Association for Regulatory Reform v. Pierce, Civ. A. No. 86-3462-OG.

• Decision Date: 28 July 1987
• Docket Number: Civ. A. No. 86-3462-OG.
• Citation: 670 F. Supp. 1041
• Parties: ASSOCIATION FOR REGULATORY REFORM, Plaintiff, v. Samuel PIERCE, et al., Defendants.
• Court: U.S. District Court — District of Columbia

670 F. Supp. 1041

ASSOCIATION FOR REGULATORY REFORM, Plaintiff, v. Samuel PIERCE, et al., Defendants.

Civ. A. No. 86-3462-OG.

United States District Court, District of Columbia.

July 20, 1987.

As Modified July 28, 1987.

Edward F. Canfield and S. Churchill Elmore, Washington, D.C., for plaintiff.

John C. Martin, Asst. U.S. Atty., Washington, D.C., for defendants.

MEMORANDUM

GASCH, District Judge.

I. INTRODUCTION

Plaintiff Association for Regulatory Reform ("ARR"), an association of manufacturers of mobile homes ("manufactured homes"), brings suit against defendants, the United States Department of Housing and Urban Development ("HUD" or "the agency"); HUD's Secretary, Samuel Pierce; and the Director of HUD's Manufactured Housing and Construction Standards Division, William Sorrentino.¹ The plaintiff charges that HUD improperly modified its definition of a manufactured home as defined by the National Manufactured Housing Construction and Safety Standards Act of 1974 ("the Manufactured Housing Act" or "the Act").² The ARR charges that HUD failed to employ the required rulemaking procedures to effect the change and that the agency's definition is arbitrary and capricious. The ARR complains that HUD's definition overturns long-standing agency practice and will severely injure, if not cripple, the manufactured housing industry. Accordingly, the ARR seeks a declaration that HUD's definition of a manufactured home is erroneous and a permanent injunction preventing implementation of the agency's definition. The defendants have moved to dismiss the case for lack of jurisdiction or, in the alternative, for summary judgment.³

II. STATUTORY AND REGULATORY BACKGROUND

Congress enacted the Manufactured Housing Act in 1974 "to reduce the number of personal injuries and deaths and the amount of insurance costs and property damage resulting from manufactured home accidents and to improve the quality and durability of manufactured homes." 42 U.S.C. § 5401. To achieve this goal, the Act requires HUD to promulgate construction and safety standards, see 24 C.F.R. Part 3280, addressing, inter alia, the proper materials and manner of installing "fire safety, plumbing, heat-producing and electrical systems of manufactured homes." Id. at § 3280.1. The incentive offered by the Act is exemption from the myriad state and local regulations across the country which loosely track HUD's regulations. 42 U.S.C. § 5403(d).⁴

Pursuant to subsection 5402(6) of the Manufactured Housing Act, a "manufactured home" is defined as one which is,

... transportable in one or more sections, which in the traveling mode, is eight body feet or more in width or forty body feet or more in length, or, when erected on site, is three hundred twenty 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....

42 U.S.C. § 5402(6) (emphasis added). Neither the statute nor its legislative history further defines the term "permanent chassis." However, HUD's regulations help to make the phrase explicable. HUD defines a "chassis" to be "the entire transportation system comprising the following subsystems: drawbar and coupling mechanism, frame, running gear assembly, and lights." 24 C.F.R. § 3280.902(a) (emphasis added). HUD considers a chassis permanent as long as the underlying frame remains in place, which, in the vast majority of cases, requires only the maintenance of two steel I-beams.⁵ Declaration of William C. Sorrentino, Director of HUD's Manufactured Housing and Construction Standards Division ("Sorrentino Declaration") at ¶ 6. Thus, pursuant to HUD's current policy, the axles, wheels, and drawbar may be removed without destroying the permanence of the chassis.

HUD's regulations further define permanence. Manufactured housing designs must provide the manner in which the floor will be attached to the chassis, 24 C.F.R. § 3280.305(a), (e), and must demonstrate that the chassis is designed to last the intended life of the manufactured home. 24 C.F.R. § 3280.904(a). The requirement of a permanent chassis becomes more understandable when considered in light of the fact that Manufactured Housing Act prohibits manufactured homes which are "designed only for erection or installation on a site-built permanent foundation" or are "not designed to be moved once so erected or installed." 42 U.S.C. § 5403(h)(1), (2). These strictures make clear that a permanent chassis is required to ensure that manufactured homes will remain "transportable" and truly mobile. 42 U.S.C. § 5402(6) ("`manufactured home' means a structure, transportable ..." (emphasis added)).⁶

III. FACTS

The action by HUD which resulted in ARR's filing this suit was the issuance of a letter-directive by defendant Sorrentino, Director of HUD's Manufactured Housing and Construction Standards Division. The letter was addressed to a Design Approval Primary Inspection Agency ("DAPIA"). Pursuant to HUD regulations, a DAPIA's function is to approve or disapprove designs for manufactured housing submitted by the producers of these homes.⁷ See 24 C.F.R. § 3282.7(aa)(1). Sorrentino's letter transmitted HUD's disapproval of a DAPIA's decision to allow a manufactured home producer to build homes with a removable chassis.⁸ Sorrentino's letter states, in pertinent part, that,

it has come to our attention that some DAPIAs have approved designs explicitly permitting chassis removal. This is to inform you that DAPIAs are not authorized to approve manufactured home designs permitting the removal of chassis.

Letter of William Sorrentino, Director of HUD's Manufactured Housing and Construction Standards Division (August 22, 1986) ("Sorrentino letter" or "Sorrentino directive").⁹

The Sorrentino directive was issued without notice either to the public or to manufacturers, who claim to have previously received continuous approval of removable chassis designs. The plaintiff maintains that the Sorrentino letter constitutes either legislative rulemaking which has failed to comply with the notice and comment requirements of the Administrative Procedure Act ("APA"), 5 U.S.C. § 553, or an arbitrary and capricious definition of manufactured housing. To the contrary, HUD claims that the letter merely reaffirms the agency's long-standing policy disallowing the removal of the chassis from a manufactured home.

In considering the defendants' motions, the Court must determine whether HUD's directive constitutes a legislative rule pursuant to the APA or an interpretive bulletin under HUD's regulations, also subject to informal rulemaking requirements of notice and comment, or whether HUD's directive is only an interpretive rule. In either case, the Court must decide whether the definition of a "manufactured home" stated by the Sorrentino letter should be sustained.

IV. JURISDICTION

As a threshold issue, HUD questions this Court's jurisdiction. Subsection 5403(a) of the Manufactured Housing Act requires HUD to "establish by order appropriate Federal manufactured home construction and safety standards" ("construction and safety standards"). 42 U.S.C. § 5403(a). As previously noted, these standards address, inter alia, the proper materials and manner of installing "fire safety, plumbing, heat-producing and electrical systems of manufactured homes." See 24 C.F.R. § 3280.1. The jurisdictional provision of the Manufactured Housing Act specifies that,

in a case of actual controversy as to the validity of any order under section 42 U.S.C. § 5403 construction and safety standards, any person who may be adversely affected by such order when it is effective may at any time prior to the sixtieth day after such order is issued file a petition with the United States court of appeals for the circuit wherein such person resides or has his principal place of business, for judicial review of such order.

42 U.S.C. § 5405(a)(1) (emphasis added). This grant of jurisdiction to the court of appeals is narrow. By its terms, the provision only applies to inquiries about the "validity of any order under section 42 U.S.C. § 5403." The jurisdictional question thus reduces itself to whether the Sorrentino letter addresses the validity of a HUD order relating to Federal construction and safety standards.

ARR maintains that jurisdiction is proper in this Court. The plaintiff attempts to support this proposition by assuming that the Sorrentino directive represents a modification of the construction and safety standards. See Plaintiff's Supplemental Opposition at 2. Pursuant to subsection 5405(a)(1), only the court of appeals has jurisdiction over "orders" relating to construction and safety standards. 42 U.S.C. § 5405(a)(1). However, pursuant to subsection 5403(b), all "orders" issued under the construction and safety standards section of the Act must be preceded by notice and an opportunity for comment. See 42 U.S.C. § 5403(b). ARR thus reasons that since HUD provided neither notice nor an opportunity for comment, the Sorrentino directive cannot constitute a valid subsection 5405(a)(1) type "order" triggering review by the United States court of appeals.¹⁰

This argument fails because the Sorrentino letter does not address the validity of an order relating to the construction and safety standards; rather, it seeks to define more clearly the term "manufactured home." Section 5403 of the Manufactured Housing Act requires the Secretary to "establish by order appropriate Federal manufactured home construction and safety standards." 42 U.S.C. § 5403. The statute does not define the scope of these standards. Part 3280 of HUD's regulations generally addresses construction and safety matters. 24 C.F.R. § 3280.1 et seq. The regulations are divided into groups and address topics like design of manufactured housing, proper equipment and installation, fire safety, plumbing, heating, and proper electrical systems. See 24 C.F.R. § 3280.1(a). By setting forth specific criteria for...