### Mr. Joe A. Garcia Executive Director Manufactured Housing Division Texas Department ofHousing and Community Affairs Post Office Box 12489 Austin, Texas 78711-2489 DearMr. Garcia: 

## KEN PAXTON ATTORNEY GENERAL OF TEXAS


### May 16, 2018
OpinionNo. KP-0199 Re: Whether the authority granted by section 1201.461 of the Occupations Code to a manufactured home retailer to remove the label ofa salvaged manufactured home is preempted by federal law (RQ-0194-KP)
Regulations promulgated by the United States Department of Housing and Urban Development ("federal agency"), pu:rsuant to the National Manufactured Housing Construction and Safety Standards Act of 1974 ("Act"), require that a manufactured home for sale or lease in the United States bear a label certifying its compliance with federal construction and safety standards. 24 C.F.R. § 3280.11 (describing certification label); see generally 

### 42 U.S.C. §§ 5401- 5426. You tell us that Hurricane Harvey damaged many retail manufactured homes within the State, and in the storm's aftermath, the Texas Department ofHousing and Community Affairs Manufactured Housing Division ("state agency") issued an industry bulletin based on section 1201.461 of the Occupations Code directing retailers to remove certification labels from irreparably damaged homes. 1 See 

### Attachments at 1(Industry BulletinNo. 2017-002) ("Forhome~ thatcannotberepairedtheRetailer shouldremovethe

...labels and sendthemto the [state agency] along with an Application for Statement ofownership electing the home as SALVAGE."); see also 

### TEX. 

### 0cc. CODE § 1201.461(c) (providing that if a new manufactured home is scrapped, dismantled, or destroyed,· or ifan insurance company pays the full insured value ofthe home, the "retailer shall remove the label and surrender [it]

...to the director for issuance ofa statement of ownership that indicates thatthe home is salvaged"). Shortly afterthe bulletin's issuance, youtell us the federal agency advisedthatthis procedure conflicts with federal procedures requiring thirdparty inspectors, known as Production Inspection Primary Inspection Agencies ("inspection agencies"), to "remove all

... Labels from manufactured homes." Request Letter at 2. After reviewing the authorities cited by the federal agency as preempting Texas.law, however, you tell us you "could not identify a conflict between our statute and the federal regulations" and that on

1Letter and Attachments from Mr. Joe A. Garcia, Exec. Dir., Tex. Dep't of Hous. & Cmty. Affairs, Mfd. Hous. Div., to Honorable Ken Paxton, Tex. Att'yGen. at 1-2 (Nov. 27, 2017), https://www.texasattomeygeneral.gov/ opinion/requests-for-opinion-rqs ("Request Letter" and "Attachments," respectively) (Attachments on file with the Op. Comm.).Mr. Joe A. Garcia

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its own website, the federal agency "provided different "methods of how to handle salvaged manufactured homes." 

### Id. You further tell us that in later communications, the federal agency advised that it reversed its ·position and was no longer asserting preemption.2 Given these inconsistencies, you seek clarification as to whether federal law preempts the authority given to retailers under Texas law to remove certification labels. 

### Id. at 1-2. Passed by Congress to improve the quality ofmanufactured homes, the Act sets minimum constructionand safety standards for manufacturedhomes. 42U.S.C. § 5401. Congress expressly defined the preemptive reach ofthe Act, stating: Whenever a Federal manufactured home construction and safety standard establishedunderthis chapteris in effect, no State

... shall have any authority either to establish, or to continue in effect, with respect to any manufactured home covered, any standard regarding the construction or safety applicable to the same aspect of performance ofsuch manufactured home which is not identical to the Federal manufactured home construction and safety standard. Federal preemption under this subsection shall be broadly and liberally construed to ensure that disparate State or local requirements or standards do not affect the uniformity and comprehensiveness ofthe standards promulgated under this section nor the Federal superintendence of the manufactured housing industry as established by this chapter. 42U.S.C. §5403(d);

### see also Cipollone v. LiggettGrp., Inc., 505 U.S. 504,517(1992) ("Congress' enactment ofa provision defining the pre-emptive reach ofa statute implies that matters beyond that reach are not pre-empted."). Federal regulations passed pursuant to the Act additionally contain express preemptionprovisions, providing in part: No State or locality may establish or enforce any rule or regulation ortake any action that stands as an obstacle to the accomplishment and execution ofthe full purposes and objectives ofCongress. 

### The test of whether a State rule or action is valid or must give way is whether the State rule can be enforced or the action taken without impairing the Federal superintendence ofthe manufactured home industry as establishedby theAct. 24 C.F.R. § 3282.1 l(d) (emphasis added). We musttherefore determine whetherthe authorization givento retailers under Texas law to remove certification labels from irreparably damaged homes impairs the federal superintendence ofthe manufacturedhomeindustry. 

### See id. The Actprovidesthat, upon delivery of a manufactured home, a manufacturer must provide a retailer with a label that is to be

2Telephone Conference with Amy Morehouse, Gen. Counsel, Tex. Dep't ofHous. & Cmty. Affairs, Mfd. Hous. Div. (Dec. 6, 2017). ·Mr. Joe A. Garcia- Page 3 (KP-0199)

"permanently affixed to each manufactured home" certifying that it "conforms to all applicable Federal construction and safety standards." 42 U.S.C. § 5415. The Act does not address the removal ofa label from a manufactured home that no longer conforms to federal standards. See id. §§ 5401-5426. In your correspondence with the federal agency, however, it identified two provisions as preemptingthe Texas law. See Attachments at24-26. Foremost, the federal agency assertedthatits regulations, under 24 C.F.R. § 3282.362, require that onlythe inspection agencies remove a certification label from a damaged manufactured home. Id.; see 24 C.F.R. § 3282.362( c)(2)(i), (ii). These regulations contain numerous specifications for the certification label, including requiring that the "label shall be provided to the manufacturer only by the [inspection agencies]." 24 C.F.R. § 3282.362(c)(2)(i)(F) (emphasis added). The regulations do not, however, address the removal of a certification label from an irreparably damaged manufacturedhome. See id. § 3282.362(c)(2)(i), (ii). The federal agency additionally asserted preemption under an informational bulletin it issued discussing procedures for the labeling ofmanufactured homes damaged intransit: Ifan [inspection agency] has no knowledge that a mobile home is damagedintransit, as will oftenbethe case, the [inspection agency 

## J hasno responsibility. Further, there is no requirementto inform the [inspection agency 

## Jthata home has been so damaged, exceptwhen the manufacturer wants [inspection agency] approval ofthe repair orwants to replace the damaged unit. When an [inspection agency] knows that a homebearing its label hasbeendamaged, it shall, atits discretion

... red-tag the unit in question, or ifthe mobile home is goingto bejunkedor destroyedratherthanrepaired, the [inspection agency] shall remove and destroy the label. See Attachments at 15 (Informational Bulletin 2-77) (emphases added). Contrary to the federal agency's initial assertions, the plain language ofthe bulletin provides that when a manufactured home is damaged the inspection agencies will generally have no knowledge of the event nor responsibility, and "thereisno requirementto inform [them]." See Attachments at 15. Rather, the federal bulletin requires only that a manufacturer contact the inspection agencies regarding a damaged manufactured home ifit intends to repair orreplace the damagedunit. Id. Ifcontacted, the inspection agencies then at their discretion may eitherbeginthe process for approving repairs or destroy the certification label if the home cannot be repaired. See id.; see also 24 C.F.R. § 3282.362( c)(2)(i)(G) (describingprocess for inspection agenciesto red-tag manufacturedhomes during repairs).3 Collectively, neither the Actnorthese federal publications require a retailer to contactthe inspection agencies to remove a certification label from an irreparably damaged home that no longer conformsto federal standards. Nordo these federal authorities vestthe inspectionagencies withthe sole authorityto remove such certifications. "Thetest ofwhether a Staterule

... is valid or must give way is whether the State rule can be enforced

... without impairing the Federal

3As the federal bulletin does not conflict with Texas procedures, we need not address whether it has the potential to preempt state law.Mr. Joe A. Garcia

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superintendence ofthe manufactured home industry." 24 C.F.R. 

### § 3282.1 l(d). As a retailer may remove a certification label from an irreparably damaged home under the authority granted by Texas law without impairing the federal superintendence ofthe manufactured home industry, the Act therefore does notpreemptthe authority givento retailers.

### Mr. Joe A. Garcia

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### SUMMARY The National Manufactured Housing Construction and Safety Standards Act of 1974 does not preempt the authority provided to retailers of manufactured homes under Texas Occupations Code section 1201.461 to remove labels certifying compliance with federal standards from irreparably damaged manufactured homes.

JEFFREY C. MATEER First Assistant Attorney General BRANTLEY STARR Deputy First Assistant Attorney General VIRGINIA K. HOELSCHER Chair, Opinion Committee ASHLEY FRANKLIN Very truly yours,

KEN PAXTON Attorney General ofTexas

Assistant Attorney General, Opinion Committee