons)................................................ 1.48E-04 4.45E-04 5.93E-04
NOX (thousand metric tons)...................................... 25.4 64.8 90.2
SO2 (thousand metric tons)...................................... 0.21 0.47 0.67
CH4 (thousand metric tons)...................................... 127 354 481
N2O (thousand metric tons)...................................... 0.011 0.026 0.037
----------------------------------------------------------------------------------------------------------------
Total Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................................... 21.5 58.9 80.4
Hg (metric tons)................................................ 2.93E-02 9.64E-02 0.13
NOX (thousand metric tons)...................................... 36.3 91.4 127.7
SO2 (thousand metric tons)...................................... 7.44 20.9 28.3
CH4 (thousand metric tons)...................................... 128 357 485
N2O (thousand metric tons)...................................... 0.23 0.59 0.82
----------------------------------------------------------------------------------------------------------------

[[Page 32733]]

DOE estimates the value of climate benefits from a reduction in
greenhouse gases using four different estimates of the social cost of
CO<INF>2</INF> (SC-CO<INF>2</INF>), the social cost of methane (SC-
CH<INF>4</INF>), and the social cost of nitrous oxide (SC-
N<INF>2</INF>O). Together these represent the social cost of greenhouse
gases (SC-GHG). DOE used interim SC-GHG values developed by an
Interagency Working Group on the Social Cost of Greenhouse Gases
(IWG).\5\ The derivation of these values is discussed in section IV.D
of this document. For presentational purposes, the climate benefits
associated with the average SC-GHG at a 3-percent discount rate are
estimated to be $3.3 billion. DOE does not have a single central SC-GHG
point estimate and it emphasizes the importance and value of
considering the benefits calculated using all four SC-GHG estimates.\6\
DOE estimated the monetary health benefits of NO<INF>X</INF> and
SO<INF>2</INF> emission reduction, also discussed in section IV.D of
this document. Table I.8 provides the NPV of monetized climate and
health benefits from reduction in emissions.
---------------------------------------------------------------------------

\5\ See Interagency Working Group on Social Cost of Greenhouse
Gases, Technical Support Document: Social Cost of Carbon, Methane,
and Nitrous Oxide. Interim Estimates Under Executive Order 13990,
Washington, DC, February 2021. Available at: <a href="http://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf">www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf</a>
(last accessed March 17, 2022).
\6\ On March 16, 2022, the Fifth Circuit Court of Appeals (No.
22-30087) granted the federal government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction
issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a
result of the Fifth Circuit's order, the preliminary injunction is
no longer in effect, pending resolution of the federal government's
appeal of that injunction or a further court order. Among other
things, the preliminary injunction enjoined the defendants in that
case from ``adopting, employing, treating as binding, or relying
upon'' the interim estimates of the social cost of greenhouse
gases--which were issued by the Interagency Working Group on the
Social Cost of Greenhouse Gases on February 26, 2021--to monetize
the benefits of reducing greenhouse gas emissions. In the absence of
further intervening court orders, DOE will revert to its approach
prior to the injunction and presents monetized benefits where
appropriate and permissible under law.

Table I.8--Net Present Value of Monetized Climate and Health Benefits From Emissions Reductions
----------------------------------------------------------------------------------------------------------------
Net present value (million 2020$)
Monetary benefits * Discount rate -----------------------------------
(%) Single-section Multi-section
----------------------------------------------------------------------------------------------------------------
Climate Benefits **....................................... 3 881.3 2,425.9
Health Benefits [dagger].................................. 3 1,503.5 4,088.2
7 508.1 1,386.3
----------------------------------------------------------------------------------------------------------------
* Monetized values do not include other important unquantified effects, including certain climate benefits and
certain air quality benefits from the reduction of toxic air pollutants and other emissions
** Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
(SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
95th percentile at 3 percent discount rate), as in Table IV.22 through Table IV.24. Together these represent
the global SC-GHG. For presentational purposes of this table, the climate benefits associated with the average
SC-GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
estimate. See section IV.D of this document for more details. On March 16, 2022, the Fifth Circuit Court of
Appeals (No. 22-30087) granted the federal government's emergency motion for stay pending appeal of the
February 11, 2022, preliminary injunction issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a
result of the Fifth Circuit's order, the preliminary injunction is no longer in effect, pending resolution of
the federal government's appeal of that injunction or a further court order. Among other things, the
preliminary injunction enjoined the defendants in that case from ``adopting, employing, treating as binding,
or relying upon'' the interim estimates of the social cost of greenhouse gases--which were issued by the
Interagency Working Group on the Social Cost of Greenhouse Gases on February 26, 2021--to monetize the
benefits of reducing greenhouse gas emissions. In the absence of further intervening court orders, DOE will
revert to its approach prior to the injunction and presents monetized benefits where appropriate and
permissible under law.
[dagger] Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only
monetizing (for NOX and SO2) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits,
but will continue to assess the ability to monetize other effects such as health benefits from reductions in
direct PM2.5 emissions. See section IV.D.2 of this document for more details.

E. Total Benefits and Costs

Table I.9 summarizes the monetized benefits and costs expected to
result from the amended standards for manufactured homes. There are
other important unquantified effects, including certain unquantified
climate benefits, unquantified public health benefits from the
reduction of toxic air pollutants and other emissions, unquantified
energy security benefits, and distributional effects, among others.

Table I.9--Summary of Monetized Benefits and Costs to the Nation Under
the Adopted Standards
------------------------------------------------------------------------
Net present value
(billion $2020)
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings...................... 10.2
Climate Benefits *................................... 3.3
Health Benefits **................................... 5.6
Total Benefits....................................... 19.1
Consumer Incremental Product Costs [dagger].......... 5.1
Net Benefits..................................... 14.0
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings...................... 3.9
Climate Benefits *................................... 3.3
Health Benefits **................................... 1.9
Total Benefits [dagger].............................. 9.1

[[Page 32734]]

Consumer Incremental Product Costs [dagger][dagger].. 2.4
Net Benefits..................................... 6.7
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with
manufactured housing shipped in 2023-2052. These results include
benefits to consumers which accrue after 2052 from the products
shipped in 2023-2052.
* Climate benefits are calculated using four different estimates of the
social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
(SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
discount rates; 95th percentile at 3 percent discount rate), as shown
in Table IV.22 through Table IV.24. Together these represent the
global SC-GHG. For presentational purposes of this table, the climate
benefits associated with the average SC-GHG at a 3 percent discount
rate are shown, but the Department does not have a single central SC-
GHG point estimate. See section. IV.D of this document for more
details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-
30087) granted the federal government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction issued
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result
of the Fifth Circuit's order, the preliminary injunction is no longer
in effect, pending resolution of the federal government's appeal of
that injunction or a further court order. Among other things, the
preliminary injunction enjoined the defendants in that case from
``adopting, employing, treating as binding, or relying upon'' the
interim estimates of the social cost of greenhouse gases--which were
issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of
reducing greenhouse gas emissions. In the absence of further
intervening court orders, DOE will revert to its approach prior to the
injunction and presents monetized benefits where appropriate and
permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for NOX and SO2) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects such as health benefits from reductions in direct PM2.5
emissions. See section IV.D.2 of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
health benefits that can be quantified and monetized. For presentation
purposes, total and net benefits for both the 3-percent and 7-percent
cases are presented using the average SC-GHG with 3-percent discount
rate, but the Department does not have a single central SC-GHG point
estimate. DOE emphasizes the importance and value of considering the
benefits calculated using all four SC-GHG estimates.
[dagger][dagger] The incremental costs include incremental costs
associated with principal and interest, mortgage and property tax for
the analyzed loan types. Further discussion can be found in chapter 8
of the TSD.

The benefits and costs of the standards for manufactured housing
sold in 2023-2052 can also be expressed in terms of annualized values.
The monetary values for the total annualized net benefits are (1) the
savings in consumer operating costs, minus (2) the increases in product
installed costs, plus (3) the value of the climate and health benefits
of emission reductions, all annualized.\7\ The national operating cost
savings are domestic private U.S. consumer monetary savings that occur
as a result of purchasing the covered housing and are measured for the
lifetime of manufactured housing shipped in 2023-2052. Total Benefits
for both the 3-percent and 7-percent cases are presented using the
average social costs with 3-percent discount rate. Estimates of SC-GHG
values are presented for all four discount rates in section IV.D of
this document. Table I.10 presents the total estimated monetized
benefits and costs to manufactured housing homeowners associated with
the standard, expressed in terms of annualized values.
---------------------------------------------------------------------------

\7\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2020, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2020 or 2030), and then discounted the present value from
each year to 2020. The calculation uses discount rates of 3 and 7
percent for all costs and benefits. Using the present value, DOE
then calculated the fixed annual payment over a 30-year period,
starting in the compliance year, which yields the same present
value.

Table I.10--Annualized Monetized Benefits and Costs to the Nation Under the Adopted Standard
----------------------------------------------------------------------------------------------------------------
High-net-
Primary estimate Low-net-benefits benefits
estimate estimate
----------------------------------------------------------------------------------------------------------------
(Million $2020)
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings........................... 551 478 627
Climate Benefits *........................................ 169 155 180
Health Benefits **........................................ 285 263 303
Total Benefits [dagger]................................... 1,005 896 1110
Consumer Incremental Product Costs [dagger][dagger]....... 277 255 294
Net Benefits.......................................... 728 641 816
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings........................... 361 322 402
Climate Benefits *........................................ 169 155 180
Health Benefits **........................................ 153 143 161
Total Benefits [dagger]................................... 682 620 742
Consumer Incremental Product Costs [dagger][dagger]....... 221 213 231

[[Page 32735]]

Net Benefits.......................................... 461 407 511
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with manufactured housing shipped in 2023-2052.
These results include benefits to consumers which accrue after 2052 from the products shipped in 2023-2052.
The Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from the
AEO2020 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition,
incremental product costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the Low
Net Benefits Estimate, and a high decline rate in the High Net Benefits Estimate. The methods used to derive
projected price trends are explained in sections IV.A and IV.C of this document. Note that the Benefits and
Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the SC-GHG (see section IV.D of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
estimate, and it emphasizes the importance of considering the benefits calculated using all four SC-GHG
estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal
government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the
preliminary injunction is no longer in effect, pending resolution of the federal government's appeal of that
injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in
that case from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the
social cost of greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. In the
absence of further intervening court orders, DOE will revert to its approach prior to the injunction and
presents monetized benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for NOX and SO2) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. See section IV.D.2 of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate, but the Department does not have a single central SC-GHG point estimate.
[dagger][dagger] The incremental costs include incremental costs associated with principal and interest,
mortgage and property tax for the analyzed loan types. Further discussion can be found in chapter 8 of the
TSD.

DOE's analysis of the national impacts of the standards is
described in sections IV.C, IV.D, and IV.E of this document.

F. Conclusion

DOE has determined that the conservation standards in this final
rule are cost-effective when evaluating the impact of the standards on
the purchase price of a manufactured home and on the total life-cycle
construction and operating costs. As discussed in section III.A of this
document, the tiered standards adopted in this final rule provide
positive average LCC savings over the life of the manufactured home
(i.e., 30-years) in every city for which the standards are analyzed, as
well as nationally. Additionally, DOE has also determined that the
benefits to the Nation of the standards (energy savings, consumer LCC
savings, positive NPV of consumer benefit, energy security, and
emission reductions) outweigh the burdens (loss of INPV, LCC increases
for some homeowners of manufactured housing. and price-sensitive
consumers who do not purchase manufactured homes).

II. Introduction

This section addresses the legal and factual background to date
regarding DOE's efforts to establish energy conservation standards for
manufactured housing. By statute, DOE is obligated to set standards for
manufactured housing in consultation with HUD and to consider certain
specific factors when establishing these standards. DOE is also
obligated to update these standards within a prescribed period of time.

A. Authority

Section 413 of EISA directs DOE to:
<bullet> Establish standards for energy conservation in
manufactured housing;
<bullet> Provide notice of, and an opportunity for comment on, the
proposed standards by manufacturers of manufactured housing and other
interested parties;
<bullet> Consult with the Secretary of HUD, who may seek further
counsel from the Manufactured Housing Consensus Committee (``MHCC'');
and
<bullet> Base the energy conservation standards on the most recent
version of the IECC and any supplements to that document, except in
cases where DOE finds that the IECC is not cost-effective or where a
more stringent standard would be more cost-effective, based on the
impact of the IECC on the purchase price of manufactured housing and on
total life-cycle construction and operating costs.

(42 U.S.C. 17071(a) and (b)(1))

Section 413 of EISA also provides that DOE may:
<bullet> Consider the design and factory construction techniques of
manufactured housing;
<bullet> Base the climate zones on the climate zones established by
HUD \8\ rather than the climate zones under the IECC; and
---------------------------------------------------------------------------

\8\ The statute uses the term ``climate zones'' in reference to
the HUD requirements (42 U.S.C. 17071(b)(2)(B). HUD has not
established ``climate zones'' but has established ``insulation
zones.'' See, U/O Value Zone Map for Manufactured Housing at 24 CFR
3280.506. DOE understands the statutory reference to ``climate
zones'' in this context to mean the established insulation zones at
24 CFR 3280.506.
---------------------------------------------------------------------------

<bullet> Provide for alternative practices that, while not meeting
the specific standards established by DOE, result in net estimated
energy consumption equal to or less than the specific energy
conservation standards.

(42 U.S.C. 17071(b)(2))

DOE is directed to update its standards not later than one year
after any revision to the IECC. (42 U.S.C. 17071(b)(3)) Finally, under
EISA, a manufacturer of manufactured housing that violates a provision
of Part 460 ``is liable to the United States for a civil penalty not
exceeding 1 percent of the manufacturer's retail list price of the
manufactured housing.'' (42 U.S.C. 17071(c))

B. Background

1. Current Standards
Section 413 of EISA requires DOE to regulate energy conservation in
manufactured housing, an area of the building construction industry

[[Page 32736]]

traditionally regulated by HUD. HUD has regulated the manufactured
housing industry since 1976, when it first promulgated the HUD Code.
(42 U.S.C. 5401 et seq.; 24 CFR part 3280 et seq.) The purpose of the
HUD Code includes protecting the quality, durability, safety, and
affordability of manufactured homes; facilitating the availability of
affordable manufactured homes and increasing homeownership for all
Americans; protecting residents of manufactured homes with respect to
personal injuries and the amount of insurance costs and property
damages in manufactured housing; and ensuring that the public interest
in, and need for, affordable manufactured housing is duly considered in
all determinations relating to the Federal standards and their
enforcement. (42 U.S.C. 5401(b))
The HUD Code includes requirements related to the energy
conservation of manufactured homes. Specifically, Subpart F of the HUD
Code, entitled ``Thermal Protection,'' establishes requirements for
U<INF>o</INF> of the building thermal envelope. U<INF>o</INF> is a
measurement of the heat loss or gain rate through the building thermal
envelope of a manufactured home; therefore, a lower U<INF>o</INF>
corresponds with a more insulated building thermal envelope. The HUD
Code contains maximum requirements for the combined U<INF>o</INF> value
of walls, ceilings, floors, fenestration, and external ducts within the
building thermal envelope for manufactured homes installed in different
zones. 24 CFR 3280.506(a).
The HUD Code also provides an alternate pathway to compliance that
allows manufacturers to construct manufactured homes that meet adjusted
U<INF>o</INF> requirements based on the installation of high-efficiency
heating and cooling equipment in the manufactured home. 24 CFR
3280.508(d). Moreover, Subpart F of the HUD Code establishes
requirements to reduce air leakage through the building thermal
envelope. 24 CFR 3280.505.
Subpart H of the HUD Code, entitled ``Heating, Cooling, and Fuel
Burning Systems,'' establishes requirements for sealing air supply
ducts and for insulating both air supply and return ducts. 24 CFR
3280.715(a). R-value is the measure of a building component's ability
to resist heat flow (thermal resistance). A higher R-value represents a
greater ability to resist heat flow and generally corresponds with a
thicker level of insulation. The HUD Code contains no requirements for
fenestration solar heat gain coefficient (``SHGC''), mechanical system
piping insulation, or installation of insulation.
The statutory authority for DOE's rulemaking effort is different
from the statutory authority underlying the HUD Code. EISA directs DOE
to establish energy conservation standards for manufactured housing
without reference to existing HUD Code requirements that also address
energy conservation. However, EISA also requires DOE to consult with
HUD. (42 U.S.C. 17071(a)(2)(B)) Such consultations have informed DOE in
development of the regulations finalized in this document, and DOE
remains cognizant of the HUD Code, as well as HUD's Congressional
charge to protect the quality, durability, safety, affordability, and
availability of manufactured homes. Compliance with the DOE
requirements adopted in this final rule would not prevent a
manufacturer from complying with the requirements, including energy
conservation requirements, set forth in the HUD Code. Section III.G of
this document provides a crosswalk of the energy conservation standards
in this rule with the standards in the HUD Code. Moreover, as discussed
further in section III, DOE considered the potential impact on
manufactured home purchasers resulting from costs associated with
additional energy efficiency measures.
2. The International Energy Conservation Code (IECC)
The statutory authority for this rulemaking requires DOE to base
its standards on the most recent version of the IECC \9\ and any
supplements to that document, subject to certain exceptions and
considerations. (42 U.S.C. 17071(b)(1)) The IECC is a nationally-
recognized model code, developed under the auspices of and published by
the International Code Council (``ICC''). Many state and local
governments have adopted the IECC \10\ in establishing minimum design
and construction requirements for the energy efficiency of residential
and commercial buildings, including site-built residential and modular
homes.\11\ The IECC is developed through a consensus process that seeks
input from a number of relevant stakeholders and is updated on a
rolling basis, with new editions of the IECC published approximately
every three years. The IECC was first published in 1998, with the most
recent version, the 2021 IECC, being published in January 2021.
---------------------------------------------------------------------------

\9\ The website of the IECC is <a href="https://shop.iccsafe.org/international-codes/iecc-references.html">https://shop.iccsafe.org/international-codes/iecc-references.html</a>.
\10\ The current status of the adoption of the IECC is provided
at <a href="http://www.energycodes.gov/status-state-energy-code-adoption">www.energycodes.gov/status-state-energy-code-adoption</a>.
\11\ Modular homes are generally excluded from the coverage of
the National Manufactured Housing Construction and Safety Standards
Act and constructed to the same state, local or regional building
codes as site-built homes. See 42 U.S.C. 5403(f); 24 CFR 3282.12.
---------------------------------------------------------------------------

The 2021 IECC is divided into two major sections, with provisions
for both residential and commercial buildings. The manufactured housing
energy conservation standards and test procedure are based on the
requirements for residential buildings. The residential building
requirements of the 2021 IECC, however, are not specific to
manufactured housing.
Chapter 4 of the residential section of the 2021 IECC sets forth
specifications for residential energy efficiency, including
specifications for building thermal envelope energy conservation,
thermostats, duct insulation and sealing, mechanical system piping
insulation, heated water circulation system, and mechanical
ventilation. To the extent that the HUD Code regulates similar aspects
of energy conservation as the 2021 IECC, the 2021 IECC is generally
considered more stringent than the corresponding requirements in the
HUD Code, given that many areas of the HUD Code have not been updated
as frequently as the IECC.
DOE notes that the IECC is designed for building structures that
have a permanent foundation. Manufactured housing structures, however,
are not built on permanent foundations but are built on a steel chassis
to enable them to be moved or towed when needed. As a result, because
they present their own set of unique considerations that the IECC was
not intended to address, some aspects of the IECC are unable, or highly
impractical, to be applied to manufactured housing. Instead, consistent
with the considerations required by EISA (e.g., 42 U.S.C.
17071(b)(2)(A)), these adopted standards utilize aspects of the IECC
that are appropriate for manufactured housing as the basis for the
standards, thereby accounting for the unique physical characteristics
of manufactured housing.
3. Development of the Initial Proposal and Responses
Based on the 2019 American Housing Survey (``2019 AHS''),
manufactured housing accounts for approximately six percent of all
homes in the United States.\12\ Because the purchase price of
manufactured homes often is lower than similarly-sized site-built
homes, manufactured homes serve as affordable housing options,
particularly for lower

[[Page 32737]]

to median income families. However, using the data from the 2019 AHS,
the median energy burden (median cost of electricity, gas, fuel oil and
other fuel as a percentage of median household income) is approximately
5 percent for manufactured home residents compared to 3 percent for all
homes. Further, the same data suggests the per square foot utility cost
for manufactured homes ($0.15 per square foot; median $178 for 1140
square feet) is higher than single-family homes ($0.14 per square foot;
median $249 for 1800 square feet). As such, the energy burden as
measured on a square foot basis, is significantly higher for residents
of manufactured homes.
---------------------------------------------------------------------------

\12\ U.S. Census Bureau, American Housing Survey 2019--National
Summary Tables. Available at <a href="http://www.census.gov/programs-surveys/ahs/data.html">www.census.gov/programs-surveys/ahs/data.html</a>.
---------------------------------------------------------------------------

Establishing improved energy conservation requirements for
manufactured homes results in the dual benefit of reducing manufactured
home energy use and enabling owners of manufactured homes to experience
lower utility expenses over the long-term. Improved energy conservation
standards are also expected to provide nationwide benefits of reducing
utility energy production levels that would in turn reduce greenhouse
gas emissions and other air pollutants.
DOE published an advance notice of proposed rulemaking (``ANOPR'')
to initiate the process of developing energy conservation standards for
manufactured housing and to solicit information and data from industry
and stakeholders.\13\ See 75 FR 7556 (February 22, 2010). DOE also
consulted with HUD in developing the requirements and in obtaining
input and suggestions that would increase energy conservation in
manufactured housing, while maintaining affordability. In addition to
meeting with HUD on multiple occasions, DOE attended three MHCC
meetings, where DOE gathered information from MHCC members. DOE also
initiated discussions with members of the manufactured housing industry
following the issuance of the ANOPR.\14\ A summary of each meeting is
available at <a href="http://www.regulations.gov/docket?D=EERE-2009-BT-BC-0021">www.regulations.gov/docket?D=EERE-2009-BT-BC-0021</a>. The
June 2016 NOPR provides more details on the comments received in
response to the ANOPR. 81 FR 39755 (June 17, 2016)
---------------------------------------------------------------------------

\13\ The ANOPR comments can be accessed at: <a href="http://www.regulations.gov/#!docketDetail">www.regulations.gov/#!docketDetail</a>;D=EERE-2009-BT-BC-0021.
\14\ These included discussions with the Manufactured Housing
Institute (``MHI'') and several of its member manufacturers, the
California Department of Housing and Community Development, the
Georgia Manufactured Housing Division, three private-sector third-
party primary inspection agencies under the HUD manufactured housing
program, and one private-sector stakeholder familiar with
manufactured housing.
---------------------------------------------------------------------------

On June 25, 2013, DOE published a request for information (``RFI'')
seeking information on indoor air quality, financing and related
incentives, model systems of enforcement, and other studies and
research relevant to DOE's effort to establish energy conservation
standards for manufactured housing. 78 FR 37995 (``June 2013 RFI'').
The June 2016 NOPR provides more details on the comments received on
the RFI. 81 FR 39765 (June 17, 2016).
After reviewing the comments received in response to the ANOPR, the
June 2013 RFI, and other stakeholder input, DOE ultimately determined
that development of proposed manufactured housing energy conservation
standards would benefit from a negotiated rulemaking process. On June
13, 2014, DOE published a notice of intent to establish a negotiated
rulemaking manufactured housing working group (``MH working group'') to
discuss and, if possible, reach consensus on a proposed rule. 79 FR
33873. On July 16, 2014, the MH working group was established under the
Appliance Standards and Rulemaking Federal Advisory Committee
(``ASRAC'') in accordance with the Federal Advisory Committee Act and
the Negotiated Rulemaking Act. 79 FR 41456; 5 U.S.C. 561-570, App. 2.
The MH working group consisted of representatives of interested
stakeholders with a directive to consult, as appropriate, with a range
of external experts on technical issues in developing a term sheet with
recommendations on the proposed rule. The MH working group consisted of
22 members, including one member from ASRAC, and one DOE
representative. 79 FR 41456. The MH working group met in person during
six sets of public meetings held in 2014 on August 4-5, August 21-22,
September 9-10, September 22-23, October 1-2, and October 23-24. 79 FR
48097 (Aug. 15, 2014); 79 FR 59154 (Oct. 1, 2014).
On October 31, 2014, the MH working group reached consensus on
energy conservation standards for manufactured housing and assembled
its recommendations for DOE into a term sheet that was presented to
ASRAC. Public docket EERE-2009-BT-BC-0021-0107 (``Term Sheet''). ASRAC
approved the term sheet during an open meeting on December 1, 2014, and
sent it to the Secretary of Energy to develop a proposed rule.
On February 11, 2015, DOE published an RFI requesting information
that would aid in determining proposed solar heat gain coefficient
(``SHGC'') requirements for certain climate zones. 80 FR 7550
(``February 2015 RFI''). Following preparation and submission of the
term sheet by the MH working group, DOE also consulted further with HUD
regarding DOE's proposed energy conservation standards. In addition to
meeting with HUD, DOE prepared two presentations to discuss the
proposed rule with MHCC members, which were designed to gather
information on development of the proposed standards.\15\
---------------------------------------------------------------------------

\15\ Available at <a href="http://www.regulations.gov/document?D=EERE-2009-BT-BC-0021-0069">www.regulations.gov/document?D=EERE-2009-BT-BC-0021-0069</a> and <a href="http://www.regulations.gov/document?D=EERE-2009-BT-BC-0021-0058">www.regulations.gov/document?D=EERE-2009-BT-BC-0021-0058</a>.
---------------------------------------------------------------------------

On June 17, 2016, DOE published a NOPR for the manufactured housing
energy conservation standards rulemaking. 81 FR 39755. (``June 2016
NOPR'') DOE posted the NOPR analysis as well as the complete NOPR TSD
on its website.\16\ In response to comments on the 2013 RFI, DOE also
published the 2016 EA-RFI to accompany the 2016 NOPR. The draft EA drew
no conclusions regarding the potential impacts on the indoor air
quality of manufactured homes as a result of implementing any final
energy conservation standards for these structures. DOE held a public
meeting on July 13, 2016, to present the June 2016 NOPR, which included
the proposed prescriptive and performance requirements, in addition to
the LCC, NIA, manufacturer impact analysis (``MIA''), and emissions
analyses. DOE received a number of responses to its June 2016 NOPR.
Further, in December 2017, the Sierra Club filed a suit against DOE in
the U.S. District Court for the District of Columbia, alleging that DOE
had failed to meet its statutory deadlines for establishing energy
efficiency standards for manufactured housing. Sierra Club v. Granholm,
No. 1:17-cv-02700-EGS (D.D.C. filed Dec. 18, 2017).
---------------------------------------------------------------------------

\16\ The NOPR analysis, NOPR TSD, and NOPR public meeting
information are available at <a href="http://www.regulations.gov">www.regulations.gov</a> under docket number
EERE-2009-BT-BC-0021.
---------------------------------------------------------------------------

In response to concerns related to potential adverse impacts on
price-sensitive, low-income purchasers of manufactured homes from the
imposition of energy conservation standards on manufactured housing,
DOE sought additional information from the public regarding these
impacts by publishing the August 2018 NODA. See 83 FR 38073 (August 3,
2018). That NODA indicated that DOE had re-examined its available data
and re-evaluated its approach in developing standards for manufactured
housing. See 83 FR 38073, 38075. These discussions with HUD, along with
a

[[Page 32738]]

concern over the initial first-cost impacts that DOE's earlier proposal
would have on low-income buyers, led DOE to examine a potential tiered
proposal that would set varying levels of energy efficiency performance
with specified increases in incremental upfront costs that would still
improve the overall energy efficiency of manufactured homes. See 83 FR
38077. In November 2019, the court in the above-referenced litigation
entered a consent decree in which DOE agreed to complete the rulemaking
by stipulated dates.
On August 26, 2021, DOE published a supplemental NOPR (``SNOPR'')
for the manufactured housing energy conservation standards rulemaking.
86 FR 47744 (``August 2021 SNOPR''). In response to comments to the
June 2016 NOPR and August 2018 NODA, DOE proposed two standards, one
being the primary ``tiered'' proposal and the other being the alternate
``untiered'' proposal. DOE's primary proposal was the ``tiered''
approach, based on the 2021 IECC, wherein a subset of the energy
conservation standards would be less stringent for certain manufactured
homes in light of the cost-effectiveness considerations required by
EISA. DOE's alternate proposal was the ``untiered'' approach, wherein
energy conservation standards based on the 2021 IECC would apply to all
manufactured homes without a subset of less stringent standards for
certain manufactured homes. Under the tiered proposal, two sets of
standards would be established in proposed 10 CFR part 460, subpart B
(i.e., Tier 1 and Tier 2). Tier 1 would apply to manufactured homes
with a manufacturer's retail list price of $55,000 or less, and
incorporate building thermal envelope measures based on certain thermal
envelope components subject to the 2021 IECC, but would limit the
incremental purchase price increase to an average of less than $750.
Tier 2 would apply to manufactured homes with a manufacturer's retail
list price above $55,000, and incorporate building thermal envelope
measures based on certain thermal envelope components and
specifications of the 2021 IECC (i.e., the Tier 2 requirements would be
the same as those under the proposed single, ``untiered'' set of
standards). 86 FR 47744, 47746. Both proposals replaced DOE's June 2016
proposal. Additionally, DOE noted in the August 2021 SNOPR that it had
considered, and was still considering, tiers based upon metrics other
than manufacturer's retail list price such as size (e.g., square
footage, number of sections) and regional variations, and requested
feedback on the use of these other bases for the tier thresholds. Id.
at 86 FR 47760-47761. Further, DOE also considered in the August 2021
SNOPR the impacts on the LCC savings of requiring less stringent
exterior wall insulation for Tier 2 climate zones 2 and 3 (at R-21
instead of R-20+5) to remove the continuous insulation requirement. Id.
at 86 FR 47802-47803. DOE held a public meeting on September 28, 2021,
to present the August 2021 SNOPR.
On October 26, 2021, DOE published a NODA regarding updated inputs
to the August 2021 SNOPR and results of corresponding analyses,
including certain sensitivity analyses. 86 FR 59042 (``October 2021
NODA'') The updated inputs resulted, in part, in raising the threshold
between Tiers 1 and 2 to $63,000. Also, as contemplated in the August
2021 SNOPR and based on feedback from stakeholders and HUD, the
additional analyses in the NODA included analysis and impacts of a
sized-based tier threshold (based on number of sections) and analyses
of alternative exterior wall insulation requirements (R-21) for climate
zones 2 and 3. DOE reopened the public comment period on the SNOPR
through November 26, 2021, and sought comment on the updated $63,000
tier threshold, the size-based tier threshold, and alternate exterior
wall insulations requirements. In response to the August 2021 SNOPR and
the October 2021 NODA, DOE received public comments from a variety of
stakeholders. DOE also received over 900 substantively similar mass
mail campaign letters from organizations and individuals in response to
the August 2021 SNOPR, and over 300 in response to the October 2021
NODA. Further, DOE also received a number of comments from individual
commenters.\17\ All of the comment submissions are available in the
docket for this rulemaking.
---------------------------------------------------------------------------

\17\ DOE has not identified each and every individual commenter
in the Table II.2 of this document, but has included and addressed
their comments in this final rule
---------------------------------------------------------------------------

On January 14, 2022, DOE published the draft environmental impact
statement for proposed energy conservation standards for manufactured
housing (DOE/EIS-0550). 87 FR 2430 (``January 2022 DEIS'') DOE prepared
the January 2022 DEIS in support of the August 2021 SNOPR. The January
2022 DEIS analyzed price-based alternatives based around the $63,000
threshold for manufacturer retail list price and different wall
insulation requirements. It also analyzed the alternatives based on the
size of the manufactured housing (single sections and multiple sections
with differences in wall insulation requirements), untiered
alternatives with only differences in wall insulation requirements, and
a ``no action'' alternative (i.e., no DOE standard). Accordingly, DOE
published a notice re-opening the comment period on the rulemaking
proceeding to consider how the January 2022 DEIS should inform the
final energy conservation standards for manufactured housing. January
14, 2022 (87 FR 2359)
In response to the January 2022 DEIS, DOE received additional
public comments from a variety of stakeholders as to how the DEIS
should inform the final rule. In this final rule, DOE is only including
and addressing comments as the comments relate to the energy
conservation standards. As such, DOE is not including or addressing
comments on the discussion and analyses presented in the January 2022
DEIS; those comments are addressed as part of the environmental impact
assessment process. DOE also received over 300 substantively similar
form letters from individuals in response to the January 2022 DEIS. All
of the comment submissions are available in the docket for this
rulemaking. The comments and DOE's responses are discussed in sections
III, IV, and V of this document.
Table II.1 presents a summary of all the written comments received
for the August 2021 SNOPR, October 2021 NODA, and the January 2022
DEIS, as it relates to the energy conservation standards.

[[Page 32739]]

Table II.1-- Summary of Written Comments *
----------------------------------------------------------------------------------------------------------------
Organization(s) Reference in this final rule Organization type
----------------------------------------------------------------------------------------------------------------
Alliance to Save Energy, American Council for an Joint Commenters............ Efficiency organization.
Energy-Efficient Economy, E4TheFuture, Earth
Advantage, Elevate Energy, Environmental and Energy
Study Institute, Institute for Market
Transformation, National Association of Energy
Service Companies, National Association of State
Energy Officials, Next Step Network, Natural
Resources Defense Council.
Adventure Homes...................................... Adventure Homes............. Manufacturer.
American Chemistry Council's Foam Sheathing Committee ACC FSC..................... Trade association.
American Council for an Energy-Efficient Economy..... ACEEE....................... Efficiency organization.
American Homestar.................................... American Homestar........... Manufacturer.
American Public Gas Association, The Aluminum APGA et. al................. Trade association.
Association, American Chemistry Council, American
Exploration & Production Council, American Farm
Bureau Federation, American Fuel & Petrochemical
Manufacturers, American Gas Association, American
Highway Users Alliance, American Iron and Steel
Institute,.
American Petroleum Institute, American Public Gas
Association, American Public Power Association,
Associated Builders and Contractors, Associated
General Contractors of America, Council of
Industrial Boiler Owners, The Fertilizer Institute,
Independent Petroleum Association of America,
National Association of Manufacturers, National Lime
Association, National Mining Association, National
Rural Electric Cooperative Association, Portland
Cement Association, U.S. Chamber of Commerce.
Arizona Department of Housing........................ ADOH........................ State Government.
American Society of Heating, Refrigerating and Air- ASHRAE...................... Trade association.
Conditioning Engineers.
Attorneys General of NY, IL, ME, MN, NV, NJ, NM, OR, State Attorneys General..... State Government--State
VT, WA, MA, and NY. Attorneys General.
Blount County Habitat for Humanity................... Blount County Habitat for Non-profit.
Humanity.
C2ES, Institute for Policy Integrity at NYU Law, C2ES et. al................. Environmental Non-profit.
Sierra Club, Union of Concerned Scientists.
California Energy Commission......................... CEC......................... Efficiency Organization.
CASA of Oregon....................................... CASA of Oregon.............. Non-profit.
Cavco Industries..................................... Cavco....................... Manufacturer.
Champion Home Builders Inc........................... Champion Home Builders...... Manufacturer.
Clayton Home Building Group.......................... Clayton Homes............... Manufacturer.
Connecticut Manufactured Home Owners Alliance........ CMHOA....................... Non-profit.
Community Housing Partners........................... CHP......................... Affordable Housing and
Community Development Non-
profit.
E4TheFuture.......................................... E4TheFuture................. Efficiency Organization.
Earthjustice & Prosperity Now........................ Earthjustice and Prosperity Efficiency Non-profit.
Now.
Fahe................................................. Fahe........................ Community Development
Financial Institution.
Habitat for Humanity of Greater Los Angeles.......... Habitat for Humanity of LA.. Non-profit.
Idaho Manufactured Housing Association............... IMHA........................ Non-profit/Trade
association.
Indiana Manufactured Housing Association/Recreation IMHA/RVIC................... Trade association.
Vehicle Indiana Council.
International Code Council........................... ICC......................... Codes organization.
Kansas Manufactured Housing Association.............. KMHA........................ Non-profit/Trade
association.
LifeStyle Factory Homes LLC.......................... LifeStyle................... Manufacturer.
Local Initiatives Support Corporation................ LISC........................ Non-profit.
Manufactured & Modular Home Association of Minnesota. MMHA........................ Trade association.
Manufactured Housing Association for Regulatory MHARR....................... Trade association.
Reform.
Manufactured Housing Consensus Committee............. MHCC........................ Advisory committee.
Manufactured Housing Institute....................... MHI......................... Trade association.
Michigan Manufactured Housing Association............ Michigan MHA................ Non-profit/Trade
association.
Mississippi Manufactured Housing Association......... Mississippi MHA............. Non-profit/Trade
association.
Modular Lifestyles, Inc.............................. Modular Lifestyles.......... Manufacturer.
National Association of Home Builders................ NAHB........................ Trade association.
National Association of State Energy Officials....... NASEO....................... Non-profit.
National Manufactured Home Owners Association........ NMHOA....................... Non-profit.
National Rural Electric Cooperative Association...... NRECA....................... Electric cooperative.
Natural Resources Defense Council.................... NRDC........................ Efficiency organization.
Network for Oregon Affordable Housing................ NOAH........................ Non-profit.
New Building Institute............................... NBI......................... Non-profit.
New Jersey Manufactured Housing Association.......... NJMHA....................... Trade association.
New York State Energy Research and Development NYSERDA..................... State corporation.
Authority.
Next Step Network, Inc............................... Next Step................... Efficiency organization.
North American Insulation Manufacturers Association.. NAIMA....................... Trade association.
Northwest Energy Efficiency Alliance................. NEEA........................ Efficiency organization.
Northwest Power and Conservation Council............. NPCC........................ Interstate Compact Agency.
Ohio Manufactured Homes Association.................. OMHA........................ Non-profit.
Oliver Technologies Inc.............................. Oliver Technologies......... Manufacturer.

[[Page 32740]]

PA Department of Community and Economic Development.. PA-DCED..................... Government.
Pennsylvania Manufactured Housing Association........ PMHA........................ Trade association.
PathStone Corporation................................ PathStone................... Not-for-profit
organization.
People's Self-Help Housing, Inc...................... People's Self-Help Housing.. Non-profit.
Pleasant Valley Homes, Inc........................... Pleasant Valley............. Manufacturer.
Redwood Energy....................................... Redwood Energy.............. Designers.
ReFrame Foundation................................... ReFrame Foundation.......... Non-profit.
Responsible Energy Codes Alliance.................... RECA........................ Efficiency organization.
Rural Community Assistance Corporation............... RCAC........................ Non-profit.
Schulte, Philip...................................... Schulte..................... Individual.
Skyline Champion Corporation......................... Skyline Champion............ Manufacturer.
Texas Manufactured Housing Association............... TMHA........................ Trade association.
Trellis.............................................. Trellis..................... Non-profit.
Members of Congress of the United States (David Select Representatives of Government.
Kustoff, Larry Bucshon, Bill Huizenga, Lance Gooden, Congress.
William Timmons, Bryan Steil, Gary Palmer, Bill
Johnson, Tim Walberg, Greg Pence, Ann Wagner, John
Rose, French Hill, Debbie Lesko, John Joyce, H.
Morgan Griffith, Barry Loudermilk, Tom Emmer, Andy
Barr).
University of Arizona and Arizona State University... University of Arizona and University.
Arizona State.
University of Colorado Boulder....................... UCB......................... University.
University of Colorado Denver........................ UCD......................... University.
University of Colorado Law School.................... UC Law School............... University.
Urban Habitat Initiatives Inc........................ UHI......................... Sustainability Consultant.
Verde................................................ Verde....................... Non-profit.
Vermont Energy Investment Corporation................ VEIC........................ Efficiency organization.
Vermont Law School................................... Vermont Law School.......... University.
Virginia Manufactured and Modular Housing Association VAMMHA...................... Trade association.
West Indianapolis Development Corporation............ WIDC........................ Trade association.
Western Manufactured Housing Communities Association. WMA......................... Trade association.
Westland Distributing................................ Westland.................... Distributor.
Wisconsin Housing Alliance........................... WHA......................... Trade association.
----------------------------------------------------------------------------------------------------------------
* DOE received a number of comments in response to the January 2022 DEIS that were almost identical in substance
to comments submitted by the same commenters in response to the August 2021 SNOPR or October 2021 NODA.
Accordingly, for the purposes of this notice, DOE is only referencing the submission ID of the first
submission of comments with identical content.

On April 8, 2022, DOE published the notice of availability for the
final EIS (DOE/EIS-0550). 87 FR 20852. (``April 2022 FEIS'') The final
EIS includes the information presented in the January 2022 DEIS as well
as further analyses developed in response to public comments on the
January 2022 DEIS. Elsewhere in this issue of the Federal Register, DOE
has issued its record of decision (``ROD'') pursuant to its obligations
under NEPA. The ROD finalizes DOE's considerations of the environmental
impacts under the NEPA process and memorializes DOE's determinations
and approach chosen consistent with this final rule. Further discussion
of the final EIS, the ROD and the NEPA process may be found in section
V.D. of this document.
The comments and DOE's responses are discussed in sections III, IV,
and V of this document.

C. Abbreviations

The abbreviations used in this document, other than abbreviations
of the names of commenters listed in Table II.1, Summary of Written
Comments, are defined as follows:

ACCA: Air Conditioning Contractors of America.
ACH: Air changes per hour.
ACH50: Air changes per hour at 50 Pascals pressure difference
between the inside and outside of the home.
AEO: Annual Energy Outlook.
AFUE: Annual fuel utilization efficiency.
AHS: American Housing Survey.
AMI: Area median income.
ANOPR: Advance notice of proposed rulemaking.
BECP: Building Energy Codes Program.
CCE: certification, compliance, and enforcement.
CDFI: Community Development Financial Institutions.
cfm: Cubic feet per minute.
CFR: Code of Federal Regulations.
DEIS: Draft environmental impact statement.
DHP: Ductless heat pump.
DOE or in context, ``the Department'': U.S. Department of
Energy.
DTI: Debt-to-income ratio.
E.O.: Executive Order.
EA: Environmental Assessment.
EAP: Equity Action Plan.
EEM: Energy efficiency measure.
EGUs: Electric generating units.
EIA: U.S. Energy Information Administration (within DOE).
EIS: Environmental impact statement.
EISA: Energy Independence and Security Act of 2007.
EPA: U.S. Environmental Protection Agency.
EPCA: Energy Policy and Conservation Act.
ERI: Energy Rating Index.
ERV: Energy recovery ventilator.
FEIS: Final environmental impact statement.
FFC: Full-fuel-cycle.
FHA: Federal Housing Administration (within HUD).
FRFA: Final regulatory flexibility analysis.
GRIM: Government Regulatory Impact Model.
GSE: Government-sponsored enterprise.
HAP: Hazardous air pollutants.
HoF: ASHRAE Handbook of Fundamentals.
HRV: Heat recovery ventilator.
HSPF: Heating seasonal performance factor.
HUD Code: HUD Manufactured Home Construction and Safety
Standards.
HUD: U.S. Department of Housing and Urban Development.
HVAC: Heating, ventilation, and air conditioning.
IECC: International Energy Conservation Code.
INPV: Industry net present value.
IRFA: Initial regulatory flexibility analysis.
IWG: Interagency Working Group on the Social Cost of Greenhouse
Gases

[[Page 32741]]

LCC: Life-cycle cost.
MATS: Mercury and Air Toxics Standards.
MH: Manufactured home or manufactured housing.
MHCSS: Manufactured home construction and safety standards.
MHI: Manufactured Housing Institute.
MHS: Manufactured Housing Survey.
MIA: Manufacturer impact analysis.
NAAQS: National Ambient Air Quality Standards.
NAICS: North American Industry Classification System.
NEMS: National Energy Modeling System.
NES: National energy savings.
NIA: National impact analysis.
NODA: Notice of Data Availability.
NOPR: Notice of proposed rulemaking.
NPV: Net present value.
OIRA: Office of Information and Regulatory Affairs (within OMB).
OMB: Office of Management and Budget.
PBP: Payback period.
PITI: Principal, interest, taxes, and insurance.
PM2.5: Fine particulate matter (with an aerodynamic equivalent
diameter of 2.5 micrometers (microns)).
PUF: Public use file.
RFI: Request for information.
SBA: U.S. Small Business Administration.
SC: Social cost.
SEER: Seasonal energy efficiency ratio.
sf: Square foot or square feet.
SHGC: Solar heat gain coefficient.
SNOPR: Supplemental notice of proposed rulemaking.
TSD: Technical support document.
UMRA: Unfunded Mandates Reform Act of 1995.
Uo: Overall thermal transmittance.

III. Discussion of the Standards

A. The Basis for the Standards

EISA requires DOE to base standards for manufactured housing on the
IECC. However, application of the IECC standards is also subject to a
number of considerations set forth by the statute in order to ensure
standards will be appropriately tailored for manufactured homes and the
manufactured home market. Specifically, EISA requires that DOE
establish energy conservation standards for manufactured housing that
are ``based on the most recent version of the [IECC], except in cases
in which [DOE] finds that the [IECC] is not cost-effective, or a more
stringent standard would be more cost-effective, based on the impact of
the [IECC] on the purchase price and on total life-cycle construction
and operating costs.'' (42 U.S.C. 17071(b)(1))
In addition to the required cost-effectiveness considerations, EISA
explicitly allows DOE to consider the differences in design and factory
construction techniques of manufactured homes, as compared to site-
built and modular homes. (42 U.S.C. 17071(b)(2)) As noted in section
II.B.2, the 2021 IECC applies generally to residential buildings,
including site-built and modular housing, and is not specific to
manufactured housing. Additionally, EISA requires DOE to consult with
HUD, which may seek further counsel from the MHCC, prior to
establishing the standards. 42 U.S.C. 17071(a)(2)(B). EISA also allows
DOE to base the standards on climate zones established by HUD, and to
provide for alternative practices that result in net estimated energy
consumption equal to or less than the specified standards. 42 U.S.C.
17071(b)(2)) As discussed more in section III.F, DOE has opted to base
its standards on the climate zones established by HUD. Additionally,
DOE's standards provide two methods by which to achieve compliance with
the building thermal envelope requirements of Subpart B: A prescriptive
pathway (which utilizes the components specified by DOE) and an overall
Uo performance pathway (which allows for compliance based on the
overall thermal performance of the manufactured home). The latter
approach, i.e., the Uo method, gives manufacturers the flexibility to
use any combination of energy efficiency measures as long as the
minimum Uo is met. Manufacturers do not need to meet both the
prescriptive and the performance method; rather they have the option to
only meet one.
The energy conservation standards in this final rule are based on
specifications included in the 2021 IECC while also accounting for the
unique aspects of manufactured housing. DOE carefully considered the
following aspects of manufactured housing design and construction in
developing the standards:
<bullet> Manufactured housing structural requirements contained in
the HUD Code;
<bullet> External dimensional limitations associated with
transportation restrictions;
<bullet> The need to optimize interior space within manufactured
homes; and
<bullet> Factory construction techniques that facilitate sealing
the building thermal envelope to limit air leakage.
In DOE's view, the language Congress used in instructing DOE to set
standards for these structures is broad and does not require the
imposition of requirements for manufactured homes that are identical to
those that IECC provides for site-built structures. The use of the
phrase ``based on'' readily indicates that Congress anticipated that
DOE would need to use its discretion in adapting elements of the IECC's
provisions for manufactured housing use, including whether those
elements would be appropriate in light of the specific circumstances
related to the structure. Congress also provided that DOE has
discretion to depart from the IECC to the extent it is not cost-
effective, or a more stringent standard could be more cost-effective.
Finally, Congress required DOE to consult with HUD, the primary
regulator of manufactured housing, for input prior to establishing the
DOE standards.
Pursuant to this discretion afforded by Congress, DOE is
establishing tiered standards based on the 2021 IECC. Specifically, DOE
is finalizing a tiered standard whereby single-section manufactured
homes (``Tier 1'' manufactured homes) would be subject to different
building thermal envelope requirements (subpart B of 10 CFR part 460)
than all other manufactured homes (``Tier 2'' manufactured homes). Both
tiers are based on the 2021 IECC in that both tiers have requirements
for the building thermal envelope, duct and air sealing, installation
of insulation, HVAC specifications, service hot water systems,
mechanical ventilation fan efficacy, and heating and cooling equipment
sizing provisions consistent with the 2021 IECC. In light of the first-
cost concerns raised during the EISA-required consultation with HUD and
the MHCC, and in comments from stakeholders, Tier 1 provides tailored
improvements in efficiency with regard to building thermal envelope
components based on the 2021 IECC, which are projected to result in an
average incremental price increase of less than $750 for single-section
homes. Tier 2 focuses on the building thermal envelope, duct and air
sealing, insulation installation, HVAC specifications, service hot
water systems, mechanical ventilation fan efficacy, and heating and
cooling equipment sizing provisions, at stringencies consistent with
those for site-built homes in the 2021 IECC, and is estimated to result
in an average incremental price increase of $4,100-$4,500 for multi-
section homes.

[[Page 32742]]

Further, with regards to the aspects of manufactured housing design
and construction, DOE considered the range of efficiency measures
originally identified by the MH working group as appropriate for
manufactured home design, which included the following: exterior
ceiling R-22 to R-38; exterior wall R-11 to R-21+5; exterior floor R-11
to R-30; window U-factor U-1.08 to U-0.30; and window SHGC 0.7 to 0.25.
(See chapter 5 of the final rule TSD) Accordingly, based on the
information provided by the MH working group, DOE did not include
several of the 2021 IECC requirements, including the more stringent
ceiling R-value requirements (greater than R-38) \18\ and requirement
for the exterior ceiling insulation to be of uniform thickness or
uniform density, given the space constraints of manufactured homes.
---------------------------------------------------------------------------

\18\ Specifically, manufactured homes typically have a lower
overall height compared to site-built homes, which leads to
constrained space, and therefore limited ability to increase
exterior ceiling insulation.
---------------------------------------------------------------------------

DOE determined that the energy conservation standards in this final
rule are cost-effective by evaluating the impact on the purchase price
of a manufactured home and on the total lifecycle construction and
operating costs. Both Tier 1 and Tier 2 are cost-effective for the 30-
year period that was analyzed. Specifically, section I.A presents the
benefits and burdens to purchasers of manufactured homes, with Table
I.1 and Table I.3 presenting the total incremental purchase price under
the standards, and Table I.3 presenting the estimated national average
LCC savings. The incremental purchase price was determined by
calculating the difference in the energy efficiency measure (``EEM'')
costs of DOE-compliant and minimally compliant HUD homes. These
incremental costs correspond to the purchase prices seen by the
homeowner, and thus account for manufacturer and retail markups. The
LCC savings accounts for the energy cost savings and purchase costs
(including down payment, mortgage and taxes based on incremental
purchase price) over the entire analysis period discounted to a present
value. As presented in Table I.3, there are positive national average
LCC savings over the life of the manufactured home (i.e., 30-years). In
addition, the positive 30-year LCC savings carries through to every
climate zone and city analyzed. (See Chapter 8 of the TSD for results.)
Finally, Table I.3 presents the national average simple payback period
to be 3.7 years and 8.9 years for single- and multi-section homes
respectively.
As noted previously, in establishing standards for manufactured
housing, Congress directed DOE to: (1) Consult with the Secretary of
HUD (42 U.S.C. 17071(a)(2)(b)), and (2) base the standards on the most
recent version of the IECC, except in cases in which the Secretary
finds that the code is not cost-effective, or a more stringent standard
would be more cost-effective, based on the impact of the codeon the
purchase price of manufactured housing and on total life-cycle
construction and operating costs. (42 U.S.C. 17071(b)(1)) Relatedly,
the Secretary of HUD is mandated to establish standards for
manufactured housing that, in part, ``ensure that the public interest
in, and need for, affordable manufactured housing is duly considered in
all determinations relating to the Federal standards and their
enforcement.'' (42 U.S.C. 5401(b))
In this consultative role, HUD raised concerns with the potential
adverse impacts on manufactured housing affordability that could result
from additional energy efficiency standards proposed for manufactured
homes in the June 2016 NOPR and the August 2021 SNOPR. More
specifically, HUD noted concerns that increases in the purchase prices
for manufactured homes resulting from the costs of requiring to meet
standards based upon the IECC could result in prospective manufactured
homeowners being unable to purchase a manufactured home. With this
concern in mind, DOE reviewed the 2021 Consumer Financial Protection
Bureau report, ``Manufactured-Housing Finance: New Insights from the
Home Mortgage Disclosure Act Data (HMDA),'' (hereinafter, ``2021 CFPB
Report'') \19\, and in the October 2021 NODA, presented updated
analyses based on this report and sought comment on the report and
these updates. 86 FR 59042, 59044.
---------------------------------------------------------------------------

\19\ CFPB report, 2021. <a href="https://files.consumerfinance.gov/f/documents/cfpb_manufactured-housing-finance-new-insights-hmda_report_2021-05.pdf">https://files.consumerfinance.gov/f/documents/cfpb_manufactured-housing-finance-new-insights-hmda_report_2021-05.pdf</a>.
---------------------------------------------------------------------------

DOE's review of the 2021 CFPB Report'', presented the following key
findings:
<bullet> Manufactured homes represent an affordable housing option
for millions of Americans because they cost less on average than site-
built homes and are one of the least expensive forms of housing
available without government subsidies.
<bullet> Manufactured home homeowners tend to have lower incomes
(median is $52,000 for manufactured home homeowners with chattel (i.e.,
personal property) loans and $53,000 for those with mortgage loans) and
less net worth than their counterparts who own site-built homes (median
is $83,000);
<bullet> Borrowers who own their land can either finance their home
purchase with a chattel loan or a mortgage, whereas those who do not
own their land are typically only able to finance with a chattel loan.
<bullet> Manufactured home loan amounts for (1) chattel loans range
from $40,500 (25th percentile) to $80,785 (75th percentile), with
median at $58,672; (2) mortgage loans range from $90,330 (25th
percentile) to $172,812 (75th percentile), with median at $127,056.
Comparatively, site-built home loan amounts range from $162,011 (25th
percentile) to $342,678 (75th percentile), with median at $236,624.
<bullet> Of the manufactured housing loans acquired, the percentage
of chattel loans nationally is estimated to range from 42 percent (from
the 2019 HMDA, which includes new and used homes) to 76 percent (from
2019 Manufactured Housing Survey, which includes new homes only).
Compared to mortgages for site-built homes, MH mortgages tend to
have smaller loan amounts, higher interest rates, fewer refinances, and
less of a secondary market, patterns that are even more acute for
chattel loans. Additionally, chattel loans have shorter loan terms than
mortgages for either MH or site-built homes. A key reason for this
difference is that the vast majority of manufactured housing stock is
titled as chattel (i.e., personal property), and, as a result, is
eligible only for chattel financing. Chattel financing is typically
offered to purchasers at a significantly higher interest rate than the
rates offered to site-built homeowners. While most manufactured
homeowners who also own the land on which the manufactured home is
sited may be eligible for mortgage financing, there is a tradeoff
between lower origination costs with significantly higher interest
rates (chattel loans) and higher origination costs with significantly
lower interest rates and greater consumer protections (mortgage). 2021
CFPB, pp. 33-34.
In response to the affordability concerns raised by HUD and
commenters regarding purchasers and renters who may live in these
homes, and the general financial circumstances for manufactured housing
occupants, DOE is finalizing a tiered standard in this final rule that
would mitigate first-cost impacts for purchasers at the lower end of
the manufactured home price

[[Page 32743]]

range. To the extent that manufactured home purchasers are cost-driven,
in conjunction with the lower median income and net worth of these
purchasers, consumers at the lower end of the manufactured home
purchase price range are generally likely to be more sensitive to
increases in purchase price. DOE's considerations of affordability and
cost-effectiveness in establishing these standards, and associated
responses to comments, are discussed more below in sections III.A.1 and
III.B.
Finally, the standards established in this final rule are based on
the climate zones of the HUD Code. EISA also allows DOE to base
standards on the climate zones of the HUD Code instead of the IECC. (42
U.S.C. 17071(b)(2)(B)) There are differences in the number and
boundaries of the HUD zones as compared to the IECC climate zones. For
example, under the 2021 IECC climate zone map, California is divided
into five climate zones (including zone variation based on moisture
regimes), with four of the zones subject to SHGC maximums (0.40
applicable to climate zones 4 and 5, and 0.25 applicable to climate
zones 2 and 3). Under the HUD zone map, all of California is within a
single zone. Developing energy conservation standards based on the HUD
zones, as permitted under EISA, necessitates deviating from the IECC.
DOE has determined that aligning the climate zones between the DOE
requirements and the HUD Code would reduce the complexities and burden
faced by manufacturers of compliance with the DOE standards. The
updated standards would establish thermal envelope requirements, as
does the 2021 IECC, but setting the values for those requirements
necessitates that DOE develop standard levels different than those in
the 2021 IECC to account for the difference in the number of climate
zones. Use of the HUD zones in DOE's standards is discussed more in
section III.F.2.a. of this document.
As discussed more in sections III.C and D, DOE is not addressing a
test procedure, or compliance and enforcement provisions for energy
conservation standards for manufactured housing in this document. DOE
notes that HUD has an established design approval, monitoring and
enforcement system, defined in 24 CFR part 3282, that is robust and
provides compliance and enforcement of the manufactured housing
industry standards. Moreover, manufacturers must comply with referenced
standards incorporated by HUD in its regulations. DOE continues to
consult with HUD about pathways to address testing, compliance and
enforcement for these standards in a manner that may leverage the
current HUD inspection and enforcement process so that such testing,
compliance and enforcement procedures are not overly burdensome or
duplicative for manufacturers, and are well understood by manufacturers
and consumers alike.
In response to the August 2021 SNOPR proposal and the October 2021
NODA, DOE received a number of comments regarding the statute, IECC and
the rulemaking in general, which are summarized and addressed in the
following sections.
1. Affordability
Multiple commenters stated that the proposed energy requirements
fail the EISA statutory requirement of cost-effectiveness and the
proposal will eliminate manufactured housing as an affordable housing
option for families. Additionally, they commented that the proposal
ignores the unique features of factory-built housing, to the point that
many parts of the proposal are simply not feasible from a construction
and transportation standpoint. Further, they stated that the
development of the rule was not compliant in any meaningful way with
the EISA requirement to consult with HUD or MHCC and does not follow an
accurate cost-benefit analysis as the statute requires. (MMHA, No. 995
at p. 4); (Michigan MHA, No. 1012 at p. 2-3); (WHA, No. 1025 at p. 2);
(PMHA, No. 1165 at p. 3); (Westland, No. 1263 at p. 2); (Pleasant
Valley, No. 1307 at p. 2); (American Homestar, No. 1337 at p. 2-3);
(Oliver Technologies, No. 1350 at p. 3); (KMHA, No. 1368 at p. 2);
(Adventure Homes, No. 1383 at p. 3); (NJMHA, No. 1451 at p. 3); (WMA,
No. 1452 at p. 2); (IMHA/RVIC, No. 1466 at p. 2); (Cavco, No. 1497 at
p. 3); (Skyline Champion, No. 1499 at p.2); (Mississippi MHA, No. 1588
at p. 4); (Clayton Homes, No. 1589 at p. 3) The campaign form letter(s)
stated that the proposed rule will eliminate a significant source of
affordable housing for hundreds of thousands of American families and,
in many cases, it would be simply impossible to construct and transport
homes built with the requirements. Commenters stated that increased
costs will never be recouped by the homeowner, and for many buyers the
increased cost will pose a barrier to homeownership in the first place.
In addition, commenters stated that DOE's energy conservation standards
must balance affordability with energy efficiency, which commenters
alleged the proposed rule did not. (Campaign Form Letter, Multiple
submissions at p. 1) An individual commenter would not support the
proposed rule unless modified because of affordability issues.
(Wangelin, No. 975 at p. 1) Another individual commenter stated that
the cost of the new energy standards might outweigh the effects it will
have on the environment because manufactured homes are made to be
affordable. (Heidbreder, No. 940 at p. 1) Another individual commenter
suggested that either tier would be a big upgrade from current
requirements. (Major, No. 1023 at p. 1)
MHI commented that the higher home cost associated with the
proposed standards will make manufactured housing far more expensive,
excluding potential buyers and reducing total manufactured housing
sales. MHI also commented that DOE's own analysis shows the proposal
will increase costs for homebuyers without reciprocal energy savings,
and many households will simply be priced out of homeownership due to
this proposal. MHI's survey of manufacturers found that it is unlikely
that a buyer purchasing a new home and financing 90 percent of the
purchase price would recover these upfront costs at a future sale, and
while there are several reasons contributing to this, the fact that
homebuyers usually sell their homes within the first 7-10 years is the
most relevant. (MHI, No. 1592 at p. 3, 4) Further, MHI stated that the
proposal could jeopardize homeownership for millions of Americans at a
time when there is an affordable housing shortage. MHI further stated
that this increase will have a disproportionate impact on minority
communities, who face the most significant burden in obtaining
affordable homeownership, and that this would be in direct contrast to
the Administration's goal of achieving racial equity in homeownership.
(MHI, No. 1592 at p. 3, 23); (Clayton Homes, No. 1589 at p. 14)
MHARR stated that it opposed the proposed standards because they
are a baseless and useless burden on both moderate and lower-income
consumers and will lead to a decrease in homeownership and higher
levels of homelessness. (MHARR, No. 1388 at p. 2-3); (MHARR, No. 1974
at p. 2) UCB stated that the rule will eliminate affordable housing for
many low-income people. They stated that although DOE says the initial
cost increase will be paid back over the life of the home from energy
savings, most owners will not see this payback. (UCB, No. 1405 at p. 1)
An individual commenter stated that the proposed changes would very
likely eliminate hundreds of thousands of buyers from the market during
a time when housing is in short supply, and

[[Page 32744]]

that, if adopted, the new energy standards would dramatically increase
the cost of manufactured homes and likely eliminate many of the design
features that make manufactured homes livable (high ceilings, overhead
HVAC ducts, etc.). Moreover, this commenter stated that the upfront
cost from higher down payments would disqualify many home buyers for a
mortgage, and any future utility cost savings would take decades to
recoup. (Individual Commenter, No. 1496 at p. 1)
IMHA stated that the proposal is fundamentally flawed and will
eliminate manufactured housing as an affordable housing option for
families throughout Idaho. Further, they were concerned that DOE's cost
analysis assumptions and the average tenure of a manufactured homeowner
will result in a situation where the homeowner will never recoup the
additional costs of these measures with energy savings. They stated
that imposing these standards on manufactured homes built in Idaho (or
elsewhere) will rob their industry of seeking out those amendments that
make the energy code best fit the construction practices of a
manufactured home, and that this will add to costs and complications
that will certainly price homeowners out of the market. (IMHA, No. 1453
at p. 1)
NRECA commented that the proposed standards in the SNOPR could put
home ownership out of reach for those who cannot afford site-built
homes, thus denying them the potential opportunity to attain this
milestone for themselves and their families. They stated that their
members have explored and implemented many different initiatives to
improve energy efficiency for their consumer-members and that they are
doing so in a way that balances costs and benefits. Therefore, they
urged DOE to reconsider the proposal in its SNOPR to balance
affordability of manufactured housing with common-sense, proven methods
at improving their energy efficiency. (NRECA, No. 1406 at p. 2) ADOH
was concerned that the proposed changes will equate to a price point
that is either out of reach for a potential purchaser of a manufactured
home, or will eliminate or prevent a manufactured home from being an
affordable housing option. ADOH recommended continued reliance on the
existing standards in the National Manufactured Housing Construction
and Safety Act. (ADOH, No. 1459 at p. 1)
Select Representatives of Congress were concerned that the proposed
rule would require manufacturers to redesign most (if not all) of their
existing floorplans to comply with standards concerning thermal systems
and air and duct sealing. Select Representatives of Congress stated
that this would result in a significant price increase that would delay
or prevent some potential manufactured homebuyers--whose median annual
household income is around $33,000--from buying a home. They urged DOE
to analyze closely the effective cost and impact of any proposed energy
efficiency standards on those who are pursuing affordable
homeownership. (Select Representatives of Congress, No. 1445 at p. 1)
UC Law School stated that the purchase price for manufactured homes
should not factor into the cost-benefit analysis because DOE did not
deliver economic considerations and integrated efforts with other
agencies to secure affordability to the manufactured homes. Instead,
they suggested that only the social cost of carbon and GHG emissions
should be factored into the cost-benefit analysis, based on the
Interagency Working Group (IWG). (UC Law School, No. 1634 at p. 11, 13,
14) UCB stated the SNOPR should consider the emissions costs associated
with not implementing stricter energy efficiency standards for
manufactured homes over a 30-year lifetime, which, in the commenter's
view, would create a good comparison to show how much of a difference
these standards would make. (UCB, No. 1618 at p. 17)
NAHB urged DOE to continue to facilitate consumer choice by
ensuring any new energy conservation standards and regulatory reform
efforts do not favor manufactured homes over other types of residences,
leading to consumer confusion and unfair competition in the
marketplace. (NAHB, No. 1398 at p. 3) An individual commenter stated
that a consumer should have the freedom to choose a less energy
efficient, but less expensive, window, door, or construction method for
the home they are building, and that absorbing the SNOPR proposed
requirement expenditure is quite difficult. (Hoover, No. 1566 at p. 1)
In light of the concerns it noted, MHARR stated that DOE must
withdraw the proposed manufactured housing energy standards as being
inappropriate for MH, excessively costly in violation of applicable
law, destructive of the affordable MH market, not cost-justified and
fundamentally arbitrary, capricious and an abuse of discretion in
violation of the federal Administrative Procedure Act, federal MH law
and the EISA of 2007. (MHARR, No. 1640 at p. 9) MHARR commented that
the average MH energy costs for all fuel types tracked by the U.S.
Census Bureau are already lower than those for much more costly site-
built homes, none of which are subject to the 2021 IECC. MHARR also
stated that alleged climate benefits of the proposed standards would be
miniscule in relation to the economic costs, and that newer data
published in the 2019 AHS shows that manufactured homes have lower
median monthly energy costs than site-built homes in all major fuel
categories. MHARR also suggested that DOE should reject cost
comparisons based on a ``per-square foot'' energy usage and should
instead consider ``whole-house'' energy usage. (MHARR, No. 1388 at p.
3, 5-6); (MHARR, No. 1974 at pp. 5-6; 11-12)
Multiple commenters suggested that the most appropriate code to
utilize to update energy standards for manufactured homes is the HUD
Code, and to instead include new energy efficiency standards as part
the HUD Code. (MMHA, No. 995 at p. 4); (Michigan MHA, No. 1012 at p.
2); (WHA, No. 1025 at p. 2); (PMHA, No. 1165 at p. 3); (Westland, No.
1263 at p. 2); (Pleasant Valley, No. 1307 at p. 2); (American Homestar,
No. 1337 at p. 2); (Oliver Technologies, No. 1350 at p. 2); (KMHA, No.
1368 at p. 2); (Adventure Homes, No. 1383 at p. 2); (NJMHA, No. 1451 at
p. 2-3); (WMA, No. 1452 at p. 2); (IMHA/RVIC, No. 1466 at p. 2);
(Cavco, No. 1497 at p. 2); (Skyline Champion, No. 1499 at p.2);
(Mississippi MHA, No. 1588 at p. 2) ; (Skyline Champion, No. 1612 at p.
3); (Cavco, No. 1622 at p. 2); (VAMMHA, No. 1624 at p. 2); (Champion
Home Builders, No. 1639 at p. 4); (IMHA, No. 1453 at p. 2); (MHI, No.
1592 at p. 4-6, 25) MHI believes the most appropriate code to utilize
to update energy standards for manufactured homes is the HUD Code.
(MHI, No. 1592 at p. 25)
Alternatively, NASEO stated that failure to update the standards in
a manner consistent with EISA will only increase the difficulty of
meeting future standards and unnecessarily leaves manufactured home
residents with homes built to decades-old standards and high energy
bills. (NASEO, No. 1565 at p. 3) Another individual commenter commented
that although the rule would incur some upfront costs, there is long-
term benefit in the rule related to reducing carbon emissions.
(Anonymous, No. 593 at p. 1; (Anonymous, No. 781 at p. 1) Another
individual commenter suggested that although the tiered system of cost
implementation creates significantly more administrative
responsibility, it is a more equitable and desirable means of
accomplishing the aforementioned agency goals. They suggested that the

[[Page 32745]]

proposed rule by DOE seems adequately supported by reasonable inquiries
into emission reduction, energy efficiency, and cost allocation for
thermal requirements of manufactured homes. (Gustafson, No. 778 at p.
1) NAIMA supported the updates recommended as a good faith attempt of
the 2021 IECC while recognizing unique construction challenges. NAIMA
also stated that a home's energy efficiency and affordability is not an
either/or proposition. (NAIMA, No. 1017 at p. 1) NYSERDA supported
DOE's two-tier approach to address the affordability concerns.
(NYSERDA, No. 1620 at p. 1)
In addition, Schulte stated that ENERGY STAR-certified homes
represent a significant market share of home production especially in
Zone 2 States and this fact would support that manufactured home
purchasers are willing to purchase more expensive and energy efficient
homes that save them money in the long run. Also, Schulte stated that
there is no evidence from sales figures that enhanced thermal standards
reduced the demand of manufactured homes from 1990-1999. Finally,
Schulte stated that adopting Tier 1 standards would substantially
reduce the price hike for additional energy investments. However, it
would also mean that utility bills would remain high for many
manufactured home purchasers who tend to have lower incomes than the
median family income. (Schulte, No. 1028 at p. 14, 15, 18 & 22)
ACEEE suggested that the impact on affordability should consider
energy burden (i.e., energy cost as a percentage of income) and housing
cost burden (i.e., total housing costs as a percentage of income). In
their comment and analysis, they interpreted high energy burden to be
energy bills exceeding 6 percent of the income and high housing burden
to be total housing costs exceeding 30 percent of the income. They
stated that based on the 2019 AHS, for residents of manufactured homes,
the median energy burden (i.e., the energy cost as a percentage of
income) is 5.3 percent compared to 2.9 percent for all homes, and 44
percent of manufactured home residents face a high energy burden. They
stated that setting stronger efficiency standards can improve the
affordability of these homes by lowering their occupants' high energy
burdens. (ACEEE, No. 1631 at pp. 2-3) NRDC recommended using a more
reasonable cost effectiveness metric, such as a present value analysis
using a defensible discount rate, such as the 3 percent real rate that
DOE employs in appliance efficiency analysis, over the observed
lifetime of the home. (NRDC, No. 1599 at p. 5, 7)
Next Step commented that manufactured homes are a critical
component of America's affordable housing stock, and the need for
increased energy efficiency in housing is particularly acute for low-
income homebuyers. (Next Step, No. 1617 at p. 1) They commented that
based on the median income of manufactured home owners and renters and
the HUD definitions for what constitutes ``low-income,'' \20\
manufactured housing serves households below 60 percent median income
for low-income owners and below 50 percent median income for very low-
income renters.\21\ (Next Step, No. 1617 at p. 2) Further, they
commented that based on a 2020 Urban Institute study,\22\ the monthly
housing costs for manufactured home occupants falls within 30 percent
of monthly income, which is defined as ``cost-burdened'' based on HUD's
housing cost burden metric.\23\ Accordingly, they supported increased
energy efficiency standards, arguing that data suggest that the
incremental costs for energy efficiency upgrades (added to other
housing costs) keep manufactured housing affordable and accessible to
low-income homeowners earning less than 60 percent of median income.
(Next Step, No. 1617 at p. 1)
---------------------------------------------------------------------------

\20\ Next Step cited the following HUD program definitions: 50%
median income = $33,761 = Very Low Income; 80% Median Income =
$54,017 = Low Income;
\21\ In their review, they stated that manufactured homes are a
portfolio of housing that serves a median income of $38,087 for
owners and $28,280 for renters. Based on the federal low-income
housing definitions, 60 percent median income (which is a
multifamily tax subsidy income limit) amounts to $40,513 (in 2020
dollars) and 50 percent median income (which is the very low income
limit) amounts to $33,761.
\22\ Choi, J.H., and Goodman, L. (2020, August). 22 Million
Renters and Owners of Manufactured Homes Are Mostly Left Out of
Pandemic Assistance. The Urban Institute. <a href="https://www.urban.org/urban-wire/22-million-renters-and-owners-manufactured-homes-are-mostly-left-out-pandemic-assistance">https://www.urban.org/urban-wire/22-million-renters-and-owners-manufactured-homes-are-mostly-left-out-pandemic-assistance</a>.
\23\ HUD defines spending more than 30 percent of income on
housing costs as cost-burdened. Spending more than 50 percent of
income on housing costs is considered severely cost-burdened.
---------------------------------------------------------------------------

Finally, Next Step also commented that Freddie Mac's research
analyzed energy efficient homes rated between 2013 and 2017 and found
the following: (1) From the property value analysis, rated homes are
sold for, on average, 2.7 percent more than comparable unrated homes;
(2) Better-rated homes are sold for 3-5 percent more than lesser-rated
homes; (3) From the loan performance analysis, the default risk of
rated homes is not, on average, different from unrated homes (once
borrower and underwriting characteristics are considered). Loans in the
high debt-to-income (``DTI'') bucket (45 percent and above) that have
ratings, however, appear to have a lower delinquency rate than unrated
homes. (Next Step, No. 1617 at p. 6) Further, Next Step noted Freddie
Mac's GreenCHOICE program, which weighs energy efficiency into its
underwriting and covers manufactured housing. Id
EISA directs DOE to establish energy conservation standards for
manufactured housing. (42 U.S.C. 17071) Further, EISA directs that
cost-effectiveness is determined based on the impact of the IECC on the
purchase price of manufactured housing and on total life-cycle
construction and operating costs. (42 U.S.C. 17071(a) and (b)(1))
In response to the affordability concerns raised by HUD and
commenters on first cost impacts, and the general financial
circumstances for manufactured housing owners, DOE is finalizing a
tiered standard, based on the 2021 IECC, that would alleviate first-
cost impacts for purchasers at the lower end of the manufactured home
price range. Tier 1 would apply to single-section manufactured homes,
and incorporate building thermal envelope measures based on certain
thermal envelope components subject to the 2021 IECC and would increase
the incremental purchase price increase by less than $750 for single-
section homes. This lower incremental cost would allow those first-cost
sensitive purchasers, assumed to be those with lower median income and
net worth, to still purchase a new manufactured home with improved
energy efficiency measures that will generate cost savings to the
purchaser over time. Accordingly, Tier 1 limits the incremental
purchase price such that a purchaser would, on average, realize a
positive cash flow within Year 1 of the standard based on the down
payment, incremental loan payment, and energy cost savings. See Table
III.4 for results.
Tier 2 would apply to multi-section manufactured homes, and
incorporate building thermal envelope measures based on certain thermal
envelope components and specifications of the 2021 IECC, with alternate
exterior wall insulation requirement (R-21) for climate zones 2 and 3
(see section III.F.2.b which includes further discussion on wall
insulation). Otherwise, DOE notes that the adopted Tier 2 requirements
in this final rule will only update the window U-factor requirements
for all climate zones compared to the term sheet agreed upon by the MH
working group (window U-

[[Page 32746]]

factor of 0.35 and 0.32; to 0.32 and 0.30, respectively), which is the
same as what was proposed in the August 2021 SNOPR. The window U-
factors were updated consistent with the 2021 IECC. Adopting R-21
instead of R-20+5 also resolves issues regarding shipping width that
the stakeholders commented on, which is discussed in section III.F.2.b.
of this document.
The total life-cycle construction and operating costs of the home
is calculated based on the total expected lifetime of the home, which
is 30 years. Both Tier 1 and Tier 2 standards would provide benefits in
energy savings to the consumer which, over the span of the payback
period (``PBP''), would offset the increase in purchase price. Under
the tiered proposal, manufactured homes that would be subject to the
Tier 1 standards would, in all cases, have a PBP less than 10 years,
with a range of 1.4 years to 7.4 years amongst all cities analyzed, and
a national average of 3.7 years. This is well within the range
suggested by MHI in which first homeowners often sell their
manufactured homes. Further discussion on these results is provided in
section IV.A.2. of this document.
DOE estimates in this final rule the number of households no longer
able to purchase a manufactured home from the pool of households
planning to purchase a manufactured home (which is much smaller than
the total number of American households). DOE estimates the final rule
would result in a loss in demand and availability because of the
increase in upfront home price for each tier. Therefore, DOE includes
in the analysis a price elasticity of demand. Price elasticity is
typically represented as a ratio of the percentage change in quantity
relative to a percentage change in price. DOE considered a price
elasticity of -0.48 based on a study by Marshall and Marsh \24\ and
considered an additional price elasticity as part of a scenario
analysis (See appendix 11A for further information).
---------------------------------------------------------------------------

\24\ See Marshall, M.I. & Marsh, T.L. Consumer and investment
demand for manufactured housing units. J. Hous. Econ. 16, 59-71
(2007).
---------------------------------------------------------------------------

In the study published in the Journal of Housing Economics by
Marshall and Marsh, the authors conclude that national and local
programs that cause small price increases in manufactured housing units
(e.g., increasing energy efficiency) will not necessarily deter
thousands of low-income families from purchasing manufactured homes and
that such consumers are likely to be willing to accept incrementally
higher prices from improvements in energy use and cost efficiency.
Specifically, the study states that these consumers are not nearly as
price-sensitive because ``the cost of a manufactured home still ranges
from 21 to 65 percent of the cost of a site built home and low- and
moderate-income families have few low-cost choices for home
ownership.'' \22\ Costs provided by a 2021 manufactured housing
industry overview fact sheet developed by MHI suggests that in 2019, on
average, the average sales price of a manufactured home compared to a
new single-family site built home is about 27 percent (without
land).\25\
---------------------------------------------------------------------------

\25\ Manufactured Housing Institute. 2021 Manufactured Housing
Facts: Industry Overview.
---------------------------------------------------------------------------

As such, DOE estimated the final rule would result in a loss in
demand and availability of about 31,975 homes (single section and
multi-section combined) for the tiered standard using a price
elasticity of demand of -0.48 for the 30-year analysis period (2023-
2052). Out of the 31,975 homes in the tiered standard, the majority of
the reduction is in Tier 2 (80 percent) vs. Tier 1 (20 percent). Within
Tier 1, DOE estimates a 0.55 percent reduction in demand and
availability of single-section homes for low-income purchasers due to
Tier 1 standards. DOE assumes that low-income consumers generally
purchase lower priced manufactured homes (i.e., many single section
homes) based on data that shows single-section homes, on average, have
householders with lower to median incomes, as opposed to multi-section
homes (see conclusions in section III.B.1). Accordingly, DOE concludes
that low-income consumers would not be priced out by the Tier 1
standards adopted in this final rule.
Finally, for those manufactured home purchasers that buy new homes,
even with the incremental costs, DOE notes that the median purchase
price of a manufactured home would continue to be significantly lower
than site-built homes (per 2019 AHS, the median purchase price of
manufactured homes is $32,000 vs. a single-detached home is $158,000).
Costs provided by a 2021 manufactured housing industry overview fact
sheet developed by MHI suggests that in 2019, on average, the average
sales price of a manufactured home compared to a new single-family site
built home is about 27 percent (without land).\26\ Additionally, the
2021 CFPB Report \27\ states that manufactured homes represent an
affordable housing option for millions of Americans because they cost
less on average than site-built homes and are one of the least
expensive forms of housing available without government subsidies.
---------------------------------------------------------------------------

\26\ Manufactured Housing Institute. 2021 Manufactured Housing
Facts: Industry Overview.
\22\ Consumer Financial Protection Bureau. Manufactured Housing
Finance: New Insights from the Home Mortgage Disclosure Act Data
(2021).
---------------------------------------------------------------------------

In conclusion, based on the input received from HUD during
consultation and input from commenters, DOE believes that access to
affordable housing and reducing energy burdens of the purchasers are of
the utmost importance in the manufactured housing market. The tiered
standard adopted in this final rule addresses both of these concerns.
Both tiers within the tiered standard reduce energy costs and provide
positive LCC savings for homeowners over the life of the average
manufactured home (i.e., 30-years). Further, Tier 1 of the tiered
standard mitigates first-cost impacts for purchasers at the lower end
of the manufactured home price range, and would provide, on average, a
positive cash flow within Year 1 of the standard based on the down
payment, incremental loan payment, and energy cost savings.
Accordingly, as discussed further, DOE has adopted the tiered approach
in this final rule.
2. Loan Qualification
MHARR stated that neither the NODA nor the original DOE SNOPR
considers, or accounts in any way, for the impact that regulatory-
driven purchase price increases, attributable both directly and
indirectly to the proposed rule, would have on the ability of lower and
moderate-income consumers to access financing for, and purchase,
mainstream manufactured homes. (MHARR, No. 1640 at p. 4, 5) Several
commenters stated that the proposed standards ignore the large number
of homebuyers who will no longer be able to buy a MH because they no
longer qualify for an FHA, Fannie Mae, or Freddie Mac mortgage loan due
to the impact of increased mortgage payments on debt-to-income ratios.
(Westland, No. 1263 at p. 2); (Pleasant Valley, No. 1307 at p. 3);
(American Homestar, No. 1337 at p. 3); (Oliver Technologies, No. 1350
at p. 3); (Adventure Homes, No. 1383 at p. 3); (Champion Home Builders,
No. 1639 at p. 5); (MHI, No. 1592 at pp. 3, 11) MHI stated that FHA's
customary DTI requirement is 43 percent, and therefore any homebuyer at
the edge of this 43 percent DTI requirement will no longer qualify for
an FHA loan because of the higher price caused by the new energy
standards. (MHI, No. 1592 at p. 3, 11) MHARR stated that the higher
level of loan rejection rates within the chattel or personal property
loan sector will disproportionately impact and harm ``Hispanic white,
Black and African-American and American Indian and Alaska Native
borrowers'' and will have

[[Page 32747]]

a racially-disproportionate impact. (MHARR, No. 1640 at p. 5)
Separately, NASEO stated that by failing to establish cost-
effective baselines of energy efficiency in the lowest-cost homes, DOE
increases the likelihood that the residents of these homes will require
federal and state public assistance from the Weatherization Assistance
Program, Low-Income Home Energy Assistance Program, or other bill
payment assistance programs in the future. (NASEO, No. 1565 at p. 2)
LISC recommended the federal government ensure there is flexibility
in federally insured and guaranteed home mortgage program regulations
to permit an increase in debt to income ratios when paired with
reductions in energy costs. In addition, they suggested that the
federal government should proactively market these programs and other
potential assistance to help with incremental cost increases, including
ENERGY STAR tax credits and other financing vehicles that factor in
future energy savings. (LISC, No. 1233 at p. 3) NRECA suggested DOE
could incentivize dealers to showcase ENERGY STAR-qualified
manufactured homes on their lots by providing rebates for the price
difference to the dealers so that the price difference does not force
the consumer to make a choice between affordability and home ownership.
They commented that such action would improve the overall efficiency of
new manufactured homes up front in such a way that would not jeopardize
home ownership potential for consumers. (NRECA, No. 1406 at p. 1, 3)
UCB stated that DOE should be working with HUD to come up with
subsidies and offsets/ways to pay for extra insulation, and that the
previous DOE claim that there is no authority to provide this is
incorrect. (UCB, No. 1405 at p. 2) They recommended that for low-income
purchasers, the DOE front the chattel loans in a government program
similar to other federal agencies programs--HUD, the U.S. Department of
Veteran Affairs, and the USDA's rural housing service--to provide lower
interest rates and additional consumer protections that could cover the
cost of better insulation. They also stated that, although the tiered
standards are more cost-effective overall for homebuyers, the cost of
these homes should still be subsidized, and loan programs should be
created by the DOE in collaboration with HUD. Finally, they noted that
DOE should consider providing a renter's tax credit targeted at certain
MH buyers. (UCB, No. 1618 at p. 9-11) Schulte advised that in the
coming years, DOE may want to work with EPA and other agencies to
encourage more utilities to provide rebates for energy efficient
manufactured homes, because these rebates can help offset part of the
cost increases. (Schulte, No. 1028 at p. 16)
UC Law School commented that DOE should subsidize the costs of low-
income participants who might be directly impacted by the Final Rule,
including consideration of financing, tax credits, or other financial
incentives or assistance for consumers of manufactured housing. (UC Law
School, No. 1634 at pp. 5, 9, 10) UCB stated that DOE should consider
policies that would reinforce anti-discrimination housing laws and
support novel lending practices to involve people of color who may not
otherwise be eligible for a traditional loan while making certain the
sustainability of their loan protects the investment of equity. (UCB,
No. 1618 at p. 9)
Next Step commented that the incremental costs for energy-
efficiency upgrades do not price out manufactured home residents. They
noted that manufactured housing is often considered a source of
Naturally Occurring Affordable Housing (defined as unsubsidized housing
that meets the affordability standard for households making 60-80
percent of area median income, or AMI). They commented that two of the
most prominent affordable housing, new construction programs (the HOME
Program and the Low-Income Housing Tax Credit Program), are used for
individual and family household incomes below 60 percent AMI. In their
evaluation of Tier 2 of the proposed standard, they used CFPB's median
loan data in conjunction with DOE's average incremental cost increase
and concluded that loans will remain affordable to those at 60 percent
of median income (``AMI''), even when accounting for increased energy
efficiency upgrades. (Next Step, No. 1617 at pp. 5, 7-9) Finally, Next
Step commented that the Federal Housing Administration (``FHA'') and
other government-backed lenders, conventional lenders, and Community
Development Financial Institutions (``CDFIs'') generally underwrite
manufactured home loans to ensure affordability by using a housing
ratio of 29 percent of gross monthly income applied to housing costs,
which includes the principal, interest, taxes, and insurance
(``PITI''). However, The FHA's Energy Efficient Mortgage absorbs energy
savings for efficient homes and stretches the ratio to 31 percent, and
Freddie Mac's GreenChoice Program weighs energy efficiency into its
underwriting and includes manufactured housing. (Next Step, No. 1617 at
p. 6)
The State Attorneys General stated that analyses performed by Next
Step, a member of the federal advisory MHCC with expertise in
affordable housing, confirm that despite potential increases in
purchase price due to incremental construction costs associated with
improved efficiency requirements, a manufactured home built to DOE's
proposed IECC-based standards would remain affordable to even the most
price sensitive consumers due to the availability of federal and state
tax incentives, and loan and down-payment assistance programs to assist
low income home buyers. (State Attorneys General, No. 1625 at p. 5)
The 2021 CFPB report provides some data on borrower characteristics
for manufactured homes. As suggested by the commenters, DOE confirmed
that the standard FHA guidelines allow for a DTI up to 43 percent on
the back end, but allow for higher ratios based on compensating factors
like residual income, cash reserves, good credit score, etc.\28\ The
back-end DTI ratio refers to the ratio of the applicant's total monthly
debt to the total monthly income. Table 7 of the 2021 CFPB summarizes
that the median debt-to-income DTI ratio for chattel loans is 35.7
percent, and for mortgage loans is 38.9 percent. DOE notes the DTI data
presented are not separated for new manufactured homes, so DOE presumes
the ratio is for all manufactured homes. Further, Table 3 of the 2021
CFPB shows that chattel loans, despite being potentially eligible for
FHA loans, are seldom FHA for manufactured housing; 0.7 percent of
chattel loans are FHA loans and 39.4 percent of mortgage loans are FHA
loans. The 2019 AHS also estimates that only 16 percent of all MH
homeowners with at least one regular mortgage \29\ report having FHA
insurance. Therefore, DOE concludes that FHA loans may not be as
prevalent for consumers for manufactured homes because of the low
percentage of borrowers presented in both the 2021 CFPB and the 2019
AHS, and therefore amended energy conservation standards may not have
as much of an impact as commenters are suggesting.
---------------------------------------------------------------------------

\28\ <a href="https://fhalenders.com/fha-debt-to-income-ratio/">https://fhalenders.com/fha-debt-to-income-ratio/</a>.
\29\ This figure includes home-equity lump sum mortgages, but
excludes home-equity credit lines and reverse annuity mortgages.
---------------------------------------------------------------------------

As discussed, Tier 1 in the final rule responds to concerns on
first-cost impacts for low-income consumers. As presented in Table I.1,
the national average incremental housing purchase

[[Page 32748]]

price for Tier 1 single-section homes is $660. As such, the Tier 1
standard would slightly increase the monthly debt portion of the DTI
ratio; assuming chattel rate at 9 percent with 23-year loan term and a
down-payment of 10 percent (see chapter 8 of the final rule TSD for
further discussion on these assumptions), this would increase monthly
payments by approximately $6. Table 7 of the 2021 CFPB suggests a
median income of $52,000 for chattel loans, which can be used to
calculate the original median monthly debt of $1,547 (35.7 DTI *
52,000/12). All else equal, with the increase in monthly payments of
approximately $6 for single-section homes resulting from this final
rule, DTI can be recalculated as 35.8 DTI, which increases the DTI by
0.1 and is still under the standard 43 DTI limit for the small portion
of consumers for manufactured homes that use FHA loans (although as
noted previously, this ratio can be higher based on certain
compensating factors). Considering average household income of single-
section homeowners (approximately $40,000 based on the 2019 AHS), the
incremental monthly payments of approximately $6 would increase the DTI
to 35.9, which is 0.2 above the median DTI ratio for chattel loans
presented in the 2021 CFPB and well under the 43 DTI limit. Further,
DTI does not take into account any reduction in energy costs from the
standards established in this final rule. Finally, DOE only considered
the effect of DTI on the Tier 1 standard because commenters were
focused on how the energy conservation standards could affect DTI on
low-income consumers who have higher DTIs and affordability concerns.
Accordingly, DOE concludes that the final rule will not have the impact
on loan qualification that the commenters suggest, and to the extent
there are such impacts, Tier 1 of the final rule helps mitigate them
because of the lower first-costs.
Finally, as mentioned by Next Step, Freddie Mac has a GreenChoice
Mortgage[supreg] program which facilitates the financing of energy
efficient home improvements and energy efficient homes, including
manufactured homes. This program is specifically also meant for
borrowers who want to qualify for greater purchasing power despite
their higher DTI and housing expense-to-income for manually
underwritten loans. With respect to commenters' suggestions that DOE
provide forms of financial assistance or other aid to assist
manufactured home purchasers, EISA does not authorize DOE to provide
such assistance in establishing the standards for manufactured housing.
However, DOE will work with other Federal agencies within its statutory
authorities to assist homeowners, including manufactured homeowners, in
achieving energy burden reductions in an affordable and equitable
manner.
3. IECC
Multiple commenters stated that that the IECC does not take into
consideration all the construction aspects unique to manufactured
housing, and its application to manufactured housing would require the
industry to comply with a building code that was developed for
commercial and site-built residential buildings. (MMHA, No. 995 at p.
3); (Michigan MHA, No. 1012 at p. 2); (WHA, No. 1025 at p. 2); (PMHA,
No. 1165 at p. 3); (Westland, No. 1263 at p. 2); (Pleasant Valley, No.
1307 at p. 2); (American Homestar, No. 1337 at p. 2); (Oliver
Technologies, No. 1350 at p. 2); (KMHA, No. 1368 at p. 2); (Adventure
Homes, No. 1383 at p. 2); (NJMHA, No. 1451 at p. 2); (WMA, No. 1452 at
p. 2); (IMHA/RVIC, No. 1466 at p. 2); (Cavco, No. 1497 at p. 2);
(Skyline Champion, No. 1499 at p. 2); (Mississippi MHA, No. 1588 at p.
3); (Mississippi MHA, No. 1588 at p. 4); (Skyline Champion, No. 1627 at
p. 2); (Campaign Form Letter, Multiple submissions at p. 1-2) NRECA
commented that they are concerned that the 2021 IECC standard and the
other features of the SNOPR could ultimately price many consumers out
of the market and urged DOE to consider alternatives. (NRECA, No. 1406
at p. 3) Accordingly, NRECA questioned the use of the 2021 IECC
standard for manufactured housing in the SNOPR, while most states are
still following the 2009 IECC standard for site-built homes. They
suggested that DOE look to other iterations of the IECC standard which
could better balance efficiency and affordability, while still
including an efficient building envelope as part of the standard.
(NRECA, No. 1406 at p. 4)
Clayton Homes stated that they believe that requiring the industry
to comply with the IECC is not an appropriate solution. (Clayton Homes,
No. 1589 at p. 16) The MHCC stated that they believe the energy
efficiency requirements from the 2021 IECC, as currently proposed, are
not the appropriate resource to be used in updating manufactured
housing energy requirements, as the 2021 IECC was not developed or
intended for these homes. (MHCC, No. 1600 at p. 6) TMHA stated the IECC
was never intended to apply to HUD-Code manufactured homes and as
proven in Texas it poses significant issues to the factory-built home
manufacturing process at affordable price points. TMHA stated that they
believe that DOE, in concert with HUD and the MHCC, should reach an
agreement on which elements from the Code deliver the most energy
conservation gains while minimizing the increase in construction cost
to protect low-income consumers and the supply of affordable housing.
(TMHA, No. 1628 at p. 3) MHARR commented that manufactured homes have
never previously been subject to any version of the IECC. Thus, for
manufactured homes, the increase in costs entailed in implementing the
2021 IECC would not be an ``incremental'' or marginal increase over and
above the cost of the 2018 IECC, but the total, cumulative costs of
implementing all elements of the IECC incorporated within its 2021
iteration, dating back to the very first version of that code. (MHARR,
No. 1640 at p. 8)
Alternatively, Earthjustice and Prosperity Now stated that DOE must
adopt standards based on the most recent version of the IECC, except as
expressly permitted by EISA. They stated that the language of EISA
makes clear that DOE must analyze the IECC's cost effectiveness on a
provision-by-provision basis. (Earthjustice and Prosperity Now, No.
1637 at p. 1, 2) Further, ASHRAE stated that the most recent edition of
their standard ANSI/AHSRAE/IEC 90.2-2018 includes manufactured housing
within scope and because Standard 90.2 is an industry-based standard,
it allows manufacturers credit for energy savings from a wider variety
of measures than are used in other model codes such as the IECC
prescriptive standards, including the use of higher efficiency heating
and cooling equipment, and also solar panels. Accordingly, they
recommended that DOE evaluate whether ASHRAE 90.2-2018 would be more
cost-effective than the proposed standard, and for DOE to consider
Standard 90.2 alongside or in place of the 2021 IECC. (ASHRAE, No. 1373
at p. 2) NRDC also recommended the use of ASHRAE 90.2-2018 as a
starting point to set the standards at a higher level. NRDC stated that
the one known method of reducing default risk is to increase energy
efficiency and require disclosable energy ratings/quality assurance.
NRDC stated that ASHRAE 90.2 accomplishes both goals, and urged DOE to
evaluate this standard as well as the IECC 2021 code as the basis for
its standards for manufactured housing, since ASHRAE 90.2 requirements
have been demonstrated to be cost-effective. (NRDC, No. 1599 at p. 5-7)

[[Page 32749]]

As described in section II.A, EISA mandates that the manufactured
housing energy conservation standards be based upon the most recent
IECC, except in cases in which the Secretary finds that the IECC is not
cost-effective, or a more stringent standard would be more cost-
effective, based on the impact of the IECC on the purchase price of
manufactured housing and on total life-cycle construction and operating
costs. (42 U.S.C. 17071(b)(1)) As noted previously and discussed more
below in section IV, DOE has found today's final rule, which is based
on the 2021 IECC, to be cost-effective. Accordingly, DOE evaluated the
requirements of the IECC along with the other considerations enumerated
by EISA in establishing these standards. In DOE's view, the directive
that these standards ``shall be based on'' the most recent version of
the IECC indicates Congress' intent that DOE exercise discretion in
establishing these standards and does not require these standards for
manufactured homes to be an identical or verbatim equivalent of the
IECC, especially in light of the other considerations DOE must make
under the statute (i.e., the design and construction techniques of
manufactured homes, cost-effectiveness, etc.).
Additionally, DOE disagrees with Earthjustice and Prosperity Now's
comment that DOE must analyze the cost-effectiveness of the IECC on a
provision-by-provision basis. Nothing in section 413 of EISA suggests
that Congress intended for DOE to conduct a provision-by-provision
cost-effectiveness analysis of the IECC. If Congress wanted DOE to take
such a granular approach, it would have specified such a requirement.
Moreover, while DOE disagrees with the commenters' assertion, DOE
nonetheless has engaged in an analysis to determine which IECC
provisions are appropriately applied to manufactured housing and which
impact first-cost and affordability considerations, consistent with the
considerations enumerated in EISA. But, unlike the analysis commenters
suggest, DOE's evaluations have been in the context of the whole home,
rather than considering individual provisions in isolation, which is
more consistent with the approach for which manufactured housing has
met current HUD energy conservation requirements via a Uo for the
entire home. Considerations regarding the design and construction of
manufactured homes were a main focus of the MH working group while
developing the recommendations that DOE has considered in this
rulemaking. For example, section R402.2.4 of the 2015 IECC (which was
considered by the MH working group) and the 2021 IECC (which is the
latest version of the IECC) include a specification for vertical doors
that provide access from conditioned to unconditioned spaces to meet
certain fenestration insulation requirements. However, internal doors
that separate conditioned and unconditioned space rarely are relevant
to manufactured homes. Therefore, the MH working group recommended that
this provision be removed from the energy conservation standards as it
was deemed not relevant to manufactured housing design and
construction. Further, DOE did not incorporate requirements for uniform
thickness or a uniform density for the exterior ceiling insulation
given that the space between the roof and exterior ceiling is limited
in a manufactured home as compared to a site-built home, particularly
at the eaves, and as such uniformity of thickness may not be possible
at the insulation levels established in this final rule. Because the
IECC is specific to site-built structures, the approach finalized in
this document would establish requirements using modified versions of
those related IECC provisions that can be adapted for manufactured
homes.
With respect to ASHRAE Standard 90.2-2018, DOE notes that, while
commenters provided some information regarding the cost-effectiveness
of Standard 90.1-2018 to site-built homes, they did not provide
information regarding the cost-effectiveness of 90.2-2018 as applied to
manufactured homes. Moreover, the commenters did not provide
information on how 90.2-2018 applies to manufactured homes relative to
the 2021 IECC-based requirements DOE proposed in the August 2021 SNOPR
and finalized in this rule. EISA does allow DOE to base its
manufactured housing energy conservations standards on a code other
than the IECC to the extent that the IECC is not cost-effective, or the
alternate code is more stringent and more cost-effective. At this time,
DOE is declining to make such determinations for Standard 90.2-2018.
Instead, DOE has elected to maintain the 2021 IECC as the basis for
this final rule, consistent with the considerations of EISA section 413
and the recommendations of the MH working group and other stakeholders.
DOE remains open to consideration of Standard 90.2-2018 or other
building energy codes that may be appropriately applied to manufactured
housing and meet the increased stringency and cost-effectiveness
requirements of EISA section 413 in future rulemakings for these
standards.

B. Final Standards

DOE is finalizing tiered standards that would prescribe cost-
effective energy conservation requirements based on requirements in the
2021 IECC. The Tier 1 standards would apply to single-section
manufactured homes. The Tier 1 requirements incorporate IECC-based
building thermal envelope component measures that result in an
incremental purchase price increase less than $750 for single-section
homes. In other words, the Tier 1 requirements address many of the same
thermal envelope components of a home as the IECC (after accounting for
the design and factory construction considerations under EISA discussed
previously), but with lesser stringencies to address the affordability
concerns raised by HUD during consultation and in stakeholder comments.
The Tier 2 standards would apply to multi-section manufactured homes.
The Tier 2 standards would be based on the most recent version of the
IECC with similar stringencies for thermal envelope components, taking
into consideration the design and factory construction techniques of
manufactured homes. Tier 2 includes the alternate exterior wall
insulation requirement (R-21) for climate zones 2 and 3, as presented
in the August 2021 SNOPR and October 2021 NODA. Tier 2 is estimated to
result in an average incremental price increase of $4,100-$4,500 for
multi-section homes. Both Tier 1 and Tier 2 standards also include
requirements that are applicable to manufactured homes related to
ducts; HVAC; service hot water systems; mechanical ventilation fan
efficacy; and heating and cooling equipment sizing. These requirements
are also based on the 2021 IECC after accounting for the design and
factory construction considerations under EISA, and are applicable to
all manufactured homes (single-section and multi-section).
1. Size-Based Threshold
In this final rule, DOE is finalizing standards based on home size
instead of the August 2021 SNOPR proposed manufacturer's retail list
price. DOE initially considered a retail-price threshold to address the
affordability concerns expressed by HUD and other stakeholders. 86 FR
47744, 47760. DOE received a number of comments against using
manufacturer's retail list price, and alternate suggestions to use a
size-based threshold instead, as discussed in section III.B.3 of this
document. DOE noted in the August 2021 SNOPR that it had considered a
size-based threshold

[[Page 32750]]

and requested comment on the use of a size-based threshold, or other
alternate threshold, in place of the retail list price threshold. Id.
at 47760-47762. DOE also performed a sensitivity analysis regarding an
alternate sized-based tier threshold in the October 2021 NODA.\30\ 86
FR 59042.
---------------------------------------------------------------------------

\30\ DOE also evaluated a sized-based threshold among the
alternatives for both the January 2022 DEIS and April 2022 FEIS. 87
FR 2430; 87 FR 20852.
---------------------------------------------------------------------------

The manufactured housing survey (``MHS'') 2020 public use file
(``PUF'') data, provides estimates of average sales prices for new
manufactured homes sold or intended for sale by geographical region and
size of home.\31\ Table III.1 summarizes the average, minimum and
maximum sales prices based on census region and section.
---------------------------------------------------------------------------

\31\ Manufactured Housing Survey, Public Use File (PUF) 2020.
<a href="http://www.census.gov/data/datasets/2020/econ/mhs/puf.html">www.census.gov/data/datasets/2020/econ/mhs/puf.html</a>.

Table III.1--MHS PUF 2020 Census Region and Sales Price Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single-section sales price (2020$) Dual-section sales price (2020$)
Census region ------------------------------------------------------------------------------------------------
Average Minimum Maximum Average Minimum Maximum
--------------------------------------------------------------------------------------------------------------------------------------------------------
Northeast.............................................. $57,916 $35,600 $95,000 $107,951 $56,000 $233,000
Midwest................................................ 56,983 33,200 79,000 104,987 54,000 184,000
South.................................................. 56,798 31,400 79,000 106,942 58,000 170,000
West................................................... 61,748 34,100 117,000 118,282 64,000 236,000
------------------------------------------------------------------------------------------------
All................................................ 57,233 31,400 117,000 108,583 54,000 236,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

Further, the MHS also summarizes average manufactured home sales
price by state.\32\ Table III.2 presents the average sales prices in
2020 per HUD zone based on the MHS data discussed previously and
manufactured home shipments published by Manufactured Housing
Institute.\33\
---------------------------------------------------------------------------

\32\ Manufactured Housing Survey, Annual Tables of New
Manufactured Homes: 2014--2020; <a href="http://www.census.gov/data/tables/time-series/econ/mhs/annual-data.html">www.census.gov/data/tables/time-series/econ/mhs/annual-data.html</a>.
\33\ Manufactured Housing Institute, Annual Production and
Shipment Data; <a href="http://www.manufacturedhousing.org/annual-production/">www.manufacturedhousing.org/annual-production/</a> production/.

Table III.2--MHS Average Sales Price Data by HUD Zone
----------------------------------------------------------------------------------------------------------------
Single-section average sales Dual-section average sales
HUD zone price (2020$) price (2020$)
----------------------------------------------------------------------------------------------------------------
1.................................................. $57,124 $107,003
2.................................................. 57,290 111,208
3.................................................. 56,207 109,147
----------------------------------------------------------------------------------------------------------------

As presented in Table III.1 and Table III.2, the average, minimum
and maximum sales price for single-section homes are significantly
lower than the same for multi-section homes.
The 2019 AHS separately provides data relating household income to
manufactured housing size. On average, the household income for
households in single-section homes ($39,331) is lower than that of
multi-section homes ($51,358). The 2019 AHS also provides data relating
the poverty status \34\ (using the federal poverty level thresholds
\35\) to size of home. Table III.6 summarizes that a larger portion of
single-section homes have residents at poverty levels less than 100 and
200 percent of the Federal Poverty Level compared to multi-section
homes.
---------------------------------------------------------------------------

\34\ In the AHS tables, poverty status was determined by
comparing the combined income of the individuals living in the
household to the appropriate size-based poverty threshold (i.e.,
two-person poverty threshold, three-person poverty threshold, etc.).
Further details on the definition for poverty status is found in the
AHS definitions handbook (<a href="http://www2.census.gov/programs-surveys/ahs/2019/2019%20AHS%20Definitions.pdf">www2.census.gov/programs-surveys/ahs/2019/2019%20AHS%20Definitions.pdf</a>).
\35\ U.S. Census Bureau. Poverty Thresholds. <a href="http://www.census.gov/data/tables/time-series/demo/income-poverty/historical-poverty-thresholds.html">www.census.gov/data/tables/time-series/demo/income-poverty/historical-poverty-thresholds.html</a>.

Table III.3--2019 AHS Poverty Level Summary Data
----------------------------------------------------------------------------------------------------------------
Number of units (thousands) Percentage of units (%)
Poverty level ----------------------------------------------------------------------------
Single-wide Double-wide Single-wide Double-wide
----------------------------------------------------------------------------------------------------------------
Less than 100 percent.............. 1109 506 29 17
Less than 200 percent.............. 2278 1307 60 45
----------------------------------------------------------------------------------------------------------------

Accordingly, DOE concludes that single-section homes, on average,
have lower sales prices than multi-section homes. Further, DOE
concludes that single-section homes, on average, have householders with
lower to median incomes than multi-section homes. To the extent that
manufactured home purchasers are cost-driven, in conjunction with the
lower average income, consumers at the lower end of the manufactured
home purchase price range generally would be more sensitive to
increases in purchase price. Based on the relationship between home
size and cost, DOE has determined that, similar to the retail list
price-based threshold, the size-based threshold addresses affordability
concerns. However, as noted by commenters, the size-based threshold
would not be susceptible to fluctuations in pricing due to changing
market conditions or consumer customization that could impact the
applicability of standards (see the discussion in section III.B.3 of
this document). The size-based threshold

[[Page 32751]]

therefore provides greater certainty for manufacturers and consumers as
to the applicability of standards to individual manufactured homes and
reduces opportunities for gaming. Accordingly, DOE is finalizing a
tiered standard with the Tier 1 standard applicable to single-section
homes and the Tier 2 standard applicable to multi-section homes.
2. Tiered Standard
DOE developed the Tier 1 standard with the lower incremental
purchase price in response to concerns from HUD and other commenters
regarding the incremental purchase price of a manufactured home built
to a DOE standard, and the current ability of the first homeowner/
purchaser of these homes to recoup the increase in purchase price and
realize the savings offered by the greater energy efficiency of a Tier
1 manufactured home. The Tier 1 standard includes requirements for
thermal envelope components similar to those of the 2021 IECC, but at
lesser stringencies than the 2021 IECC to lower the incremental
purchase price in order to address the affordability concerns raised by
HUD and other stakeholders.
In determining the energy efficiency measure (``EEM'') combinations
included in Tier 1, DOE ensured that the performance-based overall
thermal transmittance (Uo) for these combinations would be more
stringent than the current HUD requirements. DOE's objective in
defining the Tier 1 incremental purchase price threshold was based on
implementing efficiency improvements by which a low-income buyer
purchasing a single-section home (using typical loan terms currently
available to these homebuyers, primarily chattel loans with higher
interest rates) would, on average, realize a positive cash flow within
Year 1 of the standard based on the down payment, incremental loan
payment, and energy cost savings. DOE believes this approach addresses
the concerns raised by HUD and other stakeholders regarding
affordability as low-income purchasers, whom DOE considered in
developing Tier 1 standards, would begin to quickly realize the energy
cost savings of the standards. As such, DOE determined that an
incremental purchase price of less than $750 for a set of energy
efficiency measures provided a beneficial financial outcome for these
consumers given lifecycle cost savings and energy cost savings, while
minimizing first cost impacts in the manner noted above. Specifically,
for single-section manufactured homes, DOE determined the set of energy
efficiency measures with an average incremental purchase price of $660
(as presented in Table I.1) with a 10 percent down payment (using a
chattel loan) would, on average, result in a positive cash flow within
the first year, as presented in Table III.4. Further discussion on the
LCC inputs to this subgroup calculation are presented in section
Chapter 9 of the TSD.

Table III.4--Tier 1 LCC Sub-Group National Results
------------------------------------------------------------------------
Single-section only; 30-year analysis period; national
results Tier 1
------------------------------------------------------------------------
Incremental cost........................................ $660
Incremental down-payment (10%).......................... 66
Yearly Incremental Loan Payment......................... 67
First Year Incremental Payment (Down-payment + Loan).... 133
Yearly Energy Cost Savings.............................. 177
First Year Savings (Energy Cost Savings--Incremental 44
Payment)...............................................
------------------------------------------------------------------------

The Tier 2 standard would apply the same thermal envelope EEMs to
multi-section homes, but at similar stringencies as the 2021 IECC, with
consideration of cost-effectiveness and design and factory construction
techniques of manufactured homes taken into account. (42 U.S.C.
17071(b)(1); 42 U.S.C. 17071(b)(2)(A)) Tier 2 also incorporates the
alternate exterior wall insulation requirement (R-21) for climate zones
2 and 3, as presented in the August 2021 SNOPR and October 2021 NODA.
DOE notes that Tier 2 requirements adopted in this final rule will
update only the window U-factor requirements for all climate zones
compared to the term sheet agreed upon by the MH working group (window
U-factor: 0.35 and 0.32; to 0.32 and 0.30 respectively). The window U-
factors were updated consistent with the 2021 IECC, while the other
updates were not included because of the design and factory
construction of a manufactured home or cost-effectiveness
considerations (see further discussion in section III.F.2.b of this
document). Otherwise, the remaining Tier 2 EEMs are consistent with the
recommendations from the MH working group, except based on the three
HUD zones (as opposed to the four climate zones recommended in the Term
sheet). Further discussion of the climate zones may be found in section
III.F.2.a. of this document.
The required building thermal envelope requirements for both tiers
are presented in section III.F.2.b of this document.
3. Comments on the August 2021 SNOPR Proposal and the October 2021 NODA
DOE received a number of comments regarding whether a tiered or the
alternative untiered approach should be considered.
Multiple commenters supported single-tier (i.e., untiered)
standards for energy conservation based on the 2021 IECC standards.
They stated that all manufactured homes should be as efficient as would
be cost-effective, considering the construction costs, energy costs,
and financing over the life-cycle of the homes. They also commented
that homebuyers purchasing homes in Tier 1 should not be subjected to
the pitfalls of lower-quality, inefficient homes, which would also
reduce resale value. The commenters also noted that a two-tiered
approach would further stratify the growing homeownership gap for
underserved communities, depriving individuals and families from
quality, energy-efficient housing choices. (CASA of Oregon, No. 925 at
p. 1-2) (Verde, No. 928 at p. 1-2), (Trellis, No. 974 at p. 1-2),
(NOAH, No. 976 at p. 1-2), (PathStone, No. 1013 at p. 1-2), (Habitat
for Humanity of LA, No. 1015 at p. 1-2), (WIDC, No. 1016 at p. 1-2),
(RCAC, No. 1183 at p. 1-2), (UCD, No. 1030 at p. 1-2), (LISC, No. 1233,
at p. 2-3); (CHP, No. 1384 at p. 1-2); (Blount County Habitat for
Humanity, No. 1417 at p. 1-2); (ReFrame Foundation, No. 1424 at p. 1-
2); (People's Self-Help Housing, No. 1591 at p. 1); (Fahe, No. 1572 at
p. 1-2); (NBI, No. 1404 at p. 1-2); (NPCC, No. 1567 at p. 2);
(E4TheFuture, No. 1374 at p. 1); (Next Step, No. 1617 at p. 10, 11);
(UHI, No. 1026 at p. 1); (E4TheFuture, No. 1976 at p. 1); (ICC, No.
1979 at p. 2); (NYSERDA, No. 1981 at p. 1); (Next Step, No. 1984 at p.
1, 2) UHI stated that

[[Page 32752]]

lower-quality, less efficient homes will be less comfortable and
subject residents to potential health and safety hazards from poor
ventilation, poor insulation, and a lesser ability to withstand extreme
weather conditions. (UHI, No. 1026 at p. 1) VEIC recommended that DOE
pursue a single standard for all manufactured homes that is based on
the 2021 IECC and incorporate all measures that are cost-effective
based on total lifetime costs of the home, including energy costs.
(VEIC, No. 1633 at p. 3) NMHOA stated that while establishing a tiered
system may somewhat address the issue of the higher upfront costs
associated with purchasing a home, doing so fails to address the core
purpose of the proposed rule: addressing the ongoing costs of
ownership. (NMHOA, No. 1635 at p. 3) UC Law School stated the untiered
approach makes the most sense from a climate perspective, provided DOE
could solve the affordability problem. (UC Law School, No. 1634 at p.
6, 7, 10) NBI commented that proposed Tier 2 energy conservation
standards missed significant energy savings by not applying the entire
scope of the 2021 IECC to manufactured homes. (NBI, No. 1404 at p. 1-2)
ACEEE commented that the proposed Tier 1 standards are illegal. The
authorizing statute (42 U.S.C. 17071) requires DOE to set the standards
based on the most recent version of the IECC (currently the 2021 IECC)
except when that code is not cost-effective or a more stringent
standard would be more cost-effective. It specifies that cost-
effectiveness is based on ``the purchase price . . . and on total life-
cycle construction and operating costs.'' Thus, they stated that DOE
must base any change from the 2021 IECC on cost-effectiveness,
including total life-cycle energy costs. (ACEEE, No. 1631 at p. 4)
ACEEE also expressed concern that the proposed Tier 1 would not help
low-income residents, that there may be cheaper savings not included in
the draft standard. (ACEEE, No. 1498 at p. 1) ACEEE also commented that
tiered standards will reinforce inequitable outcomes. Setting weaker
standards for cheaper homes will result in inequitable access to the
benefits of higher quality, more efficient construction, and will
create a dangerous precedent by setting standards that are targeted
according to consumer income level. (ACEEE, No. 1631 at p. 3) Instead,
ACEEE commented that untiered standards will ensure that all residents
benefit equitably from the same strong, cost-effective efficiency
standards. They stated that the proposed threshold for Tier 2 is
arbitrary and subject to gaming and the use of manufacturer's retail
list price is a notional amount that can be manipulated. (ACEEE, No.
1631 at p. 4-6) Further, ACEEE also stated that the untiered standards
are justified based on legal requirements, cost-effectiveness, and
environmental impacts without consideration of the economic or other
impacts from greenhouse gas reduction, and thus, the recent injunction
\36\ on the use of the social cost of carbon should not delay this
standard. (ACEEE, No. 1988 at p. 3) Finally, ACEEE stated that the EIS
confirms that the untiered standards deliver the highest 30-year LCC
savings to residents and provides the greatest climate, environmental
justice, socioeconomic, and health benefits. In addition, they stated
the untiered standards deliver the largest reduction in ongoing energy
costs, which is an essential part of preserving the affordability of
manufactured housing and lowering high energy burdens for its
residents. (ACEEE, No. 1988 at p. 1)
---------------------------------------------------------------------------

\36\ Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.).
---------------------------------------------------------------------------

Vermont Law School commented that DOE lacked the legal authority to
adopt the proposed less energy efficient tiered standards based on a
manufactured home's retail list price or number of sections because the
2021 IECC does not base any of its provisions on a home's list price,
number of sections, ``first cost impacts on purchasers,'' or 1-10 year
payback periods, and DOE has not affirmatively found that the 2021 IECC
standard is not cost effective. (Vermont Law School, No. 1638 at p. 2-
4) Vermont Law School reiterated their concern that the tiered approach
was not cost-effective, nor consistent with the 2021 IECC, then went on
to acknowledge that ``DOE has, however, explicitly and affirmatively
found that the untiered approach, which is based on the IECC, is cost-
effective.'' Vermont Law School also commented that the untiered
approach goes much further than the tiered approach in addressing the
financial, health, and energy burdens faced by low-income residents,
and will reduce the energy burden of all new residents of manufactured
homes. (Vermont Law School, No. 1991 at p. 1-3)
The CEC urged DOE to adopt the untiered approach that applies the
2021 IECC to all manufactured housing, regardless of retail cost or
size. They stated that adopting either tiered approach (retail cost-
based or size-based) would impede the nation's and individual states'
efforts to address climate change in a just and equitable way. CEC also
stated that, because DOE may not deviate from establishing standards
based on the IECC for all manufactured housing unless it makes a
finding that the code is not cost-effective, DOE must finalize the
untiered approach. (CEC, No. 1629 at p. 2, 3) While CEC acknowledged
that to make the standards meaningful, DOE has discretion to adopt
standards based on the IECC rather than identical IECC standards, they
disagreed with DOE's conclusion that this discretion extends to the
bifurcated application of IECC standards based on cost or configuration
in a way that reduces energy savings, utility savings, or greenhouse
gas emissions. This interpretation would effectively render the
statutory requirement meaningless. (CEC, No. 1629 at p. 3) Finally, CEC
commented that they were concerned regarding equity considerations and
the disproportionate impact the tiered proposals would have on low-
income residents. (CEC, No. 1629 at p. 4) Next Step commented that by
sacrificing energy-efficiency features in lower-cost manufactured
homes, the proposed DOE rule will adversely impact lower-income
communities--including immigrant communities and communities of color,
and that the rulemaking should be considered under President Biden's
January 20, 2021, Executive Order on Advancing Racial Equity and
Support for Underserved Communities Through the Federal Government.
(Next Step, No. 1617 at p. 7, 11) In April 2022, DOE released its
Equity Action Plan (EAP) to implement this Executive order: <a href="https://www.energy.gov/equity">https://www.energy.gov/equity</a>. As directed by the Executive order, the EAP lays
out a roadmap for how DOE will incorporate equity considerations in
procurement, financial assistance, and stakeholder engagement across
DOE programs. In developing this rule, DOE has taken equity impacts
into account and the Administration's comprehensive approach to
advancing equity. Moreover, the FEIS provides a detailed analysis of
socioeconomic and environmental justice considerations.
Earthjustice, Prosperity Now, and Sierra Club urged DOE to abandon
the proposed tiered approach and to apply a strengthened version of the
proposed Tier 2 standards to all new homes. They stated that DOE has
entirely failed to consider the beneficial impacts of stronger
standards on renters of new homes, and therefore has ignored an
important aspect of the affordability problem it claims to be
addressing. (Earthjustice and Prosperity Now, No. 1637 at pp. 1, 5, 6,
8); (Earthjustice, Prosperity Now, and Sierra Club, No.

[[Page 32753]]

1992 at p. 2) Further, they commented that (1) the Tier 1 standards are
not based on 2021 IECC and DOE has not shown that standards based on
the 2021 IECC are not cost-effective; and (2) the tiered approach
raises significant equity concerns. (Earthjustice and Prosperity Now,
No. 1637 at p. 3) In addition, they stated by prescribing weaker energy
efficiency standards for the lowest cost homes as DOE has proposed,
these commenters assert that DOE would limit access to the benefits of
higher quality, more efficient construction, particularly for families
renting a manufactured home and those who own a home and rent a lot in
a manufactured housing community, in which a significant share of
lower-cost homes are placed. (Earthjustice and Prosperity Now, No. 1637
at p. 6) Finally, they noted that there is ample evidence in the record
to support DOE's nationwide adoption of standards that are far stronger
and more comprehensive than the requirements included in the proposed
Tier 2 standards, even if the economic impacts of avoiding greenhouse
gas emissions are completely ignored. (Earthjustice, Prosperity Now,
and Sierra Club, No. 1992 at p. 9)
RECA urged DOE to take the untiered approach proposed in the SNOPR
because it is the only proposed alternative consistent with the
relevant statute, and it is the most equitable long-term solution
because it recognizes that reducing utility bills is just as important
(and likely more important) for low-income households as it is for
higher-income households. RECA stated that, unless DOE has specifically
found a lack of cost-effectiveness or a more stringent cost-effective
measure than what is contained in the IECC, the 2021 IECC should be the
standard for energy conservation in manufactured housing. (RECA, No.
1570 at pp. 1, 2, and 7)
NASEO commented that DOE and HUD are proposing energy efficiency
standards for Tier 1 homes which are or will soon be less efficient
than the efficiency codes and standards in place in the various states,
and which states are unable to supersede due to federal pre-emption.
NASEO was particularly concerned that it has been nearly 30 years since
the last update to MH standards. NASEO stated that establishing a two-
tiered standard that excludes the lowest cost homes from energy
efficiency saddles those residents with high energy bills for the 30-40
year average lifetime of a manufactured home. (NASEO, No. 1565 at p. 2)
NEEA strongly opposed a two-tier approach for four reasons: (1)
Those who buy a Tier 1 home may have a lower first cost, but future
buyers will have to bear higher life-cycle and energy costs; (2) the 2-
tier approach based on retail list price will shift market pricing
practices to keep advertised price low while adding higher priced
dealer options at the point of sale; (3) park owners will continue to
purchase less efficient Tier-1 homes since rent is set on market rates
and energy bills will be paid by the tenants; and (4) a 2-tier approach
introduces complexity into this code and sets a bad precedent for other
product categories. NEEA commented that DOE must recognize the
landlord-tenant relationship (where landlords are not incentivized to
invest in energy efficiency because they are not paying the utility
bills) and implement single tier, strong energy conservation standards
for manufactured housing. (NEEA, No. 1601 at pp. 2, 3, 6, 8, and 9)
The State Attorneys General urged DOE to prescribe the requirements
set forth in DOE's untiered proposal. They commented that a tiered
approach is inconsistent with the IECC. Were DOE to adopt a tiered
approach, it would do so in violation of 42 U.S.C. 17071(b)(1), which
provides that DOE's standards for manufactured housing ``shall be based
on'' the IECC. Accordingly, they stated that DOE should adopt standards
based on the 2021 IECC and make them applicable to all manufactured
homes, regardless of home cost or size. They argued that DOE's untiered
proposal is a significant improvement over the current HUD Code, but
DOE should still adopt a more stringent set of requirements to fully
comply with EISA. (State Attorneys General, No. 1625 at pp. 2, and 4-6)
Further, they commented that the tiered approach would create a double
standard that will perpetuate persistent poverty and inequality. (State
Attorneys General, No. 1625 at p. 4) UC Law School stated that the
untiered approach is the most cost-effective when the cost-benefit
analysis factors in only the social cost of carbon and the emissions
reductions into the equation. (UC Law School, No. 1634 at p. 11, 13,
14).
University of Arizona and Arizona State strongly endorsed the
application of minimum standards for energy conservation based on the
2021 IECC for all new manufactured homes sold (as in, did not endorse
the tiered standards) in order to reduce future health and financial
vulnerabilities among manufactured housing residents. They stated that
manufactured homes also provide housing for high concentrations of
heat-sensitive populations, including older adult, low-income and
minority groups, and that new standards for manufactured housing
energy-efficiency are long overdue and should be issued and implemented
as soon as possible. (University of Arizona and Arizona State, No. 1379
at p. 1-2)
MHI also supported a single-tier standard, albeit not with the
requirements that DOE proposed in the untiered approach. MHI
recommended less stringent component and U<INF>o</INF> requirements for
the single-tier standards (which are discussed further in section
III.F.2.b). (MHI, No. 1990 at p. 14-17)
On the other hand, NAHB did not support the untiered standards and
thus supports the adoption of a tiered approach to allow builders and
manufacturers to have options when implementing building thermal
envelope requirements. They stated that the ``tiered'' approach
provides options for builders and manufacturers when implementing
building thermal envelope requirements. However, they also stated that
it is unclear if using the manufacturer's retail price is an
appropriate metric for the two tiers. (NAHB, No. 1398 at p. 2) An
anonymous commenter offered its support for the tiered standards as a
way to strike a balance between increased energy efficiency and
affordable housing. (Anonymous, No. 1446 at p. 1, 2) Clayton Homes
commented that the untiered proposal is not cost-effective in general
or for low-income consumers. (Clayton Homes, No. 1589 at p. 16)
UC Law School stated that the untiered approach risks making
manufactured homes unaffordable for low-income consumers. First, under
the untiered standard, purchase price increases could represent a
significant portion of the average consumer's annual income while those
customers are likely already living paycheck to paycheck. Second, under
the untiered approach, the dramatic increase in purchase price will
increase the amount of chattel or real property loan taken out by the
buyer to obtain a manufactured home. Third, DOE stated in the SNOPR
that various factors contribute to consumers of manufactured homes
being more price-sensitive to changes that would impact the cost of a
manufactured home. Accordingly, they suggested that DOE should consider
this when evaluating the tiered and untiered approaches for this
proposed rule, as only the tiered approach considers the financial
hardship the rule will pose to low-income consumers. (UC Law School,
No. 1634 at p. 7, 8)
An individual commenter stated that the proposed rule is a
necessary step in reducing U.S. energy usage and increasing
manufactured housing

[[Page 32754]]

efficiency, and that the ``tiered'' approach to regulating homes'
thermal envelopes would help to reduce overall energy consumption while
also keeping home costs relatively unchanged. (Kurfman, No. 941 at p.
1) Another individual commenter suggested that although the tiered
system of cost implementation creates significantly more administrative
responsibility, it is a more equitable and desirable means of
accomplishing the aforementioned agency goals. They suggested that the
proposed rule by DOE seems adequately supported by reasonable inquiries
into emission reduction, energy efficiency, and cost allocation for
thermal requirements of manufactured homes. (Gustafson, No. 778 at p.
1) NYSERDA supported DOE's two-tier approach to address the
affordability concerns. (NYSERDA, No. 1620 at p. 1)
Further, DOE also received a number of comments on the tiered
approach, specifically as it relates to the proposed threshold (i.e.,
manufacturer's retail list price), which are summarized in the
following paragraphs.
Multiple commenters suggested that the $55,000 low-income threshold
for the eligibility for streamlined energy efficiency requirements for
the tiered standard should be eliminated (or significantly increased),
and that it is incorrect that homes above $55,000 are not affordable to
low-income homebuyers. (MMHA, No. 995 at p. 4); (Michigan MHA, No. 1012
at p. 2); (WHA, No. 1025 at p. 2); (PMHA, No. 1165 at p. 3); (Westland,
No. 1263 at p. 2); (Pleasant Valley, No. 1307 at p. 2); (American
Homestar, No. 1337 at p. 2); (Oliver Technologies, No. 1350 at p. 2);
(KMHA, No. 1368 at p. 2); (Adventure Homes, No. 1383 at p. 2); (NJMHA,
No. 1451 at p. 2-3); (WMA, No. 1452 at p. 2); (IMHA/RVIC, No. 1466 at
p. 2); (Cavco, No. 1497 at p. 2); (Skyline Champion, No. 1499 at p.2);
(Mississippi MHA, No. 1588 at p. 2) ; (Skyline Champion, No. 1612 at
p.2); (Cavco, No. 1622 at p. 2); (VAMMHA, No. 1624 at p. 2); (Champion
Home Builders, No. 1639 at p. 4); (IMHA, No. 1453 at p. 2); (MHI, No.
1592 at p. 4-6, 25)
MHARR stated that the $55,000 dividing line between Tier 1 and Tier
2 standards selected by DOE is fundamentally arbitrary and would limit
the applicability of the proposed Tier 1 standards to a mere 17.3
percent of the total HUD Code market notwithstanding the fact that all
manufactured housing is identified and protected as affordable housing
under applicable federal law. MHARR also objected to any threshold set
so low, including the updated $63,000 price threshold, because it would
subject a significant majority of all manufactured homes and all
manufactured homeowners to prohibitively costly energy standards. MHARR
further stated that the inflationary and supply chain pressures will
increase the threshold amounts by the time of the implementation of any
such standard. (MHARR, No. 1640 at p. 2-4) NBI stated that establishing
a pri

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