Manufactured Housing: Revision of Notification, Correction, and Procedural Regulations, 60193-60208 [2013-23775]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 78, Number 190 (Tuesday, October 1, 2013)]
[Rules and Regulations]
[Pages 60193-60208]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-23775]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 3282

[Docket No. FR-5238-F-02]
RIN 2502-AI84


Manufactured Housing: Revision of Notification, Correction, and 
Procedural Regulations

AGENCY: Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner, HUD.

ACTION: Final rule.

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SUMMARY: This final rule amends HUD regulations that establish 
procedures for manufacturers and others to address reports of problems 
with manufactured homes. These ``Subpart I'' regulations establish a 
system of protections with respect to imminent safety hazards and 
violations of the federal construction and safety standards, assuring a 
minimum of formality and delay, while protecting the rights of all 
parties. This final rule establishes the procedures that manufacturers, 
retailers, distributors, State Administrative Agencies (SAAs), and 
primary inspection agencies (PIAs), are required to follow to assure 
that notification and correction are provided with respect to 
manufactured homes, when required.

DATES: Effective March 31, 2014.

FOR FURTHER INFORMATION CONTACT: Henry S. Czauski, Acting Deputy 
Administrator, Office of Manufactured Housing Programs, Office of 
housing, Department of Housing and Urban Development, 451 Seventh 
Street SW., Room 9164, Washington, DC 20410; telephone number 202-708-
6409 (this is not a toll-free number). Persons with hearing or speech 
impairments may access this number via TTY by calling the Federal Relay 
Service at 800-877-8339 (this is a toll free number).

SUPPLEMENTARY INFORMATION: This final rule follows publication of a 
February 15, 2011, proposed rule and takes into consideration the 
public comments received on the proposed rule. After careful 
consideration of the issues raised by the commenters and further 
consideration of the issues by HUD, this final rule makes some changes 
to the February 15, 2011, proposed rule.

I. Background

    The National Manufactured Housing Construction and Safety Standards 
Act of 1974 (42 U.S.C. 5401-5426) (the Act) authorizes HUD to establish 
the Federal Manufactured Home Construction and Safety Standards 
(Construction and Safety Standards), codified in 24 CFR part 3280. 
Section 615 of the Act provides that manufacturers of manufactured 
homes furnish notification of any defect in any manufactured home 
produced by such manufacturer that fails to conform to the Construction 
and Safety Standards or which constitutes an imminent safety hazard to 
the purchaser of such manufactured home. HUD's procedural and 
enforcement provisions published at 24 CFR part 3282, subpart I 
(Subpart I), implement these requirements and have, since their 
promulgation in 1976, been a major component of HUD's manufactured 
housing regulations. These provisions establish the system for 
manufacturers and retailers to assure that factory-built homes sold to 
consumers after having been manufactured pursuant to a federal building 
code provide at least the protections that are built into the 
construction and safety standards in that building code. Because the 
federal building code preempts a multiplicity of state and local 
building codes that would otherwise apply to the construction of such 
homes, manufacturers, distributors, retailers, and regulators are 
charged with particular responsibilities designed to protect both the 
purchasers of these homes and the general public. The regulations in 
Subpart I seek to balance the interests of all persons who have a stake 
in the future of quality, affordable manufactured housing.
    As the manufactured housing industry has evolved from manufacturing 
largely single-section homes to today's multiple-section homes that can 
be creatively and aesthetically configured and finished,

[[Page 60194]]

while maintaining the important affordable character of the homes, 
various parties have identified a need to refine the regulations in 
Subpart I. The Manufactured Housing Consensus Committee (MHCC), 
established by the Manufactured Housing Improvement Act of 2000 (Pub. 
L. 106-569, approved December 27, 2000), has made refinement of these 
regulations a priority, and HUD has worked with the MHCC to redraft 
Subpart I in a way that would address issues identified by regulated 
entities, state and federal regulators, and consumers. The MHCC has 
twice recommended specific revisions of Subpart I to the Secretary. In 
both cases, HUD concluded that the MHCC recommendations were not 
consistent with the statutory requirements and the Secretary's 
authority.\1\
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    \1\ See HUD Notices: Manufactured Housing Consensus Committee-
Rejection of Consumer Complaint Handling Proposal; Correction, 68 FR 
47881 (August 12, 2003), amending a denial of a proposed 
recommendation by the Manufactured Housing Consensus Committee to 
revise regulations concerning how manufacturers are required to 
handle reports of problems with manufactured homes, 68 FR 35850 
(July 25, 2003); and Notice of Rejection of Manufactured Housing 
Consensus Committee recommendation of proposed regulation. 
Manufactured Housing Consensus Committee-Rejection of Subpart I 
Proposal, A Proposed Rule by the Housing and Urban Development 
Department, June 14, 2006. (71 FR 34464.)
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    The June 14, 2006, notice includes the complete text of a set of 
MHCC recommendations that were developed through extensive discussions 
in public meetings of the MHCC, in task force and subcommittees, and 
which was very close to being acceptable under the Act. As required by 
section 604(b)(3) of the Act (42 U.S.C. 5403(b)(3)), HUD first 
submitted its proposed rule to the MHCC for the committee's 
prepublication review and comments. On February 15, 2011 (76 FR 8852), 
HUD published its proposed rule on this set of MHCC recommendations, 
with a few modifications. HUD's February 15, 2011, proposed rule 
describes HUD's modifications of the MHCC's recommendations and 
provides a detailed explanation for each modification. HUD's proposed 
rule also includes a section, as required by section 604(b)(3) of the 
Act, that discusses in detail HUD's rejection of significant comments 
provided by the MHCC during its formal review of the HUD proposed 
regulation, including a written explanation of the reasons for the 
rejection and the MHCC's comments, and HUD's request for public comment 
on the MHCC's comments. Members of the public are encouraged to review 
HUD's February 15, 2011, proposed rule for HUD's responses to the 
MHCC's prepublication comments.

II. Changes and Clarifications Made in This Final Rule

    This final rule follows publication of the February 15, 2011, 
proposed rule and takes into consideration the public comments received 
on the proposed rule. In response to public comment, a discussion of 
which is presented in the following section of this preamble, and in 
further consideration of issues addressed at the proposed rule stage, 
HUD is making the following changes, at this final rule stage, to the 
February 15, 2011, proposed rule:
    1. Definition of ``Defect'' (Sec.  3282.7). The final rule 
maintains the currently codified definition of defect without change.
    2. Production Inspection Primary Inspection Agencies (IPIAs) (Sec.  
3282.362). In response to public comment, HUD has revised this 
paragraph to provide that IPIAs must review the manufacturer's service 
and inspection records. HUD is also relocating this paragraph to Sec.  
3282.366(b).
    3. Purpose and Scope (Sec.  3282.401(a)). HUD has revised Sec.  
3282.401(a) to provide that the purpose of Subpart I is to address 
safety hazards and failures to conform to the construction and safety 
standards rather than to address violations of the standards.
    4. General provisions (Sec.  3282.402(b)). HUD has removed the 
words ``unforeseeable'' and ``unreasonable'' from Sec.  3282.402(b) to 
clarify that manufacturers are not responsible for failures due to any 
consumer abuse or neglect of maintenance.
    5. Manufacturers' determinations; Methods for determining class 
(Sec.  3282.404(c)(iii)). HUD has revised Sec.  3282.404(c)(iii) to 
provide that inspection of service records is an appropriate method to 
determine whether a defect exists in a class of manufactured homes if 
the defect or hazard would be ``visible to and reportable by consumers 
or retailers.''
    6. Manufacturers' determinations; Methods of Notification (Sec.  
3282.405(d)). HUD has revised Sec.  3282.405(d) to provide that 
manufacturers may notify distributors, purchasers, or registered owners 
of manufactured homes to a defect or imminent safety hazard by any 
means that provides a receipt.
    7. Required manufacturer correction (Sec.  3282.406). HUD is 
clarifying Sec.  3282.406 to provide that a manufacturer, retailer, or 
installer may not be held responsible for problems created by a 
consumer or purchaser if it is determined through dispute resolution, 
or by other means, that the consumer or purchaser is responsible for 
the problem. HUD is also adding a cross-reference to Sec.  3286.115 to 
clarify the date of installation from which the manufacturer, retailer, 
or installer of a manufactured home may be responsible for defects in 
the home that render it not fit for the use for which it was intended.
    8. Replacement or repurchase of homes after sale to purchaser 
(Sec.  3282.414). In response to a public comment, HUD is clarifying 
that the Secretary or an SAA may require corrective action if the 
manufacturer is unable to correct or remove the hazard or defect within 
60 days of an order issued under Sec.  3282.413(c).
    9. Correction of homes before sale to purchaser (Sec.  3282.415). 
To clarify the point at which the sale of a home to a purchaser is 
complete, HUD is adding a cross-reference to Sec.  3282.252 to this 
section.
    10. Recordkeeping requirements. In response to a public comment, 
HUD is removing proposed Sec. Sec.  3282.417(f) and 3282.417(g), the 
requirement for retailers and distributors to maintain records of 
corrections taken to bring a home into compliance with the construction 
and safety standards and the proposed time period for the record 
retention, respectively. HUD notes, however, that retailers remain 
responsible for retaining the records required under HUD's Dispute 
Resolution Program.

III. Public Comments

    The following section presents a summary of the significant issues 
raised by the public comments in response to the February 15, 2011, 
proposed rule, and HUD's responses to the issues. Four public comments 
were submitted on the proposed regulation. Commenters included a 
national trade association representing the manufactured housing 
industry, a number of agencies providing legal services for low-income 
individuals, a state that serves as an in-plant primary inspection 
agency (IPIA) and State Administrative Agency (SAA), and an independent 
third-party design approval and in-plant primary inspection agency 
(DAPIA, IPIA). The comments were generally supportive. One commenter, 
for example, stated that it was pleased that HUD adopted the MHCC 
recommendation to extend, from 20 to 30 days, the time required to make 
an initial determination regarding the possibility of a noncompliance, 
defect, serious defect, or imminent safety hazard. (See proposed Sec.  
3282.404(a)).
    A group of commenters supported HUD's efforts to strengthen its 
Subpart I regulations, describing them as an

[[Page 60195]]

effort to create a ``lemon law'' for repurchase or replacement of 
defective manufactured homes when a manufacturer cannot correct an 
imminent safety hazard or a serious defect. The group stated that the 
remedies provided by Subpart I would not rise to the level of 
protections available to Ohio consumers under Ohio's new car lemon 
laws, and that manufactured home purchasers would benefit greatly from 
the protections for manufactured housing provided by the rule. The 
commenters stated that even though repurchase or replacement may seldom 
be necessary, the availability of the remedies provided by the rule 
will increase accountability and give individual consumers more options 
when it becomes apparent that they have not received the full benefit 
of their bargain and have trouble getting cooperation from any of the 
various industry players in the supply chain.
    Another commenter supported HUD's proposal to add retailers to the 
list of persons responsible for correction of defects in homes. 
According to the commenter, the integrated sales contractual system of 
manufacturers and specified dealers often results in employees of the 
retailers making the corrections for the manufacturer. The commenters 
stated that, by making both the manufacturer and seller equally 
responsible for the correction, this proposal would eliminate blame 
shifting, reduce the delay in correcting the problem, and better ensure 
that defects are corrected.
    Other commenters submitted detailed comments about specific 
provisions in the regulations, which are reviewed and addressed 
sequentially, by section, below.
    Comment: Definition of ``Defect'' (Sec.  3282.7). A commenter 
stated their concern that the definition of defect may expand the 
obligations of manufacturers to provide notice and correction to 
consumers for defects other than those directly related to construction 
of the manufactured home as required in 24 CFR part 3280. The commenter 
also stated that it does not make sense to use a word in its own 
definition.
    HUD Response: HUD agrees that the definition of defect proposed in 
HUD's February 15, 2011, proposed rule does not add clarity to the 
term. As a result, HUD has decided to maintain the currently codified 
definition of ``defect'' without change. This definition, which has in 
essence been codified since 1976, provides that the term encompasses 
failures to comply with federal safety and construction standards that 
render the home or any part thereof not fit for the ordinary use for 
which it was intended but which do not result in an unreasonable risk 
of injury or death to occupants of the manufactured home.
    Comment: Production Inspection Primary Inspection Agencies (Sec.  
3282.362(c)). Two commenters stated that the proposed regulation 
requires PIAs to periodically review the records required under Sec.  
3282.417(e) to determine whether evidence exists that the manufacturer 
is ignoring or not performing under its approved quality assurance 
manual. The commenters stated that they continued to support the more 
specific recommendations of the MHCC that required that only the 
service records be reviewed by the PIA. They contended that the 
proposed regulation is overly broad, and that it seemed inappropriate 
to require the PIA to examine records unrelated to Subpart I problems. 
The commenters stated that the PIA's responsibilities under the 
Procedural and Enforcement regulations are clearly spelled out in Sec.  
3282.351 and include two basic functions: Approval of the plant 
facility and performance of inspections of the manufacturing process. 
The commenters stated that the comprehensive recordkeeping and review 
requirements required by this proposal far exceed the appropriate PIA 
functions under Sec.  3282.351 and will do nothing to ensure that 
consumers are protected. The commenters stated the new requirement as 
written is vague and ambiguous, and that the change would significantly 
add to the PIA's responsibilities, increase costs, and diminish the 
primary PIA responsibility of inspecting homes and ensuring that 
manufacturers are conducting quality assurance.
    HUD Response: HUD agrees with the commenters and has revised the 
final rule to limit the IPIAs review of manufacturer records to service 
and inspection records. HUD has relocated the language to Sec.  
3282.366, which is a more appropriate location for this requirement.
    Comment: Purpose and Scope (Sec.  3282.401(a)). A commenter 
recommended that the purpose of Subpart I is not to address violations 
of the construction and safety standards and recommends that the 
paragraph be revised accordingly.
    HUD Response: HUD agrees with the commenter and has revised this 
paragraph to provide that the purpose of Subpart I is to address safety 
hazards and failures to conform to the construction and safety 
standards rather than to address violations of the standards.
    Comment: General provisions (Sec.  3282.402(b)). Two commenters, an 
association and a public agency, recommended that the words 
``unforeseeable'' and ``unreasonable'' be removed from Sec.  
3282.402(b), as these words are subjective and, in a court of law, 
consumer abuse and neglect of maintenance are sufficient on their own 
to limit responsibility.
    HUD Response: HUD agrees with the commenters and has deleted those 
terms from the final rule to clarify that manufacturers are not 
responsible for failure due to any consumer abuse or neglect of 
maintenance.
    Comment: Manufacturers determination and related concurrences. 
Expansion of the scope of consumer protection requirements (Sec.  
3282.404). A commenter stated that the manufacturer's responsibilities 
outlined in Sec.  3282.404 improperly expand the scope of the consumer 
protection requirements envisioned by Subpart I. The commenter stated, 
for example, that a small drywall crack or loose piece of trim could 
require extensive investigations of designs, homes, service records, 
audit findings, quality control records, etc., to make a reasonable 
determination as to whether a problem requiring action under Subpart I 
exists. The commenter contended that the extensive investigations 
required by Sec.  3282.404 to make an initial determination would 
require extremely time consuming and labor intensive data collection 
for problems that are not related to any underlying structural or 
design flaw that would trigger a Subpart I action. Although the 
commenter supported the narrower requirement in the proposed rule, 
which requires manufacturers to investigate the existence of ``likely 
defects'' rather than ``possible defects,'' they recommended that HUD 
clarify what it means by ``reasonable'' investigation in Sec.  
3282.404(a)(3).
    HUD Response: This final rule clarifies that when a manufacturer 
makes a determination of a noncompliance for a minor problem found in 
one home, it only needs to make a record of its determination as 
required by Sec.  3282.417. In addition, the term ``reasonable'' has 
been deleted in the final rule and the manufacturer's investigation 
requirements have been clarified by indicating that the manufacturer is 
to include a review of its inspection and service records, IPIA 
inspection records, and, as appropriate, to conduct inspections of 
homes in the class.
    Comment: Manufacturer responsibility when no further action under 
Subpart I is required (Sec.  3282.404(a)). A commenter stated that the 
rule should clarify how problems

[[Page 60196]]

should be addressed when manufacturers make a determination that no 
further action is required, but a problem still exists. Under the 
current regulations, the manufacturer notifies the responsible party, 
but the proposed regulation is silent on how the problem should be 
addressed. The commenter also stated that when the manufacturer makes 
an initial determination that no further action under Subpart I is 
required, but a problem still exists, the manufacturer must forward 
information in its possession to the appropriate retailer and, if 
known, the installer for consideration.
    HUD Response: HUD has clarified Sec.  3282.404(a), which describes 
the responsibility of the manufacturer to inform the retailer and 
installer, respectively, when the manufacturer determines that no 
further action is required, but the problem continues to exist, and has 
added a reference to Sec.  3282.417. The final rule also adds that the 
manufacturer, retailer, or installer may choose to resolve 
responsibility for corrections under dispute resolution under 24 CFR 
part 3288.
    Comment: Duplicative Reporting Requirements (Sec.  3282.404(a)(2)). 
A commenter stated that this section requires the manufacturer to 
immediately report a serious defect or imminent safety hazard to the 
Secretary, the manufacturers' PIA, and to the SAA in the state of 
manufacture. The commenter stated that the reporting requirement 
duplicates the same requirements in Sec.  3282.408, which requires the 
notification as a part of the manufacturer's notification and 
correction plan. The commenter recommended that during this first 
critical 30-day period, the focus should be on finding and determining 
the scope of the problem, and preparing a plan to fix the problem, not 
on additional paperwork. The commenter recommended adopting the MHCC 
recommendation to require this notification only once, per Sec.  
3282.408.
    HUD Response: The Department does not agree with the commenter as 
immediate follow-up and notice is needed to rectify these problems in 
all manufactured homes where these serious and potentially life-
threatening situations exist.
    Comment: ``Readily'' Reportable (Sec.  3282.404(c)). A commenter 
supported the inclusion of service records, in addition to actual home 
inspections, as one method to investigate the existence of a problem 
with a class of homes. However, the commenter expressed that the 
subjective wording as to what would or would not be ``readily 
reportable,'' and whether or not the Secretary or a SAA would agree, 
was an issue. An SAA means an agency of a state that has been approved 
or conditionally approved to carry out the state plan for enforcement 
of the standards pursuant to section 623 of the Act, 42 U.S.C. 5422, 
and subpart G of this part. The commenter stated that it believed that 
HUD's intent is to not limit service records as the only source of 
determining whether a problem exists, but believed that speculation and 
guess work should not be a component of Subpart I.
    HUD Response: HUD agrees with the commenter and has revised this 
section to provide that inspection of service records is an appropriate 
method to determine whether a defect exists in a class of manufactured 
homes if the defect or hazard would be ``visible to and reportable by 
consumers or retailers.''
    Comment: Revise terminology for certified mail. SAA 
responsibilities (Sec.  3282.405 (d)). A commenter recommended that HUD 
replace ``certified mail or other more expeditious means'' and 
``certified or express mail'' with ``by certified mail or other 
expeditious means that provide a receipt.'' The commenter contended 
that this would allow FedEx, UPS, DHL, and email communication, with 
return receipt from recipient required, and would help support 
paperless environments.
    HUD Response: HUD agrees with the recommendation offered by the 
commenter and has revised Sec.  3282.405(d) to provide that 
manufacturers may notify distributors, purchasers, or registered owners 
of manufactured homes to a defect or imminent safety hazard by any 
means that provides a receipt.
    Comment: Required manufacturer correction (Sec.  3282.406). A 
commenter stated that Sec.  3282.406(a)(2) provides warranty protection 
for one year, beginning on the date of installation of the home. 
According to the commenter, the intent of this provision is to provide 
consumers with warranty protection for issues reported during the first 
year after the sale of the home to the homebuyer. However, the 
commenter contends that, as written, the warranty period could go 
beyond a year. The commenter expressed concern that there would be 
situations where the homebuyer purchases a home and leaves it on-site 
without proper blocking or protection. Between the time of sale and the 
installation of the home, the home could suffer serious degradation. 
The commenter suggested that the proposed regulation be amended to take 
into consideration this scenario. The commenter recommended that 
manufacturers, installers, and retailers should not be responsible for 
actions taken by the purchaser, and which are outside their control.
    HUD Response: HUD agrees with the commenter and is clarifying Sec.  
3286.406 to provide that a manufacturer, retailer, or installer may not 
be held responsible for problems created by a consumer or purchaser if 
dispute resolution or other means determines that the consumer or 
purchaser is responsible for the problem. HUD is also adding a cross-
reference to Sec.  3286.115 to clarify the date of installation from 
which the manufacturer, retailer or installer of a manufactured home 
may be responsible for defects in the home that render it not fit for 
the use for which it was intended.
    Comment: Clarify date of installation (Sec.  3282.406(a)(2)). A 
commenter suggested that the ``date of installation'' be clarified, 
effectively suggesting that the ``date of installation of the home'' 
refers to the period following the consumers purchase of the home. The 
commenter stated that homes are often installed in manufactured home 
communities and listed for sale. The commenter stated that the consumer 
would thus not have adequate protection against possible defects if 
they purchased the house after it had been installed and the one-year 
period had expired.
    HUD Response: HUD agrees with the commenter and is adding a cross-
reference to Sec.  3286.115 to clarify the date of installation in the 
final rule.
    Comment: Specify that SAAs would notify the Secretary about classes 
of manufactured homes rather than individual homes (Sec.  3282.412(b)). 
A commenter recommended that Sec.  3282.412(b) be amended to specify 
that the SAA must notify the Secretary when a serious defect or an 
imminent safety hazard possibly exists in more than one home or in a 
class of homes. The commenter questioned whether the intent of this 
section was to extend the scope of the language to require that the SAA 
notify the Secretary if individual homes have a defect or imminent 
safety hazard.
    HUD Response: The final rule was not revised as recommended by the 
commenter since notification by an SAA is needed by HUD to facilitate 
correction of any other homes produced by the same or different 
manufacturers in other states that contain the same or similar types of 
serious defect or life-threatening problems.
    Comment: Implementation of final determinations (Sec.  3282.414). A 
commenter recommended that the word ``fully'' be deleted from Sec.  
3282.414(a).

[[Page 60197]]

The commenter states that the word is ambiguous, open to wide 
interpretation, and could result in costly legal fees by consumers, 
manufacturers, and the Federal Government to determine what the word 
``fully'' actually means.
    HUD Response: HUD agrees with the commenter and is deleting the 
word ``fully'' and substituting ``completely correct or remove'' in the 
final rule.
    Comment: Correction of homes before sale to purchaser (Sec.  
3282.415). A commenter suggested that Sec.  3282.415(a) be revised to 
more clearly define when the sale of a home to a purchaser is complete. 
The commenter recommended that the existing language in Sec.  3282.252, 
``Completion of a retail sale will be at the time the dealer completes 
set-up of the manufactured home,'' be added to the end of Sec.  
3282.415(a) of the proposed regulation.
    HUD Response: As suggested, by the commenter, HUD is clarifying the 
point at which the sale of a home to a purchaser is complete by adding 
a cross-reference to Sec.  3282.252.
    Comment: Oversight of notification and correction activities (Sec.  
3282.416). Two commenters stated that Sec.  3282.416(a)(4) requires 
periodic review of the manufacturer's service record by its IPIA. The 
commenters stated that this requirement goes beyond the appropriate 
responsibilities and functions of the IPIA and will diminish the 
overriding responsibility of the IPIA to ensure that homes are being 
inspected and that manufacturers are conducting quality assurance.
    HUD Response: HUD does not agree with commenters but has clarified 
the frequency of review in the final rule to require at least a monthly 
review of the service records by the IPIA.
    Comment: Recordkeeping requirements for Determinations, 
Notification, and Corrections (Sec.  3282.417). Two commenters stated 
that this provision gives sufficient flexibility to the manufacturer to 
determine how to keep such records so as not to repeat the same 
information in the file associated with every manufactured home that is 
part of a class determination, but that Sec.  3282.417(e) improperly 
adds requirements under Subpart I for keeping records for 
determinations, notifications, and corrections. The commenters state 
that the section sets forth detailed and prescriptive recordkeeping 
requirements for every manufactured home regardless of whether the home 
is part of a Subpart I action. The commenters stated that the proposal 
will require time consuming and costly overhaul of current 
recordkeeping systems and provides little or no flexibility to maintain 
records based on company size, production volume, quality assurance 
manuals, or other individual administrative practices. One commenter 
recommended that Sec.  3282.417(e) be deleted from the proposed 
regulation. Another commenter suggested that the scope be clarified to 
assure that the section deals only with records related to 
determinations.
    HUD Response: HUD does not agree with the commenters. Section 
3282.417 does not expand the scope or type of information required to 
be maintained by the manufacturer. Additionally, this final rule 
continues to permit manufacturers to maintain either consolidated or 
separate class files. Section 3282.417(e) simply adds a requirement 
that the manufacturer organize its files in serial-number order to 
simplify retrieval.
    Comment: Require recordkeeping by home rather than by class (Sec.  
3282.417). One commenter, a regulator, stated that the proposed 
regulation allows the manufacturer flexibility in recordkeeping, but 
its experience is that it can achieve a quicker turnaround in working 
with manufacturers when all the information is consolidated. The 
commenter also stated that consolidated information facilitated a 
comprehensive review of the service records, documented handling of 
consumer complaints, and missing/incomplete Record of Purchaser cards 
which manufacturers are required to provide to purchasers under Sec.  
3282.211 of the regulation. The commenter recommended, therefore, the 
consolidation of all the records in each home file. Another commenter 
stated that the section places a new added burden on retailers (Sec.  
3282.417(f)). The commenter suggested that the section be eliminated 
given that the current draft proposed regulation does not require a 
retailer to review the records. The commenter also stated that there 
was no time period for the record retention.
    HUD Response: HUD agrees with the commenters and is removing the 
requirement for retailers and distributors to maintain records of 
corrections taken to bring a home into compliance with the construction 
and safety standards and the proposed time period for the record 
retention. HUD notes, however, that retailers remain responsible for 
retaining the records required under HUD's Dispute Resolution Program.
    Comment: Revise the factors for appropriateness and amount of civil 
penalties (Sec.  3282.418(e)). A commenter stated that the ``ability to 
pay a civil penalty'' should not be a determining factor if all the 
other factors determine a civil penalty is appropriate. The commenter 
suggests that if a manufacturer could not or would not pay the civil 
penalty, HUD would have to find another remedy, such as a criminal 
penalty. The commenter recommended and agreed that the civil penalty 
would best be determined by HUD under its enforcement authority in 
Sec.  3282.10 to ensure consistency among states and manufacturers.
    HUD Response: HUD does not agree with the commenter as all of the 
criteria need to be considered and are retained in the final rule for 
determining the amount, application, and appropriateness of civil 
penalties.

IV. Conforming Changes

    HUD is also making nonsubstantive, technical edits to 24 CFR part 
3282. First, HUD is removing the term ``dealer'' and substituting the 
term ``retailer'' throughout part 3282. This change is intended to 
conform part 3282 to section 603(a)(1) of the Manufactured Housing 
Improvement Act of 2000 (Pub. L. 106-569) (42 U.S.C. 5402), which 
amended the National Manufactured Housing Construction and Safety 
Standards Act of 1974 by deleting the term ``dealer'' and substituting 
the term ``retailer.'' Second, HUD is removing references to 
``Director, Manufactured Housing Standards Division,'' and substituting 
``Administrator, Office of Manufactured Housing Programs, Office of 
Housing.'' HUD is making this change to reflect updated titles and 
office designations. Finally, HUD is making edits to ensure that 
affected sections contain accurate cross-references to the provisions 
implemented by this Subpart I final rule. These edits are technical in 
nature and make no substantive changes to requirements.

V. Findings and Certifications

Regulatory Review--Executive Orders 12866 and 13563

    Under Executive Order 12866 (Regulatory Planning and Review), a 
determination must be made whether a regulatory action is significant 
and, therefore, subject to review by the Office of Management and 
Budget (OMB) in accordance with the requirements of the Order. 
Executive Order 13563 (Improving Regulations and Regulatory Review) 
directs executive agencies to analyze regulations that are ``outmoded, 
ineffective, insufficient, or excessively burdensome, and to modify, 
streamline, expand, or repeal them in accordance with what has been 
learned.'' Executive

[[Page 60198]]

Order 13563 also directs that, where relevant, feasible, and consistent 
with regulatory objectives, and to the extent permitted by law, 
agencies are to identify and consider regulatory approaches that reduce 
burdens and maintain flexibility and freedom of choice for the public.
    This rule is not a significant regulatory action under section 3(f) 
of Executive Order 12866, and it was not reviewed by OMB. This rule 
revises 24 CFR part 3282, Subpart I, which provides the procedures by 
which HUD enforces the notification and correction of defects 
requirements of the Manufactured Home Construction and Safety Standards 
Act of 1974. This rule is not significant because it reorganizes and 
streamlines the existing regulation and proposes to clarify rather than 
change or add substance to the existing regulation.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) establishes requirements for federal agencies to assess the 
effects of their regulatory actions on state, local, and tribal 
governments and the private sector. This final rule does not impose any 
federal mandates on any state, local, or tribal government or the 
private sector within the meaning of the Unfunded Mandates Reform Act 
of 1995.

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
for this rule was made at the proposed rule stage in accordance with 
HUD regulations at 24 CFR part 50, which implement section 102(2)(C) of 
the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). 
The Finding of No Significant Impact remains applicable to this final 
rule and is available for public inspection between 8 a.m. and 5 p.m., 
weekdays, in the Regulations Division, Room 10276, Office of General 
Counsel, Department of Housing and Urban Development, 451 7th Street 
SW., Washington, DC 20410-0500. Due to security measures at the HUD 
Headquarters building, please schedule an appointment to review the 
docket file by calling the Regulations Division at 202-402-3055 (this 
is not a toll-free number). Individuals with speech or hearing 
impairments may access this number via TTY by calling the Federal 
Information Relay Service, 800-877-8339 (this is a toll free number).

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits, to the 
extent practicable and permitted by law, an agency from promulgating a 
regulation that has federalism implications and either imposes 
substantial direct compliance costs on state and local governments and 
is not required by statute, or preempts state law, unless the relevant 
requirements of section 6 of the Executive Order are met. This rule 
does not have federalism implications and does not impose substantial 
direct compliance costs on state and local governments or preempt state 
law within the meaning of the Executive Order.
    HUD is amending its current regulations in 24 CFR part 3282, 
subpart I, in order to make the regulations clearer and more consistent 
with the Act. This rule is, in large part, based on the recommendations 
of the MHCC and does not greatly change current requirements affecting 
or preempting state law. Participation by an SAA in HUD's Manufactured 
Housing Program is optional, and preemption of state law is provided 
only to the extent required by the Act.

Paperwork Reduction Act

    The information collection requirements contained in this proposed 
regulation have been approved by OMB under the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501-3520) and assigned OMB Control Number 2502-
0541. In accordance with the Paperwork Reduction Act, HUD may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information, unless the collection displays a currently 
valid OMB control number.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
HUD is required by law to implement statutory requirements concerning 
how manufacturers and others address reports of problems with 
manufactured homes, in order to protect both purchasers of factory-
built homes and the general public. Small entities would not be 
burdened by this rule because the rule would not establish requirements 
that differ significantly from current requirements. This rule 
streamlines the current regulatory process to reduce burdens on small 
entities. The annual number of manufactured home placements since 1999 
has decreased considerably and was estimated at 58,100 in 2009. This 
rule does not, however, affect or alter the cost of manufacture of such 
homes. For instance, this rule amends current regulations to allow 
manufacturers to indemnify themselves through agreements or contracts 
with retailers, transporters, installers, distributors, or others for 
certain costs associated with corrective work performed. As a result, 
HUD does not believe that the rule would have a significant economic 
effect on a substantial number of small entities. Further, the rule is 
intended to have a beneficial impact, by reducing the recordkeeping 
burdens on manufacturers. For example, manufacturers would be allowed 
to keep records in a central file, thereby reducing recordkeeping 
requirements for small entities. Also under the rule, manufacturers 
would no longer be required to provide notification of a possible 
defect if only one home is involved and the manufacturer corrects the 
home, thus further reducing paperwork burdens on small entities. These 
revisions impose no significant economic impact on a substantial number 
of small entities. Therefore, the undersigned certifies that this rule 
will not have a significant impact on a substantial number of small 
entities.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number for the 
Manufactured Housing Program is 14.171.

List of Subjects in 24 CFR Part 3282

    Administrative practice and procedure, Consumer protection, 
Intergovernmental relations, Investigations, Manufactured homes, 
Reporting and recordkeeping requirements.

    Accordingly, for the reasons stated in the preamble, HUD amends 
part 3282 of title 24 of the Code of Federal Regulations, as follows:

PART 3282--MANUFACTURED HOUSING PROCEDURAL AND ENFORCEMENT 
REGULATIONS

0
1. The authority citation for part 3282 continues to read as follows:

    Authority:  28 U.S.C. 2461 note; 42 U.S.C. 5424; and 42 U.S.C. 
3535(d).

[[Page 60199]]

Sec. Sec.  3282.8. 3282.14, 3282.205, 3282.207, 3282.208, 3282.211, 
3282.251, 3282.252, 3282.253, 3282.254, 3282.255, 3282.256, 3282.302, 
3282.303, 3282.307, 3282.362, 3282.363, and 3282.552  [Amended]


0
2. In 24 CFR part 3282, remove the words ``dealer'' and ``dealers'' and 
add in their place the words ``retailer'' or ``retailers,'' 
respectively, in the following places:
0
a. Sec.  3282.8(e) and (j);
0
b. Sec.  3282.14(b)(8) and (e);
0
c. Sec.  3282.205(c);
0
d. Sec.  3282.207(d);
0
e. Sec.  3282.208(a);
0
f. Sec.  3282.211(a)(1) and (a)(2)(i);
0
g. Subpart F subpart heading;
0
h. Sec.  3282.251(a), (b), and (c);
0
i. Sec.  3282.252(a) introductory text, (a)(2), and (b);
0
j. Sec.  3282.253(b) and (c);
0
k. Sec.  3282.254 section heading, (a), (b), and (c);
0
l. Sec.  3282.255(a) and (b);
0
m. Sec.  3282.256 section heading, (a), and (b);
0
n. Sec.  3282.302(b)(13);
0
o. Sec.  3282.303(a) and (b);
0
p. Sec.  3282.307(b)(1);
0
q. Sec.  3282.362(d)(1) and (d)(4);
0
r. Sec.  3282.363;
0
s. Sec.  3282.552.
0
2. Amend Sec.  3282.7 as follows:
0
a. Revise paragraphs (c) and (v);
0
b. Remove and reserve paragraphs (i) and (l); and
0
c. Add paragraph (dd).
    The revisions and addition read as follows:


Sec.  3282.7  Definitions.

* * * * *
    (c) Alteration means the replacement, addition, and modification, 
or removal of any equipment or installation after sale by a 
manufacturer to a retailer or distributor but prior to sale by a 
retailer to a purchaser which may affect the construction, fire safety, 
occupancy, plumbing, heat-producing or electrical system. It includes 
any modification made in the manufactured home that may affect the 
compliance of the home with the standards, but it does not include the 
repair or replacement of a component or appliance requiring plug-in to 
an electrical receptacle where the replaced item is of the same 
configuration and rating as the one being replaced. It also does not 
include the addition of an appliance requiring plug-in to an electrical 
receptacle, which appliance was not provided with the manufactured home 
by the manufacturer, if the rating of the appliance does not exceed the 
rating of the receptacle to which it is connected.
* * * * *
    (v) Manufactured home construction means all activities relating to 
the assembly and manufacture of a manufactured home including, but not 
limited to, those relating to durability, quality, and safety, but does 
not include those activities regulated under the installation standards 
in this chapter.
* * * * *
    (dd) Retailer means any person engaged in the sale, leasing, or 
distribution of new manufactured homes primarily to persons who in good 
faith purchase or lease a manufactured home for purposes other than 
resale.
* * * * *


0
3. Revise Sec.  3282.52 to read as follows:


Sec.  3282.52  Address of communications.

    Unless otherwise specified, communications shall be addressed to 
the Administrator, Office of Manufactured Housing Programs, Office of 
Housing, Department of Housing and Urban Development, 451 7th Street 
SW., Washington, DC 20410.


0
4. In Sec.  3282.204, revise paragraph (e) to read as follows:


Sec.  3282.204  IPIA services.

* * * * *
    (e) If during the course of production, an IPIA finds a failure to 
conform to a standard exists in a manufactured home under production, 
the manufacturer must correct the failure to conform in any 
manufactured home still in the factory and held by distributors or 
retailers and shall carry out remedial actions under Sec.  3282.416(a) 
with respect to any other manufactured homes which may contain the same 
failure to conform.


0
5. In Sec.  3282.253, revise paragraph (a) to read as follows:


Sec.  3282.253  Removal of prohibition of sale.

    (a) If a distributor or retailer has a manufactured home in its 
possession or a manufactured home with respect to a sales transaction 
has not yet been completed, and a distributor or retailer knows as a 
result of notification by the manufacturer or otherwise that the 
manufactured home contains a failure to conform or imminent safety 
hazard, the distributor or retailer may seek the remedies available 
under Sec.  3282.415.
* * * * *


0
6. In Sec.  3282.302, revise the introductory text and paragraphs 
(b)(4), (b)(5)(i), and (b)(5)(ii) to read as follows:


Sec.  3282.302  State plan.

    A State wishing to qualify and act as an SAA under this subpart 
shall make a State Plan Application under this section. The State Plan 
Application shall be made to the Administrator, Office of Manufactured 
Housing Programs, Office of Housing, Department of Housing and Urban 
Development, 451 7th Street SW., Washington, DC 20410, and shall 
include:
* * * * *
    (b) * * *
    (4) Provide for the notification and correction procedures under 
subpart I of this part where the SAA is to act under that subpart by 
providing the required approval by the SAA of the plan for notification 
and correction described in Sec. Sec.  3282.408, 3282.409, and 
3282.410, including approval of the number of units that may be 
affected and the proposed repairs, and by providing for approval of 
corrective actions where appropriate under subpart I,
    (5) * * *
    (i) Remedial actions carried out by manufacturers for which the SAA 
approved the plan for notification and correction or for which the SAA 
has waived formal notification under subpart I.
    (ii) A manufacturer's handling of consumer complaints and other 
information under subpart I as to plants located in the State.
* * * * *


0
7. In Sec.  3282.309, revise paragraph (a) to read as follows:


Sec.  3282.309  Formal and informal presentations of views held by 
SAAs.

    (a) When an SAA is the appropriate agency to hold a Formal or 
Informal Presentation of Views under Sec.  3282.412 of subpart I, the 
SAA shall follow the procedures set out in Sec. Sec.  3282.152 and 
3282.153, with the SAA acting as the Secretary otherwise would under 
that section. Where Sec.  3282.152 requires publication of notice in 
the Federal Register, the SAA shall, to the maximum extent possible, 
provide equivalent notice throughout the State by publication in the 
newspaper or newspapers having statewide coverage or otherwise. The 
determination of whether to provide an Informal Presentation of Views 
under Sec.  3282.152(f), or a Formal Presentation of Views under Sec.  
3282.152(g), is left to the SAA.
* * * * *


0
8. In Sec.  3282.353, revise the introductory text to read as follows:


Sec.  3282.353  Submission format.

    States and private organizations that wish to act as primary 
inspection agencies shall submit to the Administrator, Office of 
Manufactured

[[Page 60200]]

Housing Programs, Office of Housing, Department of Housing and Urban 
Development, 451 7th Street SW., Washington, DC 20410, an application 
that includes the following:
* * * * *


0
9. Revise Sec.  3282.366 to read as follows:


Sec.  3282.366  Notification and correction campaign responsibilities.

    (a) Both IPIAs and DAPIAs are responsible for assisting the 
Secretary or an SAA in identifying the class of manufactured homes that 
may have been affected where the Secretary or an SAA makes or is 
contemplating making a preliminary determination of imminent safety 
hazard, serious defect, defect, or noncompliance under Sec.  3282.412 
with respect to manufactured homes for which the IPIA and DAPIA 
provided either plant inspection or design approval services.
    (b) The IPIA must in each manufacturing plant review at least 
monthly the manufacturer's service and inspection records to verify if 
appropriate determinations are being made by the manufacturer under 
Sec.  3282.404 and, if not, take the actions required by this section 
and Sec.  3282.404.
    (c) The IPIA in each manufacturing plant is also responsible for 
reviewing manufacturer determinations of the class of manufactured 
homes affected when the manufacturer is acting under subpart I. The 
IPIA must concur in the method used to determine the class of 
potentially affected manufactured homes or is to state why it finds the 
method to be inappropriate, inadequate, or incorrect.

0
10. Revise Subpart I to read as follows:

Subpart I--Consumer Complaint Handling and Remedial Actions

Sec.
3282.401 Purpose and scope.
3282.402 General provisions.
3282.403 Consumer complaint and information referral.
3282.404 Manufacturers' determinations and related concurrences.
3282.405 Notification pursuant to manufacturer's determination.
3282.406 Required manufacturer correction.
3282.407 Voluntary compliance with the notification and correction 
requirements under the Act.
3282.408 Plan of notification required.
3282.409 Contents of plan.
3282.410 Implementation of plan.
3282.411 SAA initiation of remedial action.
3282.412 Preliminary and final administrative determinations.
3282.413 Implementation of Final Determination.
3282.414 Replacement or repurchase of homes after sale to purchaser.
3282.415 Correction of homes before sale to purchaser.
3282.416 Oversight of notification and correction activities.
3282.417 Recordkeeping requirements.
3282.418 Factors for appropriateness and amount of civil penalties.


Sec.  3282.401  Purpose and scope.

    (a) Purpose. The purpose of this subpart is to establish a system 
of protections provided by the Act with respect to imminent safety 
hazards and failures to conform to the construction and safety 
standards with a minimum of formality and delay, while protecting the 
rights of all parties.
    (b) Scope. This subpart sets out the procedures to be followed by 
manufacturers, retailers, and distributors, SAAs, primary inspection 
agencies, and the Secretary to assure that notification and correction 
are provided with respect to manufactured homes when required under 
this subpart. Notification and correction may be required with respect 
to manufactured homes that have been sold or otherwise released by the 
manufacturer to another party.


Sec.  3282.402  General provisions.

    (a) Purchaser's rights. Nothing in this subpart shall limit the 
rights of the purchaser under any contract or applicable law.
    (b) Manufacturer's liability limited. A manufacturer is not 
responsible for failures that occur in any manufactured home or 
component as the result of normal wear and aging, consumer abuse, or 
neglect of maintenance. The life of a component warranty may be one of 
the indicators used to establish normal wear and aging. A failure of 
any component may not be attributed by the manufacturer to normal wear 
and aging under this subpart during the term of any applicable warranty 
provided by the original manufacturer of the affected component.


Sec.  3282.403  Consumer complaint and information referral.

    (a) Retailer responsibilities. When a retailer receives a consumer 
complaint or other information about a home in its possession, or that 
it has sold or leased, that likely indicates a noncompliance, defect, 
serious defect, or imminent safety hazard, the retailer must forward 
the complaint or information to the manufacturer of the manufactured 
home in question as early as possible, in accordance with Sec.  
3282.256.
    (b) SAA and HUD responsibilities. (1) When an SAA or the Secretary 
receives a consumer complaint or other information that likely 
indicates a noncompliance, defect, serious defect, or imminent safety 
hazard in a manufactured home, the SAA or HUD must:
    (i) Forward the complaint or information to the manufacturer of the 
home in question as early as possible; and
    (ii) Send a copy of the complaint or other information to the SAA 
of the State where the manufactured home was manufactured or to the 
Secretary if there is no such SAA.
    (2) When it appears from the complaint or other information that an 
imminent safety hazard or serious defect may be involved, the SAA of 
the State where the home was manufactured must also send a copy of the 
complaint or other information to the Secretary.
    (c) Manufacturer responsibilities. Whenever the manufacturer 
receives information from any source that the manufacturer believes in 
good faith relates to a noncompliance, defect, serious defect, or 
imminent safety hazard in any of its manufactured homes, the 
manufacturer must, for each such occurrence, make the determinations 
required by Sec.  3282.404.


Sec.  3282.404  Manufacturers' determinations and related concurrences.

    (a) Initial determination. (1) Not later than 30 days after a 
manufacturer receives information that it believes in good faith may 
indicate a noncompliance, defect, serious defect, or imminent safety 
hazard, the manufacturer must make a specific initial determination 
that there is a noncompliance, defect, serious defect, or imminent 
safety hazard, or that the information requires no further action under 
this subpart. If a manufacturer makes a final determination of 
noncompliance for an individual home (see Sec.  3282.412(b)) and a 
class of homes is not involved, no further action is needed by the 
manufacturer other than to keep a record of its determination as 
required by Sec.  3282.417. If the manufacturer determines that it is 
not the cause of the problem, but a problem still exists, the 
manufacturer must forward the information in its possession to the 
appropriate retailer (see Sec.  3282.254), and, if known, to the 
installer (see Sec. Sec.  3286.115 and 3286.811) for their 
consideration. Alternatively, the manufacturer, retailer, or installer 
may choose to submit the issue for resolution under dispute resolution 
(see 24 CFR part 3288).
    (2) When a manufacturer makes an initial determination that there 
is a serious defect or an imminent safety hazard, the manufacturer must 
immediately notify the Secretary, the

[[Page 60201]]

SAA in the state of manufacture, and the manufacturer's IPIA.
    (3) In making the determination of noncompliance, defect, serious 
defect, or imminent safety hazard, or that no further action is 
required under this subpart, the manufacturer must review the 
information it received and carry out investigations, including, a 
review of service records, IPIA inspection records, and, as 
appropriate, inspections of homes in the class. The manufacturer must 
review the information, the known facts, and the circumstances relating 
to the complaint or information, including service records, approved 
designs, and audit findings, as applicable, to decide what 
investigations are reasonable.
    (b) Class determination. (1) When the manufacturer makes an initial 
determination of defect, serious defect, or imminent safety hazard, the 
manufacturer must also make a good-faith determination of the class 
that includes each manufactured home in which the same defect, serious 
defect, or imminent safety hazard exists or likely exists. Multiple 
occurrences of defects may be considered the same defect if they have 
the same cause, are related to a specific workstation description, or 
are related to the same failure to follow the manufacturer's approved 
quality assurance manual. Good faith may be used as a defense to the 
imposition of a penalty, but does not relieve the manufacturer of its 
responsibilities for notification or correction under this subpart I. 
The manufacturer must make this class determination not later than 20 
days after making a determination of defect, serious defect, or 
imminent safety hazard.
    (2) Paragraph (c) of this section sets out methods for a 
manufacturer to use in determining the class of manufactured homes. If 
the manufacturer can identify the precise manufactured homes affected 
by the defect, serious defect, or imminent safety hazard, the class of 
manufactured homes may include only those manufactured homes actually 
affected by the same defect, serious defect, or imminent safety hazard. 
The manufacturer is also permitted to exclude from the class those 
manufactured homes for which the manufacturer has information that 
indicates the homes were not affected by the same cause. If it is not 
possible to identify the precise manufactured homes affected, the class 
must include every manufactured home in the group of homes that is 
identifiable, since the same defect, serious defect, or imminent safety 
hazard exists or likely exists in some homes in that group of 
manufactured homes.
    (3) For purposes related to this section, a defect, a serious 
defect, or an imminent safety hazard likely exists in a manufactured 
home if the cause of the defect, serious defect, or imminent safety 
hazard is such that the same defect, serious defect, or imminent safety 
hazard would likely have been introduced systematically into more than 
one manufactured home. Indications that the defect, serious defect, or 
imminent safety hazard would likely have been introduced systematically 
may include, but are not limited to, complaints that can be traced to 
the same faulty design or faulty construction, problems known to exist 
in supplies of components or parts, information related to the 
performance of a particular employee or use of a particular process, 
and information signaling a failure to follow quality control 
procedures with respect to a particular aspect of the manufactured 
home.
    (4) If the manufacturer must determine the class of homes pursuant 
to paragraph (b) of this section, the manufacturer must obtain from the 
IPIA, and the IPIA must provide, either:
    (i) The IPIA's written concurrence on the methods used by the 
manufacturer to identify the homes that should be included in the class 
of homes; or
    (ii) The IPIA's written statement explaining why it believes the 
manufacturer's methods for determining the class of homes were 
inappropriate or inadequate.
    (c) Methods for determining class. (1) In making a class 
determination under paragraph (b) of this section, a manufacturer is 
responsible for carrying out reasonable investigations. In carrying out 
investigations, the manufacturer must review the information, the known 
facts, and the relevant circumstances, and generally must establish the 
cause of the defect, serious defect, or imminent safety hazard. Based 
on the results of such investigations and all information received or 
developed, the manufacturer must use an appropriate method or 
appropriate methods to determine the class of manufactured homes in 
which the same defect, serious defect, or imminent safety hazard exists 
or likely exists.
    (2) Methods that may be used in determining the class of 
manufactured homes include, but are not limited to:
    (i) Inspection of the manufactured home in question, including its 
design, to determine whether the defect, serious defect, or imminent 
safety hazard resulted from the design itself;
    (ii) Physical inspection of manufactured homes of the same design 
or construction, as appropriate, that were produced before and after a 
home in question;
    (iii) Inspection of the service records of a home in question and 
of homes of the same design or construction, as appropriate, produced 
before and after that home, if it is clear that the cause of the 
defect, serious defect, or imminent safety hazard is such that the 
defect, serious defect, or imminent safety hazard would be visible to 
and reportable by consumers or retailers;
    (iv) Inspection of manufacturer quality control records to 
determine whether quality control procedures were followed and, if not, 
the time frame during which they were not;
    (v) Inspection of IPIA records to determine whether the defect, 
serious defect, or imminent safety hazard was either detected or 
specifically found not to exist in some manufactured homes;
    (vi) Identification of the cause as relating to a particular 
employee whose work, or to a process whose use, would have been common 
to the production of the manufacturer's homes for a period of time; and
    (vii) Inspection of records relating to components supplied by 
other parties and known to contain or suspected of containing a defect, 
a serious defect, or an imminent safety hazard.
    (3) When the Secretary or an SAA decides the method chosen by the 
manufacturer to conduct an investigation in order to make a class 
determination is not the most appropriate method, the Secretary or SAA 
must explain in writing to the manufacturer why the chosen method is 
not the most appropriate.
    (d) Documentation required. The manufacturer must comply with the 
recordkeeping requirements in Sec.  3282.417 as applicable to its 
determinations and any IPIA concurrence or statement that it does not 
concur.


Sec.  3282.405  Notification pursuant to manufacturer's determination.

    (a) General requirement. Every manufacturer of manufactured homes 
must provide notification, as set out in this section, with respect to 
any manufactured home produced by the manufacturer in which the 
manufacturer determines, in good faith, that there exists or likely 
exists in more than one home, the same defect introduced 
systematically, a serious defect, or an imminent safety hazard.
    (b) Requirements by category. (1) Noncompliance. A manufacturer 
must provide notification of a noncompliance only when ordered to do so 
by the

[[Page 60202]]

Secretary or an SAA, pursuant to Sec. Sec.  3282.412 and 3282.413.
    (2) Defects. When a manufacturer has made a class determination in 
accordance with Sec.  3282.404 that a defect exists or likely exists in 
more than one home, the manufacturer must prepare a plan for 
notification in accordance with Sec.  3282.408, and must provide 
notification with respect to each manufactured home in the class of 
manufactured homes.
    (3) Serious defects and imminent safety hazards. When a 
manufacturer has made an initial determination in accordance with Sec.  
3282.404(a) that a serious defect or imminent safety hazard exists or 
likely exists, the manufacturer must prepare a plan for notification in 
accordance with Sec.  3282.408, must provide notification with respect 
to all manufactured homes in which the serious defect or imminent 
safety hazard exists or likely exists, and must correct the home or 
homes in accordance with Sec.  3282.406.
    (c) Plan for notification required. (1) If a manufacturer 
determines that it is responsible for providing notification under this 
section, the manufacturer must prepare and receive approval on a plan 
for notification as set out in Sec.  3282.408, unless the manufacturer 
meets alternative requirements established in Sec.  3282.407.
    (2) If the Secretary or SAA orders a manufacturer to provide 
notification in accordance with the procedures in Sec. Sec.  3282.412 
and 3282.413, the Secretary or SAA has the option of requiring a 
manufacturer to prepare and receive approval on a plan for 
notification.
    (d) Method of notification. When a manufacturer provides 
notification as required under this section, notification must be:
    (1) By certified mail or other more expeditious means that provides 
a receipt to each retailer or distributor to whom any manufactured home 
in the class of homes containing the defect, serious defect, or 
imminent safety hazard was delivered;
    (2) By certified mail or other more expeditious means that provides 
a receipt to the first purchaser of each manufactured home in the class 
of manufactured homes containing the defect, serious defect, or 
imminent safety hazard, and, to the extent feasible, to any subsequent 
owner to whom any warranty provided by the manufacturer or required by 
federal, state, or local law on such manufactured home has been 
transferred, except that notification need not be sent to any person 
known by the manufacturer not to own the manufactured home in question 
if the manufacturer has a record of a subsequent owner of the 
manufactured home; and
    (3) By certified mail or other more expeditious means that provides 
a receipt to each other person who is a registered owner of a 
manufactured home in the class of homes containing the defect, serious 
defect, or imminent safety hazard and whose name has been ascertained 
pursuant to Sec.  3282.211 or is known to the manufacturer.


Sec.  3282.406  Required manufacturer correction.

    (a) Correction of noncompliances and defects. (1) Section 3282.415 
sets out requirements with respect to a manufacturer's correction of 
any noncompliance or defect that exists in each manufactured home that 
has been sold or otherwise released to a retailer but that has not yet 
been sold to a purchaser.
    (2) In accordance with section 623 of the Act and Part 3288, 
``Manufactured Home Dispute Resolution Program,'' of this chapter, the 
manufacturer, retailer, or installer of a manufactured home deemed 
responsible for correction of repairs or defects must correct, at its 
expense, each failure in the performance, construction, components, or 
material of the home that renders the home or any part of the home not 
fit for the ordinary use for which it was intended and that is reported 
during the one-year period beginning on the date of installation of the 
home (see Sec.  3286.115).
    (b) Correction of serious defects and imminent safety hazards. (1) 
A manufacturer required to furnish notification under Sec.  3282.405 or 
Sec.  3282.413 must correct, at its expense, any serious defect or 
imminent safety hazard that can be related to an error in design or 
assembly of the manufactured home by the manufacturer, including an 
error in design or assembly of any component or system incorporated 
into the manufactured home by the manufacturer.
    (2) If, while making corrections under any of the provisions of 
this subpart, the manufacturer creates an imminent safety hazard or 
serious defect, the manufacturer shall correct the imminent safety 
hazard or serious defect.
    (3) Each serious defect or imminent safety hazard corrected under 
this paragraph (b) must be brought into compliance with applicable 
construction and safety standards or, where those standards are not 
specific, with the manufacturer's approved design.
    (c) Inclusion in plan. (1) In the plan required by Sec.  3282.408, 
the manufacturer must provide for correction of those homes that are 
required to be corrected pursuant to paragraph (b) of this section.
    (2) If the Secretary or SAA orders a manufacturer to provide 
correction in accordance with the procedures in Sec.  3282.413, the 
Secretary or SAA has the option of requiring a manufacturer to prepare 
and receive approval on a plan for correction.
    (d) Corrections by owners. A manufacturer that is required to make 
corrections under paragraph (b) of this section, or that elects to make 
corrections in accordance with Sec.  3282.407, must reimburse any owner 
of an affected manufactured home who choses to make the correction 
before the manufacturer did so, for the reasonable cost of correction.
    (e) Correction of appliances, components, or systems. (1) If any 
appliance, component, or system in a manufactured home is covered by a 
product warranty, the manufacturer, retailer, or installer that is 
responsible under this section for correcting a noncompliance, defect, 
serious defect, or imminent safety hazard in the appliance, component, 
or system may seek the required correction directly from the producer. 
The SAA that approves any plan of notification required pursuant to 
Sec.  3282.408 or the Secretary, as applicable, may establish 
reasonable time limits for the manufacturer of the home and the 
producer of the appliance, component, or system to agree on who is to 
make the correction and for completing the correction.
    (2) Nothing in this section shall prevent the manufacturer, 
retailer, or installer from seeking indemnification from the producer 
of the appliance, component, or system for correction work done on any 
appliance, component, or system.


Sec.  3282.407  Voluntary compliance with the notification and 
correction requirements under the Act.

    A manufacturer that takes corrective action that complies with one 
of the following three alternatives to the requirement in Sec.  
3282.408 for preparing a plan will be deemed to have provided any 
notification required by Sec.  3282.405:
    (a) Voluntary action--one home. When a manufacturer has made a 
determination that only one manufactured home is involved, the 
manufacturer is not required to provide notification pursuant to Sec.  
3282.405 or to prepare or submit a plan if:
    (1) The manufacturer has made a determination of defect; or
    (2) The manufacturer has made a determination of serious defect or

[[Page 60203]]

imminent safety hazard and corrects the home within the 20-day period. 
The manufacturer must maintain, in the plant where the manufactured 
home was manufactured, a complete record of the correction. The record 
must describe briefly the facts of the case and any known cause of the 
serious defect or imminent safety hazard, state what corrective actions 
were taken, and be maintained in the service records in a form that 
will allow the Secretary or an SAA to review all such corrections.
    (b) Voluntary action--multiple homes. Regardless of whether a plan 
has been submitted under Sec.  3282.408, the manufacturer may act prior 
to obtaining approval of the plan. Such action is subject to review and 
disapproval by the SAA of the state where the home was manufactured or 
by the Secretary, unless the manufacturer obtains the written agreement 
of the SAA or the Secretary that the corrective action is adequate. If 
such an agreement is obtained, the correction must be accepted as 
adequate by all SAAs and the Secretary, if the manufacturer makes the 
correction as agreed to and any imminent safety hazard or serious 
defect is eliminated.
    (c) Waiver. (1) A manufacturer may obtain a waiver of the 
notification requirements in Sec.  3282.405 and the plan requirements 
in Sec.  3282.408 either from the SAA of the state of manufacture, when 
all of the manufactured homes that would be covered by the plan were 
manufactured in that state, or from the Secretary. As of the date of a 
request for a waiver, the notification and plan requirements are 
deferred pending timely submission of any additional documentation as 
the SAA or the Secretary may require and final resolution of the waiver 
request. If a waiver request is not granted, the plan required by Sec.  
3282.408 must be submitted within 5 days after the expiration of the 
time frame established in Sec.  3282.408, if the manufacturer is 
notified that the request was not granted.
    (2) The waiver may be approved if, not later than 20 days after 
making the determination that notification is required, the 
manufacturer presents evidence that it, in good faith, believes would 
show to the satisfaction of the SAA or the Secretary that:
    (i) The manufacturer has identified all homes that would be covered 
by the plan in accordance with Sec.  3282.408;
    (ii) The manufacturer will correct, at its expense, all of the 
identified homes, either within 60 days of being informed that the 
request for waiver has been granted or within another time limit 
approved in the waiver;
    (iii) The proposed repairs are adequate to remove the defect, 
serious defect, or imminent safety hazard that gave rise to the 
determination that correction is required; and
    (3) The manufacturer must correct all affected manufactured homes 
within 60 days of being informed that the request for waiver has been 
granted or within the time limit approved in the waiver, as applicable. 
The manufacturer must record the known cause of the problem and the 
correction in the service records, in an approved form that will allow 
the Secretary or SAA to review the cause and correction.


Sec.  3282.408  Plan of notification required.

    (a) Manufacturer's plan required. Except as provided in Sec.  
3282.407, if a manufacturer determines that it is responsible for 
providing notification under Sec.  3282.405, the manufacturer must 
prepare a plan in accordance with this section and Sec.  3282.409. The 
manufacturer must, as soon as practical, but not later than 20 days 
after making the determination of defect, serious defect, or imminent 
safety hazard, submit the plan for approval to one of the following, as 
appropriate:
    (1) The SAA of the State of manufacture, when all of the 
manufactured homes covered by the plan were manufactured in that State; 
or
    (2) The Secretary, when the manufactured homes were manufactured in 
more than one State or there is no SAA in the State of manufacture.
    (b) Implementation of plan. Upon approval of the plan, including 
any changes for cause required by the Secretary or SAA after 
consultation with the manufacturer, the manufacturer must carry out the 
approved plan within the agreed time limits.


Sec.  3282.409  Contents of plan.

    (a) Purpose of plan. This section sets out the requirements that 
must be met by a manufacturer in preparing any plan it is required to 
submit under Sec.  3282.408. The underlying requirement is that the 
plan show how the manufacturer will fulfill its responsibilities with 
respect to notification and correction.
    (b) Contents of plan. The plan must:
    (1) Identify, by serial number and other appropriate identifying 
criteria, all manufactured homes for which notification is to be 
provided, as determined pursuant to Sec.  3282.404;
    (2) Include a copy of the notice that the manufacturer proposes to 
use to provide the notification required by Sec.  3282.405;
    (3) Provide for correction of those manufactured homes that are 
required to be corrected pursuant to Sec.  3282.406(b);
    (4) Include the IPIA's written concurrence or statement on the 
methods used by the manufacturer to identify the homes that should be 
included in the class of homes, as required pursuant to Sec.  
3282.404(b); and
    (5) Include a deadline for completion of all notifications and 
corrections.
    (c) Contents of notice. Except as otherwise agreed by the Secretary 
or the SAA reviewing the plan under Sec.  3282.408, the notice to be 
approved as part of the plan must include the following:
    (1) An opening statement that reads: ``This notice is sent to you 
in accordance with the requirements of the National Manufactured 
Housing Construction and Safety Standards Act.''
    (2) The following statement: ``[choose one, as appropriate: 
Manufacturer's name, or the Secretary, or the (insert State) SAA] has 
determined that [insert identifying criteria of manufactured home] may 
not comply with an applicable Federal Manufactured Home Construction or 
Safety Standard.''
    (3) Except when the manufacturer is providing notice pursuant to an 
approved plan or agreement with the Secretary or an SAA under Sec.  
3282.408, each applicable statement must read as follows:
    (i) ``An imminent safety hazard may exist in (identifying criteria 
of manufactured home).''
    (ii) ``A serious defect may exist in (identifying criteria of 
manufactured home).''
    (iii) ``A defect may exist in (identifying criteria of manufactured 
home).''
    (4) A clear description of the defect, serious defect, or imminent 
safety hazard and an explanation of the risk to the occupants, which 
must include:
    (i) The location of the defect, serious defect, or imminent safety 
hazard in the manufactured home;
    (ii) A description of any hazards, malfunctions, deterioration, or 
other consequences that may reasonably be expected to result from the 
defect, serious defect, or imminent safety hazard;
    (iii) A statement of the conditions that may cause such 
consequences to arise; and
    (iv) Precautions, if any, that the owner can, should, or must take 
to reduce the chance that the consequences will arise before the 
manufactured home is repaired;
    (5) A statement of whether there will be any warning that a 
dangerous

[[Page 60204]]

occurrence may take place and what that warning would be, and of any 
signs that the owner might see, hear, smell, or feel that might 
indicate danger or deterioration of the manufactured home as a result 
of the defect, serious defect, or imminent safety hazard;
    (6) A statement that the manufacturer will correct the manufactured 
home, if the manufacturer will correct the manufactured home under this 
subpart or otherwise;
    (7) A statement in accordance with whichever of the following is 
appropriate:
    (i) Where the manufacturer will correct the manufactured home at no 
cost to the owner, the statement must indicate how and when the 
correction will be done, how long the correction will take, and any 
other information that may be helpful to the owner; or
    (ii) When the manufacturer does not bear the cost of repair, the 
notification must include a detailed description of all parts and 
materials needed to make the correction; a description of all steps to 
be followed in making the correction, including appropriate 
illustrations; and an estimate of the cost of the purchaser or owner of 
the correction;
    (8) A statement informing the owner that the owner may submit a 
complaint to the SAA or Secretary if the owner believes that:
    (i) The notification or the remedy described therein is inadequate;
    (ii) The manufacturer has failed or is unable to remedy the problem 
in accordance with its notification; or
    (iii) The manufacturer has failed or is unable to remedy the 
problem within a reasonable time after the owner's first attempt to 
obtain remedy; and
    (9) A statement that any actions taken by the manufacturer under 
the Act in no way limit the rights of the owner or any other person 
under any contract or other applicable law and that the owner may have 
further rights under contract or other applicable law.


Sec.  3282.410  Implementation of plan.

    (a) Deadline for notifications. (1) The manufacturer must complete 
the notifications carried out under a plan approved by an SAA or the 
Secretary under Sec.  3282.408 on or before the deadline approved by 
the SAA or Secretary. In approving each deadline, an SAA or the 
Secretary will allow a reasonable time to complete all notifications, 
taking into account the number of manufactured homes involved and the 
difficulty of completing the notifications.
    (2) The manufacturer must, at the time of dispatch, furnish to the 
SAA or the Secretary a true or representative copy of each notice, 
bulletin, and other written communication sent to retailers, 
distributors, or owners of manufactured homes regarding any serious 
defect or imminent safety hazard that may exist in any homes produced 
by the manufacturer, or regarding any noncompliance or defect for which 
the SAA or Secretary requires, under Sec.  3282.413(c), the 
manufacturer to submit a plan for providing notification.
    (b) Deadline for corrections. A manufacturer that is required to 
correct a serious defect or imminent safety hazard pursuant to Sec.  
3282.406(b) must complete implementation of the plan required by Sec.  
3282.408 on or before the deadline approved by the SAA or the 
Secretary. The deadline must be no later than 60 days after approval of 
the plan. In approving the deadline, the SAA or the Secretary will 
allow a reasonable amount of time to complete the plan, taking into 
account the seriousness of the problem, the number of manufactured 
homes involved, the immediacy of any risk, and the difficulty of 
completing the action. The seriousness and immediacy of any risk posed 
by the serious defect or imminent safety hazard will be given greater 
weight than other considerations.
    (c) Extensions. An SAA that approved a plan or the Secretary may 
grant an extension of the deadlines included in a plan, if the 
manufacturer requests such an extension in writing and shows good cause 
for the extension, if the SAA or the Secretary decides that the 
extension is justified and not contrary to the public interest. When 
the Secretary grants an extension for completion of any corrections, 
the Secretary will notify the manufacturer and must publish notice of 
such extension in the Federal Register. When an SAA grants an extension 
for completion of any corrections, the SAA must notify the Secretary 
and the manufacturer.
    (d) Recordkeeping. The manufacturer must provide the report and 
maintain the records that are required by Sec.  3282.417 for all 
notification and correction actions.


Sec.  3282.411  SAA initiation of remedial action.

    (a) SAA review of information. Whenever an SAA has information 
indicating the possible existence of a noncompliance, defect, serious 
defect, or imminent safety hazard in a manufactured home, the SAA may 
initiate administrative review of the need for notification and 
correction. An SAA initiates administrative review by either:
    (1) Referring the matter to another SAA in accordance with 
paragraph (b) of this section or to the Secretary; or
    (2) Taking action itself, in accordance with Sec.  3282.412, when 
it appears that all of the homes affected by the noncompliance, defect, 
serious defect, or imminent safety hazard were manufactured in the 
SAA's State.
    (b) SAA referral of matter. If at any time it appears that the 
affected manufactured homes were manufactured in more than one State, 
an SAA that decides to initiate such administrative review must refer 
the matter to the Secretary for possible action pursuant to Sec.  
3282.412. If it appears that all of the affected manufactured homes 
were manufactured in another State, an SAA that decides to initiate 
administrative review must refer the matter to the SAA in the State of 
manufacture or to the Secretary, for possible action pursuant to Sec.  
3282.412.


Sec.  3282.412  Preliminary and final administrative determinations.

    (a) Grounds for issuance of preliminary determination. The 
Secretary or, in accordance with Sec.  3282.411, an SAA in the State of 
manufacture, may issue a Notice of Preliminary Determination when:
    (1) The manufacturer has not provided to the Secretary or SAA the 
necessary information to make a determination that:
    (i) A noncompliance, defect, serious defect, or imminent safety 
hazard possibly exists; or
    (ii) A manufacturer had information that likely indicates a 
noncompliance, defect, serious defect, or imminent safety hazard for 
which the manufacturer failed to make the determinations required under 
Sec.  3282.404;
    (2) The Secretary or SAA has information that indicates a 
noncompliance, defect, serious defect, or imminent safety hazard 
possibly exists, and, in the case of the SAA, the SAA believes that:
    (i) The affected manufactured home has been sold or otherwise 
released by a manufacturer to a retailer or distributor, but there is 
no completed sale of the home to a purchaser;
    (ii) Based on the same factors that are established for a 
manufacturer's class determination in Sec.  3282.404(b), the 
information indicates a class of homes in which a noncompliance or 
defect possibly exists; or
    (iii) The information indicates one or more homes in which a 
serious defect or an imminent safety hazard possibly exists;

[[Page 60205]]

    (3) The Secretary or SAA is reviewing a plan under Sec.  3282.408 
and the Secretary or SAA disagree with the manufacturer on proposed 
changes to the plan;
    (4) The Secretary or SAA believes that the manufacturer has failed 
to fulfill the requirements of a waiver granted under Sec.  
3282.407(c); or
    (5) There is information that a manufacturer failed to make the 
determinations required under Sec.  3282.404.
    (b) Additional requirements--SAA issuance. (1) An SAA that receives 
information that indicates a serious defect or an imminent safety 
hazard possibly exists in a home manufactured in that SAA's State must 
notify the Secretary about that information.
    (2) An SAA that issues a preliminary determination must provide a 
copy of the preliminary determination to the Secretary at the time of 
its issuance. Failure to comply with this requirement does not affect 
the validity of the preliminary determination.
    (c) Additional requirements--Secretary issuance. The Secretary will 
notify the SAA of each State where the affected homes were 
manufactured, and, to the extent reasonable, the SAA of each State 
where the homes are located, of the issuance of a preliminary 
determination. Failure to comply with this requirement does not affect 
the validity of the preliminary determination.
    (d) Notice of Preliminary Determination. (1) The Notice of 
Preliminary Determination must be sent by certified mail or express 
delivery and must:
    (i) Include the factual basis for the determination;
    (ii) Include the criteria used to identify any class of homes in 
which the noncompliance, defect, serious defect, or imminent safety 
hazard possibly exists;
    (iii) If applicable, indicate that the manufacturer may be required 
to make corrections on a home or in a class of homes; and
    (iv) If the preliminary determination is that the manufacturer 
failed to make an initial determination required under Sec.  
3282.404(a), include an allegation that the manufacturer failed to act 
in good faith.
    (2) The Notice of Preliminary Determination must inform the 
manufacturer that the preliminary determination will become final 
unless the manufacturer requests a hearing or presentation of views 
under subpart D of this part.
    (e) Presentation of views. (1) If a manufacturer elects to exercise 
its right to a hearing or presentation of views, the Secretary or the 
SAA, as applicable, must receive the manufacturer's request for a 
hearing or presentation of views:
    (i) Within 15 days of delivery of the Notice of Preliminary 
Determination of serious defect, defect, or noncompliance; or
    (ii) Within 5 days of delivery of the Notice of Preliminary 
Determination of imminent safety hazard.
    (2) A Formal or an Informal Presentation of Views will be held in 
accordance with Sec.  3282.152 promptly upon receipt of a 
manufacturer's request under paragraph (c) of this section.
    (f) Issuance of Final Determination. (1) The SAA or the Secretary, 
as appropriate, may make a Final Determination that is based on the 
allegations in the preliminary determination and adverse to the 
manufacturer if:
    (i) The manufacturer fails to respond to the Notice of Preliminary 
Determination within the time period established in paragraph (c)(2) of 
this section; or
    (ii) The SAA or the Secretary decides that the views and evidence 
presented by the manufacturer or others are insufficient to rebut the 
preliminary determination.
    (2) At the time that the SAA or Secretary makes a Final 
Determination that an imminent safety hazard, serious defect, defect, 
or noncompliance exists, the SAA or Secretary, as appropriate, must 
issue an order in accordance with Sec.  3282.413.


Sec.  3282.413  Implementation of Final Determination.

    (a) Issuance of orders. (1) The SAA or the Secretary, as 
appropriate, must issue an order directing the manufacturer to furnish 
notification if:
    (i) The SAA makes a Final Determination that a defect or 
noncompliance exists in a class of homes;
    (ii) The Secretary makes a Final Determination that an imminent 
safety hazard, serious defect, defect, or noncompliance exists; or
    (iii) The SAA makes a Final Determination that an imminent safety 
hazard or a serious defect exists in any home, and the SAA has received 
the Secretary's concurrence on the issuance of the Final Determination 
and order.
    (2) The SAA or the Secretary, as appropriate, must issue an order 
directing the manufacturer to make corrections in any affected 
manufactured home if:
    (i) The SAA or the Secretary makes a Final Determination that a 
defect or noncompliance exists in a manufactured home that has been 
sold or otherwise released by a manufacturer to a retailer or 
distributor but for which the sale to a purchaser has not been 
completed;
    (ii) The Secretary makes a Final Determination that an imminent 
safety hazard or serious defect exists; or
    (iii) The SAA makes a Final Determination that an imminent safety 
hazard or serious defect exists in any home, and the SAA has received 
the Secretary's concurrence on the issuance of the Final Determination 
and order.
    (3) Only the Secretary may issue an order directing a manufacturer 
to repurchase or replace any manufactured home already sold to a 
purchaser, unless the Secretary authorizes an SAA to issue such an 
order.
    (4) An SAA that has a concurrence or authorization from the 
Secretary on any order issued under this section must have the 
Secretary's concurrence on any subsequent changes to the order. An SAA 
that has issued a Preliminary Determination must have the Secretary's 
concurrence on any waiver of notification or any settlement when the 
concerns addressed in the Preliminary Determination involve a serious 
defect or an imminent safety hazard.
    (5) If an SAA or the Secretary makes a Final Determination that the 
manufacturer failed to make, in good faith, an initial determination 
required under Sec.  3282.404(a):
    (i) The SAA may impose any penalties or take any action applicable 
under State law and may refer the matter to the Secretary for 
appropriate action; and
    (ii) The Secretary may take any action permitted by law.
    (b) Decision to order replacement or repurchase. The SAA or the 
Secretary will order correction of any manufactured home covered by an 
order issued in accordance with paragraph (a)(2) of this section, 
unless any requirements and factors applicable under Sec.  3282.414 and 
Sec.  3282.415 indicate that the SAA or the Secretary should order 
replacement or repurchase of the home.
    (c) Time for compliance with order. (1) The SAA or the Secretary 
may require the manufacturer to submit a plan for providing any 
notification and any correction, replacement, or repurchase remedy that 
results from an order under this section. The manufacturer's plan must 
include the method and date by which notification and any corrective 
action will be provided.
    (2) The manufacturer must provide any such notification and 
correction, replacement, or repurchase remedy as early as practicable, 
but not later than:

[[Page 60206]]

    (i) Thirty days after issuance of the order, in the case of a Final 
Determination of imminent safety hazard or when the SAA or Secretary 
has ordered replacement or repurchase of a home pursuant to Sec.  
3282.414; or
    (ii) Sixty days after issuance of the order, in the case of a Final 
Determination of serious defect, defect, or noncompliance.
    (3) Subject to the requirements of paragraph (a)(3) of this 
section, the SAA that issued the order or the Secretary may grant an 
extension of the deadline for compliance with an order if:
    (i) The manufacturer requests such an extension in writing and 
shows good cause for the extension; and
    (ii) The SAA or the Secretary is satisfied that the extension is 
justified in the public interest.
    (4) When the SAA grants an extension, it must notify the 
manufacturer and forward to the Secretary a draft of a notice of the 
extension for the Secretary to publish in the Federal Register. When 
the Secretary grants an extension, the Secretary must notify the 
manufacturer and publish notice of such extension in the Federal 
Register.
    (d) Appeal of SAA determination. Within 10 days of a manufacturer 
receiving notice that an SAA has made a Final Determination that an 
imminent safety hazard, a serious defect, a defect, or noncompliance 
exists or that the manufacturer failed to make the determinations 
required under Sec.  3282.404, the manufacturer may appeal the Final 
Determination to the Secretary under Sec.  3282.309.
    (e) Settlement offers. A manufacturer may propose in writing, at 
any time, an offer of settlement and shall submit it for consideration 
by the Secretary or the SAA that issued the Notice of Preliminary 
Determination. The Secretary or the SAA has the option of providing the 
manufacturer making the offer with an opportunity to make an oral 
presentation in support of such offer. If the manufacturer is notified 
that an offer of settlement is rejected, the offer is deemed to have 
been withdrawn and will not constitute a part of the record in the 
proceeding. Final acceptance by the Secretary or an SAA of any offer of 
settlement automatically terminates any proceedings related to the 
matter involved in the settlement.
    (f) Waiver of notification. (1) At any time after the Secretary or 
an SAA has issued a Notice of Preliminary Determination, the 
manufacturer may ask the Secretary or SAA to waive any formal 
notification requirements. When requesting a waiver, the manufacturer 
must certify that:
    (i) The manufacturer has made a class determination in accordance 
with Sec.  3282.404(b);
    (ii) The manufacturer will correct, at the manufacturer's expense, 
all affected manufactured homes in the class within a time period 
specified by the Secretary or SAA, but not later than 60 days after the 
manufacturer is notified of the acceptance of the request for waiver or 
the issuance of any Final Determination, whichever is later; and
    (iii) The proposed repairs are adequate to correct the 
noncompliance, defect, serious defect, or imminent safety hazard that 
gave rise to the issuance of the Notice of Preliminary Determination.
    (2) If the Secretary or SAA grants a waiver, the manufacturer must 
reimburse any owner of an affected manufactured home who chose to make 
the correction before the manufacturer did so, for the reasonable cost 
of correction.
    (g) Recordkeeping. The manufacturer must provide the report and 
maintain the records that are required by Sec.  3282.417 for all 
notification and correction actions.


Sec.  3282.414  Replacement or repurchase of homes after sale to 
purchaser.

    (a) Order to replace or repurchase. Whenever a manufacturer cannot 
correct or remove an imminent safety hazard or a serious defect in a 
manufactured home, for which there is a completed sale to a purchaser, 
within 60 days of the issuance of an order under Sec.  3282.413 or any 
extension of the 60-day deadline that has been granted by the Secretary 
in accordance with Sec.  3282.413(c)(3), the Secretary or, if 
authorized in writing by the Secretary in accordance with Sec.  
3282.413(a)(3), the SAA may require that the manufacturer:
    (1) Replace the manufactured home with a home that:
    (i) Is substantially equal in size, equipment, and quality; and
    (ii) Either is new or is in the same condition that the defective 
manufactured home would have been in at the time of discovery of the 
imminent safety hazard or serious defect had the imminent safety hazard 
or serious defect not existed; or
    (2) Take possession of the manufactured home, if the Secretary or 
the SAA so orders, and refund the purchase price in full, except that 
the amount of the purchase price may be reduced by a reasonable amount 
for depreciation if the home has been in the possession of the owner 
for more than one year and the amount of depreciation is based on:
    (i) Actual use of the home; and
    (ii) An appraisal system approved by the Secretary or the SAA that 
does not take into account damage or deterioration resulting from the 
imminent safety hazard or serious defect.
    (b) Factors affecting order. In determining whether to order 
replacement or refund by the manufacturer, the Secretary or the SAA 
will consider:
    (1) The threat of injury or death to manufactured home occupants;
    (2) Any costs and inconvenience to manufactured-home owners that 
will result from the lack of adequate repair within the specified 
period;
    (3) The expense to the manufacturer;
    (4) Any obligations imposed on the manufacturer under contract, or 
other applicable law of which the Secretary or the SAA has knowledge; 
and
    (5) Any other relevant factors that may be brought to the attention 
of the Secretary or the SAA.
    (c) Owner's election of remedy. When under contract or other 
applicable law the owner has the right of election between replacement 
and refund, the manufacturer must inform the owner of such right of 
election and must inform the Secretary of the election, if any, made by 
the owner.
    (d) Recordkeeping. The manufacturer must provide the report that is 
required by Sec.  3282.417 when a manufactured home has been replaced 
or repurchased under this section.


Sec.  3282.415  Correction of homes before sale to purchaser.

    (a) Sale or lease prohibited. Manufacturers, retailers, and 
distributors must not sell, lease, or offer for sale or lease any 
manufactured home that they have reason to know, in the exercise of due 
care, contains a noncompliance, defect, serious defect, or imminent 
safety hazard. The sale of a home to a purchaser is complete when all 
contractual obligations of the manufacturer, retailer, and distributor 
to the purchaser and conditions specified in Sec.  3282.252 have been 
met.
    (b) Retailer/distributor notification to manufacturer. When a 
retailer, acting as a reasonable retailer, or a distributor, acting as 
a reasonable distributor, believes that a manufactured home that has 
been sold to the retailer or distributor, but for which there is no 
completed sale to a purchaser, likely contains a noncompliance, defect, 
serious defect, or imminent safety hazard, the retailer or distributor 
must notify the manufacturer of the home in a timely manner.
    (c) Manufacturer's remedial responsibilities. Upon a Final

[[Page 60207]]

Determination pursuant to Sec.  3282.412(f) by the Secretary or an SAA, 
a determination by a court of appropriate jurisdiction, or a 
manufacturer's own determination that a manufactured home that has been 
sold to a retailer but for which there is no completed sale to a 
purchaser contains a noncompliance, defect, serious defect, or imminent 
safety hazard, the manufacturer must do one of the following:
    (1) Immediately repurchase such manufactured home from the retailer 
or distributor at the price paid by the retailer or distributor, plus 
pay all transportation charges involved, if any, and a reasonable 
reimbursement of not less than one percent per month of such price 
paid, prorated from the date the manufacturer receives notice by 
certified mail of the noncompliance, defect, serious defect, or 
imminent safety hazard; or
    (2) At its expense, immediately furnish to the retailer or 
distributor all required parts or equipment for installation in the 
home by the retailer or distributor, and the manufacturer must 
reimburse the retailer or distributor for the reasonable value of the 
retailer's or distributor's work, plus a reasonable reimbursement of 
not less than one percent per month of the manufacturer's or 
distributor's selling price, prorated from the date the manufacturer 
receives notice by certified mail to the date the noncompliance, 
defect, serious defect, or imminent safety hazard is corrected, so long 
as the retailer or distributor proceeds with reasonable diligence with 
the required work; or
    (3) Carry out all needed corrections to the home.
    (d) Establishing costs. The value of reasonable reimbursements as 
specified in paragraph (c) of this section will be fixed by either:
    (1) Mutual agreement of the manufacturer and retailer or 
distributor; or
    (2) A court in an action brought under section 613(b) of the Act 
(42 U.S.C. 5412(b)).
    (e) Records required. The manufacturer and the retailer or 
distributor must maintain records of their actions taken under this 
section in accordance with Sec.  3282.417.
    (f) Exception for leased homes. This section does not apply to any 
manufactured home purchased by a retailer or distributor that has been 
leased by such retailer or distributor to a tenant for purposes other 
than resale. Other remedies that may be available to a retailer or 
distributor under subpart I of this part continue to be applicable.
    (g) Indemnification. A manufacturer may indemnify itself through 
agreements or contracts with retailers, distributors, transporters, 
installers, or others for the costs of repurchase, parts, equipment, 
and corrective work incurred by the manufacturer pursuant to paragraph 
(c).


Sec.  3282.416  Oversight of notification and correction activities.

    (a) IPIA responsibilities. The IPIA in each manufacturing plant 
must:
    (1) Assure that notifications required under this subpart I are 
sent to all owners, purchasers, retailers, and distributors of whom the 
manufacturer has knowledge;
    (2) Audit the certificates required by Sec.  3282.417 to assure 
that the manufacturer has made required corrections;
    (3) Whenever a manufacturer is required to determine a class of 
homes pursuant to Sec.  3282.404(b), provide either:
    (i) The IPIA's written concurrence on the methods used by the 
manufacturer to identify the homes that should be included in the class 
of homes; or
    (ii) The IPIA's written statement explaining why it believes the 
manufacturer's methods for determining the class of homes were 
inappropriate or inadequate; and
    (4) Conduct, at least monthly, a review the manufacturer's service 
records of determinations under Sec.  3282.404 and take appropriate 
action in accordance with Sec. Sec.  3282.362(c) and 3282.364.
    (b) SAA and Secretary's responsibilities. (1) SAA oversight of 
manufacturer compliance with this subpart will be done primarily by 
periodically checking the records that manufacturers are required to 
keep under Sec.  3282.417.
    (2) The SAA or Secretary to which the report required by Sec.  
3282.417(a) is sent is responsible for assuring, through oversight, 
that remedial actions have been carried out as described in the report. 
The SAA of the State in which an affected manufactured home is located 
may inspect that home to determine whether any correction required 
under this subpart I is carried out in accordance with the approved 
plan or, if there is no plan, with the construction and safety 
standards or other approval obtained by the manufacturer.


Sec.  3282.417  Recordkeeping requirements.

    (a) Manufacturer report on notifications and corrections. Within 30 
days after the deadline for completing any notifications, corrections, 
replacement, or repurchase required pursuant to this subpart, the 
manufacturer must provide a complete report of the action taken to, as 
appropriate, the Secretary or the SAA that approved the plan under 
Sec.  3282.408, granted a waiver, or issued the order under Sec.  
3282.413. If any other SAA or the Secretary forwarded the relevant 
consumer complaint or other information to the manufacturer in 
accordance with Sec.  3282.403, the manufacturer must send a copy of 
the report to that SAA or the Secretary, as applicable.
    (b) Records of manufacturer's determinations. (1) A manufacturer 
must record each initial and class determination required under Sec.  
3282.404, in a manner approved by the Secretary or an SAA and that 
identifies who made each determination, what each determination was, 
and all bases for each determination. Such information must be 
available for review by the IPIA.
    (2) The manufacturer records must include:
    (i) The information it received that likely indicated a 
noncompliance, defect, serious defect, or imminent safety hazard;
    (ii) All of the manufacturer's determinations and each basis for 
those determinations;
    (iii) The methods used by the manufacturer to establish any class, 
including, when applicable, the cause of the defect, serious defect, or 
imminent safety hazard; and
    (iv) Any IPIA concurrence or statement that it does not concur with 
the manufacturer's class determination, in accordance with Sec.  
3282.404(b).
    (3) When the records that a manufacturer is required to keep in 
accordance with this paragraph (b) involve a class of manufactured 
homes that have the same noncompliance, defect, serious defect, or 
imminent safety hazard, the manufacturer has the option of meeting the 
requirements of this paragraph by establishing a class determination 
file, instead of including the same information in the file required by 
paragraph (e) of this section for each affected home. Such class 
determination file must contain the records of each class 
determination, notification, and correction, as applicable. For each 
class determination, the manufacturer must record once in each class 
determination file the information common to the class, and must 
identify by serial number all of the homes that the class comprises and 
that are subject to notification and correction, as applicable.

[[Page 60208]]

    (c) Manufacturer records of notifications. When a manufacturer is 
required to provide notification under this subpart, the manufacturer 
must maintain a record of each type of notice sent and a complete list 
of the persons notified and their addresses. The manufacturer must 
maintain these records in a manner approved by the Secretary or an SAA 
to identify each notification campaign.
    (d) Manufacturer records of corrections. When a manufacturer is 
required to provide or provides correction under this subpart, the 
manufacturer must maintain a record of one of the following, as 
appropriate, for each manufactured home involved:
    (1) If the correction is made, a certification by the manufacturer 
that the repair was made to conform to the federal construction and 
safety standards in effect at the time the home was manufactured and 
that each identified imminent safety hazard or serious defect has been 
corrected; or
    (2) If the owner refuses to allow the manufacturer to repair the 
home, a certification by the manufacturer that:
    (i) The owner has been informed of the problem that may exist in 
the home;
    (ii) The owner has been provided with a description of any hazards, 
malfunctions, deterioration, or other consequences that may reasonably 
be expected to result from the defect, serious defect, or imminent 
safety hazard; and
    (iii) An attempt has been made to repair the problems, but the 
owner has refused the repair.
    (e) Maintenance of manufacturer's records. (1) Except as provided 
in paragraph (b)(3) of this section, for each manufactured home 
produced by a manufacturer, the manufacturer must maintain in a printed 
or electronic format all of the information required by paragraphs (b), 
(c), and (d) of this section, and must consolidate the information in a 
readily accessible file or in a readily accessible combination of a 
printed file and an electronic file. For each home, the manufacturer 
also must include in such file a copy of the homes data plate; all 
information related to manufacture, handling, and assembly of the home; 
any checklist or similar documentation used by the manufacturer in the 
transport of the home; the name and address of the retailer; the 
original or a copy of each purchaser's registration record received by 
the manufacturer; all correspondence with the retailer and homeowner 
that is related to the home; any information received by the 
manufacturer regarding setup of the home; all work orders for servicing 
the home; and the information that the manufacturer is required to keep 
pursuant to Sec.  3282.211. The manufacturer must organize all such 
files in order of the serial numbers of the homes produced.
    (2) The manufacturer must maintain each of these manufactured-home 
records at the plant where the home was produced. If that plant is no 
longer in existence, the manufacturer must keep the records at its 
nearest production plant in the same State, or, if such a plant does 
not exist, at the manufacturer's corporate headquarters.


Sec.  3282.418  Factors for appropriateness and amount of civil 
penalties.

    In determining whether to seek a civil penalty for a violation of 
the requirements of this subpart, and the amount of such penalty to be 
recommended, the Secretary will consider the provisions of the Act and 
the following factors:
    (a) The gravity of the violation;
    (b) The degree of the violator's culpability, including whether the 
violator had acted in good faith in trying to comply with the 
requirements;
    (c) The injury to the public;
    (d) Any injury to owners or occupants of manufactured homes
    (e) The ability to pay the penalty;
    (f) Any benefits received by the violator;
    (g) The extent of potential benefits to other persons;
    (h) Any history of prior violations;
    (i) Deterrence of future violations; and
    (j) Such other factors as justice may require.

0
11. In 3282.554, revise paragraph (b) to read as follows:


Sec.  3282.554  SAA reports.

* * * * *
    (b) The description of the SAA's oversight activities and findings 
regarding consumer complaints, notification, and correction actions 
during the preceding month. The IPIA report for the preceding month 
described in Sec.  3282.553, as well as any orders issued pursuant to 
3282.413 and manufacturer reports under Sec.  3282.417(a), which were 
received during the preceding month, are to be attached to each such 
SAA report as an Appendix thereto.

    Dated: September 18, 2013.
Carol J. Galante,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2013-23775 Filed 9-30-13; 8:45 am]
BILLING CODE 4210-67-P