Energy Conservation Program: Energy Conservation Standards for Manufactured Housing

Federal RegisterMay 31, 2022

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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.

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:

appliancestandardsquestions@ee.doe.gov

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:

matthew.ring@hq.doe.gov

SUPPLEMENTARY INFORMATION:

This final rule incorporates by reference into 10 CFR part 460 the following industry standards:

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.

www.acca.org

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

www.huduser.org/portal/publications/manufhsg/uvalue.html.

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”).

(42

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.

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).

See

42 U.S.C. 5403(f). See also 24 CFR 3282.12.

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.

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.

Available at:

www.regulations.gov/document?D=EERE-2009-BT-BC-0021-0136

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.

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

energy conservation standards for manufactured housing. The Notice of Availability for the FEIS (DOE/EIS-0550) was published on April 8, 2022.

(87 FR 20852).

The draft and final EIS documents are available at

www.ecs-mh.evs.anl.gov/

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 Lifetime)

$1,594

$3,573

Lifecycle Cost Savings (10-Year Lifetime)

$720

$743

Annual Energy Cost Savings in 2020$

$177

$475

Simple Payback Period (Years)

3.7

8.9

* negative values in parenthesis.

ER31MY22.209

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

(quads)

Multi-section

(quads)

Total

(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.

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

(billion 2020$)

Multi-section

(billion 2020$)

Total

(billion 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

(billion 2020$)

Multi-section

(billion 2020$)

Total

(billion 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

), mercury (Hg), nitric oxide and nitrogen dioxide (NO

), sulfur dioxide (SO

), methane (CH

), and nitrous oxide (N

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 × 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

(million metric tons)

19.5

53.8

73.3

Hg (metric tons)

2.92E-02

9.60E-02

1.25E-01

(thousand metric tons)

10.9

26.6

37.5

(thousand metric tons)

7.2

20.4

27.6

(thousand metric tons)

1.03

3.11

4.14

O (thousand metric tons)

0.21

0.57

0.78

Upstream Emissions Reductions

(million metric tons)

2.01

5.05

7.06

Hg (metric tons)

1.48E-04

4.45E-04

5.93E-04

(thousand metric tons)

25.4

64.8

90.2

(thousand metric tons)

0.21

0.47

0.67

(thousand metric tons)

127

354

481

O (thousand metric tons)

0.011

0.026

0.037

Total Emissions Reductions

(million metric tons)

21.5

58.9

80.4

Hg (metric tons)

2.93E-02

9.64E-02

0.13

(thousand metric tons)

36.3

91.4

127.7

(thousand metric tons)

7.44

20.9

28.3

(thousand metric tons)

128

357

485

O (thousand metric tons)

0.23

0.59

0.82

DOE estimates the value of climate benefits from a reduction in greenhouse gases using four different estimates of the social cost of CO

(SC-CO

), the social cost of methane (SC-CH

), and the social cost of nitrous oxide (SC-N

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).

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.

DOE estimated the monetary health benefits of NO

and SO

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.

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:

www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf

(last accessed March 17, 2022).

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

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

Monetary benefits *

Discount rate

(

)

Net present value

(million 2020$)

Single-section

Multi-section

Climate Benefits **

881.3

2,425.9

Health Benefits †

1,503.5

4,088.2

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-CO

), methane (SC-CH

), and nitrous oxide (SC-N

O) (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

Biden,

† Health benefits are calculated using benefit-per-ton values for NO

and SO

. DOE is currently only monetizing (for NO

and SO

) PM

2.5

precursor health benefits and (for NO

) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM

2.5

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 †

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 †

9.1

Consumer Incremental Product Costs ††

2.4

Net Benefits

6.7

Note:

* Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO

), methane (SC-CH

), and nitrous oxide (SC-N

O) (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

Biden,

** Health benefits are calculated using benefit-per-ton values for NO

and SO

. DOE is currently only monetizing (for NO

and SO

) PM

2.5

precursor health benefits and (for NO

) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM

2.5

emissions. See section IV.D.2 of this document for more details.

† 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.

†† 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.

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.

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

Primary estimate

Low-net-benefits estimate

High-net-benefits 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 †

1,005

896

1110

Consumer Incremental Product Costs ††

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 †

682

620

742

Consumer Incremental Product Costs ††

221

213

231

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

Biden,

** Health benefits are calculated using benefit-per-ton values for NO

and SO

. DOE is currently only monetizing (for NO

and SO

) PM

2.5

precursor health benefits and (for NO

) ozone precursor health benefits, but will continue to assess the ability to monetize other effects such as health benefits from reductions in direct PM

2.5

emissions. See section IV.D.2 of this document for more details.

† 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.

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:

• Establish standards for energy conservation in manufactured housing;

• Provide notice of, and an opportunity for comment on, the proposed standards by manufacturers of manufactured housing and other interested parties;

• Consult with the Secretary of HUD, who may seek further counsel from the Manufactured Housing Consensus Committee (“MHCC”); and

• 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:

• Consider the design and factory construction techniques of manufactured housing;

• Base the climate zones on the climate zones established by HUD

rather than the climate zones under the IECC; and

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.

• 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

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

of the building thermal envelope.

is a measurement of the heat loss or gain rate through the building thermal envelope of a manufactured home; therefore, a lower

corresponds with a more insulated building thermal envelope. The HUD Code contains maximum requirements for the combined

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

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

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

in establishing minimum design and construction requirements for the energy efficiency of residential and commercial buildings, including site-built residential and modular homes.

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.

The website of the IECC is

https://shop.iccsafe.org/international-codes/iecc-references.html

The current status of the adoption of the IECC is provided at

www.energycodes.gov/status-state-energy-code-adoption

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.

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

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.

U.S. Census Bureau, American Housing Survey 2019—National Summary Tables. Available at

www.census.gov/programs-surveys/ahs/data.html

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.

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.

A summary of each meeting is available at

www.regulations.gov/docket?D=EERE-2009-BT-BC-0021

. The June 2016 NOPR provides more details on the comments received in response to the ANOPR. 81 FR 39755 (June 17, 2016)

The ANOPR comments can be accessed at:

www.regulations.gov/#!docketDetail;D=EERE-2009-BT-BC-0021

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.

Available at

www.regulations.gov/document?D=EERE-2009-BT-BC-0021-0069

and

www.regulations.gov/document?D=EERE-2009-BT-BC-0021-0058

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.

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

Granholm,

No. 1:17-cv-02700-EGS (D.D.C. filed Dec. 18, 2017).

The NOPR analysis, NOPR TSD, and NOPR public meeting information are available at

www.regulations.gov

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

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.

All of the comment submissions are available in the docket for this rulemaking.

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.

Table II.1— Summary of Written Comments *

Organization(s)

Reference in this final rule

Organization type

Alliance to Save Energy, American Council for an 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

Joint Commenters

Efficiency organization.

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

Manufacturer.

American Public Gas Association, The Aluminum 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

APGA et. al.

Trade association.

Arizona Department of Housing

ADOH

State Government.

American Society of Heating, Refrigerating and Air-Conditioning Engineers

ASHRAE

Trade association.

Attorneys General of NY, IL, ME, MN, NV, NJ, NM, OR, VT, WA, MA, and NY

State Attorneys General

State Government—State Attorneys General.

Blount County Habitat for Humanity

Non-profit.

C2ES, Institute for Policy Integrity at NYU Law, Sierra Club, Union of Concerned Scientists

C2ES et. al.

Environmental Non-profit.

California Energy Commission

CEC

Efficiency Organization.

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

Efficiency Organization.

Earthjustice & Prosperity Now

Earthjustice and Prosperity Now

Efficiency Non-profit.

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 Vehicle Indiana Council

IMHA/RVIC

Trade association.

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 Reform

MHARR

Trade association.

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 Authority

NYSERDA

State corporation.

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.

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

Designers.

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

Non-profit.

Members of Congress of the United States (David Kustoff, Larry Bucshon, Bill Huizenga, Lance Gooden, 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)

Select Representatives of Congress

Government.

University of Arizona and Arizona State University

University of Arizona and Arizona State

University.

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

Non-profit.

Vermont Energy Investment Corporation

VEIC

Efficiency organization.

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.

ACH

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

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.

2.5

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.

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

performance pathway (which allows for compliance based on the overall thermal performance of the manufactured home). The latter approach,

i.e.,

the

method, gives manufacturers the flexibility to use any combination of energy efficiency measures as long as the minimum

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:

• Manufactured housing structural requirements contained in the HUD Code;

• External dimensional limitations associated with transportation restrictions;

• The need to optimize interior space within manufactured homes; and

• 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.

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)

and requirement for the exterior ceiling insulation to be of uniform thickness or uniform density, given the space constraints of manufactured homes.

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”)

, 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.

CFPB report, 2021.

https://files.consumerfinance.gov/f/documents/cfpb_manufactured-housing-finance-new-insights-hmda_report_2021-05.pdf.

DOE's review of the 2021 CFPB Report”, presented the following key findings:

• 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.

• 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);

• 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.

• 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.

• 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

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

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

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,”

manufactured housing serves households below 60 percent median income for low-income owners and below 50 percent median income for very low-income renters.

(Next Step, No. 1617 at p. 2) Further, they commented that based on a 2020 Urban Institute study,

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.

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)

Next Step cited the following HUD program definitions: 50% median income = $33,761 = Very Low Income; 80% Median Income = $54,017 = Low Income;

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.

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.

https://www.urban.org/urban-wire/22-million-renters-and-owners-manufactured-homes-are-mostly-left-out-pandemic-assistance.

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.

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-

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

and considered an additional price elasticity as part of a scenario analysis (See appendix 11A for further information).

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.”

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).

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).

Additionally, the 2021 CFPB Report

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.

Manufactured Housing Institute. 2021 Manufactured Housing Facts: Industry Overview.

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

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.

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

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.

https://fhalenders.com/fha-debt-to-income-ratio/.

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

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® 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)

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

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

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.

86 FR 59042.

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.

Table III.1 summarizes the average, minimum and maximum sales prices based on census region and section.

Manufactured Housing Survey, Public Use File (PUF) 2020.

www.census.gov/data/datasets/2020/econ/mhs/puf.html.

Table III.1—MHS PUF 2020 Census Region and Sales Price Data

Census region

Single-section sales price (2020$)

Average

Minimum

Maximum

Dual-section sales price (2020$)

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.

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.

Manufactured Housing Survey, Annual Tables of New Manufactured Homes: 2014—2020;

www.census.gov/data/tables/time-series/econ/mhs/annual-data.html.

Manufactured Housing Institute, Annual Production and Shipment Data;

www.manufacturedhousing.org/annual-production/.

Table III.2—MHS Average Sales Price Data by HUD Zone

HUD zone

Single-section average sales price (2020$)

Dual-section average sales price (2020$)

$57,124

$107,003

57,290

111,208

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

(using the federal poverty level thresholds

) 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.

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 (

www2.census.gov/programs-surveys/ahs/2019/2019%20AHS%20Definitions.pdf

U.S. Census Bureau. Poverty Thresholds.

www.census.gov/data/tables/time-series/demo/income-poverty/historical-poverty-thresholds.html.

Table III.3—2019 AHS Poverty Level Summary Data

Poverty level

Number of units (thousands)

Single-wide

Double-wide

Percentage of units (%)

Single-wide

Double-wide

Less than 100 percent

1109

506

Less than 200 percent

2278

1307

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

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 (

) 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%)

Yearly Incremental Loan Payment

First Year Incremental Payment (Down-payment + Loan)

133

Yearly Energy Cost Savings

177

First Year Savings (Energy Cost Savings—Incremental 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

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

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)

Louisiana

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 se

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