By: Parker S.B. No. 1955               A BILL TO BE ENTITLED   AN ACT   relating to the regulation of industrial housing and buildings.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle C, Title 7, Occupations Code, is   amended by adding a new Chapter 1203 to read as follows:   SECTION 1   CHAPTER 1203. MODULAR DWELLING SYSTEM REGULATION.   Sec. 1203.001.  LEGISLATIVE FINDINGS AND POLICY.   (a) The legislature finds that:                (1)  there is a continuing need to provide safe,   affordable, and well-constructed housing;                (2)  regulations in connection with industrial   housing, mobile homes, and manufactured homes,   along with partial building systems such as   structurally insulated panels serve the state   well;                (3)  private construction creativity and market forces   have derived(?) new, innovative housing   construction techniques, including modular and   complete residential building systems, from   preapproved components or modules that are   manufactured off-site, then transported to a site   for final assembly and completion on a permanent   foundation;                (4)  because of the nature of construction, modular,   complete residential building system assembly   presents unique opportunities to optimize uniform   health and safety standards at the place of   manufacture, while minimizing inspection   procedures and time delays associated with   traditional on-site inspection procedures; and                (5)  there is a significant public benefit to   encouraging home ownership, by utilizing modular,   complete residential building construction   techniques to address the growing need for safe,   affordable, and well-constructed housing.   Sec. 1203.002  SUBCHAPTER A. GENERAL PROVISIONS.   Sec. 1203.003.  APPLICABILITY OF CHAPTER.  (a) Except as otherwise   provided by this chapter, this chapter applies only to a   municipality with a population of 300,000 or more. Except as   otherwise provided by this chapter, this chapter applies   exclusively to a modular, complete residential dwelling for   residential occupancy by one or more families. Unless clearly   indicated otherwise by context, the following words and terms when   used by this chapter shall have the following meanings.          Sec. 1203.003  GENERAL DEFINITIONS. In this chapter:                (1)  "Commission" means the Texas Commission of   Licensing and Regulation.                (2)  "Council" means the Texas Industrialized Building   Code Council.                (3)  "Department" means the Texas Department of   Licensing and Regulation.                (4)  "Executive director" means the executive director   of the department.   Sec. 1203.004  DEFINITIONS FOR MODULAR RESIDENTIAL DWELLINGS. In   this chapter:                (1)  "Modular residential technique" means a method of   construction that utilizes a pre-engineered, complete building   assembly or system of building subassemblies, designed, built and   constructed in one or more three dimensional modules in a factory   that are transported to a residential site for assembly and   finishing.                (2)  "Modular Residential Dwellings" means a structure   designed and built for residential use and constructed using a   modular technique in one or more three dimensional modules in a   factory, designed, and built utilizing an agency approved method of   construction that consists of pre-engineered, inspection   factory-fabricated sections that are transported to a site for   final assembly and finishing to completion on a permanent   foundation for residential occupancy by one or more families and   including the necessary electrical, plumbing, heating,   ventilation, and other service systems, which is of closed   construction. Modular residential dwelling does not include mobile   homes, recreational vehicles, or manufactured homes. A modular   residential dwelling located in Texas is regulated by the Texas   Department of Licensing and Regulation.                (3)  "Approved foundation and support system" means,   for a modular residential dwelling unit, a closed perimeter   formation consisting of materials such as concrete, mortared   concrete block, mortared brick, steel, or treated lumber extending   into the ground.                (4)  "Closed construction" is any residential building   component, assembly or system manufactured in such a manner that   all portions cannot readily be inspected at the installation site   with disassembly, damage to, or destruction thereof.                (5)  "Code compliance certificate" means the   certificate provided by the manufacturer or builder to the   Department that warrants that the modular residential dwelling unit   complies with appropriate safety codes as established by the   Department. The Codes shall contain the standards and requirements   for modular residential dwellings so that adequate performance for   the intended use is made to test the acceptability, provided that   the structural requirements adopted for modular residential   dwellings shall be no more stringent than the requirements   contained in the most recent edition of the International   Residential Code for One and Two Family Dwellings or the   International Building Code, as applicable. The Code of Standards   shall permit the use of new technology, techniques, methods, and   materials for modular residential dwellings, consistent with   recognized and accepted codes and standards developed by the   International Code Council, the National Fire Protection   Association, and the International Association of Plumbing and   Mechanical Officials.                (6)  "Approved Inspection Agency" means a person,   organization, or local government approved by the executive   director to be especially qualified by reason of facilities,   personnel, experience, and demonstrated reliability to   investigate, test, evaluate, and inspect modular residential   dwelling units, systems, or the component parts of modular   residential dwelling units together with the plans,   specifications, and quality control procedures to ensure that such   units, systems, or component parts are in full compliance with the   minimum standards adopted by the executive director pursuant to   this part and to label such units complying with those standards.   Any person, or any organization whose membership is composed of   persons, employed by a manufacturer of modular residential dwelling   units or owning any interest in any such manufacturing business   shall be ineligible for approval by the executive director to serve   as an inspection agency.                (7)  "Installation" means the assembly of a modular   residential dwelling or dwellings onsite and/or the process of   affixing a modular residential dwelling or dwellings, which may   include the structural, electrical, mechanical, plumbing, fire   protection, or other structurally integrated system or systems   thereof affecting life safety.                (8)  "Installer" means a company or general contractor   certified by the department that is responsible for design,   engineering, manufacturing, and installation of the components for   a modular residential dwelling unit at the final onsite location   pursuant to the Original Building Manufacturer's (OBM)   instructions.                (9)  "Person" means any individual, group of   individuals, association, trust, partnership, limited liability   company, corporation, person doing business under an assumed name,   county, municipality, the State of Texas, or any political   subdivision or department thereof, or any other entity.                (10)  "Complete application" means a submitted plan,   application for construction of a modular residential dwelling, or   request for inspection that contains all the information and   supporting documentation required by the county or municipality to   enable making the determination as to whether the plan,   application, or request is in compliance with regulatory   requirements of this Act and department rules.                (11)  "Certification". The department shall issue an   authorizing certification to any manufacturer or installer upon   submittal of an application that is supported by affidavit in   addition to other evidence which the department deems necessary to   satisfy itself that the project meets the modular residential   dwelling criteria and that the project is compliant with this Act   and thereby approved to manufacture, install, rent, sell, or offer   for sale a modular residential dwelling.                (12)  "Modular Residential Dwelling Fund" (Fund) means   a fund established within the department's budget, consisting of   fines and penalties, subject to appropriation, to be used for   enforcement of this Act.   Sec. 1203.005  PREREQUISITES TO SALE OR INSTALLATION. (a) After   the effective date of the rules adopted pursuant to this part, no   modular residential dwelling shall be offered for sale, sold, or   installed in this state unless it is approved and bears the insignia   of approval of the executive director, the executive director's   designee, or an approved inspection agency. It is unlawful for any   person to manufacture, rent, sell, or offer for sale for location   within this state any modular residential dwelling unless such   modular residential dwelling complies with this Act and all rules   adopted by the department.          (b)  All modular residential dwelling units manufactured in   this state, or intended to be offered for sale, sold, or   installed in this state, shall be inspected by the   executive director, the executive director's designee,   or an approved inspection agency, at the place of   manufacture of the modular residential dwelling unit.          (c)  No more than 30 days after receipt of both a modular   residential dwelling unit or project application and   the affidavit from a qualifying manufacturer,   installer, or construction contractor, the department   shall issue the requested authorization or provide   written notice to the applicant identifying the   specific plan features that do not comply with the   applicable regulatory requirements, as well as the   specific code chapters and sections of such regulatory   requirements. If the department or any local governing   authority fails to provide written notice of alleged   deficiencies within the prescribed 30-day period, the   application shall be deemed approved as a matter of law   and the project may proceed.          (d)  Nothing in this chapter prohibits a city, town, village,   or county from adopting construction standards for   modular residential dwelling units under local   ordinances, provided such ordinances are in substantial   compliance with state requirements and reviewed and   approved by the department.          (e)  No local standard relating to the construction or   installation of modular residential dwelling units   shall be applicable to any modular residential dwelling   unit subject to this part, unless such standard is   identical to that set by the department pursuant to this   Chapter. Any residential modular dwelling unit bearing   an insignia of approval issued by the executive   director, the executive director's designee, or an   approved inspection agency pursuant to this part shall   be deemed to comply with any local standard relating to   the construction of modular residential dwelling units.          (f)  Subject to subdivision 1203.005(C), a local government   may make, and charge a fee for, an inspection of the   installation of a modular residential dwelling unit.   Any such fee shall not exceed the amount charged for the   equivalent inspection on conventionally, onsite, built   housing.          (e)  Local land use and zoning requirements and flood control   areas are specifically and entirely reserved to local   government. Such local requirements and rules that may   be enacted by a local government must be reasonable and   uniformly applied and enforced without any distinction   as to whether a residential dwelling is conventionally,   onsite constructed or a modular residential dwelling   unit under this Chapter.          (f)  Modular residential dwelling units bearing an insignia   of approval issued by the executive director, the   executive director's designee, or an approved   inspection agency pursuant to this part shall not be   modified prior to or during installation, except in   conformance with the rules of the executive director.          (g)  The department shall promulgate a standard form notice   and a standard form certificate that shall be used to   administer this Act. Any local inspectors shall make   copies of the standard forms available to contractors.          (h)  Upon submission of the certification required by this   subsection, the local governing authority shall be   required to accept the inspection without the necessity   of further inspection or approval, except that the   local governing authority may perform an inspection at   any time and may issue a stop-work order for the project   or any portion thereof as provided by law, after giving   prompt, written notice to the manufacturer or   installer, or the contractor of record, if the work is   found to be in violation of code requirements.          (i)  If a local governing authority issues a stop-work order,   the local official shall be available to meet with the   person responsible for manufacturing, installing, or   constructing the modular residential dwelling unit   within two business days to resolve any dispute.   Sec. 1203.006  POWERS AND DUTIES OF THE EXECUTIVE DIRECTOR.   (A)  The executive director shall enforce and administer this part.                (1)  The executive director shall promulgate such rules   and regulations as the executive director finds necessary to   protect health and safety of the public against dangers inherent in   the use of substandard construction and unsafe plumbing,   electrical, and heating systems, and other appropriate regulations   to carry out this part, in accordance with the Texas Administrative   Procedures Act found in Title 10, Chapter 2001, Texas Government   Code.                (2)  The executive director may impose an   administrative penalty against any person who violates this Act, or   any rule adopted under this Act, or who violates any determination   or order of the department under this Act. The department shall   establish violations and penalties by rule, with each day's   violation constituting a separate offense. The maximum penalty   shall be $1,000 per day per violation. All penalties collected   under this section shall be deposited into the "Modular Residential   Dwelling Fund". Subject to appropriation, moneys in the Fund shall   be used for enforcement of this Act.                (3)  The executive director is authorized to require   licenses of manufacturers and any other person involved in the   construction, installation, sale, or lease of a modular residential   dwelling unit, and to set reasonable fees and conditions for such   licenses.                (4)  The executive director may also establish record   keeping requirements from manufactures and installers.   (B)  In addition to any other powers conferred on the executive   director by law, the executive director is authorized to perform   necessary inspection of manufacturing facilities and products to   implement the provisions of this Act, including:          (1)  Prescribe all forms required to be filed pursuant to   this part;          (2)  Establish a schedule of fees to pay the cost incurred by   the department for the administration and uniform   enforcement of the codes consistent with rules,   regulations, and interpretations promulgated by the   department;          (3)  Appoint and employ such qualified personnel as are   necessary to carry out the duties imposed upon the   executive director by this part;          (4)  Delegate inspection authority under this part, by   contract or other agreement, to local governments,   private persons, corporations, associations, and   agencies of other states, as an approved inspection   agency; and          (5)  After notice and opportunity for hearing to an applicant   or insignia holder, may deny, suspend, or revoke a   certification or asses a civil penalty not to exceed   five thousand dollars ($5,000) for each violation of   this Act in any case where a finding of substantial   failure to comply with the provisions of this Act or the   minimum standards, rules, and regulations adopted by   the department under this Act.          (6)  All final administrative or civil penalty decisions by   the executive director shall be subject to judicial   review.   (C)  If a modular residential dwelling is manufactured, sold, or   installed in violation of this part, the executive director may   require:          (1)  The manufacturer or installer in violation of this part   to provide the executive director with as-built plans   to be evaluated and approved by the executive director   for compliance with state building codes;          (2)  The manufacturer or installer in violation of this part   to make available for inspection any components and   concealed spaces of the structure and to repair any   damages made when making the components and concealed   spaces available for inspection;          (3)  Inspections to be made during the remanufacturing   process and may require that closed construction or   concealed spaces be opened or made accessible as   necessary to determine that components comply with   state building codes; and          (4)  The manufacturer or installer to be responsible for all   costs or expenses incurred pursuant to this subsection   (c).   Sec. 1203.007  RECIPROCITY - INTERSTATE AGREEMENTS. If the   executive director determines that the minimum standards for   construction and inspection of modular residential dwelling units   prescribed by statute or rule of another state are at least equal to   rules prescribed under this part and that such standards are   enforced by such other state, the executive director may negotiate   and enter into reciprocal agreements with appropriate officials of   other states.   SECTION 2.  This Act does not make an appropriation. A provision in   this Act that creates a new governmental program, creates a new   entitlement, or imposes a new duty on a governmental entity is not   mandatory during a fiscal period for which the legislature has not   made a specific appropriation to implement the provision.          SECTION 3.  (a) As soon as practicable after the effective   date of this Act, the executive director of the Texas Department of   Licensing and Regulation shall adopt rules as necessary to   implement the changes in law made by this Act.          (b)  As soon as practicable after the effective date of this   Act, the Texas Commission of Licensing and Regulation shall adopt   rules necessary to implement the changes in law made by Chapter   1203, as added by this Act.          SECTION 40.  This Act takes effect immediately if it   receives a vote of two-thirds of all the members elected to each   house, as provided by Section 39, Article III, Texas Constitution.   If this Act does not receive the vote necessary for immediate   effect, this Act takes effect September 1, 2023.