AGENCY:

Office of the Assistant Secretary for Housing—Federal Housing Commissioner, HUD.

ACTION:

Final rule.

SUMMARY:

HUD is issuing a final rule to implement the Formaldehyde Standards for Composite Wood Products Act of 2010, which added Title VI to the Toxic Substances Control Act (TSCA). The purpose of TSCA Title VI is to reduce exposures to formaldehyde emissions from composite wood products, thereby resulting in benefits from avoided adverse health effects. In addition, HUD is removing certain aspects of the current manufactured housing formaldehyde standards requirements that are not addressed by TSCA. This final rule follows publication of a March 22, 2019, proposed rule and takes into consideration the public comments received on the proposed rule. This final rule also incorporates by reference, ASTM D6007-14 and ASTM E1333-14, the current standard requirements for formaldehyde concentration and emissions rate air chamber testing.

DATES:

This final rule is effective March 2, 2020. The incorporation by reference of certain publications listed in the rule is approved by the Director of the Federal Register as of March 2, 2020.

FOR FURTHER INFORMATION CONTACT:

Teresa B. Payne, Acting Administrator, Office of Manufactured Housing Programs, Office of Housing, Department of Housing and Urban Development, 451 7th Street SW, Washington, DC 20410; telephone 202-402-5365 (this is not a toll-free number). Persons with hearing or speech impairments may access this number via TTY by calling the Federal Relay Service at 800-877-8389 (toll-free number).

SUPPLEMENTARY INFORMATION:

I. Background—HUD's March 22, 2019 Proposed Rule

The Formaldehyde Standards for Composite Wood Products Act of 2010, which added TSCA Title VI (Pub. L. 111-199, enacted on July 7, 2010) (“Formaldehyde Act of 2010”), established new formaldehyde emissions standards for all hardwood plywood, medium-density fiberboard, and particleboard, including when incorporated into finished goods, that are sold, supplied, offered for sale, or manufactured (including imported) in the United States. TSCA Title VI directs HUD to update its regulation addressing formaldehyde emission standards to ensure consistency with the standards in TSCA not later than 180 days after the Environmental Protection Agency (EPA) promulgates regulations. EPA's final rule implementing the new requirements became effective May 22, 2017. See 81 FR 89674.

On March 22, 2019, HUD published a proposed rule in the Federal Register, at 84 FR 10738, to streamline and align formaldehyde emission control standards requirements for certain wood products in manufactured homes with Title VI of the Toxic Substance Control Act. The rule proposed revising HUD's current formaldehyde emission standards for composite wood products used in manufactured housing at 24 CFR parts 3280 and 3282 to ensure consistency with the requirements established by section 601 of TSCA and EPA requirements, including the scope of products tested and processes for testing.

In addition, HUD proposed to remove certain aspects of HUD's manufactured housing formaldehyde standards requirements that are not addressed by TSCA, including provisions for a health notice to be posted in every manufactured home, testing of panels treated after certification, and testing of certain plywood materials. Lastly, HUD's proposed rule also added the EPA required provision for labeling finished goods by requiring labeling of each manufactured home as being “TSCA Title VI compliant” to the data plate of each manufactured home in 24 CFR 3280.5,^[1] as recommended by the Manufactured Housing Consensus Committee.^[2] For additional information about HUD's proposed rule, see 84 FR 10738.

II. Changes and Clarifications Made in This Final Rule

In response to public comments on the proposed rule, a discussion of which is presented in the following section of this preamble, this final rule incorporates the following changes described below and minor technical changes.

A. Samples for Testing

HUD's new § 3280.406(c) incorporated the testing of composite wood product samples under 40 CFR 770.24. As drafted, the language of this provision was limited to samples not produced in the United States, but imported and transported across the country for testing. Recognizing that the provision was meant to permit samples to be sent for testing without automatically triggering a violation for both American producers as well as importers, HUD amends the language in the final rule to apply to all samples for testing.

B. Quality Control Testing

HUD's new § 3280.407(b) incorporated the composite wood product quality control test methods from 40 CFR 770.20(d). The language in the proposed rule provided that panels being tested with an equivalence, correlation, or “alternative method” must be in compliance with the requirements of 40 CFR 770.20(d). However, a commenter noted that almost all testing is done with reference to a correlation value, regardless of the testing method. The term “alternative method” is eliminated from the final rule for clarity.

C. Technical Changes

HUD amends for clarity the language on the data plate from “TSCA Title VI compliant” to compliant with Title VI, Toxic Substances Control Act. In addition, HUD makes minor changes to the language in § 3280.406 to clarify certification testing and quarterly testing.

III. Discussion of Public Comments Received on March 22, 2019, Proposed Rule

The public comment period for the proposed rule closed on April 22, 2019. HUD received five public comments in response to the proposed rule. These comments were submitted by a private citizen, industry associations, and manufactured housing associations.

Four commenters generally supported HUD's proposed rule. One commenter supported the removal of the provisions that were inconsistent with TSCA, and another commenter noted that the streamlining will avoid the need for duplicative testing. Commenters were generally supportive of the proposed rule, but, as provided in the following section of this Preamble, they also recommended changes or clarifications, two of which are discussed above.

Comments: Most commenters agreed that the removal of the health notice was appropriate and necessary. The commenters noted that requiring such a notice for manufactured homes, but not site-built homes is inconsistent and doing so created a stigma. One commenter wrote that the notice should not be removed because the change to ventilation standards may still have no effect on decreasing the risks derived from the formaldehyde emissions.

HUD Response: HUD believes the significant decrease in formaldehyde emissions required by EPA's rule and referenced by HUD's rule combined with HUD's whole house ventilation requirements mitigate issues identified in the health notice. Further, the substantial similarities in construction methods, materials, and ventilation features between manufactured and site-built housing, without such a notice required for site-built housing, supports the action to eliminate the health notice in manufactured housing.

Comments: One commenter suggested that HUD amend § 3280.406(c), which incorporates the testing of samples under 40 CFR 770.24. The commenter noted that HUD limited the sampling language to imported samples in the proposed rule, but the provision was drafted to permit samples to be sent for testing without automatically triggering a violation for both American producers as well as importers.

HUD Response: HUD agrees and has made appropriate clarifications within the final language in § 3280.406(c).

Comments: One commenter suggested HUD amend § 3280.407(b), which incorporates control testing under 40 CFR 770.20(d). The commenter noted that almost all quality control testing is done with reference to a correlation value, regardless of the test methodology. The commenter wrote that it is unclear what “alternative method” means in this context; “equivalence and correlation” must be determined in accordance with 40 CFR 770.20(d).

HUD Response: HUD agrees and has made appropriate clarifications within the final language in § 3280.407(b).

Comments: One commenter noted that the proposed rule restricts the merchantability of non-conforming material. Such restrictions on an end user may be unfairly burdensome for a homeowner trying to resell a home that was purchased in good faith and without knowledge of any defect. The commenter suggested that HUD adapt the EPA's remedy of this problem by providing an exception for “any finished good that has previously been sold or supplied to an end user, an individual, or entity that purchased or acquired the finished good in good faith for purposes other than resale.” The commenter also recommended that HUD go further to protect an end user who acquired a manufactured home in good faith and is now selling it, but is either currently unaware or was only recently made aware that the home is not in compliance.

HUD Response: HUD's regulations are intended for the design and construction of new manufactured homes. HUD does not regulate resale transactions. However, latent defects in manufactured housing are addressable under the Manufactured Home Procedural and Enforcement Regulations. If a manufacturer becomes aware that it has systematically introduced a failure to conform into a manufactured home, it must conduct an investigation and take additional action (notification, correction, or both) as may be required under 24 CFR part 3232, subpart I. Regarding composite wood products, if a home manufacturer acquires knowledge that it has used non-conforming material, the home manufacturer remains responsible and may choose to work with the panel producer and/or supplier to address any required corrections approved by a State Administrative Agency or HUD as part of a Notification and Correction campaign.

Comments: One commenter noted that EPA's rule is discriminatory in its treatment of HUD manufactured housing as a “finished good” at 40 CFR 770.3, but not site-built homes. The commenter suggested that HUD reject this distinction because manufactured housing results in increased compliance costs that mostly fall on lower and moderate-income American families that reside in manufactured housing.

HUD Response: HUD is absent authority to interpret or otherwise modify EPA's rule. However, HUD is streamlining its formaldehyde emissions standards through this rulemaking to ensure home manufacturers are not subject to different regulatory compliance requirements of both EPA and HUD. HUD believes this will reduce regulatory burdens and as such minimize cost impacts to manufacturers and costs passed on to home purchasers.

Comments: One commenter recommended that HUD repeal its regulations entirely to eliminate duplication of regulations. The commenter cited the fact that EPA standards are lower, the EPA rule addresses composite-wood products, and the EPA regulations include testing and certification prior to fabrication. The commenter also noted that manufactured homes have, for nearly 30 years, already achieved formaldehyde safety for consumers through compliance with existing HUD regulations that are less costly to meet than the TSCA standards, but nevertheless ensure the safety of manufactured home residents.

HUD Response: HUD is completing this rulemaking in accordance with the Toxic Substances Control Act Title VI in order to streamline its formaldehyde emissions standards and eliminate differing standards. Through this rulemaking, HUD will ensure home manufacturers are not subject to different regulatory compliance requirements of multiple federal oversight agencies. HUD believes this will reduce regulatory burdens and as such minimize cost impacts to manufacturers and home purchasers.

Comments: Two commenters recommended that HUD delay final rule implementation until EPA provides any clarifications as a result of its proposed rulemaking issued November 1, 2018, entitled “Technical Issues in the Formaldehyde Emission Standards for Composite Wood Products Regulation.”

HUD Response: HUD is issuing a final rule that correlates with EPA's final rule provisions, mostly by reference to EPA's regulations. HUD will consider future rulemaking, as needed, pursuant to changes EPA may make in future rulemaking if those changes affect any specific provision promulgated by HUD.

Comments: One commenter agreed that HUD should move the disclosure statement to the data plate, consistent with the other items on the data plate. Another commenter noted that space on the data plate is limited and suggested that HUD shorten the statement to either “TSCA Title VI compliant” or “This home is TSCA Title VI compliant.” Another commenter suggested that HUD forego such a statement and reserve the space for future disclosures or technical information, given that only compliant homes receive a data plate.

HUD Response: HUD believes that sufficient space is available within the data plate for the minimal compliance statement required by § 3280.5(i). Further, HUD has decided to change the text of the data plate statement by spelling out the Toxic Substance Control Act.

IV. Incorporation by Reference

This rule incorporates the following standard test methods for determining formaldehyde concentrations in air and emission rates from wood products, listed below. The standards are readily available electronically or in print and are relatively inexpensive (less than $60 a copy). Copies of these materials may be obtained from the American Society for Testing and Materials (ASTM), 100 Barr Harbor Drive, West Conshohocken, PA 19428, (610) 832-9500, fax number (610) 832-9555, website: http://www.astm.org.

• ASTM D0007-14 Standard Test Method for Determining Formaldehyde Concentrations in Air from Wood Products Using a Small-Scale Chamber (2014). This test method measures the formaldehyde concentrations in air from wood products under defined test conditions of temperature and relative humidity. Results obtained from this small-scale chamber test method are intended to be comparable to results obtained testing larger product samples by the large chamber test method for wood products, Test Method E1333. The results may be correlated to values obtained from ASTM Test Method E1333.

ASTM D60007-14 is available for purchase in electronic and hard copy formats at http://www.astm.org/​cgi-bin/​resolver.cgi?​D6007. General information is available at http://www.astm.org/​Standards/​D60007.htm.

• ASTM E1333-14 Standard Test Method for Determining Formaldehyde Concentrations in Air and Emission Rates from Wood Products Using a Large Chamber (2014). This test method measures the formaldehyde concentration in air and emission rate from wood products containing formaldehyde by the use of a large chamber under specific test conditions of temperature and relative humidity, or conditions designed to simulate product use. This method employs a single set of environmental conditions but different product loading ratios to assess formaldehyde concentrations in air and emission rates from certain wood products. The conditions controlled in the procedure are the conditioning of specimens prior to testing, exposed surface area of the specimens in the test chamber, test chamber temperature and relative humidity, number of air changes per hour, and air circulation within the chamber. At the end of a specified time period in the test chamber, the air is sampled, and the concentration of formaldehyde in the air and emission rate are determined.

ASTM E1333-14 is available for purchase in electronic and hard copy formats at http://www.astm.org/​cgi-bin/​resolver.cgi?​E1333. General information is available at http://www.astm.org/​Standards/​E1333.htm.

V. Findings and Certifications

Regulatory Review—Executive Orders 12866 and 13563

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health, and safety effects; distributive impacts; and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility.

Under Executive Order 12866 (Regulatory Planning and Review), a determination must be made whether a regulatory action is significant and, therefore, subject to review by the Office of Management and Budget (OMB) in accordance with the requirements of the order. This final rule was determined not to be a “significant regulatory action” as defined in section 3(f) of the Executive order, and not an economically significant regulatory action, as provided under section 3(f)(1) of Executive Order 12866.

Executive Order 13771

Executive Order 13771, entitled “Reducing Regulation and Controlling Regulatory Costs,” was issued on January 30, 2017. Section 2(a) of Executive Order 13771 requires an agency, unless prohibited by law, to identify at least two existing regulations to be repealed when the agency publicly proposes for notice and comment or otherwise promulgates a new regulation. In furtherance of this requirement, section 2(c) of Executive Order 13771 requires that the new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations.

For the reasons discussed in the Regulatory Impact Analysis, this final rule has been determined to be an Executive Order 13771 deregulatory action.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a valid control number. OMB issued HUD control number 2502-0253 for the information collection requirements under the Manufactured Home Construction and Safety Standards Act Reporting Requirements.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act (UMRA) of 1995 (Pub. L. 104-4, approved March 22, 1995), establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments, and on the private sector. This final rule does not impose any Federal mandates on any State, local, or tribal government, or on the private sector, within the meaning of the UMRA.

Environmental Review

A Finding of No Significant Impact with respect to the environment has been made in accordance with HUD regulations at 24 CFR part 50, which implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The Finding of No Significant Impact is available for public inspection between the hours of 8 a.m. and 5 p.m. weekdays in the Regulations Division, Office of General Counsel, Room 10276, Department of Housing and Urban Development, 451 Seventh Street SW, Washington, DC 20410-0500.

Regulatory Flexibility Act

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. This final rule regulates establishments primarily engaged in making manufactured homes (North American Industry Classification System (NAICS) Code 32991). The Small Business Administration defines a small manufactured homes manufacturing business as one that does not exceed 1,250 employees. Of the 222 firms included under this NAICS definition, approximately 35 produce manufactured homes subject to HUD's Manufactured Housing Construction and Safety Standards. Other entities covered by this NAICS code build non-HUD-code prefabricated buildings. Of the 35 manufacturers subject to HUD's Manufactured Housing Construction and Safety Standards, 31 are considered to be small businesses based on the threshold of 1,250 employees or less.

As required by statute, EPA published a final rule that established new formaldehyde emission standards for composite wood products (81 FR 89674). As also required by statute, HUD's final rule updates HUD's formaldehyde requirements to align with and reflect those issued by EPA. Despite the new requirements, as discussed in HUD's regulatory impact analysis, HUD anticipates there will not be any new or additional cost impacts resulting from implementation of this final rule—other than de minimis costs to change the template used to create the data plate. Initially, composite wood products at EPA reduced formaldehyde levels are currently the majority of products available in the marketplace. This circumstance exists because of similar requirements currently in effect in California under the California Air Resources Board (CARB) Airborne Toxic Control Measure (ATCM). CARB ATCM requires composite wood products used in manufactured housing shipped to California to already comply with CARB requirements. As with many industries, rather than procuring special products for different final destinations, manufactured housing producers are likely to procure products that can be used in homes that it can ship anywhere.

This impact analysis includes all segments—manufacturers, retailers, and consumers, including small entities. In EPA's final rule, which affected a much broader number and type of small entities, for example, EPA determined in Table 2 that 99 percent of small business firms with cost impacts of more than 1 percent of revenues will have annualized costs of less than $250 per year.

In addition, this final rule will provide cost savings for HUD's manufactured housing manufacturers covered by this rule by eliminating the burden of placing the health notice (approximately $270,270 a year), testing structural plywood and retesting panels after a finishing is added. Therefore, while the final rule affects a substantial number of small entities, for 31 out of the 35 affected entities (86 percent), HUD believes the de minimis cost of implementing this final rule—specifically the change to the data plate—will be offset by the savings that result from the changes in materials subject to testing and the removal of the health notice. HUD has determined the impact of this final rule on all entities, to include small entities, is not significant.

For the reasons stated above, HUD knows of no instance of a manufacturer with fewer than 1,250 employees that will be significantly affected economically by this rule. Therefore, although this final rule affects a substantial number of small entities, HUD has determined that it will not have a significant economic impact on them.

Executive Order 13132, Federalism

Executive Order 13132 (entitled “Federalism”) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial direct compliance costs on State and local governments or is not required by statute, or the rule preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive order. This final rule does not have federalism implications and does not impose substantial direct compliance costs on State and local governments or preempt State law within the meaning of the Executive order.

Catalog of Federal Domestic Assistance

The Catalog of Federal Domestic Assistance program number for Manufactured Housing Construction and Safety Standards is 14.171.

List of Subjects

24 CFR Part 3280

• Housing standards
• Incorporation by reference
• Manufactured homes

24 CFR Part 3282

• Consumer protection
• Manufactured homes

Accordingly, for the reasons stated above, HUD amends 24 CFR parts 3280 and 3282 as follows:

PART 3280—MANUFACTURED HOME CONSTRUCTION AND SAFETY STANDARDS

1. The authority citation for part 3280 is revised to read as follows:

Authority: 15 U.S.C. 2697, 42 U.S.C. 3535(d), 5403, and 5424.

2. Amend § 3280.4 as follows:

a. Redesignate paragraphs (p)(25) through (33) as paragraphs (p)(26) through (34);

b. Add new paragraph (p)(25); and

c. Revise newly redesignated paragraph (p)(31).

The addition and revision read as follows:

3. In § 3280.5, add paragraph (i) to read as follows:

4. Revise § 3280.308 to read as follows:

5. Remove § 3280.309.

6. Revise § 3280.406 to read as follows:

7. Add § 3280.407 to read as follows:

PART 3282—MANUFACTURED HOME PROCEDURAL AND ENFORCEMENT REGULATIONS

8. The authority citation for part 3282 is revised to read as follows:

Authority: 15 U.S.C. 2697, 42 U.S.C. 3535(d), 5403, and 5424.

9. In § 3282.7, add paragraph (o) to read as follows:

10. Add § 3282.212 to read as follows:

11. Add § 3282.257 to read as follows:

Footnotes