                                             KEN PAXTON
                                         ATTORNEY GENERAL OF TEXAS




                                                May 16, 2018



Mr. Joe A. Garcia                                        Opinion No. KP-0199
Executive Director
Manufactured Housing Division                            Re: Whether the authority granted by section
Texas Department of Housing and                          1201.461 of the Occupations Code to a
     Community Affairs                                   manufactured home retailer to remove the label
Post Office Box 12489                                    of a salvaged manufactured home is preempted
Austin, Texas 78711-2489                                 by federal law (RQ-0194-KP)

Dear Mr. Garcia:

        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 of Housing 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 Bulletin No. 2017-002) ("For home~
that cannot be repaired the Retailer should remove the ... labels and send them to the [state agency]
along with an Application for Statement of ownership 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 if an insurance company pays the full insured value of the home, the
"retailer shall remove the label and surrender [it] ... to the director for issuance of a statement of
ownership that indicates that the home is salvaged"). Shortly after the bulletin's issuance, you tell
us the federal agency advised that this procedure conflicts with federal procedures requiring third-
party 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

        1
          Letter 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'y Gen. 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 - Page 2                      (KP-0199)



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 of manufactured homes, the Act sets minimum
construction and safety standards for manufactured homes. 42 U.S.C. § 5401. Congress expressly
defined the preemptive reach of the Act, stating:

                Whenever a Federal manufactured home construction and safety
                standard established under this chapter is 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 of such 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 of the standards promulgated under this section
                nor the Federal superintendence of the manufactured housing
                industry as established by this chapter.

42 U.S.C. § 5403(d); see also Cipollone v. Liggett Grp., Inc., 505 U.S. 504,517 (1992) ("Congress'
enactment of a provision defining the pre-emptive reach of a statute implies that matters beyond
that reach are not pre-empted."). Federal regulations passed pursuant to the Act additionally
contain express preemption provisions, providing in part:

                No State or locality may establish or enforce any rule or regulation
                or take any action that stands as an obstacle to the accomplishment
                and execution of the full purposes and objectives of Congress. 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 of the manufactured home
                industry as established by the Act.

24 C.F.R. § 3282.1 l(d) (emphasis added).

       We must therefore determine whether the authorization given to retailers under Texas law
to remove certification labels from irreparably damaged homes impairs the federal
superintendence of the manufactured home industry. See id. The Act provides that, upon delivery
of a manufactured home, a manufacturer must provide a retailer with a label that is to be

        2
         Telephone Conference with Amy Morehouse, Gen. Counsel, Tex. Dep't of Hous. & 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 of a 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 preempting the Texas law. See Attachments at 24-26. Foremost, the federal agency
asserted that its regulations, under 24 C.F.R. § 3282.362, require that only the 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
manufactured home. 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 of manufactured homes damaged in transit:

                 If an [inspection agency] has no knowledge that a mobile home is
                 damaged in transit, as will often be the case, the [inspection agencyJ
                 has no responsibility. Further, there is no requirement to inform the
                 [inspection agencyJ that a home has been so damaged, except when
                 the manufacturer wants [inspection agency] approval of the repair
                 or wants to replace the damaged unit. When an [inspection agency]
                 knows that a home bearing its label has been damaged, it shall, at its
                 discretion ... red-tag the unit in question, or if the mobile home is
                 going to be junked or destroyed rather than repaired, 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 of the bulletin provides that when a manufactured
home is damaged the inspection agencies will generally have no knowledge of the event nor
responsibility, and "there is no requirement to inform [them]." See Attachments at 15. Rather, the
federal bulletin requires only that a manufacturer contact the inspection agencies regarding a
damaged manufactured home if it intends to repair or replace the damaged unit. Id. If contacted,
the inspection agencies then at their discretion may either begin the 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) (describing process for inspection agencies to red-tag manufactured homes
during repairs). 3

        Collectively, neither the Act nor these federal publications require a retailer to contact the
inspection agencies to remove a certification label from an irreparably damaged home that no
longer conforms to federal standards. Nor do these federal authorities vest the inspection agencies
with the sole authority to remove such certifications. "The test of whether a State rule ... is valid
or must give way is whether the State rule can be enforced ... without impairing the Federal

          3
            As 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 - Page 4                 (KP-0199)



superintendence of the 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 of the manufactured home industry, the
Act therefore does not preempt the authority given to retailers.
Mr. Joe A. Garcia - Page 5                (KP-0199)



                                     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.

                                          Very truly yours,




                                          KEN PAXTON
                                          Attorney General of Texas



JEFFREY C. MATEER
First Assistant Attorney General

BRANTLEY STARR
Deputy First Assistant Attorney General

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

ASHLEY FRANKLIN
Assistant Attorney General, Opinion Committee
