[Federal Register Volume 87, Number 104 (Tuesday, May 31, 2022)]
[Rules and Regulations]
[Pages 32728-32824]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-10926]
[[Page 32727]]
Vol. 87
Tuesday,
No. 104
May 31, 2022
Part III
Department of Energy
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10 CFR Part 460
Energy Conservation Program: Energy Conservation Standards for
Manufactured Housing; Final Rule
Federal Register / Vol. 87 , No. 104 / Tuesday, May 31, 2022 / Rules
and Regulations
[[Page 32728]]
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DEPARTMENT OF ENERGY
10 CFR Part 460
[EERE-2009-BT-BC-0021]
RIN 1904-AC11
Energy Conservation Program: Energy Conservation Standards for
Manufactured Housing
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Final rule.
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SUMMARY: The U.S. Department of Energy (``DOE'' or ``the Department'')
is publishing a final rule to establish energy conservation standards
for manufactured housing pursuant to the Energy Independence and
Security Act of 2007. This document presents standards based on the
2021 version of the International Energy Conservation Code (``IECC'')
and comments received during interagency consultation with the U.S.
Department of Housing and Urban Development, as well as from
stakeholders. The adopted standards would provide a set of ``tiered''
standards based on size that would apply the 2021 IECC-based standards
to manufactured homes, except that single-section manufactured homes
would be subject to less stringent building thermal envelope
requirements compared to multi-section manufactured homes.
DATES: The effective date of this rule is August 1, 2022. Compliance
with the adopted standards established for manufactured housing in this
final rule is required on and after May 31, 2023.
The incorporation by reference of certain publications listed in
this rule is approved by the Director of the Federal Register on August
1, 2022.
FOR FURTHER INFORMATION CONTACT: Mr. John Cymbalsky, U.S. Department of
Energy, Office of Energy Efficiency and Renewable Energy, Building
Technologies Program (EE-2J), 1000 Independence Avenue SW, Washington,
DC 20585; Telephone: 202-287-1692; Email:
[email protected].
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: [email protected].
SUPPLEMENTARY INFORMATION: This final rule incorporates by reference
into 10 CFR part 460 the following industry standards:
ANSI/ACCA 2 Manual J-2016 (ver 2.50) (``ACCA Manual J''), Manual
J--Residential Load Calculations, Eight Edition, Version 2.50,
Copyright 2016.
ANSI/ACCA 3 Manual S-2014 (``ACCA Manual S''), Manual S--
Residential Equipment Selection, Second Edition, Version 1.00,
Copyright 2014.
Copies of Manual J and Manual S may be purchased from Air
Conditioning Contractors of America Inc., (ACCA), 2800 S. Shirlington
Road, Suite 300, Arlington, VA 22206, Telephone: 703-575-4477.
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'').\1\ (42
[[Page 32729]]
U.S.C. 17071) Manufactured homes are constructed according to a code
administered by the U.S. Department of Housing and Urban Development
(``HUD Code''). 24 CFR part 3280. See also generally 42 U.S.C. 5401-
5426. Structures, such as site-built and modular homes that are
constructed to the state, local or regional building codes are excluded
from the coverage of the HUD Code.\2\
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\1\ The National Manufactured Housing Construction and Safety
Standards Act of 1974, as amended, defines ``manufactured home'' as
``a structure, transportable in one or more sections, which in the
traveling mode is 8 body feet or more in width or 40 body feet or
more in length or which when erected on-site is 320 or more square
feet, and which is built on a permanent chassis and designed to be
used as a dwelling with or without a permanent foundation when
connected to the required utilities, and includes the plumbing,
heating, air-conditioning, and electrical systems contained therein;
except that such term shall include any structure that meets all the
requirements of this paragraph except the size requirements and with
respect to which the manufacturer voluntarily files a certification
required by the Secretary [pursuant to 24 CFR 3282.13] and complies
with the standards established under this title [24 CFR part 3280];
and except that such term shall not include any self-propelled
recreational vehicle.'' 42 U.S.C. 5402(6).
\2\ See 42 U.S.C. 5403(f). See also 24 CFR 3282.12.
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EISA directs DOE to base the standards on the most recent version
of the International Energy Conservation Code (``IECC'') and any
supplements to that document, except in cases where DOE finds that the
IECC is not cost-effective or where a more stringent standard would be
more cost-effective, based on the impact of the IECC on the purchase
price of manufactured housing and on total life-cycle construction and
operating costs. (See 42 U.S.C. 17071(b)(1)) Standards shall be
established after notice and an opportunity to comment by manufacturers
of manufactured housing and other interested parties, and consultation
with the Secretary of Housing and Urban Development (``HUD''), who may
seek further counsel from the Manufactured Housing Consensus Committee.
(42 U.S.C. 17071(a)(2)) The energy conservation standards established
by DOE may: (1) Take into consideration the design and factory
construction techniques of manufactured homes, (2) be based on the
climate zones established by HUD rather than the climate zones of the
IECC, and (3) provide for alternative practices that result in net
estimated energy consumption equal to or less than the specified
standards. (42 U.S.C. 17071(b)(2)).
On June 17, 2016, DOE published in the Federal Register a notice of
proposed rulemaking (``NOPR''), including proposals recommended by the
negotiated rulemaking working group for manufactured housing. 81 FR
39756 (``June 2016 NOPR''). DOE also issued a comprehensive technical
support document. See Document ID EERE-2009-BT-BC-0021-0136.\3\ The
agency also issued for public review and comment a draft Environmental
Assessment (``EA'') pursuant to the National Environmental Policy Act.
In conjunction with the draft EA, DOE issued a request for information
that would help it analyze potential impacts of the proposed standards
on the indoor air quality of manufactured homes. See Draft
Environmental Assessment for Notice of Proposed Rulemaking, ``Energy
Conservation Standards for Manufactured Housing'' With Request for
Information on Impacts to Indoor Air Quality, 81 FR 42576 (June 30,
2016) (``2016 EA-RFI''). DOE received nearly 50 comments on the
proposed rule during the comment period. In addition, DOE also received
over 700 substantively similar form letters from individuals. DOE also
received 7 comments to the 2016 EA-RFI during its comment period.
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\3\ Available at: www.regulations.gov/document?D=EERE-2009-BT-BC-0021-0136.
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During DOE's interagency consultation with HUD, HUD expressed
concerns about the adverse impacts on manufactured housing
affordability that would likely follow if DOE were to adopt the
approach laid out in its June 2016 NOPR. A variety of commenters also
expressed concerns over the potentially negative impacts on the
affordability of manufactured housing flowing from increased consumer
costs resulting from DOE's approach in the June 2016 NOPR. In December
2017, the Sierra Club filed a suit against DOE in the U.S. District
Court for the District of Columbia, alleging that DOE had failed to
meet its statutory deadlines for establishing energy efficiency
standards for manufactured housing. On August 3, 2018, DOE published a
Notice of Data Availability (``NODA''). 83 FR 38073 (``August 2018
NODA''). In the August 2018 NODA, DOE stated it was examining a number
of possible alternatives to those proposed in the June 2016 NOPR on
which it sought further input from the public, including the first-time
costs related to the purchase of these homes. In November 2019, the
court in the above-referenced litigation entered a consent decree in
which DOE agreed to complete the rulemaking by stipulated dates.
After evaluating the comments received in response to the June 2016
NOPR and the August 2018 NODA, DOE published a supplemental NOPR
(``SNOPR'') on August 26, 2021, in which DOE proposed energy
conservation standards for manufactured homes based on the 2021 IECC.
86 FR 47744 (``August 2021 SNOPR''). In the August 2021 SNOPR, DOE also
proposed that the standards would be based on the current HUD zones.
DOE's primary proposal in the August 2021 SNOPR was a ``tiered''
approach, based on the 2021 IECC, wherein a subset of the energy
conservation standards (based on retail list price) would be less
stringent for certain manufactured homes in light of the cost-
effectiveness considerations required by statute. DOE's alternate
proposal was an ``untiered'' approach, wherein energy conservation
standards for all manufactured homes would be based on certain thermal
envelope components and specifications of the 2021 IECC. Both proposals
replaced the June 2016 NOPR proposal. Id. DOE sought comment on these
proposals, as well as alternate thresholds, including a size-based
threshold (e.g., square footage, number of sections) and a region-based
threshold, and alternative exterior wall insulation requirements (R-21)
for certain HUD zones. Id.
On October 26, 2021, DOE published a NODA regarding updated inputs
and results of corresponding analyses presented in the August 2021
SNOPR (both tiered and untiered approaches), including a sensitivity
analysis regarding an alternate sized based tier threshold and an
alternate exterior wall insulation requirement (R-21) for certain HUD
zones. 86 FR 59042 (``October 2021 NODA'') In addition, DOE reopened
the public comment period on the August 2021 SNOPR through November 26,
2021. DOE explained that it would consider the updated inputs and
corresponding analyses, as well as comments on the inputs and analyses,
as part of the rulemaking. In addition, DOE stated it may further
revise the analysis presented in this rulemaking based on any new or
updated information or data it obtains and encouraged stakeholders to
provide any additional data or information that may inform the
analysis. Id
On January 14, 2022, DOE published a draft environmental impact
statement (``DEIS'') for proposed energy conservation standards for
manufactured housing (DOE/EIS-0550D). (87 FR 2359) (``January 2022
DEIS'') DOE prepared the January 2022 DEIS in support of the August
2021 SNOPR and October 2021 NODA.
DOE invited input on the January 2022 DEIS for 45 days (through
February 28, 2022). In January 2022, DOE held two public meetings for
the DEIS and invited oral comments. Upon issuance of the January 2022
DEIS, DOE reopened the public comment period on the SNOPR through
February 28, 2022, to invite public comments under the rulemaking
process on how the January 2022 DEIS should inform the final energy
conservation standards. January 14, 2022 (87 FR 2359) Relevant comments
on the January 2022 DEIS and those submitted in the concurrent comment
period for the SNOPR were considered by DOE in preparing the final
Environmental Impact Statement (``FEIS''), to help inform DOE's
decision-making process for establishing
[[Page 32730]]
energy conservation standards for manufactured housing. The Notice of
Availability for the FEIS (DOE/EIS-0550) was published on April 8,
2022.\4\ (87 FR 20852).
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\4\ The draft and final EIS documents are available at www.ecs-mh.evs.anl.gov/.
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In this final rule, DOE codifies the energy conservation standards
in a new part of the Code of Federal Regulations (``CFR'') under 10 CFR
part 460, subparts A, B, and C. Subpart A presents generally the scope
of the rule and provides definitions of key terms. Subpart B would
establish new requirements for manufactured homes that relate to
climate zones, the building thermal envelope, air sealing, and
installation of insulation, based on certain provisions of the 2021
IECC. Subpart C would establish new requirements based on the 2021 IECC
related to duct sealing, heating, ventilation, and air conditioning
(``HVAC''); service hot water systems; mechanical ventilation fan
efficacy; and heating and cooling equipment sizing.
Under the energy conservation standards, the stringency of the
requirements under subpart B would depend on the size of the
manufactured home for the tiered approach. Accordingly, two sets of
standards would be established in subpart B (i.e., Tier 1 and Tier 2).
Both Tier 1 and Tier 2 incorporate building thermal envelope measures
based on certain thermal envelope components subject to the 2021 IECC
that DOE, over the course of this rulemaking, determined applicable and
appropriate for manufactured homes. Tier 1 applies these building
thermal envelope provisions to single-section manufactured homes, but,
for the reasons discussed in section III of this document, only
includes components at stringencies that would increase the incremental
purchase price by less than $750. Tier 2 applies these same building
thermal envelope provisions to multi-section manufactured homes but at
higher stringencies specified for site built homes in the 2021 IECC,
with alternate exterior wall insulation requirement (R-21) for climate
zones 2 and 3 based on consideration of the design and factory
construction techniques of manufactured homes, as presented in the
August 2021 SNOPR and October 2021 NODA. Further, the energy
conservation standards for both tiers also include duct and air
sealing, insulation installation, HVAC and service hot water system
specifications, mechanical ventilation fan efficacy, and heating and
cooling equipment sizing provisions, based on the 2021 IECC.
DOE is adopting a compliance date such that the standards would
apply to manufactured homes starting one year after the publication
date of the final rule in the Federal Register. As discussed in
sections I.F and III.A of this document, DOE has concluded that this
approach is cost-effective based on the expected total life-cycle cost
(``LCC'') savings for the lifetime of the home associated with
implementation of the energy conservation standards.
A. Benefits and Costs to Purchasers of Manufactured Housing
As explained in greater detail in section IV.A of this document and
in chapter 9 of the final rule technical support document (``TSD''),
DOE estimates that benefits to manufactured home homeowners--in terms
of LCC savings--of the requirements outweighs the potential increase in
purchase price for manufactured homes.
Table I.1 and Table I.2 present the average purchase price increase
of a manufactured home as a result of the energy conservation
standards. This does not include any potential testing or compliance
costs.
Table I.1--National Average Manufactured Housing Purchase Price (and
Percentage) Increases Under Tier 1 Standard
[2020$]
------------------------------------------------------------------------
Single-section
-------------------------------
$ %
------------------------------------------------------------------------
Climate Zone 1.......................... 627 1.1
Climate Zone 2.......................... 627 1.1
Climate Zone 3.......................... 719 1.3
National Average........................ 660 1.2
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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 *
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Tier 1 standard Tier 2 standard
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Lifecycle Cost Savings (30-Year $1,594 $3,573
Lifetime)........................
Lifecycle Cost Savings (10-Year $720 $743
Lifetime)........................
Annual Energy Cost Savings in $177 $475
2020$............................
Simple Payback Period (Years)..... 3.7 8.9
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* negative values in parenthesis.
[[Page 32731]]
[GRAPHIC] [TIFF OMITTED] TR31MY22.209
B. Impact on Manufacturers
As discussed in more detail in section IV.B of this document and
chapter 12 of the final rule TSD, the industry net present value
(``INPV'') is the sum of the discounted cash flows to the industry from
the reference year (2022) through the end of the analysis period
(2052). Using a real discount rate of 9.2 percent, as discussed in
section IV.B.2 of this document, DOE estimates the INPV under a no-
regulatory-action alternative, which would maintain energy conservation
requirements at the levels established in the existing HUD Code, to be
$15.0 billion. Under the updated standard, the change in INPV would
range from -1.4 percent to 1.3 percent. Industry would incur total
conversion costs of $29.5 million. Conversion costs are one-time
investments, as described in section IV.B.1 of this section.
C. Nationwide Impacts
As described in more detail in section IV.C of this document and
chapter 11 of the final rule TSD, DOE's national impact analysis
(``NIA'') projects a net benefit to the nation as a whole under the
standard, in terms of national energy savings (``NES'') and the net
present value (``NPV'') of expected total manufactured homeowner costs
and savings compared with the baseline. In this case, the baseline is
manufactured homes built to the minimum standards established in the
HUD Code. As part of its NIA, DOE has projected the energy savings,
operating cost savings, incremental costs, and NPV of manufactured
homeowner benefits for manufactured homes sold in a 30-year period from
the compliance year of 2023 through 2052. The NIA builds off the LCC
analysis by aggregating results for all affected shipments over a 30-
year period. All NES and percentage energy savings calculations are
relative to a no-regulatory-action alternative, which would maintain
energy conservation requirements at the levels established in the
existing HUD Code.
Table I.4 illustrates the cumulative NES over the 30-year analysis
period under the standards on a full-fuel-cycle (``FFC'') energy
savings basis. FFC energy savings apply a factor to account for losses
associated with generation, transmission, and distribution of
electricity, and the energy consumed in extracting, processing, and
transporting or distributing primary fuels. NES differ among the
different climate zones because of varying energy conservation
requirements and varying shipment projections in each climate zone. All
NES and percentage energy savings calculations are relative to a no-
regulatory-action alternative, which as discussed would maintain energy
conservation requirements at the levels established in the existing HUD
Code. DOE estimates that under the updated standards, 1.88 quads of FFC
energy would be saved relative to the baseline over the 30-year
analysis period.
Table I.4--Cumulative Full-Fuel-Cycle National Energy Savings of Manufactured Homes Purchased 2023-2052 With a
30-Year Lifetime
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Single-section
quadrillion Btu Multi-section Total (quads)
(quads) (quads)
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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
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Total................................................. 0.462 1.414 1.876
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Table I.5 and Table I.6 illustrate the NPV of consumer benefits
over the 30-year analysis period for a discount rate of 7 percent and 3
percent, respectively, the percentages are used in accordance with
Office of Management and Budget guidance, as discussed in section
IV.A.1.d of this document. The NPV of consumer benefits differ among
the three climate zones because of differing initial costs and
corresponding operating cost savings, as well as differing shipment
projections in each climate zone.
[[Page 32732]]
Table I.5--Net Present Value of Consumer Benefits for Manufactured Homes Purchased 2023-2052 With a 30-Year
Lifetime at a 7% Discount Rate
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Single-section Multi-section Total (billion
(billion 2020$) (billion 2020$) 2020$)
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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 $1.52
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Table I.6--Net Present Value of Consumer Benefits for Manufactured Homes Purchased 2023-2052 With a 30-Year
Lifetime at a 3% Discount Rate
----------------------------------------------------------------------------------------------------------------
Single-section Multi-section Total (billion
(billion 2020$) (billion 2020$) 2020$)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1............................................ $0.40 $1.17 $1.58
Climate Zone 2............................................ $0.35 $0.89 $1.24
Climate Zone 3............................................ $1.10 $1.15 $2.25
-----------------------------------------------------
Total................................................. $1.85 $3.21 $5.06
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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 (CO2), mercury (Hg),
nitric oxide and nitrogen dioxide (NOX), sulfur dioxide
(SO2), methane (CH4), and nitrous oxide
(N2O). These emissions reductions are referred to as
``site'' emissions reductions. Furthermore, DOE estimates reductions in
emissions associated with the production of these fuels (including
extracting, processing, and transporting these fuels to power plants or
manufactured homes). These emissions reductions are referred to as
``upstream'' emissions reductions. Together, site emissions reductions
and upstream emissions reductions account for the FFC.
Table I.7 lists the emissions reductions under the rule for both
single-section and multi-section manufactured homes. (In this table and
elsewhere in this document, the ``E'' format notes a multiplier of a
power of ten, e.g., ``2.92E-02'' means 2.9 x 10-02, which is
0.029.)
Table I.7--Emissions Reductions Associated With Electricity Production for Manufactured Homes Purchased 2023-
2052 With a 30-Year Lifetime
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Pollutant Single-section Multi-section Total
----------------------------------------------------------------------------------------------------------------
Site Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................................... 19.5 53.8 73.3
Hg (metric tons)................................................ 2.92E-02 9.60E-02 1.25E-01
NOX (thousand metric tons)...................................... 10.9 26.6 37.5
SO2 (thousand metric tons)...................................... 7.2 20.4 27.6
CH4 (thousand metric tons)...................................... 1.03 3.11 4.14
N2O (thousand metric tons)...................................... 0.21 0.57 0.78
----------------------------------------------------------------------------------------------------------------
Upstream Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................................... 2.01 5.05 7.06
Hg (metric tons)................................................ 1.48E-04 4.45E-04 5.93E-04
NOX (thousand metric tons)...................................... 25.4 64.8 90.2
SO2 (thousand metric tons)...................................... 0.21 0.47 0.67
CH4 (thousand metric tons)...................................... 127 354 481
N2O (thousand metric tons)...................................... 0.011 0.026 0.037
----------------------------------------------------------------------------------------------------------------
Total Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................................... 21.5 58.9 80.4
Hg (metric tons)................................................ 2.93E-02 9.64E-02 0.13
NOX (thousand metric tons)...................................... 36.3 91.4 127.7
SO2 (thousand metric tons)...................................... 7.44 20.9 28.3
CH4 (thousand metric tons)...................................... 128 357 485
N2O (thousand metric tons)...................................... 0.23 0.59 0.82
----------------------------------------------------------------------------------------------------------------
[[Page 32733]]
DOE estimates the value of climate benefits from a reduction in
greenhouse gases using four different estimates of the social cost of
CO2 (SC-CO2), the social cost of methane (SC-
CH4), and the social cost of nitrous oxide (SC-
N2O). Together these represent the social cost of greenhouse
gases (SC-GHG). DOE used interim SC-GHG values developed by an
Interagency Working Group on the Social Cost of Greenhouse Gases
(IWG).\5\ The derivation of these values is discussed in section IV.D
of this document. For presentational purposes, the climate benefits
associated with the average SC-GHG at a 3-percent discount rate are
estimated to be $3.3 billion. DOE does not have a single central SC-GHG
point estimate and it emphasizes the importance and value of
considering the benefits calculated using all four SC-GHG estimates.\6\
DOE estimated the monetary health benefits of NOX and
SO2 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.
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\5\ See Interagency Working Group on Social Cost of Greenhouse
Gases, Technical Support Document: Social Cost of Carbon, Methane,
and Nitrous Oxide. Interim Estimates Under Executive Order 13990,
Washington, DC, February 2021. Available at: www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf
(last accessed March 17, 2022).
\6\ On March 16, 2022, the Fifth Circuit Court of Appeals (No.
22-30087) granted the federal government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction
issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a
result of the Fifth Circuit's order, the preliminary injunction is
no longer in effect, pending resolution of the federal government's
appeal of that injunction or a further court order. Among other
things, the preliminary injunction enjoined the defendants in that
case from ``adopting, employing, treating as binding, or relying
upon'' the interim estimates of the social cost of greenhouse
gases--which were issued by the Interagency Working Group on the
Social Cost of Greenhouse Gases on February 26, 2021--to monetize
the benefits of reducing greenhouse gas emissions. In the absence of
further intervening court orders, DOE will revert to its approach
prior to the injunction and presents monetized benefits where
appropriate and permissible under law.
Table I.8--Net Present Value of Monetized Climate and Health Benefits From Emissions Reductions
----------------------------------------------------------------------------------------------------------------
Net present value (million 2020$)
Monetary benefits * Discount rate -----------------------------------
(%) Single-section Multi-section
----------------------------------------------------------------------------------------------------------------
Climate Benefits **....................................... 3 881.3 2,425.9
Health Benefits [dagger].................................. 3 1,503.5 4,088.2
7 508.1 1,386.3
----------------------------------------------------------------------------------------------------------------
* Monetized values do not include other important unquantified effects, including certain climate benefits and
certain air quality benefits from the reduction of toxic air pollutants and other emissions
** Climate benefits are calculated using four different estimates of the social cost of carbon (SC-CO2), methane
(SC-CH4), and nitrous oxide (SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent discount rates;
95th percentile at 3 percent discount rate), as in Table IV.22 through Table IV.24. Together these represent
the global SC-GHG. For presentational purposes of this table, the climate benefits associated with the average
SC-GHG at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
estimate. See section IV.D of this document for more details. On March 16, 2022, the Fifth Circuit Court of
Appeals (No. 22-30087) granted the federal government's emergency motion for stay pending appeal of the
February 11, 2022, preliminary injunction issued in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a
result of the Fifth Circuit's order, the preliminary injunction is no longer in effect, pending resolution of
the federal government's appeal of that injunction or a further court order. Among other things, the
preliminary injunction enjoined the defendants in that case from ``adopting, employing, treating as binding,
or relying upon'' the interim estimates of the social cost of greenhouse gases--which were issued by the
Interagency Working Group on the Social Cost of Greenhouse Gases on February 26, 2021--to monetize the
benefits of reducing greenhouse gas emissions. In the absence of further intervening court orders, DOE will
revert to its approach prior to the injunction and presents monetized benefits where appropriate and
permissible under law.
[dagger] Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only
monetizing (for NOX and SO2) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits,
but will continue to assess the ability to monetize other effects such as health benefits from reductions in
direct PM2.5 emissions. See section IV.D.2 of this document for more details.
E. Total Benefits and Costs
Table I.9 summarizes the monetized benefits and costs expected to
result from the amended standards for manufactured homes. There are
other important unquantified effects, including certain unquantified
climate benefits, unquantified public health benefits from the
reduction of toxic air pollutants and other emissions, unquantified
energy security benefits, and distributional effects, among others.
Table I.9--Summary of Monetized Benefits and Costs to the Nation Under
the Adopted Standards
------------------------------------------------------------------------
Net present value
(billion $2020)
------------------------------------------------------------------------
3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings...................... 10.2
Climate Benefits *................................... 3.3
Health Benefits **................................... 5.6
Total Benefits....................................... 19.1
Consumer Incremental Product Costs [dagger].......... 5.1
Net Benefits..................................... 14.0
------------------------------------------------------------------------
7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings...................... 3.9
Climate Benefits *................................... 3.3
Health Benefits **................................... 1.9
Total Benefits [dagger].............................. 9.1
[[Page 32734]]
Consumer Incremental Product Costs [dagger][dagger].. 2.4
Net Benefits..................................... 6.7
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with
manufactured housing shipped in 2023-2052. These results include
benefits to consumers which accrue after 2052 from the products
shipped in 2023-2052.
* Climate benefits are calculated using four different estimates of the
social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
(SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
discount rates; 95th percentile at 3 percent discount rate), as shown
in Table IV.22 through Table IV.24. Together these represent the
global SC-GHG. For presentational purposes of this table, the climate
benefits associated with the average SC-GHG at a 3 percent discount
rate are shown, but the Department does not have a single central SC-
GHG point estimate. See section. IV.D of this document for more
details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-
30087) granted the federal government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction issued
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result
of the Fifth Circuit's order, the preliminary injunction is no longer
in effect, pending resolution of the federal government's appeal of
that injunction or a further court order. Among other things, the
preliminary injunction enjoined the defendants in that case from
``adopting, employing, treating as binding, or relying upon'' the
interim estimates of the social cost of greenhouse gases--which were
issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of
reducing greenhouse gas emissions. In the absence of further
intervening court orders, DOE will revert to its approach prior to the
injunction and presents monetized benefits where appropriate and
permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for NOX and SO2) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects such as health benefits from reductions in direct PM2.5
emissions. See section IV.D.2 of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
health benefits that can be quantified and monetized. For presentation
purposes, total and net benefits for both the 3-percent and 7-percent
cases are presented using the average SC-GHG with 3-percent discount
rate, but the Department does not have a single central SC-GHG point
estimate. DOE emphasizes the importance and value of considering the
benefits calculated using all four SC-GHG estimates.
[dagger][dagger] The incremental costs include incremental costs
associated with principal and interest, mortgage and property tax for
the analyzed loan types. Further discussion can be found in chapter 8
of the TSD.
The benefits and costs of the standards for manufactured housing
sold in 2023-2052 can also be expressed in terms of annualized values.
The monetary values for the total annualized net benefits are (1) the
savings in consumer operating costs, minus (2) the increases in product
installed costs, plus (3) the value of the climate and health benefits
of emission reductions, all annualized.\7\ The national operating cost
savings are domestic private U.S. consumer monetary savings that occur
as a result of purchasing the covered housing and are measured for the
lifetime of manufactured housing shipped in 2023-2052. Total Benefits
for both the 3-percent and 7-percent cases are presented using the
average social costs with 3-percent discount rate. Estimates of SC-GHG
values are presented for all four discount rates in section IV.D of
this document. Table I.10 presents the total estimated monetized
benefits and costs to manufactured housing homeowners associated with
the standard, expressed in terms of annualized values.
---------------------------------------------------------------------------
\7\ To convert the time-series of costs and benefits into
annualized values, DOE calculated a present value in 2020, the year
used for discounting the NPV of total consumer costs and savings.
For the benefits, DOE calculated a present value associated with
each year's shipments in the year in which the shipments occur
(e.g., 2020 or 2030), and then discounted the present value from
each year to 2020. The calculation uses discount rates of 3 and 7
percent for all costs and benefits. Using the present value, DOE
then calculated the fixed annual payment over a 30-year period,
starting in the compliance year, which yields the same present
value.
Table I.10--Annualized Monetized Benefits and Costs to the Nation Under the Adopted Standard
----------------------------------------------------------------------------------------------------------------
High-net-
Primary estimate Low-net-benefits benefits
estimate estimate
----------------------------------------------------------------------------------------------------------------
(Million $2020)
----------------------------------------------------------------------------------------------------------------
3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings........................... 551 478 627
Climate Benefits *........................................ 169 155 180
Health Benefits **........................................ 285 263 303
Total Benefits [dagger]................................... 1,005 896 1110
Consumer Incremental Product Costs [dagger][dagger]....... 277 255 294
Net Benefits.......................................... 728 641 816
----------------------------------------------------------------------------------------------------------------
7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings........................... 361 322 402
Climate Benefits *........................................ 169 155 180
Health Benefits **........................................ 153 143 161
Total Benefits [dagger]................................... 682 620 742
Consumer Incremental Product Costs [dagger][dagger]....... 221 213 231
[[Page 32735]]
Net Benefits.......................................... 461 407 511
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with manufactured housing shipped in 2023-2052.
These results include benefits to consumers which accrue after 2052 from the products shipped in 2023-2052.
The Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from the
AEO2020 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition,
incremental product costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the Low
Net Benefits Estimate, and a high decline rate in the High Net Benefits Estimate. The methods used to derive
projected price trends are explained in sections IV.A and IV.C of this document. Note that the Benefits and
Costs may not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the SC-GHG (see section IV.D of this
document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
estimate, and it emphasizes the importance of considering the benefits calculated using all four SC-GHG
estimates. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the federal
government's emergency motion for stay pending appeal of the February 11, 2022, preliminary injunction issued
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth Circuit's order, the
preliminary injunction is no longer in effect, pending resolution of the federal government's appeal of that
injunction or a further court order. Among other things, the preliminary injunction enjoined the defendants in
that case from ``adopting, employing, treating as binding, or relying upon'' the interim estimates of the
social cost of greenhouse gases--which were issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of reducing greenhouse gas emissions. In the
absence of further intervening court orders, DOE will revert to its approach prior to the injunction and
presents monetized benefits where appropriate and permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
(for NOX and SO2) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
continue to assess the ability to monetize other effects such as health benefits from reductions in direct
PM2.5 emissions. See section IV.D.2 of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
percent discount rate, but the Department does not have a single central SC-GHG point estimate.
[dagger][dagger] The incremental costs include incremental costs associated with principal and interest,
mortgage and property tax for the analyzed loan types. Further discussion can be found in chapter 8 of the
TSD.
DOE's analysis of the national impacts of the standards is
described in sections IV.C, IV.D, and IV.E of this document.
F. Conclusion
DOE has determined that the conservation standards in this final
rule are cost-effective when evaluating the impact of the standards on
the purchase price of a manufactured home and on the total life-cycle
construction and operating costs. As discussed in section III.A of this
document, the tiered standards adopted in this final rule provide
positive average LCC savings over the life of the manufactured home
(i.e., 30-years) in every city for which the standards are analyzed, as
well as nationally. Additionally, DOE has also determined that the
benefits to the Nation of the standards (energy savings, consumer LCC
savings, positive NPV of consumer benefit, energy security, and
emission reductions) outweigh the burdens (loss of INPV, LCC increases
for some homeowners of manufactured housing. and price-sensitive
consumers who do not purchase manufactured homes).
II. Introduction
This section addresses the legal and factual background to date
regarding DOE's efforts to establish energy conservation standards for
manufactured housing. By statute, DOE is obligated to set standards for
manufactured housing in consultation with HUD and to consider certain
specific factors when establishing these standards. DOE is also
obligated to update these standards within a prescribed period of time.
A. Authority
Section 413 of EISA directs DOE to:
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 \8\ rather than the climate zones under the IECC; and
---------------------------------------------------------------------------
\8\ The statute uses the term ``climate zones'' in reference to
the HUD requirements (42 U.S.C. 17071(b)(2)(B). HUD has not
established ``climate zones'' but has established ``insulation
zones.'' See, U/O Value Zone Map for Manufactured Housing at 24 CFR
3280.506. DOE understands the statutory reference to ``climate
zones'' in this context to mean the established insulation zones at
24 CFR 3280.506.
---------------------------------------------------------------------------
Provide for alternative practices that, while not meeting
the specific standards established by DOE, result in net estimated
energy consumption equal to or less than the specific energy
conservation standards.
(42 U.S.C. 17071(b)(2))
DOE is directed to update its standards not later than one year
after any revision to the IECC. (42 U.S.C. 17071(b)(3)) Finally, under
EISA, a manufacturer of manufactured housing that violates a provision
of Part 460 ``is liable to the United States for a civil penalty not
exceeding 1 percent of the manufacturer's retail list price of the
manufactured housing.'' (42 U.S.C. 17071(c))
B. Background
1. Current Standards
Section 413 of EISA requires DOE to regulate energy conservation in
manufactured housing, an area of the building construction industry
[[Page 32736]]
traditionally regulated by HUD. HUD has regulated the manufactured
housing industry since 1976, when it first promulgated the HUD Code.
(42 U.S.C. 5401 et seq.; 24 CFR part 3280 et seq.) The purpose of the
HUD Code includes protecting the quality, durability, safety, and
affordability of manufactured homes; facilitating the availability of
affordable manufactured homes and increasing homeownership for all
Americans; protecting residents of manufactured homes with respect to
personal injuries and the amount of insurance costs and property
damages in manufactured housing; and ensuring that the public interest
in, and need for, affordable manufactured housing is duly considered in
all determinations relating to the Federal standards and their
enforcement. (42 U.S.C. 5401(b))
The HUD Code includes requirements related to the energy
conservation of manufactured homes. Specifically, Subpart F of the HUD
Code, entitled ``Thermal Protection,'' establishes requirements for
Uo of the building thermal envelope. Uo is a
measurement of the heat loss or gain rate through the building thermal
envelope of a manufactured home; therefore, a lower Uo
corresponds with a more insulated building thermal envelope. The HUD
Code contains maximum requirements for the combined Uo 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
Uo requirements based on the installation of high-efficiency
heating and cooling equipment in the manufactured home. 24 CFR
3280.508(d). Moreover, Subpart F of the HUD Code establishes
requirements to reduce air leakage through the building thermal
envelope. 24 CFR 3280.505.
Subpart H of the HUD Code, entitled ``Heating, Cooling, and Fuel
Burning Systems,'' establishes requirements for sealing air supply
ducts and for insulating both air supply and return ducts. 24 CFR
3280.715(a). R-value is the measure of a building component's ability
to resist heat flow (thermal resistance). A higher R-value represents a
greater ability to resist heat flow and generally corresponds with a
thicker level of insulation. The HUD Code contains no requirements for
fenestration solar heat gain coefficient (``SHGC''), mechanical system
piping insulation, or installation of insulation.
The statutory authority for DOE's rulemaking effort is different
from the statutory authority underlying the HUD Code. EISA directs DOE
to establish energy conservation standards for manufactured housing
without reference to existing HUD Code requirements that also address
energy conservation. However, EISA also requires DOE to consult with
HUD. (42 U.S.C. 17071(a)(2)(B)) Such consultations have informed DOE in
development of the regulations finalized in this document, and DOE
remains cognizant of the HUD Code, as well as HUD's Congressional
charge to protect the quality, durability, safety, affordability, and
availability of manufactured homes. Compliance with the DOE
requirements adopted in this final rule would not prevent a
manufacturer from complying with the requirements, including energy
conservation requirements, set forth in the HUD Code. Section III.G of
this document provides a crosswalk of the energy conservation standards
in this rule with the standards in the HUD Code. Moreover, as discussed
further in section III, DOE considered the potential impact on
manufactured home purchasers resulting from costs associated with
additional energy efficiency measures.
2. The International Energy Conservation Code (IECC)
The statutory authority for this rulemaking requires DOE to base
its standards on the most recent version of the IECC \9\ and any
supplements to that document, subject to certain exceptions and
considerations. (42 U.S.C. 17071(b)(1)) The IECC is a nationally-
recognized model code, developed under the auspices of and published by
the International Code Council (``ICC''). Many state and local
governments have adopted the IECC \10\ in establishing minimum design
and construction requirements for the energy efficiency of residential
and commercial buildings, including site-built residential and modular
homes.\11\ The IECC is developed through a consensus process that seeks
input from a number of relevant stakeholders and is updated on a
rolling basis, with new editions of the IECC published approximately
every three years. The IECC was first published in 1998, with the most
recent version, the 2021 IECC, being published in January 2021.
---------------------------------------------------------------------------
\9\ The website of the IECC is https://shop.iccsafe.org/international-codes/iecc-references.html.
\10\ The current status of the adoption of the IECC is provided
at www.energycodes.gov/status-state-energy-code-adoption.
\11\ Modular homes are generally excluded from the coverage of
the National Manufactured Housing Construction and Safety Standards
Act and constructed to the same state, local or regional building
codes as site-built homes. See 42 U.S.C. 5403(f); 24 CFR 3282.12.
---------------------------------------------------------------------------
The 2021 IECC is divided into two major sections, with provisions
for both residential and commercial buildings. The manufactured housing
energy conservation standards and test procedure are based on the
requirements for residential buildings. The residential building
requirements of the 2021 IECC, however, are not specific to
manufactured housing.
Chapter 4 of the residential section of the 2021 IECC sets forth
specifications for residential energy efficiency, including
specifications for building thermal envelope energy conservation,
thermostats, duct insulation and sealing, mechanical system piping
insulation, heated water circulation system, and mechanical
ventilation. To the extent that the HUD Code regulates similar aspects
of energy conservation as the 2021 IECC, the 2021 IECC is generally
considered more stringent than the corresponding requirements in the
HUD Code, given that many areas of the HUD Code have not been updated
as frequently as the IECC.
DOE notes that the IECC is designed for building structures that
have a permanent foundation. Manufactured housing structures, however,
are not built on permanent foundations but are built on a steel chassis
to enable them to be moved or towed when needed. As a result, because
they present their own set of unique considerations that the IECC was
not intended to address, some aspects of the IECC are unable, or highly
impractical, to be applied to manufactured housing. Instead, consistent
with the considerations required by EISA (e.g., 42 U.S.C.
17071(b)(2)(A)), these adopted standards utilize aspects of the IECC
that are appropriate for manufactured housing as the basis for the
standards, thereby accounting for the unique physical characteristics
of manufactured housing.
3. Development of the Initial Proposal and Responses
Based on the 2019 American Housing Survey (``2019 AHS''),
manufactured housing accounts for approximately six percent of all
homes in the United States.\12\ Because the purchase price of
manufactured homes often is lower than similarly-sized site-built
homes, manufactured homes serve as affordable housing options,
particularly for lower
[[Page 32737]]
to median income families. However, using the data from the 2019 AHS,
the median energy burden (median cost of electricity, gas, fuel oil and
other fuel as a percentage of median household income) is approximately
5 percent for manufactured home residents compared to 3 percent for all
homes. Further, the same data suggests the per square foot utility cost
for manufactured homes ($0.15 per square foot; median $178 for 1140
square feet) is higher than single-family homes ($0.14 per square foot;
median $249 for 1800 square feet). As such, the energy burden as
measured on a square foot basis, is significantly higher for residents
of manufactured homes.
---------------------------------------------------------------------------
\12\ U.S. Census Bureau, American Housing Survey 2019--National
Summary Tables. Available at 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.\13\ See 75 FR 7556 (February 22, 2010). DOE also
consulted with HUD in developing the requirements and in obtaining
input and suggestions that would increase energy conservation in
manufactured housing, while maintaining affordability. In addition to
meeting with HUD on multiple occasions, DOE attended three MHCC
meetings, where DOE gathered information from MHCC members. DOE also
initiated discussions with members of the manufactured housing industry
following the issuance of the ANOPR.\14\ A summary of each meeting is
available at 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)
---------------------------------------------------------------------------
\13\ The ANOPR comments can be accessed at: www.regulations.gov/#!docketDetail;D=EERE-2009-BT-BC-0021.
\14\ These included discussions with the Manufactured Housing
Institute (``MHI'') and several of its member manufacturers, the
California Department of Housing and Community Development, the
Georgia Manufactured Housing Division, three private-sector third-
party primary inspection agencies under the HUD manufactured housing
program, and one private-sector stakeholder familiar with
manufactured housing.
---------------------------------------------------------------------------
On June 25, 2013, DOE published a request for information (``RFI'')
seeking information on indoor air quality, financing and related
incentives, model systems of enforcement, and other studies and
research relevant to DOE's effort to establish energy conservation
standards for manufactured housing. 78 FR 37995 (``June 2013 RFI'').
The June 2016 NOPR provides more details on the comments received on
the RFI. 81 FR 39765 (June 17, 2016).
After reviewing the comments received in response to the ANOPR, the
June 2013 RFI, and other stakeholder input, DOE ultimately determined
that development of proposed manufactured housing energy conservation
standards would benefit from a negotiated rulemaking process. On June
13, 2014, DOE published a notice of intent to establish a negotiated
rulemaking manufactured housing working group (``MH working group'') to
discuss and, if possible, reach consensus on a proposed rule. 79 FR
33873. On July 16, 2014, the MH working group was established under the
Appliance Standards and Rulemaking Federal Advisory Committee
(``ASRAC'') in accordance with the Federal Advisory Committee Act and
the Negotiated Rulemaking Act. 79 FR 41456; 5 U.S.C. 561-570, App. 2.
The MH working group consisted of representatives of interested
stakeholders with a directive to consult, as appropriate, with a range
of external experts on technical issues in developing a term sheet with
recommendations on the proposed rule. The MH working group consisted of
22 members, including one member from ASRAC, and one DOE
representative. 79 FR 41456. The MH working group met in person during
six sets of public meetings held in 2014 on August 4-5, August 21-22,
September 9-10, September 22-23, October 1-2, and October 23-24. 79 FR
48097 (Aug. 15, 2014); 79 FR 59154 (Oct. 1, 2014).
On October 31, 2014, the MH working group reached consensus on
energy conservation standards for manufactured housing and assembled
its recommendations for DOE into a term sheet that was presented to
ASRAC. Public docket EERE-2009-BT-BC-0021-0107 (``Term Sheet''). ASRAC
approved the term sheet during an open meeting on December 1, 2014, and
sent it to the Secretary of Energy to develop a proposed rule.
On February 11, 2015, DOE published an RFI requesting information
that would aid in determining proposed solar heat gain coefficient
(``SHGC'') requirements for certain climate zones. 80 FR 7550
(``February 2015 RFI''). Following preparation and submission of the
term sheet by the MH working group, DOE also consulted further with HUD
regarding DOE's proposed energy conservation standards. In addition to
meeting with HUD, DOE prepared two presentations to discuss the
proposed rule with MHCC members, which were designed to gather
information on development of the proposed standards.\15\
---------------------------------------------------------------------------
\15\ Available at 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.\16\ In response to comments on the 2013 RFI, DOE also
published the 2016 EA-RFI to accompany the 2016 NOPR. The draft EA drew
no conclusions regarding the potential impacts on the indoor air
quality of manufactured homes as a result of implementing any final
energy conservation standards for these structures. DOE held a public
meeting on July 13, 2016, to present the June 2016 NOPR, which included
the proposed prescriptive and performance requirements, in addition to
the LCC, NIA, manufacturer impact analysis (``MIA''), and emissions
analyses. DOE received a number of responses to its June 2016 NOPR.
Further, in December 2017, the Sierra Club filed a suit against DOE in
the U.S. District Court for the District of Columbia, alleging that DOE
had failed to meet its statutory deadlines for establishing energy
efficiency standards for manufactured housing. Sierra Club v. Granholm,
No. 1:17-cv-02700-EGS (D.D.C. filed Dec. 18, 2017).
---------------------------------------------------------------------------
\16\ The NOPR analysis, NOPR TSD, and NOPR public meeting
information are available at 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
[[Page 32738]]
concern over the initial first-cost impacts that DOE's earlier proposal
would have on low-income buyers, led DOE to examine a potential tiered
proposal that would set varying levels of energy efficiency performance
with specified increases in incremental upfront costs that would still
improve the overall energy efficiency of manufactured homes. See 83 FR
38077. In November 2019, the court in the above-referenced litigation
entered a consent decree in which DOE agreed to complete the rulemaking
by stipulated dates.
On August 26, 2021, DOE published a supplemental NOPR (``SNOPR'')
for the manufactured housing energy conservation standards rulemaking.
86 FR 47744 (``August 2021 SNOPR''). In response to comments to the
June 2016 NOPR and August 2018 NODA, DOE proposed two standards, one
being the primary ``tiered'' proposal and the other being the alternate
``untiered'' proposal. DOE's primary proposal was the ``tiered''
approach, based on the 2021 IECC, wherein a subset of the energy
conservation standards would be less stringent for certain manufactured
homes in light of the cost-effectiveness considerations required by
EISA. DOE's alternate proposal was the ``untiered'' approach, wherein
energy conservation standards based on the 2021 IECC would apply to all
manufactured homes without a subset of less stringent standards for
certain manufactured homes. Under the tiered proposal, two sets of
standards would be established in proposed 10 CFR part 460, subpart B
(i.e., Tier 1 and Tier 2). Tier 1 would apply to manufactured homes
with a manufacturer's retail list price of $55,000 or less, and
incorporate building thermal envelope measures based on certain thermal
envelope components subject to the 2021 IECC, but would limit the
incremental purchase price increase to an average of less than $750.
Tier 2 would apply to manufactured homes with a manufacturer's retail
list price above $55,000, and incorporate building thermal envelope
measures based on certain thermal envelope components and
specifications of the 2021 IECC (i.e., the Tier 2 requirements would be
the same as those under the proposed single, ``untiered'' set of
standards). 86 FR 47744, 47746. Both proposals replaced DOE's June 2016
proposal. Additionally, DOE noted in the August 2021 SNOPR that it had
considered, and was still considering, tiers based upon metrics other
than manufacturer's retail list price such as size (e.g., square
footage, number of sections) and regional variations, and requested
feedback on the use of these other bases for the tier thresholds. Id.
at 86 FR 47760-47761. Further, DOE also considered in the August 2021
SNOPR the impacts on the LCC savings of requiring less stringent
exterior wall insulation for Tier 2 climate zones 2 and 3 (at R-21
instead of R-20+5) to remove the continuous insulation requirement. Id.
at 86 FR 47802-47803. DOE held a public meeting on September 28, 2021,
to present the August 2021 SNOPR.
On October 26, 2021, DOE published a NODA regarding updated inputs
to the August 2021 SNOPR and results of corresponding analyses,
including certain sensitivity analyses. 86 FR 59042 (``October 2021
NODA'') The updated inputs resulted, in part, in raising the threshold
between Tiers 1 and 2 to $63,000. Also, as contemplated in the August
2021 SNOPR and based on feedback from stakeholders and HUD, the
additional analyses in the NODA included analysis and impacts of a
sized-based tier threshold (based on number of sections) and analyses
of alternative exterior wall insulation requirements (R-21) for climate
zones 2 and 3. DOE reopened the public comment period on the SNOPR
through November 26, 2021, and sought comment on the updated $63,000
tier threshold, the size-based tier threshold, and alternate exterior
wall insulations requirements. In response to the August 2021 SNOPR and
the October 2021 NODA, DOE received public comments from a variety of
stakeholders. DOE also received over 900 substantively similar mass
mail campaign letters from organizations and individuals in response to
the August 2021 SNOPR, and over 300 in response to the October 2021
NODA. Further, DOE also received a number of comments from individual
commenters.\17\ All of the comment submissions are available in the
docket for this rulemaking.
---------------------------------------------------------------------------
\17\ DOE has not identified each and every individual commenter
in the Table II.2 of this document, but has included and addressed
their comments in this final rule
---------------------------------------------------------------------------
On January 14, 2022, DOE published the draft environmental impact
statement for proposed energy conservation standards for manufactured
housing (DOE/EIS-0550). 87 FR 2430 (``January 2022 DEIS'') DOE prepared
the January 2022 DEIS in support of the August 2021 SNOPR. The January
2022 DEIS analyzed price-based alternatives based around the $63,000
threshold for manufacturer retail list price and different wall
insulation requirements. It also analyzed the alternatives based on the
size of the manufactured housing (single sections and multiple sections
with differences in wall insulation requirements), untiered
alternatives with only differences in wall insulation requirements, and
a ``no action'' alternative (i.e., no DOE standard). Accordingly, DOE
published a notice re-opening the comment period on the rulemaking
proceeding to consider how the January 2022 DEIS should inform the
final energy conservation standards for manufactured housing. January
14, 2022 (87 FR 2359)
In response to the January 2022 DEIS, DOE received additional
public comments from a variety of stakeholders as to how the DEIS
should inform the final rule. In this final rule, DOE is only including
and addressing comments as the comments relate to the energy
conservation standards. As such, DOE is not including or addressing
comments on the discussion and analyses presented in the January 2022
DEIS; those comments are addressed as part of the environmental impact
assessment process. DOE also received over 300 substantively similar
form letters from individuals in response to the January 2022 DEIS. All
of the comment submissions are available in the docket for this
rulemaking. The comments and DOE's responses are discussed in sections
III, IV, and V of this document.
Table II.1 presents a summary of all the written comments received
for the August 2021 SNOPR, October 2021 NODA, and the January 2022
DEIS, as it relates to the energy conservation standards.
[[Page 32739]]
Table II.1-- Summary of Written Comments *
----------------------------------------------------------------------------------------------------------------
Organization(s) Reference in this final rule Organization type
----------------------------------------------------------------------------------------------------------------
Alliance to Save Energy, American Council for an Joint Commenters............ Efficiency organization.
Energy-Efficient Economy, E4TheFuture, Earth
Advantage, Elevate Energy, Environmental and Energy
Study Institute, Institute for Market
Transformation, National Association of Energy
Service Companies, National Association of State
Energy Officials, Next Step Network, Natural
Resources Defense Council.
Adventure Homes...................................... Adventure Homes............. Manufacturer.
American Chemistry Council's Foam Sheathing Committee ACC FSC..................... Trade association.
American Council for an Energy-Efficient Economy..... ACEEE....................... Efficiency organization.
American Homestar.................................... American Homestar........... Manufacturer.
American Public Gas Association, The Aluminum APGA et. al................. Trade association.
Association, American Chemistry Council, American
Exploration & Production Council, American Farm
Bureau Federation, American Fuel & Petrochemical
Manufacturers, American Gas Association, American
Highway Users Alliance, American Iron and Steel
Institute,.
American Petroleum Institute, American Public Gas
Association, American Public Power Association,
Associated Builders and Contractors, Associated
General Contractors of America, Council of
Industrial Boiler Owners, The Fertilizer Institute,
Independent Petroleum Association of America,
National Association of Manufacturers, National Lime
Association, National Mining Association, National
Rural Electric Cooperative Association, Portland
Cement Association, U.S. Chamber of Commerce.
Arizona Department of Housing........................ ADOH........................ State Government.
American Society of Heating, Refrigerating and Air- ASHRAE...................... Trade association.
Conditioning Engineers.
Attorneys General of NY, IL, ME, MN, NV, NJ, NM, OR, State Attorneys General..... State Government--State
VT, WA, MA, and NY. Attorneys General.
Blount County Habitat for Humanity................... Blount County Habitat for Non-profit.
Humanity.
C2ES, Institute for Policy Integrity at NYU Law, C2ES et. al................. Environmental Non-profit.
Sierra Club, Union of Concerned Scientists.
California Energy Commission......................... CEC......................... Efficiency Organization.
CASA of Oregon....................................... CASA of Oregon.............. Non-profit.
Cavco Industries..................................... Cavco....................... Manufacturer.
Champion Home Builders Inc........................... Champion Home Builders...... Manufacturer.
Clayton Home Building Group.......................... Clayton Homes............... Manufacturer.
Connecticut Manufactured Home Owners Alliance........ CMHOA....................... Non-profit.
Community Housing Partners........................... CHP......................... Affordable Housing and
Community Development Non-
profit.
E4TheFuture.......................................... E4TheFuture................. Efficiency Organization.
Earthjustice & Prosperity Now........................ Earthjustice and Prosperity Efficiency Non-profit.
Now.
Fahe................................................. Fahe........................ Community Development
Financial Institution.
Habitat for Humanity of Greater Los Angeles.......... Habitat for Humanity of LA.. Non-profit.
Idaho Manufactured Housing Association............... IMHA........................ Non-profit/Trade
association.
Indiana Manufactured Housing Association/Recreation IMHA/RVIC................... Trade association.
Vehicle Indiana Council.
International Code Council........................... ICC......................... Codes organization.
Kansas Manufactured Housing Association.............. KMHA........................ Non-profit/Trade
association.
LifeStyle Factory Homes LLC.......................... LifeStyle................... Manufacturer.
Local Initiatives Support Corporation................ LISC........................ Non-profit.
Manufactured & Modular Home Association of Minnesota. MMHA........................ Trade association.
Manufactured Housing Association for Regulatory MHARR....................... Trade association.
Reform.
Manufactured Housing Consensus Committee............. MHCC........................ Advisory committee.
Manufactured Housing Institute....................... MHI......................... Trade association.
Michigan Manufactured Housing Association............ Michigan MHA................ Non-profit/Trade
association.
Mississippi Manufactured Housing Association......... Mississippi MHA............. Non-profit/Trade
association.
Modular Lifestyles, Inc.............................. Modular Lifestyles.......... Manufacturer.
National Association of Home Builders................ NAHB........................ Trade association.
National Association of State Energy Officials....... NASEO....................... Non-profit.
National Manufactured Home Owners Association........ NMHOA....................... Non-profit.
National Rural Electric Cooperative Association...... NRECA....................... Electric cooperative.
Natural Resources Defense Council.................... NRDC........................ Efficiency organization.
Network for Oregon Affordable Housing................ NOAH........................ Non-profit.
New Building Institute............................... NBI......................... Non-profit.
New Jersey Manufactured Housing Association.......... NJMHA....................... Trade association.
New York State Energy Research and Development NYSERDA..................... State corporation.
Authority.
Next Step Network, Inc............................... Next Step................... Efficiency organization.
North American Insulation Manufacturers Association.. NAIMA....................... Trade association.
Northwest Energy Efficiency Alliance................. NEEA........................ Efficiency organization.
Northwest Power and Conservation Council............. NPCC........................ Interstate Compact Agency.
Ohio Manufactured Homes Association.................. OMHA........................ Non-profit.
Oliver Technologies Inc.............................. Oliver Technologies......... Manufacturer.
[[Page 32740]]
PA Department of Community and Economic Development.. PA-DCED..................... Government.
Pennsylvania Manufactured Housing Association........ PMHA........................ Trade association.
PathStone Corporation................................ PathStone................... Not-for-profit
organization.
People's Self-Help Housing, Inc...................... People's Self-Help Housing.. Non-profit.
Pleasant Valley Homes, Inc........................... Pleasant Valley............. Manufacturer.
Redwood Energy....................................... Redwood Energy.............. Designers.
ReFrame Foundation................................... ReFrame Foundation.......... Non-profit.
Responsible Energy Codes Alliance.................... RECA........................ Efficiency organization.
Rural Community Assistance Corporation............... RCAC........................ Non-profit.
Schulte, Philip...................................... Schulte..................... Individual.
Skyline Champion Corporation......................... Skyline Champion............ Manufacturer.
Texas Manufactured Housing Association............... TMHA........................ Trade association.
Trellis.............................................. Trellis..................... Non-profit.
Members of Congress of the United States (David Select Representatives of Government.
Kustoff, Larry Bucshon, Bill Huizenga, Lance Gooden, Congress.
William Timmons, Bryan Steil, Gary Palmer, Bill
Johnson, Tim Walberg, Greg Pence, Ann Wagner, John
Rose, French Hill, Debbie Lesko, John Joyce, H.
Morgan Griffith, Barry Loudermilk, Tom Emmer, Andy
Barr).
University of Arizona and Arizona State University... University of Arizona and University.
Arizona State.
University of Colorado Boulder....................... UCB......................... University.
University of Colorado Denver........................ UCD......................... University.
University of Colorado Law School.................... UC Law School............... University.
Urban Habitat Initiatives Inc........................ UHI......................... Sustainability Consultant.
Verde................................................ Verde....................... Non-profit.
Vermont Energy Investment Corporation................ VEIC........................ Efficiency organization.
Vermont Law School................................... Vermont Law School.......... University.
Virginia Manufactured and Modular Housing Association VAMMHA...................... Trade association.
West Indianapolis Development Corporation............ WIDC........................ Trade association.
Western Manufactured Housing Communities Association. WMA......................... Trade association.
Westland Distributing................................ Westland.................... Distributor.
Wisconsin Housing Alliance........................... WHA......................... Trade association.
----------------------------------------------------------------------------------------------------------------
* DOE received a number of comments in response to the January 2022 DEIS that were almost identical in substance
to comments submitted by the same commenters in response to the August 2021 SNOPR or October 2021 NODA.
Accordingly, for the purposes of this notice, DOE is only referencing the submission ID of the first
submission of comments with identical content.
On April 8, 2022, DOE published the notice of availability for the
final EIS (DOE/EIS-0550). 87 FR 20852. (``April 2022 FEIS'') The final
EIS includes the information presented in the January 2022 DEIS as well
as further analyses developed in response to public comments on the
January 2022 DEIS. Elsewhere in this issue of the Federal Register, DOE
has issued its record of decision (``ROD'') pursuant to its obligations
under NEPA. The ROD finalizes DOE's considerations of the environmental
impacts under the NEPA process and memorializes DOE's determinations
and approach chosen consistent with this final rule. Further discussion
of the final EIS, the ROD and the NEPA process may be found in section
V.D. of this document.
The comments and DOE's responses are discussed in sections III, IV,
and V of this document.
C. Abbreviations
The abbreviations used in this document, other than abbreviations
of the names of commenters listed in Table II.1, Summary of Written
Comments, are defined as follows:
ACCA: Air Conditioning Contractors of America.
ACH: Air changes per hour.
ACH50: Air changes per hour at 50 Pascals pressure difference
between the inside and outside of the home.
AEO: Annual Energy Outlook.
AFUE: Annual fuel utilization efficiency.
AHS: American Housing Survey.
AMI: Area median income.
ANOPR: Advance notice of proposed rulemaking.
BECP: Building Energy Codes Program.
CCE: certification, compliance, and enforcement.
CDFI: Community Development Financial Institutions.
cfm: Cubic feet per minute.
CFR: Code of Federal Regulations.
DEIS: Draft environmental impact statement.
DHP: Ductless heat pump.
DOE or in context, ``the Department'': U.S. Department of
Energy.
DTI: Debt-to-income ratio.
E.O.: Executive Order.
EA: Environmental Assessment.
EAP: Equity Action Plan.
EEM: Energy efficiency measure.
EGUs: Electric generating units.
EIA: U.S. Energy Information Administration (within DOE).
EIS: Environmental impact statement.
EISA: Energy Independence and Security Act of 2007.
EPA: U.S. Environmental Protection Agency.
EPCA: Energy Policy and Conservation Act.
ERI: Energy Rating Index.
ERV: Energy recovery ventilator.
FEIS: Final environmental impact statement.
FFC: Full-fuel-cycle.
FHA: Federal Housing Administration (within HUD).
FRFA: Final regulatory flexibility analysis.
GRIM: Government Regulatory Impact Model.
GSE: Government-sponsored enterprise.
HAP: Hazardous air pollutants.
HoF: ASHRAE Handbook of Fundamentals.
HRV: Heat recovery ventilator.
HSPF: Heating seasonal performance factor.
HUD Code: HUD Manufactured Home Construction and Safety
Standards.
HUD: U.S. Department of Housing and Urban Development.
HVAC: Heating, ventilation, and air conditioning.
IECC: International Energy Conservation Code.
INPV: Industry net present value.
IRFA: Initial regulatory flexibility analysis.
IWG: Interagency Working Group on the Social Cost of Greenhouse
Gases
[[Page 32741]]
LCC: Life-cycle cost.
MATS: Mercury and Air Toxics Standards.
MH: Manufactured home or manufactured housing.
MHCSS: Manufactured home construction and safety standards.
MHI: Manufactured Housing Institute.
MHS: Manufactured Housing Survey.
MIA: Manufacturer impact analysis.
NAAQS: National Ambient Air Quality Standards.
NAICS: North American Industry Classification System.
NEMS: National Energy Modeling System.
NES: National energy savings.
NIA: National impact analysis.
NODA: Notice of Data Availability.
NOPR: Notice of proposed rulemaking.
NPV: Net present value.
OIRA: Office of Information and Regulatory Affairs (within OMB).
OMB: Office of Management and Budget.
PBP: Payback period.
PITI: Principal, interest, taxes, and insurance.
PM2.5: Fine particulate matter (with an aerodynamic equivalent
diameter of 2.5 micrometers (microns)).
PUF: Public use file.
RFI: Request for information.
SBA: U.S. Small Business Administration.
SC: Social cost.
SEER: Seasonal energy efficiency ratio.
sf: Square foot or square feet.
SHGC: Solar heat gain coefficient.
SNOPR: Supplemental notice of proposed rulemaking.
TSD: Technical support document.
UMRA: Unfunded Mandates Reform Act of 1995.
Uo: Overall thermal transmittance.
III. Discussion of the Standards
A. The Basis for the Standards
EISA requires DOE to base standards for manufactured housing on the
IECC. However, application of the IECC standards is also subject to a
number of considerations set forth by the statute in order to ensure
standards will be appropriately tailored for manufactured homes and the
manufactured home market. Specifically, EISA requires that DOE
establish energy conservation standards for manufactured housing that
are ``based on the most recent version of the [IECC], except in cases
in which [DOE] finds that the [IECC] is not cost-effective, or a more
stringent standard would be more cost-effective, based on the impact of
the [IECC] on the purchase price and on total life-cycle construction
and operating costs.'' (42 U.S.C. 17071(b)(1))
In addition to the required cost-effectiveness considerations, EISA
explicitly allows DOE to consider the differences in design and factory
construction techniques of manufactured homes, as compared to site-
built and modular homes. (42 U.S.C. 17071(b)(2)) As noted in section
II.B.2, the 2021 IECC applies generally to residential buildings,
including site-built and modular housing, and is not specific to
manufactured housing. Additionally, EISA requires DOE to consult with
HUD, which may seek further counsel from the MHCC, prior to
establishing the standards. 42 U.S.C. 17071(a)(2)(B). EISA also allows
DOE to base the standards on climate zones established by HUD, and to
provide for alternative practices that result in net estimated energy
consumption equal to or less than the specified standards. 42 U.S.C.
17071(b)(2)) As discussed more in section III.F, DOE has opted to base
its standards on the climate zones established by HUD. Additionally,
DOE's standards provide two methods by which to achieve compliance with
the building thermal envelope requirements of Subpart B: A prescriptive
pathway (which utilizes the components specified by DOE) and an overall
Uo performance pathway (which allows for compliance based on the
overall thermal performance of the manufactured home). The latter
approach, i.e., the Uo method, gives manufacturers the flexibility to
use any combination of energy efficiency measures as long as the
minimum Uo is met. Manufacturers do not need to meet both the
prescriptive and the performance method; rather they have the option to
only meet one.
The energy conservation standards in this final rule are based on
specifications included in the 2021 IECC while also accounting for the
unique aspects of manufactured housing. DOE carefully considered the
following aspects of manufactured housing design and construction in
developing the standards:
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.
[[Page 32742]]
Further, with regards to the aspects of manufactured housing design
and construction, DOE considered the range of efficiency measures
originally identified by the MH working group as appropriate for
manufactured home design, which included the following: exterior
ceiling R-22 to R-38; exterior wall R-11 to R-21+5; exterior floor R-11
to R-30; window U-factor U-1.08 to U-0.30; and window SHGC 0.7 to 0.25.
(See chapter 5 of the final rule TSD) Accordingly, based on the
information provided by the MH working group, DOE did not include
several of the 2021 IECC requirements, including the more stringent
ceiling R-value requirements (greater than R-38) \18\ and requirement
for the exterior ceiling insulation to be of uniform thickness or
uniform density, given the space constraints of manufactured homes.
---------------------------------------------------------------------------
\18\ Specifically, manufactured homes typically have a lower
overall height compared to site-built homes, which leads to
constrained space, and therefore limited ability to increase
exterior ceiling insulation.
---------------------------------------------------------------------------
DOE determined that the energy conservation standards in this final
rule are cost-effective by evaluating the impact on the purchase price
of a manufactured home and on the total lifecycle construction and
operating costs. Both Tier 1 and Tier 2 are cost-effective for the 30-
year period that was analyzed. Specifically, section I.A presents the
benefits and burdens to purchasers of manufactured homes, with Table
I.1 and Table I.3 presenting the total incremental purchase price under
the standards, and Table I.3 presenting the estimated national average
LCC savings. The incremental purchase price was determined by
calculating the difference in the energy efficiency measure (``EEM'')
costs of DOE-compliant and minimally compliant HUD homes. These
incremental costs correspond to the purchase prices seen by the
homeowner, and thus account for manufacturer and retail markups. The
LCC savings accounts for the energy cost savings and purchase costs
(including down payment, mortgage and taxes based on incremental
purchase price) over the entire analysis period discounted to a present
value. As presented in Table I.3, there are positive national average
LCC savings over the life of the manufactured home (i.e., 30-years). In
addition, the positive 30-year LCC savings carries through to every
climate zone and city analyzed. (See Chapter 8 of the TSD for results.)
Finally, Table I.3 presents the national average simple payback period
to be 3.7 years and 8.9 years for single- and multi-section homes
respectively.
As noted previously, in establishing standards for manufactured
housing, Congress directed DOE to: (1) Consult with the Secretary of
HUD (42 U.S.C. 17071(a)(2)(b)), and (2) base the standards on the most
recent version of the IECC, except in cases in which the Secretary
finds that the code is not cost-effective, or a more stringent standard
would be more cost-effective, based on the impact of the codeon the
purchase price of manufactured housing and on total life-cycle
construction and operating costs. (42 U.S.C. 17071(b)(1)) Relatedly,
the Secretary of HUD is mandated to establish standards for
manufactured housing that, in part, ``ensure that the public interest
in, and need for, affordable manufactured housing is duly considered in
all determinations relating to the Federal standards and their
enforcement.'' (42 U.S.C. 5401(b))
In this consultative role, HUD raised concerns with the potential
adverse impacts on manufactured housing affordability that could result
from additional energy efficiency standards proposed for manufactured
homes in the June 2016 NOPR and the August 2021 SNOPR. More
specifically, HUD noted concerns that increases in the purchase prices
for manufactured homes resulting from the costs of requiring to meet
standards based upon the IECC could result in prospective manufactured
homeowners being unable to purchase a manufactured home. With this
concern in mind, DOE reviewed the 2021 Consumer Financial Protection
Bureau report, ``Manufactured-Housing Finance: New Insights from the
Home Mortgage Disclosure Act Data (HMDA),'' (hereinafter, ``2021 CFPB
Report'') \19\, and in the October 2021 NODA, presented updated
analyses based on this report and sought comment on the report and
these updates. 86 FR 59042, 59044.
---------------------------------------------------------------------------
\19\ CFPB report, 2021. 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
[[Page 32743]]
range. To the extent that manufactured home purchasers are cost-driven,
in conjunction with the lower median income and net worth of these
purchasers, consumers at the lower end of the manufactured home
purchase price range are generally likely to be more sensitive to
increases in purchase price. DOE's considerations of affordability and
cost-effectiveness in establishing these standards, and associated
responses to comments, are discussed more below in sections III.A.1 and
III.B.
Finally, the standards established in this final rule are based on
the climate zones of the HUD Code. EISA also allows DOE to base
standards on the climate zones of the HUD Code instead of the IECC. (42
U.S.C. 17071(b)(2)(B)) There are differences in the number and
boundaries of the HUD zones as compared to the IECC climate zones. For
example, under the 2021 IECC climate zone map, California is divided
into five climate zones (including zone variation based on moisture
regimes), with four of the zones subject to SHGC maximums (0.40
applicable to climate zones 4 and 5, and 0.25 applicable to climate
zones 2 and 3). Under the HUD zone map, all of California is within a
single zone. Developing energy conservation standards based on the HUD
zones, as permitted under EISA, necessitates deviating from the IECC.
DOE has determined that aligning the climate zones between the DOE
requirements and the HUD Code would reduce the complexities and burden
faced by manufacturers of compliance with the DOE standards. The
updated standards would establish thermal envelope requirements, as
does the 2021 IECC, but setting the values for those requirements
necessitates that DOE develop standard levels different than those in
the 2021 IECC to account for the difference in the number of climate
zones. Use of the HUD zones in DOE's standards is discussed more in
section III.F.2.a. of this document.
As discussed more in sections III.C and D, DOE is not addressing a
test procedure, or compliance and enforcement provisions for energy
conservation standards for manufactured housing in this document. DOE
notes that HUD has an established design approval, monitoring and
enforcement system, defined in 24 CFR part 3282, that is robust and
provides compliance and enforcement of the manufactured housing
industry standards. Moreover, manufacturers must comply with referenced
standards incorporated by HUD in its regulations. DOE continues to
consult with HUD about pathways to address testing, compliance and
enforcement for these standards in a manner that may leverage the
current HUD inspection and enforcement process so that such testing,
compliance and enforcement procedures are not overly burdensome or
duplicative for manufacturers, and are well understood by manufacturers
and consumers alike.
In response to the August 2021 SNOPR proposal and the October 2021
NODA, DOE received a number of comments regarding the statute, IECC and
the rulemaking in general, which are summarized and addressed in the
following sections.
1. Affordability
Multiple commenters stated that the proposed energy requirements
fail the EISA statutory requirement of cost-effectiveness and the
proposal will eliminate manufactured housing as an affordable housing
option for families. Additionally, they commented that the proposal
ignores the unique features of factory-built housing, to the point that
many parts of the proposal are simply not feasible from a construction
and transportation standpoint. Further, they stated that the
development of the rule was not compliant in any meaningful way with
the EISA requirement to consult with HUD or MHCC and does not follow an
accurate cost-benefit analysis as the statute requires. (MMHA, No. 995
at p. 4); (Michigan MHA, No. 1012 at p. 2-3); (WHA, No. 1025 at p. 2);
(PMHA, No. 1165 at p. 3); (Westland, No. 1263 at p. 2); (Pleasant
Valley, No. 1307 at p. 2); (American Homestar, No. 1337 at p. 2-3);
(Oliver Technologies, No. 1350 at p. 3); (KMHA, No. 1368 at p. 2);
(Adventure Homes, No. 1383 at p. 3); (NJMHA, No. 1451 at p. 3); (WMA,
No. 1452 at p. 2); (IMHA/RVIC, No. 1466 at p. 2); (Cavco, No. 1497 at
p. 3); (Skyline Champion, No. 1499 at p.2); (Mississippi MHA, No. 1588
at p. 4); (Clayton Homes, No. 1589 at p. 3) The campaign form letter(s)
stated that the proposed rule will eliminate a significant source of
affordable housing for hundreds of thousands of American families and,
in many cases, it would be simply impossible to construct and transport
homes built with the requirements. Commenters stated that increased
costs will never be recouped by the homeowner, and for many buyers the
increased cost will pose a barrier to homeownership in the first place.
In addition, commenters stated that DOE's energy conservation standards
must balance affordability with energy efficiency, which commenters
alleged the proposed rule did not. (Campaign Form Letter, Multiple
submissions at p. 1) An individual commenter would not support the
proposed rule unless modified because of affordability issues.
(Wangelin, No. 975 at p. 1) Another individual commenter stated that
the cost of the new energy standards might outweigh the effects it will
have on the environment because manufactured homes are made to be
affordable. (Heidbreder, No. 940 at p. 1) Another individual commenter
suggested that either tier would be a big upgrade from current
requirements. (Major, No. 1023 at p. 1)
MHI commented that the higher home cost associated with the
proposed standards will make manufactured housing far more expensive,
excluding potential buyers and reducing total manufactured housing
sales. MHI also commented that DOE's own analysis shows the proposal
will increase costs for homebuyers without reciprocal energy savings,
and many households will simply be priced out of homeownership due to
this proposal. MHI's survey of manufacturers found that it is unlikely
that a buyer purchasing a new home and financing 90 percent of the
purchase price would recover these upfront costs at a future sale, and
while there are several reasons contributing to this, the fact that
homebuyers usually sell their homes within the first 7-10 years is the
most relevant. (MHI, No. 1592 at p. 3, 4) Further, MHI stated that the
proposal could jeopardize homeownership for millions of Americans at a
time when there is an affordable housing shortage. MHI further stated
that this increase will have a disproportionate impact on minority
communities, who face the most significant burden in obtaining
affordable homeownership, and that this would be in direct contrast to
the Administration's goal of achieving racial equity in homeownership.
(MHI, No. 1592 at p. 3, 23); (Clayton Homes, No. 1589 at p. 14)
MHARR stated that it opposed the proposed standards because they
are a baseless and useless burden on both moderate and lower-income
consumers and will lead to a decrease in homeownership and higher
levels of homelessness. (MHARR, No. 1388 at p. 2-3); (MHARR, No. 1974
at p. 2) UCB stated that the rule will eliminate affordable housing for
many low-income people. They stated that although DOE says the initial
cost increase will be paid back over the life of the home from energy
savings, most owners will not see this payback. (UCB, No. 1405 at p. 1)
An individual commenter stated that the proposed changes would very
likely eliminate hundreds of thousands of buyers from the market during
a time when housing is in short supply, and
[[Page 32744]]
that, if adopted, the new energy standards would dramatically increase
the cost of manufactured homes and likely eliminate many of the design
features that make manufactured homes livable (high ceilings, overhead
HVAC ducts, etc.). Moreover, this commenter stated that the upfront
cost from higher down payments would disqualify many home buyers for a
mortgage, and any future utility cost savings would take decades to
recoup. (Individual Commenter, No. 1496 at p. 1)
IMHA stated that the proposal is fundamentally flawed and will
eliminate manufactured housing as an affordable housing option for
families throughout Idaho. Further, they were concerned that DOE's cost
analysis assumptions and the average tenure of a manufactured homeowner
will result in a situation where the homeowner will never recoup the
additional costs of these measures with energy savings. They stated
that imposing these standards on manufactured homes built in Idaho (or
elsewhere) will rob their industry of seeking out those amendments that
make the energy code best fit the construction practices of a
manufactured home, and that this will add to costs and complications
that will certainly price homeowners out of the market. (IMHA, No. 1453
at p. 1)
NRECA commented that the proposed standards in the SNOPR could put
home ownership out of reach for those who cannot afford site-built
homes, thus denying them the potential opportunity to attain this
milestone for themselves and their families. They stated that their
members have explored and implemented many different initiatives to
improve energy efficiency for their consumer-members and that they are
doing so in a way that balances costs and benefits. Therefore, they
urged DOE to reconsider the proposal in its SNOPR to balance
affordability of manufactured housing with common-sense, proven methods
at improving their energy efficiency. (NRECA, No. 1406 at p. 2) ADOH
was concerned that the proposed changes will equate to a price point
that is either out of reach for a potential purchaser of a manufactured
home, or will eliminate or prevent a manufactured home from being an
affordable housing option. ADOH recommended continued reliance on the
existing standards in the National Manufactured Housing Construction
and Safety Act. (ADOH, No. 1459 at p. 1)
Select Representatives of Congress were concerned that the proposed
rule would require manufacturers to redesign most (if not all) of their
existing floorplans to comply with standards concerning thermal systems
and air and duct sealing. Select Representatives of Congress stated
that this would result in a significant price increase that would delay
or prevent some potential manufactured homebuyers--whose median annual
household income is around $33,000--from buying a home. They urged DOE
to analyze closely the effective cost and impact of any proposed energy
efficiency standards on those who are pursuing affordable
homeownership. (Select Representatives of Congress, No. 1445 at p. 1)
UC Law School stated that the purchase price for manufactured homes
should not factor into the cost-benefit analysis because DOE did not
deliver economic considerations and integrated efforts with other
agencies to secure affordability to the manufactured homes. Instead,
they suggested that only the social cost of carbon and GHG emissions
should be factored into the cost-benefit analysis, based on the
Interagency Working Group (IWG). (UC Law School, No. 1634 at p. 11, 13,
14) UCB stated the SNOPR should consider the emissions costs associated
with not implementing stricter energy efficiency standards for
manufactured homes over a 30-year lifetime, which, in the commenter's
view, would create a good comparison to show how much of a difference
these standards would make. (UCB, No. 1618 at p. 17)
NAHB urged DOE to continue to facilitate consumer choice by
ensuring any new energy conservation standards and regulatory reform
efforts do not favor manufactured homes over other types of residences,
leading to consumer confusion and unfair competition in the
marketplace. (NAHB, No. 1398 at p. 3) An individual commenter stated
that a consumer should have the freedom to choose a less energy
efficient, but less expensive, window, door, or construction method for
the home they are building, and that absorbing the SNOPR proposed
requirement expenditure is quite difficult. (Hoover, No. 1566 at p. 1)
In light of the concerns it noted, MHARR stated that DOE must
withdraw the proposed manufactured housing energy standards as being
inappropriate for MH, excessively costly in violation of applicable
law, destructive of the affordable MH market, not cost-justified and
fundamentally arbitrary, capricious and an abuse of discretion in
violation of the federal Administrative Procedure Act, federal MH law
and the EISA of 2007. (MHARR, No. 1640 at p. 9) MHARR commented that
the average MH energy costs for all fuel types tracked by the U.S.
Census Bureau are already lower than those for much more costly site-
built homes, none of which are subject to the 2021 IECC. MHARR also
stated that alleged climate benefits of the proposed standards would be
miniscule in relation to the economic costs, and that newer data
published in the 2019 AHS shows that manufactured homes have lower
median monthly energy costs than site-built homes in all major fuel
categories. MHARR also suggested that DOE should reject cost
comparisons based on a ``per-square foot'' energy usage and should
instead consider ``whole-house'' energy usage. (MHARR, No. 1388 at p.
3, 5-6); (MHARR, No. 1974 at pp. 5-6; 11-12)
Multiple commenters suggested that the most appropriate code to
utilize to update energy standards for manufactured homes is the HUD
Code, and to instead include new energy efficiency standards as part
the HUD Code. (MMHA, No. 995 at p. 4); (Michigan MHA, No. 1012 at p.
2); (WHA, No. 1025 at p. 2); (PMHA, No. 1165 at p. 3); (Westland, No.
1263 at p. 2); (Pleasant Valley, No. 1307 at p. 2); (American Homestar,
No. 1337 at p. 2); (Oliver Technologies, No. 1350 at p. 2); (KMHA, No.
1368 at p. 2); (Adventure Homes, No. 1383 at p. 2); (NJMHA, No. 1451 at
p. 2-3); (WMA, No. 1452 at p. 2); (IMHA/RVIC, No. 1466 at p. 2);
(Cavco, No. 1497 at p. 2); (Skyline Champion, No. 1499 at p.2);
(Mississippi MHA, No. 1588 at p. 2) ; (Skyline Champion, No. 1612 at p.
3); (Cavco, No. 1622 at p. 2); (VAMMHA, No. 1624 at p. 2); (Champion
Home Builders, No. 1639 at p. 4); (IMHA, No. 1453 at p. 2); (MHI, No.
1592 at p. 4-6, 25) MHI believes the most appropriate code to utilize
to update energy standards for manufactured homes is the HUD Code.
(MHI, No. 1592 at p. 25)
Alternatively, NASEO stated that failure to update the standards in
a manner consistent with EISA will only increase the difficulty of
meeting future standards and unnecessarily leaves manufactured home
residents with homes built to decades-old standards and high energy
bills. (NASEO, No. 1565 at p. 3) Another individual commenter commented
that although the rule would incur some upfront costs, there is long-
term benefit in the rule related to reducing carbon emissions.
(Anonymous, No. 593 at p. 1; (Anonymous, No. 781 at p. 1) Another
individual commenter suggested that although the tiered system of cost
implementation creates significantly more administrative
responsibility, it is a more equitable and desirable means of
accomplishing the aforementioned agency goals. They suggested that the
[[Page 32745]]
proposed rule by DOE seems adequately supported by reasonable inquiries
into emission reduction, energy efficiency, and cost allocation for
thermal requirements of manufactured homes. (Gustafson, No. 778 at p.
1) NAIMA supported the updates recommended as a good faith attempt of
the 2021 IECC while recognizing unique construction challenges. NAIMA
also stated that a home's energy efficiency and affordability is not an
either/or proposition. (NAIMA, No. 1017 at p. 1) NYSERDA supported
DOE's two-tier approach to address the affordability concerns.
(NYSERDA, No. 1620 at p. 1)
In addition, Schulte stated that ENERGY STAR-certified homes
represent a significant market share of home production especially in
Zone 2 States and this fact would support that manufactured home
purchasers are willing to purchase more expensive and energy efficient
homes that save them money in the long run. Also, Schulte stated that
there is no evidence from sales figures that enhanced thermal standards
reduced the demand of manufactured homes from 1990-1999. Finally,
Schulte stated that adopting Tier 1 standards would substantially
reduce the price hike for additional energy investments. However, it
would also mean that utility bills would remain high for many
manufactured home purchasers who tend to have lower incomes than the
median family income. (Schulte, No. 1028 at p. 14, 15, 18 & 22)
ACEEE suggested that the impact on affordability should consider
energy burden (i.e., energy cost as a percentage of income) and housing
cost burden (i.e., total housing costs as a percentage of income). In
their comment and analysis, they interpreted high energy burden to be
energy bills exceeding 6 percent of the income and high housing burden
to be total housing costs exceeding 30 percent of the income. They
stated that based on the 2019 AHS, for residents of manufactured homes,
the median energy burden (i.e., the energy cost as a percentage of
income) is 5.3 percent compared to 2.9 percent for all homes, and 44
percent of manufactured home residents face a high energy burden. They
stated that setting stronger efficiency standards can improve the
affordability of these homes by lowering their occupants' high energy
burdens. (ACEEE, No. 1631 at pp. 2-3) NRDC recommended using a more
reasonable cost effectiveness metric, such as a present value analysis
using a defensible discount rate, such as the 3 percent real rate that
DOE employs in appliance efficiency analysis, over the observed
lifetime of the home. (NRDC, No. 1599 at p. 5, 7)
Next Step commented that manufactured homes are a critical
component of America's affordable housing stock, and the need for
increased energy efficiency in housing is particularly acute for low-
income homebuyers. (Next Step, No. 1617 at p. 1) They commented that
based on the median income of manufactured home owners and renters and
the HUD definitions for what constitutes ``low-income,'' \20\
manufactured housing serves households below 60 percent median income
for low-income owners and below 50 percent median income for very low-
income renters.\21\ (Next Step, No. 1617 at p. 2) Further, they
commented that based on a 2020 Urban Institute study,\22\ the monthly
housing costs for manufactured home occupants falls within 30 percent
of monthly income, which is defined as ``cost-burdened'' based on HUD's
housing cost burden metric.\23\ Accordingly, they supported increased
energy efficiency standards, arguing that data suggest that the
incremental costs for energy efficiency upgrades (added to other
housing costs) keep manufactured housing affordable and accessible to
low-income homeowners earning less than 60 percent of median income.
(Next Step, No. 1617 at p. 1)
---------------------------------------------------------------------------
\20\ Next Step cited the following HUD program definitions: 50%
median income = $33,761 = Very Low Income; 80% Median Income =
$54,017 = Low Income;
\21\ In their review, they stated that manufactured homes are a
portfolio of housing that serves a median income of $38,087 for
owners and $28,280 for renters. Based on the federal low-income
housing definitions, 60 percent median income (which is a
multifamily tax subsidy income limit) amounts to $40,513 (in 2020
dollars) and 50 percent median income (which is the very low income
limit) amounts to $33,761.
\22\ Choi, J.H., and Goodman, L. (2020, August). 22 Million
Renters and Owners of Manufactured Homes Are Mostly Left Out of
Pandemic Assistance. The Urban Institute. https://www.urban.org/urban-wire/22-million-renters-and-owners-manufactured-homes-are-mostly-left-out-pandemic-assistance.
\23\ HUD defines spending more than 30 percent of income on
housing costs as cost-burdened. Spending more than 50 percent of
income on housing costs is considered severely cost-burdened.
---------------------------------------------------------------------------
Finally, Next Step also commented that Freddie Mac's research
analyzed energy efficient homes rated between 2013 and 2017 and found
the following: (1) From the property value analysis, rated homes are
sold for, on average, 2.7 percent more than comparable unrated homes;
(2) Better-rated homes are sold for 3-5 percent more than lesser-rated
homes; (3) From the loan performance analysis, the default risk of
rated homes is not, on average, different from unrated homes (once
borrower and underwriting characteristics are considered). Loans in the
high debt-to-income (``DTI'') bucket (45 percent and above) that have
ratings, however, appear to have a lower delinquency rate than unrated
homes. (Next Step, No. 1617 at p. 6) Further, Next Step noted Freddie
Mac's GreenCHOICE program, which weighs energy efficiency into its
underwriting and covers manufactured housing. Id
EISA directs DOE to establish energy conservation standards for
manufactured housing. (42 U.S.C. 17071) Further, EISA directs that
cost-effectiveness is determined based on the impact of the IECC on the
purchase price of manufactured housing and on total life-cycle
construction and operating costs. (42 U.S.C. 17071(a) and (b)(1))
In response to the affordability concerns raised by HUD and
commenters on first cost impacts, and the general financial
circumstances for manufactured housing owners, DOE is finalizing a
tiered standard, based on the 2021 IECC, that would alleviate first-
cost impacts for purchasers at the lower end of the manufactured home
price range. Tier 1 would apply to single-section manufactured homes,
and incorporate building thermal envelope measures based on certain
thermal envelope components subject to the 2021 IECC and would increase
the incremental purchase price increase by less than $750 for single-
section homes. This lower incremental cost would allow those first-cost
sensitive purchasers, assumed to be those with lower median income and
net worth, to still purchase a new manufactured home with improved
energy efficiency measures that will generate cost savings to the
purchaser over time. Accordingly, Tier 1 limits the incremental
purchase price such that a purchaser would, on average, realize a
positive cash flow within Year 1 of the standard based on the down
payment, incremental loan payment, and energy cost savings. See Table
III.4 for results.
Tier 2 would apply to multi-section manufactured homes, and
incorporate building thermal envelope measures based on certain thermal
envelope components and specifications of the 2021 IECC, with alternate
exterior wall insulation requirement (R-21) for climate zones 2 and 3
(see section III.F.2.b which includes further discussion on wall
insulation). Otherwise, DOE notes that the adopted Tier 2 requirements
in this final rule will only update the window U-factor requirements
for all climate zones compared to the term sheet agreed upon by the MH
working group (window U-
[[Page 32746]]
factor of 0.35 and 0.32; to 0.32 and 0.30, respectively), which is the
same as what was proposed in the August 2021 SNOPR. The window U-
factors were updated consistent with the 2021 IECC. Adopting R-21
instead of R-20+5 also resolves issues regarding shipping width that
the stakeholders commented on, which is discussed in section III.F.2.b.
of this document.
The total life-cycle construction and operating costs of the home
is calculated based on the total expected lifetime of the home, which
is 30 years. Both Tier 1 and Tier 2 standards would provide benefits in
energy savings to the consumer which, over the span of the payback
period (``PBP''), would offset the increase in purchase price. Under
the tiered proposal, manufactured homes that would be subject to the
Tier 1 standards would, in all cases, have a PBP less than 10 years,
with a range of 1.4 years to 7.4 years amongst all cities analyzed, and
a national average of 3.7 years. This is well within the range
suggested by MHI in which first homeowners often sell their
manufactured homes. Further discussion on these results is provided in
section IV.A.2. of this document.
DOE estimates in this final rule the number of households no longer
able to purchase a manufactured home from the pool of households
planning to purchase a manufactured home (which is much smaller than
the total number of American households). DOE estimates the final rule
would result in a loss in demand and availability because of the
increase in upfront home price for each tier. Therefore, DOE includes
in the analysis a price elasticity of demand. Price elasticity is
typically represented as a ratio of the percentage change in quantity
relative to a percentage change in price. DOE considered a price
elasticity of -0.48 based on a study by Marshall and Marsh \24\ and
considered an additional price elasticity as part of a scenario
analysis (See appendix 11A for further information).
---------------------------------------------------------------------------
\24\ See Marshall, M.I. & Marsh, T.L. Consumer and investment
demand for manufactured housing units. J. Hous. Econ. 16, 59-71
(2007).
---------------------------------------------------------------------------
In the study published in the Journal of Housing Economics by
Marshall and Marsh, the authors conclude that national and local
programs that cause small price increases in manufactured housing units
(e.g., increasing energy efficiency) will not necessarily deter
thousands of low-income families from purchasing manufactured homes and
that such consumers are likely to be willing to accept incrementally
higher prices from improvements in energy use and cost efficiency.
Specifically, the study states that these consumers are not nearly as
price-sensitive because ``the cost of a manufactured home still ranges
from 21 to 65 percent of the cost of a site built home and low- and
moderate-income families have few low-cost choices for home
ownership.'' \22\ Costs provided by a 2021 manufactured housing
industry overview fact sheet developed by MHI suggests that in 2019, on
average, the average sales price of a manufactured home compared to a
new single-family site built home is about 27 percent (without
land).\25\
---------------------------------------------------------------------------
\25\ Manufactured Housing Institute. 2021 Manufactured Housing
Facts: Industry Overview.
---------------------------------------------------------------------------
As such, DOE estimated the final rule would result in a loss in
demand and availability of about 31,975 homes (single section and
multi-section combined) for the tiered standard using a price
elasticity of demand of -0.48 for the 30-year analysis period (2023-
2052). Out of the 31,975 homes in the tiered standard, the majority of
the reduction is in Tier 2 (80 percent) vs. Tier 1 (20 percent). Within
Tier 1, DOE estimates a 0.55 percent reduction in demand and
availability of single-section homes for low-income purchasers due to
Tier 1 standards. DOE assumes that low-income consumers generally
purchase lower priced manufactured homes (i.e., many single section
homes) based on data that shows single-section homes, on average, have
householders with lower to median incomes, as opposed to multi-section
homes (see conclusions in section III.B.1). Accordingly, DOE concludes
that low-income consumers would not be priced out by the Tier 1
standards adopted in this final rule.
Finally, for those manufactured home purchasers that buy new homes,
even with the incremental costs, DOE notes that the median purchase
price of a manufactured home would continue to be significantly lower
than site-built homes (per 2019 AHS, the median purchase price of
manufactured homes is $32,000 vs. a single-detached home is $158,000).
Costs provided by a 2021 manufactured housing industry overview fact
sheet developed by MHI suggests that in 2019, on average, the average
sales price of a manufactured home compared to a new single-family site
built home is about 27 percent (without land).\26\ Additionally, the
2021 CFPB Report \27\ states that manufactured homes represent an
affordable housing option for millions of Americans because they cost
less on average than site-built homes and are one of the least
expensive forms of housing available without government subsidies.
---------------------------------------------------------------------------
\26\ Manufactured Housing Institute. 2021 Manufactured Housing
Facts: Industry Overview.
\22\ Consumer Financial Protection Bureau. Manufactured Housing
Finance: New Insights from the Home Mortgage Disclosure Act Data
(2021).
---------------------------------------------------------------------------
In conclusion, based on the input received from HUD during
consultation and input from commenters, DOE believes that access to
affordable housing and reducing energy burdens of the purchasers are of
the utmost importance in the manufactured housing market. The tiered
standard adopted in this final rule addresses both of these concerns.
Both tiers within the tiered standard reduce energy costs and provide
positive LCC savings for homeowners over the life of the average
manufactured home (i.e., 30-years). Further, Tier 1 of the tiered
standard mitigates first-cost impacts for purchasers at the lower end
of the manufactured home price range, and would provide, on average, a
positive cash flow within Year 1 of the standard based on the down
payment, incremental loan payment, and energy cost savings.
Accordingly, as discussed further, DOE has adopted the tiered approach
in this final rule.
2. Loan Qualification
MHARR stated that neither the NODA nor the original DOE SNOPR
considers, or accounts in any way, for the impact that regulatory-
driven purchase price increases, attributable both directly and
indirectly to the proposed rule, would have on the ability of lower and
moderate-income consumers to access financing for, and purchase,
mainstream manufactured homes. (MHARR, No. 1640 at p. 4, 5) Several
commenters stated that the proposed standards ignore the large number
of homebuyers who will no longer be able to buy a MH because they no
longer qualify for an FHA, Fannie Mae, or Freddie Mac mortgage loan due
to the impact of increased mortgage payments on debt-to-income ratios.
(Westland, No. 1263 at p. 2); (Pleasant Valley, No. 1307 at p. 3);
(American Homestar, No. 1337 at p. 3); (Oliver Technologies, No. 1350
at p. 3); (Adventure Homes, No. 1383 at p. 3); (Champion Home Builders,
No. 1639 at p. 5); (MHI, No. 1592 at pp. 3, 11) MHI stated that FHA's
customary DTI requirement is 43 percent, and therefore any homebuyer at
the edge of this 43 percent DTI requirement will no longer qualify for
an FHA loan because of the higher price caused by the new energy
standards. (MHI, No. 1592 at p. 3, 11) MHARR stated that the higher
level of loan rejection rates within the chattel or personal property
loan sector will disproportionately impact and harm ``Hispanic white,
Black and African-American and American Indian and Alaska Native
borrowers'' and will have
[[Page 32747]]
a racially-disproportionate impact. (MHARR, No. 1640 at p. 5)
Separately, NASEO stated that by failing to establish cost-
effective baselines of energy efficiency in the lowest-cost homes, DOE
increases the likelihood that the residents of these homes will require
federal and state public assistance from the Weatherization Assistance
Program, Low-Income Home Energy Assistance Program, or other bill
payment assistance programs in the future. (NASEO, No. 1565 at p. 2)
LISC recommended the federal government ensure there is flexibility
in federally insured and guaranteed home mortgage program regulations
to permit an increase in debt to income ratios when paired with
reductions in energy costs. In addition, they suggested that the
federal government should proactively market these programs and other
potential assistance to help with incremental cost increases, including
ENERGY STAR tax credits and other financing vehicles that factor in
future energy savings. (LISC, No. 1233 at p. 3) NRECA suggested DOE
could incentivize dealers to showcase ENERGY STAR-qualified
manufactured homes on their lots by providing rebates for the price
difference to the dealers so that the price difference does not force
the consumer to make a choice between affordability and home ownership.
They commented that such action would improve the overall efficiency of
new manufactured homes up front in such a way that would not jeopardize
home ownership potential for consumers. (NRECA, No. 1406 at p. 1, 3)
UCB stated that DOE should be working with HUD to come up with
subsidies and offsets/ways to pay for extra insulation, and that the
previous DOE claim that there is no authority to provide this is
incorrect. (UCB, No. 1405 at p. 2) They recommended that for low-income
purchasers, the DOE front the chattel loans in a government program
similar to other federal agencies programs--HUD, the U.S. Department of
Veteran Affairs, and the USDA's rural housing service--to provide lower
interest rates and additional consumer protections that could cover the
cost of better insulation. They also stated that, although the tiered
standards are more cost-effective overall for homebuyers, the cost of
these homes should still be subsidized, and loan programs should be
created by the DOE in collaboration with HUD. Finally, they noted that
DOE should consider providing a renter's tax credit targeted at certain
MH buyers. (UCB, No. 1618 at p. 9-11) Schulte advised that in the
coming years, DOE may want to work with EPA and other agencies to
encourage more utilities to provide rebates for energy efficient
manufactured homes, because these rebates can help offset part of the
cost increases. (Schulte, No. 1028 at p. 16)
UC Law School commented that DOE should subsidize the costs of low-
income participants who might be directly impacted by the Final Rule,
including consideration of financing, tax credits, or other financial
incentives or assistance for consumers of manufactured housing. (UC Law
School, No. 1634 at pp. 5, 9, 10) UCB stated that DOE should consider
policies that would reinforce anti-discrimination housing laws and
support novel lending practices to involve people of color who may not
otherwise be eligible for a traditional loan while making certain the
sustainability of their loan protects the investment of equity. (UCB,
No. 1618 at p. 9)
Next Step commented that the incremental costs for energy-
efficiency upgrades do not price out manufactured home residents. They
noted that manufactured housing is often considered a source of
Naturally Occurring Affordable Housing (defined as unsubsidized housing
that meets the affordability standard for households making 60-80
percent of area median income, or AMI). They commented that two of the
most prominent affordable housing, new construction programs (the HOME
Program and the Low-Income Housing Tax Credit Program), are used for
individual and family household incomes below 60 percent AMI. In their
evaluation of Tier 2 of the proposed standard, they used CFPB's median
loan data in conjunction with DOE's average incremental cost increase
and concluded that loans will remain affordable to those at 60 percent
of median income (``AMI''), even when accounting for increased energy
efficiency upgrades. (Next Step, No. 1617 at pp. 5, 7-9) Finally, Next
Step commented that the Federal Housing Administration (``FHA'') and
other government-backed lenders, conventional lenders, and Community
Development Financial Institutions (``CDFIs'') generally underwrite
manufactured home loans to ensure affordability by using a housing
ratio of 29 percent of gross monthly income applied to housing costs,
which includes the principal, interest, taxes, and insurance
(``PITI''). However, The FHA's Energy Efficient Mortgage absorbs energy
savings for efficient homes and stretches the ratio to 31 percent, and
Freddie Mac's GreenChoice Program weighs energy efficiency into its
underwriting and includes manufactured housing. (Next Step, No. 1617 at
p. 6)
The State Attorneys General stated that analyses performed by Next
Step, a member of the federal advisory MHCC with expertise in
affordable housing, confirm that despite potential increases in
purchase price due to incremental construction costs associated with
improved efficiency requirements, a manufactured home built to DOE's
proposed IECC-based standards would remain affordable to even the most
price sensitive consumers due to the availability of federal and state
tax incentives, and loan and down-payment assistance programs to assist
low income home buyers. (State Attorneys General, No. 1625 at p. 5)
The 2021 CFPB report provides some data on borrower characteristics
for manufactured homes. As suggested by the commenters, DOE confirmed
that the standard FHA guidelines allow for a DTI up to 43 percent on
the back end, but allow for higher ratios based on compensating factors
like residual income, cash reserves, good credit score, etc.\28\ The
back-end DTI ratio refers to the ratio of the applicant's total monthly
debt to the total monthly income. Table 7 of the 2021 CFPB summarizes
that the median debt-to-income DTI ratio for chattel loans is 35.7
percent, and for mortgage loans is 38.9 percent. DOE notes the DTI data
presented are not separated for new manufactured homes, so DOE presumes
the ratio is for all manufactured homes. Further, Table 3 of the 2021
CFPB shows that chattel loans, despite being potentially eligible for
FHA loans, are seldom FHA for manufactured housing; 0.7 percent of
chattel loans are FHA loans and 39.4 percent of mortgage loans are FHA
loans. The 2019 AHS also estimates that only 16 percent of all MH
homeowners with at least one regular mortgage \29\ report having FHA
insurance. Therefore, DOE concludes that FHA loans may not be as
prevalent for consumers for manufactured homes because of the low
percentage of borrowers presented in both the 2021 CFPB and the 2019
AHS, and therefore amended energy conservation standards may not have
as much of an impact as commenters are suggesting.
---------------------------------------------------------------------------
\28\ https://fhalenders.com/fha-debt-to-income-ratio/.
\29\ This figure includes home-equity lump sum mortgages, but
excludes home-equity credit lines and reverse annuity mortgages.
---------------------------------------------------------------------------
As discussed, Tier 1 in the final rule responds to concerns on
first-cost impacts for low-income consumers. As presented in Table I.1,
the national average incremental housing purchase
[[Page 32748]]
price for Tier 1 single-section homes is $660. As such, the Tier 1
standard would slightly increase the monthly debt portion of the DTI
ratio; assuming chattel rate at 9 percent with 23-year loan term and a
down-payment of 10 percent (see chapter 8 of the final rule TSD for
further discussion on these assumptions), this would increase monthly
payments by approximately $6. Table 7 of the 2021 CFPB suggests a
median income of $52,000 for chattel loans, which can be used to
calculate the original median monthly debt of $1,547 (35.7 DTI *
52,000/12). All else equal, with the increase in monthly payments of
approximately $6 for single-section homes resulting from this final
rule, DTI can be recalculated as 35.8 DTI, which increases the DTI by
0.1 and is still under the standard 43 DTI limit for the small portion
of consumers for manufactured homes that use FHA loans (although as
noted previously, this ratio can be higher based on certain
compensating factors). Considering average household income of single-
section homeowners (approximately $40,000 based on the 2019 AHS), the
incremental monthly payments of approximately $6 would increase the DTI
to 35.9, which is 0.2 above the median DTI ratio for chattel loans
presented in the 2021 CFPB and well under the 43 DTI limit. Further,
DTI does not take into account any reduction in energy costs from the
standards established in this final rule. Finally, DOE only considered
the effect of DTI on the Tier 1 standard because commenters were
focused on how the energy conservation standards could affect DTI on
low-income consumers who have higher DTIs and affordability concerns.
Accordingly, DOE concludes that the final rule will not have the impact
on loan qualification that the commenters suggest, and to the extent
there are such impacts, Tier 1 of the final rule helps mitigate them
because of the lower first-costs.
Finally, as mentioned by Next Step, Freddie Mac has a GreenChoice
Mortgage[supreg] program which facilitates the financing of energy
efficient home improvements and energy efficient homes, including
manufactured homes. This program is specifically also meant for
borrowers who want to qualify for greater purchasing power despite
their higher DTI and housing expense-to-income for manually
underwritten loans. With respect to commenters' suggestions that DOE
provide forms of financial assistance or other aid to assist
manufactured home purchasers, EISA does not authorize DOE to provide
such assistance in establishing the standards for manufactured housing.
However, DOE will work with other Federal agencies within its statutory
authorities to assist homeowners, including manufactured homeowners, in
achieving energy burden reductions in an affordable and equitable
manner.
3. IECC
Multiple commenters stated that that the IECC does not take into
consideration all the construction aspects unique to manufactured
housing, and its application to manufactured housing would require the
industry to comply with a building code that was developed for
commercial and site-built residential buildings. (MMHA, No. 995 at p.
3); (Michigan MHA, No. 1012 at p. 2); (WHA, No. 1025 at p. 2); (PMHA,
No. 1165 at p. 3); (Westland, No. 1263 at p. 2); (Pleasant Valley, No.
1307 at p. 2); (American Homestar, No. 1337 at p. 2); (Oliver
Technologies, No. 1350 at p. 2); (KMHA, No. 1368 at p. 2); (Adventure
Homes, No. 1383 at p. 2); (NJMHA, No. 1451 at p. 2); (WMA, No. 1452 at
p. 2); (IMHA/RVIC, No. 1466 at p. 2); (Cavco, No. 1497 at p. 2);
(Skyline Champion, No. 1499 at p. 2); (Mississippi MHA, No. 1588 at p.
3); (Mississippi MHA, No. 1588 at p. 4); (Skyline Champion, No. 1627 at
p. 2); (Campaign Form Letter, Multiple submissions at p. 1-2) NRECA
commented that they are concerned that the 2021 IECC standard and the
other features of the SNOPR could ultimately price many consumers out
of the market and urged DOE to consider alternatives. (NRECA, No. 1406
at p. 3) Accordingly, NRECA questioned the use of the 2021 IECC
standard for manufactured housing in the SNOPR, while most states are
still following the 2009 IECC standard for site-built homes. They
suggested that DOE look to other iterations of the IECC standard which
could better balance efficiency and affordability, while still
including an efficient building envelope as part of the standard.
(NRECA, No. 1406 at p. 4)
Clayton Homes stated that they believe that requiring the industry
to comply with the IECC is not an appropriate solution. (Clayton Homes,
No. 1589 at p. 16) The MHCC stated that they believe the energy
efficiency requirements from the 2021 IECC, as currently proposed, are
not the appropriate resource to be used in updating manufactured
housing energy requirements, as the 2021 IECC was not developed or
intended for these homes. (MHCC, No. 1600 at p. 6) TMHA stated the IECC
was never intended to apply to HUD-Code manufactured homes and as
proven in Texas it poses significant issues to the factory-built home
manufacturing process at affordable price points. TMHA stated that they
believe that DOE, in concert with HUD and the MHCC, should reach an
agreement on which elements from the Code deliver the most energy
conservation gains while minimizing the increase in construction cost
to protect low-income consumers and the supply of affordable housing.
(TMHA, No. 1628 at p. 3) MHARR commented that manufactured homes have
never previously been subject to any version of the IECC. Thus, for
manufactured homes, the increase in costs entailed in implementing the
2021 IECC would not be an ``incremental'' or marginal increase over and
above the cost of the 2018 IECC, but the total, cumulative costs of
implementing all elements of the IECC incorporated within its 2021
iteration, dating back to the very first version of that code. (MHARR,
No. 1640 at p. 8)
Alternatively, Earthjustice and Prosperity Now stated that DOE must
adopt standards based on the most recent version of the IECC, except as
expressly permitted by EISA. They stated that the language of EISA
makes clear that DOE must analyze the IECC's cost effectiveness on a
provision-by-provision basis. (Earthjustice and Prosperity Now, No.
1637 at p. 1, 2) Further, ASHRAE stated that the most recent edition of
their standard ANSI/AHSRAE/IEC 90.2-2018 includes manufactured housing
within scope and because Standard 90.2 is an industry-based standard,
it allows manufacturers credit for energy savings from a wider variety
of measures than are used in other model codes such as the IECC
prescriptive standards, including the use of higher efficiency heating
and cooling equipment, and also solar panels. Accordingly, they
recommended that DOE evaluate whether ASHRAE 90.2-2018 would be more
cost-effective than the proposed standard, and for DOE to consider
Standard 90.2 alongside or in place of the 2021 IECC. (ASHRAE, No. 1373
at p. 2) NRDC also recommended the use of ASHRAE 90.2-2018 as a
starting point to set the standards at a higher level. NRDC stated that
the one known method of reducing default risk is to increase energy
efficiency and require disclosable energy ratings/quality assurance.
NRDC stated that ASHRAE 90.2 accomplishes both goals, and urged DOE to
evaluate this standard as well as the IECC 2021 code as the basis for
its standards for manufactured housing, since ASHRAE 90.2 requirements
have been demonstrated to be cost-effective. (NRDC, No. 1599 at p. 5-7)
[[Page 32749]]
As described in section II.A, EISA mandates that the manufactured
housing energy conservation standards be based upon the most recent
IECC, except in cases in which the Secretary finds that the IECC is not
cost-effective, or a more stringent standard would be more cost-
effective, based on the impact of the IECC on the purchase price of
manufactured housing and on total life-cycle construction and operating
costs. (42 U.S.C. 17071(b)(1)) As noted previously and discussed more
below in section IV, DOE has found today's final rule, which is based
on the 2021 IECC, to be cost-effective. Accordingly, DOE evaluated the
requirements of the IECC along with the other considerations enumerated
by EISA in establishing these standards. In DOE's view, the directive
that these standards ``shall be based on'' the most recent version of
the IECC indicates Congress' intent that DOE exercise discretion in
establishing these standards and does not require these standards for
manufactured homes to be an identical or verbatim equivalent of the
IECC, especially in light of the other considerations DOE must make
under the statute (i.e., the design and construction techniques of
manufactured homes, cost-effectiveness, etc.).
Additionally, DOE disagrees with Earthjustice and Prosperity Now's
comment that DOE must analyze the cost-effectiveness of the IECC on a
provision-by-provision basis. Nothing in section 413 of EISA suggests
that Congress intended for DOE to conduct a provision-by-provision
cost-effectiveness analysis of the IECC. If Congress wanted DOE to take
such a granular approach, it would have specified such a requirement.
Moreover, while DOE disagrees with the commenters' assertion, DOE
nonetheless has engaged in an analysis to determine which IECC
provisions are appropriately applied to manufactured housing and which
impact first-cost and affordability considerations, consistent with the
considerations enumerated in EISA. But, unlike the analysis commenters
suggest, DOE's evaluations have been in the context of the whole home,
rather than considering individual provisions in isolation, which is
more consistent with the approach for which manufactured housing has
met current HUD energy conservation requirements via a Uo for the
entire home. Considerations regarding the design and construction of
manufactured homes were a main focus of the MH working group while
developing the recommendations that DOE has considered in this
rulemaking. For example, section R402.2.4 of the 2015 IECC (which was
considered by the MH working group) and the 2021 IECC (which is the
latest version of the IECC) include a specification for vertical doors
that provide access from conditioned to unconditioned spaces to meet
certain fenestration insulation requirements. However, internal doors
that separate conditioned and unconditioned space rarely are relevant
to manufactured homes. Therefore, the MH working group recommended that
this provision be removed from the energy conservation standards as it
was deemed not relevant to manufactured housing design and
construction. Further, DOE did not incorporate requirements for uniform
thickness or a uniform density for the exterior ceiling insulation
given that the space between the roof and exterior ceiling is limited
in a manufactured home as compared to a site-built home, particularly
at the eaves, and as such uniformity of thickness may not be possible
at the insulation levels established in this final rule. Because the
IECC is specific to site-built structures, the approach finalized in
this document would establish requirements using modified versions of
those related IECC provisions that can be adapted for manufactured
homes.
With respect to ASHRAE Standard 90.2-2018, DOE notes that, while
commenters provided some information regarding the cost-effectiveness
of Standard 90.1-2018 to site-built homes, they did not provide
information regarding the cost-effectiveness of 90.2-2018 as applied to
manufactured homes. Moreover, the commenters did not provide
information on how 90.2-2018 applies to manufactured homes relative to
the 2021 IECC-based requirements DOE proposed in the August 2021 SNOPR
and finalized in this rule. EISA does allow DOE to base its
manufactured housing energy conservations standards on a code other
than the IECC to the extent that the IECC is not cost-effective, or the
alternate code is more stringent and more cost-effective. At this time,
DOE is declining to make such determinations for Standard 90.2-2018.
Instead, DOE has elected to maintain the 2021 IECC as the basis for
this final rule, consistent with the considerations of EISA section 413
and the recommendations of the MH working group and other stakeholders.
DOE remains open to consideration of Standard 90.2-2018 or other
building energy codes that may be appropriately applied to manufactured
housing and meet the increased stringency and cost-effectiveness
requirements of EISA section 413 in future rulemakings for these
standards.
B. Final Standards
DOE is finalizing tiered standards that would prescribe cost-
effective energy conservation requirements based on requirements in the
2021 IECC. The Tier 1 standards would apply to single-section
manufactured homes. The Tier 1 requirements incorporate IECC-based
building thermal envelope component measures that result in an
incremental purchase price increase less than $750 for single-section
homes. In other words, the Tier 1 requirements address many of the same
thermal envelope components of a home as the IECC (after accounting for
the design and factory construction considerations under EISA discussed
previously), but with lesser stringencies to address the affordability
concerns raised by HUD during consultation and in stakeholder comments.
The Tier 2 standards would apply to multi-section manufactured homes.
The Tier 2 standards would be based on the most recent version of the
IECC with similar stringencies for thermal envelope components, taking
into consideration the design and factory construction techniques of
manufactured homes. Tier 2 includes the alternate exterior wall
insulation requirement (R-21) for climate zones 2 and 3, as presented
in the August 2021 SNOPR and October 2021 NODA. Tier 2 is estimated to
result in an average incremental price increase of $4,100-$4,500 for
multi-section homes. Both Tier 1 and Tier 2 standards also include
requirements that are applicable to manufactured homes related to
ducts; HVAC; service hot water systems; mechanical ventilation fan
efficacy; and heating and cooling equipment sizing. These requirements
are also based on the 2021 IECC after accounting for the design and
factory construction considerations under EISA, and are applicable to
all manufactured homes (single-section and multi-section).
1. Size-Based Threshold
In this final rule, DOE is finalizing standards based on home size
instead of the August 2021 SNOPR proposed manufacturer's retail list
price. DOE initially considered a retail-price threshold to address the
affordability concerns expressed by HUD and other stakeholders. 86 FR
47744, 47760. DOE received a number of comments against using
manufacturer's retail list price, and alternate suggestions to use a
size-based threshold instead, as discussed in section III.B.3 of this
document. DOE noted in the August 2021 SNOPR that it had considered a
size-based threshold
[[Page 32750]]
and requested comment on the use of a size-based threshold, or other
alternate threshold, in place of the retail list price threshold. Id.
at 47760-47762. DOE also performed a sensitivity analysis regarding an
alternate sized-based tier threshold in the October 2021 NODA.\30\ 86
FR 59042.
---------------------------------------------------------------------------
\30\ DOE also evaluated a sized-based threshold among the
alternatives for both the January 2022 DEIS and April 2022 FEIS. 87
FR 2430; 87 FR 20852.
---------------------------------------------------------------------------
The manufactured housing survey (``MHS'') 2020 public use file
(``PUF'') data, provides estimates of average sales prices for new
manufactured homes sold or intended for sale by geographical region and
size of home.\31\ Table III.1 summarizes the average, minimum and
maximum sales prices based on census region and section.
---------------------------------------------------------------------------
\31\ Manufactured Housing Survey, Public Use File (PUF) 2020.
www.census.gov/data/datasets/2020/econ/mhs/puf.html.
Table III.1--MHS PUF 2020 Census Region and Sales Price Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
Single-section sales price (2020$) Dual-section sales price (2020$)
Census region ------------------------------------------------------------------------------------------------
Average Minimum Maximum Average Minimum Maximum
--------------------------------------------------------------------------------------------------------------------------------------------------------
Northeast.............................................. $57,916 $35,600 $95,000 $107,951 $56,000 $233,000
Midwest................................................ 56,983 33,200 79,000 104,987 54,000 184,000
South.................................................. 56,798 31,400 79,000 106,942 58,000 170,000
West................................................... 61,748 34,100 117,000 118,282 64,000 236,000
------------------------------------------------------------------------------------------------
All................................................ 57,233 31,400 117,000 108,583 54,000 236,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Further, the MHS also summarizes average manufactured home sales
price by state.\32\ Table III.2 presents the average sales prices in
2020 per HUD zone based on the MHS data discussed previously and
manufactured home shipments published by Manufactured Housing
Institute.\33\
---------------------------------------------------------------------------
\32\ Manufactured Housing Survey, Annual Tables of New
Manufactured Homes: 2014--2020; www.census.gov/data/tables/time-series/econ/mhs/annual-data.html.
\33\ Manufactured Housing Institute, Annual Production and
Shipment Data; www.manufacturedhousing.org/annual-production/ production/.
Table III.2--MHS Average Sales Price Data by HUD Zone
----------------------------------------------------------------------------------------------------------------
Single-section average sales Dual-section average sales
HUD zone price (2020$) price (2020$)
----------------------------------------------------------------------------------------------------------------
1.................................................. $57,124 $107,003
2.................................................. 57,290 111,208
3.................................................. 56,207 109,147
----------------------------------------------------------------------------------------------------------------
As presented in Table III.1 and Table III.2, the average, minimum
and maximum sales price for single-section homes are significantly
lower than the same for multi-section homes.
The 2019 AHS separately provides data relating household income to
manufactured housing size. On average, the household income for
households in single-section homes ($39,331) is lower than that of
multi-section homes ($51,358). The 2019 AHS also provides data relating
the poverty status \34\ (using the federal poverty level thresholds
\35\) to size of home. Table III.6 summarizes that a larger portion of
single-section homes have residents at poverty levels less than 100 and
200 percent of the Federal Poverty Level compared to multi-section
homes.
---------------------------------------------------------------------------
\34\ In the AHS tables, poverty status was determined by
comparing the combined income of the individuals living in the
household to the appropriate size-based poverty threshold (i.e.,
two-person poverty threshold, three-person poverty threshold, etc.).
Further details on the definition for poverty status is found in the
AHS definitions handbook (www2.census.gov/programs-surveys/ahs/2019/2019%20AHS%20Definitions.pdf).
\35\ 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
----------------------------------------------------------------------------------------------------------------
Number of units (thousands) Percentage of units (%)
Poverty level ----------------------------------------------------------------------------
Single-wide Double-wide Single-wide Double-wide
----------------------------------------------------------------------------------------------------------------
Less than 100 percent.............. 1109 506 29 17
Less than 200 percent.............. 2278 1307 60 45
----------------------------------------------------------------------------------------------------------------
Accordingly, DOE concludes that single-section homes, on average,
have lower sales prices than multi-section homes. Further, DOE
concludes that single-section homes, on average, have householders with
lower to median incomes than multi-section homes. To the extent that
manufactured home purchasers are cost-driven, in conjunction with the
lower average income, consumers at the lower end of the manufactured
home purchase price range generally would be more sensitive to
increases in purchase price. Based on the relationship between home
size and cost, DOE has determined that, similar to the retail list
price-based threshold, the size-based threshold addresses affordability
concerns. However, as noted by commenters, the size-based threshold
would not be susceptible to fluctuations in pricing due to changing
market conditions or consumer customization that could impact the
applicability of standards (see the discussion in section III.B.3 of
this document). The size-based threshold
[[Page 32751]]
therefore provides greater certainty for manufacturers and consumers as
to the applicability of standards to individual manufactured homes and
reduces opportunities for gaming. Accordingly, DOE is finalizing a
tiered standard with the Tier 1 standard applicable to single-section
homes and the Tier 2 standard applicable to multi-section homes.
2. Tiered Standard
DOE developed the Tier 1 standard with the lower incremental
purchase price in response to concerns from HUD and other commenters
regarding the incremental purchase price of a manufactured home built
to a DOE standard, and the current ability of the first homeowner/
purchaser of these homes to recoup the increase in purchase price and
realize the savings offered by the greater energy efficiency of a Tier
1 manufactured home. The Tier 1 standard includes requirements for
thermal envelope components similar to those of the 2021 IECC, but at
lesser stringencies than the 2021 IECC to lower the incremental
purchase price in order to address the affordability concerns raised by
HUD and other stakeholders.
In determining the energy efficiency measure (``EEM'') combinations
included in Tier 1, DOE ensured that the performance-based overall
thermal transmittance (Uo) for these combinations would be more
stringent than the current HUD requirements. DOE's objective in
defining the Tier 1 incremental purchase price threshold was based on
implementing efficiency improvements by which a low-income buyer
purchasing a single-section home (using typical loan terms currently
available to these homebuyers, primarily chattel loans with higher
interest rates) would, on average, realize a positive cash flow within
Year 1 of the standard based on the down payment, incremental loan
payment, and energy cost savings. DOE believes this approach addresses
the concerns raised by HUD and other stakeholders regarding
affordability as low-income purchasers, whom DOE considered in
developing Tier 1 standards, would begin to quickly realize the energy
cost savings of the standards. As such, DOE determined that an
incremental purchase price of less than $750 for a set of energy
efficiency measures provided a beneficial financial outcome for these
consumers given lifecycle cost savings and energy cost savings, while
minimizing first cost impacts in the manner noted above. Specifically,
for single-section manufactured homes, DOE determined the set of energy
efficiency measures with an average incremental purchase price of $660
(as presented in Table I.1) with a 10 percent down payment (using a
chattel loan) would, on average, result in a positive cash flow within
the first year, as presented in Table III.4. Further discussion on the
LCC inputs to this subgroup calculation are presented in section
Chapter 9 of the TSD.
Table III.4--Tier 1 LCC Sub-Group National Results
------------------------------------------------------------------------
Single-section only; 30-year analysis period; national
results Tier 1
------------------------------------------------------------------------
Incremental cost........................................ $660
Incremental down-payment (10%).......................... 66
Yearly Incremental Loan Payment......................... 67
First Year Incremental Payment (Down-payment + Loan).... 133
Yearly Energy Cost Savings.............................. 177
First Year Savings (Energy Cost Savings--Incremental 44
Payment)...............................................
------------------------------------------------------------------------
The Tier 2 standard would apply the same thermal envelope EEMs to
multi-section homes, but at similar stringencies as the 2021 IECC, with
consideration of cost-effectiveness and design and factory construction
techniques of manufactured homes taken into account. (42 U.S.C.
17071(b)(1); 42 U.S.C. 17071(b)(2)(A)) Tier 2 also incorporates the
alternate exterior wall insulation requirement (R-21) for climate zones
2 and 3, as presented in the August 2021 SNOPR and October 2021 NODA.
DOE notes that Tier 2 requirements adopted in this final rule will
update only the window U-factor requirements for all climate zones
compared to the term sheet agreed upon by the MH working group (window
U-factor: 0.35 and 0.32; to 0.32 and 0.30 respectively). The window U-
factors were updated consistent with the 2021 IECC, while the other
updates were not included because of the design and factory
construction of a manufactured home or cost-effectiveness
considerations (see further discussion in section III.F.2.b of this
document). Otherwise, the remaining Tier 2 EEMs are consistent with the
recommendations from the MH working group, except based on the three
HUD zones (as opposed to the four climate zones recommended in the Term
sheet). Further discussion of the climate zones may be found in section
III.F.2.a. of this document.
The required building thermal envelope requirements for both tiers
are presented in section III.F.2.b of this document.
3. Comments on the August 2021 SNOPR Proposal and the October 2021 NODA
DOE received a number of comments regarding whether a tiered or the
alternative untiered approach should be considered.
Multiple commenters supported single-tier (i.e., untiered)
standards for energy conservation based on the 2021 IECC standards.
They stated that all manufactured homes should be as efficient as would
be cost-effective, considering the construction costs, energy costs,
and financing over the life-cycle of the homes. They also commented
that homebuyers purchasing homes in Tier 1 should not be subjected to
the pitfalls of lower-quality, inefficient homes, which would also
reduce resale value. The commenters also noted that a two-tiered
approach would further stratify the growing homeownership gap for
underserved communities, depriving individuals and families from
quality, energy-efficient housing choices. (CASA of Oregon, No. 925 at
p. 1-2) (Verde, No. 928 at p. 1-2), (Trellis, No. 974 at p. 1-2),
(NOAH, No. 976 at p. 1-2), (PathStone, No. 1013 at p. 1-2), (Habitat
for Humanity of LA, No. 1015 at p. 1-2), (WIDC, No. 1016 at p. 1-2),
(RCAC, No. 1183 at p. 1-2), (UCD, No. 1030 at p. 1-2), (LISC, No. 1233,
at p. 2-3); (CHP, No. 1384 at p. 1-2); (Blount County Habitat for
Humanity, No. 1417 at p. 1-2); (ReFrame Foundation, No. 1424 at p. 1-
2); (People's Self-Help Housing, No. 1591 at p. 1); (Fahe, No. 1572 at
p. 1-2); (NBI, No. 1404 at p. 1-2); (NPCC, No. 1567 at p. 2);
(E4TheFuture, No. 1374 at p. 1); (Next Step, No. 1617 at p. 10, 11);
(UHI, No. 1026 at p. 1); (E4TheFuture, No. 1976 at p. 1); (ICC, No.
1979 at p. 2); (NYSERDA, No. 1981 at p. 1); (Next Step, No. 1984 at p.
1, 2) UHI stated that
[[Page 32752]]
lower-quality, less efficient homes will be less comfortable and
subject residents to potential health and safety hazards from poor
ventilation, poor insulation, and a lesser ability to withstand extreme
weather conditions. (UHI, No. 1026 at p. 1) VEIC recommended that DOE
pursue a single standard for all manufactured homes that is based on
the 2021 IECC and incorporate all measures that are cost-effective
based on total lifetime costs of the home, including energy costs.
(VEIC, No. 1633 at p. 3) NMHOA stated that while establishing a tiered
system may somewhat address the issue of the higher upfront costs
associated with purchasing a home, doing so fails to address the core
purpose of the proposed rule: addressing the ongoing costs of
ownership. (NMHOA, No. 1635 at p. 3) UC Law School stated the untiered
approach makes the most sense from a climate perspective, provided DOE
could solve the affordability problem. (UC Law School, No. 1634 at p.
6, 7, 10) NBI commented that proposed Tier 2 energy conservation
standards missed significant energy savings by not applying the entire
scope of the 2021 IECC to manufactured homes. (NBI, No. 1404 at p. 1-2)
ACEEE commented that the proposed Tier 1 standards are illegal. The
authorizing statute (42 U.S.C. 17071) requires DOE to set the standards
based on the most recent version of the IECC (currently the 2021 IECC)
except when that code is not cost-effective or a more stringent
standard would be more cost-effective. It specifies that cost-
effectiveness is based on ``the purchase price . . . and on total life-
cycle construction and operating costs.'' Thus, they stated that DOE
must base any change from the 2021 IECC on cost-effectiveness,
including total life-cycle energy costs. (ACEEE, No. 1631 at p. 4)
ACEEE also expressed concern that the proposed Tier 1 would not help
low-income residents, that there may be cheaper savings not included in
the draft standard. (ACEEE, No. 1498 at p. 1) ACEEE also commented that
tiered standards will reinforce inequitable outcomes. Setting weaker
standards for cheaper homes will result in inequitable access to the
benefits of higher quality, more efficient construction, and will
create a dangerous precedent by setting standards that are targeted
according to consumer income level. (ACEEE, No. 1631 at p. 3) Instead,
ACEEE commented that untiered standards will ensure that all residents
benefit equitably from the same strong, cost-effective efficiency
standards. They stated that the proposed threshold for Tier 2 is
arbitrary and subject to gaming and the use of manufacturer's retail
list price is a notional amount that can be manipulated. (ACEEE, No.
1631 at p. 4-6) Further, ACEEE also stated that the untiered standards
are justified based on legal requirements, cost-effectiveness, and
environmental impacts without consideration of the economic or other
impacts from greenhouse gas reduction, and thus, the recent injunction
\36\ on the use of the social cost of carbon should not delay this
standard. (ACEEE, No. 1988 at p. 3) Finally, ACEEE stated that the EIS
confirms that the untiered standards deliver the highest 30-year LCC
savings to residents and provides the greatest climate, environmental
justice, socioeconomic, and health benefits. In addition, they stated
the untiered standards deliver the largest reduction in ongoing energy
costs, which is an essential part of preserving the affordability of
manufactured housing and lowering high energy burdens for its
residents. (ACEEE, No. 1988 at p. 1)
---------------------------------------------------------------------------
\36\ Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.).
---------------------------------------------------------------------------
Vermont Law School commented that DOE lacked the legal authority to
adopt the proposed less energy efficient tiered standards based on a
manufactured home's retail list price or number of sections because the
2021 IECC does not base any of its provisions on a home's list price,
number of sections, ``first cost impacts on purchasers,'' or 1-10 year
payback periods, and DOE has not affirmatively found that the 2021 IECC
standard is not cost effective. (Vermont Law School, No. 1638 at p. 2-
4) Vermont Law School reiterated their concern that the tiered approach
was not cost-effective, nor consistent with the 2021 IECC, then went on
to acknowledge that ``DOE has, however, explicitly and affirmatively
found that the untiered approach, which is based on the IECC, is cost-
effective.'' Vermont Law School also commented that the untiered
approach goes much further than the tiered approach in addressing the
financial, health, and energy burdens faced by low-income residents,
and will reduce the energy burden of all new residents of manufactured
homes. (Vermont Law School, No. 1991 at p. 1-3)
The CEC urged DOE to adopt the untiered approach that applies the
2021 IECC to all manufactured housing, regardless of retail cost or
size. They stated that adopting either tiered approach (retail cost-
based or size-based) would impede the nation's and individual states'
efforts to address climate change in a just and equitable way. CEC also
stated that, because DOE may not deviate from establishing standards
based on the IECC for all manufactured housing unless it makes a
finding that the code is not cost-effective, DOE must finalize the
untiered approach. (CEC, No. 1629 at p. 2, 3) While CEC acknowledged
that to make the standards meaningful, DOE has discretion to adopt
standards based on the IECC rather than identical IECC standards, they
disagreed with DOE's conclusion that this discretion extends to the
bifurcated application of IECC standards based on cost or configuration
in a way that reduces energy savings, utility savings, or greenhouse
gas emissions. This interpretation would effectively render the
statutory requirement meaningless. (CEC, No. 1629 at p. 3) Finally, CEC
commented that they were concerned regarding equity considerations and
the disproportionate impact the tiered proposals would have on low-
income residents. (CEC, No. 1629 at p. 4) Next Step commented that by
sacrificing energy-efficiency features in lower-cost manufactured
homes, the proposed DOE rule will adversely impact lower-income
communities--including immigrant communities and communities of color,
and that the rulemaking should be considered under President Biden's
January 20, 2021, Executive Order on Advancing Racial Equity and
Support for Underserved Communities Through the Federal Government.
(Next Step, No. 1617 at p. 7, 11) In April 2022, DOE released its
Equity Action Plan (EAP) to implement this Executive order: https://www.energy.gov/equity. As directed by the Executive order, the EAP lays
out a roadmap for how DOE will incorporate equity considerations in
procurement, financial assistance, and stakeholder engagement across
DOE programs. In developing this rule, DOE has taken equity impacts
into account and the Administration's comprehensive approach to
advancing equity. Moreover, the FEIS provides a detailed analysis of
socioeconomic and environmental justice considerations.
Earthjustice, Prosperity Now, and Sierra Club urged DOE to abandon
the proposed tiered approach and to apply a strengthened version of the
proposed Tier 2 standards to all new homes. They stated that DOE has
entirely failed to consider the beneficial impacts of stronger
standards on renters of new homes, and therefore has ignored an
important aspect of the affordability problem it claims to be
addressing. (Earthjustice and Prosperity Now, No. 1637 at pp. 1, 5, 6,
8); (Earthjustice, Prosperity Now, and Sierra Club, No.
[[Page 32753]]
1992 at p. 2) Further, they commented that (1) the Tier 1 standards are
not based on 2021 IECC and DOE has not shown that standards based on
the 2021 IECC are not cost-effective; and (2) the tiered approach
raises significant equity concerns. (Earthjustice and Prosperity Now,
No. 1637 at p. 3) In addition, they stated by prescribing weaker energy
efficiency standards for the lowest cost homes as DOE has proposed,
these commenters assert that DOE would limit access to the benefits of
higher quality, more efficient construction, particularly for families
renting a manufactured home and those who own a home and rent a lot in
a manufactured housing community, in which a significant share of
lower-cost homes are placed. (Earthjustice and Prosperity Now, No. 1637
at p. 6) Finally, they noted that there is ample evidence in the record
to support DOE's nationwide adoption of standards that are far stronger
and more comprehensive than the requirements included in the proposed
Tier 2 standards, even if the economic impacts of avoiding greenhouse
gas emissions are completely ignored. (Earthjustice, Prosperity Now,
and Sierra Club, No. 1992 at p. 9)
RECA urged DOE to take the untiered approach proposed in the SNOPR
because it is the only proposed alternative consistent with the
relevant statute, and it is the most equitable long-term solution
because it recognizes that reducing utility bills is just as important
(and likely more important) for low-income households as it is for
higher-income households. RECA stated that, unless DOE has specifically
found a lack of cost-effectiveness or a more stringent cost-effective
measure than what is contained in the IECC, the 2021 IECC should be the
standard for energy conservation in manufactured housing. (RECA, No.
1570 at pp. 1, 2, and 7)
NASEO commented that DOE and HUD are proposing energy efficiency
standards for Tier 1 homes which are or will soon be less efficient
than the efficiency codes and standards in place in the various states,
and which states are unable to supersede due to federal pre-emption.
NASEO was particularly concerned that it has been nearly 30 years since
the last update to MH standards. NASEO stated that establishing a two-
tiered standard that excludes the lowest cost homes from energy
efficiency saddles those residents with high energy bills for the 30-40
year average lifetime of a manufactured home. (NASEO, No. 1565 at p. 2)
NEEA strongly opposed a two-tier approach for four reasons: (1)
Those who buy a Tier 1 home may have a lower first cost, but future
buyers will have to bear higher life-cycle and energy costs; (2) the 2-
tier approach based on retail list price will shift market pricing
practices to keep advertised price low while adding higher priced
dealer options at the point of sale; (3) park owners will continue to
purchase less efficient Tier-1 homes since rent is set on market rates
and energy bills will be paid by the tenants; and (4) a 2-tier approach
introduces complexity into this code and sets a bad precedent for other
product categories. NEEA commented that DOE must recognize the
landlord-tenant relationship (where landlords are not incentivized to
invest in energy efficiency because they are not paying the utility
bills) and implement single tier, strong energy conservation standards
for manufactured housing. (NEEA, No. 1601 at pp. 2, 3, 6, 8, and 9)
The State Attorneys General urged DOE to prescribe the requirements
set forth in DOE's untiered proposal. They commented that a tiered
approach is inconsistent with the IECC. Were DOE to adopt a tiered
approach, it would do so in violation of 42 U.S.C. 17071(b)(1), which
provides that DOE's standards for manufactured housing ``shall be based
on'' the IECC. Accordingly, they stated that DOE should adopt standards
based on the 2021 IECC and make them applicable to all manufactured
homes, regardless of home cost or size. They argued that DOE's untiered
proposal is a significant improvement over the current HUD Code, but
DOE should still adopt a more stringent set of requirements to fully
comply with EISA. (State Attorneys General, No. 1625 at pp. 2, and 4-6)
Further, they commented that the tiered approach would create a double
standard that will perpetuate persistent poverty and inequality. (State
Attorneys General, No. 1625 at p. 4) UC Law School stated that the
untiered approach is the most cost-effective when the cost-benefit
analysis factors in only the social cost of carbon and the emissions
reductions into the equation. (UC Law School, No. 1634 at p. 11, 13,
14).
University of Arizona and Arizona State strongly endorsed the
application of minimum standards for energy conservation based on the
2021 IECC for all new manufactured homes sold (as in, did not endorse
the tiered standards) in order to reduce future health and financial
vulnerabilities among manufactured housing residents. They stated that
manufactured homes also provide housing for high concentrations of
heat-sensitive populations, including older adult, low-income and
minority groups, and that new standards for manufactured housing
energy-efficiency are long overdue and should be issued and implemented
as soon as possible. (University of Arizona and Arizona State, No. 1379
at p. 1-2)
MHI also supported a single-tier standard, albeit not with the
requirements that DOE proposed in the untiered approach. MHI
recommended less stringent component and Uo requirements for
the single-tier standards (which are discussed further in section
III.F.2.b). (MHI, No. 1990 at p. 14-17)
On the other hand, NAHB did not support the untiered standards and
thus supports the adoption of a tiered approach to allow builders and
manufacturers to have options when implementing building thermal
envelope requirements. They stated that the ``tiered'' approach
provides options for builders and manufacturers when implementing
building thermal envelope requirements. However, they also stated that
it is unclear if using the manufacturer's retail price is an
appropriate metric for the two tiers. (NAHB, No. 1398 at p. 2) An
anonymous commenter offered its support for the tiered standards as a
way to strike a balance between increased energy efficiency and
affordable housing. (Anonymous, No. 1446 at p. 1, 2) Clayton Homes
commented that the untiered proposal is not cost-effective in general
or for low-income consumers. (Clayton Homes, No. 1589 at p. 16)
UC Law School stated that the untiered approach risks making
manufactured homes unaffordable for low-income consumers. First, under
the untiered standard, purchase price increases could represent a
significant portion of the average consumer's annual income while those
customers are likely already living paycheck to paycheck. Second, under
the untiered approach, the dramatic increase in purchase price will
increase the amount of chattel or real property loan taken out by the
buyer to obtain a manufactured home. Third, DOE stated in the SNOPR
that various factors contribute to consumers of manufactured homes
being more price-sensitive to changes that would impact the cost of a
manufactured home. Accordingly, they suggested that DOE should consider
this when evaluating the tiered and untiered approaches for this
proposed rule, as only the tiered approach considers the financial
hardship the rule will pose to low-income consumers. (UC Law School,
No. 1634 at p. 7, 8)
An individual commenter stated that the proposed rule is a
necessary step in reducing U.S. energy usage and increasing
manufactured housing
[[Page 32754]]
efficiency, and that the ``tiered'' approach to regulating homes'
thermal envelopes would help to reduce overall energy consumption while
also keeping home costs relatively unchanged. (Kurfman, No. 941 at p.
1) Another individual commenter suggested that although the tiered
system of cost implementation creates significantly more administrative
responsibility, it is a more equitable and desirable means of
accomplishing the aforementioned agency goals. They suggested that the
proposed rule by DOE seems adequately supported by reasonable inquiries
into emission reduction, energy efficiency, and cost allocation for
thermal requirements of manufactured homes. (Gustafson, No. 778 at p.
1) NYSERDA supported DOE's two-tier approach to address the
affordability concerns. (NYSERDA, No. 1620 at p. 1)
Further, DOE also received a number of comments on the tiered
approach, specifically as it relates to the proposed threshold (i.e.,
manufacturer's retail list price), which are summarized in the
following paragraphs.
Multiple commenters suggested that the $55,000 low-income threshold
for the eligibility for streamlined energy efficiency requirements for
the tiered standard should be eliminated (or significantly increased),
and that it is incorrect that homes above $55,000 are not affordable to
low-income homebuyers. (MMHA, No. 995 at p. 4); (Michigan MHA, No. 1012
at p. 2); (WHA, No. 1025 at p. 2); (PMHA, No. 1165 at p. 3); (Westland,
No. 1263 at p. 2); (Pleasant Valley, No. 1307 at p. 2); (American
Homestar, No. 1337 at p. 2); (Oliver Technologies, No. 1350 at p. 2);
(KMHA, No. 1368 at p. 2); (Adventure Homes, No. 1383 at p. 2); (NJMHA,
No. 1451 at p. 2-3); (WMA, No. 1452 at p. 2); (IMHA/RVIC, No. 1466 at
p. 2); (Cavco, No. 1497 at p. 2); (Skyline Champion, No. 1499 at p.2);
(Mississippi MHA, No. 1588 at p. 2) ; (Skyline Champion, No. 1612 at
p.2); (Cavco, No. 1622 at p. 2); (VAMMHA, No. 1624 at p. 2); (Champion
Home Builders, No. 1639 at p. 4); (IMHA, No. 1453 at p. 2); (MHI, No.
1592 at p. 4-6, 25)
MHARR stated that the $55,000 dividing line between Tier 1 and Tier
2 standards selected by DOE is fundamentally arbitrary and would limit
the applicability of the proposed Tier 1 standards to a mere 17.3
percent of the total HUD Code market notwithstanding the fact that all
manufactured housing is identified and protected as affordable housing
under applicable federal law. MHARR also objected to any threshold set
so low, including the updated $63,000 price threshold, because it would
subject a significant majority of all manufactured homes and all
manufactured homeowners to prohibitively costly energy standards. MHARR
further stated that the inflationary and supply chain pressures will
increase the threshold amounts by the time of the implementation of any
such standard. (MHARR, No. 1640 at p. 2-4) NBI stated that establishing
a price threshold for manufactured homes that must meet lower energy
efficiency requirements will no doubt risk gaming of the threshold by
manufacturers and inadvertently shift more of the market to less
efficient manufactured homes. (NBI, No. 1404 at p. 1-2)
If DOE keeps the tiered proposal, multiple commenters commented
that the $55,000 low-income price cap threshold for streamlined energy
efficiency requirements should be eliminated or significantly increased
to at least $110,260. (Westland, No. 1263 at p. 1); (Pleasant Valley,
No. 1307 at p. 2); (American Homestar, No. 1337 at p. 2); (Oliver
Technologies, No. 1350 at p. 2); (Adventure Homes, No. 1383 at p. 2);
(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); (MHI, No. 1592 at p. 17);
(Cavco, No. 1622 at p.3); (Champion Home Builders, No. 1639 at p. 4)
Clayton Homes recommended that the $55,000 low-income price cap
threshold should be either eliminated or increased to at least $110,000
for a single section and $140,000 for a multi-section home to better
reflect today's affordable housing market. (Clayton Homes, No. 1589 at
p. 13, 15, 16, 18)
MHI commented that if a tiered system based on price is used, the
price point in Tier 1 must be significantly increased to at least
$110,260, and must be updated annually to reflect actual costs, which
can change dramatically. MHI says that as of now, the $55,000/$63,000
threshold is arbitrary, and it excludes significant numbers of low
income manufactured housing homebuyers. (MHI, No. 1592 at p. 2, 17) MHI
stated that home price is determined by the retailer based on the home
features selected by the consumer, and requiring approval of every
floorplan after consumer choices are made (which would determine the
retail price) would mean every house would have to be approved
separately, adding astronomical costs and slowdowns to the process.
(MHI, No. 1592 at p. 7, 22, 23, 25) In addition, MHI and Clayton Homes
suggested that the Tier 2 definition should not have a threshold price;
instead, a Tier 2 home should be defined as ``A manufactured home that
is not qualified as a Tier 1 home.'' (MHI, No. 1592 at p. 30); (Clayton
Homes, No. 1589 at p. 21)
MHCC stated that they do not believe a tiered approach based on
manufacturer's retail list price is appropriate. Using manufacturer's
retail list price as a basis for thresholds could lead to situations
where, for a single model, multiple plan sets may need to be generated
leading to multiple plan review and approvals. (MHCC, No. 1600 at p. 3,
4) Schulte recommended that if DOE wishes to use the Tier 1 method, the
price limit should be closer to the anticipated average sales price in
2022 (e.g., $75,000) to cover 68 percent of the single wide market as
stated in the proposed value. However, they stated that the
manufactured home production costs are very likely to increase due to
rising component, construction labor, financing and transportation
costs, and therefore the price baseline could rapidly become obsolete.
(Schulte, No. 1028 at p. 5, 22) Further, they commented that the
differing parts and components of the two tiers of homes will make
compliance with the published designs and components of the quality
assurance system even more challenging than it already is. (Schulte,
No. 1028 at p. 21)
Skyline Champion commented that the $55,000 low-income price cap
threshold for streamlined energy efficiency requirements should be
eliminated. Skyline Champion strongly disagreed with any tiered system.
Skyline Champion stated that they believe a single set of requirements
based on value and affordability that offers the customer a clear path
to a cost benefit is the best solution. (Skyline Champion, No. 1612 at
p. 3) They suggested for the untiered standard, adjusting the tier 1
values slightly upward to improve requirements of ceiling insulation
for thermal zones 2 and 3 along with floor insulation on thermal zone
3. (Skyline Champion, No. 1612 at p. 3)
TMHA stated that the price increase considerations that were
appropriately made by DOE regarding the Tier 1 standards need to be
applied to all HUD-Code homes regardless of their price. TMHA stated
that they do not believe that a price threshold should be used at all,
and the HMDA data for low-income manufactured home purchases provides
evidence that HUD-Code homes across the price distribution deserve
cost-effectiveness consideration as intended under 42 U.S.C.
17071(b)(1), which makes no mention of segmenting manufactured housing
by price and instead only states that HUD zones be
[[Page 32755]]
used for any differentiation. If DOE decides to use a price threshold
still, TMHA recommended that DOE at least apply the 70th percentile
calculation to the entire set of home prices as opposed to limiting the
data used to only single-section homes. (TMHA, No. 1628 at p. 1, 2)
TMHA stated that the entire range of manufactured housing property
values that went to these low-income households is a better
representation of affordable home values and should be considered for
the same cost-effectiveness protection. (TMHA, No. 1628 at p. 2)
While MHI does not believe a price threshold is at all appropriate,
MHI suggested that if used there absolutely needs to be an index to
increase the price over time. The proposed rule should establish the
Federal agency tasked with providing the annually adjusted threshold
values. Whether it is HUD or the DOE, MHI suggested that a single
adjusted value must be provided to ensure consistency across the
industry. Also, MHI stated the application of the AEO to the adjustment
of home price needs to be standardized and established in the rule for
the purposes of enforcement. (MHI, No. 1592 at p. 16, 23) UCB stated
that DOE should use the untiered standards if they are to choose a
price-based alternative, but otherwise consider other potentially
effective options for determining energy efficiency thresholds. (UCB,
No. 1618 at p. 3, 10-12)
Alternatively, ACC FSC commented that DOE should consider
thresholds based on square footage instead of retail price. They stated
that a square footage threshold is more objective than a manufacturer's
suggested retail price and should be more reliably implemented and
enforced, and would still target the affordable housing market. They
suggested that Tier 1 should only apply to single-section homes. (ACC
FSC, No. 1364 at p. 1) UCB suggested using different monetary standards
for tiers, size-based tiers, or location-based tiers. (UCB, No. 1405 at
p. 3) Clayton Homes urged DOE to consider other thresholds such as
square footage (recommending 1650 sq. ft. of living space) or a measure
that differentiates based on location where the home will be sited,
rather than price. (Clayton Homes, No. 1589 at p. 15) MHI stated DOE
must seriously consider an alternative tier approach such as square
footage or sections. (MHI, No. 1592 at p. 2, 17) MHCC stated that if
DOE moves forward with a tiered approach, single- or multi-section
would be the most appropriate metric. (MHCC, No. 1600 at p. 3, 4) ACEEE
supported a metric that is harder to manipulate (such as home floor
area) if DOE insisted on creating multiple tiers. ACEEE also stated
that disclosure prior to initial sale or rental should clearly identify
lower-tier homes and inform buyers and renters that they are likely to
pay higher energy bills and may face other problems. (ACEEE, No. 1631
at p. 4-6)
As discussed previously, in response to feedback from stakeholders
and based on the statutorily required consultation with HUD, DOE
proposed the ``tiered'' approach in the August 2021 SNOPR to mitigate
the potential adverse impacts of increased costs on manufactured
housing affordability for low-income consumers that may arise from
increasing the stringency of energy efficiency requirements applied to
manufactured homes. In this final rule, DOE is finalizing a size-based
tiered approach as it mitigates the potential adverse impacts of
increased first-costs on manufactured housing affordability from
increasing the stringency of energy efficiency requirements applied to
manufactured homes.
In response to comments opposing the tiered approach, the tiered
approach is ``based on'' the 2021 IECC, as DOE interprets the statute.
As noted previously in DOE's reading, the language Congress used in
instructing DOE to set standards for these structures does not require
the imposition of requirements for manufactured homes that are
identical to those that IECC provides for site-built structures.
Instead, DOE reads the language of the statute as readily indicating
that Congress anticipated that DOE would need to use its discretion in
adapting the IECC's provisions for manufactured housing use, including
whether those elements would be appropriate in light of the design and
factory construction techniques of manufactured homes and to the extent
the IECC is not cost-effective. As noted previously, the IECC does not
apply to manufactured homes, and the IECC's provisions could not be
transferred verbatim to manufactured homes because of differences in
these structures. Moreover, Congress directed DOE to ``establish
standards for energy efficiency in manufactured housing'' that are
``based on'' the IECC. Congress could have, but did not, require DOE to
establish standards that are ``equivalent to'' those in the IECC, ``the
same as'' those in the IECC, or similar such language that would
indicate a lack of discretion. Therefore, it is DOE's reading of the
statute that Congress provided DOE with ample discretion to adapt the
IECC to the unique design, manufacturing, transportation, and cost
characteristics of manufactured homes and the associated market.
In addition, because DOE does not read ``based on'' as being
``identical to,'' there is no reason to make a finding that the IECC is
not cost-effective, which is required only when DOE is not basing its
standards on the IECC (or, alternatively, utilizing more stringent
standards than found in the IECC). Here, DOE is basing its standards on
the IECC, but necessarily adapting these standards to the unique
features of manufactured housing. If, in EISA, Congress did intend for
``based on'' to be ``identical to'' (contrary to DOE's interpretation),
then DOE would necessarily have to conclude that the IECC is not cost-
effective because it is impracticable to copy standards for site-built
housing to manufactured housing. Thus, DOE still would adopt the
standards adopted in this final rule because they promote the energy
efficiency of manufactured housing based on the criteria set forth by
Congress.
The tiered approach in this final rule is ``based on'' the 2021
IECC. As noted in the August 2021 SNOPR, 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 those of the 2021 IECC. 86 FR 47757. In other words,
both tiers in this final rule regulate the same components of a home as
the 2021 IECC, with modifications made by DOE to account for the
design, construction, transportation and cost-effectiveness
considerations for manufactured homes required by EISA, and as agreed
upon by the MH working group. Pursuant to the discretion afforded DOE
by Congress, neither the tiered nor the untiered standard (i.e., Tier
2) replicates the 2021 IECC as it would apply to site built homes.
Rather, both tiers adopted in this final rule are ``based on'' the 2021
IECC. Even if DOE had opted against tiering of standards in this rule,
the standards adopted still would not be identical to the 2021 IECC (as
alternatively proposed in the SNOPR), because, as repeatedly noted, it
is not possible to impose standards developed for site-built structures
to manufactured homes.
DOE also disagrees with commenters suggestion that the Tier 1
requirements are inconsistent with section 413 of EISA because DOE
tentatively found the proposed untiered standard to be cost-effective,
or otherwise did not show that the untiered standard was not cost-
[[Page 32756]]
effective. First, as noted previously, the tiered standard is based on
the 2021 IECC and is cost-effective, and is therefore consistent with
the statute. Second, the only differences between the tiered standard
and the untiered standard are the lesser stringencies of the building
thermal envelope components for Tier 1 homes that DOE incorporated in
order to address the first-cost and affordability concerns raised by
HUD in the EISA-required consultation, as well as other stakeholders
throughout the rulemaking process. (See section III.C of this document
for more discussion on DOE's consultation process with HUD) As the
primary regulator of manufactured homes for nearly 50 years, HUD has
significant expertise in the unique design, construction,
transportation and cost characteristics of manufactured homes. In
requiring consultation under EISA, Congress intended for DOE to benefit
from this expertise. To ignore the advice and concerns voiced by HUD
would render the statutory consultation requirement meaningless.
Moreover, as noted previously, DOE estimates a 0.55 percent
reduction (essentially no reduction) in demand and availability of
single-section homes for low-income purchasers due to Tier 1 standards.
Given that low-income consumers generally purchase lower priced
manufactured homes (i.e., many single section homes), DOE concludes
that low-income consumers would not be priced out by the Tier 1
standards adopted in this final rule. In contrast, as noted in the
October 2021 NODA, DOE estimated a 2.8 percent reduction in shipments
due to the untiered standard (2.1 percent reduction for the untiered
standard using the R-21 wall insulation in Climate Zones 2 and 3).\37\
See 86 FR 59060. DOE believes the tiered standard adopted in this final
rule better addresses the affordability concerns raised by HUD during
consultation, and other stakeholder comments, because it will ensure
continued availability for the homes most often purchased by low-income
purchasers (single-section homes) with little change to the current
market, while providing energy cost savings that provide positive cash
flow within 1 year of purchase. Accordingly, DOE incorporated the
tiered structure into its rule in order to ensure that HUD's first-cost
and affordability concerns were addressed.
---------------------------------------------------------------------------
\37\ In the October 2021 NODA, DOE estimated that the untiered
standard would result in a reduction in shipments of 70,203 homes
(single and multi-section combined), and 53,185 homes for the
untiered standard using the alternative R-21 wall insulation in
Climate Zones 2 and 3. 86 FR 59060.
---------------------------------------------------------------------------
With respect to comments regarding equity concerns related to the
tiered approach, DOE understands and acknowledges that, under the
tiered approach, purchasers of some single-section homes (which are
more likely to be low-income individuals) will not obtain the same
long-term energy savings benefits as purchasers of multi-section homes.
However, the tiered standards adopted in today's final rule, in
addition to increasing energy efficiency relative to the current HUD
code, will help mitigate first-cost impacts to prospective manufactured
home purchasers. With respect to comments that the standard--tiered or
untiered--should not be based on the IECC, as described previously,
EISA requires DOE to base the standards on the latest version of the
IECC, which in this case is the 2021 IECC, unless the standards based
on the IECC would not be cost-effective. 42 U.S.C. 17071(b)(1). As
discussed previously, the tiered standards are based on the 2021 IECC,
and DOE has found them cost-effective consistent with the other
considerations contained in EISA. Thus, DOE is finalizing a tiered
standard based on the 2021 IECC.
With respect to comments regarding the threshold for the tiered
standard, based on further review and consideration of the comments
received, DOE is not establishing the tier threshold based on the
proposed manufacturer's retail list price, and is instead finalizing
tiers based threshold on manufactured home size (single-section and
multi-section). DOE agrees with commenters that a price-based threshold
may be difficult to implement. DOE notes that applicability of the
size-based threshold, as compared to a retail-list-price based
threshold, would be impacted less by variations within a specific model
that may change the retail list price. Further, DOE notes that a
manufacturer is able to determine the size of the home they are
manufacturing prior to distribution in commerce for sale or
installation in the field. As such, basing the tiers on size would
provide greater certainty as to the applicability of standards for
specific manufactured home models, reducing the potential for
``gaming,'' as well as reduce the complexity of any potential
enforcement of the standards.
In addition, as discussed in III.B.1 of this document, DOE
understands that affordability is directly tied with manufactured home
size, in that single-section homes are consistently less expensive than
multi-section homes. To the extent that manufactured home purchasers
are cost-driven, in conjunction with the lower median income and net
worth of these purchasers, these purchasers would tend to buy less
expensive homes, and generally would also be more sensitive to
increases in purchase price. Accordingly, given the relationship
between home size and cost, basing the standards on the home size still
responds to first-cost impact concerns, while allowing for a less
burdensome and more objective mechanism for manufacturers to comply
with standards and achieving significant energy savings relative to the
HUD code. Therefore, DOE is finalizing a size-based tiered standard in
this final rule.
C. Rulemaking Process
As part of developing energy conservation standards for
manufactured housing, DOE has undertaken a multi-stage process
providing numerous opportunities for public comment and engagement, as
discussed in further detail in section II.B.3 of this document. For
this rulemaking, EISA requires DOE to ``consult with the Secretary of
HUD, who may seek further counsel from the Manufactured Housing
Consensus Committee''. 42 U.S.C. 17071(a)(2)(B). Pursuant to the
statutory requirement, DOE has consulted with HUD throughout the
development of these standards, as discussed in section II.B.3. of this
document, DOE met with HUD multiple times during the preliminary stages
of the proposed rule, as well as throughout the rest of the rulemaking
process, and consulted HUD in the development of the August 2021 SNOPR,
the October 2021 NODA and this final rule. As EISA expressly states
that the Secretary of HUD may engage with the MHCC with regard to this
rulemaking, DOE has attended three MHCC meetings, most recently in June
of 2021, to gather further information and input on the rule. This rule
addresses comments submitted by the MHCC (MHCC, No. 1600), which
mirrored comments from other individual stakeholders. A number of other
stakeholders, including industry stakeholders, have also provided
information, data, and opinions regarding the rule.
In response to the August 2021 SNOPR and the October 2021 NODA, DOE
received several comments regarding the rulemaking process used by DOE
in developing these energy conservation standards.
MHI commented that DOE's proposal failed to comply with the
statutory requirement to consult with HUD. (MHI, No. 1592 at p. 10) MHI
also stated that many of the changes conflict with current HUD Code
requirements, and no
[[Page 32757]]
direction is given as to how the two differing standards should be
integrated, which will result in complicated, overlapping requirements.
(MHI, No. 1592 at pp. 6-7) MHARR commented that DOE should rescind the
SNOPR and pursue a legitimate rulemaking based on the unique nature,
construction and affordability of MH using the pre-existing Federal
manufactured home construction and safety standards (``MHCSS'') and
statutory HUD manufactured housing consensus process. (MHARR, No. 1388
at p. 2-3) Select Representatives of Congress were concerned that the
proposed rule may conflict with statutory obligations contained within
the National Manufactured Home Construction and Safety Standards Act,
which establishes HUD as the primary regulator of construction and
safety standards for manufactured housing. To change energy efficiency
standards for manufactured housing, they stated that DOE is required by
EISA to consult with HUD, which in turn can seek further counsel from
the MHCC. Select Representatives of Congress requested that DOE develop
the proposed rule and a subsequent implementation strategy in
consultation with HUD and MHCC, in line with statutory requirements.
(Select Representatives of Congress, No. 1445 at p. 1, 2) PA-DCED
stated that it would be more appropriate to review existing
requirements within the MHCSS and to modify those standards through
submissions to the MHCC for possible revisions rather than a separate
agency implementing a totally new standard(s). (PA-DCED, No. 1485 at p.
2) Clayton Homes also recommend that DOE work with HUD and MHCC to
evaluate the energy standard improvements that will add the most value
in energy savings and account for the cost impact to consumers.
(Clayton Homes, No. 1589 at p. 4)
As stated earlier, DOE is conducting this rulemaking pursuant to
the statutory provisions in EISA that direct DOE to establish energy
conservation standards for manufactured housing. This statutory
directive is separate from the 1974 National Manufacturing Housing
Construction and Safety Standards Act that governs HUD's authority in
promulgating regulations for manufactured housing. Additionally, DOE
demonstrates in section III.F of this document how the standards do not
conflict with those established by HUD. Furthermore, this discussion
and related supporting analyses together present the analytical
approach used by DOE in evaluating the relevant information and on
which DOE based its determinations regarding the proposed requirements
in accordance with the directives in EISA, the Administrative Procedure
Act and the Negotiated Rulemaking Act. Accordingly, as discussed
previously, in preparation for the prior negotiated rulemaking that
produced the June 2016 NOPR, DOE set up a negotiated rulemaking process
in accordance with the Federal Advisory Committee Act and the
Negotiated Rulemaking Act, which included a broad and balanced array of
stakeholder interests and expertise, and included a representative from
MHARR. 79 FR 41456 (July 16, 2014). Further, as stated previously, DOE
has consulted both with HUD and engaged with the MHCC with regard to
this rulemaking, and has incorporated information and considerations
provided by HUD and the MHCC into this final rule.\38\
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\38\ DOE presented to the MHCC on December 3, 2014, August 18,
2015, and June 10, 2021. The minutes of these meetings can be found
at www.hud.gov/program_offices/housing/rmra/mhs/mhccom.
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D. Test Procedure
DOE published a test procedure NOPR for manufactured housing on
November 9, 2016. 81 FR 78733 (November 2016 test procedure NOPR). The
November 2016 test procedure NOPR proposed applicable test methods to
determine compliance with the following metrics that were included in a
June 2016 NOPR: The R-value of insulation; the U-factor of windows,
skylights, and doors; the SHGC of fenestration; U-factor alternatives
to R-value requirements; the air leakage rate of air distribution
systems; and mechanical ventilation fan efficacy. The November 2016
test procedure NOPR proposed test methods that would dictate the basis
on which a manufactured home's performance is represented and how
compliance with the energy conservation standards would be determined.
DOE notes that a number of the test methods that were proposed were
consistent with test methods from the IECC, which includes test methods
for R-value of insulation, U-factor and SHGC of fenestration, duct
leakage and mechanical fan efficacy.
The November 2016 test procedure NOPR provided stakeholders an
opportunity to comment on the proposed test procedure for manufactured
housing. In response to the August 2021 SNOPR, DOE received some
comments on the test procedure.
MHI stated that testing requirements for each of the systems being
modified in the proposal are not included and must be addressed before
any rule is published. If testing is required to be performed by a
third-party or in cases where the installer is not capable of
performing the testing, the additional cost of testing could be $600 or
more. For example, MHI questioned whether the duct testing will require
every unit to be tested thus requiring each manufacturer to hire one
individual to test the ducts in line. Further, if each multi-section
home will need to be tested on-site, they stated it will cost around
$1,000 per unit, assuming the duct system passes the first time. Also,
although MHI supports efforts to limit duct leakage, they believe such
tests should be limited to testing of duct systems in the factory only,
where such testing provides the best value to consumers. (MHI, No. 1592
at pp. 20, 22, and 28) Clayton Homes said DOE must not propose a rule
without including the required testing requirements, so any analysis
can include the true impact. (Clayton Homes, No. 1589 at pp. 3-5)
ICC stated that testing and inspection should be conducted under
the purview of either a state program or third-party entities with the
requisite knowledge and procedures to assure the results. In states
without state programs, third-party providers should be permitted to
conduct testing and inspection. DOE should require third-party
providers be accredited to ISO/IEC 17020, which ensures the competence
of inspection bodies, their impartiality, and the consistency of their
inspection activities. (ICC, No. 1621 at p. 3)
As discussed previously, DOE is not addressing a test procedure in
this rulemaking. DOE will consider the comments related to test
procedures, including an analysis of any related costs, in any future
action on test procedures.
E. Certification, Compliance, and Enforcement
In the November 2016 test procedure NOPR and in the August 2021
SNOPR, DOE did not propose a system of certification, compliance, and
enforcement (``CCE''), instead indicating those items would be
addressed in a separate rulemaking. At this time, DOE is not addressing
CCE issues in this rulemaking, but may do so in the future. DOE
received a number of comments regarding CCE implementation and costs.
UCB stated that compliance and implementation need to be included
in the rule since it will make a large difference on how the standard
is enforced, and suggested that DOE should work with HUD not only
outside of the rulemaking, but also as part of the rulemaking. (UCB,
No. 1405 at p. 1)
[[Page 32758]]
NEEA urged DOE to move quickly to address compliance and enforcement of
the standards with opportunity for stakeholder input. (NEEA, No. 1601
at p. 15) An anonymous commenter stated that DOE should expand the
proposed rule to include the projected regulatory compliance and
implementation of the proposed rule, because the current proposal does
not consider additional regulatory costs that will occur with a change
in the regulatory policy. (Anonymous, No. 1446 at p. 1, 2) Clayton
Homes commented that the rule does not include energy testing or
compliance costs, which would further exacerbate homeownership
affordability challenges in the wake of the recent escalation of home
prices, and could amount to $600 or more. (Clayton Homes, No. 1589 at
p. 6) MHI stated that DOE's proposal is based on improper calculations
and methodologies, including not considering the costs of testing
procedures and compliance. (MHI, No. 1592 at pp. 4-6, 25) MHARR stated
that the analysis does not include additional purchase price impacts
due to costs related to enforcement, testing, and regulatory
compliance. (MHARR, No. 1640 at pp. 2-4) Campaign Form Letter commented
that failure to implement a comprehensive compliance path creates
competing regulations (HUD and DOE) would both cause uncertainty in
quality assurance processes, and cause delays in production, which in
turn would harm the industry and consumers who are eagerly seeking the
affordable housing the manufactured homes provide. (Campaign Form
Letter, Multiple submissions at p. 2)
Regarding compliance approach, Schulte stated that DOE staff should
work directly with HUD so that both agencies can meet their separate
statutory responsibilities. Initially, they stated that DOE may wish to
visit the primary inspection agencies, manufacturing plants to see the
factory inspection process in action along with the inspection process
for the placement of the homes. In Schulte's view, doing this will give
DOE the opportunity to evaluate the current HUD regulatory process and
whether DOE wants to participate in the current enforcement system
managed by HUD rather than instituting a separate compliance process
under 10 CFR part 429. They suggested that HUD and DOE should publish
amendments to 10 CFR part 460 and 24 CFR part 3280 to reflect the final
standards issued by both agencies. (Schulte, No. 1028 at p. 28, 32)
Schulte also stated that the HUD Code already contains a number of
certification documents which can be modified to accommodate many
different items and therefore the cost of updating these certifications
will be negligible and have no real impact on the life-cycle cost
analysis. (Schulte, No. 1028 at p. 31) Skyline Champion stated that HUD
already has a well-established system for enforcement which is working
effectively, and Skyline Champion strongly encouraged the use of this
established system with any final rule created. (Skyline Champion, No.
1627 at p. 3); (Champion Home Builders, No. 1639 at p. 3) MHI and
Clayton Homes stated that it is unnecessary for DOE to develop a new
enforcement mechanism because the HUD Code is an already-established
enforcement mechanism that mandates a uniform standard for design,
construction, and installation, including federal requirements for
safety, durability, and energy efficiency. Accordingly, they urged DOE
to work with HUD to utilize the compliance and enforcement provisions
already in place today. (Clayton Homes, No. 1589 at p. 6, 7); (MHI, No.
1592 at p. 10)
ICC commented that DOE should coordinate any compliance
verification processes it mandates with the existing program in place
at HUD. Overlapping or disjointed requirements would create process
inefficiencies for manufacturers and inspection agencies, potentially
raising costs. Finally, ICC encouraged DOE to consider the 2021 IECC
pathways to achieve compliance in the rulemaking. Should DOE consider
options that require verification onsite, post transport, they stated
that DOE should be mindful of the scope of local building officials'
inspection authority with respect to manufactured housing. (ICC, No.
1621 at p. 3) NMHOA stated that HUD should be the lead agency in
implementing the new rules. They stated that compliance should be
addressed in the final rule to ensure DOE and HUD efforts and
coordinated, and that HUD's regulatory and inspections processes appear
to be the most appropriate mechanism for ensuring compliance without
creating a new, complicated system of two-party inspections. (NMHOA,
No. 1635 at p. 4)
Separately, NAIMA commented that new manufactured homes should
carry a label that details all relevant information related to energy
efficiency standard compliance, similar to the 2021 IECC permanent
certificate which includes insulation R-values, U-factors of
fenestration, duct leakage testing results, and types and efficiencies
of heating, cooling and water heating equipment. They stated that
requiring the same certification on manufactured housing will promote
owner/occupant awareness and help ensure manufacturer compliance with
the standard. (NAIMA, No. 1017 at p. 1) ACEEE stated that DOE should
ensure that buyers, owners, and renters have understandable and usable
information on the overall efficiency or energy use of each home and on
its efficiency features, and recommended that disclosure in the sales
process and a permanent label could provide the information. (ACEEE,
No. 1631 at p. 16)
DOE notes that many of the requirements in the standards would
require minimal compliance efforts (e.g., documenting the use of
materials subject to separate Federal or industry standards, such as
the R-value of insulation or U-factor values for fenestration), and
therefore such efforts would result in minimal additional costs to
manufacturers. However, DOE acknowledges that it has not fully
enumerated testing and enforcement costs at this time. DOE continues to
work with HUD on potential approaches for compliance, enforcement and
labeling that may leverage the existing HUD inspection and enforcement
process to ensure manufacturer compliance with the standards in a
manner that is not overly burdensome or costly to manufacturers.
Accordingly, DOE has also not included any potential associated costs
of testing, compliance or enforcement at this time. DOE will consider
the comments related to CCE, testing and labeling received in this
rulemaking and will continue to consult with HUD in any future actions.
F. Energy Conservation Standards Requirements
This section discusses in detail the energy conservation standards
in this final rule. DOE is codifying in a new part of the CFR under 10
CFR part 460 subparts A, B, and C.
Subpart A provides the scope of the standards, definitions of key
terms, and other commercial standards that are incorporated by
reference into this part. The subpart also would establish a compliance
date of one year following the publication of the final rule.
Subpart B would include the energy conservation standards
requirements associated with the building thermal envelope of a
manufactured home according to the tier and climate zone in which the
home is located. DOE bases its standards on the three HUD zones.
Manufacturers would be able to choose between two pathways to comply,
with each one ensuring an appropriate level of thermal transmittance
through the building thermal envelope. The first pathway relies on
prescriptive requirements for components of the
[[Page 32759]]
building thermal envelope. The second pathway relies on performance
requirements, under which a manufactured home is required to achieve a
maximum Uo in addition to fenestration U-factor and SHGC requirements.
Manufactured homes would be required to comply with one of these two
pathways. Subpart B would also establish prescriptive requirements for
insulation and sealing the building thermal envelope to limit air
leakage.
Subpart C includes requirements related to duct leakage, HVAC
thermostats and controls, service water heating, mechanical ventilation
fan efficacy, and equipment sizing.
1. Subpart A: General
a. Sec. 460.1 Scope
Section 413 of EISA directs DOE to establish energy conservation
standards for manufactured housing. (42 U.S.C. 17071(a)(1)) In this
final rule, Sec. 460.1 would (1) restate the statutory requirement and
introduce the scope of the requirements, and (2) require manufactured
homes that are manufactured on or after one year following publication
of the final rule to comply with the requirements established,
consistent with the August 2021 SNOPR.
In response to the August 2021 SNOPR, multiple commenters stated
that these standards for manufactured housing energy-efficiency are
long overdue and should be issued and implemented as soon as possible.
(CASA of Oregon, No. 925 at p. 1); (Verde, No. 928 at p. 1), (Trellis,
No. 974 at p. 1), (NOAH, No. 976 at p. 1), (PathStone, No. 1013 at p.
1), (Habitat for Humanity of LA, No. 1015 at p. 1), (WIDC, No. 1016 at
p. 1), (RCAC, No. 1183 at p. 1), (UCD, No. 1030 at p. 1), (LISC, No.
1233, at p. 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. 2);
(NPCC, No. 1567 at p.2); (Fahe, No. 1572 at p. 1); (People's Self-Help
Housing, No. 1591 at p. 1) (Joint Commenters, No. 1630 at p. 1). UC Law
School stated that DOE should consider a 1-year lead time as sufficient
for compliance with the DOE standards for the purposes of the HUD
certification process. (UC Law School, No. 1634 at p. 15) Next Step
stated that HUD and the manufactured housing industry should implement
the law within one to two years, with allowance for exceptions.
(NextStep, No. 1617 at p. 12) ACEEE commented that a one-year lead time
before compliance is required should be sufficient. They stated that if
particular provisions of the standards cannot be met in that timeframe,
then DOE could allow temporary exceptions or waivers (as for appliance
standards) or could set a later compliance date for those provisions.
(ACEEE, No. 1631 at p. 15) NYSERDA encouraged DOE to move as swiftly as
possible to finalize the rulemaking. (NYSERDA, No. 1620 at p. 2);
(NYSERDA, No. 1981 at p.2) Schulte commented that moving forward with a
final rule in 2022 would give consumers, especially low- to moderate-
income Americans the benefits of lower energy bills and increased
comfort. (Schulte, No. 1028 at p. 10) Further, they commented that due
to HUD's performance-based code and the efficiencies inherent in
factory production based on approved designs, manufactured home
producers are nimble and can adjust relatively quickly to new
standards. (Schulte, No. 1028 at p. 18)
On the other hand, Clayton Homes stated that the proposed rule
would impose more extreme changes than the industry can absorb in one
code cycle, and recommended that the implementation period should be 5
years. The ICC updates building codes such as the IECC in three-year
cycles, and States normally consider adoption on similar three-to-five-
year cycles. The commenter believes the best first step should be to
improve the minimum standards that are currently in place that are
workable in the present market environment, and then continue to
evaluate additional improvements to the standards over time. (Clayton
Homes, No. 1589 at p. 3); (Clayton Homes, No. 1986 at p. 3-5) NAHB also
supported allowing for a longer time than the proposed 1-year timeframe
so that manufacturers have enough time to adjust procurement, design,
and production practices while managing their limited resources. (NAHB,
No. 1398 at p. 3) NMHOA commented that the proposed one-year lead time
to implementation is not sufficient given the changes required to the
production process, inspections process, and more than likely, the
other public policy changes that would be required to make the higher
upfront costs work for consumers and suggested that a three-year time
frame seems more appropriate. (NMHOA, No. 1635 at p. 4) Champion Home
Builders urged DOE to provide the industry with ample time of 3-5 years
to properly implement the adopted energy conservation standards once
they are finalized. (Champion Home Builders, No. 1983 at p. 3, 4) MHI
stated that when DOE makes changes to appliance standards there is
generally a five-year compliance period. Given that the process for
manufacturing homes is at least as complex as appliances, the same time
period should apply. (MHI, No. 1592 at p. 24); (MHI, No. 1990 at p. 4)
MHCC commented that major changes to the manufacturer's process,
facilities, home designs, and supply chains would be required to comply
with the DOE standards and a more realistic time frame for
implementation would be a minimum of 5 years. (MHCC, No. 1600 at p. 5)
TMHA requested that any effective date consider having backlogs and
supply-chains to have returned to normal. (TMHA, No. 1628 at p. 4)
DOE notes that the industry has experience with the means to comply
with the performance requirements (i.e., Uo), as they have had to
comply with HUD Uo requirements previously. Further, many manufacturers
have complied with ENERGY STAR Version 2 efficiency requirements for
homes produced on or after June 1, 2020, which includes both component
specific and overall Uo requirements. Finally, certain manufacturers
have been complying with the NEEM program (i.e., NEEM+ certification),
which also includes component specific and overall Uo requirements.
Therefore, DOE believes that many manufacturers already have experience
complying with efficiency requirements similar to what DOE is requiring
in this final rule.
DOE notes that section 413 requires DOE to update the manufactured
home standards within one year following an update to the IECC. (42
U.S.C. 17071(b)(3)(B)) This one-year rule development time period
provides DOE the time to evaluate industry compliance with the
standards prior to DOE's consideration of updates to the IECC in 2024,
as required by the statute. The one-year rule development time period
would also minimize the lag time between updates to the IECC and any
potential updates to the DOE standards, ensuring that manufactured home
purchasers are receiving energy savings based on the most recent model
energy codes.
DOE recognizes that compliance with the DOE energy conservation
standards may require manufacturers to update designs required under
the HUD Code. However, EISA requires DOE to base the energy
conservation standards for manufactured homes on the latest edition of
the IECC, with considerations made for cost-effectiveness. As discussed
in detail in section I.A of this document, while manufacturers may
incur costs to update designs to meet the proposed standards, DOE's
analysis indicates these costs are outweighed by the benefits gained in
energy savings by
[[Page 32760]]
manufactured home purchasers as a result of the standards, as discussed
in section III.A of this document.
b. Sec. 460.2 Definitions
In this final rule, DOE is finalizing all definitions proposed in
the August 2021 SNOPR, except DOE is modifying the definition for
``whole-house mechanical ventilation system'' based on a comment
received. Accordingly, DOE is finalizing the definitions for the
following terms proposed in the August 2021 SNOPR in Sec. 460.2:
``access (to),'' ``air barrier,'' ``automatic,'' ``building thermal
envelope,'' ``ceiling,'' ``climate zone,'' ``conditioned space,''
``continuous air barrier,'' ``door,'' ``dropped ceiling,'' ``dropped
soffit,'' ``duct,'' ``duct system,'' ``eave,'' ``equipment,''
``exterior ceiling,'' ``exterior floor,'' ``exterior wall,''
``fenestration,'' ``floor,'' ``glazed or glazing,'' ``insulation,''
``heated water circulation system,'' ``2021 IECC,'' ``manufactured
home,'' ``manufacturer,'' ``manual,'' ``opaque door,'' ``R-value
(thermal resistance),'' ``rough opening,'' ``service hot water,''
``skylight,'' ``skylight well,'' ``solar heat gain coefficient
(SHGC),'' ``state,'' ``thermostat,'' ``U-factor (thermal
transmittance),'' ``Uo (overall thermal transmittance),''
``ventilation,'' ``vertical fenestration,'' ``wall,'' ``window,'' and
``zone.''
In response to comments received to the August 2021 SNOPR, DOE is
updating the definition for the term ``whole-house mechanical
ventilation system'' as follows: means an exhaust system, supply
system, or combination thereof that is designed to mechanically
exchange indoor air with outdoor air when operating continuously or
through a programmed intermittent schedule to satisfy the whole house
ventilation rates.
The following paragraphs summarize the comments received in
response to the August 2021 SNOPR regarding the definitions and the
discussion regarding the ``whole-house mechanical ventilation system''
definition update.
MHI recommended that the definition of ``whole-house mechanical
ventilation system'' must be revised to include ``to satisfy the whole
house ventilation rates'' at the end of the definition. They stated
that as proposed in the August 2021 SNOPR, the definition would include
all exhaust fans including bath fans and range hoods, systems that MHI
stated that they do not believe should be included. (MHI, No. 1592 at
pp. 16, 21) In reviewing section R202 of 2021 IECC, DOE notes that the
definition is in line with the MHI recommendation, in that it includes
``to satisfy the whole house ventilation rates'' at the end of the
definition. Further, the MH Working Group also recommended including
the full definition of the term from the 2015 IECC, which included ``to
satisfy the whole house ventilation rates'' at the end of the
definition. Term Sheet, No. 107 at p. 11. DOE notes that the definition
remained unchanged in the 2021 IECC update. Therefore, to be consistent
with the 2021 IECC and the MH Working Group recommendation, DOE is
updating the definition to be finalized as follows: Means an exhaust
system, supply system, or combination thereof that is designed to
mechanically exchange indoor air with outdoor air when operating
continuously or through a programmed intermittent schedule to satisfy
the whole house ventilation rates.
NEEA commented that improved clarity on what is considered interior
conditioned space is needed. NEEA stated that the space under the floor
but above insulation should not be considered conditioned space. (NEEA,
No. 1601 at p. 15) DOE received the same exact comment from NEEA in
response to the June 2016 NOPR. In response to this comment, DOE
recognized that there was an error regarding the ``conditioned space''
definition proposed in the June 2016 NOPR and instead, proposed in the
August 2021 SNOPR that the definition be updated to match the 2021 IECC
definition. DOE stated that under the proposed definition, the space
under the floor but above the insulation is considered conditioned
space, and because DOE is proposing the term as defined in the IECC,
the term is appropriately understood by industry. 86 FR 47744, 47767.
As such, in this final rule, DOE is finalizing the same proposed
definition for ``conditioned space,'' consistent with the August 2021
SNOPR and the 2021 IECC.
NEEA also recommended that ``skylight wells'' be defined as
exterior walls, to clearly indicate that they require insulation to at
least exterior wall insulation levels. (NEEA, No. 1601 at p. 16) Again,
DOE received the same exact comment from NEEA in response to the June
2016 NOPR. In response to this comment, DOE agreed with NEEA's
suggestion to define skylight well and proposed the following
definition: The exterior walls underneath a skylight that extend from
the interior finished surface of the exterior ceiling to the exterior
surface of the location to which the skylight is attached. DOE also
proposed to specify that skylight wells are exterior walls by updating
the definition of ``exterior wall'' to include skylight wells. 86 FR
47744, 47767. DOE did not receive any other comments on this proposal.
As such, in this final rule, DOE is finalizing the same proposed
definition for ``skylight well,'' consistent with the August 2021
SNOPR.
NEEA also commented that a clearer definition of ``access'' should
be included. (NEEA, No. 1601 at p. 15) In the August 2021 SNOPR, DOE
discussed that the 2021 IECC replaced ``accessible'' with ``access
(to)'' within the code. As the definition of the word ``access'' was
found in the 2021 IECC, DOE proposed to include a definition for this
term. Further, to prevent confusion, DOE proposed to revise the
regulatory text to incorporate the use of the word ``access'' instead
of ``accessible,'' similar to the updates in the 2021 IECC. 86 FR
47744, 47767-47768. DOE did not receive any other comments on this
proposal. As such, in this final rule, DOE is finalizing the same
proposed definition for ``access (to),'' consistent with the August
2021 SNOPR.
ACC FSC commented that the prescriptive R-value requirement in the
proposed standards includes a continuous insulation component that is
not adequately described or explained in the currently proposed Tier 2
provisions for HUD Zones 2 and 3. Therefore, they stated that
continuous insulation is directly and indirectly a part of the proposed
standards and a definition is needed together with a table footnote
explaining the insulation components such as cavity insulation and
continuous insulation where they are combined. Accordingly, they
recommended DOE include the IECC definition for continuous insulation:
insulating material that is continuous across all structural members
without thermal bridges other than fasteners and service openings. It
is installed on the interior or exterior, or is integral to any opaque
surface, of the building envelope. (ACC FSC, No. 1364 at p. 4) In this
final rule, DOE is no longer including the exterior wall continuous
insulation requirement and instead is finalizing an R-21 exterior wall
insulation for Tier 2 climate zones 2 and 3; comments and discussion
related to this topic are provided in section III.E.2.b of this
document. Therefore, because continuous insulation is no longer
included as part of the requirements, a definition for the same is not
necessary in this final rule.
VEIC recommended that DOE adopt the IECC definition for ``high-
efficacy light sources''. (VEIC, No. 1633 at p. 6) Because the
regulatory text adopted in this final rule does not use the term
``high-efficacy light sources,'' DOE is not defining this term. Further
discussion
[[Page 32761]]
on lighting is provided in section III.F.2 of this document.
Finally, Clayton Homes recommended that DOE adopt a proposed
definition for ``Manufacturer's retail list price.'' (Clayton Homes,
No. 1986 at p. 9) In addition, Clayton Homes recommended language
revisions toSec. 460.4(b) and (c) regarding the tiered system proposed
in the August 2021 SNOPR. (Clayton Homes, No. 1986 at p. 10) In this
final rule, DOE is adopting tiered energy conservation standards based
on home size, and not based on manufacturer's retail list price.
Because the threshold based on manufacturer's retail list price is no
longer applicable, DOE is not including a definition for manufacturer's
retail list price in this final rule.
c. Sec. 460.3 Materials Incorporated by Reference
In this final rule, DOE is not incorporating the 2021 IECC by
reference. The 2021 IECC serves as the basis for the regulations
proposed in this document, with the proposed requirements addressing
technical issues specific to manufactured homes, relying on the HUD
zones, and addressing issues related to health and safety, as well as
the need to preserve the affordability of manufactured homes.
Further, DOE is incorporating by reference Air Conditioning
Contractors of America (``ACCA'') Manual J; ACCA Manual S; and
``Overall U-Values and Heating/Cooling Loads--Manufactured Homes'' by
Conner and Taylor (the Battelle Method). DOE is incorporating by
reference ACCA Manuals J and S in Sec. 460.205 of the regulatory text
and would relate to the selection and sizing of heating and cooling
equipment. In addition, PNL-8006 (``Overall U-values and Heating/
Cooling Loads-Manufactured Homes''), or the Battelle Method, is an
industry standard methodology for calculating the overall thermal
transmittance (Uo) of a manufactured home and is also currently
referenced in the HUD Code for calculation of overall thermal
transmittance. DOE is incorporating by reference the Battelle Method to
determine the same (Uo).
DOE received a number of comments regarding the materials
incorporated by reference. DOE also received technical comments
regarding the application of ACCA Manuals S and J for manufactured
housing, which are discussed in section III.F.3.e of this document.
MHI recommended deleting the reference to the specific sections of
the 2021 IECC in the proposed regulatory text Sec. 460.102 through
Sec. 460.204. (MHI, No. 1592 at pp. 17 through 21) Conversely, the ICC
requested that in referencing the IECC, DOE ensures it has respected
the Code Council's rights as a copyright holder. Referencing Office of
Management and Budget (``OMB'') Circular A-119, ``Federal Participation
in the Development and Use of Voluntary Consensus Standards and in
Conformity Assessment Activities, Revised,'' ICC commented that in
order to meet the minimum requirements, DOE must ``(a) expressly
acknowledge that the IECC is a copyright protected document, published
and owned by ICC; (b) explicitly state that any reproduction or copying
of the standard (other than for personal, non-commercial purposes)
requires express written permission or license from ICC; and (c) state
that copies of the IECC are available for purchase from ICC at its
website, www.iccsafe.org.'' Accordingly, the ICC encouraged that DOE
incorporate by reference the copywritten material from the IECC. (ICC,
No. 1621 at p.2)
Subject to copyright law, DOE acknowledges that the IECC is a
copyright protected document, published and owned by the ICC, and that
reproduction or copying of the IECC requires written permission or
license from the ICC. As noted previously, copies of the IECC are
available for purchase at www.iccsafe.org. They may also be viewed for
free on ICC's public access website at: https://codes.iccsafe.org/public/collections/I-Codes. As discussed previously, DOE and the
manufactured housing working group evaluated the 2015 IECC, and DOE
subsequently evaluated the 2018 and the 2021 IECC. The MH working group
recommendations and the June 2016 NOPR were based on the 2015 IECC, but
as explained throughout this document, modifications are necessary to
address technical issues that are specific to manufactured housing, as
opposed to site-built housing, which is the focus of the IECC. As such,
this final rule is (1) based directly on certain IECC sections, (2)
based on other sections of the IECC with modification, and (3) does not
include certain other sections as they were either not pertinent to
manufactured housing or not needed to establish energy conservation
standards.
2. Subpart B: Building Thermal Envelope
The requirements in subpart B relate to climate zones, the building
thermal envelope, installation of insulation and building thermal
envelope leakage for manufactured homes. The following sections provide
further details, a discussion of comments on the August 2021 SNOPR and
October 2021 NODA relevant to subpart B and responses to any such
comments. As discussed previously, for the tiered standards, Tier 1
manufactured homes (i.e., single-section homes) would be subject to
different building thermal envelope requirements than all other
manufactured homes (Tier 2 manufactured homes; i.e., multi-section
homes). The requirements are discussed in the following sections.
a. Sec. 460.101 Climate Zones
Pursuant to EISA, DOE may base its energy conservation standards on
the climate zones established by HUD rather than on the climate zones
contained in the IECC. (42 U.S.C. 17071(b)(2)(B)) The potential for
climatic differences to affect energy consumption supports an approach
in which energy conservation standards account for geographic
differences in climate. In this final rule, DOE aligns with the HUD
zones.
As indicated in Figure III.1, the HUD Code divides the United
States into three distinct climate zones for the purpose of setting its
building thermal envelope requirements, the boundaries of which are
separated along state lines. By contrast, as indicated in Figure III.2,
section R301 of the 2021 IECC divides the country into nine climate
zones, the boundaries of which are separated along county lines. The
2021 IECC also provides requirements for three possible variants (dry,
moist, and marine) within certain climate zones, as indicated in Figure
III.2. The HUD Code zones were developed to be sensitive to the manner
in which the manufactured housing industry constructs and places
manufactured homes into the market. The IECC climate zones are
separated along county lines to reflect a more granular overview of
climate distinctions within the United States, and to facilitate state
and local enforcement of the IECC for residential and commercial
buildings, including site-built and modular construction.
BILLING CODE 6450-01-P
[[Page 32762]]
[GRAPHIC] [TIFF OMITTED] TR31MY22.210
[GRAPHIC] [TIFF OMITTED] TR31MY22.211
BILLING CODE 6450-01-C
In the August 2021 SNOPR and October 2021 NODA, DOE proposed three
climate zones consistent with the HUD zones. DOE received several
comments regarding climate zones.
UCB suggested that DOE should consider different climate zone maps
that are more representative of actual U.S. climate variability. They
commented that the zones do not accurately reflect areas of similar
weather and climate for the country. Accordingly, they stated that a
more complex climate zone map that accounts for different areas of
climate variability would be more sufficient in determining these
different levels of efficiency standards, and therefore DOE should
create a new climate zone map based on the IECC zones. (UCB, No. 1618
at p. 3, 12-14) On the other hand, MHI appreciated DOE's use of the HUD
Code zones to match manufacturing practices more appropriately. (MHI,
No. 1592 at p. 17) MHCC and Clayton Homes also strongly supported using
the current HUD zones for the purpose of this standard. (MHCC, No. 1600
at p. 6); (Clayton Homes, No. 1589 at p. 16) Schulte stated that while
there are similarities in the proposed insulation requirements for
components for zones 1 and 2 walls and floors, the climates of
temperate zone states are sufficiently different from those of warm
states to justify a separate thermal zone. (Schulte, No. 1028 at p. 12)
As already discussed, EISA explicitly permits the use of HUD zones.
(42 U.S.C. 17071(b)(2)(B)) The HUD zones were developed with specific
consideration of the manner in which the manufactured housing industry
constructs and places manufactured homes into the market. The HUD zone
boundaries are separated along state lines. 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
[[Page 32763]]
DOE standards. Additionally, it would reduce the potential for
confusion of manufactured home purchasers by allowing them to rely on a
single map to determine whether a manufactured home would be
appropriate for a given location, as opposed to requiring them to
consult one map under the HUD Code and a different map under the DOE
requirements. As such, in this final rule, DOE maintains the three
climate zones, consistent with the HUD zones. DOE understands that the
HUD code may be updated in the future to adopt more representative HUD
zones. Should HUD update those zones, DOE would move in a timely manner
to consider adopting aligning changes in its own code in future
rulemakings for manufactured housing as DOE understands the importance
of harmonization and reducing complexities for manufacturers.
b. Sec. 460.102 Building Thermal Envelope Requirements
For the standard, Tier 1 would incorporate building thermal
envelope measures based on the 2021 IECC but would limit the
incremental purchase price increase to an average of less than $750 for
single-section homes. For Tier 2, the building thermal envelope
measures are based on those proposed in the June 2016 NOPR, updated to
reflect the HUD zones and cost-effective measures based on the 2021
IECC requirements. Further, Tier 2 includes alternate exterior wall
insulation requirement (R-21) for climate zones 2 and 3, as presented
in the August 2021 SNOPR and October 2021 NODA.
Consistent with the August 2021 SNOPR, DOE is including Sec.
460.102 in the regulatory text to establish requirements related to the
building thermal envelope, including the materials within a
manufactured home that separate the interior conditioned space from the
exterior of the building or interior spaces that are not conditioned
space. Further Sec. 460.102(a) would provide manufacturers the option
of choosing one of two pathways for compliance to ensure that the
building thermal envelope would meet more stringent energy conservation
levels. These two pathways are known as the prescriptive approach and
the performance approach. Consistent with the recommendation of the MH
working group, DOE will allow manufacturers to choose between these two
pathways for compliance, which would result in cost-effective energy
savings for homeowners while providing for flexibility within the
manufactured housing industry. Term Sheet, No. 107 at pp. 3-4. This
approach is also consistent with the 2021 IECC, which provides a
climate zone-specific prescriptive building thermal envelope component
pathway (R402.1.2) and an alternate pathway to compliance, which allows
for a home to be constructed using a variety of materials as long as
the entire building thermal envelope has a maximum, singular total UA
value \39\ (R402.1.5).
---------------------------------------------------------------------------
\39\ UA is the U-factor multiplied by area.
---------------------------------------------------------------------------
Further, consistent with the August 2021 SNOPR and the October 2021
NODA, DOE continues to include prescriptive requirements that would
establish specific component minimum R-value, maximum U-factor, and
SHGC requirements, providing a straightforward option for construction
planning. The prescriptive requirements would be under Sec.
460.102(b), with the building thermal envelope requirements under Sec.
460.102(b)(1). The compliance option based on performance requirements,
on the other hand, would allow a manufactured home to be constructed
using a variety of materials with varying thermal properties so long as
the building thermal envelope achieved a required level of overall
thermal performance. The performance requirements thus would provide
manufacturers with greater flexibility in identifying and implementing
cost-effective approaches to building thermal envelope design. The
Uo requirements would be determined by applying the adopted
prescriptive building thermal envelope requirements to manufactured
homes using typical dimensions and construction techniques and then
calculating the resulting Uo.
In developing the set of Tier 1 energy efficiency measures, DOE
considered measures for building elements of manufactured homes based
on building components subject to the 2021 IECC (i.e., exterior floor,
exterior walls, exterior ceiling, and fenestration). DOE evaluated
different combinations of energy efficiency measures and stringencies
for exterior floor, wall, ceiling, and windows (fenestration). DOE
compared the potential energy savings for each of the different
combinations analyzed and determined the optimal set of energy
efficiency measures that would yield an incremental cost increase less
than $750.
In developing the set of Tier 2 energy efficiency measures, DOE
first mapped the June 2016 NOPR requirements (based on four climate
zones) to HUD zones (based on three climate zones). DOE used the
manufactured home national shipment percentages for each of the cities
analyzed,\40\ and the corresponding HUD zone and the June 2016 NOPR
climate zone identifiers for each of the cities. DOE then summed the
shipment percentages of the cities with the same June 2016 NOPR
proposed climate zones within each of the HUD zones. According to which
of the June 2016 NOPR-proposed climate zones showed the maximum
shipment weight per HUD zone, DOE incorporated those proposed June 2016
NOPR requirements for that HUD zone.
---------------------------------------------------------------------------
\40\ DOE used shipments for 2020 from the annual production and
shipment data provided by MHI. See Manufactured Home Shipments by
Product Mix, Manufactured Housing Institute (2020).
---------------------------------------------------------------------------
As part of the energy efficiency measures, DOE considered the
updates to the 2021 IECC. In reviewing Section R402.1 of the 2021 IECC,
DOE determined the following relevant updates are merited when compared
to the 2015 IECC that the MH working group had considered:
The maximum fenestration U-factors were updated from 0.35
to 0.30 for IECC climate zones 3 and 4 (except marine); and from 0.32
to 0.30 for IECC climate zones marine 4, 5 through 8.
The maximum glazed fenestration SHGC was updated from NR
to 0.40 for IECC climate zones 5 and marine 4.
The minimum ceiling R-value was updated from R-38 to R-49
for IECC climate zones 2 and 3; and from R-49 to R-60 for IECC climate
zones 4 through 8.
The minimum wall R-value was updated from R-13 to R-13 or
R-0+10 for IECC climates zones 0 through 2; from R-20 or R-13+5 to R-20
or R-13+5ci or R-0+15 for IECC climate zones 3; from R-20 or R-13+5 to
R-20+5 or R-13+10ci or R-0+15 for IECC climate zones 4 and 5; and from
R-20+5 or R-13+10ci to R-20+5ci or R-13+10ci or R-0+20 for IECC climate
zones 6 through 8.
With regards to the 2021 IECC updates, DOE did not incorporate the
minimum ceiling R-value updates given the physical space constraints of
manufactured homes and because EISA allows DOE to consider the design
and factory construction techniques of manufactured homes as compared
to site-built and modular homes. (42 U.S.C. 17071(b)(2)). Specifically,
manufactured homes typically have a lower overall height compared to
site-built homes, which leads to constrained space, and therefore there
is less exterior ceiling insulation. DOE did consider all other updates
consistent with EISA and the analysis done for the June 2016 NOPR and
the August 2021 SNOPR. Accordingly, DOE similarly mapped the 2021 IECC
updates to the corresponding climate zone.
[[Page 32764]]
Therefore, for the standard, the Tier 1 prescriptive building
thermal envelope requirements are presented in Table III.5 and the Tier
2 prescriptive building thermal envelope requirements are presented in
Table III.6. Further discussion on the requirements is provided in the
forthcoming sections.
Table III.5--Tier 1 Building Thermal Envelope Prescriptive Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Exterior Exterior
Exterior wall ceiling floor Window U- Skylight U- Glazed
Climate zone insulation R- insulation R- insulation R- factor factor Door U-factor fenestration
value value value SHGC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................... 13 22 22 1.08 0.75 0.40 0.7
2....................................... 13 22 19 0.5 0.55 0.40 0.6
3....................................... 19 22 22 0.35 0.55 0.40 Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table III.6--Tier 2 Building Thermal Envelope Prescriptive Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Exterior Exterior
Exterior wall ceiling floor Window U- Skylight U- Glazed
Climate zone insulation R- insulation R- insulation R- factor factor Door U-factor fenestration
value value value SHGC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................... 13 30 13 0.32 0.75 0.40 0.33
2....................................... 21 30 19 0.30 0.55 0.40 0.25
3....................................... 21 38 30 0.30 0.55 0.40 Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------
As discussed, use of the HUD zones instead of the IECC climate
zones does not allow for use of the IECC requirements absent
modification. In line with the building thermal envelope requirements
and use of the HUD zones, DOE is finalizing the following proposals
from the August 2021 SNOPR:
The requirement regarding the use of a combination of R-21
batt insulation and R-14 blanket insulation in lieu of R-30 for the
purpose of compliance with the Climate Zone 3 exterior floor insulation
R-value requirement. (This would be applicable for Tier 2 only.)
The maximum U-factor values as alternatives to the minimum
R-value requirements. DOE calculated the maximum U-factor values by
using the Battelle Method that was recommended by the MH working
group.\41\ DOE performed these calculations based on typical wall,
ceiling, and floor assemblies used by the manufactured home industry.
Table III.7 provides the updated maximum U-factor values for Tier 1
manufactured homes (which would be for single-section homes only).
---------------------------------------------------------------------------
\41\ ``Overall U-Values and Heating/Cooling Loads--Manufactured
Homes'' by Conner and Taylor.
---------------------------------------------------------------------------
Table III.8 provides the updated maximum U-factor values
for Tier 2 manufactured homes (which would be for multi-section homes
only).
Table III.7--U-Factor Alternatives to the Tier 1 R-Value Requirements
----------------------------------------------------------------------------------------------------------------
Exterior Exterior
Climate zone ceiling U- Exterior wall floor U-
factor U-factor factor
----------------------------------------------------------------------------------------------------------------
1............................................................... 0.061 0.094 0.049
2............................................................... 0.061 0.094 0.056
3............................................................... 0.061 0.068 0.049
----------------------------------------------------------------------------------------------------------------
Table III.8--U-Factor Alternatives to the Tier 2 R-Value Requirements
----------------------------------------------------------------------------------------------------------------
Exterior Exterior
Climate zone ceiling U- Exterior wall floor U-
factor U-factor factor
----------------------------------------------------------------------------------------------------------------
1............................................................... 0.043 0.094 0.078
2............................................................... 0.043 0.063 0.056
3............................................................... 0.037 0.063 0.032
----------------------------------------------------------------------------------------------------------------
Uo values using the Battelle Method for single- and multi-
section manufactured homes. Table III.9 provides the updated Uo values
for Tier 1 manufactured homes. The Tier 1 standards provide energy
efficiency standards more stringent than the HUD thermal protection
standards required in 24 CFR 3280.506(a). Table III.10 provides the
updated Uo values for Tier 2 manufactured homes.
[[Page 32765]]
Table III.9--Tier 1 Building Thermal Envelope Performance Requirements
------------------------------------------------------------------------
Single-section Uo
Climate zone
------------------------------------------------------------------------
1.................................................... 0.110
2.................................................... 0.091
3.................................................... 0.074
------------------------------------------------------------------------
Table III.10--Tier 2 Building Thermal Envelope Performance Requirements
------------------------------------------------------------------------
Multi-section Uo
Climate zone
------------------------------------------------------------------------
1.................................................... 0.082
2.................................................... 0.066
3.................................................... 0.055
------------------------------------------------------------------------
Area-weighted average vertical fenestration U-factor
requirements to not exceed 0.48 in Climate Zone 2 or 0.40 in Climate
Zone 3.
Area-weighted average skylight U-factor requirements to
not exceed 0.75 in Climate Zone 2 and Climate Zone 3.
The following sections discuss comments DOE received regarding the
building thermal envelope requirements proposed in the August 2021
SNOPR and presented in the October 2021 NODA. Further, the following
sections also provides the reasoning for the amended final rule
prescriptive and performance requirements.
Tier 1 Standard Requirements
DOE received a number of comments regarding the proposed Tier 1
standard requirements. Schulte stated that Tier 1 standards are only a
minor improvement from the existing HUD standards issued nearly 30
years ago, and that it is hard to see how approving these standards
would accomplish the EISA goals. (Schulte, No. 1028 at p. 12) RECA
stated that the Uo baseline should be improved by at least a similar
percentage as the improvements in the IECC made since the 2007 EISA.
RECA stated that, even if the efficiency requirements for specific
components may not match the IECC perfectly, they would expect the
percentage improvement in the Uo targets for both single- and multi-
section units to improve by as much as the IECC over the period since
Congress included this requirement in the 2007 EISA, and likely even
more, considering how far behind these standards were in 2007. RECA
also mentioned that the proposed Uo targets for Tier 1 (for both
single-section and multi-section units) are only moderately improved
(5.17-9.38 percent) from the current targets in 24 CFR 3280.506(a), and
capture only a fraction of the IECC improvements adopted since 2007.
Because of this, RECA recommended that DOE eliminate Tier 1 Uo targets
and instead use Tier 2 Uo targets for all buildings, consistent with
the improvements in the IECC since the 2007 EISA. If different Tier 1
targets are deemed absolutely necessary, they suggested that the
standards should be set at least 20-25 percent more stringent than the
current requirement. (RECA, No. 1570 at pp. 4-6)
In response to August 2021 SNOPR and October 2021 NODA, Clayton
Homes stated that proposed Tier 1 energy conservation standards are a
reasonable first step in raising the energy standards for MH. (Clayton
Homes, No. 1589 at p. 16) MHI stated that based on the calculations
performed on prototypical homes, the proposed Zone 1 requirements
should be able to be met with upgraded insulation and upgraded windows.
MHI recommended the following changes for Table 460.102-5 of the
regulatory text: Change Zone 1 total Uo to 0.098 for single and 0.096
for multi-sectional, Zone 2 total Uo to 0.081 for single and 0.079 for
multi-sectional, and the Zone 3 total Uo to 0.076 for single and 0.073
for multi-sectional. (MHI, No. 1592 at p. 9, 18); (Clayton Homes, No.
1589 at p. 9)
However, in response to the January 2022 DEIS, both MHI and Clayton
provided alternate recommendations. MHI recommended untiered standards
with less stringent requirements than Tier 2. (MHI, No. 1990 at p. 14-
17) Clayton Homes separately recommended the following changes to Table
460.102-1 of the regulatory text: Change Zone 1 exterior wall
insulation requirements to R-11, exterior ceiling insulation to R-22,
and exterior floor insulation requirements to R-13; Change zone 2
exterior wall insulation requirements to R-11 and exterior ceiling
insulation requirements to R-25; and change Zone 3 exterior wall
insulation requirements to R-15, and exterior ceiling insulation
requirements to R-25. In addition, Clayton Homes recommended the
following changes to Table 460.102-3 of the regulatory text: Change
Zone 1 exterior wall U-factor to 0.111 and exterior floor U-factor to
0.078, and change Zone 2 exterior wall U-factor to 0.111. (Clayton
Homes, No. 1986 at p. 11, 13)
Regarding specific Tier 1 component requirements, RECA recommended
that climate zone 2 be set at the same insulation R-value level as
climate zones 1 and 3 for floor insulation, because they see no reason
why climate zone 2 should be lower than climate zone 1 or 3. (RECA, No.
1570 at pp. 4-6) RECA also commented that the fenestration requirements
for Tier 1 are unreasonably weak given the ubiquity of reasonably
efficient and cost-effective fenestration with U-factors at or below
0.30 and SHGCs less than 0.25. Further, RECA stated that the proposed
requirements for Tier 1 ceiling insulation, particularly in Climate
Zone 3, are lower than the prescriptive requirements for any climate
zone set by any version of the IECC published in the past 15 years.
(RECA, No. 1570 at p. 3, 6) VEIC stated that they find it unacceptable
that DOE would allow for single pane windows or single pane with storm
windows in any climate zone. VEIC stated that if tiered standards are
adopted, DOE should increase the prescriptive window efficiency
standards for all zones. (VEIC, No. 1633 at p. 6, 7)
As discussed previously, in developing the set of Tier 1 energy
efficiency measures, DOE started with the 2021 IECC building components
and then adjusted the requirements to meet a first cost target. As
such, DOE compared the potential energy savings for each of the
different combinations analyzed (those building components subject to
the 2021 IECC, i.e., exterior floor, exterior walls, exterior ceiling,
and fenestration) using the range of efficiency measures originally
identified by the MH working group as appropriate for manufactured home
design and determined the optimal set of energy efficiency measures
that would yield an incremental cost increase less than $750.
DOE's objective in defining the Tier 1 incremental purchase price
threshold was based on which threshold a low-income buyer purchasing a
single-section home (using typical loan terms 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 considered positive cash flow within Year 1 to ensure
manufactured homes would remain affordable for a low-income consumer.
DOE believes this addresses the concerns raised by HUD and other
stakeholders. As such, DOE determined that an incremental purchase
price of less than $750 provided a beneficial financial outcome for
these consumers given lifecycle cost savings and energy cost savings,
while minimizing first cost impacts.
Accordingly, because of the objective of the tier to develop an
optimal set of measures, the analysis resulted in different insulation
requirements depending on climate zone, and for
[[Page 32766]]
certain insulation requirements to be higher than others. Therefore,
any changes in requirements would have negative effects on positive
cash flow for low-income consumers, which is contrary to DOE's
intentions regarding housing affordability. Any decrease in efficiency
measures would not provide the original benefit of expected energy cost
savings within Year 1 of the standard. Finally, DOE notes that the
performance method, i.e., Uo method, provides manufacturers more
flexibility with determining the component specific requirements, as
long as the minimum Uo requirements are met. As such, DOE maintains the
Tier 1 energy efficiency options proposed in the August 2021 SNOPR.
Additional Efficiency Packages
Section R401.2.5 of the 2021 IECC requires that in addition to the
prescriptive compliance option, additional energy efficiency
requirements must be utilized to achieve further energy savings.
Section 408.2 provides five additional efficiency package options to
achieve these additional energy savings, which include: (1) Enhanced
envelope performance; (2) more efficient HVAC equipment performance;
(3) reduced energy use in service water heating; (4) more efficient
duct thermal distribution; and (5) improved air sealing and efficient
ventilation systems. In developing recommendations, the MH working
group evaluated the 2015 IECC, which did not include comparable
provisions to sections R401.2.5 and R408.2 of the 2021 IECC. In the
August 2021 SNOPR, DOE did not propose any of the additional efficiency
packages either because of consideration of the design and factory
construction of manufactured homes, or potential cost-effectiveness
constraints. 86 FR 47744, 47773-47774.
In response to the August 2021 SNOPR, DOE received a number of
comments regarding these additional efficiency packages.
NPCC stated that the standards should ensure additional savings
through prescriptive requirements and an additional efficiency
requirement with package options based on the model code. (NPCC, No.
1567 at p. 2) The CEC recommended that DOE should incorporate the State
Attorneys General's request to require manufacturers to include the
additional efficiency packages consistent with IECC R401.2.5.1. (CEC,
No. 1629 at p. 4) NBI stated that the 2021 IECC requires homes
following the prescriptive pathway to choose among several efficiency
packages, which they believe should apply to manufactured homes. (NBI,
No. 1404 at p. 1-2) The Joint Commenters stated that neither DOE's
tiered nor untiered standards require manufacturers to provide
additional energy savings through efficiency package options such as
those required by IECC R401.2.5.1. Therefore, to ensure compliance with
EISA, they stated that DOE's final standards should include such a
requirement. (Joint Commenters, No. 1630 at p. 1, 2) The Attorneys
General urged DOE to consider additional energy savings through
efficiency package options such as those required by IECC R401.2.5.1 to
ensure compliance with EISA. (Attorneys General, No. 1625 at p. 2, 4,
6)
RECA stated that the final rule should incorporate the additional
efficiency options of equivalent energy savings. RECA commented that
the fact that specific requirements in the IECC are not already adapted
for use in manufactured housing does not release DOE from its
obligation to set energy conservation standards that are consistent
with the model code, and RECA urged DOE to reconsider this decision and
to require a 5 percent improvement and/or to find other alternatives to
achieve similar energy savings. (RECA, No. 1570 at p. 1, 2, 7)
Earthjustice and Prosperity Now suggested that DOE is required to
evaluate provisions of sections R401.2.5 and R408 of the 2021 IECC.
They stated that DOE has not yet determined whether this requirement
would be cost-effective. Further, they suggested that HRV/ERVs (i.e.,
heat recovery and energy recovery ventilators) must be addressed. They
commented that DOE is required to consider the statutorily-mandated
analysis and must address this defect in the final rule. (Earthjustice
and Prosperity Now, No. 1637 at p. 7) Major mentioned that furnaces in
MH are always oversized and that there are no furnace standards
mentioned in the document. (Major, No. 1023 at p. 1)
NRECA stated that they have researched upgrading the ``shell'' or
envelope of the manufactured home through rebates but doing so did not
make sense once applying a cost-benefit analysis. Instead, they
suggested focusing on upgrading the heating/cooling of the manufactured
home made the most economic sense. NRECA stated that the most effective
way to both improve efficiency in manufactured homes and lead to lower
electricity bills for their consumer-members is by upgrading to high-
efficiency heat pumps in the heating systems of these homes up front,
before the home is delivered. They suggested that providing rebates to
install high-efficiency heat pumps in new or existing MH would be
helpful. (NRECA, No. 1406 at p. 1, 3)
NEEA recommended inclusion of the five IECC options plus a
``limited house size'' option. For enhanced envelope performance, not
only did NEEA encourage DOE to increase the attic insulation to align
with the IECC 2021 prescriptive path, but also to insert an additional
efficiency package focused on envelope improvements that could reward
manufacturers who are already building efficient envelopes. (NEEA, No.
1601 at p. 4) For more efficient HVAC, NEEA encouraged an additional
efficiency package that requires air-source heat pumps instead of
electric furnaces or electric baseboard heat will have significant
energy and cost savings (NEEA found that 40 percent of MH use low
efficiency electric furnaces). NEEA encouraged DOE to require 10 HSPF/
16 SEER air source heat pumps, which aligns with IECC 2021. For gas
furnaces in manufactured homes, NEEA encouraged requiring a 95 percent
AFUE condensing gas furnace plus 16 SEER air conditioning unit, which
would be installed instead of a non-condensing gas furnace. NEEA
referenced a study that suggested that there is an incremental cost of
$217 for a 95 AFUE gas furnace compared to current practice baseline
assumed at 92 AFUE. (NEEA, No. 1601 at pp. 4-5)
For reduced energy use in service water heating, NEEA encouraged
DOE to consider more efficient heat pump water heaters and tankless gas
water heaters. Due to challenges in retrofitting heat pump water
heaters into manufactured homes after initial construction, NEEA
recommends encouraging their installation during initial construction.
For distribution or ductwork, NEEA encouraged ductless heat pump
(``DHP'') solutions that eliminate all energy losses due to ductwork.
They suggested that allowing a 10 HSPF/16 SEER DHP option to satisfy
the distribution criteria could lead to significant energy savings.
Alternatively, NEEA suggested that bringing ducts inside the building
shell to reduce the amount of heat loss external to the building.
(NEEA, No. 1601 at p. 5) Regarding enhanced air sealing, NEEA stated
that technology such as pressurized whole-building air sealing could be
used in a warehouse and result in a very low-infiltration rate of the
building shell. Further, they suggested an Energy Recovery Ventilator
(``ERV'') or Heat Recovery Ventilator (``HRV'') for continuous
mechanical ventilation could address poor air quality. Finally, NEEA
encouraged a sixth additional efficiency option package based on
limited house size.
[[Page 32767]]
They suggested that manufacturers could build a single wide home to the
untiered standards and select the limited house size option (i.e., they
would not need to choose one of the five additional energy package
options). For multi-section homes, however, NEEA suggested these homes
would still need to select from the five other options. (NEEA, No. 1601
at p. 6)
ACEEE stated that a heat pump for cooling and heating, a heat pump
water heater, a better thermal distribution system, better air sealing
and ventilation, and possibly a better envelope all may be cost-
effective options for additional savings. They stated that heat pumps
can provide highly efficient heating (especially compared to electric
resistance heat, the most common source in MH) and that heat pump water
heaters also can provide large energy and carbon savings at a
reasonable cost. ACEEE further provided a detailed study, with costs
and energy savings, for including a heat pump option for manufactured
homes.\42\ (ACEEE, No. 1631 at p. 6) VEIC strongly recommended DOE
adopt the additional efficiency package options requirement and modify
the package options as appropriate to manufactured housing. They stated
that only one option needs to be selected to demonstrate cost-
effectiveness of the code overall, and provided an example of one
potential package option, where ductwork was brought inside the thermal
envelope by a factory located in New England. They stated that these
duct designs could easily be integrated into a manufactured home
assembly line. (VEIC, No. 1633 at p. 7, 8)
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\42\ Bell-Pasht, A., and L. Ungar. 2021. Strong Universal Energy
Efficiency Standards Will Make Manufactured Homes More Affordable.
Washington, DC: American Council for an Energy-Efficient Economy.
aceee.org/white-paper/2022/01/strong-universal-energy-efficiencystandards-manufactured-homes.
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On the other hand, MHI stated that HRV and ERV provisions would add
significantly to the cost (because of redesign and construction) of
manufactured homes. (MHI, No. 1592 at p. 25) MHCC also stated that HRV
and ERV systems are not cost effective for manufactured housing and
have proven to be problematic in certain climate zones (without
providing further details as to why). (MHCC, No. 1600 at p. 11)
Regarding costs, Schulte stated that the costs and energy savings
for the five additional efficiency packages in the IECC have been
evaluated by several organizations. The first is the National
Association of Home Builders Home Innovation Research Lab Report No.
CR1391: 2021 IECC Residential Cost Effectiveness Analysis.\43\ The
report covered the five additional efficiency options based on a 2,500
square foot standard reference single family home and the changes from
the 2018 to the 2021 IECC standards. The report concluded that the five
optional efficiency packages would have very long simple paybacks
ranging from 20 years for the water heater to as much as 90 years for
the improved ventilation, electric house with improved air tightness.
The enhanced water heater had substantially shorter payback periods
than the HVAC or duct sealing options. Schulte stated that the water
heater option might be cost efficient, but even that option has a
payback period of 20 years. Further, they referenced the PNNL-31440
Report \44\ which they stated confirms the other findings that optional
efficiency measure R408.2.3 for water heaters is the most cost-
effective way to achieve the 5 percent additional reduction in energy
usage. (Schulte, No. 1028 at p. 24-25)
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\43\ Home Innovation Research Labs. 2021. 2021 IECC Residential
Cost Effectiveness Analysis; Report No. CR1391_06112021. https://www.nahb.org/-/media/NAHB/advocacy/docs/top-priorities/codes/code-adoption/2021-iecc-cost-effectiveness-analysis-hirl.pdf.
\44\ PNNL-31440 prepared for U.S. DOE; July 2021; Energy Savings
Analysis: 2021 IECC for Residential Buildings; https://www.energycodes.gov/sites/default/files/2021-07/2021_IECC_Final_Determination_AnalysisTSD.pdf.
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As discussed in the August 2021 SNOPR and further in this section,
consistent with the recommendations of the MH working group, the
performance requirements in the proposed energy conservation standards
are specific to the building thermal envelope only, and do not
incorporate any specifications on HVAC energy efficiency. Accordingly,
DOE did not consider the more efficient HVAC equipment performance and
reduced energy use in service water heating options. Further, DOE also
did not examine the more efficient duct thermal distribution option
based on EISA's allowance to consider the design and factory
construction techniques of manufactured housing. This option in the
2021 IECC focuses primarily on the location of the duct or ductless
systems in a home (in terms of duct thermal distribution design) as
opposed to improving efficiency of the ducts as already installed and
designed, and therefore is not appropriate for this rule. (42 U.S.C.
17071(b)(2)) Finally, for the enhanced envelope performance option, DOE
was unable to incorporate this requirement given the building thermal
envelope energy efficiency measure limitations based on the space
constraints of manufactured homes. 86 FR 47744, 47773-47774
For the remaining efficiency package option, i.e., improved air
sealing and efficient ventilation system option, DOE acknowledges the
possibility of achieving additional energy savings for manufactured
homes, as suggested by commenters. In the August 2021 SNOPR, DOE
presented the Building Energy Codes Program (``BECP'') analysis on HRVs
and stated that that it had not yet determined whether including HRV or
ERV would be cost-effective for manufactured homes. 86 FR 47744, 47774.
Accordingly, DOE requested costs and savings data associated with this
requirement (in addition to the other additional efficiency package
options). Id. DOE did not receive any data regarding the cost-
effectiveness of the ERV/HRV requirement. At this time, DOE does not
have sufficient data to provide a reasonable assessment of these
measures when applied to manufactured homes as required by the EISA
statute. In other words, DOE is unable to determine whether these
measures are appropriate for manufactured homes when considering the
unique design and construction techniques of these homes and whether
such measures would be cost-effective when applied to them.
Accordingly, DOE is not considering these additional efficiency package
options in this final rule. However, DOE will continue to accept any
data regarding these measures and may consider these options in any
future rulemakings.
Tier 2 Exterior Wall Insulation Requirement
In the August 2021 SNOPR, DOE proposed R-20+5 insulation for
climate zone 2 and 3 for the Tier 2/Untiered standard to be consistent
with the 2021 IECC. 86 FR 47744, 47772. DOE received a number of
comments on the proposed Tier 2 Climate Zones 2 and 3 proposed R-20+5
continuous exterior wall insulation requirement.
VEIC applauded DOE's inclusion of a continuous insulation
requirement for zones 2 and 3. VEIC recommended that DOE maintain the
2021 IECC alternative prescriptive approaches to obtaining the intended
exterior wall efficiency, by specifically including the additional
prescriptive wall insulation options within the prescriptive
requirements table, i.e., the 2021 IECC Table R402.1.3 minimum
insulation R-value requirement for wood frame walls is written as
follows: R-20+5 or 13+10 or 0+20. (VEIC, No. 1633 at p. 5) NEEA
encouraged DOE not to revert to R-21 as explored in the NODA. They
stated that continuous wall insulation reduces thermal bridging and
increases occupant
[[Page 32768]]
comfort, and they stated that there is evidence of potential cost
savings from stick-built practices. NEEA recommended keeping the
continuous insulation provision to align with IECC in Climate Zones 2
and 3, and that Climate Zone 1 better aligns with 2021 IECC currently.
(NEEA, No. 1601 at pp. 4, 16)
ACC FSC suggested that DOE consider alternatives to 2 x 6 R-20
construction for Climate Zones 2 and 3 in the Tier 2 provisions.\45\
They stated that 2 x 4 construction is much more common and suitable
for manufactured housing, and recommended that if a compromise to the
IECC levels of wall performance is needed, the most practical and
reasonable cost-effective solutions should turn to 2 x 4 wall assembly
options which may include R-15+5, R-13+7.5, R-15+7.5, or similar
prescriptive R-value solutions for HUD Zones 2 and 3. They stated that
the alternatives (R-15+5, R-13+7.5, or R-15+7.5) will make use of and
employ the mentioned economic and performance benefits of a
continuously insulated wall assembly, will more closely maintain the
basis of the 2021 IECC, and will make modifications to better
accommodate the practical constraints of manufactured housing as the
authority given to DOE in EISA allows. (ACC FSC, No. 1364 at p. 2)
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\45\ In the energy simulation analysis, DOE considered a 2 x 6
stud for any R-values at or greater than R-19 and a 2 x 4 stud for
any R-values less than R-19. Chapter 7, Section 7.4.2 of the August
2021 SNOPR TSD.
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Further, ACC FSC commented that the R-20+5 analysis misses the
benefits of foam plastic continuous insulation by protecting the wall
assembly from moisture and condensation by providing an insulation
ratio effect that is effective in HUD Zones 2 and 3. They commented
that the benefits tend to result in better performing and more
resilient manufactured homes, which will also tend to improve the
economics of home-ownership by having extended life-expectancy
(typically more than 40-years, not 30-years as assumed by DOE). ACC FSC
also commented that vapor and moisture control strategies are
inextricably linked to energy efficiency measures such as insulation
properties, amount, and location on the assembly. (ACC FSC, No. 1364 at
p. 2-3) Finally, ACC FSC stated that the R-20+5 vs. R-21 wall
insulation analysis missed the economic benefit of having reduced
heating/cooling load and equipment sizing with the R-20+5 option, and
that this benefit would also apply to consideration of the above-
mentioned R-15+5, R-13+7.5, and R-15+7.5 alternatives. (ACC FSC, No.
1364 at p. 3)
On the other hand, Schulte stated it is not clear that the energy
savings for R-20+5 will offset the added investment cost, and therefore
DOE should defer imposition of the R-20+5 requirement until it can
demonstrate its cost effectiveness. (Schulte, No. 1028 at p. 23) Cavco
stated that homes built for thermal zones 2 and 3 will no longer allow
for 2 x 4 wall construction but will require 2 x 6 walls with rigid
foam insulation. They stated that this simple change increases the cost
of materials, adds steps to the production process, decreases the
available habitable space and requires floor plans to be redrawn and
resubmitted. Cavco stated that this large jump is not cost justified,
especially when considering the impact to the production process.
(Cavco, No. 1497 at p. 2)
In response to the August 2021 SNOPR and October 2021 NODA, Clayton
Homes commented that insulated foam sheathing is not a good option for
manufactured homes because it adds a layer of flexible foam product
between rigid framing and sheathing materials, which adversely impacts
homes transportation performance. (Clayton Homes, No. 1589 at p. 4, 6)
Clayton Homes stated that R-21 wall insulation without a continuous
insulation should be the benchmark requirement in Climate Zones 2 and
3. (Clayton Homes, No. 1589 at p. 16) MHI stated that the requirement
of R-20 in the exterior wall will force the sidewall to 2 x 6
construction resulting in the following: (1) The installation of the
exterior insulation will be more costly for manufacturers to install,
stemming from the overall cost of the home being higher from the
increased material and labor costs; (2) The exterior insulation will
also require most plants to re-work their production stations to allow
time for this installation; (3) The exterior insulation will also
create an additional problem for fastening the exterior finish siding
since the siding would now have to be fastened thru the exterior
insulation--currently, there are no approved fasteners to penetrate
through the 1-inch exterior insulation and the fasteners themselves
would also have to support the siding during transportation; (4)
Windows and doors will need to be installed on framed extensions to
pack out nailing surfaces to the thickness of the continuous R-5
insulation; (5) Continuous flashing may be required at the bottom edge
of the rigid insulation layer to protect from exposure to weather and
infestation; and (6) The extra thickness of insulation on the exterior
wall would either increase the shipping width or decrease the habitable
space on the interior. Accordingly, MHI stated that for houses
currently designed to maximize the legal shipping width, there is no
additional width available on the exterior, and therefore, the space
for the exterior insulation on these homes would have to be taken from
the interior of the home. (MHI, No. 1592 at p. 8) Further, MHI stated
that the use of continuous insulation is problematic due to the
required changes in design, associated costs, and need for products
that do not exist. Additionally, they stated that the R-20 wall
insulation listed in Tier 2 for zones 2 and 3 may not be readily
available in roll form, as typically used in production. In addition,
they commented that having a continuous insulation on the outside of
the studs may become problematic for siding installation due to
transportation. Accordingly, MHI recommended revising 20+5 wall R-
values to R-21 or R-13+5. Further, they stated it will be difficult to
source a material to use as the R-5 continuous exterior insulation that
will meet the requirements of the proposed changes as well as the
current HUD Code.\46\ MHI stated that the perm ratings of the rigid
foam may also lead to redundant vapor barriers and stud cavities that
may not breathe properly, and therefore this may be a potential area
where the proposed changes and the current HUD Code may have a
conflict. (MHI, No. 1592 at p. 6, 17, 29); (Clayton Homes, No. 1589 at
p. 9, 21)
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\46\ Section 3280.504 has requirements for the perm rating of
the exterior wall assemblies.
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In response to the January 2022 DEIS, however, Clayton Homes and
MHI provided alternative recommendations. They recommended that DOE
change the exterior wall insulation R-value for Climate zone 2 to R-13,
and for Climate Zone 3 to R-15. In addition, they recommended that DOE
change the U-factor alternative for the exterior wall insulation to
0.094 for Climate Zone 2, and 0.076 for Climate Zone 3. (Clayton Homes,
No. 1986 at p. 13); (MHI, No. 1990 at p. 16)
MHCC also stated that an R-20+5 exterior wall insulation is neither
cost effective or feasible for MH, asserting that implementing
continuous exterior wall insulation would negatively impact throughput
rates of manufacturers and significantly increase overall costs. (MHCC,
No. 1600 at p. 7, 12) Skyline Champion commented that the requirement
of continuous R-5 insulation in thermal zones 2 and 3 not only adds
significant direct material and labor expense but also adds indirect
material and labor costs. Indirect costs
[[Page 32769]]
like flashing, window/door installations, jamb extensions, sliding
installation changes, soffit and floor width impacts are some of the
costs that Skyline Champion argued DOE's analysis may have not properly
captured. Skyline Champion recommended holding prescriptive R-values in
wall assemblies to R-19 for zones 2 and 3 for tier 2 and adjust overall
U-values accordingly. (Skyline Champion, No. 1627 at p. 2); (Champion
Home Builders, No. 1639 at p. 2)
In this final rule, DOE is requiring R-21 insulation instead of the
August 2021 SNOPR proposed R-20+5 for the prescriptive requirements for
Tier 2 climate zone 2 and 3. As presented in the August 2021 SNOPR (and
with updated inputs in the October 2021 NODA), both the R-20+5 and R-21
Tier 2 30-year life-cycle cost savings results for the nation are
positive. 86 FR 59042, 59048. However, San Francisco resulted in
negative Tier 2 30-year LCC savings for R-20+5, which is not the case
for R-21. 86 FR 47744, 47802; 86 FR 59042, 59055.
EISA requires consideration of cost-effectiveness of the standards
(42 U.S.C. 17071(a) and (b)(1)) and the design and factory construction
techniques of manufactured homes (42 U.S.C. 17071(b)(2)). As discussed
in section III.A of this document, DOE determined the cost-
effectiveness of the standards by considering the LCC savings over the
life of the manufactured home not only for the nation, but also for
each city analyzed. Therefore considering at least one city during the
30-year analysis in Tier 2 resulted in negative LCC savings with R-20+5
exterior wall insulation, in this final rule, DOE is adopting the next
stringent insulation, R-21 for Tier 2. Further, DOE was unable to
assess the other implications presented by the stakeholders at this
time, including but not limited to the limitations on including R-20+5
with the design of the home. DOE needs to conduct further study on the
full implementation of the continuous insulation requirement on
manufactured homes, and therefore is not including this requirement at
this time. Finally, adopting R-21 instead of R-20+5 also resolves
issues regarding shipping width that the stakeholders commented on,
which is discussed in a following section. However, DOE is open to
receiving further data to consider this requirement in future
standards.
DOE notes, however, that requiring R-21 for Tier 2 prescriptive
standards does not preclude manufacturers in using R-20+5 to comply
with Tier 2 prescriptive standards. Further, the performance method
(i.e., Uo) allows manufacturers flexibility in using any combination of
energy efficiency measures as long as the minimum Uo is met, including,
but not limited to, R-20+5.
DOE also received other comments regarding exterior wall
insulation. NAIMA commented that the standards should include minimum
mandatory wall insulation requirements under 460.102(c) of the
regulatory text, consistent with the 2021 IECC, which includes minimum
insulation requirements for performance path compliance. They
recommended a mandatory minimum wall insulation requirement of R-13 in
Tier 1 and Climate Zone 1 Tier 2 homes and R-21 in Climate Zones 2-3
Tier 2 homes when a builder selects the performance path for standards
compliance. (NAIMA, No. 1017 at p. 2) The 2021 IECC does not have a Uo-
based performance path. However, the 2021 IECC does include a ``Total
UA alternative'' requirement in R402.1.5, which is similar in concept
to Uo in that the calculation is done using the component U-factor and
the component area. As such, R402.1.5 of the 2021 IECC only provides
additional requirements for fenestration SHGC and maximum U-factors,
and does not include additional requirements for exterior wall
insulation. Accordingly, DOE is only including additional requirements
for fenestration SHGC and maximum U-factors in 460.102(c)(2)-(4).
ACC FSC requested that the wall U-factors (associated with the
prescribed R-values) in Tables 460.102-3 and 460.102-4 be revised
(decreased) to be consistent with a typical or ``default'' framing
factor of 15 percent and that the Uo values in Tables 460.102-5 and
460.102-6 be adjusted accordingly, as opposed to the 25 percent that
was used for the baseline framing for walls. They stated that the Uo
approach (and the referenced Battelle Method) provide a default value
of 15 percent for typical manufactured housing walls (see also HUD Code
Section 3280.509). (ACC FSC, No. 1364 at p. 4) DOE notes that the
Battelle Method report cites the 1989 ASHRAE Handbook of Fundamentals
(``HoF'') as the source of the 15 percent framing factor for exterior
walls with 16'' on center (o.c.). The 1993 edition of the ASHRAE
handbook, however, updated the framing factor for exterior walls 16''
o.c. to 25 percent and all successive editions through the 2021 edition
of the HoF have included a 25 percent factor. In addition, a 25 percent
framing factor was used during the MH working group negotiations. At
this time, DOE has not found any data on whether framing factors should
be lower for manufactured housing. Therefore, DOE continued to use 25
percent framing factor as part of the analysis.
Tier 2 Exterior Ceiling Insulation Requirement
In the August 2021 SNOPR, for the untiered/Tier 2 standard, DOE
proposed R-30 for climate zone 1 and 2, and R-38 for climate zone 3.
DOE proposed not to incorporate the minimum ceiling R-value updates
from the 2021 IECC given the physical space constraints of manufactured
homes. Accordingly, DOE proposed ceiling insulation requirements that
were consistent with the June 2016 NOPR requirements (as recommended by
the MH working group), updated from four climate zones to three climate
zones. 86 FR 47744, 47772. DOE received multiple comments regarding the
exterior ceiling insulation requirement.
MHI stated that due to the thicker insulation of R-30 in the
ceiling, the proposed standards state that a 5.5-inch truss heel height
would be required. This change in the truss profile will affect the
overall shipping height of the home unless other conciliatory changes
are made. (MHI, No. 1592 at p. 6, 8) Further, MHI stated that for the
exterior ceiling insulation as R-38, the depth of insulation will be
difficult to achieve on lower sloped roofs and cathedral style truss
profiles. (MHI, No. 1592 at p. 8) Skyline Champion stated that
requirements for ceiling insulation and heel height will force
significant truss re-designs to accommodate energy heels and shipping
limitations in many circumstances. Popular design options may be
severely limited or eliminated due to increased cavity volume
requirements of the truss profiles. Regarding climate zone 3 floor
insulation, they suggested that all homes will require increased floor
joist sizes to create enough space in joist cavities for additional
insulation requirements, leading to additional labor and materials that
are likely not properly reflected in cost calculations. (Skyline
Champion, No. 1627 at p. 2); (Champion Home Builders, No. 1639 at p. 3)
On the other hand, VEIC stated that they have worked with factory
partners that have demonstrated the ability to cost-effectively install
insulation levels above R-38 in the ceiling/roof assembly and still
maintain overall height requirements of MH. They presented an example
of an MH design that allows for a ceiling insulation system that
accommodated R-38 uncompressed and continuous insulation over the
entire attic with 7.5-8.5' ceiling height and a 3/12 pitch roof system.
They stated that blocking is utilized at the eaves to
[[Page 32770]]
ensure that full-height insulation can be a simple low-cost application
such as a cardboard product. Accordingly, VEIC suggested that if DOE
intends to maintain the R-38 ceiling insulation requirement for zone 3,
they recommend the standards also require that R-38 is installed
uncompressed at full height over 100 percent of the ceiling or attic
area extended over the wall top plate at the eaves, as per 2021 IECC
Section R402.2.1. Alternatively, DOE could set higher R-value standards
with the allowance for a lower R-value when installed uncompressed over
the entire ceiling area. (VEIC, No. 1633 at pp. 3-5)
As discussed previously, DOE took into consideration the range of
efficiency measures originally considered by the MH working group that
was appropriate for manufactured home design, which included the
following: Exterior ceiling R-22 to R-38. DOE notes that ceiling height
constraints in manufactured homes limit the amount of ceiling
insulation that can be installed without compression. While NEEM and
NEEM+ homes require ceiling insulation of R-40 and R-44 respectively,
DOE conducted the analysis up to ceiling insulation levels of R-38
based on the recommendations of the MH working group. DOE notes that
typical R-30 and R-38 insulation has thicknesses of approximately 9.7''
and 12.3'' respectively. A common MH home truss design is 17'' deep at
the marriage line and can accommodate these levels of insulation,
except the compression at the eaves. Accordingly, DOE understands that
there is enough room in the truss to accommodate higher insulation
without having to redesign. Further, DOE confirmed with an industry
expert in the Pacific Northwest that almost all manufactured home
trusses can accommodate ceiling insulation up to R-40. While DOE did
not consider ceiling insulation levels beyond R-38, DOE notes that
almost all roof truss designs can accommodate insulation up to R-40,
but there is a very small incremental improvement in thermal
performance between R-38 and R-40. The MH working group also did not
consider the requirements regarding uncompressed insulation in R402.2.1
of the 2015 IECC (which is also included in the 2021 IECC), and
therefore did not assess the cost-effective impact as part of this
rulemaking. DOE will plan to consider these updates in future
rulemakings.
Further, as stated by VEIC, homes are currently being built with
insulations at the higher end of the range, with no issues with
transportation. In addition, even current ENERGY STAR requirements,
under the envelope-only package, require ceiling insulation at R-
38.\47\ DOE also confirmed that the Northwest Energy-Efficient
Manufactured Housing Program (NEEM)+ homes,\48\ which go beyond ENERGY
STAR and provide ceiling insulation up to R-44, do not deal with
transportation issues because of the added insulation.
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\47\ Further details on specification can be found here:
www.energystar.gov/newhomes/energy_star_manufactured_homes.
\48\ Further details on specification can be found here: https://www.neemhomes.com/efficiency-certified/#what-is-neem-plus.
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Finally, DOE notes that manufacturers can also comply with the
standards using the performance, Uo, method, which gives manufacturers
the flexibility in using any combination of energy efficiency measures
as long as the minimum Uo is met. Accordingly, DOE is unpersuaded that
the Tier 2 ceiling insulation requirements will significantly limit
design options, necessitate changes in truss profiles, or impact
transportation of MH models, and therefore DOE maintains the August
2021 SNOPR Tier 2 exterior ceiling insulation requirements in this
final rule.
Tier 2 Exterior Floor Insulation Requirement
In the August 2021 SNOPR, for the untiered/Tier 2 standard, DOE
proposed R-13 for climate zone 1, R-19 for climate zone 2, and R-30 for
climate zone 3. DOE did not identify any updated floor insulation
requirements in the 2021 IECC applicable to manufactured homes.
Accordingly, DOE proposed floor insulation requirements that were
consistent with the June 2016 NOPR requirements (as recommended by the
MH working group), updated from four climate zones to three climate
zones. 86 FR 47744, 47772. DOE received multiple comments regarding the
exterior floor insulation requirements.
Several commenters suggested that for Climate Zone 3, most floors
are constructed with 2 x 6 framing but with an R-30 insulation
requirement, DOE analysis assumes 2 x 8 floor joist and insulation
thicknesses that exceed 5.5-inches, which cannot reasonably be assumed
in HUD home construction. Further, they stated that placing more than
R-11 blankets under the floor joists cannot be done without offsetting
outriggers and providing blocking between joists because compressing
more than R-11 insulation between an outrigger and a joist results in
noticeable humps in the floor at each outrigger location. (MMHA, No.
995 at p. 2); (Michigan MHA, No. 1012 at p. 1-2); (WHA, No. 1025 at p.
1-2); (PMHA, No. 1165 at p. 1-2); (Westland, No. 1263 at p. 1-2);
(Pleasant Valley, No. 1307 at p. 1-2); (American Homestar, No. 1337 at
p. 1-2); (Oliver Technologies, No. 1350 at p. 1-2); (KMHA, No. 1368 at
p. 1-2); (Adventure Homes, No. 1383 at p. 1-2); (Clayton Homes, No.
1589 at p. 22)
MHI stated that DOE's analysis assumes that the floor joists are 2
x 6 with insulation up to and including R-22, and 2 x 8 floor joists
insulated to R-30 and above. They stated that currently, 90 percent of
floors produced use 2 x 6 floor joists. They also stated that the 2''
floor joist change will also increase the shipping height. (MHI, No.
1592 at p. 25-26); (Clayton Homes, No. 1589 at p. 16-18, 22); (MHCC,
No. 1600 at p. 6) In response to the January 2022 DEIS, MHI recommended
that DOE change the exterior floor insulation R-value for Climate zone
3 to R-25. In addition, they recommended that DOE change the U-factor
alternative for the exterior floor insulation to 0.036 for Climate Zone
3. (Clayton Homes, No. 1986 at p. 11, 13); (MHI, No. 1990 at p. 15, 16)
As previously stated, DOE did not update the Tier 2 exterior floor
insulation requirements from those recommended by the MH working group
in the term sheet, besides updating the June 2016 NOPR-proposed four
climate zones to the August 2021 SNOPR-proposed three HUD zones. NEEM+
homes provide floor insulation at R-33, and do not deal with
transportation issues because of the added insulation. Even though the
analysis assumes 2 x 8 floor joists for floor insulation above R-30,
DOE notes NEEM homes meet R-33 floor insulation by incorporating a
combination of R-11 blankets and R-22 in 2 x 6 joists and R-33 belly
insulation below joists.\49\ Finally, even current ENERGY STAR
requirements, under the envelope-only package, require floor insulation
in Climate Zone 3 at R-33. Accordingly, considering current techniques
can still be implemented, DOE is unpersuaded that the Tier 2 floor
insulation requirements will significantly impact shipping height and
result in transportation issues.
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\49\ See Figure 2 on page 10--https://static1.squarespace.com/static/5b10a91989c172d4391ab016/t/5b45160b2b6a286e299e4ba5/1531254288322/3157.pdf.
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Finally, DOE notes that manufacturers can also comply with the
standards using the performance, Uo, method, which gives manufacturers
the flexibility to use any combination of energy efficiency measures as
long as
[[Page 32771]]
the minimum Uo is met. Accordingly, DOE maintains the August 2021 SNOPR
Tier 2 exterior floor insulation requirements in this final rule.
Tier 2 Fenestration Requirements
In the August 2021 SNOPR, for the untiered/Tier 2 standard, DOE
proposed the following window U-factors: 0.32 for climate zone 1, 0.30
for climate zone 2, and 0.30 for climate zone 3. In addition, DOE also
proposed the following glazed fenestration SHGCs: 0.33 for climate zone
1, 0.25 for climate zone 2, and ``not applicable'' for climate zone 3.
DOE proposed window U-factors consistent with the 2021 IECC. For the
SHGC, DOE proposed requirements based on the updated window U-factors,
and the recommendations by the MH working group. 86 FR 47744, 47772.
DOE received multiple comments regarding fenestration requirements.
VEIC stated that the SHGC requirements of the Tier 2/untiered
proposal run contrary to best practice, and to IECC requirements. They
stated that lower SHGC should be required in warmer climate zones. At
minimum, VEIC recommends reversing the SHGC requirements for zone 1 and
zone 2. (VEIC, No. 1633 at p. 6, 7) ACEEE stated that the proposed
standards have higher (less stringent) SHGC values in Climate Zone 1
than in Climate Zone 2 and none in Climate Zone 3. They stated that
this difference is counter to the IECC and to the logic of increased
savings where there is increased sunlight and it should be corrected.
(ACEEE, No. 1631 at p. 8) RECA also recommended that DOE set the
maximum SHGC for both Climate Zones 1 and 2 at 0.25, which is
consistent with the 2021 IECC requirement for IECC climate zones 1-3
and has been in the IECC since the 2012 edition. RECA stated there is
no reason why HUD Zone 1 should have a higher SHGC than Climate Zone 2.
(RECA, No. 1570 at p. 6)
During the MH working group negotiations, to determine the number
of climate zones (which at the time was four climate zones), one of the
building thermal requirements that DOE analyzed for cost-effectiveness
was the window SHGC. For the June 2016 NOPR-proposed Climate Zone 1,
DOE analyzed a range of window SHGC from 0.25 to 0.40. DOE proposed the
most cost-effective SHGC requirement, which was 0.25. The MH working
group agreed on the SHGC for Climate Zone 1 in the term sheet. See Term
Sheet at 3. For the June 2016 NOPR-proposed Climate Zone 2, the MH
working group recommended that DOE perform a sensitivity analysis of
the total cost of ownership to determine the most cost-effective SHGC,
rather than recommending a specific SHGC value in the term sheet. See
Term Sheet at 3. DOE performed its SHGC sensitivity analysis using SHGC
values of 0.25, 0.30, and 0.33. This analysis indicated an SHGC of 0.33
had the greatest total cost of ownership savings; therefore, in the
June 2016 NOPR, DOE proposed requiring a SHGC value of 0.33. Except for
the SHGC, all other proposed building thermal requirements for the June
2016 NOPR-proposed Climate Zones 1 and 2 were the same. 81 FR 39756,
39772.
In the August 2021 SNOPR, for the Tier 2 standards, DOE mapped the
June 2016 NOPR climate zones (based on four climate zones) to the HUD
zones (based on three climate zones). DOE used the manufactured home
national shipment percentages for each of the cities analyzed,\50\ and
the corresponding HUD zone and the June 2016 NOPR climate zone
identifiers for each of the cities. For HUD Zone 1, the cities
identified were in either the June 2016 NOPR-proposed Climate Zones 1
or 2; however, the summed shipment weights per the June 2016 NOPR-
proposed climate zone did not provide an obvious indicator as to which
of the energy efficiency measures to incorporate for HUD Zone 1. The
only difference between the June 2016 NOPR-proposed Climate Zone 1 and
Climate Zone 2 energy efficiency measures was the glazed fenestration
requirement. Therefore, in the August 2021 SNOPR, DOE proposed to use
the less stringent glazed fenestration requirement (0.33 vs. 0.25) to
accommodate cost-effective measures that were proposed in the June 2016
NOPR for HUD Zone 2. 86 FR 47744, 47772. This evaluation is consistent
with the recommendations from the MH working group.
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\50\ DOE used shipments for 2019 from the annual production and
shipment data provided by MHI. See Manufactured Home Shipments by
Product Mix, Manufactured Housing Institute (2019).
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For this final rule, DOE reassessed the cost-effectiveness of 0.33
vs. 0.25 SHGC for Tier 2 Climate Zone 1. The new analysis continued to
conclude that an SHGC of 0.33 is more cost-effective than 0.25.
Therefore, consistent with the recommendation to require the more cost-
effective measure as part of the standards, DOE maintains the proposed
0.33 SHGC for Tier 2 Climate Zone 1 in this final rule.
DOE also received comments from MHI and Clayton Homes recommending
that the prescriptive requirements for window U-factor be changed to
0.5 for Climate Zone 1, 0.35 for Climate Zone 2, and 0.32 for Climate
Zone 3, but did not provide any justification for these changes. (MHI,
No. 1990 at p. 14, 15); (Clayton Homes, No. 1986 at p. 11) As
previously noted, DOE proposed window U-factor requirements consistent
with the 2021 IECC. Further, as discussed in section III.A of this
document, DOE has determined the adopted Tier 2 requirements are cost-
effective based on the resulting positive 30-year LCC savings.
Accordingly, DOE is adopting the August 2021 SNOPR proposal Tier 2
window U-factors.
MHI recommended adding the following language to section R402.3.4
of the proposal: ``[R402.3.4] Opaque door exemption. One side-hinged
opaque door assembly not greater than 24 square feet (2.22 m\2\) in
area shall be exempt from the U-factor requirement in Section R402.1.2.
This exemption shall not apply to the Total UA alternative in Section
R402.1.5.'' (MHI, No. 1592 at p. 18) In the June 2016 NOPR, DOE did not
propose adopting this requirement because excluding these types of
doors from this proposed rulemaking also would represent the loss of a
significant source of home energy conservation. 81 FR 39756, 39773. DOE
carried this proposal forward with the August 2021 SNOPR. As such, in
this final rule DOE continues to exclude this exemption for the same
reason, consistent with what was proposed in the August 2021 SNOPR.
Further, MHI recommended adding the following language to section
R402.3.3 of the proposal: ``[R402.3.3] Glazed fenestration exemption.
Not greater than 15 square feet (1.4 m\2\) of glazed fenestration per
dwelling unit shall be exempt from the U-factor and SHGC requirements
in Section R402.1.2. This exemption shall not apply to the Total UA
alternative in Section R402.1.5.'' (MHI, No. 1592 at p. 26) MHCC also
stated that the fenestration exemptions that exist in the 2021 IECC
must also be included. (MHCC, No. 1600 at p. 7, 12) DOE notes that this
specific requirement was deleted by the MH working group, and instead
the recommendation was to supersede this requirement with the term
sheet. See Term Sheet at 17. DOE discussed in the June 2016 NOPR that
DOE did not propose to adopt this requirement because the prescriptive
fenestration SHGC and U-factor requirements would apply to all
fenestration. Given that 15 square feet represents a large portion of
the overall fenestration area that comprises a manufactured home, DOE
noted that the adoption of this requirement would potentially exclude
from these requirements a significant source of energy conservation. 81
FR 39756, 39773. DOE carried this proposal
[[Page 32772]]
forward with the August 2021 SNOPR. Therefore, in this final rule, DOE
continues to exclude this exemption for the same reason consistent with
what was proposed in the August 2021 SNOPR.
As noted in the August 2021 SNOPR, based on comments and consistent
with the 2015 and 2021 IECC, DOE proposed to remove the maximum ratio
of 12 percent for glazed fenestration area to floor area for energy
modeling purposes, consistent with the recommendation from the MH
working group. MHI and MHCC agreed that DOE should not limit the amount
of glazed fenestration. (MHI, No. 1592 at p. 26); (MHCC, No. 1600 at p.
7, 12) As such, DOE is finalizing this proposal in this final rule.
Tier 2 Uo Performance Requirements
MHI stated that the Untiered/Tier 2 standards requirements
represent significant changes over the current HUD Code and will be
more of a challenge to implement in a cost-effective manner. (MHI, No.
1592 at pp. 7, 9) Clayton Homes and MHI commented that the proposed
requirements should be significantly reduced (specifically, they
encouraged DOE to lower proposed requirements within Climate Zone 3 to
more closely align to IECC Climate Zone 3 requirements). (Clayton
Homes, No. 1589 at p. 4, 6); (MHI, No. 1592 at p. 25)
Schulte mentioned that there are already HUD-Code homes which have
been designed and constructed to meet the 2009 IECC standards, and
ENERGY STAR homes. However, the increase in home prices, especially in
Zone 2 is significant and, in this zone, the life-cycle cost savings
are relatively slight. Accordingly, they recommended adopting less
stringent Uo values as a first action which would reduce the price
increases and the impact on affordability, and suggested that the next
version of the standards assess the level of state adoption of the 2021
IECC code and address some of the other issues that have been deferred.
(Schulte, No. 1028 at p. 19, 23, 26) Specifically, they recommended the
following Uo: 0.081 for Climate Zone 1; 0.075 for Climate Zone 2, and
0.060 for Climate Zone 3. (Schulte, No. 1028 at p. 13)
MHI and Clayton Homes stated that in Climate Zone 2, based on the
calculations MHI performed on the prototypical homes, the proposed Zone
2 requirements would require many changes such as upgraded insulation,
2 x 6 wall construction, upgraded windows, and taller truss heel. For
Climate Zone 3, MHI was not able to satisfy the overall U factor
requirements using common options that are available to most
manufacturers. Upgrading insulation, 2 x 6 exterior walls, deeper
trusses, deeper floor joists, and upgraded windows did not lower the
overall U-factor enough to meet the proposed requirements. However, for
the calculations that MHI performed, they did not evaluate the addition
of continuous exterior insulation due to the installation and
transportation issues involved with this product. Accordingly, MHI
recommended the following changes for the Uo requirements: Change
Climate Zone 1 total Uo to 0.093 for single-section and 0.090 for
multi-section; change Climate Zone 2 total Uo to 0.081 for single-
section and 0.076 for multi-section and the Climate Zone 3 total Uo to
0.065 for single-section and 0.061 for multi-section. (MHI, No. 1990 at
p. 17); (Clayton Homes, No. 1986 at p. 13) Clayton Homes had the same
recommendations, however instead elected to change the Climate Zone 3
total Uo to 0.064 for multi-section.
On the other hand, NEEA stated that more than half of the
manufactured homes in the Northwest are built with a Uo equal to Tier 2
of the August 2021 SNOPR. They stated that they have been applying 2 x
6 frame walls to homes for the past 14 years. (NEEA, No. 1601 at p. 14)
Further, NEEA commented that industry and others have made false claims
that the incremental cost of a home should be based on internal floor
area of the homes, suggesting that increasing framing in Climate Zone 3
from 2 x 4 to 2 x 6 stud walls would increase the cost per square foot
of the home. They stated that DOE should avoid this logic as it
presumes homes are sold based on interior floor area when in fact the
advertised area of a manufactured home is on the exterior frame
dimensions of the house. (NEEA, No. 1601 at p. 10)
As discussed previously, in developing the set of Tier 2 energy
efficiency measures, DOE's objective was for it to be based on the most
recent version of the IECC, with consideration of cost-effectiveness
and design and factory construction techniques of manufactured homes.
(42 U.S.C. 17071(b)(1); 42 U.S.C. 17071(b)(2)(A)) As such, in the
analysis, DOE took into consideration the range of efficiency measures
originally considered by the MH working group that was considered
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) DOE did not consider
any energy efficiency measures beyond the ranges considered by the MH
working group.
DOE notes that 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: 0.35 and 0.32; to 0.32 and 0.30 respectively). The window U-
factors were updated consistent with the 2021 IECC. Otherwise, the
remaining Tier 2 EEMs are consistent with the recommendations from the
MH working group, except based on three climate zones (as opposed to
the four climate zones recommended in the Term sheet). As discussed in
section III.A of this document, DOE has determined that the adopted
Tier 2 requirements are cost-effective because of the positive LCC
savings over the life of the manufactured home for both the nation, and
every city analyzed. As such, Table III.6 presents the amended building
thermal envelope prescriptive requirements. DOE used the Battelle
Method to determine the associated Uo performance values, which are
provided in Table III.9.
Construction and Transportation
DOE received multiple comments that the Tier 2/untiered building
thermal envelope requirements will make transportation of manufactured
homes incredibly challenging, as many states have height restrictions
that will be impossible to meet due to the new design requirements.
(MMHA, No. 995 at p. 2); (Michigan MHA, No. 1012 at p. 1-2); (WHA, No.
1025 at p. 1-2); (PMHA, No. 1165 at p. 1-2); (Westland, No. 1263 at p.
1-2); (Pleasant Valley, No. 1307 at p. 1-2); (American Homestar, No.
1337 at p. 1-2); (Oliver Technologies, No. 1350 at p. 1-2); (KMHA, No.
1368 at p. 1-2); (Adventure Homes, No. 1383 at p. 1-2); (Clayton Homes,
No. 1589 at p. 22); (IMHA, No. 1453 at p.1)
PMHA commented that their factories are concerned that several of
the proposed changes will change the building thermal systems, which in
turn will affect the overall shipping height and width of a home. By
increasing the truss heel height, increasing floor joist depth and
adding insulation outside of the studs, the overall shipping envelope
would change and in most cases be significant. They stated that homes
built in Pennsylvania are sold throughout the Northeast and Mid-
Atlantic (70 percent of production is shipped outside of Pennsylvania)
and that the Northeast relies heavily on the Pennsylvania factories for
supply. They stated that the Northeast has the most restrictive laws
[[Page 32773]]
for transporting manufactured homes. (PMHA, No. 1165 at p. 2) PMHA
commented that most of Pennsylvania's market region limits height to
14'6'' when transporting homes, whereas several states such as
Connecticut and Massachusetts limit height to 13'6''. They stated that
the highways in Connecticut and Massachusetts are vital when shipping
homes to homebuyers in Vermont, New Hampshire and Maine. PMHA commented
that Pennsylvania would not entertain future efforts to increase the
loads beyond 16 feet width. They stated that width restrictions take
the body of the home in consideration, in addition to eave overhangs,
doorknobs, windowsills, siding, exterior trims etc. (PMHA, No. 1165 at
p. 3)
Mississippi MHA stated that the Mississippi Department of
Transportation allows width up to 16 feet and 15 feet and 6 inches for
height for manufactured homes. Any home that exceeds these dimensions
will require a special permit which will cost the customer more in
transportation costs. Therefore, they stated that the proposed
standards may even prohibit a customer in rural Mississippi from buying
a home due to the transporting requirements on rural roads.
(Mississippi MHA, No. 1588 at p. 3)
NJMHA commented, having no manufacturers located in New Jersey,
that the proposal will directly impact the transportation of
manufactured homes and add additional cost for homes delivered to New
Jersey. They stated that the added challenge of transporting a
manufactured home into New Jersey, coupled with their supply issues,
will decrease their ability to supply homes at an affordable price
point. (NJMHA, No. 1451 at p. 2)
Clayton Homes and MHI and multiple others stated that the proposed
rule fails to take into consideration construction methods,
transportation demands, and short on-site completion duration that are
unique to manufactured housing. (Campaign Form Letter, Multiple
Submissions at p. 1) Clayton Homes and MHI stated that several of the
changes in the proposed rule would apply to the building thermal
systems which may affect the overall shipping height and width of a
home, and by changing various factors, the overall shipping envelope
will change. For example, the additional height could prevent shipping
a home into an area of the country with low bridges, resulting in
consumers having to settle for a different style of home, or, more than
likely, being forced out of the housing market due to a lack of
affordable housing. Also, additional escorts could add thousands of
dollars to the purchase price of the home. Essentially, they stated
that by increasing the truss heel height, increasing floor joist depth,
and adding insulation outside of the studs, the overall shipping
envelope will change. (Clayton Homes, No. 1589 at p. 3, 6); (MHI, No.
1592 at p. 2) MHI also stated that for houses currently designed to
maximize the legal shipping width, there is no additional width
available on the exterior, and therefore, the space for the exterior
insulation (i.e., proposed R-20+5 continuous insulation) on these homes
would have to be taken from the interior of the home. (MHI, No. 1592 at
p. 8)
On the other hand, NEEA stated that more than half of the
manufactured homes in the Northwest are built with a Uo equal to Tier 2
of the August 2021 SNOPR. They stated that they have been applying 2 x
6 frame walls to homes for the past 14 years.\51\ (NEEA, No. 1601 at
pp. 13-14)
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\51\ All frame and related dimensional descriptions (e.g., ``2 x
6'') are denoted in inches.
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DOE understands the construction and transportation issues that the
stakeholders are commenting on relate specifically to the increased
insulation for exterior wall, floor and ceiling insulation required by
Tier 2 in this final rule. As discussed in the previous sections (which
provides further detail, but is summarized here), for Tier 2 exterior
wall insulation, DOE is finalizing an R-21 exterior wall insulation for
climate zones 2 and 3, which should resolve a number of the width
concerns. For Tier 2 exterior ceiling insulation, DOE notes that there
is enough room in the truss to accommodate higher insulation without
having to redesign. For Tier 2 exterior floor insulation, DOE confirmed
that there are homes being built that meet R-33 floor insulation by
incorporating a combination of R-11 blankets and R-22 in 2 x 6 joists,
and R-33 belly insulation below joists (instead of only using 2 x 8
joists). Accordingly, DOE is unpersuaded with the concerns that amended
Tier 2 standards would require changes in exterior home dimensions and
cause transportation issues beyond any transportation issues that
currently exist.
Additionally, as suggested by NEEA, DOE notes that there are homes
that are currently being built with insulation levels at the Tier 2
requirements, with no issues with transportation. Even current ENERGY
STAR requirements, under the envelope-only package, require insulation
similar to the Tier 2 standards. Finally, DOE confirmed that the
Northwest Energy-Efficient Manufactured Housing Program (NEEM)+ homes,
which go beyond ENERGY STAR, do not deal with transportation issues
because of the added insulation. DOE is acknowledging that changes will
be needed to accommodate higher insulation. However, DOE understands
that around 53,400 NEEM homes have been transported over the last 20
years without any issues. In addition, the northwest went through the
transition in 1990s and Clayton Homes also has models meeting the
higher insulation requirements.\52\
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\52\ The NEEM website lists Clayton Homes in CA, ID, NV, OR, UT,
and WA as retailers for NEEM-certified homes; https://www.neemhomes.com/where-to-buy. NEEM and NEEM+ require insulation
levels greater than Tier 2 for ceilings and floors.
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Finally, DOE also notes that manufacturers can also comply with the
standards using the performance, Uo, method, which gives manufacturers
the flexibility to use any combination of energy efficiency measures as
long as the minimum Uo is met.
Other Efficiency Improvements
Greer suggested that DOE consider light pollution and recommended
using downward positioning lighting for the outside of the buildings.
(Greer, No. 1443 at p. 1) DOE's authority for this rule is only with
regards to establishing energy conservation standards (42 U.S.C.
17071(a) and (b)(1)), which does not encompass light pollution or the
position of lighting, and therefore those topics are not addressed in
this rule.
VEIC recommends that DOE adopt the IECC R404 requirement for 100
percent high efficacy lighting in permanently installed fixtures and
controls. (VEIC, No. 1633 at p. 6) The NPCC stated that the standards
should include additional cost-effective energy-saving measures,
including equipment, because measures beyond the building shell,
including efficient lighting, heating and cooling equipment, water
heating equipment, appliances, and ducts could yield large cost-
effective energy savings. (NPCC, No. 1567 at p. 2) Next Step also
stated the standards should include cost-effective energy-saving
measures, including equipment. Next Step also stated the standards
should include ventilation and moisture control measures, if needed, to
ensure that air sealing improves the health of residents. (Next Step,
No. 1617 at p. 10, 11) The Attorneys General urge DOE to include a
requirement that manufacturers provide additional energy saving
features such as high-efficiency appliances or heating and cooling
systems using an ENERGY STAR[supreg]-certified heat pump. (Attorneys
General, No. 1625 at p. 2, 4, 6)
[[Page 32774]]
Earthjustice and Prosperity Now suggested that several important
provisions of the 2021 IECC are absent from DOE's analysis of potential
manufactured housing standards, including lighting efficacy
requirements found in section R404 of the 2021 IECC. (Earthjustice and
Prosperity Now, No. 1637 at p. 7) They stated that in DOE's previous
response suggesting that ``the energy efficiency of those products is
specifically governed by the comprehensive Appliance Standards program
established under [the Energy Policy and Conservation Act (``EPCA'')]
(42 U.S.C. 6291-6317)'' DOE cites no authority for the proposition that
it can ignore IECC provisions applicable to covered appliances, nor
does the Department make any attempt to explain why Congress would have
intended to allow DOE to ignore IECC provisions that address the
efficiency of regulated appliances. Id. In addition, Earthjustice,
Prosperity Now, and Sierra Club commented saying that DOE's
characterization of its appliance efficiency program as
``comprehensive'' ignores that the Department has long refused to
update the standards for some furnaces used in manufactured homes
because such standards allegedly could not meet other requirements
applicable under EPCA. (Earthjustice, Prosperity Now, and Sierra Club,
No. 1992 at p. 8, 9)
While the 2021 IECC does include certain efficiency requirements
for HVAC, water heaters, lighting, furnaces, and appliances, DOE is not
adopting energy conservation standards for these products in the
manufactured home energy conservation standards. As discussed in
section III.A of this document, section 413 of EISA requires DOE to
base the manufactured housing energy conservation standards on the
latest version of the IECC, except where not cost-effective or where a
more stringent code would be more cost-effective (42 U.S.C.
17071(b)(1)). 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. This language does not require the imposition of requirements for
manufactured homes that are identical to those of the IECC.
DOE also did not simply ignore the updated provisions of the 2021
IECC related to appliance and product energy efficient requirements
that were not included in the 2015 IECC, and therefore not considered
by the working group. In the August 2021 SNOPR, DOE addressed the fact
that the MH working group evaluated the 2015 IECC, which does not
include updated sections of the 2021 IECC, such as comparable
provisions to sections R401.2.5 and R408.2 of the 2021 IECC. 86 FR
47773-47774. With respect to those provisions of the 2021 IECC, DOE
noted that the MH working group generally did not recommend provisions
addressing minimum appliance or equipment efficiencies for manufactured
housing, and therefore, DOE declined to adopt such measures consistent
with the approach of the working group. Id. Accordingly, the
performance requirements in the energy conservation standards proposed
in the August 2021 SNOPR and adopted in this document are specific to
the building thermal envelope only, and do not incorporate any
specifications on HVAC or appliance energy efficiency.\53\
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\53\ Earthjustice and Prosperity Now also stated that DOE's
refusal to consider lighting efficacy measures is inconsistent with
its rationale for refusing to evaluate the HVAC and water heating
equipment requirements in the 2021 IECC because the 2014 working
group specifically recommended that DOE include the lighting
efficacy provisions from the 2015 IECC in the negotiated
manufactured housing standards. Earthjustice, Prosperity Now, and
Sierra Club, No. 1992 at p. 7). However, in the June 2016 NOPR, DOE
stated that it was not proposing the lighting efficacy requirements
from the 2015 IECC recommended by the working group because of DOE's
ongoing rulemaking efforts to establish nationwide minimum lamp
efficacy standards under EPCA, and requested comment on the
sufficiency of DOE's rulemaking efforts for lamp efficacy to achieve
lighting efficiency in manufactured homes. See 81 FR 39780.
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The energy efficiency of those products is specifically governed by
the comprehensive Appliance Standards program established under EPCA.
(42 U.S.C. 6291-6317) Covered products going into newly built
manufactured homes will still have to meet the minimum energy
conservation standards set by the Appliance Standards program. DOE
notes that under this final rule, manufacturers would not be prohibited
from installing more efficient appliances than the minimum standards
set by the Appliance Standards program into newly manufactured
homes.\54\
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\54\ See http://energy.gov/eere/buildings/standards-and-test-procedures.
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Insulation Supply and Demand
MHI stated that manufacturers are currently using R-11 for most of
the insulation which is predominantly used in the walls and floors for
Zones 1 and 2. Further, manufacturers typically prefer to use two
layers of R-11 if they need more insulation in the floors. However,
they are concerned that the proposed changes do not use R-11, but
rather the lowest insulation value used is R-13. Therefore, MHI stated
that this may cause a supply issue for the manufacturers that have
ramped up to supply large quantities of R-11, and the same supply issue
will be present for R-20 and R-19, which is currently not used in large
quantities. Further, the availability of R-30 insulation in a blanket
style may be an issue in meeting this requirement or force further
production changes to accommodate other styles of insulation. (MHI, No.
1592 at pp. 6, 8) Clayton Homes stated that the proposed standards
would require manufactured homes to have significantly more insulation,
which would cause the demand for fiberglass insulation to overwhelm a
market that is already under substantial stress from the current
insulation shortage, which is projected to continue for a few more
years. (Clayton Homes, No. 1589 at p. 4, 6)
DOE notes that the performance path, i.e., Uo method, gives
manufacturers the flexibility in using any combination of energy
efficiency measures as long as the minimum Uo is met. Manufacturers do
not need to meet both the prescriptive and the performance method;
rather they have the option to only meet one. As such, manufacturers
can continue to use current insulation types and techniques to meet the
energy conservation standards. DOE is not restricting the type of
insulation being used, as long as the standards (either prescriptive or
performance) are met.
Other Remaining Comments
Redwood Energy suggested that DOE adopt an all-electric version of
ENERGY STAR as the standards. They suggested that all-electric design
is already roughly 50 percent of manufactured housing and produces less
net GHGs than natural gas or propane on clean grids. They stated that
ENERGY STAR yellow tags show the lowest utility bills only to ENERGY
STAR heat pump for HVAC and DHW. They also commented that there was
some support from the Director of Business Development of Champion
Homes for a California Energy Commission grant, illustrating their
willingness to build with a 2 x 6 framed walls, 14'' deep attic
insulation and all-electric. (Redwood Energy, No. 1363 at p. 1) 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)) Accordingly, DOE developed the standards based on
the requirements in the 2021 IECC.
In addition, regarding NFRC labels, NEEA recommended that the final
rule be explicit that the NFRC labels should remain on the windows
until the house
[[Page 32775]]
arrives at the site. (NEEA, No. 1601 at pp. 14-15) DOE's authority for
this rulemaking is to establish energy conservation standards for
manufactured housing as manufactured. (42 U.S.C. 17071(c)) The energy
conservation standards are specific only to the building thermal
requirements for a manufactured home. However, DOE notes that DOE's
energy conservation standards would not prevent industry from pursuing
this labeling practice suggested by NEEA.
Schulte stated that setting the Uo values for the home and letting
manufacturers decide how to meet these performance standards encourages
innovation by allowing manufacturers to choose higher efficiency
windows or other changes to achieve the required Uo values. (Schulte,
No. 1028 at p. 23) VEIC recommended considering a compliance option
using an Energy Rating Index (``ERI'') compliance alternative, which
not only allows for prescriptive and total UA compliance approaches,
but also provides performance-based compliance based on annual modeled
energy costs of the whole-home. (VEIC, No. 1633 at p. 3) Consistent
with the recommendations of the MH working group, the performance
requirements in the energy conservation standards are specific to the
building thermal envelope only, and do not provide for tradeoffs with
mechanical equipment such as appliances. DOE does allow tradeoffs
between the building thermal envelope components as long as the Uo is
met through the performance path. This is similar to the Total UA path
in the IECC. Similar to those sections, a Uo calculation gives the
manufactured home manufacturer the flexibility to design the
manufactured home, as long as the overall Uo is met.
NEEA recommended that the final rule be explicit about what needs
to be included in an installation manual, specifically that the multi-
section marriage line air seal shall be installed at the factory with
proper QA/QC. (NEEA, No. at p. 14, 15) All requirements in this final
rule would apply to the manufactured home as manufactured, i.e., the
manufacturer of the manufactured home is responsible for ensuring
compliance with the requirements. (42 U.S.C. 17071(c)) A manufactured
home would have to comply with the requirements, once finalized, prior
to being installed in the field. Therefore, DOE has included a
clarification in Sec. 460.1 of the regulatory text that the
requirements apply to the manufactured home as manufactured at the
factory, prior to distribution in commerce for sale or installation in
the field.
ACC FSC stated that the proposed standards do not appear to
address, amend, or prohibit use of Sec. 3280.508 of the HUD Code which
provides for a so-called ``high efficiency heating and cooling
equipment credit'', and requested that this loophole be removed to
avoid erosion of durable envelope energy efficiency in trade-off for
shorter-lived equipment that happens to exceed NAECA minimum efficiency
requirements which, in some key cases, have not kept up with the
market. They stated that while DOE indicated that equipment trade-offs
are ``only allowed within the building thermal envelope, and not HVAC
equipment or other appliances'', this issue still remains unclear in
the proposed standards and in DOE's documentation. (ACC FSC, No. 1364
at p. 4-5). EISA directs DOE to establish energy conservation standards
for manufactured housing. 42 U.S.C. 17071. As such, Sec. 3280.508 is
under HUD's authority and not DOE. However, DOE's energy conservation
standards are more stringent than the HUD code in a number of key
respects, and manufacturers must comply with both HUD and DOE's
requirements. Nevertheless, DOE acknowledges this comment and will plan
to coordinate with HUD, as needed, on the application of the DOE
requirements in relation to the HUD heat loss/heat gain requirements.
MHI and Clayton Homes recommended clarifying the language in Sec.
460.102 paragraphs (b)(1) and (b)(5) of the proposed regulatory text as
follows: adding that the applicable R-value for the prescriptive
requirements is the ``nominal value of insulation'', specifying the
maximum U-factor as ``glazing maximum U-factor'', and adding that
compliance with the applicable requirements in paragraph (b)(1) may be
determined using the ``maximum component U-factor'' values set forth in
Sec. 460.102 of the proposed regulatory text. (Clayton Homes, No. 1986
at p. 11-13); (MHI, No. 1990 at p. 14, 15) DOE views these additions as
adding further specificity to the prescriptive requirements, and
therefore has adopted the recommendations.
Finally, MHI recommended that DOE delete the entirety of Sec.
460.3 of the regulatory text, as well as paragraph (c)(2) of Sec.
460.3. In addition, MHI also recommended deleting Tables 460.102-1 and
460.102-3 of the regulatory text as proposed in the August 2021 SNOPR.
(MHI, No. 1990 at p. 11, 12, 14, 16) DOE understands MHI's recommended
deletion in the regulatory text to suggest that MHI does not recommend
a tiered standard, but rather an untiered standard albeit with
requirements less stringent than those proposed by DOE. As previously
discussed in section III.A of this document, in light of affordability
and cost-effectiveness concerns, DOE is adopting the tiered standards
in this final rule. Therefore, DOE is maintaining the Tier 1 regulatory
text requirements. Otherwise, responses to MHI's recommendations for
the prescriptive and performance requirements for the tiered standards
are already addressed in previous sections.
c. Sec. 460.103 Installation of Insulation
Consistent with the August 2021 SNOPR, in this final rule, DOE is
adopting in Sec. 460.103 of the regulatory text, the requirement for
manufacturers to install insulation according to both the insulation
manufacturer's installation instructions and the instructions set forth
in proposed Table 460.103. Sec. 460.103 specifies requirements for the
installation of insulation, which is based on the R402 of the 2021
IECC. DOE is also adopting the requirement for manufacturers to comply
with the insulation manufacturer's installation instructions to ensure
that the intended performance of the insulation is achieved. Further,
consistent with the August 2021 SNOPR, DOE is adopting as part of a new
Table 460.103 several component installation requirements, including
general requirements, and requirements for access hatches, panels and
doors, baffles, ceiling or attic, narrow cavities, rim joists, shower
or tub adjacent to exterior wall, and walls, and is removing
installation requirements for eave vents.
In addition, in response to comments received on the August 2021
SNOPR proposal, DOE is adding clarifying language for the ``baffles''
component as it relates to air-permeable insulation in vented attics
and eave venting, and to the ``Access hatches, panels, and doors''
component as it relates to doors. The installation of insulation
requirements would apply to both Tier 1 and Tier 2 homes.
The following paragraphs discuss comments DOE received regarding
the installation of insulation requirements proposed in the August 2021
SNOPR.
DOE received comments on the August 2021 SNOPR regarding the
language used in Table 460.103, particularly the ``baffles'' component.
MHCC commented that DOE should clarify that the requirements for
baffles in Table 460.103 should apply when the baffles are used in
conjunction with eave venting. (MHCC, No. 1600 at p. 8) The 2021 IECC
does not include specification that the installation requirements for
baffles are only
[[Page 32776]]
applicable when the baffles are used in conjunction with eave venting.
However, DOE notes that baffles are typically used in conjunction with
eave venting. As such, DOE understands MHCC's recommended change to be
more of a clarification specific to manufactured housing. Therefore, in
this final rule, DOE is adding clarifying language for ``baffles'' to
specify that the requirements apply when they are used in conjunction
with eave venting, consistent with the recommendation by the MHCC.
MHI commented that DOE should add a statement clarifying that
baffles must extend over the top of the attic insulation ``where
insulation is restrained from full depth in order to maintain 1-inch
minimum air space between insulation and roof decking.'' (MHI, No. 1592
at p. 26, 27); (Clayton Homes, No. 1589 at p. 10, 13, 16); (MHCC, No.
1600 at p. 2, 3) DOE notes that the proposed August 2021 SNOPR
requirement is stronger in terms of maintaining the clear path of
airflow between the insulation and the eaves in all cases.
Specifically, the baffles component in proposed Table 460.103 states
that ``baffles must be constructed using a solid material, maintain an
opening equal or greater than the size of the vents, and extend over
the top of the attic insulation'' ensuring that baffles are always
properly installed, and that insulation does not fall into the vents
and block the air path. Adding in MHI's recommended language would lead
to ambiguity when determining where baffles must be installed over the
top of the attic insulation. Therefore, DOE has chosen to maintain the
August 2021 SNOPR requirements.
VEIC commented that it is essential that the factories install
solid baffles and venting at the eaves to ensure that compliant
insulation levels extend to the outside of the exterior wall, and that
there is ventilation along the roof sheathing to prevent moisture
issues. (VEIC, No. 1633 at p. 4) DOE appreciates the comment and agrees
that this is good building practice. This practice is covered in Table
460.103 under the installation requirements for ``baffles'' and
therefore DOE maintains the proposed language in the final rule.
DOE received comments regarding the installation requirements for
``eave vents'' in Table 460.103. MHI and MHCC suggested that the
language regarding ``eave vents'' be removed, since it is not within
the 2021 IECC and is not relevant to manufactured housing. MHI also
said that it should be acceptable to use nonpermeable insulation
adjacent to ventilated soffits as long as the required free air path is
maintained. (MHI, No. 1592 at p. 18, 27); (MHCC, No. 1600 at p. 8) DOE
notes that R402.2.3 of 2021 IECC discusses eave vents as it relates to
baffles. Specifically, R402.2.3 includes language that ``for air-
permeable insulation in vented attics, a baffle shall be installed
adjacent to soffit and eave vents.'' As such, consistent with the 2021
IECC, DOE has removed the separate ``eave vents'' row in Table 460.103,
and included the same requirements in the ``baffles'' row instead.
Further, DOE notes that this requirement only clarifies insulation
installation criteria as it relates to air permeable insulation; the
requirement is not restricting use of other insulation products.
DOE also requested comment in the August 2021 SNOPR on whether the
2021 IECC updates on the installation criteria for baffles are
applicable to manufactured housing and should be considered in this
rulemaking. 86 FR 47744, 47781. DOE did not receive any comments
regarding the applicability of these requirements to manufactured homes
and is therefore not including them in the final rule.
DOE received a comment regarding a language change for the ``Access
hatches, panels, and doors'' component of Table 460.103. MHCC suggested
that ``doors'' be deleted from Table 460.103 under ``Access hatches,
panels, and doors.'' MHCC stated that doors are commonly used for
exterior access of utility and water heater room in certain regions of
the country, and they are specified by the U-factor requirements
already established in Sec. 460.102. (MHCC, No. 1600 at p. 8, 9) In
addition, MHI stated that the requirement that access hatches, panels,
and doors between conditioned space and unconditioned space must be
insulated to a level equivalent to the insulation of the surrounding
surface does not seem to be consistent with the discussion around
exterior doors in the earlier section of the proposed standards. (MHI,
No. 1592 at p. 7)
DOE understands that there is confusion regarding the door U-factor
requirements specified in Table 460.102 compared to the door
installation of insulation requirements in Table 460.103. In this final
rule, DOE is clarifying the requirements in Table 460.102 specifically
relate to attic or crawlspace access doors. External doors, which are
used to block or allow access to an entrance of a manufactured home,
would be required to meet the requirements in Table 460.102. As such,
DOE is retaining the door insulation installation requirements and
adding the clarification that it applies to attic and crawlspaces in
Table 460.102.
DOE received a comment on the August 2021 SNOPR regarding the
language used in Table 460.103, particularly the ``walls'' component.
ACC FSC commented that Table 460.103 appears to be restrictive of and
only addresses ``air permeable'' insulation products, to the exclusion
of many others. Specifically, they identified that the proposed
installation requirements state that air-permeable insulation must
completely fill cavities, and this potentially excludes or disfavors
the use of other cavity insulation materials and methods, such as a
combination of closed-cell spray foam and fibrous insulation. (ACC FSC,
No. 1364 at p. 5) DOE notes that the wall component specifications only
clarify the wall insulation installation criteria as it relates to air
permeable insulation. The wall component specifications are not
restricting use of other insulation products. The MH working group
recommended that DOE modify the language of the 2015 IECC requirement
with this clarification to account for the unique design of
manufactured housing. See 9/23 Working Group Transcript, EERE-2009-BT-
BC-0021-0122 at p. 315. The 2021 IECC did not update the wall
insulation installation criteria from the 2015 IECC. Accordingly, DOE
continues to include this requirement, as recommended by the MH working
group, to ensure that wall assemblies in manufactured homes achieve the
thermal performance requirements set forth under Sec. 460.102.
Regarding duct insulation, NEEA recommended that all crossover
ducts should have R-8 insulation. (NEEA, No. 1601 at p. 14, 15) DOE's
research indicates that HVAC ducts are generally located between the
floor and the insulation and are therefore within the conditioned
space. Therefore, because ducts are already located within the
conditioned space, and would already be insulated because of the
insulation required within the conditioned space, DOE is not adopting
any additional insulation for ducts in this final rule.
NEEA also commented that a clearer definition of how a proper air
barrier should be designed was needed to make construction requirements
more specific, and to establish a single meaning without ambiguity.
(NEEA, No. 190 at p. 2). NEEA did not provide further explanation of
how the proposed requirements for an air barrier were lacking or
present an opportunity for misapplication. As stated earlier in this
section, DOE has listed many specific requirements for proper air
barrier installation in Table 460.104. These requirements were based on
Table R402.4.1.1 of the 2021 IECC and related
[[Page 32777]]
recommendations from the MH working group. Further, DOE reviewed the
2021 IECC to make any additional updates to the air barrier criteria
(see Table III.14 in the August 2021 SNOPR).
NEEA also recommended adding a clearer statement that, as
installed, insulation should contain no voids or compression. (NEEA,
No. 1601 at p. 15) DOE requires that insulation must be installed
according to the insulation manufacturer's installation instructions.
Certain insulation manufacturer's installation instructions
specifically state that compression must be avoided when installing
insulation, because compression will reduce the R-value. Therefore, DOE
continues to find that the requirements proposed in Sec. 460.103 of
the August 2021 SNOPR are sufficient to prohibit compression and voids,
and will adopt these requirements without change, consistent with
R303.2 of the 2021 IECC.
In the August 2021 SNOPR, DOE also requested comment on removing
the proposed requirement that exterior floor insulation installed must
maintain permanent contact with the underside of the rough floor
decking over which the finished floor, flooring material, or carpet is
laid. 86 FR 47744, 47780. Commenters supported exempting manufactured
housing from the requirement that exterior floor insulation installed
must maintain permanent contact with the underside of the rough floor
decking. They stated that doing this will result in many design changes
which will increase shipping height. (MHI, No. 1592 at p. 25-26);
(Clayton Homes, No. 1589 at p. 16-18, 22); (MHCC, No. 1600 at p. 6) As
such, DOE is finalizing the August 2021 SNOPR proposal in this final
rule.
In the August 2021 SNOPR, DOE also requested comment on the
proposal to not require that exterior ceiling insulation must have
uniform thickness or a uniform density. 86 FR 47744, 47778. NAHB
supported DOE's proposal to not require exterior ceiling insulation to
have uniform thickness or density. They also agreed that space
constraints make several of the insulation requirements in the 2021
IECC not applicable to manufactured housing. (NAHB, No. 1398 at p. 3)
MHI, Clayton Homes and MHCC agreed that manufactured homes should not
have a uniform thickness of installation requirement. Installing
insulation with a non-uniform thickness is required to construct most
manufactured homes due to shipping height restrictions and the need to
minimize truss heel height. They provided further supporting
information to remove this requirement. (MHI, No. 1592 at p. 25-26);
(Clayton Homes, No. 1589 at p. 16-18, 22); (MHCC, No. 1600 at p. 6) As
such, in this final rule, DOE is not requiring that exterior ceiling
insulation must have uniform thickness or a uniform density.
d. Sec. 460.104 Building Thermal Envelope Air Leakage
Consistent with the August 2021 SNOPR, DOE is adopting Sec.
460.104 to require manufacturers to seal manufactured homes against air
leakage. Air leakage sealing limits air infiltration through the
building thermal envelope, which in turn reduces heating and cooling
loads. Section 460.104 would specify both general and specific
requirements for sealing a manufactured home to prevent air leakage,
all of which are based on Table R402.4.1.1 of the 2021 IECC with
modifications based on recommendations from the MH working group. Term
Sheet No. 107 at p. 5. The MH working group also recommended
prescriptive air leakage sealing requirements that are designed to
achieve an overall air exchange rate of five air changes per hour
(``ACH'') within a manufactured home. Term Sheet No. 107 at p. 5.
The general requirements in Sec. 460.104 would require that
manufacturers seal all joints, seams, and penetrations in the building
thermal envelope to establish a continuous air barrier and use
appropriate sealing materials to allow for differential expansion and
contraction of dissimilar materials. The specific requirements in Table
460.104 include air barrier criteria for ceiling or attic, duct system
register boots, electrical box or phone on exterior walls, floors,
mating line surfaces, recessed lighting, rim joists, shower or tub
adjacent to exterior wall, walls and windows, skylights and doors. In
response to comments, however, DOE is adjusting language for the air
barrier installation criteria for ``rim joists'' in Table 460.104 based
on a recommendation received from MHI, which is discussed below. The
adopted building thermal envelope air leakage requirements would apply
to both Tier 1 and Tier 2 homes.
In developing its recommendations, the MH working group also
identified concerns regarding the potential impacts of the air sealing
requirements on the indoor air quality in manufactured homes, but
understood indoor air quality to be outside the scope of the working
group. (MH Working Group Meeting Transcript No. 115, pp. 95-96) As
such, DOE published the January 2022 DEIS to, in part, address the
impacts of DOE's proposed standards on indoor air quality. As discussed
more in section V.D, DOE received numerous comments on indoor air
quality issues in the January 2022 DEIS, and DOE considered all of the
information presented in the analyses and comments from the January
2022 DEIS, and the analyses in the final EIS in constructing this final
rule.
The following paragraphs discuss comments DOE received regarding
the building thermal envelope air leakage requirements proposed in the
August 2021 SNOPR.
DOE received a comment regarding a language change in Table
460.104. MHI recommended removing ``to the sill plate and the rim
board'' from Table 460.104 in the ``Rim Joists'' section. MHI stated
that mud sill plates are not typically used in manufactured housing
and, if used, would be installed on-site by others outside the scope of
this rule. (MHI, No. 1592 at p. 19) As DOE understands this situation,
a sill plate is the board laid directly on top of the foundation wall
attached to the foundation wall with anchor bolts. DOE proposed the
aforementioned requirements in the August 2021 SNOPR because the 2021
IECC included the update. However, DOE also requested comment on
whether the proposed update applies to manufactured home construction.
86 FR 47744, 47784 Therefore, although the 2021 IECC included updates
that the junctions of the rim board to the sill plate and the rim board
and the subfloor shall be air sealed, based on MHI's comment, DOE has
concluded that sill plates and their air leakage installation criteria
are not directly applicable to manufactured housing construction in the
factories. To be consistent with EISA in considering the design and
factory construction techniques for manufactured homes (42 U.S.C.
17071(b)(2)), DOE has removed ``to the sill plate and the rim board''
from the air barrier installation criteria of the ``Rim Joists''
component of Table 460.104 in the final rule.
DOE received a comment regarding duct sealing methodologies.
Schulte commented that the requirement that the duct sealing should be
done in accordance with the duct manufacturer's instructions is
consistent with the approach used for many manufactured housing
systems. (Schulte, No. 1028 at p. 25) DOE notes that this is consistent
with what was proposed in the August 2021 SNOPR; therefore, DOE
maintains the requirement in the final rule.
DOE received a comment regarding sealing exemptions. MHI
recommended that holes in the floor, such as under bathtubs and
showers, must be exempted from sealing to permit the
[[Page 32778]]
installation of p-traps in 2 x 6 floor systems, because these holes do
not allow air intrusion from the exterior because the exterior floor
air barrier is the bottom board and is not the floor itself. (MHI, No.
1592 at p. 27-28) DOE understands this comment to mean that holes in
the floor must not be sealed to allow future installation of plumbing
pipe components. However, DOE's research confirms that the holes in the
floor around bathtubs and showers are difficult to go back and fix, and
need to be sealed correctly the first time. In addition, DOE's
requirement is consistent with the air barrier criteria in Table
R402.4.1.1 of the 2021 IECC which states that all holes created by
wiring, plumbing or other obstructions in the air barrier assembly
shall be air sealed. Therefore, DOE maintains the requirement in the
final rule to ensure that efficiency standards are being met.
DOE received several comments regarding the requirements for
sealing of duct system register boots. MHI and Clayton Homes stated
that in manufactured homes with heat ducts installed in the belly of
the home, there is no need to seal the duct register and boots to the
sub-floor because they are installed within the thermal envelope. (MHI,
No. 1592 at p. 6, 7); (Clayton Homes, No. 1589 at p. 8, 10,11, 15, 20)
DOE notes that the duct system register boots requirement is consistent
with Table R402.4.1.1 of the 2021 IECC, and additionally states that
only the HVAC supply and return register booths that penetrate building
thermal envelope shall be sealed to the subfloor, wall covering, or
ceiling penetrated by the boot. Therefore, this requirement only
applies when the duct system penetrates the building thermal envelope.
If the duct system does not penetrate the building thermal envelope,
this requirement would not apply. Therefore, to ensure proper sealing
for when HVAC supply and return register booths penetrate the building
thermal envelope, DOE maintains the requirement in the final rule.
DOE received several comments regarding a language clarification in
Table 460.104. MHI, Clayton Homes and MHCC stated that the ``shower or
tub adjacent to exterior wall'' component of Table 460.104 should be
deleted or clarified to apply only when interior wall surface is used
as an air barrier. (MHI, No. 1592 at p. 19); (Clayton Homes, No. 1589
at p. 18); (MHCC, No. 1600 at p. 9, 10) Table R402.4.1.1 of the 2021
IECC states, with regards to the shower/tub on exterior wall component,
that the air barrier installed at exterior walls adjacent to showers
and tubs shall separate the wall from the shower or tub, and that
exterior walls adjacent to showers and tubs shall be insulated. This
IECC requirement has been both accepted by the MH working group and has
been implemented for years, as it was in the 2015 version of the IECC
as well. In addition, having an air barrier between the showers/tubs
and the exterior wall is necessary to prevent energy loss through these
gaps and to prevent the shower or tub enclosures from getting too cold.
Therefore, DOE maintains the requirement in the final rule.
DOE received a comment regarding the air barrier criteria for
electrical boxes or phone boxes on exterior walls. MHCC stated that the
option to provide an air barrier behind junction boxes or seal around
the junction boxes should remain as written in Table 460.104. (MHCC,
No. 1600 at p. 9) As such, DOE is finalizing the proposed requirement
as it relates to the air barrier installation criteria for electrical
boxes or phone boxes on exterior walls.
DOE received comments regarding the air leakage rate target. ACC
FSC commented that for HUD zones 2 and 3, the air leakage rate target
should be set at 3 air changes per hour at 50 Pascals pressure
difference between the inside and outside of the home (ACH50). Further,
they stated that the IECC requires whole building air leakage testing
with the air barrier installation requirements providing minimum
practices to achieve the required air leakage control and recommended
that whole building air leakage testing be implemented in a manner that
provides assurance of the intended performance on a model-by-model
basis, not necessarily for every installation of a model. (ACC FSC, No.
1364 at p. 6) VEIC recommended that the air leakage testing requirement
as part of the third-party certification process be included in the HUD
Code as follows: Maximum air leakage rate of 5 ACH50 for HUD zones 1
and 2, and maximum air leakage rate of 3 ACH50 for HUD zone 3. (VEIC,
No. 1633 at p. 6) MHCC stated that in the absence of building leakage
testing criteria, it is unrealistic for the MHCC to provide proper
feedback, and that there are current requirements and terminology in
the proposed rule that do not apply to manufactured homes. (MHCC, No.
1600 at p. 9)
Conversely, DOE received a comment from MHI saying that there is
substantial evidence that the prescriptive building thermal envelope
air leakage standards incorporated within the rule are adequate to
ensure homes achieve an air leakage rate of 5 ACH50. Further, MHI
believes that whole house air leakage testing is unnecessary. (MHI, No.
1592 at p. 27)
The requirement of 5 ACH50 was evaluated by the MH working group.
Specifically, the requirements set forth in the working group term
sheet were intended to provide a prescriptive path for reaching
envelope tightness of 5 ACH when pressurized to 50 Pascals. (Term
Sheet, No. 107 at p. 5). Therefore, the rule would not establish
maximum building thermal envelope air leakage rate requirements.
Instead, the MH working group recommended sealing requirements that
would ensure that a home can be tightly sealed with techniques that can
be visually inspected, thus minimizing the compliance burden on
manufacturers. Because the working group agreed upon the requirements
to reach an air leakage rate target of 5 ACH50 to minimize burden, DOE
is finalizing requirements that meet that leakage rate in this final
rule. Further, as discussed previously, this rulemaking only specifies
energy conservation standards for manufactured housing and is not
addressing a test procedure in this rulemaking.
In the August 2021 SNOPR, DOE requested comments on whether any
other air barrier criteria language for recessed lighting, narrow
cavities and plumbing from the 2021 IECC are applicable to manufactured
housing. 86 FR 47744, 47784. MHI and MHCC stated that no additional
language needs to be added for narrow cavities as any such activities
are rare in manufactured housing and when they do occur, they generally
do not disrupt the air barrier and are insulated or gasketed.
Similarly, they stated that additional information does not need to be
added for wiring and plumbing as most often these utilities are routed
in the floor systems within the thermal envelope and larger vent piping
is already caulked and sealed. (MHCC, No. 1600 at p. 10); (MHI, No.
1592 at p. 27) In addition, MHCC stated that they did not find any
additional 2021 IECC updates that would be relevant to manufactured
housing. (MHCC, No. 1600 at p. 9) MHI and MHCC stated that recessed
lighting housings do not need specification on air leakage rates, as
these fixtures are usually insulated contact rated and significantly
airtight especially when considering that they are buried in the attic
and will be sealed at the ceiling penetration. (MHI, No. 1592 at p. 27-
28); (MHCC, No. 1600 at p. 9, 10) Therefore, DOE did not add any
additional air barrier criteria language for recessed lighting, narrow
cavities and plumbing and maintains the proposed language in the final
rule.
[[Page 32779]]
Finally, DOE received a comment from MHI recommending that DOE
delete the recessed lighting requirements in Table 460.104 of the
regulatory text without providing any further justification. (MHI, No.
1990 at p. 19) The proposed recessed lighting air barrier criteria
requirement is consistent with Section R402.4.5 of the 2021 IECC,
therefore DOE has chosen to maintain this requirement in the final
rule.
3. Subpart C: HVAC, Service Water Heating, and Equipment Sizing
Subpart C adopts 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.
Subpart C requirements would be applicable to all manufactured homes.
The following sections provide further details regarding Subpart C.
a. Sec. 460.201 Duct System
In this final rule, DOE is adopting the August 2021 SNOPR proposed
duct systems requirements, and is including in Sec. 460.201(a) a
requirement that manufactured homes equipped with a duct system be
designed to limit total air leakage to less than or equal to 4 cubic
feet per minute (``cfm'') per 100 square feet of conditioned floor area
when ducts are pressurized to 25 Pascals. DOE determined this
requirement to be consistent with section R403 of the 2021 IECC. In
addition, DOE also will require that building framing cavities not be
used as ducts or plenums under Sec. 460.201(a), consistent with the
2021 IECC and the recommendation of the MH working group (Term Sheet,
No. 107 at p. 1). Building framing cavities are typically not tightly
sealed and do not provide an adequate barrier against foreign bodies
for air quality reasons. The use of building framing cavities as ducts
and plenums is generally considered to be poor construction practice
and is not a typical practice in the manufactured housing industry. The
adopted duct system requirements would apply to both Tier 1 and Tier 2
homes.
The following paragraphs discuss comments DOE received regarding
the duct system requirements proposed in the August 2021 SNOPR.
DOE received multiple comments regarding duct leakage testing. NEEA
recommended that ductless heat pumps or other HVAC systems with all
ductwork placed inside the conditioned space not be required to have
duct leakage tested. In addition, NEEA recommended that DOE include
language requiring pressure testing of supply ducts during
construction. (NEEA, No. 1601 at p. 11, 16) MHCC commented that total
duct leakage is not an appropriate test for a manufactured home because
the majority of duct work in manufactured homes is within the thermal
barrier. (MHCC, No. 1600 at p. 10) MHI also stated that with homes
where the duct system is installed in the belly, any duct leakage that
may occur is still within the thermal envelope of the home, and that
the required testing for the duct leakage limitation is not included in
the DOE cost analysis. In addition, MHI recommended DOE clarify the
testing requirements to ensure supply duct systems maintain a leakage
of less than 4 cfm per 100 square feet of conditioned floor area as
installed and tested within the building facility. (MHI, No. 1592 at p.
28) MHI also recommended that DOE add language to specify that ``multi-
section homes may have each home section isolated and tested
separately'' (MHI, No. 1592 at p. 7, 19-20) Finally, Clayton Homes and
MHI advocated for the use of a specific rough-in test method to
determine the air leakage of the duct systems, where Clayton Homes
elects to include the exception for the case where all ducts and air
handlers are located entirely within the building (MHI, No. 1592 at p.
19) (Clayton, No. 1986 at p. 15). DOE appreciates the information
received regarding testing and compliance. As discussed previously,
this rulemaking only specifies energy conservation standards for
manufactured housing and is not addressing a test procedure at this
time. However, DOE will consider these comments for any potential
future rulemaking.
DOE also received comments regarding language adjustments in Sec.
460.201. MHI recommended specifying in the rule that only the supply
ducts be sealed to limit total air leakage to less than or equal to 4
cfm per 100 square feet of conditioned floor area. (MHI, No. 1592 at p.
7, 19-20) MHI also recommended adding sealing provisions to this
section regarding metal ducts and fittings, glass fiberboard ducts,
connections of installed ductwork, and flexible ducts. (MHI, No. 1990
at p. 20) The August 2021 SNOPR proposal did not specify that duct
systems must have supply ducts be sealed to the limit total air leakage
or any specific sealing provisions; rather, the proposal generally
specified that a manufactured home equipped with a duct system be
sealed to limit total air leakage. 86 FR 47744, 47784-47785 As such,
DOE notes that the proposed requirements already apply to homes with
supply ducts and cover all elements of an air distribution system. In
addition, although DOE recognizes the extra provisions recommended by
MHI as best practices for installation, in this final rule, DOE is
being consistent with the 2021 IECC and allowing the manufacturers to
use any appropriate sealing provisions as long as the duct leakage
limits are met. Therefore, DOE is finalizing the August 2021 SNOPR
proposed requirements.
DOE received comments in support of the requirement to limit duct
air leakage to 4 cfm per 100 square feet of conditioned floor area when
ducts are pressurized to 25 Pascals. Schulte stated that duct leakage
can be a source of energy loss and puts more strain on the HVAC
equipment, and that this is a reasonable requirement. (Schulte, No.
1028 at p. 25) NEEA strongly supported DOE's inclusion of limiting duct
leakage to the exterior to not more than 4 cfm per 100 square feet and
preventing the use of building cavities as ductwork. (NEEA, No. 1601 at
p. 10) However, NEEA also recommended that ductless heat pumps or other
HVAC systems with all ductwork placed inside the conditioned space not
be required to comply with the 4 cfm per 100 square foot requirement.
Id. DOE notes that the duct leakage requirement only applies to
manufactured homes equipped with a duct system (not ductless systems).
Further, for manufactured homes, DOE understands that it is not always
the case that ducts and air handlers are located entirely within the
building thermal envelope. As such, the proposed duct leakage
specification applies to all manufactured homes and is consistent with
the recommendations provided by the MH working group. See Term Sheet at
p. 5. Therefore, DOE is adopting the proposed requirement in the final
rule.
b. Sec. 460.202 Thermostats and Controls
In this final rule, DOE is adopting the August 2021 SNOPR proposed
specifications for thermostats in Sec. 460.202(a) of the regulatory
text based on the IECC. Section R403.1 of the 2021 IECC specifies that
at least one thermostat shall be provided for each separate heating and
cooling system. DOE is also adopting specifications for programmable
thermostats in Sec. 460.202(b), based on section R403.1.1 of the 2021
IECC. Section R403.1.1 of the 2021 IECC specifies that the thermostat
controlling the primary heating or cooling system must be capable of
controlling the heating and cooling system on a daily schedule to
maintain different temperature set
[[Page 32780]]
points at different times of the day. In addition, consistent with the
August 2021 SNOPR, DOE is including in Sec. 460.202(c) specifications
for heat pumps having supplementary heat, based on section R403.1.2 of
the 2021 IECC, which identifies specific controls that prevent
supplemental heat operation when the heat pump compressor can meet the
heating load. The adopted thermostat and control requirements would
apply to both Tier 1 and Tier 2 homes.
The following paragraphs discuss comments DOE received regarding
the thermostat and controls requirements proposed in the August 2021
SNOPR.
DOE requested comment on DOE's interpretation of section R403.1 of
the 2021 IECC, and on whether there were any of the 2021 IECC updates
relevant to manufactured housing that should be considered as part of
this rulemaking. 86 FR 47744, 47786. Regarding thermostat control, MHI
recommended that programmable thermostats should remain an option for
the homebuyer, and any pre-program requirements should be part of
regulation requirements on thermostat manufacturers if deemed
appropriate rather than on home manufacturers. (MHI, No. 1592 at p. 28)
MHI also stated they have observed that many of the current homeowners
do not use these thermostats correctly or have replaced them with a
simpler version, and that the programmable thermostat is not perceived
as ``providing value'' to the current consumer and should not be
mandated. (MHI, No. 1592 at p. 7) The proposed requirements for
programmable thermostats are consistent with the requirements in
Section R403.1.1 of the 2021 IECC. Further, these requirements were
recommended to be included by the MH working group. See Term Sheet at
1. Finally, DOE notes that programmable thermostats help consumers save
energy by providing the capability to reduce energy use automatically
during predetermined times (generally times the home is not occupied).
Accordingly, DOE is adopting the August 2021 SNOPR language in this
final rule without modifications.
DOE also received recommendations regarding language adjustments in
Sec. 460.202. MHI recommended revising Sec. 460.202(b)(3) to the
following: ``Homeowner manuals should include recommendation that
homeowners program thermostat with a heating temperature set point no
higher than 70 [deg]F (21 [deg]C) and a cooling temperature set point
no lower than 78 [deg]F (26 [deg]C).'' (MHI, No. 1592 at p. 20). The
August 2021 SNOPR originally proposed that any thermostat installed by
the manufacturer that controls the heating or cooling system must
initially be programmed with the previously mentioned heating and
cooling temperature set points, without any specification about the
homeowner manuals. The initial heating and cooling temperature set
points that DOE proposed are consistent with section R403.1.1 of the
2021 IECC and recommendations from the working group. The 2021 IECC
does not specify that it is the homeowner's responsibility for this
setting; rather that temperatures are programmed initially by the
manufacturer. Accordingly, DOE is adopting the August 2021 SNOPR
language in this final rule without modifications.
Regarding thermostat control, NEEA recommended that the final rule
be explicit that the electric resistance lockout in central heat pump
systems when the outdoor air temperature is greater than 40 [deg]F.
(NEEA, No. 1601 at p. 14, 15). While section R403.1.2 of the 2021 IECC
provides requirements for the shutoff of heat pumps having
supplementary electric-resistance heat under certain conditions, the
2021 IECC does not provide any temperature specifications for this
shutoff. Therefore, DOE did not consider this requirement in the energy
conservation standards.
c. Sec. 460.203 Service Hot Water
In this final rule, DOE is adopting the August 2021 SNOPR proposed
specifications for service hot water in Sec. 460.203(a) that requires
manufacturers to install service water heating systems according to the
service water heating system manufacturer's installation instructions.
Section 460.203 would apply to any service water heating system
installed by a manufacturer. In addition, Sec. 460.203 would require
manufacturers to provide maintenance instructions for the service water
heating system with the manufactured home. These requirements would
promote the correct installation and maintenance of service water
heating equipment and help to ensure that such equipment performs at
its intended level of efficiency.
Further, DOE is adopting the requirement in Sec. 460.203(b) that
would require any automatic and manual controls, temperature sensors,
and pumps associated with service water heating systems to be similarly
accessible. This requirement would ensure that homeowners would have
adequate control over service water heating equipment in order to
achieve the intended level of efficiency contemplated in 10 CFR part
460. This requirement is consistent with the recommendation of the MH
working group. Term Sheet, No. 107 at p. 1.
DOE also is adopting specifications for heated water circulation
systems in Sec. 460.203(c) based on section R403.5.1.1 of the 2021
IECC, which provides information on heated water circulation and
temperature maintenance systems. The specifications include: (1)
Requiring heated water circulation systems be provided with a
circulation pump, and that the system return pipe be a dedicated return
pipe or cold water supply pipe; (2) prohibiting gravity and
thermosyphon circulation systems; (3) requiring that controls for
heated water circulation system pumps identify a demand for hot water
within the home when starting the pump; and (4) requiring the controls
to automatically turn off the pump when the water in the circulation
loop is at the desired temperature and when there is no demand for hot
water.
Finally, DOE is adopting the requirement that all hot water pipes
outside conditioned space be required to be insulated to at least R-3,
and that all hot water pipes from a water heater to a distribution
manifold be required to be insulated to at least R-3. These
requirements are consistent with the recommendations of the MH working
group. Term Sheet, No. 107 at p. 6. The adopted service hot water
requirements would apply to both Tier 1 and Tier 2 homes.
The following paragraphs discuss comments DOE received regarding
the service hot water requirements proposed in the August 2021 SNOPR.
DOE requested comment in the August 2021 SNOPR on whether the
circulating hot water system temperature limit should be included as a
requirement due to the update in section R403.5.1.1 of the 2021 IECC
which states that the controls of the heated water circulation systems
shall limit the temperature of the water entering the cold-water piping
to not greater than 104[deg]F (40[deg]C). 86 FR 47744, 47786. In
response, MHI stated that circulating hot water systems are not
typically used in manufactured homes, and that 24 CFR 3280 already has
provisions for scald prevention that limit the temperature of hot
water, so additional requirements would be redundant and unnecessary.
(MHI, No. 1592 at p. 28) Therefore, DOE did not incorporate a
circulating hot water system temperature limit into the final rule.
DOE received a comment regarding water heater insulation. An
individual commenter stated that water heater jackets have proven
effective at reducing
[[Page 32781]]
heat loss and improving energy efficiency and believes that the final
rule should incorporate water heater insulation provisions. (Individual
commenter, No. 1563 at p. 1) DOE acknowledges that water heater jackets
and insulating entire water heater systems would result in higher
energy efficiency and more savings for homebuyers. However, water
heater jackets were not discussed in the 2021 IECC and are not within
the scope of this rulemaking. Specifically, DOE is not proposing energy
conservation standards for HVAC, water heaters, lighting, and
appliances because the energy efficiency of those products is
specifically governed by the comprehensive Appliance Standards program
established under EPCA. (42 U.S.C. 6291-6317). However, manufacturers
would not be prohibited from installing more efficient products and
appliances, as long as the energy conservation standards for
manufactured housing established in this final rule are met.
DOE received a comment regarding further pipe insulation. NEEA
recommended that pipe insulation be required on the hot water main
branch and locations where the insulation is not in direct contact with
the pipe or underfloor. (NEEA, No. 1601 at p. 5, 16) DOE's requirement
of a minimum R-value for all hot water pipes outside conditioned space,
and from a service hot water system to a distribution manifold is
consistent with the 2021 IECC and the MH working group recommendation.
Term Sheet, No. 107 at p. 6. Therefore, DOE is adopting the hot water
pipe insulation requirement from the August 2021 SNOPR. DOE notes that
its energy conservation standards do not prohibit manufacturers from
employing additional insulation beyond DOE's requirements.
DOE also received a comment regarding language adjustments in Sec.
460.203. MHI recommended deleting the proposed provision requiring
that, when service hot water systems are installed by the manufacturer,
the manufacturer must ensure that any maintenance instructions received
from the service hot water system manufacturer are provided with the
manufactured home. (MHI, No. 1592 at p. 20); (MHI, No. 1990 at p. 21)
DOE understands MHI's rationale for deleting this proposed requirement
to be that typical water heater instructions do not include maintenance
instructions because they are readily available online, and that this
information is already accommodated in 24 CFR part 3280. As discussed
in the August 2021 SNOPR, DOE included this requirement as it would
promote the correct installation and maintenance of service water
heating equipment and help to ensure that such equipment performs at
its intended level of efficiency. 86 FR 47744, 47786. Considering the
added instruction would ensure correct installation, DOE continues to
include in the requirements that maintenance instructions provided by
the service hot water manufacturer must be provided with the
manufactured home.
d. Sec. 460.204 Mechanical Ventilation Fan Efficacy
In this final rule, DOE is adopting the August 2021 SNOPR proposed
mechanical ventilation fan efficacy requirements, based on Table
R403.6.2 of the 2021 IECC. This includes minimum fan efficacy
requirements for HRV and ERV, and air handlers that are integrated to
tested and listed HVAC equipment, in addition to more stringent minimum
efficacy requirements for in-line supply or exhaust fans, other exhaust
fans (with separate requirements for fans having a minimum airflow rate
of <90 cubic feet per minute (``CFM'') and >=90 CFM). The adopted
mechanical ventilation fan efficacy requirements would apply to both
Tier 1 and Tier 2 homes.
The following paragraphs discuss comments DOE received regarding
the mechanical ventilation fan efficacy requirements proposed in the
August 2021 SNOPR.
DOE received comments regarding current ventilation strategies. ACC
FSC commented that DOE's intent to rely on a continuously operated
whole-house exhaust fan could create issues with maintaining a healthy
indoor environment and humidity control depending on the climate and
season of the year. (ACC FSC, No. 1364 at p. 6) ACEEE suggested that it
appears to be more typical for homes to use a furnace fan for
ventilation and to meet the HUD code, the furnace supply system to be
in continuous operation in fan-only mode. (ACEEE, No. 1631 at p. 12) On
the other hand, MHCC commented that they agree with not including
alternative ventilation strategies since the mitigation measures are
already addressed in the HUD Manufactured Home Construction and Safety
Standards in Sec. 3280.103(b)(1). (MHCC, No. 1600 at p. 11) In the
August 2021 SNOPR, DOE estimated the energy use associated with
ventilations by modeling a dedicated central exhaust fan for both the
base case representing today's manufactured homes and the standards
case representing manufactured homes that would comply with the
proposed standards. DOE modeled the ventilation system in this manner
because it represents the current requirements under the HUD Code as
explained previously. The selection of the central exhaust fan for the
energy use modeling was based on analysis from the MH Working Group.
DOE acknowledges other ventilation strategies exist, and the
requirements in this final rule do not preclude the use of other types
of ventilation systems as long as the energy conservation standards
requirements are met.
DOE requested comment in the August 2021 SNOPR on the proposal to
include the 2021 IECC fan efficacy standard requirements, and if any of
the fan efficacy requirements were not applicable to manufactured
homes. 86 FR 47744, 47787. MHI stated that DOE must clarify that the
requirements of the whole-house mechanical ventilation system do not
apply to bath fans and range hoods, which are systems MHI does not
believe should be included. (MHI, No. 1592 at p. 21) Separately, MHCC
stated that the applicability of the increased efficacy standards would
be dependent upon the additional costs associated and return of
investment of the increased mechanical ventilation requirements. (MHCC,
No. 1600 at p. 11)
As discussed in section III.F.1.b of this document, DOE is amending
the definition to ``whole house ventilation system'' in response to
MHI's comment and to be consistent with the 2021 IECC. As such, the
updated definition now specifically includes the term ``to satisfy the
whole house ventilation rates''. Otherwise, to maintain consistency
with the 2021 IECC, DOE will not be incorporating extra language to
exclude bath fans and range hoods from the definition of whole-house
mechanical ventilation system.
Schulte separately stated that consumers will prefer quieter rather
than louder mechanical devices as they do with many household
appliances, and therefore, it does not appear to be necessary to
establish a maximum sound level for ventilation fans. (Schulte, No.
1028 at p. 26) DOE did not propose sound level requirements in the
August 2021 SNOPR and continues not to in this final rule.
e. Sec. 460.205 Equipment Sizing
In this final rule, DOE is adopting the August 2021 SNOPR proposed
specifications for equipment sizing, based on section R403.7 of the
2021 IECC, which sets forth specifications on the appropriate sizing of
heating and cooling equipment within a manufactured home. This section
of the 2021 IECC requires the use of ACCA Manual S to select
appropriately sized
[[Page 32782]]
heating and cooling equipment based on building loads calculated using
ACCA Manual J. The MH working group recommended the inclusion of this
specification in the final rule. Term Sheet, No. 107 at p. 1. The
adopted equipment sizing requirements would apply to both Tier 1 and
Tier 2 homes.
The following paragraphs discuss comments DOE received regarding
the heating and cooling equipment sizing specifications proposed in the
August 2021 SNOPR.
DOE received several comments on the August 2021 SNOPR regarding
the removal of ACCA Manual J and ACCA Manual S references. MHI
commented that the incorporation of these manuals is an example of
trying to use a site-built code for manufactured homes and would
restrict current sales practices in the industry especially for
retailers located near the Zone boundaries, and that the use of Manual
J or Manual S software, as proposed, will add additional time and cost
for each model plan submission. (MHI, No. 1592 at p. 7, 21, 24);
(Clayton Homes, No. 1589 at p. 8, 9, 12, 15-17, 19-20); (MHCC, No. 1600
at p. 10, 11) MHCC commented that incorporating Manual J and Manual S
references will complicate the manufacturing process and will also
increase the overall cost of the units, approval time, and frequency of
approval. (MHCC, No. 1600 at p. 5)
Further, MHI also commented that ACCA Manual J analysis requires
knowledge of the orientation of the home with respect to the sun for
cooling load analysis, and that the proposed rule must establish a
default orientation. MHI also said that the proposed rule must provide
the required design parameters to perform an ACCA Manual J analysis
within the context of the three thermal zones in the proposed rule, and
that the rule must establish a threshold for requiring a revised Manual
J or Manual S analysis. (MHI, No. 1592 at p. 7, 21, 24) In addition,
MHCC commented that both Manual J and Manual S consider the orientation
and site-specific weather for the home, which is unknown at the time of
construction of manufactured homes. (MHCC, No. 1600 at p. 5) MHI and
Clayton Homes also suggested that the proposed rule must establish
alternate criteria for using ACCA Manual S where the design parameters
vary within a thermal zone, because the variation in design parameters
within a single thermal zone exceeds the sizing limits of ACCA Manual
S. (MHI, No. 1592 at p. 7, 21, 24); (Clayton Homes, No. 1589 at p. 12)
Alternatively, MHI and Clayton Homes suggested in their comments
submitted in response to the January 2022 DEIS that the requirements to
use ACCA Manual S and J in regulatory section 460.205 be deleted
entirely. (MHI, No. 1990 at p. 22); (Clayton Homes, No. 1986 at p. 16)
Clayton Homes also recommended deleting section 460.3 (b)(1) and
(b)(2), which lists ACCA Manual J and Manual S as materials
incorporated by reference. (Clayton Homes, No. 1986 at p. 9)
On the other hand, Schulte commented that heating and cooling
equipment sizing in accordance with ACCA Manuals J and S have been a
part of the IECC for many years, and therefore, including these manuals
would be consistent with the EISA. In addition, HUD has included the
ACCA Manual J calculation for cooling loads for site installed air
conditioners, so ACCA Manual J is already a part of the regulatory
system in circumstances where the site of placement is known. (Schulte,
No. 1028 at p. 11)
Section R403.7 of the 2021 IECC requires the use of ACCA Manual S
and J. Further, the same section states that ``Heating and cooling
equipment shall be sized in accordance with ACCA Manual S based on
building loads calculated in accordance with ACCA Manual J or other
approved heating and cooling calculation methodologies.'' DOE notes
that Manual J and Manual S calculations require details such as
orientation of the building which are unknown for manufactured housing
until placed on site, but that these calculations are an important part
of the design process. DOE expects that manufacturers already conduct
system sizing calculations using best practices based on the load
calculation and system sizing methodology specified in the HUD
code.\55\ Further, DOE understands that Manual J/S calculations are
used in the field based on feedback received and also evidenced by
plants which already use software to conduct these calculations. This
is confirmed by the lookup tables developed by EnergyStar based on
Manual J calculations conducted by the Manufactured Housing Research
Alliance for typical home configurations and design conditions across
the country.\56\ Accordingly, DOE is referencing ACCA Manual J and S as
they would apply to manufactured housing design, and is allowing
further requirements for ACCA Manual J and S to be consistent with
current manufacturer specifications and best practices.
---------------------------------------------------------------------------
\55\ See 24 CFR 3280.508.
\56\ EnergyStar lookup tables https://www.energystar.gov/ia/partners/bldrs_lenders_raters/downloads/SizingGuidelines.pdf?59f6-4ecc.
---------------------------------------------------------------------------
G. Crosswalk of Standards With the HUD Code
DOE compared the energy conservation standards in this final rule
to the construction and safety standards for manufactured homes
established by HUD to confirm that compliance with the requirements
would not prohibit a manufacturer from complying with the HUD Code.
Table III.11 lists the energy conservation standards and discusses
their relationship to similar requirements contained in the HUD Code.
Table III.11--Crosswalk of Final Rule With the HUD Code
------------------------------------------------------------------------
DOE final rule (10 CFR part HUD code (24 CFR
460) part 3280) Notes
------------------------------------------------------------------------
Section 460.101 would establish Section 3280.506 ..................
three climate zones, in line establishes three
with HUD, delineated by state zones delineated
boundaries. Further, there by state
would be different Uo boundaries. The
performance requirements for HUD Code
single- and multi-section homes. establishes one
standard for
homes of all
sizes within a
zone.
[[Page 32783]]
Section 460.102(a) would Section 3280.506 Both DOE and HUD
establish building thermal establishes a performance
envelope prescriptive and performance requirements are
performance compliance approach. based on maximum
requirements. U requirement per
zone for the
building thermal
envelope. DOE,
however,
established
separate Uo
requirements per
climate zone for
single- and multi-
section homes,
whereas HUD only
establishes one U
requirement,
regardless of
home size, per
zone.
Section 460.102(b) would set Section 3280.506 The Battelle
forth the prescriptive option establishes a Method is used to
for compliance with the performance determine
building thermal envelope approach only. performance
requirements. standards (in
terms of U) from
prescriptive
standards. The
DOE performance
standards would
be prescribed in
Sec.
460.102(c)(1).
Section 460.102(b)(2) would No corresponding
establish a minimum truss heel requirement.
height.
Section 460.102(b)(3) would No corresponding
establish an acceptable batt requirement.
and blanket insulation
combination for compliance with
the floor insulation
requirement in Tier 2 Climate
Zone 3.
Section 460.102(b)(4) would No corresponding ..................
identify certain skylights not requirements.
subject to SHGC requirements.
Section 460.102(b)(5) would No corresponding ..................
establish U-factor alternatives requirements.
for the R-value requirements
under 460.102(b)(1).
Section 460.102(c)(1) would Section DOE's maximum
establish maximum building 3280.506(a) building thermal
thermal envelope Uo establishes envelope U
requirements. maximum building requirements are
thermal envelope lower than the
Uo requirements corresponding
by zone. maximum U
requirements
under Sec.
3280.506(a).
Compliance with
the DOE U
requirements
achieve
compliance with
the U
requirements
under the HUD
Code.
Section 460.102(c)(2) would No corresponding ..................
establish maximum area-weighted requirements.
vertical fenestration U-factor
requirements in climate zones 2
and 3.
Section 460.102(c)(3) would No corresponding ..................
establish maximum area-weighted requirements.
average skylight U-factor
requirements in climate zones 2
and 3.
Section 460.102(c)(4) would No corresponding ..................
authorize windows, skylights requirements.
and doors containing more than
50 percent glazing by area to
satisfy the SHGC requirements
of Sec. 460.102(a) on the
basis of an area-weighted
average.
Section 460.102(e)(1) would Section ..................
establish a method of 3280.508(a) and
determining Uo using the (b) reference the
Overall U-values and Heating/ Overall U-values
Cooling Loads--Manufactured and Heating/
Homes, or the Battelle Method. Cooling Loads--
Manufactured
Homes, or the
Battelle Method.
Section 460.103 would require No corresponding
insulating materials to be requirements.
installed according to the
manufacturer installation
instructions and the
prescriptive requirements of
Table 460.103.
Section 460.103 would establish No corresponding
requirements for the requirements.
installation of batt, blanket,
loose fill, and sprayed
insulation materials.
Section 460.104 would require Section 3280.505 ..................
manufactured homes to be sealed establishes air
against air leakage at all sealing
joints, seams, and penetrations requirements of
associated with the building building thermal
thermal envelope in accordance envelope
with the manufacturer's penetrations and
installation instructions and joints.
the requirements set forth in
Table 460.104.
Section 460.201(a) would require Section ..................
each manufactured home to be 3280.715(a)(4)
equipped with a duct system establishes
that must be sealed to limit requirements for
total air leakage to less than airtightness of
or equal to 4 cfm per 100 supply air duct
square feet of floor area and systems.
specify that building framing
cavities are not to be used as
ducts or plenums when directly
connected to mechanical systems.
[[Page 32784]]
Section 460.202(a) would require Section Both DOE's rule
at least one thermostat to be 3280.707(e) and the HUD Code
provided for each separate requires that require the
heating and cooling system each space installation of
installed by the manufacturer. heating, cooling, at least one
or combination thermostat that
heating and is capable of
cooling system be maintaining zone
provided with at temperatures.
least one
adjustable
automatic control
for regulation of
living space
temperature.
Section 460.202(b) would require No corresponding ..................
that installed thermostats requirements.
controlling the primary heating
or cooling system be capable of
maintaining different set
temperatures at different times
of day and different days of
the week.
Section 460.202(c) would require Section Both DOE's rule
heat pumps with supplementary 3280.714(a)(1)(ii and the HUD Code
electric resistance heat to be ) requires heat require heat
provided with controls that, pumps to be pumps with
except during defrost, prevent certified to supplemental
supplemental heat operation comply with ARI electric
when the pump compressor can Standard 210/240- resistance heat
meet the heating load. 89, heat pumps to prevent
with supplemental supplemental heat
electrical operation when
resistance heat the heat pump
to be sized to compressor can
provide by meet the heating
compression at load of the
least 60 percent manufactured
of the calculated home.
annual heating
requirements of
the manufactured
home, and that a
control be
provided and set
to prevent
operation of
supplemental
electrical
resistance heat
at outdoor
temperatures
above 40[deg]F.
Section 460.203(a) would No corresponding ..................
establish requirements for the requirements.
installation of service hot
water systems.
Section 460.203(b) would require No corresponding
any automatic and manual requirement.
controls, temperature sensors,
pumps associated with service
hot water systems to be
accessible.
Section 460.203(c) would No corresponding ..................
establish requirements for requirements.
heated water circulation
systems.
Section 460.203(d) would No corresponding ..................
establish requirement for the requirements.
insulation of hot water pipes.
Section 460.204 would establish Section HUD requirements
requirements for mechanical 3280.103(b) at Sec.
ventilation system fan efficacy. establishes whole- 3280.103(b) do
house ventilation not overlap with
requirements. DOE's rule. DOE's
requirement is
for fan
electrical
efficiency, while
HUD requirements
specify minimum
and maximum air
flow rates.
Section 460.205 would establish No corresponding ..................
requirements for heating and requirements.
cooling equipment sizing.
------------------------------------------------------------------------
IV. Discussion and Results of the Economic Impact and Energy Savings
A. Economic Impacts on Individual Purchasers of Manufactured Homes
DOE conducted LCC and PBP analyses to evaluate the economic impacts
on individual consumers of energy conservation standards for
manufactured housing. The effect of new or amended energy conservation
standards on individual consumers usually involves a reduction in
operating cost and an increase in purchase cost. DOE used the following
two metrics to measure consumer impacts:
The LCC is the total consumer expense of a manufactured
home over the life of that home, consisting of total installed cost
plus total operating costs. To compute the total operating costs, DOE
discounts future operating costs to the time of purchase and sums them
over the lifetime of the product (or another specified period).
The PBP is the estimated amount of time (in years) it
takes consumers to recover the increased purchase cost (including
installation) of a more-efficient manufactured home through lower
operating costs.
The LCC of a manufactured home refers to the total homeowner
expense over the life of the manufactured home (30 years), consisting
of purchase expenses (e.g., loan or cash purchase) and operating costs
(e.g., energy costs). To compute the operating costs, DOE discounted
future operating costs to the time of purchase and summed them over the
30-year lifetime of the home used for the purpose of analyzing this
rulemaking. A 10-year LCC was also calculated to reflect the cost of
ownership over the tenure of the first homebuyer based on
recommendations from the MH working group. First homebuyer tenancy is
estimated to be 13 years; however, DOE did not do a 13-year analysis,
and instead approximates first tenancy with the 10-year analysis at the
recommendation of the MH working group. DOE calculated the PBP by
dividing the incremental increase in purchase cost by the reduction in
average annual operating costs that would result from this rule.
In the August 2021 SNOPR and the October 2021 NODA, the LCC
analysis demonstrated that increased purchase prices due to the
proposed EEMs would be offset by the benefits manufactured home
homeowners would experience via operating cost savings. DOE evaluated
these projected impacts on individual manufactured home homeowners by
analyzing the potential impacts to LCC, energy savings, and purchase
price of manufactured homes under the proposed rule. DOE compared the
purchase price and LCC for manufactured homes built in accordance with
the proposed rule relative to a baseline manufactured home built-in
compliance with the minimum requirements of the HUD Code. Specifically,
DOE performed
[[Page 32785]]
energy simulations on manufactured homes located in 19 geographically
diverse locations across the United States, accounting for five common
heating fuel/system types and two typical industry sizes of
manufactured homes (single-section and double-section manufactured
homes).\57\ 86 FR 47744, 47790-47805; 86 FR 59042, 59043.
---------------------------------------------------------------------------
\57\ Double-section manufactured homes were used to represent
all multi-section homes. Double-section manufactured homes have the
largest market share by shipments (about 98 percent) of all multi-
section homes.
---------------------------------------------------------------------------
DOE received a number of comments regarding several aspects of the
economic impacts on individual consumers described in the August 2021
SNOPR and October 2021 NODA. DOE also received comments pertaining to
the methodology and assumptions used in the economic analysis
conducted. For this final rule, DOE conducted similar LCC and PBP
analyses for the requirements adopted in this final rule. The changes
made from the analyses performed for the August 2021 SNOPR and October
2021 NODA are discussed in the following sections, including any
changes that DOE has made in the methodology and assumptions, along
with a discussion of the submitted comments.
1. Discussion of Comments and Analysis Updates
a. General
UC Law School stated that DOE failed to analyze the findings and
relevant information from the 2021 CFPB report and the 2020 U.S. Census
Manufactured Housing Survey, thereby risking a finding that its action
was arbitrary and capricious. They stated that these documents have
relevant information that should be taken into account for the
rulemaking process, especially for the financial implications of the
proposed rule. (UC Law School, No. 1634 at p. 6, 7, 10) DOE reviewed
the updates to the 2021 CFPB and the 2020 MHS in the October 2021 NODA
and provided updated analysis results. 86 FR 59042. DOE is
incorporating the same updates in this final rule.
Schulte stated that loans made for used homes are likely to be much
smaller than for new home loans. Table 4 of the 2021 CPFB report shows
a median chattel loan amount is $58,672. Schulte also mentioned that
there is currently no government-sponsored enterprise (``GSE'')
secondary market for the purchase of chattel manufactured home loans,
and that, until private financing sources decide to purchase chattel
loan pools or the GSE's move into the chattel loan market, limited
lender choice and higher loan rates are likely to persist with regards
to purchasing new manufactured homes. (Schulte, No. 1028 at pp. 6, 20)
DOE appreciates the comment. As previously mentioned, DOE has updated
the analysis to consider the 2021 CFPB. As such, the loan interest
rates DOE is using (5 percent for consumers using real estate loans, 9
percent for consumers using chattel or personal property loans) is
consistent with the rates used in the 2021 CFPB report (4.6 percent for
mortgage/real estate loans and 8.6 percent for chattel loans).
b. Analysis Period for LCC
In the August 2021 SNOPR and the October 2021 NODA, DOE analyzed a
10-year LCC to represent the first ownership period and cost to the
first homebuyer, and a 30-year LCC to represent the lifetime of the
manufactured home and associated costs, which would represent the total
costs and benefits for all occupants over the life of the manufactured
home. The 30-year lifetime was selected as a typical length that EEMs
last in the aggregate. DOE assumed that the energy efficiency measures
(e.g., thicker insulation) had a lifetime of 30 years before requiring
replacement. In addition, DOE assumed that the monetary value of those
energy efficiency measures depreciated linearly over time to having no
value at the end of its lifetime; however, DOE assumed that the
effectiveness of these measures does not decrease over time. As noted
in the TSD, EEMs may have a shorter lifespan than the home if the
measures reduce in efficacy over the 30-year lifetime; to the extent
that this is the case, the energy savings presented in IV.D may be
reduced. At the end of this 30-year lifetime, the EEMs would have no
monetary value. DOE received comments on the analysis period used.
Based on MHI's industry data, they stated that buyers usually sell
their homes within seven to ten years of purchase, and therefore it is
unlikely that a manufactured homebuyer financing the purchase of a new
manufactured home being proposed would even recover these upfront costs
at a future sale. (MHI, No. 1592 at p. 4) They stated that at the
efficiency levels proposed by DOE, 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 even recover these upfront costs at
a future sale. Id
On the other hand, Schulte stated that the average tenancy for a
manufactured home is 14 years, which supports a longer period for the
LCC analysis. (Schulte, No. 1028 at pp. 6, 20) NASEO stated that DOE
should not consider the benefits of only 10 years for determining cost
effectiveness, because it is inconsistent with DOE's previous positions
on the average 30 to 40-year lifetime of manufactured homes and an
average ownership period of 13 years. They stated that the lifetime of
a manufactured home averages 30 years as found by DOE in the June 2016
NOPR, and corroborated by DOE's own findings which indicate that many
manufactured homeowners live in their homes for 40 or more years.
Furthermore, they commented that DOE's proposed benefit analysis
indicates an ``average ownership period of 13 years'' for new homes and
states ``62 percent of all homeowners anticipate living in their homes
for more than 10 years and that 38 percent of homeowners do not
anticipate ever selling their home.'' Accordingly, they stated that DOE
should account for the ``total life-cycle construction and operating
costs'', as required by EISA. (NASEO, No. 1565 at p. 2)
Next Step commented that HUD's affordability compliance
requirements for new housing production are up to 30 years. (Next Step,
No. 1617 at p. 7-9) They also stated that two of the most prominent
affordable housing, new construction programs (the HOME Program and the
Low-Income Housing Tax Credit Program), require affordability
compliance periods for 30 years for rental new construction.
Accordingly, they recommended that the federal government considers the
long-term affordability of this housing stock, and the same principles
should be applied to manufactured housing. (Next Step, No. 1617 at p.
5) Further, they stated that the consideration for LCC costs for
manufactured homes should be based on 30 years. (Next Step, No. 1617 at
p. 6) Schulte also stated that the current HUD thermal standards were
based on the useful life of the home (33 years). Manufactured homes
once sited are not often moved unless required to do because of a loan
default or for other reasons. (Schulte, No. 1028 at p. 17)
DOE appreciates the information provided by these organizations
regarding the potential tenure period for the occupants of manufactured
homes. Based on a review of the 2019 AHS, the mean year that the
householder (owner and renter) moved to a manufactured home is 2008,
which equates to 11 years living in the home in 2019. When separating
owner and renter, the mean year was 2006 for the owner (equating to 13
years living in the home in 2019) and 2014 for the renter (equating to
5
[[Page 32786]]
years living in the home in 2019). Further, based on the nationally
representative housing sample data in the 2019 AHS, the maximum
duration for a householder living in the home is 49 years. Separately,
a 2012 study conducted by Foremost Insurance Group found that 40
percent of manufactured home homeowners do not anticipate ever selling
their manufactured home.\58\ Furthermore, a 2021 manufactured housing
industry overview fact sheet developed by MHI suggests that 62 percent
of all homeowners anticipate living in their homes for more than 10
years and that 38 percent of homeowners do not anticipate ever selling
their home.\59\ Therefore, there are many factors that may affect the
duration of time that a manufactured home remains under a given
homeowner and similarly many factors that DOE must consider in
developing its analysis. Considering the MH working group agreed on the
30-year and 10-year analysis periods, and analysis conducted by other
organizations, including HUD, and the Low-Income Housing Tax Credit
Program also conduct their analyses based on a 30-year analysis period,
DOE is maintaining both the 30-year and the 10-year analyses.
---------------------------------------------------------------------------
\58\ Foremost Insurance Group. 2012 Mobile Home Market Facts.
\59\ Manufactured Housing Institute. 2021 Manufactured Housing
Facts: Industry Overview.
---------------------------------------------------------------------------
EISA directs DOE to base the standards on the most recent version
of the IECC considering, among other things, the total life-cycle
construction and operating costs. (42 U.S.C. 17071(b)(1)) Therefore,
based on DOE's reasoning and the comments discussed previously, DOE
continued to perform the 30-year analysis to determine the economic
impacts, as well as the cumulative benefits over the lifetime of the
manufactured home. As such, DOE is considering the total life-cycle
costs and operating costs of the standards over a 30-year period in
this final rule. Separately, for the purposes of this analysis and
based on the range of time periods provided in the comments discussed
previously, DOE continues to rely on the 10-year time period as a
reasonable representation of the ownership period of the first
homebuyer for the overall manufactured housing market as it falls
within the middle ground of the ranges described in the 2019 AHS and
the comments provided.
c. LCC Methodology
DOE received a number of comments regarding the LCC methodology to
capture potential savings related to the rulemaking.
Several commenters stated that using DOE's cost analysis
assumptions and the average tenure of a manufactured homeowner, the
changes recommended by DOE will actually cost homebuyers money that
they will never recoup with energy savings. (MMHA, No. 995 at p. 1-2);
(Michigan MHA, No. 1012 at p. 1-2); (WHA, No. 1025 at p. 1-2); (PMHA,
No. 1165 at p. 1-2); (Westland, No. 1263 at p. 1-2); (Pleasant Valley,
No. 1307 at p. 1); (American Homestar, No. 1337 at p. 1); (Oliver
Technologies, No. 1350 at p. 1); (KMHA, No. 1368 at p. 1); (Adventure
Homes, No. 1383 at p. 1-2); (NJMHA, No. 1451 at p. 2); (WMA, No. 1452
at p. 1-2); (IMHA/RVIC, No. 1466 at p. 2); (Cavco, No. 1497 at p. 2);
(Skyline Champion, No. 1499 at p.1); (Mississippi MHA, No. 1588 at p.
2) ; (Skyline Champion, No. 1612 at p.2); (Cavco, No. 1622 at p. 2);
(VAMMHA, No. 1624 at p. 2)
MHI stated that DOE's analysis uses improper calculations and
methodologies. They stated that the proper way to do the cost-benefit
analysis is by examining each incremental improvement in efficiency,
individually, which DOE did not do, even though DOE developed and
promotes a Building Energy Optimization Tool that uses this incremental
approach to find the optimum investment. MHI stated that, by combining
all the energy measures together into a single figure, the slim
benefits of adding the last, least cost-efficient measures, is subsumed
in and masked by the benefits of adding the first, most cost-effective
measures. (MHI, No. 1592 at p. 4) Further, MHI also commented that many
of the locations selected by the DOE for its analysis are not locations
where manufactured housing is prevalent. (MHI, No. 1592 at p. 5)
Accordingly, MHI performed their own analysis using a down-payment of
10 percent, an interest rate of 9 percent--which MHI stated is at the
high end of mortgage rates today--a loan term of 20 years, and a
tenancy period of 10 years, MHI's cost-benefit analysis found that the
DOE's proposal would result in a net loss for single- and multi-section
homes depending on location. (MHI, No. 1592 at p. 4) Cavco commented
that the cost benefit analysis should begin at the HUD Code minimum
requirements and increase incrementally, taking into account the actual
cost and potential savings until the elements are found to produce
negative paybacks over a reasonable time period. (Cavco, No. 1622 at p.
3)
Generally, NRDC stated that while the costs of energy efficiency
improvements are borne by the first-time owner, the value is reaped by
all residents of the product, including renters and the purchasers of
existing homes. They stated that neither of these actors has any say in
determining energy efficiency unless they choose to perform retrofits,
which are much less cost effective than building in the efficiency from
the factory. (NRDC, No. 1599 at p. 2)
ACEEE recommended that DOE update the LCC analyses to also include
renters. Based on their analysis, they stated that 25 percent of
residents in manufactured homes are renters and 29 percent of residents
are in homes less than ten years old. For low-income residents, 29
percent are renters (33 percent of those in homes less than ten years
old). ACEEE also commented that the analyses should fully include
owners with no debt--the percentage of owners (not including renters)
with no home loan increases from 30 percent of owners of homes less
than 4 years old to 38 percent of homes up to 10 years, 57 percent of
homes 11-20 years, 76 percent of homes 21-30 years, and 87 percent of
those 31-70 years old. They stated that 82 percent of low-income owners
have no debt so, assuming low-income owners disproportionately purchase
homes for under $63,000, the percentage of owners with no debt is
likely higher for the cheapest homes. (ACEEE, No. 1631 at p. 8-10)
Accordingly, ACEEE referenced a separate white paper they
conducted,\60\ which suggested the following updates to the DOE LCC
analysis. First, ACEEE noted that affordability concerns are greatest
for low-income households, only 3 percent of whom own homes that are
less than ten years old; these residents tend to rent or to own older
homes. If DOE chooses also to do 10-year LCC analyses, ACEEE
recommended looking at all types of residents in years 1-10, 11-20, and
21-30 of a home to gain a better understanding of the impact on all
residents. They stated that while these residents are roughly included
in the 30-year LCC analyses, DOE should either blend these residents
into the 10-year LCC analyses or do additional 10-year analyses to
consider the impacts on these residents. Second, although income data
are limited, ACEEE stated that there is no evidence that taking out
[[Page 32787]]
chattel loans varies significantly by income level. They stated that
median income of borrowers is almost the same for mortgages and chattel
loans, per the 2021 CFPB Report. Therefore, ACEEE recommended that
residents of single-section (or Tier 1) homes and lower-income
residents have the same mix of financing as other residents and that
they did not all pay higher interest rates. Third, ACEEE stressed that
the EEM costs were too high and so it recommended updating cost
estimates for what they claim are ``more recent'' estimates. Finally,
ACEEE noted that incorporation of a heat pump water heater as an
``additional efficiency package'' option should be included. In
addition, ACEEE performed some modifications to the LCC spreadsheet,
including the following: (1) Correcting the property cash flow payments
to be in nominal dollars, such that the discounting used for the LCC
calculation is consistent; (2) adjusting the incremental property tax
payments to decline annually consistent with the residual value
assumptions; and (3) adjusting the assumed chattel loan term from 15 to
23 years.
---------------------------------------------------------------------------
\60\ Bell-Pasht, A., and L. Ungar. 2021. Strong Universal Energy
Efficiency Standards Will Make Manufactured Homes More Affordable.
Washington, DC: American Council for an Energy-Efficient Economy.
https://www.aceee.org/white-paper/2022/01/strong-universal-energy-efficiency-standards-manufactured-homes.
---------------------------------------------------------------------------
With the updates suggested, ACEEE's study found that a standard at
the untiered/Tier 2 level would generate about $900 more in net life-
cycle cost savings in the average single-section home than would the
weaker standard. Their projected savings are significant in each
climate zone, but they are especially striking in the South (Climate
Zone 1), which has been the center of affordability concerns. Further,
they estimated significantly higher LCC savings than DOE predicted
because of the updated financing assumptions and updated cost
assumptions. They also performed a 10-year LCC analysis, which
suggested that while the first 10 years provides modest savings for the
untiered/Tier 2 standards (consistent with DOE's analysis), the net
savings from the untiered/Tier 2 standards surpass Tier 1 in the second
and especially the third decade, as the energy cost savings continue
and the cost (residual value) of the measures decreases. (See A. Bell-
Pasht and L. Ungar study).
NEEA also stated that DOE's assumption that Tier 1 MH are only
purchased by low-income households and financed by chattel loans is not
accurate. (NEEA, No. 1601 at p. 6-9) Joint commenters also stated that
the standards and analysis should take into account both the
construction costs and the full energy costs for those who can buy new
homes, for renters, and for owners of older homes. They commented that
only 3 percent of low-income residents of manufactured homes own homes
that are less than ten years old, and only 13 percent of low-income
residents owe loan debt for their homes (including mortgages and
chattel loans). (Joint Comments, No. 1630 at p. 1) Next Step
recommended DOE consider that the energy savings should not be
calculated based on a simple payback for the first home buyer, but also
subsequent purchasers who will benefit over the 40-year life expectancy
of the home. (Next Step, No. 1617 at p. 7)
EISA requires that DOE establish energy conservation standards for
manufactured housing with consideration of the cost-effectiveness as
related to the purchase price and total life-cycle construction and
operating costs generally. (42 U.S.C. 17071(b)(1)) As such, the LCC
analysis addresses this requirement by incorporating the total
homeowner expense over the life of the manufactured home, consisting of
purchase expenses (e.g., loan or cash purchase) and operating costs
(e.g., energy costs). Further, the LCC analysis focuses primarily on
the effects of the rule on the individual consumers of manufactured
homes. Finally, the LCC analysis applies to all consumers, regardless
of whether they purchase the home from a commercial retailer or an
onsite community operator.
DOE used the LCC and PBP analyses developed during the MH working
group negotiations to inform the development of the rule based on the
economic impacts on individual purchasers of manufactured homes. This
includes the locations identified in the analysis--the MH working group
selected nineteen cities located throughout each of the IECC climate
zones. DOE updated the inputs to the LCC and PBP analyses based on
updated references, including Annual Energy Outlook 2021 (``AEO
2021''), 2021 CFPB and the latest U.S. Energy Information
Administration (``EIA'') prices. In performing this analysis, DOE
analyzed the costs and benefits to consumers over a 10-year analysis
period and a 30-year analysis period. The 10-year analysis period
represented the cost of ownership over the tenure of the first
homebuyer, and the 30-year analysis period reflected the total cost of
ownership over the lifetime of the manufactured home. Further
discussion on analysis period is provided in IV.A.1.b.
In reviewing the general comments regarding the LCC methodology,
DOE agrees with ACEEE and has made the following updates: (1)
Correcting all property cash flow payments to be in nominal dollars,
such that the discounting used for the LCC calculation is consistent;
and (2) adjusting the assumed chattel loan term from 15 to 23 years
(per the 2021 CFPB Report). DOE notes that the chattel loan term was
adjusted in the October 2021 NODA. 86 FR 59042, 59044. DOE is
maintaining the conservative assumption that incremental property tax
payments should be held constant, as this was an assumption used by the
MH working group, and because property tax is not just based on the
value of the home, but also on the home location. Further, DOE is not
including any requirements for the additional energy efficiency
packages in this final rule, including heat pumps, as discussed in
section III.F.2.b of this document. Finally, section IV.A.1.e addresses
all comments regarding updating the incremental costs.
As acknowledged by ACEEE, the 30-year LCC analysis roughly includes
all residents of manufactured homes, regardless of whether they are a
homeowner or a renter. DOE believes the likely effect to renters is
that the landlord would pass on their added purchase costs, financing
costs and property taxes to the renters, but the renters would reap the
same energy savings benefits as already presented in the 10- and 30-
year analyses. In addition, as discussed in section IV.A.1.b of this
document, DOE is maintaining the 30-year analysis period as a
reasonable representation of the total cost of ownership over the
lifetime of the manufactured home.
Regarding the 10-year analysis, DOE acknowledges comments that
there are all types of residents of manufactured homes, not just the
homeowners. Further, DOE acknowledges that including other residents
could show additional savings than what was presented in the August
2021 SNOPR and October 2021 NODA. However, the 10-year analysis was
included in addition to the 30-year analysis specifically to represent
the cost of ownership period over the tenure of the first homebuyer,
per the MH Working Group (See page 343 at EERE-2009-BT-BC-0021-0120).
To address affordability and the potential adverse impacts on price-
sensitive, low-income purchasers of manufactured homes from the
imposition of energy conservation standards, DOE maintains the 10-year
analysis to continue to represent the first homebuyer only, consistent
with the analysis conducted by the MH Working Group.
Further, DOE analyzed Tier 1 considering only personal property
(i.e., chattel) loans. 86 FR 47744, 47798. Although the 2021 CFPB
presents that
[[Page 32788]]
the median income of borrowers of chattel loans is not significantly
different than that of mortgage loans ($52,000 vs. $53,000; See Table 7
of the 2021 CFPB), it also notes that 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 (see page 33). Therefore, DOE understands
that the chattel loan median income in Table 7 of the 2021 CFPB could
include both borrowers who own their land and borrowers who do not.
However, DOE notes that the Tier 1 analysis represents price-sensitive
low-income purchasers, most if not all of whom would be unable to own
land. DOE also notes that data presented in 2021 CFPB show that the
median chattel loan amount for MH is $58,672 (versus a median amount of
$127,056 for MH mortgages). These median loan amounts reflect the price
differential between the median single-section and multi-section MH as
reported in the MHS PUF 2020 ($57,233 and $108,583, respectively),
which supports DOE's choice to use chattel loan rates for all Tier 1
homes (i.e., single-section homes). See Table III.1. Further, as
acknowledged by ACEEE, income data as it relates to chattel vs.
mortgage loans is limited. As such, DOE maintains the conservative
consideration that the Tier 1 analysis would apply only to personal
property or chattel loans.
Separately, MHARR stated that the October 2021 NODA assumes a lower
inflation rate going forward than the August 2021 SNOPR. However, they
suggested that current inflation easily exceeds both numbers cited by
DOE and is increasing at a rapid pace. They stated that actual
inflation is more than two times the rate estimated by DOE and has
increased drastically since the beginning of 2021. They suggested that
the latest cost data show that the purchase price impact of the DOE
proposed rule would be even greater going forward than projected by the
August 2021 SNOPR, and would undermine the inherent affordability of
manufactured housing contrary to law. (MHARR, No. 1640 at p. 6, 7)
DOE understands that there may be uncertainties regarding inflation
rates and future prices of energy. In the August 2021 SNOPR, the inputs
used in the LCC analysis, including inflation rates, energy prices and
their escalation rates, were based on the AEO 2020 and Short-Term
Energy Outlook studies, prepared by the U.S. EIA. In the October 2021
NODA, DOE updated the AEO source to the latest version, which is AEO
2021.\61\ Further, DOE updated the electricity prices from the EIA
Short-Term Energy Outlook.\62\
---------------------------------------------------------------------------
\61\ Energy Information Administration. Annual Energy Outlook
2021 with Projections to 2050. (2021).
\62\ Energy Information Administration. Short-Term Energy
Outlook: Real Prices Viewer. Available at: www.eia.gov/forecasts/steo/realprices/.
---------------------------------------------------------------------------
The AEO presents long-term annual projections of energy supply,
demand, and prices. The projections, focused on U.S. energy markets,
are based on results from EIA's National Energy Modeling System
(``NEMS''). NEMS enables EIA to make projections under internally
consistent sets of assumptions. DOE has determined these studies are
the best current and future estimates of inflation, energy prices and
escalation rates and uses these studies in support of all of its energy
conservation standard rulemakings. In the final rule, DOE proposes to
maintain the same source for establishing inflation rates, energy
prices and escalation rates as the October 2021 NODA, which was AEO
2021.
d. Payback Periods
DOE also received several comments regarding PBP results relating
to the LCC and homeownership periods.
NAHB supported a 10-year simple payback as a primary standard for
evaluating the cost effectiveness of energy saving measures. They
stated that their policy of a 10-year simple payback for mandatory
energy measures is based on consumer preferences as determined and
confirmed over many years through consumer surveys conducted by its
Economics Department and suggested that regulations that exceed a 10-
year simple payback should be supported by incentives and voluntary
programs. NAHB also identified that 12 out of 19 cities would see
paybacks over 10 years for single-section and multi-section homes.
Accordingly, they strongly encouraged that DOE re-consider the impact
that the Tier 2 and an untiered approach would have on the ability for
hundreds of thousands of Americans to be able to afford these homes.
(NAHB, No. 1398 at p. 2)
TMHA believed that payback periods across the climate zones should
be no longer than four years for all homes. (TMHA, No. 1628 at p. 3)
NRECA commented that the payback period in the SNOPR for adhering to
the 2021 IECC standard is over 10 years, which is too long for price-
sensitive consumers. (NRECA, No. 1406 at p. 5) Further, NRECA commented
that any new costs added to the manufactured home will impact the
monthly financing payment for the home and thus will impact what the
consumer chooses. Therefore, they suggested increasing that cost per
month because of efficiency upgrades must have a quick payback to
appropriately balance affordability issues. (NRECA, No. 1406 at p. 4)
On the other hand, Schulte stated because the current HUD thermal
standards were based on the useful life of the home (33 years), a
payback period of 6-8 years would substantially understate the benefits
of the proposed energy standards and is inconsistent with life-cycle
methodologies adopted by DOE and HUD. (Schulte, No. 1028 at p. 17, 18)
Next Step stated that according to the National Association of
Realtors, as of 2018, the median duration of homeownership in the U.S.
is 13 years. In addition, they stated that according to MHI, 62 percent
of all residents anticipate living in their homes for more than 10
years, and 38 percent do not expect to sell their homes. (Next Step,
No. 1617 at p. 7)
Table IV.7 provides the results for DOE's simple payback period
analysis for the rule, broken out by climate zone for Tier 1 (single-
section) and Tier 2 (multi-section) homes. These resulting simple
payback periods indicate that the first homeowner would gain a net
benefit and would realize positive net savings from the proposed energy
standards prior to the 10-year mark. As previously discussed, based on
the 2019 AHS, the mean homeowner duration is 13 years. The national
average simple payback period of a Tier 1 standard is 3.7 years for
single-section homes, and for a Tier 2 standard is 8.9 years for multi-
section homes, although these results vary by location. The Tier 2
standard simple PBP exceeds 13 years for one city, San Francisco.
e. Incremental Cost
In the August 2021 SNOPR, DOE determined the incremental cost to
the consumer (i.e., incremental purchase price) by calculating the
difference in the 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. DOE based the incremental costs on those costs provided and
agreed to by the MH working group. ASRAC Cost Analysis Data, EERE-2009-
BT-BC-0021-0091.
DOE received a comment indicating that the cost of labor, overhead,
and profit has been underestimated in DOE's cost analysis. MMHA
suggested that DOE should be accounting for the costs of additional
labor or the additional
[[Page 32789]]
overhead and profit that would be associated with the higher home cost.
In addition, MMHA stated that they conducted an independent cost-
benefit analysis using DOE's assumptions of cost and location and
concluded that the proposal would add at a minimum of almost $1,000 to
the cost of a new single-section home and up to $5,500 to the cost of a
multi-section home depending on location. (MMHA, No. 995 at p. 3) MHI
stated that DOE's proposal is based on improper calculations and
methodologies, including underestimating the current cost of homes and
the costs of the new materials to construct them. (MHI, No. 1592 at p.
4-6, 25) Earthjustice and Prosperity Now commented that the costs used
in the analysis are no longer relevant but did not provide any updated
costs. (Earthjustice and Prosperity Now, No. 1637 at p. 8) MHARR stated
that DOE failed to consider the most recent cost data. (MHARR, No. 1640
at p. 2-4) TMHA commented that the pricing data that DOE uses has a
tremendous amount of lag. (TMHA, No. 1628 at p. 2) RECA also comments
that Tier 1 appears to be based on cost information submitted by one or
more manufacturers with no real connection to the model energy codes.
(RECA, No. 1570 at p. 2, 7)
DOE also received several comments about additional construction
costs. Multiple organizations commented that the DOE analysis assumes
that the floor joists are 2 x 6 with insulation up to and including R-
22, and 2 x 8 floor joists insulated to R-30 and above. However,
according to these commenters, currently, 90 percent of floors produced
use 2 x 6 floor joists. Therefore, the commenters stated that the
increased joists depth (i.e., going to 2 x 8 floor joists) will add
approximately a 33 percent material cost increase which will be around
$200 per 14 x 76 floor. The commenters also stated that this 2-inch
floor joist change will also increase the shipping height. (MHI, No.
1592 at p. 25-26); (Clayton Homes, No. 1589 at p. 16-18, 22); (MHCC,
No. 1600 at p. 6) MMHA and many other organizations raised similar
concerns, questioning if DOE considered the cost of changing from 2 x 6
to 2 x 8 floor joists. They also stated that placing more than R-11
blankets under the floor joists cannot be done without offsetting
outriggers and providing blocking between joists because compressing
more than R-11 insulation between an outrigger and a joist results in
noticeable humps in the floor at each outrigger location, and
questioned whether DOE accounted for these additional costs in the
analysis. (MMHA, No. 995 at p. 2); (Michigan MHA, No. 1012 at p. 1-2);
(WHA, No. 1025 at p. 1-2); (PMHA, No. 1165 at p. 1-2); (Westland, No.
1263 at p. 1-2); (Pleasant Valley, No. 1307 at p. 1-2); (American
Homestar, No. 1337 at p. 1-2); (Oliver Technologies, No. 1350 at p. 1-
2); (KMHA, No. 1368 at p. 1-2); (Adventure Homes, No. 1383 at p. 1-2);
(Clayton Homes, No. 1589 at p. 22). Additionally, NAHB encouraged DOE
to work directly with the producers of manufactured homes to validate
the construction cost numbers used in the cost effectiveness analysis
because costs have increased substantially over the last two years.
(NAHB, No. 1398 at p. 2)
DOE also received multiple comments on the cost of testing and
compliance. Multiple commenters stated that DOE underestimated the
costs of new materials to construct homes and did not consider the cost
of testing and compliance in the analysis. (MMHA, No. 995 at p. 1-2);
(Michigan MHA, No. 1012 at p. 1-2); (WHA, No. 1025 at p. 1-2); (PMHA,
No. 1165 at p. 1-2); (Westland, No. 1263 at p. 1-2); (Pleasant Valley,
No. 1307 at p. 1); (American Homestar, No. 1337 at p. 1); (Oliver
Technologies, No. 1350 at p. 1); (KMHA, No. 1368 at p. 1); (Adventure
Homes, No. 1383 at p. 1-2); (NJMHA, No. 1451 at p. 2); (WMA, No. 1452
at p. 1-2); (IMHA/RVIC, No. 1466 at p. 2); (Cavco, No. 1497 at p. 2);
(Skyline Champion, No. 1499 at p.1); (Mississippi MHA, No. 1588 at p.
2); (Skyline Champion, No. 1612 at p.2); (Cavco, No. 1622 at p. 2);
(VAMMHA, No. 1624 at p. 2) MHARR claimed that, in DOE's cost-benefit
analysis, DOE does not include estimated costs for testing,
enforcement, regulatory compliance, or costs related to regular changes
to the IECC, therefore making DOE's cost analysis invalid. (MHARR, No.
1640 at pp. 7, 8) In addition, NAHB stated that the insulation
requirements in the 2021 IECC greatly increase the cost compared to the
2018 IECC, specifically mentioning the ceiling insulation. (NAHB, No.
1398 at p. 3) In addition, Skyline Champion suggested that expenses
associated with design package updates, truss re-designs, structural
and thermal calculation revisions, quality process updates,
manufacturing process changes, and procurement modifications will
contribute significantly to costs associated with implementation and
compliance requirements. (Skyline Champion, No. 1612 at p. 2)
Conversely, ACEEE conducted its own research and concluded that DOE
overestimated the material and incremental costs in its cost analysis.
ACEEE recommended that DOE reconsider the cost of continuous insulation
since there is evidence the price at scale will be lower than what DOE
estimated, and suggested that DOE should estimate the costs for
widespread implementation under a standard. DOE used an installed cost
of $0.98/sf from RS Means 2020 construction cost estimating software.
With an opaque wall area of 1,053 square feet (``sf'') for single-
section homes and 1,036 sf for double-section homes, as in DOE's SNOPR
analysis, ACEEE suggested that this would correspond to a price of
about $1,000. They stated that this is confirmed in the previously
mentioned study by E. Levy et al.,\63\ which for adding foam sheathing
(wall insulation from House B to House C in Table 39) found a cost of
$936. (ACEEE, No. 1631 at p. 10-11) In addition, ACEEE recommended
reconsidering the cost of windows. ACEEE stated the Environmental
Protection Agency conducted field research on current prices for
windows (for a 12-window replacement project in site-built homes) and
estimated that the price difference per 15 sf window from low-e (U-
factor 0.32-0.35) to add argon (0.28-0.31) is $6, to lower SHGC is
$7.5, and for two coatings with argon (0.24-0.26) is $29 per window
(with much lower component costs), which corresponded to a total price
difference of roughly $44 for a single-section home or $75 for a
double-section home to add argon, and $214 or $363 for windows (based
on 111 and 188 sf of windows respectively). They stated that Faithful +
Gould's 2012 report to PNNL \64\ estimated a $4.18/sf difference for
0.50 vs 1.2, $0.89/sf difference for 0.35 vs 0.5, $0.18/sf for 0.32 vs
0.35, and $1.15/sf for 0.3 vs 0.32, and this corresponded to a single-
section cost for Tier 2 of $583 in Climate Zone 1 and $99 in Climate
Zone 2 in 2011 dollars (not including the cost of adding argon and
improving SHGC in Climate Zone 2, which per ENERGY STAR data might add
$100). They stated that the E. Levy et al. study found a cost for a
single-section home of $1,382 for single-pane +storm (U-value 0.47/SHGC
0.73), $218 more for double-pane low-e (0.31/0.33), and $600 for
advanced argon-filled (0.30/0.23). ACEEE stated that, while not
consistent, these costs are all much lower than in DOE's current
analysis, and after adjusting to 2023 dollars, ACEEE found that with
the EPA report, estimates
[[Page 32790]]
would reduce the estimated initial cost of Tier 2 by $900 to $1,500 for
single-section homes and $1,500 to $2,100 for multi-section homes,
depending on climate zone. (ACEEE, No. 1631 at p. 11-12)
---------------------------------------------------------------------------
\63\ See, e.g., costs and savings in E. Levy, et al., Field
Evaluation of Advances in Energy Efficiency Practices for
Manufactured Homes (DOE, 2016), https://www.nrel.gov/docs/fy16osti/65436.pdf.
\64\ Faithful+Gould, Residential Energy Efficiency Measures:
Prototype Estimate and Cost Data, Revision 6.0 (2012), Tables 5.2.1
and 2.5.
---------------------------------------------------------------------------
Separately, NEEA also commented that the cost considerations used
in the SNOPR analysis should be revaluated because they are too high,
resulting in an underestimation of cost effectiveness of a more
stringent energy code. NEEA provided information based on factory
experience in the Northwest reflecting fully operationalized cost,
claiming that if DOE uses these values, payback periods would be
reduced by up to 42 percent. NEEA elaborated, stating that
manufacturers will have lower cost at scale, especially if DOE employs
an options table that enables trade-offs with house size and mechanical
equipment. (NEEA, No. 1601 at p. 6-9) NEEA also states that the
incremental costs experienced in the Northwest are substantially lower
than the values DOE used because manufactured homes are value
engineered to cut costs. They stated factories find ways to achieve Uo
values using building science to reduce heat transfer paths. (NEEA, No.
1601 at p. 7-8) Further, NEEA stated that in the Northwest housing
market, manufactured homes built to HUD Code use 2x6 frame construction
rather than 2x4 construction, and if cost per square foot was based on
interior floor area, then homes built to the HUD Code in the Northwest
would logically use 2x4 frame construction. Id. NRDC recommended that
DOE take note that the ASHRAE standard allows manufacturers to take
credit for compliance for several other measures, such as higher HVAC
and water efficiency, ductless heat pumps, high-efficiency appliances
and plumbing fixtures, etc. NRDC stated that these new options will
decrease costs of various energy efficiency measures. (NRDC, No. 1599
at p. 5-6)
In the August 2021 SNOPR, DOE discussed that the incremental costs
used were based on those provided by the MH working group, which
represented small, medium and large manufacturers. Further, to
corroborate that the costs were still relevant, DOE reviewed the RS
Means 2020 and concluded that the estimates by the MH working group
continued to remain mostly relevant. 86 FR 47744, 47794. For this final
rule, DOE conducted another review of the cost analysis of the
different energy efficiency measures to be employed as a result of this
rule (ceiling, wall, floor, and window insulation). For this
evaluation, DOE used the costs provided by the stakeholders in response
to the August 2021 SNOPR and the October 2021 NODA, as summarized
previously, in addition to costs available through RS Means 2020, the
2021 IECC,\65\ ASHRAE,\66\ and costs provided in response to the June
2016 NOPR that DOE evaluated in the August 2021 SNOPR. From this
analysis, DOE again concluded that the cost data DOE used in the
analysis relating to wall, floor, and window insulation are all within
the range of values from the different sources reviewed. For the cost
of ceiling insulation, however, DOE notes that the cost data DOE used
is slightly higher than the information provided by the stakeholders,
although not unreasonable. Accordingly, DOE concludes that the
incremental costs evaluated for the rule are reasonable when compared
to the range of cost values provided by stakeholders and determined
through other references, as previously discussed. With regards to
labor costs, DOE notes that the incremental costs provided by the MH
working group were costs relative to the purchase prices made available
to the home buyer, which includes labor costs as well as markups to
account for manufacturer overhead and profits. As such, the incremental
costs should already accommodate costs beyond just the manufacturer
production cost. Further, DOE discusses in section III.F.2.b of this
document that the amended standards would not require changes in
exterior home dimensions and can be accommodated using current home
construction techniques. Therefore, the amended standards would
primarily require choosing the appropriate EEMs to meet the adopted
prescriptive or performance requirements. Finally, DOE performed an MIA
to estimate the potential financial impact of energy conservation
standards on manufacturers of manufactured homes, which is discussed
further in section IV.B. of this document.
---------------------------------------------------------------------------
\65\ National Cost Effectiveness of the Residential Provisions
of the 2021 IECC: Available at https://www.energycodes.gov/sites/default/files/2021-07/2021IECC_CostEffectiveness_Final_Residential.pdf.
\66\ Available at https://www.ashrae.org/file%20library/technical%20resources/research/ashrae-d-rp1481-20090630.pdf.
---------------------------------------------------------------------------
As discussed in sections III.D and III.E of this document, DOE is
not addressing test procedure or compliance issues in this rulemaking,
and therefore has not incorporated any of those attendant costs in the
analysis at this time. As noted previously, many of the requirements in
the standards would require minimal compliance efforts (e.g.,
documenting the use of materials subject to separate Federal or
industry standards, such as the R-value of insulation or U-factor
values for fenestration), and therefore such efforts would result in
minimal additional costs to manufacturers. Moreover, DOE continues to
work with HUD on potential approaches for testing, compliance,
enforcement and labeling that may leverage the existing HUD inspection
and enforcement process to ensure manufacturer compliance with the
standards in a manner that is not overly burdensome or costly to
manufacturers.
DOE also received a comment mentioning the costs of truss redesign,
testing, and approval. MHCC stated that getting a truss tested and
approved for use in accordance with the HUD standard could cost upwards
of $2,500 per design. In addition, any modifications to the heel height
would create additional cost and transportation issues that were not
considered by DOE, and any increase in the shipping height of a home
would lead to additional costs such as rerouting units, pilot vehicles,
and/or redesign of units. (MHCC, No. 1600 at pp. 7, 12-13) As discussed
in section III.F.2.b of this document, DOE remains unconvinced that
truss redesigns are needed to comply with the amended energy
conservation standards. Further, DOE is no longer including the
exterior wall continuous insulation requirement, which should resolve a
number of issues related to shipping width of the home. In addition,
DOE notes that the standards developed take into consideration the
dimensional limitations of the home and consider the design and factory
construction techniques of manufactured homes, as well as the
associated incremental costs. As noted previously in section III.F.2.b,
DOE has concluded that the amended standards would not require changes
in exterior home dimensions and cause transportation issues. Finally,
to the extent redesigns are necessary, DOE addresses the costs
associated with model plan updates for the standards as part of the
MIA.
DOE also received a comment regarding the cost of insulation
installation practices. Schulte said that there appears to be a lack of
current research about the individual costs and benefits of the items
noted in Table 460.103 and their application to manufactured homes.
(Schulte, No. 1038 at pp. 6, 12, 23) DOE does not anticipate any
incremental costs associated with the proper building practices of
correctly installing insulation as listed in Table 460.103, as these
installation practices have been
[[Page 32791]]
widely accepted by industry for many years.
2. Results
This section provides the results for the projected economic
impacts on individuals, including the LCC and PBP.
DOE also used different loan parameters for the tiered standard.
This is because the Tier 1 and Tier 2 standards each would apply to a
portion of all manufactured homes. Specifically, the Tier 1 standard
would apply to single-section manufactured homes and would be
applicable to price-sensitive, low-income purchasers. This is
consistent with data presented in 2021 CFPB, which show that the median
chattel loan amount for MH is $58,672 (versus a median amount of
$127,056 for MH mortgages).\67\ These median loan amounts reflect the
price differential between the median single-section and multi-section
MH as reported in the MHS PUF 2020 ($57,233 and $108,583,
respectively). See Table III.1. Further, the 2021 CFPB notes that those
who do not own their land are typically only able to finance with a
chattel loan. Therefore, DOE considered only personal property loans
for the Tier 1 standard analysis. For the Tier 2 standard, DOE
recalculated the loan percentages such that the sales-weighted Tier 1
and Tier 2 standard loan percentages would equate to the overall loan
percentages agreed upon by the MH working group. See Table IV.1 for
details on the loan parameter percentages used for the analyses.
---------------------------------------------------------------------------
\67\ CFPB report, 2021. https://files.consumerfinance.gov/f/documents/cfpb_manufactured-housing-finance-new-insights-hmda_report_2021-05.pdf.
Table IV.1--Loan Parameter Percentages
----------------------------------------------------------------------------------------------------------------
Personal
property (%) Real estate (%) Cash (%)
----------------------------------------------------------------------------------------------------------------
Tier 1 Standard........................................... 100.0 0.0 0.0
Tier 2 Standard........................................... 39.5 20.5 40.0
Overall................................................... 54.6 15.4 30.0
----------------------------------------------------------------------------------------------------------------
The LCC analysis allowed DOE to analyze the effects of the energy
conservation standards on both the individual consumer, as well as the
aggregate benefits at the national level. Table IV.2 and Table IV.3
provide the average purchase price increases to manufactured homes
associated with the HUD zones.
Table IV.2--National Average Manufactured Housing Purchase Price (and
Percentage) Increases Under Tier 1 Standard
[2020$]
------------------------------------------------------------------------
Tier 1 standard
-----------------------------------
$ %
------------------------------------------------------------------------
Climate Zone 1...................... $627 1.1
Climate Zone 2...................... 627 1.1
Climate Zone 3...................... 719 1.3
National Average.................... 660 1.2
------------------------------------------------------------------------
Table IV.3--National Average Manufactured Housing Purchase Price (and
Percentage) Increases Under Tier 2 Standard
[2020$]
------------------------------------------------------------------------
Tier 2 standard
-----------------------------------
$ %
------------------------------------------------------------------------
Climate Zone 1...................... $4,131 3.8
Climate Zone 2...................... 4,438 4.1
Climate Zone 3...................... 4,111 3.8
National Average.................... 4,222 3.9
------------------------------------------------------------------------
Figure IV.1 illustrates the average annual energy cost savings for
space heating and air conditioning for the first year of occupation by
geographic location under the standards based on the estimated fuel
costs provided in chapter 8 of the Final rule TSD.
BILLING CODE 6450-01-P
[[Page 32792]]
[GRAPHIC] [TIFF OMITTED] TR31MY22.212
Table IV.4, and Figure IV.2 illustrate the average 30-year LCC
savings by geographic location (averaged across the five different
heating fuel/system types) associated with both single-section and
multi-section manufactured homes. As discussed in detail in chapter 8
of the final rule TSD, the results presented account for LCC savings
and impacts over a 30-year period of analysis, including energy cost
savings and chattel loans or conventional mortgage payment increases
discounted to a present value using the discount rates discussed in
chapter 4 of the final rule TSD.
Table IV.4--Average Manufactured Home LCC Savings (30 years) Under the
Tier 1 and Tier 2 Standards by Climate Zone
[2020$]
------------------------------------------------------------------------
Single-section Multi-section
(Tier 1) (Tier 2)
------------------------------------------------------------------------
Climate Zone 1...................... $1,020 $3,698
Climate Zone 2...................... 1,123 3,060
Climate Zone 3...................... 2,565 3,960
National Average.................... 1,594 3,573
------------------------------------------------------------------------
[GRAPHIC] [TIFF OMITTED] TR31MY22.213
[[Page 32793]]
Table IV.5, and Figure IV.3 illustrate the average 10-year LCC
savings by geographic location (averaged across the five different
heating fuel/system types) associated with both single-section and
multi-section manufactured homes.\68\
---------------------------------------------------------------------------
\68\ Although Tier 2 homes (multi-section) in climate zone 2 and
3 on average show positive LCC savings, San Francisco (in climate
zone 2) and Salem (in climate zone 3) result in negative LCC
savings.
Table IV.5--Average Manufactured Home LCC Savings (10 years) Under the
Tier 1 and Tier 2 Standards by Climate Zone
[2020$]
------------------------------------------------------------------------
Single-section Multi-section
(Tier 1) (Tier 2)
------------------------------------------------------------------------
Climate Zone 1...................... $427 $863
Climate Zone 2...................... 480 477
Climate Zone 3...................... 1,217 873
National Average.................... 720 743
------------------------------------------------------------------------
[GRAPHIC] [TIFF OMITTED] TR31MY22.214
The estimated LCC impacts under Figure IV vary by location for
three primary reasons. First, each geographic location analyzed is
situated in one of three climate zones and therefore would be subject
to different energy conservation requirements. Second, geographic
locations within the same climate zone would experience different
levels of energy savings. Finally, the level of energy cost savings
depends on the type of heating system installed and fuel type used in a
manufactured home. As discussed in chapter 8 of the final rule TSD, DOE
has accounted for regional differences in heating systems and fuel
types commonly installed in manufactured housing.
Table IV.6 provides the national average LCC savings and annual
energy cost savings associated with the standards for space heating and
air conditioning (and percentage reduction in space heating and cooling
costs), both of which are measured against a baseline manufactured home
constructed in accordance with the HUD Code. As discussed in further
detail in chapter 8 of the final rule TSD, each geographic location has
been determined to result in positive 30-year LCC savings and energy
savings.
Table IV.6--National Average Per-Home Cost Savings Under the Final Rule
------------------------------------------------------------------------
Tier 1 standard Tier 2 standard
(single-section) (multi-section)
------------------------------------------------------------------------
Life-Cycle Cost Savings (30 Years).. $1,594 $3,573
Annual Energy Cost Savings (2020$).. 177 475
------------------------------------------------------------------------
Table IV.7, and Figure IV.3 illustrate the nationwide average
simple payback period (purchase price increase divided by first year
energy cost savings) under the energy conservation standards. The
estimated simple payback periods vary by geographic location based on
the different climate zone requirements for manufactured housing,
geographic climatic differences within climate zones, type of heating
system installed, and fuel type used in a manufactured home.
[[Page 32794]]
Table IV.7--Average Manufactured Home Simple Payback Period Under the
Tier 1 and Tier 2 Standards by Climate Zone
------------------------------------------------------------------------
Single-section Multi-section
(Tier 1) (Tier 2)
------------------------------------------------------------------------
Climate Zone 1...................... 4.7 8.5
Climate Zone 2...................... 4.5 9.6
Climate Zone 3...................... 2.9 8.6
National Average.................... 3.7 8.9
------------------------------------------------------------------------
[GRAPHIC] [TIFF OMITTED] TR31MY22.215
BILLING CODE 645-01-C
B. Manufacturer Impacts
DOE performed an MIA to estimate the potential financial impact of
energy conservation standards on manufacturers of manufactured homes.
The MIA relied on the Government Regulatory Impact Model (``GRIM''), an
industry cash-flow model used to estimate changes in industry value as
a result of energy conservation standards. The key GRIM inputs are:
industry financial metrics, manufacturer production cost estimates,
shipments forecasts, conversion costs, and manufacturer markups. The
primary output of the GRIM is industry net present value (``INPV''),
which is the sum of industry annual cash flows over the analysis period
(2022-2052), discounted using the industry average discount rate. The
GRIM has a slightly different analysis period than the NIA and LCC
since it accounts for the conversion period, the time between the
announcement of the standards and the compliance date of the standards,
because manufacturers may need to make upfront investments to bring
their manufactured homes into compliance ahead of the standards going
into effect. DOE used an industry average discount rate of 9.2 percent
for the final rule analysis, which is consistent with the discount rate
in the August 2021 SNOPR. This rate was based on SEC filings for public
manufacturers of manufactured homes.
The GRIM estimates the impacts of more-stringent energy
conservation standards on a given industry by comparing changes in INPV
between the no-standards case and the standards cases. The GRIM
estimates a range of possible impacts under different manufacturer
markup scenarios to capture the uncertainty relating to manufacturer
pricing strategy following new standards. Additional detail on the GRIM
can be found in chapter 12 of the final rule TSD.
1. Discussion of Comments and Analysis Updates
a. Conversion Costs
DOE received a number of comments regarding the potential
conversion costs necessitated by the adopted standard. Conversion costs
are the one-time, upfront investments manufacturers would need to make
to comply with energy conservation standards. These upfront investments
include product conversion costs and capital conversion costs. Product
conversion costs are one-time expenses in research, development,
engineering time, and other costs necessary to make product designs
comply with energy conservation standards. Capital conversion costs are
one-time investments in property, plant, and equipment to adapt or
change existing production lines to fabricate and assemble new product
designs that comply with the energy conservation standards.
MHCC raised concerns about the cost on industry to update model
plans. MHCC estimated engineering and third-party review time required
for each model plan would be 10-12 hours. MHCC suggest that the number
of model plans could range from 300 to 3,000, depending on the size of
manufacturer and number of production plants. Skyline Champion noted
that the company has thousands of model plans. Skyline Champion went on
to note that design choices could lead to assembly changes and capital
expenditures, such as jig and station adjustments. (MHCC, No. 1600 at
pp. 12, 14); (Skyline Champion, No. 1612 at pp. 2-3)
For the final rule, DOE attempted to take into account stakeholder
comments on conversion costs by integrating numeric values, where
provided. Specifically, DOE updated its conversion costs to include an
average of 10 hours to review each model plan; updated its wage
calculation to reflect
[[Page 32795]]
2020 fully burdened rates for mechanical engineering time; increased
its estimate of the number of model plans in the industry to
approximately 40,800 based on 136 production plants in the industry
\69\ and 300 plans per plant; and incorporated expenditures
manufacturing lines adjustments at all production plants. Industry
conversion costs total $29.5 million for the final rule. As discussed
in detail in section III.E.2.b of this document, DOE remains
unconvinced that truss profile updates are necessitated by the
standards and truss redesign costs have not been incorporated into the
estimate of manufacturer impacts. Additional detail can be found in
Chapter 12 of the final rule TSD.
---------------------------------------------------------------------------
\69\ MHI reports there are 136 manufacturing plants in the
Unites States for manufactured housing in 2021.
www.manufacturedhousing.org/wp-content/uploads/2021/05/2021-MHI-
Quick-Facts-updated-05_2021.pdf.
---------------------------------------------------------------------------
b. Higher Standards
Schulte suggested that adopting higher Uo standards based on
currently approved designs for ENERGY STAR homes already in production
may prevent manufacturing disruptions due to the unavailability of
higher energy efficiency components. (Schulte, No. 1028 at p. 14).
The structure of the DOE energy conservation standards for
manufactured homes enables manufacturers to choose either prescriptive
or performance options for compliance, thereby providing the industry
with flexibility for compliance. If manufacturers have established
supply chains for ENERGY STAR-certified designs or find it more cost
effective to streamline designs around a higher Uo value, this final
rule does not prevent manufacturers from pursuing those options.
Accordingly, DOE did not adopt higher Uo values as suggested by the
commenter for this final rule or the accompanying analyses.
2. Results
a. Manufacturer Production Costs and Markups
DOE analyzed the effect the standards would have on manufacturer
production costs. DOE derived these costs from purchase price
information and the markup factor, which is the product of the
manufacturer markup, the retail markup, and sales tax. DOE used data
from the U.S. Census Bureau to obtain HUD minimum purchase price data
by state for single-section and multi-section manufactured homes in
2020.\70\ DOE used a shipment-weighted average to convert the average
purchase price by state to an average purchase price for each of 19
representative cities.
---------------------------------------------------------------------------
\70\ U.S. Census Bureau. Manufactured Housing Survey. (2020).
Available at: www.census.gov/data/datasets/2020/econ/mhs/puf.html
(Last accessed March 1, 2022).
---------------------------------------------------------------------------
DOE added incremental purchase prices to the HUD minimum purchase
prices to calculate the purchase price for manufactured homes built in
compliance with the proposed standard levels. The incremental purchase
prices were negotiated during MH working group meetings and discussed
further in section IV.A.1.e. of this document.
To calculate MPCs from purchase prices for homes at the baseline
level and at the proposed standard levels, DOE divided the purchase
prices by the markup factor. The markup factor is the product of the
manufacturer markup, retail markup, and the sales tax factor.
Consistent with the August 2021 SNOPR, DOE used a baseline manufacturer
markup of 1.72, a retail markup of 1.30, and a sales tax factor of 1.03
in its modeling of impacts of manufacturers.
b. Manufacturer Markup Scenarios
DOE modeled two standard case manufacturer markup scenarios that
reflect changes in the manufacturer's ability to pass on their upfront
investments and increases in production costs to the consumer. The
manufacturer markup scenarios represent the uncertainty regarding
prices and profitability for manufactured home manufacturers following
the implementation of the rule. DOE modeled a high and a low scenario
for manufacturers' ability to pass on their increased costs to the
consumer: (1) A preservation of gross margin percentage markup
scenario; and (2) a preservation of operating profit markup scenario.
These scenarios lead to different manufacturer markup values that
result in varying revenue and cash flow impacts to the manufacturer
when applied to the inputted manufacturer production costs.
Under the preservation of gross margin percentage scenario,
manufacturers maintain their current average markup of 1.72 even as
production costs increase. Manufacturers are able to maintain the same
amount of profit as a percentage of revenues, suggesting that they are
able to recover conversion costs and pass the costs of compliance to
their consumers. DOE considers this scenario the upper bound to
industry profitability.
In the preservation of operating profit scenario, manufacturer
markups are set so that the per-unit operating profit in the standards
case equals the per-unit operating profit in the no-standards case one
year after the compliance date of the new energy conservation standard.
Under this scenario, as the costs of production increase under a
standards case, manufacturers are required to reduce their markups. The
implicit assumption behind this manufacturer markup scenario is that
the industry can only maintain its existing per-unit operating profit
in absolute dollars after compliance with the new standards is
required. Therefore, the operating margin is reduced between the no-
standards case and standards case. Under this scenario, manufacturers
are not able to recover the conversion period investments made to
comply with the standard. This manufacturer markup scenario represents
a lower bound to industry profitability under a new energy conservation
standard.
c. Cash-Flow and INPV Results
DOE compares the INPV of the no-standards case to that of the
standards level. The difference between INPV in the no-standards case
and INPV in the standards case is an estimate of the economic impacts
on the industry.
Table IV.8--INPV Results: Preservation of Gross Margin Percentage
Scenario *
------------------------------------------------------------------------
Single-section Multi-section
------------------------------------------------------------------------
No-standards case INPV million 2020$ 4,489.2 10,492.0
Standards Case INPV million 2020$... 4,506.9 10,671.7
Change in INPV million 2020$........ 17.7 179.8
Change in INPV %.................... 0.4 1.7
Total Conversion Costs million 2020$ 9.1 20.4
------------------------------------------------------------------------
* Values in parentheses are negative values.
[[Page 32796]]
Table IV.9--INPV Results: Preservation of Operating Profit Markup
Scenario *
------------------------------------------------------------------------
Single-section Multi-section
------------------------------------------------------------------------
No-standards case INPV million 2020$ 4,489.2 10,492.0
Standards Case INPV million 2020$... 4,459 10,313.4
Change in INPV million 2020$........ (29.3) (178.5)
Change in INPV %.................... (0.7) (1.7)
Total Conversion Costs million 2020$ 9.1 20.4
------------------------------------------------------------------------
* Values in parentheses are negative values.
For single-section homes, the no-standards case INPV is $4.5
billion. The standards level could result in a change of industry value
ranging from -0.7 percent to 0.4 percent, or a change of -$29.3 million
to $17.7 million, for single-section units. For multi-section units,
the no-standards case INPV is $10.5 billion. The standards level could
result in a change of industry value ranging from -1.7 percent to 1.7
percent, or a change of -$178.5 million to $179.8 million. For the
entire industry, the no-standards case INPV is $15.0 billion. The
standards level could result in a change in INPV of -1.4 percent to 1.3
percent, or a change of -$207.8 million to $197.5 million. Industry
conversion costs total $29.5 million. In the lower-bound INPV scenario,
the potential decrease in INPV is less than 2%, which suggests adopted
standards will not significantly alter the valuation and structure of
the manufactured housing industry.
C. Nationwide Impacts
The national impact analysis (NIA) assesses the national energy
savings (NES) and the national net present value (NPV) from a national
perspective of total consumer costs and savings that would be expected
to result from new standards. ``Consumer'' in this context refers to
consumers of the product being regulated. DOE calculates the NES and
NPV based on projections of annual product shipments, along with the
annual energy consumption and total incremental cost data from the LCC
analyses.
In the August 2021 SNOPR and October 2021 NODA, DOE's NIA projected
a net benefit to the nation as a whole as a result of the proposed rule
in terms of NES and the NPV of total consumer costs and savings that
would be expected as a result of the proposed standards in comparison
with the minimum requirements of the HUD Code. DOE presented national
savings to only accrue to projected no-standards case shipments that
are not ENERGY STAR-certified. DOE calculated the NES and NPV based on
annual energy consumption and total construction and life-cycle cost
data from the LCC analysis (developed during the MH working group
negotiation process), and shipment projections. DOE projected the
energy savings, operating cost savings, equipment costs, and NPV of
consumer benefits sold in a 30-year period from 2023 through 2052. The
analysis also accounted for costs and savings for a manufactured home
lifetime of 30 years. 86 FR 47744, 47808-47814; 86 FR 59042, 59043.
In the October 2021 NODA, DOE updated the inputs to the August 2021
SNOPR and developed a shipments model to forecast the shipments of
manufactured homes during the analysis period. DOE first gathered
historical shipments spanning 1990-2020 from a report developed and
written by the Institute for Building Technology and Safety and
published by the Manufactured Housing Institute.\71\ Then, using the
growth rate (0.42 percent) in new residential housing starts from the
AEO 2021, DOE projected the number of manufactured housing shipments
from 2023 through 2052 in the no-standards case (no new standards
adopted by DOE). For the standards case shipments, DOE used this same
growth rate estimate (0.42 percent), but also applied an estimate for
price elasticity of demand. Price elasticity of demand (price
elasticity) is an economic concept that describes the change of the
quantity demanded in response to a change in price. DOE used the price
elasticity value of -0.48 (a 10-percent price increase would translate
to a 4.8-percent reduction in manufactured home shipments) based on a
study published in the Journal of Housing Economics by Marshall and
Marsh for estimating standards case shipments.\72\ 86 FR 59042, 59045-
59047.
---------------------------------------------------------------------------
\71\ See Manufactured Home Shipments by Product Mix (1990-2020),
Manufactured Housing Institute.
\72\ See Marshall, M.I. & Marsh, T.L. Consumer and investment
demand for manufactured housing units. J. Hous. Econ. 16, 59-71
(2007).
---------------------------------------------------------------------------
DOE developed shipments for each of the tiers using the MHS 2020
PUF data.\73\ First, DOE estimated that manufactured homes in Census
regions (the U.S. Census Bureau divides the country into four census
regions) 1, 2 and 4 combined were representative of HUD zone 3 and
manufactured homes in Census region 3 were representative of HUD zones
1 and 2. Second, DOE considered that a percentage of manufactured homes
placed/sold would shift to less stringent standards, i.e., a percentage
of homes from Tier 2 would shift to Tier 1. The inclusion of this shift
in the market is to more accurately estimate energy savings (and other
downstream results) if the proposed tiered standards are finalized. For
the analysis, DOE applied a ``substitution effect'' of 20 percent to
homes within $1,000 of the price threshold ($63,001-$64,000 in the
October 2021 NODA). DOE chose a higher-end estimate of 20 percent based
on reports that were reviewed for the energy conservation standards
rulemaking for residential furnaces. The reports reviewed included
estimates for direct rebound effects of household heating as it relates
to more efficient products used more intensively. While the concept of
``rebound effect'' for the residential furnaces rulemaking is different
than the ``substitution effect'' that is being considered in this
rulemaking, with the lack of any data specific to the rebound effect
for manufactured homes, DOE determined that 20 percent is a reasonable
proxy. 86 FR 59042, 59045.
---------------------------------------------------------------------------
\73\ Manufactured Housing Survey, Public Use File (PUF) 2020.
https://www.census.gov/data/datasets/2019/econ/mhs/puf.html.
---------------------------------------------------------------------------
DOE received a number of comments regarding several aspects of the
nationwide impacts described in the August 2021 SNOPR and October 2021
NODA. The following sections provide a discussion of each of the
submitted comments as well as updates to the NIA conducted for this
final rule.
1. Discussion of Comments and Analysis Updates
a. Shipments Analysis
ACEEE stated that the Tier 2 standards are well above ENERGY STAR
levels. In addition, ENERGY STAR will revise its criteria to exceed the
new standard. Thus, they stated that one can expect similar savings for
those homes, and they should be included in the analysis. (ACEEE, No.
1631 at p. 13)
[[Page 32797]]
As discussed previously, DOE's national impact analysis calculates
savings in comparison with the minimum requirements of the HUD Code. In
response to the June 2016 NOPR, NEEA had commented about how a portion
of the Pacific Northwest homes are already built to meet ENERGY STAR
levels. 86 FR 47744, 47808. Because ENERGY STAR-certified manufactured
homes are more efficient than minimally HUD Code-compliant homes, DOE
did not account for ENERGY STAR-certified homes in the no-standard
shipments and national impact analyses, so as to avoid overestimating
energy savings and NPV benefits to the consumer. As a result, the
national savings in the August 2021 SNOPR and October 2021 NODA only
accrue to projected no-standards case shipments that are not ENERGY
STAR-certified.
In reviewing the ENERGY STAR envelope-only package Uo requirements
(see Table IV.10), DOE notes that depending on the climate zone, ENERGY
STAR-certified homes either meet the Tier 2 DOE Uo requirements or are
slightly below that level. While DOE does acknowledge there are some
possible energy savings associated with ENERGY STAR-certified homes
having to now meet the DOE standard, which includes other requirements
beyond Uo, DOE considers these estimated savings to be minimal compared
to the energy savings associated with HUD Code-compliant homes having
to meet the Tier 2 DOE requirements. As such, in this final rule, DOE
continues to not account for ENERGY STAR-certified homes in the
national impact analyses, so as to avoid overestimating energy savings
and benefits to the consumer.
Table IV.10--U Comparison
------------------------------------------------------------------------
Energy Star (U) Tier 2 (U)
-----------------
Climate zone ------------------
Multi-section Multi-section
------------------------------------------------------------------------
1................................... 0.071 0.082
2................................... 0.064 0.066
3................................... 0.056 0.055
------------------------------------------------------------------------
ACEEE also suggested that the assumption that only 20 percent of
homes within $1,000 of the price threshold will shift to Tier 1 seems
highly optimistic. They stated that the list price could be cut without
changing actual prices by adding on fees or by pricing a stripped-down
home to which customers add options. Therefore, they suggested that
such pricing adjustments could shift the list price by thousands of
dollars with no physical changes to most homes, and manufacturers could
redesign others with cheaper components to avoid the first cost of the
standard. Accordingly, ACEEE emphasized this is another reason why DOE
should not set tiers. (ACEEE, No. 1631 at p. 5) ACEEE stated that
manufacturers may shift an even larger fraction of homes within perhaps
$10,000 of the threshold to Tier 1 with little change in the actual
homes. (ACEEE, No. 1631 at p. 13) As discussed in section III.B of this
document, DOE is finalizing a size-based tier threshold in this final
rule. Specifically, the Tier 1 standard would apply to all single-
section homes, and the Tier 2 standard would apply to all multi-section
homes. As such, DOE is no longer considering the retail list price
threshold shift. Table IV.11 presents the updated shipments breakdown
using the MHS 2020 PUF data set, which DOE had also presented in the
October 2021 NODA. 86 FR 59042, 59052-59053.
Table IV.11--Shipment Breakdown Based on Tier
----------------------------------------------------------------------------------------------------------------
All climate zones
-----------------------------------------------------
Single-section Multi-section
(%) (%) Total (%)
----------------------------------------------------------------------------------------------------------------
Tier 1 Standard........................................... 100 0 45
Tier 2 Standard........................................... 0 100 55
-----------------------------------------------------
Total................................................. 100 100 100
----------------------------------------------------------------------------------------------------------------
MHARR noted that for potential purchasers excluded from the HUD-
code manufactured home market, there would be no ``savings'' because
they wouldn't be able to buy a home in the first place. As a result,
they commented that the January 2022 DEIS is materially skewed toward
showing alleged benefits attributable to the proposed standards.
(MHARR, No. 1974 at p. 10, 11) DOE notes that the NES does not account
for the energy savings for the people who do not buy a manufactured
home under the standards case because they are price-sensitive (using
price elasticity of demand discussion in the next section). As such,
NES only accounts for savings for those that are able to purchase a
manufactured home. The NES is calculated based on the same number of
homes purchased under both the standards and no standards case (using
price elasticity of demand) such that there are no energy savings
attributed to less homes purchased.
b. Price Elasticity of Demand
Price elasticity of demand (price elasticity) is an economic
concept that describes the change of the quantity demanded in response
to a change in price. Price elasticity is typically represented as a
ratio of the percentage change in quantity relative to a percentage
change in price. It allows DOE to assess the extent to which consumers
and retailers are unable or unwilling to purchase new homes as a result
of the increased costs. In the August 2021 SNOPR and the October 2021
NODA, DOE used a price elasticity value of -0.48 to estimate the effect
of the proposed rule on manufactured home shipments. This value was
sourced from a study by Marshall and
[[Page 32798]]
Marsh.\74\ DOE received several comments regarding the price elasticity
that was used.
---------------------------------------------------------------------------
\74\ See Marshall, M.I. & Marsh, T.L. Consumer and investment
demand for manufactured housing units. J. Hous. Econ. 16, 59-71
(2007).
---------------------------------------------------------------------------
TMHA stated that it is inappropriate for the finalized rule to have
any projected decrease in the number of MH's that will ultimately be
produced. Many TMHA manufacturers had previously built modular homes in
Texas, but after the Texas Department of Licensing and Regulation
adopted the 2015 IECC in August of 2017 the number of homes built in
the state dropped by 35 percent in the subsequent 2018 fiscal year due
to the cost of compliance and the inability to source the materials
necessary to meet the new standards from upstream suppliers. TMHA asked
that DOE do everything they can to ensure that any new rule does not
decrease production. (TMHA, No. 1628 at pp. 3, 4) Clayton Homes
commented that very few homes are produced at the Tier 1 level and it
is unlikely that additional homes will be manufactured at that level.
Instead, Clayton Homes expects an overall reduction in the
manufacturing and purchase of manufactured homes across the board.
(Clayton Homes, No. 1589 at p. 21)
On the other hand, ACEEE stated that the shipment estimates likely
overstate the sales impact of the standard. ACEEE stated that the price
elasticity used for the analysis (-0.48 and -2.4) are based on data
before a significant decline in shipments of manufactured homes after
2007, and thus reflect volatility of a different market. In addition,
ACEEE stated that the price elasticity only predicts changes in demand
in response to changes in initial purchase price, and not to changes in
the underlying value and quality of the home, including reduced energy
bills, increased comfort and health, and improved longevity. They
stated that under these assumptions any improvement to the homes
reduces sales. (ACEEE, No. 1631 at p. 13) NEEA stated that manufactured
homes purchased by park owners for rent-to-own or rental will not be
impacted by the increase in cost because rental prices are based on
market rates, not the purchase price of the home. NEEA stated that
rental rates are higher than mortgage rates that a landlord would pay
and therefore price elasticity will be near zero for the fraction of
the manufactured homes sold to park owners. NEEA stated that
manufactured homes remain the low-cost affordable housing option in the
Northwest and there is no evidence that higher efficiency has
negatively impacted homeownership. (NEEA, No. 1601 at pp. 8, 13)
The Marshall and Marsh study,\75\ which DOE used to analyze the -
0.48 price elasticity, uses the number of new manufactured homes placed
for residential use as a proxy for consumer demand and also separated
short-term consumer behavior from long-term influences. As part of
their paper, Marshall and Marsh reviewed all previous studies to
determine the inputs into their model. They used national level data
for their consumer demand model. Marshall and Marsh estimated the price
elasticity of demand for manufactured homes at -0.48 using a two-stage
regression model and concluded that consumers in general are not so
price sensitive and are likely willing to accept incremental higher
prices for improvements in cost efficiency. The paper claimed that this
is especially true because the cost of a manufactured home is still
significantly lower than the cost of a site-built home and low- and
moderate-income families have few low-cost choices for home ownership.
Accordingly, for the NIA, DOE determined the Marshall and Marsh study
is still the most recent and accurate estimate of consumer demand based
on price changes for manufactured housing and therefore, DOE maintains
use of the -0.48 elasticity value. DOE notes that for the tiered
standard, DOE estimates that Tier 1 would have 0.55 percent reduction
in demand and availability, which is essentially no reduction.
---------------------------------------------------------------------------
\75\ See Marshall, M.I. & Marsh, T.L. Consumer and investment
demand for manufactured housing units. J. Hous. Econ. 16, 59-71
(2007).
---------------------------------------------------------------------------
c. Deadweight Loss
In the August 2021 SNOPR, DOE also estimated the deadweight loss
associated with the proposed rule stemming from the reduced shipments
in the standards case scenario. Deadweight loss is a cost to society as
a whole generated by shifting the market away from the no-standards
case equilibrium. If the supply curve is perfectly elastic, then the
deadweight loss of energy conservation standards is entirely borne by
consumers and not producers. The deadweight loss is equivalent to one-
half the incremental price multiplied by the reduction in total
shipments, discounted over the 30-year analysis. If, however, the
supply curve's slope near equilibrium is similar in magnitude to the
demand curve, then the deadweight loss is equivalent to the incremental
price multiplied by the reduction in total shipments, discounted over
the 30-year analysis.
DOE did not have data on the supply curve elasticity but estimated
the deadweight loss for the proposed standards using a price elasticity
of -0.48. DOE tentatively estimated that the discounted total
deadweight loss for the standards based on Tier 1 would range from $0.8
to $1.5 million (2020$, discounted at 3 percent) and $0.4 to $0.9
million (2020$, discounted at 7 percent). DOE tentatively estimated
that the discounted total deadweight loss for the standards based on
Tier 2 would range from $75.4 to $150.9 million (2020$, discounted at 3
percent) and $43.9 to $87.8 million (2020$, discounted at 7 percent).
DOE tentatively estimated that the discounted total deadweight loss for
the untiered standards would range from $103.1 to $206.2 million
(2020$, discounted at 3 percent) and $60 to $120 million (2020$,
discounted at 7 percent). 86 FR 47744, 47813.
MHCC stated that deadweight loss would be significantly higher than
DOE's estimate as many potential consumers will be priced out of the
market. For example, they referenced an NAHB published study in 2021
(NAHB Priced-Out Estimates for 2021), which estimated that a $1,000
increase in the median new home price ($346,757) would price 153,967
households out of the market. The MHCC stated that an increase of
$1,000 would have a more significant impact on manufactured housing.
(MHCC, No. 1600 at p. 13); (NAHB, No. 1398 at p. 3) MHI stated that
deadweight loss will increase as a result of the proposal, as many
potential consumers will be priced out of purchasing a manufactured
home. (MHI, No. 1592 at p. 30)
On the other hand, ACEEE stated that the use of deadweight loss is
misapplied and not appropriate in this context. They commented that
textbook treatments of deadweight loss are limited to analyzing the
effects of taxes, trade tariffs, monopoly market power, or other price
distortions on demand, all else equal. However, implementing up-to-date
efficiency standards for manufactured homes is not tantamount to a
price distortion, but instead materially alters the quality and value
of the home. They stated that revised standards will reduce energy
bills, improve resident comfort, and likely increase the longevity and
residual value of the home, none of which are incorporated into DOE's
analysis of the deadweight loss (nor captured in its price scenario
analysis). ACEEE argued that there could be a possible substitution
toward newer homes that
[[Page 32799]]
become more attractive compared to homes subject to codes nearly 30
years out of date. Further, they commented that even if updated
standards were to be considered as a price distortion, estimating
deadweight loss requires a complex general equilibrium model, including
both a supply and demand curve, which DOE did not have appropriate data
to develop. ACEEE commented that estimating deadweight loss is
unprecedented and inappropriate for the evaluation of the societal
impacts of efficiency standards. (ACEEE, No. 1631 at pp. 13-14)
DOE agrees with ACEEE that the application of deadweight loss for
this rulemaking is complex and DOE does not have sufficient data to
provide a thorough analysis. Further, the 2021 NAHB report estimates
reduction in buyers assuming all American households intend to buy a
home, whereas the DOE analysis considers 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). Finally, as discussed in
section IV.C.1.b of this document, the Marshall and Marsh study
concludes that manufactured home consumers are not as price sensitive
because the cost of a manufactured home is still significantly lower
than the cost of a site-built home. Therefore, at this time, DOE is not
estimating deadweight loss for this rule. However, DOE continues to
accept any data regarding this analysis and may consider deadweight
loss in future iterations of this rule.
d. Net Present Value
DOE received a comment concerning the discount rates used to
calculate the NPV. MHI stated that DOE's analysis is incorrect in using
a discount rate ranging from three to seven percent for computation of
future projected energy savings. Using that discount rate, they
commented that DOE significantly overstates the net savings. They
recommended that DOE should use much higher discount rates, around 10
percent, for personal property/chattel loans. (MHI, No. 1592 at p. 11)
On the other hand, UCB stated that the discount rates used in the DOE's
analysis are much too high compared to historical and projected values.
They commented that the Institute for Policy Integrity found the median
value of proposed constant discount rates, excluding outliers, was 2%.
They also found that many experts do not agree that a constant discount
rate should even be used, and that either a declining rate or a rate
calibrated with ``ethical parameters'' should be used instead. (UCB,
No. 1618 at pp. 15-16) They also mentioned that high discount rates
mean that future costs and benefits are undervalued. (UCB, No. 1405 at
p. 2)
DOE generally uses real discount rates of 3 percent and 7 percent
to discount future costs and savings to present values.\76\ The 3- and
7-percent discount rates are based on Circular A-4 issued by the Office
of Management and Budget (OMB) as guidance on the development of
regulatory analysis as required by Executive Order (``E.O.'')
12866.\77\ The 7-percent rate is the established estimate of the
average rate of return, before taxes, to private capital in the U.S.
economy. The 3-percent rate is called the ``social rate of time
preference,'' which is the rate at which society discounts future
consumption flows to their present value.\78\ These real discount rates
are used to calculate annualized benefits and costs in DOE rulemakings
in order to perform cross-industry comparisons in a standardized
manner. For these reasons, in the final rule, DOE maintains discount
rates of 3 percent and 7 percent for the NPV and the annualized
benefits and costs. Additionally, DOE uses a discount rate based on the
chattel loan interest rate in the LCC analysis.
---------------------------------------------------------------------------
\76\ DOE relies on a range of discount rates in monetizing
emission reductions as discussed in section IV.D.2 of this document.
\77\ https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf.
\78\ Office of Management and Budget, Circular A-4, September
2003.
---------------------------------------------------------------------------
2. Results
This section provides the results for the projected nationwide
impact analyses, including the NES and NPV. In this final rule, DOE
based all inputs to the NES and NPV using AEO 2021. This includes the
housing starts growth rate, inflation rates, energy prices, energy
prices growth rates, and full-fuel cycle energy factors, consistent
with what was presented in the October 2021 NODA. In addition, DOE's
shipment analysis includes the latest 2020 MHI shipments and excludes
any ENERGY STAR shipments to avoid overestimating energy savings.
Further details on the inputs are discussed in chapters 8, 10, and 11
of the final rule TSD.
DOE notes that the NES does not account for the energy savings for
those individuals who do not buy a manufactured home under the
standards case because they are price-sensitive. As such, NES only
accounts for savings for those individuals who are able and who
purchase a manufactured home. The NES is calculated based on the same
number of homes purchased under both the standards and no standards
case such that there are no energy savings attributed to less homes
purchased.
Table IV.12 reflects the NES results over a 30-year analysis period
on a primary energy savings basis. Primary energy savings apply a
factor to account for losses associated with generation, transmission,
and distribution of electricity. Primary energy savings differ among
the different climate zones because of differing energy conservation
requirements in each climate zone and different shipment projections in
each climate zone.
Table IV.12--Cumulative National Energy Savings of Manufactured Homes Purchased 2023-2052 With a 30-Year
Lifetime
----------------------------------------------------------------------------------------------------------------
Single-section Multi-section
(quads) (quads) Total (quads)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................................. 0.118 0.522 0.640
Climate Zone 2.................................................. 0.096 0.443 0.538
Climate Zone 3.................................................. 0.222 0.381 0.603
-----------------------------------------------
Total....................................................... 0.436 1.346 1.782
----------------------------------------------------------------------------------------------------------------
Table IV.13 illustrates the cumulative NES over the 30-year
analysis period on an FFC energy savings basis. FFC energy savings
apply a factor to account for losses associated with generation,
transmission, and distribution of
[[Page 32800]]
electricity, and the energy consumed in extracting, processing, and
transporting or distributing primary fuels. NES values differ among the
different climate zones because of differing energy efficiency
requirements in each climate zone and different shipment projections in
each climate zone.
Table IV.13--Cumulative National Energy Savings, Including Full-Fuel-Cycle of Manufactured Homes Purchased 2023-
2052 With a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
Single-section Multi-section
(quads) (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 IV.14 and Table IV.15 illustrate the NPV of consumer benefits
over the 30-year analysis period for a discount rate of 7 percent and 3
percent, respectively. The consumer NPV of manufactured homeowner
benefits differ among the different climate zones because there are
different upfront costs and operating cost savings associated with each
climate zone and different shipment projections in each climate zone.
For the standard being adopted in this final rule, all climate zones
have a positive consumer NPV for both discount rates.
Table IV.14--Consumer Net Present Value of Manufactured Homes Purchased 2023-2052 With a 30-Year Lifetime at a
7% Discount Rate
----------------------------------------------------------------------------------------------------------------
Single-section Multi-section
(billion (billion Total (billion
2020$) 2020$) 2020$)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................................. $0.15 $0.31 $0.46
Climate Zone 2.................................................. 0.13 0.20 0.33
Climate Zone 3.................................................. 0.40 0.32 0.73
-----------------------------------------------
Total....................................................... 0.68 0.84 1.52
----------------------------------------------------------------------------------------------------------------
Table IV.15--Consumer Net Present Value of Manufactured Homes Purchased 2023-2052 With a 30-Year Lifetime at a
3% Discount Rate
----------------------------------------------------------------------------------------------------------------
Single-section Multi-section
(billion (billion Total (billion
2020$) 2020$) 2020$)
----------------------------------------------------------------------------------------------------------------
Climate Zone 1.................................................. $0.40 $1.17 $1.58
Climate Zone 2.................................................. 0.35 0.89 1.24
Climate Zone 3.................................................. 1.10 1.15 2.25
-----------------------------------------------
Total....................................................... 1.85 3.21 5.06
----------------------------------------------------------------------------------------------------------------
Table IV.16 shows the projected benefits and costs to the
manufactured homeowner associated with the final rule, expressed in
terms of annualized values.
Table IV.16--Annualized Benefits and Costs to Manufactured Home Homeowners
----------------------------------------------------------------------------------------------------------------
Monetized (million 2020$/year)
Discount rate -----------------------------------------------
(%) Primary Low estimate High estimate
estimate ** ** **
----------------------------------------------------------------------------------------------------------------
Benefits: *
Operating (Energy) Cost..................... 7 361 322 402
Savings..................................... 3 551 478 627
Costs: *
Incremental Purchase........................ 7 221 213 231
Price Increase.............................. 3 277 255 294
Net Benefits/Costs: *
7 140 109 171
3 274 223 333
----------------------------------------------------------------------------------------------------------------
* The benefits and costs are calculated for homes shipped in 2023-2052.
** The Primary, Low, and High Estimates utilize forecasts of energy prices from the AEO 2021 Reference case, Low
Economic Growth case, and High Economic Growth case, respectively.
[[Page 32801]]
Further, DOE considered two sensitivity analyses relating to
shipments, consistent with the August 2021 SNOPR. First, DOE considered
a shipment scenario in which the growth rate is 6.5 percent (instead of
0.42 percent) based on the trend in actual manufactured home shipments
from 2011 to 2014. This growth rate applies to both the no-standards
case and standards case shipments. DOE's primary scenario is based on
the residential housing start data from AEO 2021. The sensitivity
analysis calculates the increase in NES and NPV associated with a much
larger future market for manufactured homes. Table IV.17 summarizes the
results of the sensitivity analysis. A detailed description of the
scenario analysis is provided in appendix 11A of the final rule TSD.
Table IV.17--Shipments Growth Rate Sensitivity Analysis NES and NPV Results
----------------------------------------------------------------------------------------------------------------
National energy Net present Net present
savings (full value 3% value 7%
fuel cycle discount rate discount rate
quads) (billion 2020$) (billion 2020$)
----------------------------------------------------------------------------------------------------------------
0.42% Shipment Growth (primary scenario).................. 1.88 $5.06 $1.52
6.5% Shipment Growth...................................... 6.05 14.59 3.73
----------------------------------------------------------------------------------------------------------------
In a second scenario analysis, DOE considered a standards case
shipment scenario in which the price elasticity is -2.4 (instead of -
0.48). HUD has used an estimate of -2.4 in analyses of revisions to its
regulations \79\ promulgated at 24 CFR part 3282 based on a 1992 paper
written by Carol Meeks.\80\ (See further discussion of this estimate in
Appendix 11A.) DOE's primary scenario is based on a study published in
2007 in the Journal of Housing Economics. The scenario analysis
calculates the decrease in NES and NPV associated with a larger
decrease in shipments resulting from a more elastic value. See Table
IV.18 for results of the sensitivity analysis. A description of the
scenario analysis is provided in appendix 11A of the final rule TSD.
Further, a detailed discussion on the corresponding change in shipments
is provided in section 10.4 of chapter 10 of the final rule TSD.
---------------------------------------------------------------------------
\79\ For example, see http://www.regulations.gov/#!documentDetail;D=HUD-2014-0033-0001.
\80\ Meeks, C., 1992, Price Elasticity of Demand for
Manufactured Homes: 1961 to 1989.
Table IV.18--Price Elasticity of Demand Scenario Analysis NES and NPV Results
----------------------------------------------------------------------------------------------------------------
National energy Net present Net present
savings (full- value 3% value 7%
fuel cycle discount rate discount rate
quads) (billion 2020$) (billion 2020$)
----------------------------------------------------------------------------------------------------------------
-0.48 Price Elasticity (primary scenario)................. 1.88 $5.06 $1.52
-2.4 Price Elasticity..................................... 1.76 4.77 1.44
----------------------------------------------------------------------------------------------------------------
D. Nationwide Energy Savings and Emissions Benefits
1. Emissions Analysis
DOE estimates environmental benefits in the form of reduced
emissions of air pollutants and greenhouse gases associated with
electricity production. DOE bases these estimates on a 30-year analysis
period of manufactured home shipments, accounting for a 30-year home
lifetime. DOE's analysis estimates reductions in emissions of six
pollutants associated with energy savings: carbon dioxide
(CO2), mercury (Hg), nitric oxide and nitrogen dioxide
(NOX), sulfur dioxide (SO2), methane
(CH4), and nitrous oxide (N2O). These reductions
are referred to as ``site'' emissions reductions. Furthermore, DOE
estimates reductions due to ``upstream'' activities in the fuel
production chain. These upstream activities comprise extraction,
processing, and transporting fuels to the site of combustion. Together,
site emissions reductions and upstream emissions reductions account for
the FFC.
As in the August 2021 SNOPR and October 2021 NODA, DOE estimated
emissions reductions based on emission factors for each pollutant,
which depend on the type of fuel associated with energy savings
(electricity, natural gas, liquefied petroleum gas, fuel oil). The
analysis of power sector emissions of CO2, NOX,
SO2, and Hg uses marginal emissions factors that were
derived from data in AEO 2020 for the August 2021 SNOPR, updated to AEO
2021 for the October 2021 NODA. Full details of this methodology are
described in chapter 13 of the final rule TSD.
Because the on-site operation of manufactured homes may require
combustion of fossil fuels and results in emissions of CO2,
NOX, and SO2 at the manufactured home sites where
this combustion occurs, DOE also accounted for the reduction in these
site emissions and the associated upstream emissions due to the
standards. Site emissions of the above gases were estimated using
emissions intensity factors from an EPA publication.\81\ The emissions
intensity factors are expressed in terms of physical units per MWh or
MMBtu of site energy savings. Total emissions reductions are estimated
using the energy savings calculated in the national impact analysis. As
discussed previously in section IV.C.2 of this document, the energy
savings calculated does not account for the energy savings for the
people who do not buy a manufactured home under the standards case
because they are price-sensitive, but only accounts for savings for
those that are able to purchase a manufactured home. The energy savings
is calculated based on the same number of homes purchased under both
the standards and no standards case such that there are no energy
savings attributed to less homes purchased. After calculating the total
reduction of emissions, DOE estimated the monetized value associated
with the reduction of these emissions, as
[[Page 32802]]
discussed in section IV.D.2 of this document.
---------------------------------------------------------------------------
\81\ U.S. Environmental Protection Agency. External Combustion
Sources. In Compilation of Air Pollutant Emission Factors. AP-42.
Fifth Edition. Volume I: Stationary Point and Area Sources. Chapter
1. Available at https://www.epa.gov/aiR-emissions-factors-and-quantification/ap-42-compilation-aiR-emissions-factors.
---------------------------------------------------------------------------
2. Monetizing Emissions Impacts
As part of the analysis of the impacts of this final rule, DOE
considered the estimated monetary climate and health benefits from the
reduced emissions of CO2, CH4, N2O,
NOX and SO2 that are expected to result from the
standards. In order to make this calculation analogous to the
calculation of the NPV of consumer benefit, DOE considered the reduced
emissions expected to result over the lifetime of products shipped in
the projection period for the standards. This section summarizes the
basis for the values used for monetizing the emissions benefits in this
final rule.
C2ES et al. stated that DOE operates from the premise that the
manufactured homes purchased after the proposed standards go into
effect have 30-year lifetimes, which means that any manufactured
housing purchased later than 2023 would exist--and provide value--past
2052. However, DOE's cost-benefit analysis only presents costs and
benefits for the initial 30-year period, thus failing to clearly
identify future costs and benefits beyond that timeframe. Instead, C2ES
et al. recommended that DOE should project and disclose all costs and
benefits, including benefits from avoided climate damages, out beyond
the year 2052. DOE should identify how far into the future it believes
the proposed manufactured housing energy conversation standards will
continue to generate significant costs or benefits. If the standards
will have significant effects after 2052, DOE should either extend its
timeframe or else state its reasons for not doing so. If DOE lacks
sufficient data to fully project costs and benefits beyond 2052, it
should explain the data limitations. (C2ES et al., No. 1399 at p. 35)
As previously described, DOE projected the energy savings, operating
cost savings, equipment costs, and NPV of consumer benefits sold in a
30-year period from 2023 through 2052, in addition to accounting for
costs and savings for a manufactured home lifetime of 30 years.
Further, in order to make the emissions reduction calculation analogous
to the calculation of the NPV of consumer benefit, DOE considered the
reduced emissions expected to result over the lifetime of products
shipped in the projection period for the standards (through 2082).
DOE notes that the analysis of the monetized climate and health
benefits was performed in support of the cost-benefit analyses required
by Executive Order 12866, and is provided to inform the public of the
impacts of emissions reductions resulting from this final rule. The
monetized climate and health benefits were not factored into DOE's
determination of whether the final rule is cost-effective under section
413 of EISA 2007.
a. Monetization of Greenhouse Gas Emissions
In the August 2021 SNOPR and October 2021 NODA DOE presented
estimates of the monetized benefits of the reductions in emissions of
CO2, CH4, and N2O by using a measure
of the social cost (SC) of each pollutant (e.g., SC-CO2). 86 FR 47744,
47814--47122; 86 FR 59042. DOE relied on SC-GHG estimates developed by
an interagency working group (IWG) that included DOE, the EPA and other
executive branch agencies and offices using three integrated assessment
models to develop the SC-CO2 estimates. 86 FR 47744, 47815.
For purposes of reflecting a range of modeling assumptions and
capturing the uncertainties involved in estimating climate risks,
including the risk of greater-than-expected damages, DOE determined it
was appropriate to include the four sets of SC-CO2 values as
recommended by the IWG. Id. DOE emphasized that the SC-GHG analysis
presented in the August 2021 SNOPR was performed in support of the
cost-benefit analyses required by Executive Order 12866, and was
provided to inform the public of the impacts of emissions reductions
resulting from this proposed rule. 86 FR 47744, 47817. DOE further
emphasized that the SC-GHG estimates were not factored into DOE's
determination of whether the proposed rule could be cost-effective
under section 413 of EISA 2007. Id.
The APGA commented that the interim SC-GHG values developed by the
IWG still require additional modifications before they are appropriate
for use in federal agency rulemakings or policy decisions and provided
a copy of comments previously submitted in response to a NODA published
by the Office of Management and Budget on May 7, 2021, requesting
comment on the ``Technical Support Document: Social Cost of Carbon,
Methane, and Nitrous Oxide Interim Estimates Under Executive Order
13990'' (86 FR 24669). (APGA, No. 1636 at p. 2) C2ES et al. recommended
that DOE expand upon its rationale for adopting a global damages
valuation and for the range of discount rates it applied to climate
effects, and presented potential legal, economic, and policy
justifications for the methodological approach presented in the August
2021 SNOPR. (See generally, C2ES et al., No. 1399) MHARR called on DOE
to withdraw the proposed standards entirely as a result of the
preliminary injunction issued on February 11, 2022, in Louisiana v.
Biden, No. 21-cv-1074-JDC-KK (W.D. La.), saying that DOE is prohibited
from adopting, employing, treating as binding, or relying upon any
Social Cost of Greenhouse Gas estimates based on global effects or that
otherwise fails to comply with applicable law. (MHARR, No. 1848 at p.
2); (MHARR, No. 1974 at p. 2-5)
On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-
30087) granted the federal government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction issued
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of
the Fifth Circuit's order, the preliminary injunction is no longer in
effect, pending resolution of the federal government's appeal of that
injunction or a further court order. Among other things, the
preliminary injunction enjoined the defendants in that case from
``adopting, employing, treating as binding, or relying upon'' the
interim estimates of the social cost of greenhouse gases--which were
issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of
reducing greenhouse gas emissions. In the absence of further
intervening court orders, DOE will revert to its approach prior to the
injunction and presents monetized benefits where appropriate and
permissible under law.
DOE estimates the monetized benefits of the reductions in emissions
of CO2, CH4, and N2O by using a
measure of the SC of each pollutant (e.g., SC-CO2). These
estimates represent the monetary value of the net harm to society
associated with a marginal increase in emissions of these pollutants in
a given year, or the benefit of avoiding that increase. These estimates
are intended to include (but are not limited to) climate-change-related
changes in net agricultural productivity, human health, property
damages from increased flood risk, disruption of energy systems, risk
of conflict, environmental migration, and the value of ecosystem
services.
DOE exercises its own judgment in presenting monetized climate
benefits as recommended by applicable Executive orders, and DOE would
reach the same conclusion presented in this document in the absence of
the social cost of greenhouse gases, including the February 2021
Interim Estimates presented by the Interagency Working Group on the
Social Cost of Greenhouse
[[Page 32803]]
Gases. DOE estimated the global social benefits of CO2,
CH4, and N2O reductions (i.e., SC-GHGs) using the
estimates presented in the Technical Support Document: Social Cost of
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive
Order 13990 published in February 2021 by the Interagency Working Group
on the Social Cost of Greenhouse Gases (IWG) (IWG, 2021). The SC-GHGs
is the monetary value of the net harm to society associated with a
marginal increase in emissions in a given year, or the benefit of
avoiding that increase. In principle, SC-GHGs includes the value of all
climate change impacts, including (but not limited to) changes in net
agricultural productivity, human health effects, property damage from
increased flood risk and natural disasters, disruption of energy
systems, risk of conflict, environmental migration, and the value of
ecosystem services. The SC-GHGs therefore, reflects the societal value
of reducing emissions of the gas in question by one metric ton. The SC-
GHGs is the theoretically appropriate value to use in conducting
benefit-cost analyses of policies that affect CO2,
N2O and CH4 emissions. As a member of the IWG
involved in the development of the February 2021 SC-GHG TSD), DOE
agrees that the interim SC-GHG estimates represent the most appropriate
estimate of the SC-GHG until revised estimates have been developed
reflecting the latest, peer-reviewed science.
The SC-GHGs estimates presented here were developed over many
years, using transparent process, peer reviewed methodologies, the best
science available at the time of that process, and with input from the
public. Specifically, in 2009, an IWG that included the DOE and other
executive branch agencies and offices was established to ensure that
agencies were using the best available science and to promote
consistency in the social cost of carbon (SC-CO2) values used across
agencies. The IWG published SC-CO2 estimates in 2010 that
were developed from an ensemble of three widely cited integrated
assessment models (IAMs) that estimate global climate damages using
highly aggregated representations of climate processes and the global
economy combined into a single modeling framework. The three IAMs were
run using a common set of input assumptions in each model for future
population, economic, and CO2 emissions growth, as well as
equilibrium climate sensitivity (ECS)--a measure of the globally
averaged temperature response to increased atmospheric CO2
concentrations. These estimates were updated in 2013 based on new
versions of each IAM. In August 2016 the IWG published estimates of the
social cost of methane (SC-CH4) and nitrous oxide (SC-
N2O) using methodologies that are consistent with the
methodology underlying the SC- CO2 estimates. The modeling
approach that extends the IWG SC-CO2 methodology to non-
CO2 GHGs has undergone multiple stages of peer review. The
SC-CH4 and SC-N2O estimates were developed by
Marten et al. (2015) and underwent a standard double-blind peer review
process prior to journal publication. In 2015, as part of the response
to public comments received to a 2013 solicitation for comments on the
SC-CO2 estimates, the IWG announced a National Academies of
Sciences, Engineering, and Medicine review of the SC-CO2
estimates to offer advice on how to approach future updates to ensure
that the estimates continue to reflect the best available science and
methodologies. In January 2017, the National Academies released their
final report, Valuing Climate Damages: Updating Estimation of the
Social Cost of Carbon Dioxide, and recommended specific criteria for
future updates to the SC-CO2 estimates, a modeling framework
to satisfy the specified criteria, and both near-term updates and
longer-term research needs pertaining to various components of the
estimation process (National Academies, 2017). Shortly thereafter, in
March 2017, President Trump issued Executive Order 13783, which
disbanded the IWG, withdrew the previous TSDs, and directed agencies to
ensure SC-CO2 estimates used in regulatory analyses are
consistent with the guidance contained in OMB's Circular A-4,
``including with respect to the consideration of domestic versus
international impacts and the consideration of appropriate discount
rates'' (E.O. 13783, Section 5(c)). Benefit-cost analyses following
E.O. 13783 used SC-GHG estimates that attempted to focus on the U.S.-
specific share of climate change damages as estimated by the models and
were calculated using two discount rates recommended by Circular A-4, 3
percent and 7 percent. All other methodological decisions and model
versions used in SC-GHG calculations remained the same as those used by
the IWG in 2010 and 2013, respectively.
On January 20, 2021, President Biden issued Executive Order 13990,
which reestablished the IWG and directed it to ensure that the U.S.
Government's estimates of the social cost of carbon and other
greenhouse gases reflect the best available science and the
recommendations of the National Academies (2017). The IWG was tasked
with first reviewing the SC-GHG estimates currently used in Federal
analyses and publishing interim estimates within 30 days of the E.O.
that reflect the full impact of GHG emissions, including by taking
global damages into account. The interim SC- GHG estimates published in
February 2021 are used here to estimate the climate benefits for this
final rule. The E.O. instructs the IWG to undertake a fuller update of
the SC- GHG estimates by January 2022 that takes into consideration the
advice of the National Academies (2017) and other recent scientific
literature. The February 2021 SC-GHG TSD provides a complete discussion
of the IWG's initial review conducted under E.O. 13990. In particular,
the IWG found that the SC-GHG estimates used under E.O. 13783 fail to
reflect the full impact of GHG emissions in multiple ways.
First, the IWG found that the SC-GHG estimates used under E.O.
13783 fail to fully capture many climate impacts that affect the
welfare of U.S. citizens and residents, and those impacts are better
reflected by global measures of the SC-GHG. Examples of effects omitted
from the E.O. 13783 estimates include direct effects on U.S. citizens,
assets, and investments located abroad, supply chains, U.S. military
assets and interests abroad, and tourism, and spillover pathways such
as economic and political destabilization and global migration that can
lead to adverse impacts on U.S. national security, public health, and
humanitarian concerns. In addition, assessing the benefits of U.S. GHG
mitigation activities requires consideration of how those actions may
affect mitigation activities by other countries, as those international
mitigation actions will provide a benefit to U.S. citizens and
residents by mitigating climate impacts that affect U.S. citizens and
residents. A wide range of scientific and economic experts have
emphasized the issue of reciprocity as support for considering global
damages of GHG emissions. If the United States does not consider
impacts on other countries, it is difficult to convince other countries
to consider the impacts of their emissions on the United States. The
only way to achieve an efficient allocation of resources for emissions
reduction on a global basis--and so benefit the U.S. and its citizens--
is for all countries to base their policies on global estimates of
damages. As a member of the IWG involved in the
[[Page 32804]]
development of the February 2021 SC-GHG TSD, DOE agrees with this
assessment and, therefore, in this final rule, DOE centers attention on
a global measure of SC-GHG. This approach is the same as that taken in
DOE regulatory analyses from 2012 through 2016. A robust estimate of
climate damages to U.S. citizens and residents does not currently exist
in the literature. As explained in the February 2021 TSD, existing
estimates are both incomplete and an underestimate of total damages
that accrue to the citizens and residents of the U.S. because they do
not fully capture the regional interactions and spillovers discussed
above, nor do they include all of the important physical, ecological,
and economic impacts of climate change recognized in the climate change
literature. As noted in the February 2021 SC-GHG TSD, the IWG will
continue to review developments in the literature, including more
robust methodologies for estimating a U.S.-specific SC-GHG value, and
explore ways to better inform the public of the full range of carbon
impacts. As a member of the IWG, DOE will continue to follow
developments in the literature pertaining to this issue.
Second, the IWG found that the use of the social rate of return on
capital (7 percent under current OMB Circular A- 4 guidance) to
discount the future benefits of reducing GHG emissions inappropriately
underestimates the impacts of climate change for the purposes of
estimating the SC-GHG. Consistent with the findings of the National
Academies (2017) and the economic literature, the IWG continued to
conclude that the consumption rate of interest is the theoretically
appropriate discount rate in an intergenerational context (IWG 2010,
2013, 2016a, 2016b), and recommended that discount rate uncertainty and
relevant aspects of intergenerational ethical considerations be
accounted for in selecting future discount rates.
Furthermore, the damage estimates developed for use in the SC-GHG
are estimated in consumption-equivalent terms, and so an application of
OMB Circular A-4's guidance for regulatory analysis would then use the
consumption discount rate to calculate the SC-GHG. DOE agrees with this
assessment and will continue to follow developments in the literature
pertaining to this issue. DOE also notes that while OMB Circular A-4,
as published in 2003, recommends using 3% and 7% discount rates as
``default'' values, Circular A-4 also reminds agencies that ``different
regulations may call for different emphases in the analysis, depending
on the nature and complexity of the regulatory issues and the
sensitivity of the benefit and cost estimates to the key assumptions.''
On discounting, Circular A-4 recognizes that ``special ethical
considerations arise when comparing benefits and costs across
generations,'' and Circular A-4 acknowledges that analyses may
appropriately ``discount future costs and consumption benefits . . . at
a lower rate than for intragenerational analysis.'' In the 2015
Response to Comments on the Social Cost of Carbon for Regulatory Impact
Analysis, OMB, DOE, and the other IWG members recognized that
``Circular A-4 is a living document'' and ``the use of 7 percent is not
considered appropriate for intergenerational discounting. There is wide
support for this view in the academic literature, and it is recognized
in Circular A-4 itself.'' Thus, DOE concludes that a 7% discount rate
is not appropriate to apply to value the social cost of greenhouse
gases in the analysis presented in this analysis. In this analysis, to
calculate the present and annualized values of climate benefits, DOE
uses the same discount rate as the rate used to discount the value of
damages from future GHG emissions, for internal consistency. That
approach to discounting follows the same approach that the February
2021 TSD recommends ``to ensure internal consistency--i.e., future
damages from climate change using the SC-GHG at 2.5 percent should be
discounted to the base year of the analysis using the same 2.5 percent
rate.'' DOE has also consulted the National Academies' 2017
recommendations on how SC-GHG estimates can ``be combined in RIAs with
other cost and benefits estimates that may use different discount
rates.'' The National Academies reviewed ``several options,'' including
``presenting all discount rate combinations of other costs and benefits
with [SC-GHG] estimates.''
As a member of the IWG involved in the development of the February
2021 SC-GHG TSD, DOE agrees with this assessment and will continue to
follow developments in the literature pertaining to this issue. While
the IWG works to assess how best to incorporate the latest, peer
reviewed science to develop an updated set of SC-GHG estimates, it set
the interim estimates to be the most recent estimates developed by the
IWG prior to the group being disbanded in 2017. The estimates rely on
the same models and harmonized inputs and are calculated using a range
of discount rates. As explained in the February 2021 SC-GHG TSD, the
IWG has recommended that agencies to revert to the same set of four
values drawn from the SC-GHG distributions based on three discount
rates as were used in regulatory analyses between 2010 and 2016 and
subject to public comment. For each discount rate, the IWG combined the
distributions across models and socioeconomic emissions scenarios
(applying equal weight to each) and then selected a set of four values
recommended for use in benefit-cost analyses: An average value
resulting from the model runs for each of three discount rates (2.5
percent, 3 percent, and 5 percent), plus a fourth value, selected as
the 95th percentile of estimates based on a 3 percent discount rate.
The fourth value was included to provide information on potentially
higher-than-expected economic impacts from climate change. As explained
in the February 2021 SC-GHG TSD, and DOE agrees, this update reflects
the immediate need to have an operational SC-GHG for use in regulatory
benefit-cost analyses and other applications that was developed using a
transparent process, peer-reviewed methodologies, and the science
available at the time of that process. Those estimates were subject to
public comment in the context of dozens of proposed rulemakings as well
as in a dedicated public comment period in 2013.
There are a number of limitations and uncertainties associated with
the SC-GHG estimates. First, the current scientific and economic
understanding of discounting approaches suggests discount rates
appropriate for intergenerational analysis in the context of climate
change are likely to be less than 3 percent, near 2 percent or
lower.\82\ Second, the IAMs used to produce these interim estimates do
not include all of the important physical, ecological, and economic
impacts of climate change recognized in the climate change literature
and the science underlying their ``damage functions''--i.e., the core
parts of the IAMs that map global mean temperature changes and other
physical impacts of climate change into economic (both market and
nonmarket) damages--lags behind the most recent research. For example,
limitations include the incomplete treatment of catastrophic and non-
catastrophic impacts in the integrated assessment models, their
[[Page 32805]]
incomplete treatment of adaptation and technological change, the
incomplete way in which inter-regional and intersectoral linkages are
modeled, uncertainty in the extrapolation of damages to high
temperatures, and inadequate representation of the relationship between
the discount rate and uncertainty in economic growth over long time
horizons. Likewise, the socioeconomic and emissions scenarios used as
inputs to the models do not reflect new information from the last
decade of scenario generation or the full range of projections. The
modeling limitations do not all work in the same direction in terms of
their influence on the SC-CO2 estimates. However, as
discussed in the February 2021 TSD, the IWG has recommended that, taken
together, the limitations suggest that the interim SC-GHG estimates
used in this final rule likely underestimate the damages from GHG
emissions. DOE concurs with this assessment.
---------------------------------------------------------------------------
\82\ Interagency Working Group on Social Cost of Greenhouse
Gases (IWG). 2021. Technical Support Document: Social Cost of
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive
Order 13990. February. United States Government. Available at:
<https://www.whitehouse.gov/briefing-room/blog/2021/02/26/a-return-to-science-evidence-based-estimates-of-the-benefits-of-reducing-climate-pollution/.
---------------------------------------------------------------------------
DOE's derivations of the SC-CO2, SC-N2O, and
SC-CH4 values used for this final rule are discussed in the
following paragraphs, and the results of DOE's analyses estimating the
benefits of the reductions in emissions of these pollutants are
presented in section IV.D.3.b of this document.
Social Cost of Carbon
The SC-CO2 values used for this final rule were
generated using the values presented in the 2021 update from the IWG.
Table IV.19 shows the updated sets of SC-CO2 estimates from
the latest interagency update in 5-year increments from 2020 to 2050.
The full set of annual values used is presented in Appendix 14-A of the
final rule TSD. For purposes of capturing the uncertainties involved in
regulatory impact analysis, DOE has determined it is appropriate to
include all four sets of SC-CO2 values, as recommended by
the IWG.\83\
---------------------------------------------------------------------------
\83\ For example, the TSD discusses how the understanding of
discounting approaches suggests that discount rates appropriate for
intergenerational analysis in the context of climate change may be
lower than 3 percent.
Table IV.19--Annual SC-CO2 Values From 2021 Interagency Update, 2020-2050
[2020$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
Discount rate
---------------------------------------------------------------
5% 3% 2.5% 3%
Year ---------------------------------------------------------------
95th
Average Average Average percentile
----------------------------------------------------------------------------------------------------------------
2020............................................ 14 51 76 152
2025............................................ 17 56 83 169
2030............................................ 19 62 89 187
2035............................................ 22 67 96 206
2040............................................ 25 73 103 225
2045............................................ 28 79 110 242
2050............................................ 32 85 116 260
----------------------------------------------------------------------------------------------------------------
In calculating the potential global benefits resulting from reduced
CO2 emissions, DOE used the values from the February 2021
TSD, adjusted to 2020$ using the implicit price deflator for gross
domestic product (GDP) from the Bureau of Economic Analysis. DOE
derived values from 2051 to 2070 based on estimates published by
EPA.\84\ These estimates are based on methods, assumptions, and
parameters identical to the 2020-2050 estimates published by the IWG.
DOE derived values after 2070 based on the trend in 2060-2070 in each
of the four cases (see appendix 14A).
---------------------------------------------------------------------------
\84\ See EPA, Revised 2023 and Later Model Year Light-Duty
Vehicle GHG Emissions Standards: Regulatory Impact Analysis,
Washington, DC, December 2021. Available at: www.epa.gov/system/files/documents/2021-12/420r21028.pdf (last accessed January 13,
2022).
---------------------------------------------------------------------------
DOE multiplied the CO2 emissions reduction estimated for
each year by the SC-CO2 value for that year in each of the
four cases. To calculate a present value of the stream of monetary
values, DOE discounted the values in each of the four cases using the
specific discount rate that had been used to obtain the SC-
CO2 values in each case.
Social Cost of Methane and Nitrous Oxide
The SC-CH4 and SC-N2O values used for this
final rule were generated using the values presented in the February
2021 TSD. Table IV.20 shows the updated sets of SC-CH4 and
SC-N2O estimates from the latest interagency update in 5-
year increments from 2020 to 2050. The full set of annual values used
is presented in Appendix 14-A of the final rule TSD. To capture the
uncertainties involved in regulatory impact analysis, DOE has
determined it is appropriate to include all four sets of SC-
CH4 and SC-N2O values, as recommended by the IWG.
DOE derived values after 2050 using the approach described above for
the SC-CO2.
Table IV.20--Annual SC-CH4 and SC-N2O Values from 2021 Interagency Update, 2020-2050
[2020$ per metric ton]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SC-CH4 SC-N2O
-------------------------------------------------------------------------------------------------------------------------------
Discount rate and statistic Discount rate and statistic
-------------------------------------------------------------------------------------------------------------------------------
Year 5% 3% 2.5% 3% 5% 3% 2.5% 3%
-------------------------------------------------------------------------------------------------------------------------------
95th 95th
Average Average Average percentile Average Average Average percentile
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2020............................................................ 670 1500 2000 3900 5800 18000 27000 48000
2025............................................................ 800 1700 2200 4500 6800 21000 30000 54000
2030............................................................ 940 2000 2500 5200 7800 23000 33000 60000
[[Page 32806]]
2035............................................................ 1100 2200 2800 6000 9000 25000 36000 67000
2040............................................................ 1300 2500 3100 6700 10000 28000 39000 74000
2045............................................................ 1500 2800 3500 7500 12000 30000 42000 81000
2050............................................................ 1700 3100 3800 8200 13000 33000 45000 88000
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
DOE multiplied the CH4 and N2O emissions
reduction estimated for each year by the SC-CH4 and SC-
N2O estimates for that year in each of the cases. To
calculate a present value of the stream of monetary values, DOE
discounted the values in each of the cases using the specific discount
rate that had been used to obtain the SC-CH4 and SC-
N2O estimates in each case.
b. Monetization of Other Air Pollutants
For this final rule, DOE also estimated the monetized value of
NOX and SO2 emissions reductions from electricity
generation using benefit per ton estimates based on air quality
modeling and concentration-response functions conducted for the Clean
Power Plan final rule. EPA values for PM2.5-related benefits
associated with NOX and SO2 and for ozone-related
benefits for 2025, 2030, 2035 and 2040, calculated with discount rates
of 3 percent and 7 percent. For this analysis DOE used linear
interpolation to define values for the years not given in the 2025 to
2040 range; for years beyond 2040 the value is held constant.
DOE estimated the monetized value of NOX and
SO2 emissions reductions from site use of gas in
manufactured homes using benefit per ton estimates from the EPA's
``Technical Support Document Estimating the Benefit per Ton of Reducing
PM2.5 Precursors from 17 Sectors'' (``EPA TSD''). Although
none of the sectors refers specifically to residential and commercial
buildings, the sector called ``area sources'' would be a reasonable
proxy for residential and commercial buildings. ``Area sources''
represents all emission sources for which states do not have exact
(point) locations in their emissions inventories. Because exact
locations would tend to be associated with larger sources, ``area
sources'' would be fairly representative of small dispersed sources
like homes and businesses. The EPA TSD provides high and low estimates
for 2016, 2020, 2025, and 2030 at 3- and 7-percent discount rates. DOE
primarily relied on the low estimates to be conservative. DOE
multiplied the emissions reduction (in tons) in each year by the
associated $/ton values, and then discounted each series using discount
rates of 3 percent and 7 percent as appropriate.
3. Results
a. Emissions Analysis
In this final rule, DOE utilized emission factors derived from data
in the AEO 2021.\85\ The AEO incorporates the projected impacts of
existing air quality regulations on emissions. AEO 2021 generally
represents current legislation and environmental regulations, including
recent government actions, for which implementing regulations were
available at the time of preparation of AEO 2021, including the
emissions control programs discussed in the following paragraphs.\86\
---------------------------------------------------------------------------
\85\ See Energy Information Administration, Annual Energy
Outlook 2020 with Projections to 2050 (2021).
\86\ For further information, see the Assumptions to AEO2021
report that sets forth the major assumptions used to generate the
projections in the Annual Energy Outlook. Available at www.eia.gov/outlooks/aeo/assumptions/ (last accessed July 6, 2020).
---------------------------------------------------------------------------
SO2 emissions from affected electric generating units
(``EGUs'') are subject to nationwide and regional emissions cap-and-
trade programs. Title IV of the Clean Air Act sets an annual emissions
cap on SO2 for affected EGUs in the 48 contiguous States and
the District of Columbia (DC). (42 U.S.C. 7651 et seq.) SO2
emissions from numerous eastern States and DC are also limited under
the Cross-State Air Pollution Rule (``CSAPR''), which created an
allowance-based trading program that operates along with the Title IV
program in those States and DC. 76 FR 48208 (Aug. 8, 2011). CSAPR
requires these States to reduce certain emissions, including annual
SO2 emissions, and went into effect as of January 1,
2015.\87\ AEO 2021 incorporates implementation of CSAPR, including the
update to the CSAPR ozone season program emission budgets and target
dates issued in 2016, 81 FR 74504 (Oct. 26, 2016).\88\ Compliance with
CSAPR is flexible among EGUs and is enforced through the use of
tradable emissions allowances. Under existing EPA regulations, for
states subject to SO2 emissions limits under CSAPR, any
excess SO2 emissions allowances resulting from the lower
electricity demand caused by the adoption of efficiency standards could
be used to permit offsetting increases in SO2 emissions by
another regulated EGU.
---------------------------------------------------------------------------
\87\ CSAPR requires states to address annual emissions of
SO2 and NOX, precursors to the formation of
fine particulate matter (``PM2.5'') pollution, in order
to address the interstate transport of pollution with respect to the
1997 and 2006 PM2.5 National Ambient Air Quality
Standards (``NAAQS''). CSAPR also requires certain states to address
the ozone season (May-September) emissions of NOX, a
precursor to the formation of ozone pollution, in order to address
the interstate transport of ozone pollution with respect to the 1997
ozone NAAQS. 76 FR 48208 (Aug. 8, 2011). EPA subsequently issued a
supplemental rule that included an additional five states in the
CSAPR ozone season program; 76 FR 80760 (Dec. 27, 2011)
(Supplemental Rule), and EPA issued the CSAPR Update for the 2008
ozone NAAQS. 81 FR 74504 (Oct. 26, 2016).
\88\ In Sept. 2019, the DC Court of Appeals remanded the 2016
CSAPR Update to EPA. In April 2021, EPA finalized the 2021 CSAPR
Update which resolved the interstate transport obligations of 21
states for the 2008 ozone NAAQS. 86 FR 23054 (April 30, 2021); see
also, 86 FR 29948 (June 4, 2021) (correction to preamble). The 2021
CSAPR Update became effective on June 29, 2021. The release of
AEO2021 in February 2021 predated the 2021 CSAPR Update.
---------------------------------------------------------------------------
However, beginning in 2016, SO2 emissions began to fall
as a result of implementation of the Mercury and Air Toxics Standards
(``MATS'') for power plants. 77 FR 9304 (Feb. 16, 2012). In the MATS
final rule, EPA established a standard for hydrogen chloride as a
surrogate for acid gas hazardous air pollutants (``HAP''), and also
established a standard for SO2 (a non-HAP acid gas) as an
alternative equivalent surrogate standard for acid gas HAP. The same
controls are used to reduce HAP and non-HAP acid gas; thus,
SO2 emissions are being reduced as a result of the control
technologies installed on coal-fired power plants to
[[Page 32807]]
comply with the MATS requirements for acid gas. To continue operating,
coal plants must have either flue gas desulfurization or dry sorbent
injection systems installed. Both technologies, which are used to
reduce acid gas emissions, also reduce SO2 emissions.
Because of the emissions reductions under the MATS, it is unlikely that
excess SO2 emissions allowances resulting from the lower
electricity demand would be needed or used to permit offsetting
increases in SO2 emissions by another regulated EGU.
Therefore, energy conservation standards that decrease electricity
generation will generally reduce SO2 emissions.
CSAPR also established limits on NOX emissions for
numerous States in the eastern half of the United States. Energy
conservation standards would have little effect on NOX
emissions in those States covered by CSAPR emissions limits if excess
NOX emissions allowances resulting from the lower
electricity demand could be used to permit offsetting increases in
NOX emissions from other EGUs. In such a case,
NOX emissions would remain near the limit even if
electricity generation goes down. A different case could possibly
result, depending on the configuration of the power sector in the
different regions and the need for allowances, such that NOX
emissions might not remain at the limit in the case of lower
electricity demand. In this case, energy conservation standards might
reduce NOx emissions in covered States. Despite this possibility, DOE
has chosen to be conservative in its analysis and has maintained the
assumption that energy conservation standards will not reduce
NOX emissions in States covered by CSAPR. Energy
conservation standards would be expected to reduce NOX
emissions in the States not covered by CSAPR. DOE used AEO 2021 data to
derive NOX emissions factors for the group of States not
covered by CSAPR.
The MATS limit mercury emissions from power plants, but they do not
include emissions caps and as such, DOE's energy conservation standards
would be expected to slightly reduce Hg emissions. DOE estimated
mercury emissions reduction using emissions factors based on AEO 2021,
which incorporates the MATS.\89\
---------------------------------------------------------------------------
\89\ DOE has not included the monetary impacts of the reduction
of Hg for this rule. DOE is evaluating the appropriate monetization
of these emissions for energy conservation standards rulemakings.
---------------------------------------------------------------------------
Combustion emissions of CH4 and N2O are
estimated using emissions intensity factors published by the EPA.\90\
The FFC upstream emissions are estimated based on the methodology
described in chapter 13 of the final rule TSD. The upstream emissions
include both emissions from fuel combustion during extraction,
processing, and transportation of fuel, and ``fugitive'' emissions
(direct leakage to the atmosphere) of CH4 and
CO2.
---------------------------------------------------------------------------
\90\ Available at www2.epa.gov/climateleadership/centeR-corporate-climate-leadership-ghg-emission-factors-hub.
---------------------------------------------------------------------------
Table IV.21 reflects the emissions reductions for both single-
section and multi-section manufactured homes.
Table IV.21--Emissions Reductions as a Result of the Final Rule
----------------------------------------------------------------------------------------------------------------
Pollutant Single-section Multi-section Total
----------------------------------------------------------------------------------------------------------------
Site Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................................... 19.5 53.8 73.3
Hg (metric tons)................................................ 2.92E-02 9.60E-02 1.25E-01
NOX (thousand metric tons)...................................... 10.9 26.6 37.5
SO2 (thousand metric tons)...................................... 7.2 20.4 27.6
CH4 (thousand metric tons)...................................... 1.03 3.11 4.14
N2O (thousand metric tons)...................................... 0.21 0.57 0.78
----------------------------------------------------------------------------------------------------------------
Upstream Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................................... 2.01 5.05 7.06
Hg (metric tons)................................................ 1.48E-04 4.45E-04 5.93E-04
NOX (thousand metric tons)...................................... 25.4 64.8 90.2
SO2 (thousand metric tons)...................................... 0.21 0.47 0.67
CH4 (thousand metric tons)...................................... 127 354 481
N2O (thousand metric tons)...................................... 0.011 0.026 0.037
----------------------------------------------------------------------------------------------------------------
Total Emissions Reductions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....................................... 21.5 58.9 80.4
Hg (metric tons)................................................ 2.93E-02 9.64E-02 0.13
NOX (thousand metric tons)...................................... 36.3 91.4 127.7
SO2 (thousand metric tons)...................................... 7.44 20.9 28.3
CH4 (thousand metric tons)...................................... 128 357 485
N2O (thousand metric tons)...................................... 0.23 0.59 0.82
----------------------------------------------------------------------------------------------------------------
b. Monetization of Emissions
DOE estimated the global social benefits of GHG emission reductions
expected from this final rule using the SC-GHG estimates presented in
the Technical Support Document: Social Cost of Carbon, Methane, and
Nitrous Oxide Interim Estimates under Executive Order 13990 (IWG 2021)
that would be expected to result from the final rule as discussed in
IV.D.2. DOE has determined that the estimates from the February 2021
TSD are based upon sound analysis and provide well-founded estimates
for DOE's analysis of the impacts of GHG related to the reductions of
emissions resulting from this final rule. Table IV.22 presents the
global values of the CO2 emissions reduction.
[[Page 32808]]
Table IV.22--Present Monetized Value of CO2 Emissions Reduction for Manufactured Homes Purchased 2023-2052 With
a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
SC-CO2 case
---------------------------------------------------------------
3% discount
5% discount 3% discount 2.5% discount rate, 95th
rate, average rate, average rate, average percentile
----------------------------------------------------------------------------------------------------------------
million 2020$
---------------------------------------------------------------
Single Section.................................. 160.1 723.4 1,211.5 2,228.5
Multi Section................................... 439.8 1,985.3 3,323.0 6,115.3
---------------------------------------------------------------
Total....................................... 599.9 2,708.7 4,534.4 8,343.7
----------------------------------------------------------------------------------------------------------------
Similarly, DOE has updated the quantified total climate benefits to
estimate monetary benefits likely to result from the reduced emissions
of CH4 and N2O, consistent with the interim
estimates in the February 2021 TSD. DOE multiplied the CH4
and N2O emissions reduction estimated for each year by the
SC-CH4 and SC-N2O estimates for that year in each
of the two cases.
Table IV.23 presents the value of the CH4 emissions
reduction, and Table IV.24 presents the value of the N2O
emissions reduction.
Table IV.23--Present Monetized Value of Methane Emissions Reduction for Manufactured Homes Purchased 2023-2052
With a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
SC-CH4 case
---------------------------------------------------------------
3% discount
5% discount 3% discount 2.5% discount rate, 95th
rate, average rate, average rate, average percentile
----------------------------------------------------------------------------------------------------------------
million 2020$
----------------------------------------------------------------------------------------------------------------
Single Section.................................. 47.7 154.9 230.1 412.5
Multi Section................................... 133.3 432.8 643.0 1,152.6
---------------------------------------------------------------
Total....................................... 181.0 587.6 873.2 1,565.1
----------------------------------------------------------------------------------------------------------------
Table IV.24--Present Monetized Value of Nitrous Oxide Emissions Reduction for Manufactured Homes Purchased 2023-
2052 With a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
SC-N2O case
---------------------------------------------------------------
3% discount
5% discount 3% discount 2.5% discount rate, 95th
rate, average rate, average rate, average percentile
----------------------------------------------------------------------------------------------------------------
million 2020$
---------------------------------------------------------------
Single Section.................................. 0.68 3.00 4.95 7.99
Multi Section................................... 1.80 7.89 13.01 21.03
---------------------------------------------------------------
Total....................................... 2.48 10.89 17.97 29.02
----------------------------------------------------------------------------------------------------------------
DOE updated the monetization of NOX and SO2
emissions reductions from both electricity generation and direct use
from manufactured homes. For this analysis, DOE used linear
interpolation to define values for the years not given in the 2025 to
2040 range; for years beyond 2040 the value is held constant. Full
details of this methodology are described in chapter 14 of the final
rule TSD. DOE multiplied the NOX and SO2
emissions reduction (in tons) in each year by the associated $/ton
values, and then discounted each series using discount rates of 3
percent and 7 percent as appropriate. Table IV.25 and Table IV.26
presents the results.
[[Page 32809]]
Table IV.25--Present Monetized Value of NOX Emissions Reduction for Manufactured Homes Purchased 2023-2052 With
a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
3% discount 7% discount 3% discount 7% discount
rate (high) rate (high) rate (low) rate (low)
----------------------------------------------------------------------------------------------------------------
million 2020$
---------------------------------------------------------------
Single Section.................................. 1,220.1 410.2 1,170.8 393.5
Multi Section................................... 3,208.7 1,082.0 3,110.6 1,048.9
---------------------------------------------------------------
Total....................................... 4,428.8 1,492.2 4,281.4 1,442.4
----------------------------------------------------------------------------------------------------------------
Table IV.26--Present Monetized Value of SO2 Emissions Reduction for Manufactured Homes Purchased 2023-2052 With
a 30-Year Lifetime
----------------------------------------------------------------------------------------------------------------
3% discount 7% discount 3% discount 7% discount
rate (high) rate (high) rate (low) rate (low)
----------------------------------------------------------------------------------------------------------------
million 2020$
---------------------------------------------------------------
Single Section.................................. 452.9 152.4 332.7 114.6
Multi Section................................... 1,227.2 416.0 977.6 337.4
---------------------------------------------------------------
Total....................................... 1,680.1 568.3 1,310.3 452.0
----------------------------------------------------------------------------------------------------------------
DOE has not considered the monetary benefits of the reduction of Hg
for this final rule. Not all the public health and environmental
benefits from the reduction of greenhouse gases, NOx, and
SO2 are captured in the values above, and additional
unquantified benefits from the reductions of those pollutants as well
as from the reduction of Hg, direct PM, and other co-pollutants may be
significant.
DOE emphasizes that the emissions analysis, including the SC-GHG
analysis, presented in this final rule and TSD was performed in support
of the cost-benefit analyses required by Executive Order 12866, and is
provided to inform the public of the impacts of emissions reductions
resulting from this final rule. The emissions estimates were not
factored into DOE's determination of whether the final rule is cost-
effective under section 413 of EISA 2007.
E. Total Benefits and Costs
DOE has determined that under the standards the benefits to the
Nation of the standards (energy savings, consumer LCC savings, positive
NPV of consumer benefit, energy security benefits, and emission
reductions) outweigh the burdens (loss of INPV, and LCC increases for
some homeowners of manufactured housing). The projected total benefits
and costs (from the manufactured homeowner's perspective) associated
with the standard, expressed in terms of annualized values, is
presented in Table I.10 (See section I.E of this document).\91\
---------------------------------------------------------------------------
\91\ DOE used a two-step calculation process to convert the
time-series of costs and benefits into annualized values. First, DOE
calculated a present value in 2016, the year used for discounting
the net present value of total consumer costs and savings, for the
time-series of costs and benefits using discount rates of three and
seven percent for all costs and benefits except for the value of
CO2 reductions. From the present value, DOE then
calculated the fixed annual payment over a 30-year period, starting
in 2020 that yields the same present value. The fixed annual payment
is the annualized value. Although DOE calculated annualized values,
this does not imply that the time-series of cost and benefits from
which the annualized values were determined would be a steady stream
of payments.
---------------------------------------------------------------------------
V. Procedural Issues and Regulatory Review
A. Review Under Executive Orders 12866 and 13563
Executive Order (``E.O.'') 12866, ``Regulatory Planning and
Review,'' as supplemented and reaffirmed by E.O. 13563, ``Improving
Regulation and Regulatory Review, 76 FR 3821 (Jan. 21, 2011), requires
agencies, to the extent permitted by law, to (1) propose or adopt a
regulation only upon a reasoned determination that its benefits justify
its costs (recognizing that some benefits and costs are difficult to
quantify); (2) tailor regulations to impose the least burden on
society, consistent with obtaining regulatory objectives, taking into
account, among other things, and to the extent practicable, the costs
of cumulative regulations; (3) select, in choosing among alternative
regulatory approaches, those approaches that maximize net benefits
(including potential economic, environmental, public health and safety,
and other advantages; distributive impacts; and equity); (4) to the
extent feasible, specify performance objectives, rather than specifying
the behavior or manner of compliance that regulated entities must
adopt; and (5) identify and assess available alternatives to direct
regulation, including providing economic incentives to encourage the
desired behavior, such as user fees or marketable permits, or providing
information upon which choices can be made by the public. DOE
emphasizes as well that E.O. 13563 requires agencies to use the best
available techniques to quantify anticipated present and future
benefits and costs as accurately as possible. In its guidance, the
Office of Information and Regulatory Affairs (``OIRA'') in the Office
of Management and Budget (``OMB'') has emphasized that such techniques
may include identifying changing future compliance costs that might
result from technological innovation or anticipated behavioral changes.
For the reasons stated in the preamble, this proposed/final regulatory
action is consistent with these principles.
Section 6(a) of E.O. 12866 also requires agencies to submit
``significant regulatory actions'' to OIRA for review. OIRA has
determined that this final regulatory action constitutes an
economically significant regulatory action under section 3(f) of E.O.
12866. Accordingly, pursuant to section 6(a)(3)(C) of E.O. 12866, DOE
has provided to OIRA an assessment,
[[Page 32810]]
including the underlying analysis, of benefits and costs anticipated
from the proposed/final regulatory action, together with, to the extent
feasible, a quantification of those costs; and an assessment, including
the underlying analysis, of costs and benefits of potentially effective
and reasonably feasible alternatives to the planned regulation, and an
explanation why the planned regulatory action is preferable to the
identified potential alternatives. These assessments are summarized in
the tables below, as well as elsewhere in this preamble. Further detail
on alternatives can be found in chapter 15 of the final rule TSD for
this rulemaking.
Table V.1--Summary of Total Monetized Benefits and Costs to Manufactured
Home Homeowners Under the Adopted Standards
------------------------------------------------------------------------
Net present
value (billion
$2020)
------------------------------------------------------------------------
3% Discount Rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 10.2
Climate Benefits *...................................... 3.3
Health Benefits **...................................... 5.6
Total Benefits.......................................... 19.1
Consumer Incremental Product Costs [dagger]............. 5.1
Net Benefits............................................ 14.0
------------------------------------------------------------------------
7% Discount Rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 3.9
Climate Benefits *...................................... 3.3
Health Benefits **...................................... 1.9
Total Benefits [dagger]................................. 9.1
Consumer Incremental Product Costs [dagger][dagger]..... 2.4
Net Benefits............................................ 6.7
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with
manufactured housing shipped in 2023-2052. These results include
benefits to consumers which accrue after 2052 from the products
shipped in 2023-2052.
* Climate benefits are calculated using four different estimates of the
social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
(SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
discount rates; 95th percentile at 3 percent discount rate), as shown
in Table IV.22 through Table IV.24. Together these represent the
global SC-GHG. For presentational purposes of this table, the climate
benefits associated with the average SC-GHG at a 3 percent discount
rate are shown, but the Department does not have a single central SC-
GHG point estimate. See section. IV.D of this document for more
details. On March 16, 2022, the Fifth Circuit Court of Appeals (No. 22-
30087) granted the federal government's emergency motion for stay
pending appeal of the February 11, 2022, preliminary injunction issued
in Louisiana v. Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result
of the Fifth Circuit's order, the preliminary injunction is no longer
in effect, pending resolution of the federal government's appeal of
that injunction or a further court order. Among other things, the
preliminary injunction enjoined the defendants in that case from
``adopting, employing, treating as binding, or relying upon'' the
interim estimates of the social cost of greenhouse gases--which were
issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of
reducing greenhouse gas emissions. In the absence of further
intervening court orders, DOE will revert to its approach prior to the
injunction and presents monetized benefits where appropriate and
permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for NOX and SO2) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects such as health benefits from reductions in direct PM2.5
emissions. See section IV.D.2 of this document for more details.
[dagger] Total and net benefits include those consumer, climate, and
health benefits that can be quantified and monetized. For presentation
purposes, total and net benefits for both the 3-percent and 7-percent
cases are presented using the average SC-GHG with 3-percent discount
rate, but the Department does not have a single central SC-GHG point
estimate. DOE emphasizes the importance and value of considering the
benefits calculated using all four SC-GHG estimates.
[dagger][dagger] The incremental costs include incremental costs
associated with principal and interest, mortgage and property tax for
the analyzed loan types. Further discussion can be found in chapter 8
of the TSD.
Table V.2--Annualized Monetized Benefits and Costs to Manufactured Home
Homeowners Under the Standards
------------------------------------------------------------------------
Million $2020
------------------------------------------------------------------------
3% Discount Rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 551
Climate Benefits *...................................... 169
Health Benefits **...................................... 285
Total Benefits.......................................... 1005
Consumer Incremental Product Costs [dagger]............. 277
Net Benefits............................................ 728
------------------------------------------------------------------------
7% Discount Rate
------------------------------------------------------------------------
Consumer Operating Cost Savings......................... 361
Climate Benefits *...................................... 169
Health Benefits **...................................... 153
Total Benefits.......................................... 682
Consumer Incremental Product Costs [dagger]............. 221
[[Page 32811]]
Net Benefits............................................ 461
------------------------------------------------------------------------
* Climate benefits are calculated using four different estimates of the
social cost of carbon (SC-CO2), methane (SC-CH4), and nitrous oxide
(SC-N2O) (model average at 2.5 percent, 3 percent, and 5 percent
discount rates; 95th percentile at 3 percent discount rate). Together
these represent the global social cost of greenhouse gases (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, and it emphasizes the importance and value of considering
the benefits calculated using all four SC-GHG estimates. On March 16,
2022, the Fifth Circuit Court of Appeals (No. 22-30087) granted the
federal government's emergency motion for stay pending appeal of the
February 11, 2022, preliminary injunction issued in Louisiana v.
Biden, No. 21-cv-1074-JDC-KK (W.D. La.). As a result of the Fifth
Circuit's order, the preliminary injunction is no longer in effect,
pending resolution of the federal government's appeal of that
injunction or a further court order. Among other things, the
preliminary injunction enjoined the defendants in that case from
``adopting, employing, treating as binding, or relying upon'' the
interim estimates of the social cost of greenhouse gases--which were
issued by the Interagency Working Group on the Social Cost of
Greenhouse Gases on February 26, 2021--to monetize the benefits of
reducing greenhouse gas emissions. In the absence of further
intervening court orders, DOE will revert to its approach prior to the
injunction and presents monetized benefits where appropriate and
permissible under law.
** Health benefits are calculated using benefit-per-ton values for NOX
and SO2. DOE is currently only monetizing (for NOX and SO2) PM2.5
precursor health benefits and (for NOX) ozone precursor health
benefits, but will continue to assess the ability to monetize other
effects such as health benefits from reductions in direct PM2.5
emissions. The health benefits are presented at real discount rates of
3 and 7 percent.
B. Review Under the Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
preparation of an initial regulatory flexibility analysis (``IRFA'')
and a final regulatory flexibility analysis (``FRFA'') for any rule
that by law must be proposed for public comment, unless the agency
certifies that the rule, if promulgated, will not have a significant
economic impact on a substantial number of small entities. As required
by E.O. 13272, ``Proper Consideration of Small Entities in Agency
Rulemaking,'' 67 FR 53461 (Aug. 16, 2002), DOE published procedures and
policies on February 19, 2003, to ensure that the potential impacts of
its rules on small entities are properly considered during the
rulemaking process. 68 FR 7990 (Feb. 9, 2003) DOE has made its
procedures and policies available on the Office of the General
Counsel's website (www.energy.gov/gc/office-general-counsel).
DOE prepared an IRFA as part of the August 2021 supplemental notice
of proposed rulemaking (``SNOPR''). 86 FR 47825. In the IRFA, DOE
identified 29 domestic small businesses impacted by the energy
conservation standards for manufactured housing. DOE determined that
the costs imposed on domestic small businesses as a result of this
rulemaking would be small relative to the size of the average small
manufacturer. DOE sought comment from stakeholders on the cost and
number of model plans manufacturers must update as a result of the
rule, the types of capital expenditures necessitated by the proposal,
and the total cost of updating product offerings and manufacturing
facilities. DOE also sought comment on how these values would differ
for small manufacturers, and DOE's estimate of average annual revenues
for small manufacturers of manufactured housing. In light of DOE's
analysis in the IRFA and input from stakeholders, DOE has prepared the
following FRFA as part of this final rule.
1. Need for, and Objectives of, the Rule
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. Among other
provisions, EISA directs DOE to consult with the Secretary of HUD, who
may seek further counsel from the Manufactured Housing Consensus
Committee (``MHCC''); and to base the energy conservation standards on
the most recent version of the International Energy Conservation Code
(``IECC''), except 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)
2. Significant Issues Raised
DOE received comments from the Manufactured Housing Association for
Regulatory Reform (``MHARR''), the Manufactured Housing Institute
(``MHI''), and the MHCC related to small businesses and the regulatory
flexibility analysis presented in the manufactured housing August 2021
SNOPR. These comments are addressed in this section.
In written comments, MHARR cited a U.S. Small Business
Administration (``SBA'') study to conclude that the cost burdens of
Federal regulation fall disproportionately on smaller businesses. MHARR
made a general request that DOE evaluate potential impacts on smaller
manufactured housing producers, retailers and communities and on the
future viability and market share of those smaller, independent
manufactured housing manufacturers.
DOE notes that its Regulatory Flexibility Analysis is scoped to the
parties that have a direct compliance burden resulting from the rule,
specifically the manufacturers that are subject to the energy
conservation standard. DOE's rule requires only manufacturers of
manufactured housing to comply with the rule's requirements. Analysis
of retailers and communities is therefore outside the scope of DOE's
FRFAs. For this final rule, DOE has further revised its analysis of
small manufacturer impacts based on additional data submitted in
written comments from industry stakeholders.
In response to the August 2021 SNOPR's IRFA, MHI raised concerns
about the retail list price threshold used in the tiered proposal. MHI
noted that the cost to update model plans would be a recurring annual
cost rather than a one-time cost due to recurring retail price changes.
(MHI, No. 1592 at p. 30) For the final rule, DOE is adopting a tiered
approach wherein the standard levels are dependent on a size-based
threshold instead of retail list prices. As such, the cost of updating
the industry's current model plans to comply with the standards is
expected to be a one-time conversion cost and not a recurring cost.
MHCC provided comments on DOE's August 2021 SNOPR and stated that
smaller manufacturers may not always have the ability to make model
plan changes in-house and must rely on external experts, which results
in higher costs. The MHCC noted that the estimated engineering and
third-party review time of 3 hours estimated in DOE's August 2021 SNOPR
analysis is
[[Page 32812]]
too conservative. MHCC estimated the actual time required would be 10-
12 hours. As an example of changes needed, MHCC noted model plans must
be revised for physical space impacts, evaluated through calculation
for compliance to new thermal envelope requirements, analyzed for
structural load path impacts, evaluated for procurement and material
changes, and a third-party plan review and approval. MHCC gave the
example that one large manufacturer on the MHCC has upwards of 3,000
model plans while data received from a single facility manufacturer
estimates 300 model plans.
For the final rule analysis, DOE revised its estimates of
conversion costs based on feedback from stakeholders. Specifically, DOE
revised upward its estimates of the number of model plans and the cost
to update model plans, in line with MHCC's comments. Additional detail
is in section 4 ``Description and Estimate of Compliance Requirements''
of the Review Under the Regulatory Flexibility Act.
3. Description and Estimate of the Number of Small Entities Affected
The SBA has set a size threshold for manufacturers of manufactured
homes, which defines those entities classified as ``small businesses''
for the purposes of the statute. DOE used the SBA's small business size
standards to determine whether any small entities would be subject to
the requirements of the rule. (13 CFR part 121) The size standards are
listed by North American Industry Classification System (``NAICS'')
code and industry description and are available at www.sba.gov/document/support--table-size-standards. Manufacturing of manufactured
housing is classified under NAICS code 321991: ``Manufactured Home
(Mobile Home) Manufacturing.'' The SBA sets a threshold of 1,250
employees or fewer for an entity to be considered as a small business
for this category. DOE notes that the IRFA in the June 2016 NOPR was
based on an employee threshold of 500 employees. 81 FR 42576. The
updated threshold of 1,250 employees in the IRFA in the August 2021
SNOPR and today's FRFA reflects the SBA's most recent guidance on the
employee threshold for small businesses.
To estimate the number of companies that manufacture manufactured
housing covered by this rulemaking, DOE conducted a market survey using
publicly available information. DOE first attempted to identify all
manufactured housing manufacturers by researching industry trade
associations (e.g., MHI \92\) and individual company websites. DOE used
market research tools such as Dun & Bradstreet reports,\93\
Glassdoor,\94\ and LinkedIn \95\ to gather information about the number
of employees and manufacturing locations. DOE also asked stakeholders
and industry representatives if they were aware of any other small
manufacturers. After a comprehensive list of businesses was created,
DOE screened out companies that do not offer manufactured homes
affected by this final rule, do not meet the definition of a ``small
business,'' are foreign-owned and operated, or do not manufacture
manufactured homes in the United States.
---------------------------------------------------------------------------
\92\ Manufactured Housing Institute. MHI Company Members.
(2019). www.manufacturedhousing.org/wp-content/uploads/2019/07/Current-Member-List-USE-7-18-19-3.pdf (Last accessed March 10,
2022).
\93\ Dun & Bradstreet Hoovers. Subscription login accessible at:
app.dnbhoovers.com/ (Last accessed March 10, 2022).
\94\ Glassdoor, Inc. Available at: www.glassdoor.com/index.htm
(Last accessed March 10, 2022).
\95\ LinkedIn. Available at: www.linkedin.com/ (Last accessed
March 10, 2022).
---------------------------------------------------------------------------
DOE identified 31 manufacturers of manufactured housing affected by
this rulemaking. Of these, DOE identified 27 manufacturers that qualify
as domestic small businesses.
4. Description and Estimate of Compliance Requirements
To evaluate impacts facing manufacturers of manufactured housing,
DOE estimated both the product conversion costs (e.g., expenditures on
R&D, testing, marketing, and other non-depreciable expenses) and
capital conversion costs (e.g., investments in property, plant, and
equipment) manufacturers would incur to bring their product designs and
manufacturing facilities into compliance with the standards.
To calculate product conversion costs, DOE estimated the number of
model-plans manufacturers would need to redesign. MHI reports there are
136 production plants for manufactured housing in the United
States.\96\ Three large manufacturers in the industry account for 100
of those production plants, based on production plant counts in the
companies' annual reports. The remaining 36 plants are associated with
small manufacturers. MHCC's comments indicate that individual
production plants have approximately 300 model plans. (MHCC, No. 1600
at pp. 14) DOE estimated there are 10,800 model plans associated with
the small manufacturers. Based on stakeholder input from written
comments, DOE estimated that each plan would require 10 hours of
engineering time to update. DOE chose to use the lower end of MHCC's
10-12 hour estimate because of revisions to the adopted standards,
specifically removal of R-5 continuous insulation from the prescriptive
requirements, addresses some of the more complex design concerns of
manufacturers raised in response to the August 2021 SNOPR. Using data
from the U.S. Bureau of Labor Statistics, DOE calculated a fully
burdened mean hourly wage for a mechanical engineer at $65.53/hour in
2020.\97\ Based on these inputs, DOE estimated total small business
product conversion costs of approximately $7.1 million. For this FRFA,
DOE assumed the $7.1 million in product conversion costs were evenly
spread across the 27 small businesses identified. DOE believes that
particularly small, low-volume manufacturers would offer fewer model
plans, however there was insufficient information to determine the
exact number of plans each small business offered. Furthermore, DOE
believes this even allocation avoids underestimating the investment
needed for particularly small, low-volume manufacturers. Using these
assumptions, DOE estimates product conversion costs of approximately
$262,000 per small manufacturer.
---------------------------------------------------------------------------
\96\ Manufactured Housing Institute. 2021 Manufactured Housing
Facts. Available at: www.manufacturedhousing.org/wp-content/uploads/2021/05/2021-MHI-Quick-Facts-updated-05-2021.pdf (Last accessed
March 10, 2022).
\97\ U.S. Bureau of Labor Statistics. Occupational Employment
and Wage Statistics. Available at: www.bls.gov/oes/current/oes172141.htm (Last accessed March 10, 2022).
---------------------------------------------------------------------------
While DOE understands most manufacturers have the necessary
equipment to produce manufactured homes that are compliant with the
standards as proposed in this document, DOE incorporated capital
conversion costs of $20,000 per production plant to cover tooling and
work station adjustments that may be needed to support compliance with
the standard. Accounting for 36 production plants, DOE estimates
capital conversion costs of approximately $27,000 per small
manufacturer.
DOE estimated the average small manufacturer would incur $289,000
in conversion costs. Based on data from business databases (i.e., Dun &
Bradstreet and Manta), DOE estimated that small manufacturers of
manufactured housing have an average annual revenue of $52.3 million.
Per manufacturer conversion costs are less than one percent of average
small business annual revenue.
[[Page 32813]]
While DOE's analysis indicated that conversion costs are small
relative to the annual revenue of most small manufacturers, DOE
recognized that there is a range of company sizes within the set of 27
small manufacturers. DOE evaluated the impacts of the standard of
different groupings of small manufacturers based on revenue. See Table
V.3 for the grouping of small manufacturers by revenue.
Table V.3--Annual Revenue Distribution of Manufactured Housing Small
Businesses
------------------------------------------------------------------------
Number of Conversion
Annual company revenue (millions) small cost/annual
manufacturers revenue (%)
------------------------------------------------------------------------
Less than $10........................... 4 5
$10 to $20.............................. 6 2
$20 to $30.............................. 5 1
$30 to $40.............................. 2 1
$40 to $50.............................. 4 1
$50 or more............................. 6 0
-------------------------------
Total............................... 27
------------------------------------------------------------------------
For the small manufacturer groupings with revenue over $10 million,
DOE finds the conversion costs to be small relative to company revenue.
However, the impacts could be more severe for the grouping with annual
revenue less than $10 million. For this grouping of manufacturers,
which accounts for less than 0.5 percent of industry shipments, the
estimated conversion costs could reach 5 percent of annual revenue over
the conversion period.
DOE expects the four manufacturers with less than $10 million in
annual revenue to have one production location each. If these small
manufacturers maintain fewer than 300 model plans or if these
manufacturers have existing high efficiency models that meet the
standard today, then the conversion costs would be lower. However,
there is insufficient publicly available information to allow DOE to
determine the exact number of model plans requiring redesign for just
these four specific companies.
5. Significant Alternatives Considered and Steps Taken To Minimize
Significant Economic Impacts on Small Entities
In reviewing alternatives to the proposed standards, DOE examined
energy conservation standards proposals in the June 2016 NOPR,
proposals the August 2021 SNOPR, and sensitivities in the October 2021
NODA. The June 2016 NOPR was adopted by the MH working group, which
consisted of 22 representatives of stakeholders,\98\ including
representatives of manufacturer trade groups that included small
manufacturers. However, 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 considered multiple alternatives.
---------------------------------------------------------------------------
\98\ Selected member of the MH working group were: Bert Kessler,
Palm Harbor Homes, Inc.; David Tompos, NTA, Inc.; Emanuel Levy,
Systems Building Research Alliance; Eric Lacey, Responsible Energy
Codes Alliance; Ishbel Dickens, National Manufactured Home Owners
Association (NMHOA); Keith Dennis, National Rural Electric
Cooperative Association; Lois Starkey, Manufactured Housing
Institute; Lowell Ungar, American Council for an Energy-Efficient
Economy; Manuel Santana, Cavco Industries; Mark Ezzo, Clayton Homes,
Inc.; Mark Weiss, Manufactured Housing Association for Regulatory
Reform; Michael Lubliner, Washington State University Extension
Energy Program; Michael Wade, Cavalier Home Builders; Peter
Schneider, Efficiency Vermont; Richard Hanger, Housing Technology
and Standards; Richard Potts, Virginia Department of Housing and
Community Development; Rob Luter, Lippert Components, Inc.; Robin
Roy, Natural Resources Defense Council; Scott Drake, East Kentucky
Power Cooperative; Stacey Epperson, Next Step Network. DOE and ASRAC
members were: Joseph Hagerman (DOE); and John Caskey (ASRAC,
National Electrical Manufacturers Association).
---------------------------------------------------------------------------
DOE evaluated the alternative of adopting tiered standards with
tiers based on retail pricing. In the August 2021 SNOPR, Tier 1 applied
to manufactured home with a manufacturer's retail list price of $55,000
or less, and would 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 $750 or less.
The August 2021 SNOPR also set up a Tier 2 that would apply to
manufactured homes with a manufacturer's retail list price greater than
$55,000. The Tier 2 standards would be set to stringencies based on the
2021 IECC and would increase purchase prices by more than $750.
DOE is adopting energy conservation standards based on the tiered
approach presented in the August 2021 SNOPR and October 2021 NODA with
some revisions. Tier 1 will apply to single-section manufactured homes
and Tier 2 will apply to multi-section manufactured homes. The removal
of tiers based on retail price eliminates the possibility that
manufacturers would need to revise models plans frequently due to
fluctuations in production costs or changes in retail pricing strategy.
Additionally, DOE is adopting alternate exterior wall insulation
prescriptive requirements to reduce burden on manufacturers, including
small manufacturers. Specifically, for manufacturers choosing to follow
the prescriptive requirements, eliminating the continuous insulation
requirement in exterior wall insulation reduces product conversion
costs by reducing the complexity and the extent of plan redesign.
Without this change, DOE would expect product conversion costs for
manufacturers, including small manufacturers, to be at least 20 percent
higher.
The adopted energy conservation standards incorporate building
thermal envelope measures based on specifications of the 2021 IECC,
with consideration of the design and factory construction techniques of
manufactured homes. Further, the energy conservation standards also
include duct and air sealing, insulation installation, HVAC
specifications, service hot water systems, mechanical ventilation fan
efficacy, and heating and cooling equipment sizing provisions, based on
the 2021 IECC. Additionally, the energy conservation standard
incorporates feedback from manufacturers and takes steps to mitigate
the burdens on small manufacturers, such as removing prescriptive
requirements requiring continuous insulation. The tiered energy
conservation standards provide
[[Page 32814]]
positive national average lifecycle cost savings over the life of the
manufactured home (i.e., 30-years). Additionally, this adopted standard
is expected to save 1.88 quads of FFC savings over the 30-year analysis
period.
C. Review Under the Paperwork Reduction Act
This rulemaking does not include any information collection
requirements subject to the Paperwork Reduction Act of 1995 (44 U.S.C.
3501 et seq.).
D. Review Under the National Environmental Policy Act of 1969
On January 14, 2022, DOE published the draft environmental impact
statement for proposed energy conservation standards for manufactured
housing (DOE/EIS-0550D). (``January 2022 DEIS''). The January 2022 DEIS
was published pursuant to the National Environmental Policy Act of 1969
(NEPA), the Council on Environmental Quality's Regulations for
implementing the procedural provisions of the National Environmental
Policy Act (40 CFR parts 1500-1508), and DOE's NEPA Implementing
Procedures (10 CFR part 1021). In response to the August 2021 SNOPR and
October 2021 NODA, DOE received a number of comments regarding the
January 2022 DEIS, as follows.
Schulte commented that there may be difficulty in establishing
national standards because evaluating the impact of tightening the air
envelope of the home on indoor air quality would be influenced by
regional differences in ambient climate. (Schulte, No. 1028 at p. 23)
UCB commented that they were concerned that there is not an EIS
available, and that they cannot make an informed comment without the
EIS, especially when looking at alternatives to this rule. (UCB, No.
1405 at p. 1) UC Law School stated that by failing to publish a Draft
Environmental Impact Statement, the DOE has compromised the ability of
the public to offer meaningful comments. Under NEPA, ``NEPA procedures
must ensure that environmental information is available to public
officials and citizens before decisions are made and before actions are
taken.'' 40 CFR 1500.1(b). They stated that this provision indicates
that a DEIS should have been prepared before the DOE decided on this
proposed rule and certainly should be available for public comment
before the proposed rule is promulgated. (UC Law School, No. 1634 at p.
2, 3, 5, 6) They also stated that DOE must incorporate the cost-benefit
analysis into the EIS. The CEQ rules do not require a formal CBA, but
if the agency prepares one, it must be presented in the EIS, according
to 40 CFR 1502.22. (UC Law School, No. 1634 at p. 10) Further, UC Law
School commented that the CBA does not comply with the directives of
Executive Order 12866. Executive Order 12866 directs agencies, in the
rulemaking process, to ``assess all costs and benefits of available
regulatory alternatives. . . .''. The Executive order mandates that
agencies shall: Identify the problem to be addressed and its
significance; consider the need to fix existing regulations; assess
alternatives to direct regulation; design regulations to maximize cost-
efficiency; confirm that the benefits of new rules justify the costs,
use the best reasonably obtainable information; tailor regulations to
minimize burdens; and write rules clearly to minimize uncertainty and
litigation. UC Law School stated that the alternatives were not
entirely assessed, a third approach was not examined, the regulation
was not designed to maximize cost-efficiency, and the proposed rule was
not written to minimize uncertainty and litigation since the EIS has
not been published. (UC Law School, No. 1634 at p. 11)
ACEEE stated that the analysis presented in the EIS supports a
strong untiered standard to provide the greatest environmental,
socioeconomic, and health benefits. ACEEE says that air sealing
requirements have mixed but acceptable impacts on IAQ. ACEEE stated
that its analysis shows that the air sealing requirements of the
proposed standards may increase concentrations of certain indoor air
pollutants but that does not change the overall hazard status of these
pollutants. ACEEE also stated that analysis also shows that the
proposed air sealing requirements reduce indoor exposure to pollutants
from outdoor sources (by reducing uncontrolled air flow). Thus, the
proposed efficiency standards should not be rejected based on the
potential impacts to IAQ. ACEEE stated that it is worth noting that all
options considered in the SNOPR and in the EIS have the same air
sealing requirements and thus the same IAQ impacts. ACEEE stated that
requiring effective mechanical ventilation and reducing use of off-
gassing materials in manufactured homes, regardless of the efficiency
standard, is the best way to ensure healthy indoor air quality by
reducing exposure to air pollutants from indoor sources, and referred
to ASHRAE Standard 62.2, Ventilation and Acceptable Indoor Air Quality
in Residential Buildings, as an option for meeting the HUD Code. ACEEE
concluded that the EIS confirms that the untiered standard delivers the
highest 30-year LCC savings to residents, and delivers strong climate
and environmental justice benefits. ACEEE said the untiered standard
delivers the largest reduction in ongoing energy costs, which is an
essential part of preserving the affordability of MH and lowering high
energy burdens for its residents. (ACEEE, No. 1988 at p. 1-2)
Earthjustice and Prosperity Now stated that there is no need to
view energy-saving requirements that reduce air infiltration in MH as
establishing a zero sum game between different groups or air
pollutants, and that DOE should follow through on the draft EIS
recommendations that to promote installation of energy efficient fans
for ventilation. Earthjustice and Prosperity Now stated that, at the
absolute minimum, DOE needs to fulfill its statutory obligation to
evaluate the requirements for improved ventilation contained in the
IECC, and concluded that the substantial economic, environmental, and
health benefits of improving air sealing practices in MH construction
should not come at the cost of creating environments where air
pollutants generated indoors linger until concentrations reach
potentially harmful levels, and that it is essential that these risks
be mitigated, and DOE must not pass up any opportunities to use its
legal authority to ensure the safety of the MH residents.
As previously mentioned, DOE has published the January 2022 DEIS
and the Final EIS in April of 2022 which informs this final rule.
Although DOE was unable to issue the DEIS simultaneously with the
August 2021 SNOPR, the agency reopened the energy conservation
standards rule docket for public comment in January 2022, when it
issued the January 2022 DEIS, to ensure an opportunity to comment on
how the January 2022 DEIS should inform the standards final rule.
Comments received in the rulemaking docket during the January 2022
comment period have been considered in the previous sections, though
some are discussed more below; comments received on the DEIS
specifically are considered in the FEIS.
The January 2022 DEIS analyzed a range of alternatives and impacts
for the standards considered in the August 2021 SNOPR and October 2021
NODA (i.e., tiered--using manufacturer's list price or home size;
untiered; alternate exterior wall insulation for certain climate
zones), as well as the no action alternative. The final EIS further
analyzed these alternatives, and incorporated and addressed feedback
[[Page 32815]]
from stakeholder comments on the DEIS. DOE utilized the analyses in the
DEIS, the comments received on the DEIS, and the analyses in the final
EIS to inform this final rule, particularly in regards to the issues of
indoor air quality and socioeconomics.
With respect to indoor air quality, the final EIS provides a
discussion of potential environmental impacts to indoor air quality
related to the alternatives analyzed, as well as potential mitigation
measures, which informed this rulemaking. See sections 4.2.3 and 4.3 of
the Final EIS. As noted in the EIS, all the action alternatives
analyzed would result in more airtight homes, which would have higher
indoor air concentrations of pollutants emitted indoors, increasing the
existing potential for health effects, particularly when ventilation is
not routinely used. Conversely, all the action alternatives would
result in better indoor protection from outdoor air pollutants,
including wildfire smoke. Additionally, DOE expects a lower risk of
moisture problems (e.g., mold) in the belly and attic of manufactured
homes. As noted in section 4.11 of the final EIS, DOE identified
potential mitigation measures to address increased indoor air
pollutants resulting from better sealing of homes, such as promotion of
installation of energy-efficient ventilation systems, advanced research
and stakeholder engagement to increase implementation of efficient
ventilation in manufactured housing, and promoting indoor air quality
and environmental justice through informational resources and labeling.
DOE considered all of this information in constructing this final rule.
With respect to socioeconomics, the final EIS provides a discussion
of impacts to indoor socioeconomics, which informed this rulemaking of
the reasonable alternatives that could avoid or minimize adverse
impacts. See section 4.4 of the Final EIS. DOE received numerous
comments from a variety of stakeholders about the impacts of the
alternatives analyzed in the DEIS on socioeconomics, particularly on
low-income consumers. Accordingly, DOE has finalized the tiered
standard based on home size in this final rule.
With respect to the comments at the beginning of this section, as
discussed in section III.B of this document, DOE is adopting a tiered
standard in this final rule to mitigate the affordability and cost-
effectiveness concerns raised by HUD during and consultation, and in
other stakeholder comments. DOE acknowledges that the untiered standard
provided greater long-term energy savings benefits. However, for the
reasons stated in section III.B of this document, DOE has determined to
adopt the tiered standard in today's final rule. As ACEEE noted, DOE
considered similar sealing requirements across the analyzed action
alternatives, and they had similar indoor air quality impacts.
Therefore, these impacts would be similar regardless of the alternative
chosen. With respect to Earthjustice and Prosperity Now's comments, as
discussed in section III.A.3 of this document, DOE disagrees with the
commenter that a provision-by-provision analysis of the IECC is
necessary for this final rule. Moreover, HUD is the Federal authority
that regulates safety standards, including ventilation, in manufactured
homes. Additional ventilation requirements to improve indoor air
quality are better addressed by HUD. DOE notes that the standards
adopted in this final rule are similar to those already required by the
HUD Code. Additionally, as discussed in section 4.11 of the final EIS,
DOE identified potential mitigation measures to address increased
indoor air pollutants resulting from better sealing of homes, such as
promotion of installation of energy-efficient ventilation systems,
advanced research and stakeholder engagement to increase implementation
of efficient ventilation in manufactured housing, and through
informational resources and labeling. DOE intends to pursue these
potential mitigation measures to promote indoor air quality and
environmental justice in manufactured homes.
Elsewhere in this issue of the Federal Register, DOE is publishing
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. In addition, to
remain compliant with Executive Order 12866, DOE is submitting this
final rule for review to the Office of Information and Regulatory
Affairs to ensure that the final rule, including the assessments of
cost-effectiveness and benefits, meet the requirements of Executive
Order 12866. DOE is statutorily required by EISA to base these energy
conservation standards on the most recent version of the IECC except
where it is not cost-effective, and as such, DOE followed that
statutory direction for this final rule. DOE strived to incorporate
feedback from stakeholders to maximize clarity and minimize the burden
placed on manufacturers, while also following its statutory obligations
and ensuring energy and cost savings for consumers of manufactured
housing. With regards to difficulties establishing national standards
based on regional differences in ambient climate, DOE has based the
adopted standards on the established HUD zones to account for
differences in regional climates consistent with section 413 of EISA
(42 U.S.C. 17071(b)(2)(B)).
E. Review Under Executive Order 13132
Executive Order 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999)
imposes certain requirements on Federal agencies formulating and
implementing policies or regulations that preempt State law or that
have federalism implications. The Executive order requires agencies to
examine the constitutional and statutory authority supporting any
action that would limit the policymaking discretion of the States and
to carefully assess the necessity for such actions. The Executive order
also requires agencies to have an accountable process to ensure
meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.
On March 14, 2000, DOE published a statement of policy describing the
intergovernmental consultation process it will follow in the
development of such regulations. 65 FR 13735. DOE has examined this
final rulemaking and has determined that it would not have a
substantial direct effect on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government.
DOE has examined this action and has determined that it will not
pre-empt State law. This action impacts energy efficiency requirements
for manufacturers of manufactured homes. Therefore, no further action
is required by E.O. 13132.
F. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of E.O. 12988, ``Civil
Justice Reform,'' imposes on Federal agencies the general duty to
adhere to the following requirements: (1) Eliminate drafting errors and
ambiguity; (2) write regulations to minimize litigation; (3) provide a
clear legal standard for affected conduct rather than a general
standard; and (4) promote simplification and burden reduction. 61 FR
4729 (Feb. 7, 1996). Regarding the review required by section 3(a),
section 3(b) of E.O. 12988 specifically requires that executive
[[Page 32816]]
agencies make every reasonable effort to ensure that the regulation:
(1) Clearly specifies the preemptive effect, if any; (2) clearly
specifies any effect on existing Federal law or regulation; (3)
provides a clear legal standard for affected conduct while promoting
simplification and burden reduction; (4) specifies the retroactive
effect, if any; (5) adequately defines key terms; and (6) addresses
other important issues affecting clarity and general draftsmanship
under any guidelines issued by the Attorney General. Section 3(c) of
E.O. 12988 requires Executive agencies to review regulations in light
of applicable standards in section 3(a) and section 3(b) to determine
whether they are met, or it is unreasonable to meet one or more of
them. DOE has completed the required review and determined that, to the
extent permitted by law, this proposed rule meets the relevant
standards of E.O. 12988.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'')
requires each Federal agency to assess the effects of Federal
regulatory actions on State, local, and Tribal governments and the
private sector. Public Law 104-4, section 201 (codified at 2 U.S.C.
1531). For a regulatory action likely to result in a rule that may
cause the expenditure by State, local, and Tribal governments, in the
aggregate, or by the private sector of $100 million or more in any one
year (adjusted annually for inflation), section 202 of UMRA requires a
Federal agency to publish a written statement that estimates the
resulting costs, benefits, and other effects on the national economy.
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to
develop an effective process to permit timely input by elected officers
of State, local, and Tribal governments on a ``significant
intergovernmental mandate,'' and requires an agency plan for giving
notice and opportunity for timely input to potentially affected small
governments before establishing any requirements that might
significantly or uniquely affect them. On March 18, 1997, DOE published
a statement of policy on its process for intergovernmental consultation
under UMRA. 62 FR 12820. DOE's policy statement is also available at
https://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
DOE has concluded that this rule may require expenditures of $100
million or more in one year by the private sector. Such expenditures
may include: (1) Updates to product plans and investment in capital
expenditures by manufactured home manufacturers in the years between
the final rule and the compliance date of the new standards, and (2)
incremental additional expenditures by consumers to purchase higher-
efficiency manufactured homes, starting at the compliance date for the
standards.
Section 202 of UMRA authorizes a Federal agency to respond to the
content requirements of UMRA in any other statement or analysis that
accompanies the rule. (2 U.S.C. 1532(c)) The content requirements of
section 202(b) of UMRA relevant to a private sector mandate
substantially overlap the economic analysis requirements that apply
under E.O. 12866. This SUPPLEMENTARY INFORMATION section and chapter 15
of the TSD for this final rule respond to those requirements.
Under section 205 of UMRA, the Department is obligated to identify
and consider a reasonable number of regulatory alternatives before
promulgating a rule for which a written statement under section 202 is
required. (2 U.S.C. 1535(a)) DOE is required to select from those
alternatives the most cost-effective and least burdensome alternative
that achieves the objectives of the rule unless DOE publishes an
explanation for doing otherwise, or the selection of such an
alternative is inconsistent with law.
In accordance with the statutory provisions discussed in this
document, this rule would establish energy conservation standards for
manufactured homes based on the most recent 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 code on the purchase price of manufactured housing and on total
life-cycle construction and operating costs, and taking into
consideration the design and factory construction techniques of
manufactured homes. (42 U.S.C. 17071(b)(1) and 42 U.S.C.
17071(b)(2)(A)) As discussed previously, DOE found the 2021 IECC-based
adopted final rule cost-effective consistent with section 413 of EISA.
A discussion of the alternatives considered by DOE is presented in
chapter 15 of the TSD for this final rule.
H. Review Under the Treasury and General Government Appropriations Act,
1999
Section 654 of the Treasury and General Government Appropriations
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family
Policymaking Assessment for any rule that may affect family well-being.
These standards would not have any impact on the autonomy or integrity
of the family as an institution. Accordingly, DOE has concluded that it
is not necessary to prepare a Family Policymaking Assessment.
I. Review Under Executive Order 12630
Pursuant to E.O. 12630, ``Governmental Actions and Interference
with Constitutionally Protected Property Rights,'' 53 FR 8859 (Mar. 18,
1988), DOE has determined that these standards would not result in any
takings that might require compensation under the Fifth Amendment to
the U.S. Constitution.
J. Review Under the Treasury and General Government Appropriations Act,
2001
Section 515 of the Treasury and General Government Appropriations
Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to
review most disseminations of information to the public under
information quality guidelines established by each agency pursuant to
general guidelines issued by OMB. OMB's guidelines were published at 67
FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR
62446 (Oct. 7, 2002). Pursuant to OMB Memorandum M-19-15, Improving
Implementation of the Information Quality Act (April 24, 2019), DOE
published updated guidelines which are available at https://www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has
reviewed this rule under the OMB and DOE guidelines and has concluded
that it is consistent with applicable policies in those guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA
at OMB, a Statement of Energy Effects for any significant energy
action. A ``significant energy action'' is defined as any action by an
agency that promulgates or is expected to lead to promulgation of a
final rule, and that: (1) Is a significant regulatory action under E.O.
12866, or any successor order; and (2) is likely to have a significant
adverse effect on the supply, distribution, or use of energy; or (3) is
designated by the Administrator of OIRA as a significant energy action.
For any significant energy action, the agency must give a detailed
statement of any adverse effects on energy supply,
[[Page 32817]]
distribution, or use, and of reasonable alternatives to the action and
their expected benefits on energy supply, distribution, and use.
DOE has concluded that this regulatory action, which establishes
new energy conservation standards for manufactured housing, is not a
significant energy action because the standards are not likely to have
a significant adverse effect on the supply, distribution, or use of
energy, nor has it been designated as such by the Administrator at
OIRA. Accordingly, DOE has not prepared a Statement of Energy Effects
on this final rule.
L. Information Quality
On December 16, 2004, OMB, in consultation with the Office of
Science and Technology Policy (OSTP), issued its Final Information
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14,
2005). The Bulletin establishes that certain scientific information
shall be peer-reviewed by qualified specialists before it is
disseminated by the Federal Government, including influential
scientific information related to agency regulatory actions. The
purpose of the Bulletin is to enhance the quality and credibility of
the Government's scientific information. Under the Bulletin, the energy
conservation standards rulemaking analyses are ``influential scientific
information,'' which the Bulletin defines as ``scientific information
the agency reasonably can determine will have, or does have, a clear
and substantial impact on important public policies or private sector
decisions.'' 70 FR 2664, 2667.
In response to OMB's Bulletin, DOE conducted formal peer reviews of
the energy conservation standards development process for consumer
products and industrial equipment under EPCA and the analyses that are
typically used and prepared a report describing that peer review.\99\
Generation of this report involved a rigorous, formal, and documented
evaluation using objective criteria and qualified and independent
reviewers to make a judgment as to the technical, scientific, and
business merit; the actual or anticipated results; and the productivity
and management effectiveness of programs and/or projects. Because
available data, models, and technological understanding have changed
since 2007, DOE has engaged with the National Academy of Sciences to
review DOE's analytical methodologies to ascertain whether
modifications are needed to improve the Department's analyses. DOE is
in the process of evaluating the resulting report.\100\
---------------------------------------------------------------------------
\99\ The 2007 ``Energy Conservation Standards Rulemaking Peer
Review Report'' is available at the following website: http://energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peeR-review-report-0.
\100\ The report is available at www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards.
---------------------------------------------------------------------------
M. Materials Incorporated by Reference
Under section 301 of the Department of Energy Organization Act
(Pub. L. 95-91; 42 U.S.C. 7101), DOE must comply with section 32 of the
Federal Energy Administration Act of 1974, as amended by the Federal
Energy Administration Authorization Act of 1977. (15 U.S.C. 788; FEAA)
Section 32 essentially provides in relevant part that, where a proposed
rule authorizes or requires use of commercial standards, the notice of
proposed rulemaking must inform the public of the use and background of
such standards. In addition, section 32(c) requires DOE to consult with
the Attorney General and the FTC Chairman concerning the impact of the
commercial or industry standards on competition.
DOE is incorporating by reference the industry standard published
by ACCA, titled Manual J-2016 (ver 2.50), Manual J--Residential Load
Calculations, Eight Edition, Version 2.50.. ACCA Manual J is an
industry accepted standard for calculating the heating and cooling load
associated with a building. DOE is requiring building heating and
cooling loads to be calculated (for purposes of equipment sizing) in
accordance with ACCA Manual J. ACCA Manual J is readily available on
ACCA's website at www.acca.org/.
DOE is incorporating by reference the industry standard published
by ACCA, titled Manual S-2014, Manual S--Residential Equipment
Selection, Second Edition, Version 1.00. ACCA Manual S is an industry
accepted standard for calculating the appropriate heating and cooling
equipment size for a building. DOE is requiring building heating and
cooling equipment to be sized in accordance with ACCA Manual S. ACCA
Manual S is readily available on ACCA's website at www.acca.org/.
DOE is incorporating by reference the industry standard written by
C.C Conner and Z.T. Taylor of Pacific Northwest Laboratory, titled
Overall U-Values and Heating/Cooling Loads--Manufactured Homes. This
industry standard (referred to as the ``Battelle Method'') is an
industry accepted method for calculating the overall thermal
transmittance of a manufactured home. In instances in which
manufacturers demonstrate compliance with the overall thermal
transmittance requirement, DOE is requiring manufactured housing
manufacturers to calculate the overall thermal transmittance of a
manufactured home in accordance with this industry standard. This
standard is readily available on the U.S. Department of Housing and
Urban Development's website at www.huduser.org/portal/publications/manufhsg/uvalue.html.
DOE has evaluated these standards and was unable to conclude
whether they fully comply with the requirements of section 32(b) of the
FEAA (i.e., whether they were developed in a manner that fully provides
for public participation, comment, and review.) DOE has consulted with
both the Attorney General and the Chairman of the FTC about the impact
on competition of using the methods contained in these standards and
has received no comments objecting to their use.
N. Congressional Notification
As required by 5 U.S.C. 801, DOE will report to Congress on the
promulgation of this rule prior to its effective date. The report will
state that it has been determined that the rule is a ``major rule'' as
defined by 5 U.S.C. 804(2).
VI. Approval of the Office of the Secretary
The Secretary of Energy has approved publication of this final
rule.
List of Subjects in 10 CFR Part 460
Administrative practice and procedure, Buildings and Facilities,
Energy conservation, Housing standards, Incorporation by reference,
Reporting and recordkeeping requirements.
Signing Authority
This document of the Department of Energy was signed on May 16,
2022, by Kelly J. Speakes-Backman, Principal Deputy Assistant Secretary
for Energy Efficiency and Renewable Energy, pursuant to delegated
authority from the Secretary of Energy. That document with the original
signature and date is maintained by DOE. For administrative purposes
only, and in compliance with requirements of the Office of the Federal
Register, the undersigned DOE Federal Register Liaison Officer has been
authorized to sign and submit the document in electronic format for
publication, as an official document of the Department of Energy. This
administrative process in no way alters
[[Page 32818]]
the legal effect of this document upon publication in the Federal
Register.
Signed in Washington, DC, on May 17, 2022.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.
For the reasons stated in the preamble, DOE adds part 460 of
chapter II of title 10, Code of Federal Regulations as set forth below:
PART 460--ENERGY CONSERVATION STANDARDS FOR MANUFACTURED HOMES
Subpart A--General
Sec.
460.1 Scope.
460.2 Definitions.
460.3 Materials incorporated by reference.
460.4 Energy conservation standards.
Subpart B--Building Thermal Envelope
460.101 Climate zones.
460.102 Building thermal envelope requirements.
460.103 Installation of insulation.
460.104 Building thermal envelope air leakage.
Subpart C--HVAC, Service Hot Water, and Equipment Sizing
460.201 Duct systems.
460.202 Thermostats and controls.
460.203 Service hot water.
460.204 Mechanical ventilation fan efficacy.
460.205 Equipment sizing.
Authority: 42 U.S.C. 17071; 42 U.S.C. 7101 et seq.
Subpart A--General
Sec. 460.1 Scope.
This subpart establishes energy conservation standards for
manufactured homes as manufactured at the factory, prior to
distribution in commerce for sale or installation in the field. A
manufactured home that is manufactured on or after the May 31, 2023
must comply with all applicable requirements of this part.
Sec. 460.2 Definitions.
Adapted from section R202 of the 2021 IECC and as used in this
part--
2021 IECC means the 2021 version of the International Energy
Conservation Code, issued by the International Code Council.
Access (to) means that which enables a device, appliance or
equipment to be reached by ready access or by a means that first
requires the removal or movement of a panel or similar obstruction.
Air barrier means one or more materials joined together in a
continuous manner to restrict or prevent the passage of air through the
building thermal envelope and its assemblies.
Automatic means self-acting or operating by its own mechanism when
actuated by some impersonal influence.
Building thermal envelope means exterior walls, exterior floors,
exterior ceiling, or roofs, and any other building element assemblies
that enclose conditioned space or provide a boundary between
conditioned space and unconditioned space.
Ceiling means an assembly that supports and forms the overhead
interior surface of a building or room that covers its upper limit and
is horizontal or tilted at an angle less than 60 degrees (1.05 rad)
from horizontal.
Climate zone means a geographical region identified in Sec.
460.101.
Conditioned space means an area, room, or space that is enclosed
within the building thermal envelope and that is directly or indirectly
heated or cooled. Spaces are indirectly heated or cooled where they
communicate through openings with conditioned space, where they are
separated from conditioned spaces by uninsulated walls, floors or
ceilings, or where they contain uninsulated ducts, piping, or other
sources of heating or cooling.
Continuous air barrier means a combination of materials and
assemblies that restrict or prevent the passage of air from conditioned
space to unconditioned space.
Door means an operable barrier used to block or allow access to an
entrance of a manufactured home.
Dropped ceiling means a secondary nonstructural ceiling, hung below
the exterior ceiling.
Dropped soffit means a secondary nonstructural ceiling that is hung
below the exterior ceiling and that covers only a portion of the
ceiling.
Duct means a tube or conduit, except an air passage within a self-
contained system, utilized for conveying air to or from heating,
cooling, or ventilating equipment.
Duct system means a continuous passageway for the transmission of
air that, in addition to ducts, includes duct fittings, dampers,
plenums, fans, and accessory air-handling equipment and appliances.
Eave means the edge of the roof that overhangs the face of an
exterior wall and normally projects beyond the side of the manufactured
home.
Equipment includes material, devices, fixtures, fittings, or
accessories both in the construction of, and in the plumbing, heating,
cooling, and electrical systems of a manufactured home.
Exterior ceiling means a ceiling that separates conditioned space
from unconditioned space.
Exterior floor means a floor that separates conditioned space from
unconditioned space.
Exterior wall means a wall, including a skylight well, that
separates conditioned space from unconditioned space.
Fenestration means vertical fenestration and skylights.
Floor means a horizontal assembly that supports and forms the lower
interior surface of a building or room upon which occupants can walk.
Glazed or glazing means an infill material, including glass,
plastic, or other transparent or translucent material used in
fenestration.
Heated water circulation system means a water distribution system
in which one or more pumps are operated in the service hot water piping
to circulate heated water from the water heating equipment to fixtures
and back to the water heating equipment.
Insulation means material deemed to be insulation under 16 CFR
460.2.
Manual means capable of being operated by personal intervention.
Manufactured home means 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 onsite 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
in the structure. This term includes all structures that meet the above
requirements except the size requirements and with respect to which the
manufacturer voluntarily files a certification pursuant to 24 CFR
3282.13 and complies with the construction and safety standards set
forth in 24 CFR part 3280. The term does not include any self-propelled
recreational vehicle. Calculations used to determine the number of
square feet in a structure will be based on the structure's exterior
dimensions, measured at the largest horizontal projections when erected
on site. These dimensions will include all expandable rooms, cabinets,
and other projections containing interior space, but do not include bay
windows. Nothing in this definition should be interpreted to mean that
a manufactured home necessarily meets the requirements of the U.S.
Department of Housing and Urban Development Minimum Property Standards
(HUD
[[Page 32819]]
Handbook 4900.1) or that it is automatically eligible for financing
under 12 U.S.C. 1709(b).
Manufacturer means any person engaged in the factory construction
or assembly of a manufactured home, including any person engaged in
importing manufactured homes for resale.
Opaque door means a door that is not less than 50 percent opaque in
surface area.
R-value (thermal resistance) means the inverse of the time rate of
heat flow through a body from one of its bounding surfaces to the other
surface for a unit temperature difference between the two surfaces,
under steady state conditions, per unit area (h x ft\2\ x [deg]F/Btu).
Rough opening means an opening in the exterior wall or roof, sized
for installation of fenestration.
Service hot water means supply of hot water for purposes other than
comfort heating.
Skylight means glass or other transparent or translucent glazing
material, including framing materials, installed at an angle less than
60 degrees (1.05 rad) from horizontal, including unit skylights,
tubular daylighting devices, and glazing materials in solariums,
sunrooms, roofs and sloped walls.
Skylight well means the exterior walls underneath a skylight that
extend from the interior finished surface of the exterior ceiling to
the exterior surface of the location to which the skylight is attached.
Solar heat gain coefficient (SHGC) means the ratio of the solar
heat gain entering a space through a fenestration assembly to the
incident solar radiation. Solar heat gain includes directly transmitted
solar heat and absorbed solar radiation that is then reradiated,
conducted, or convected into the space.
State means each of the 50 states, the District of Columbia, the
Commonwealth of Puerto Rico, Guam, the U.S. Virgin Islands, and
American Samoa.
Thermostat means an automatic control device used to maintain
temperature at a fixed or adjustable set point.
U-factor (thermal transmittance) means the coefficient of heat
transmission (air to air) through a building component or assembly,
equal to the time rate of heat flow per unit area and unit temperature
difference between the warm side and cold side air films (Btu/h x ft\2\
x [deg]F).
Uo (overall thermal transmittance) means the coefficient
of heat transmission (air to air) through the building thermal
envelope, equal to the time rate of heat flow per unit area and unit
temperature difference between the warm side and cold side air films
(Btu/h x ft\2\ x [deg]F).
Ventilation means the natural or mechanical process of supplying
conditioned or unconditioned air to, or removing such air from, any
space.
Vertical fenestration means windows (fixed or moveable), opaque
doors, glazed doors, glazed block and combination opaque and glazed
doors composed of glass or other transparent or translucent glazing
materials and installed at a slope of greater than or equal to 60
degrees (1.05 rad) from horizontal.
Wall means an assembly that is vertical or tilted at an angle equal
to greater than 60 degrees (1.05 rad) from horizontal that encloses or
divides an area of a building or room.
Whole-house mechanical ventilation system means an exhaust system,
supply system, or combination thereof that is designed to mechanically
exchange indoor air with outdoor air when operating continuously or
through a programmed intermittent schedule to satisfy the whole house
ventilation rates.
Window means glass or other transparent or translucent glazing
material, including framing materials, installed at an angle greater
than 60 degrees (1.05 rad) from horizontal.
Zone means a space or group of spaces within a manufactured home
with heating or cooling requirements that are sufficiently similar so
that desired conditions can be maintained using a single controlling
device.
Sec. 460.3 Materials incorporated by reference.
Certain material is incorporated by reference into this part with
the approval of the Director of the Federal Register in accordance with
5 U.S.C. 552(a) and 1 CFR part 51. To enforce any edition other than
that specified in this section, the U.S. Department of Energy (DOE)
must publish a document in the Federal Register and the material must
be available to the public. All approved material is available for
inspection at DOE and at the National Archives and Records
Administration (NARA). Contact DOE at: The U.S. Department of Energy,
Office of Energy Efficiency and Renewable Energy, Building Technologies
Program, Sixth Floor, 950 L'Enfant Plaza SW, Washington, DC 20024,
(202) 586-9127, [email protected], https://www.energy.gov/eere/buildings/building-technologies-office. For information on the
availability of this material at NARA, email: [email protected],
or go to: www.archives.gov/federal-register/cfr/ibr-locations.html. The
material may be obtained from the following sources:
(a) ACCA. Air Conditioning Contractors of America, Inc., 2800 S.
Shirlington Road, Suite 300, Arlington, VA 22206, 703-575-4477;
www.acca.org/.
(1) ANSI/ACCA 2 Manual J-2016 (ver 2.50) (``ACCA Manual J''),
Manual J-Residential Load Calculations, Eight Edition, Version 2.50,
Copyright 2016; IBR approved for Sec. 460.205.
(2) ANSI/ACCA 3 Manual S-2014 (``ACCA Manual S''), Manual S-
Residential Equipment Selection, Second Edition, Version 1.00,
Copyright 2014; IBR approved for Sec. 460.205.
(b) HUD User, 11491 Sunset Hills Road, Reston, VA 20190-5254;
www.huduser.gov/portal/publications/pdrpubli.html.
(1) HUD User No. 0005945, Overall U-Values and Heating/Cooling
Loads--Manufactured Homes, February 1, 1992 (available from
www.huduser.org/portal/publications/manufhsg/uvalue.html); IBR approved
for Sec. 460.102(e).
(2) [Reserved].
Sec. 460.4 Energy conservation standards.
(a) General. A manufactured home must comply with the energy
conservation standards specified for the applicable tier as presented
in paragraphs (b) and (c) of this section.
(b) Tier 1. A single-section manufactured home (i.e., a Tier 1
manufactured home) must comply with all applicable requirements in
subparts B and C of this part.
(c) Tier 2. A multi-section manufactured home (i.e., a Tier 2
manufactured home) must comply with all applicable requirements in
subparts B and C of this part.
Subpart B--Building Thermal Envelope
Sec. 460.101 Climate zones.
Manufactured homes subject to the requirements of this subpart must
comply with the requirements applicable to one or more of the climate
zones set forth in figure 1 to Sec. 460.101 and table 1 to Sec.
460.101.
[[Page 32820]]
[GRAPHIC] [TIFF OMITTED] TR31MY22.216
Table 1 to Sec. 460.101--U.S. States and Territories per Climate Zone
------------------------------------------------------------------------
Zone 1 Zone 2 Zone 3
------------------------------------------------------------------------
Alabama Arkansas Alaska
American Samoa Arizona Colorado
Florida California Connecticut
Georgia Kansas Delaware
Guam Kentucky District of
Columbia
Hawaii Missouri Idaho
Louisiana New Mexico Illinois
Mississippi North Carolina Indiana
South Carolina Oklahoma Iowa
Texas Tennessee Maine
The Commonwealth of Puerto Rico Maryland
U.S. Virgin Islands Massachusetts
Michigan
Minnesota
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New York
North Dakota
Ohio
Oregon
Pennsylvania
Rhode Island
South Dakota
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
------------------------------------------------------------------------
Sec. 460.102 Building thermal envelope requirements.
(a) Compliance options. The building thermal envelope must meet
either the prescriptive requirements of paragraph (b) of this section
or the performance requirements of paragraph (c) of this section.
(b) Prescriptive requirements. (1) The building thermal envelope
must meet the applicable minimum R-value (nominal value of insulation),
and the glazing maximum U-factor and SHGC, requirements set forth in
table 1 to Sec. 460.102(b)(1) and table 2 to Sec. 460.102(b)(2) or
component U-values set forth in table 3 to Sec. 460.102(b)(5) and
table 4 to Sec. 460.102(b)(5).
[[Page 32821]]
Table 1 to Sec. 460.102(b)(1)--Tier 1 Building Thermal Envelope Prescriptive Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Exterior
Exterior wall ceiling Exterior floor Window U- Skylight U- Glazed
Climate zone insulation R- insulation R- insulation R- factor factor Door U-factor fenestration
value value value SHGC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................... 13 22 22 1.08 0.75 0.40 0.7
2....................................... 13 22 19 0.5 0.55 0.40 0.6
3....................................... 19 22 22 0.35 0.55 0.40 Not
applicable.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 2 to Sec. 460.102(b)(1)--Tier 2 Building Thermal Envelope Prescriptive Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
Exterior
Exterior wall ceiling Exterior floor Window U- Skylight U- Glazed
Climate zone insulation R- insulation R- insulation R- factor factor Door U-factor fenestration
value value value SHGC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................... 13 30 13 0.32 0.75 0.40 0.33
2....................................... 21 30 19 0.30 0.55 0.40 0.25
3....................................... 21 38 30 0.30 0.55 0.40 Not
applicable.
--------------------------------------------------------------------------------------------------------------------------------------------------------
(2) For the purpose of compliance with the exterior ceiling
insulation R-value requirement of paragraph (b)(1) of this section, the
truss heel height must be a minimum of 5.5 inches at the outside face
of each exterior wall.
(3) A combination of R-21 batt insulation and R-14 blanket
insulation may be used for the purpose of compliance with the floor
insulation R-value requirement of table 2 to Sec. 460.102(b)(1),
Climate Zone 3.
(4) An individual skylight that has an SHGC that is less than or
equal to 0.30 is not subject to the glazed fenestration SHGC
requirements established in paragraph (b)(1) of this section. Adapted
from section R402 of the 2021 IECC.
(5) U-factor alternatives to R-value requirements. Compliance with
the applicable requirements in paragraph (b)(1) of this section may be
determined using the applicable maximum U-factor values set forth in
table 3 to Sec. 460.102(b)(5) and table 4 to Sec. 460.102(b)(5),
which reflect the thermal transmittance of the component, excluding
fenestration, and not just the insulation of that component, as an
alternative to the minimum nominal R-value requirements set forth in
table 1 to Sec. 460.102(b)(1) and table 2 to Sec. 460.102(b)(1),
respectively.
Table 3 to Sec. 460.102(b)(5)--U-Factor Alternatives to Tier 1 R-Value Requirements
----------------------------------------------------------------------------------------------------------------
Exterior ceiling Exterior wall U- Exterior floor
Climate zone U-factor factor U-factor
----------------------------------------------------------------------------------------------------------------
1......................................................... 0.061 0.094 0.049
2......................................................... 0.061 0.094 0.056
3......................................................... 0.061 0.068 0.049
----------------------------------------------------------------------------------------------------------------
Table 4 to Sec. 460.102(b)(5)--U-Factor Alternatives to Tier 2 R-Value Requirements
----------------------------------------------------------------------------------------------------------------
Exterior ceiling Exterior wall U- Exterior floor
Climate zone U-factor factor U-factor
----------------------------------------------------------------------------------------------------------------
1......................................................... 0.043 0.094 0.078
2......................................................... 0.043 0.063 0.056
3......................................................... 0.037 0.063 0.032
----------------------------------------------------------------------------------------------------------------
(c) Performance requirements. (1) The building thermal envelope
must have a Uo that is less than or equal to the applicable
value specified in table 5 to Sec. 460.102(c)(1) and table 6 to Sec.
460.102(c)(1).
Table 5 to Sec. 460.102(c)(1)--Tier 1 Building Thermal Envelope
Performance Requirements
------------------------------------------------------------------------
Single-section U
Climate zone
------------------------------------------------------------------------
1..................................................... 0.110
2..................................................... 0.091
3..................................................... 0.074
------------------------------------------------------------------------
Table 6 to Sec. 460.102(c)(1)--Tier 2 Building Thermal Envelope
Performance Requirements
------------------------------------------------------------------------
Multi-section U
Climate zone
------------------------------------------------------------------------
1..................................................... 0.082
[[Page 32822]]
2..................................................... 0.066
3..................................................... 0.055
------------------------------------------------------------------------
(2) Area-weighted average vertical fenestration U-factor must not
exceed 0.48 in Climate Zone 2 or 0.40 in Climate Zone 3. Adapted from
section R402 of the 2021 IECC.
(3) Area-weighted average skylight U-factor must not exceed 0.75 in
Climate Zone 2 and Climate Zone 3. Adapted from section R402 of the
2021 IECC.
(4) Windows, skylights and doors containing more than 50 percent
glazing by area must satisfy the SHGC requirements established in
paragraph (b)(1) of this section on the basis of an area-weighted
average. Adapted from section R402 of the 2021 IECC.
(d) [Reserved].
(e) Determination of compliance with paragraph (c) of this section.
(1) Uo must be determined in accordance with Overall U-Values and
Heating/Cooling Loads--Manufactured Homes (incorporated by reference;
see Sec. 460.3)
(2) [Reserved]
Sec. 460.103 Installation of insulation.
Insulating materials must be installed according to the insulation
manufacturer's installation instructions and the requirements set forth
in table 1 to 460.103, which is adapted from section R402 of the 2021
IECC.
Table 1 to Sec. 460.103--Installation of Insulation
------------------------------------------------------------------------
Component Installation requirements
------------------------------------------------------------------------
General...................... Air-permeable insulation must not be used
as a material to establish the air
barrier.
Access hatches, panels, and Access hatches, panels, and doors between
doors. conditioned space and unconditioned
space, such as attics and crawlspaces,
must be insulated to a level equivalent
to the insulation of the surrounding
surface, must provide access to all
equipment that prevents damaging or
compressing the insulation, and must
provide a wood-framed or equivalent
baffle or retainer when loose fill
insulation is installed within an
exterior ceiling assembly to retain the
insulation both on the access hatch,
panel, or door and within the building
thermal envelope.
Baffles...................... For air-permeable insulations in vented
attics, a baffle must be installed
adjacent to soffit and eave vents.
Baffles, when used in conjunction with
eave venting, must be constructed using
a solid material, maintain an opening
equal or greater than the size of the
vents, and extend over the top of the
attic insulation.
Ceiling or attic............. The insulation in any dropped ceiling or
dropped soffit must be aligned with the
air barrier.
Narrow cavities.............. Batts to be installed in narrow cavities
must be cut to fit or narrow cavities
must be filled with insulation that upon
installation readily conforms to the
available cavity space.
Rim joists................... Rim joists must be insulated such that
the insulation maintain permanent
contact with the exterior rim board.
Shower or tub adjacent to Exterior walls adjacent to showers and
exterior wall. tubs must be insulated.
Walls........................ Air permeable exterior building thermal
envelope insulation for framed exterior
walls must completely fill the cavity,
including within stud bays caused by
blocking lay flats or headers.
------------------------------------------------------------------------
Sec. 460.104 Building thermal envelope air leakage.
Manufactured homes must be sealed against air leakage at all
joints, seams, and penetrations associated with the building thermal
envelope in accordance with the component manufacturer's installation
instructions and the requirements set forth in table 1 to 460.104.
Sealing methods between dissimilar materials must allow for
differential expansion, contraction and mechanical vibration, and must
establish a continuous air barrier upon installation of all opaque
components of the building thermal envelope. All gaps and penetrations
in the exterior ceiling, exterior floor, and exterior walls, including
ducts, flue shafts, plumbing, piping, electrical wiring, utility
penetrations, bathroom and kitchen exhaust fans, recessed lighting
fixtures adjacent to unconditioned space, and light tubes adjacent to
unconditioned space, must be sealed with caulk, foam, gasket or other
suitable material. The air barrier installation criteria are adapted
from section R402 of the 2021 IECC.
Table 1 to Sec. 460.104--Air Barrier Installation Criteria
------------------------------------------------------------------------
Component Air barrier criteria
------------------------------------------------------------------------
Ceiling or attic............. The air barrier in any dropped ceiling or
dropped soffit must be aligned with the
insulation and any gaps in the air
barrier must be sealed with caulk, foam,
gasket, or other suitable material.
Access hatches, panels, and doors, drop-
down stairs, or knee wall doors to
unconditioned attic spaces must be
weather-stripped or equipped with a
gasket to produce a continuous air
barrier.
Duct system register boots... Duct system register boots that penetrate
the building thermal envelope or the air
barrier must be sealed to the subfloor,
wall covering or ceiling penetrated by
the boot, air barrier, or the interior
finish materials with caulk, foam,
gasket, or other suitable material.
Electrical box or phone box The air barrier must be installed behind
on exterior walls. electrical and communication boxes or
the air barrier must be sealed around
the box penetration with caulk, foam,
gasket, or other suitable material.
[[Page 32823]]
Floors....................... The air barrier must be installed at any
exposed edge of insulation. The bottom
board may serve as the air barrier.
Mating line surfaces......... Mating line surfaces must be equipped
with a continuous and durable gasket.
Recessed lighting............ Recessed light fixtures installed in the
building thermal envelope must be sealed
to the drywall with caulk, foam, gasket,
or other suitable material.
Rim joists................... The air barrier must enclose the rim
joists. The junctions of the rim board
and the subfloor must be air sealed.
Shower or tub adjacent to The air barrier must separate showers and
exterior wall. tubs from exterior walls.
Walls........................ The junction of the top plate and the
exterior ceiling, and the junction of
the bottom plate and the exterior floor,
along exterior walls must be sealed with
caulk, foam, gasket, or other suitable
material.
Windows, skylights, and The rough openings around windows,
exterior doors. exterior doors, and skylights must be
sealed with caulk or foam.
------------------------------------------------------------------------
Subpart C--HVAC, Service Hot Water, and Equipment Sizing
Sec. 460.201 Duct system.
Each manufactured home equipped with a duct system, which may
include air handlers and filter boxes, must be sealed to limit total
air leakage to less than or equal to four (4) cubic feet per minute per
100 square feet of conditioned floor area at a pressure differential of
0.1 inch w.g. (25 Pascals) across the system. Building framing cavities
must not be used as ducts or plenums when directly connected to
mechanical systems. The duct total air leakage requirements are adapted
from section R403 of the 2021 IECC.
Sec. 460.202 Thermostats and controls.
(a) At least one thermostat must be provided for each separate
heating and cooling system installed by the manufacturer. The
thermostat and controls requirements are adapted from section R403 of
the 2021 IECC.
(b) Any programmable thermostat installed by the manufacturer that
controls the heating or cooling system must--
(1) Be capable of controlling the heating and cooling system on a
daily schedule to maintain different temperature set points at
different times of the day and different days of the week;
(2) Include the capability to set back or temporarily operate the
system to maintain zone temperatures down to 55 [deg]F (13 [deg]C) or
up to 85 [deg]F (29 [deg]C); and
(3) Initially be programmed with a heating temperature set point no
higher than 70 [deg]F (21 [deg]C) and a cooling temperature set point
no lower than 78 [deg]F (26 [deg]C).
(c) Heat pumps with supplementary electric-resistance heat must be
provided with controls that, except during defrost, prevent
supplemental heat operation when the heat pump compressor can meet the
heating load.
Sec. 460.203 Service hot water.
(a) Service hot water systems installed by the manufacturer must be
installed according to the service hot water manufacturer's
installation instructions. Where service hot water systems are
installed by the manufacturer, the manufacturer must ensure that any
maintenance instructions received from the service hot water system
manufacturer are provided with the manufactured home. The service hot
water requirements are adapted from section R403 of the 2021 IECC.
(b) Any automatic and manual controls, temperature sensors, pumps
associated with service hot water systems must provide access.
(c) Heated water circulation systems must--
(1) Be provided with a circulation pump;
(2) Ensure that the system return pipe is a dedicated return pipe
or a cold water supply pipe;
(3) Not include any gravity or thermosyphon circulation systems;
(4) Ensure that controls for circulating heated water circulation
pumps start the pump based on the identification of a demand for hot
water within the occupancy; and
(5) Ensure that the controls automatically turn off the pump when
the water in the circulation loop is at the desired temperature and
when there is no demand for hot water.
(d) All hot water pipes--
(1) Outside conditioned space must be insulated to a minimum R-
value of R-3; and
(2) From a service hot water system to a distribution manifold must
be insulated to a minimum R-value of R-3.
Sec. 460.204 Mechanical ventilation fan efficacy.
(a) Whole-house mechanical ventilation system fans must meet the
minimum efficacy requirements set forth in table 1 to 460.204(a),
except as provided in paragraph (b) of this section. The mechanical
ventilation fan efficacy requirements are adapted from section R403 of
the 2021 IECC.
Table 1 to Sec. 460.204(a)--Mechanical Ventilation System Fan Efficacy
------------------------------------------------------------------------
Minimum
Fan type description Airflow rate minimum efficacy (cfm/
(cfm) watt)
------------------------------------------------------------------------
Heat recovery ventilator or Any................... 1.2
energy recovery ventilator.
In-line supply or exhaust fans Any................... 3.8
Other exhaust fan............. <90................... 2.8
Other exhaust fan............. >=90.................. 3.5
------------------------------------------------------------------------
(b) Mechanical ventilation fans that are integral to heating,
ventilating, and air conditioning equipment, including furnace fans as
defined in Sec. 430.2 of this subchapter, are not subject to the
efficiency requirements in paragraph (a) of this section.
[[Page 32824]]
Sec. 460.205 Equipment sizing.
Sizing of heating and cooling equipment installed by the
manufacturer must be determined in accordance with ACCA Manual S
(incorporated by reference; see Sec. 460.3) based on building loads
calculated in accordance with ACCA Manual J (incorporated by reference;
see Sec. 460.3). The equipment sizing criteria are adapted from
section R403 of the 2021 IECC.
[FR Doc. 2022-10926 Filed 5-27-22; 8:45 am]
BILLING CODE 6450-01-P