A federal judge here has ruled that the Department of Housing and Urban Development was proper in deciding last year that mobile homes with removable chassis do not meet federal standards.
As a result, mobile home manufacturers who build the removable-chassis structures, which usually are sold for use as permanent homes, may now be subject to housing standards of individual states and communities that are stricter than those imposed by HUD for ordinary mobile home construction.
The issue is critical to the manufacturers because demand is increasing for homes that can be mounted on permanent foundations after they are transported to buyers. They now constitute from 5 percent to 10 percent of all mobile homes manufactured and as much as half the business for some companies, according to an industry official.
U.S. District Judge Oliver Gasch last week rejected mobile home manufacturers' claims in a lawsuit that the government illegally changed a key regulation on the removable-chassis question without providing an opportunity for comment by the public. Gasch instead ruled that HUD "interpreted" the disputed rule, which did not require that the public be given an opportunity for comment.
The suit was filed by the Association for Regulatory Reform, a manufacturers' group, after a HUD official said mobile homes built with removable chassis do not meet federal standards. The 1974 Manufactured Housing Act empowers HUD to regulate the mobile home industry.
William Sorrentino, director of HUD's manufactured housing and construction standards division, discussed removable chassis last year in a letter to a private company licensed to approve mobile home designs. Sorrentino said he had learned that some designs calling for chassis that could be taken off had been approved and said the companies were not authorized to approve such designs.
Under Gasch's ruling, manufacturers are still free to make homes with removable chassis, but they no longer would conform to HUD's definition of a mobile home and would not be regulated by the department. Instead, the structures would have to meet the more stringent state and local building codes applied to site-built houses.
The lawsuit contended that Sorrentino was actually making or changing a rule in his letter, and that federal law requires that the public be given a chance to comment before the regulation becomes final. Mobile homes built with removable chassis had been approved by HUD "for many years" before Sorrentino's letter announced a change in the practice, the suit said.
But Gasch disagreed, saying Sorrentino issued an "interpretive rule not subject to the requirements of notice and comment rule making... . "
The law requires HUD to issue regulations prohibiting mobile homes that 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," according to Gasch's decision.
The association that filed the suit has not decided on its next legal step, but Danny D. Ghorbani, president of the organization, said, "We're not going to let this decision go" unchallenged.
Federal officials declined to comment because similar litigation is pending in federal court in South Bend, Ind., a spokesman for HUD said.
The Manufactured Housing Institute, another mobile home industry organization, filed the Indiana case, also charging that HUD was obliged to give prior public notice and provide an opportunity for comment. A hearing in the suit is scheduled for Aug. 24.
Both trade groups say federal regulators have allowed removable chassis in the past, and that if the practice is discontinued now, the industry would lose millions of dollars, manufacturing plants would close and many employes would lose their jobs.
Although HUD officials declined to discuss the dispute, a letter the department sent to Congress last October said federal regulators did not know "until recently" that some of its licensees were approving manufacturers' designs that incorporated removable chassis.
When regulators learned of the practice, they ordered it halted, they said.
Manufacturers charge that HUD cracked down on removable chassis because of pressure from builders of conventional houses. The Manufactured Housing Institute's lawsuit contends that the department changed its enforcement practices last year as "a direct result of political and competition-motivated pressure by the National Association of Home Builders," which represents builders of "traditional site-built homes."
A spokesman for the home builders' association said his organization is not afraid of competition from mobile homes, but contends that producers of site-built houses must meet state and local codes "designed to assure a greater level of structural soundness" than the federal rules for mobile homes.
Mobile home manufacturers said that they believe they serve the public interest because they produce "functional, adaptable, affordable housing on permanent foundations for low- and middle-income Americans."