On-Site Completion of Construction of Manufactured Homes, 53712-53732 [2015-21774]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 80, Number 173 (Tuesday, September 8, 2015)]
[Rules and Regulations]
[Pages 53712-53732]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-21774]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 3280, 3282 and 3285

[Docket No. FR-5295-F-02]
RIN 2502-AI83


On-Site Completion of Construction of Manufactured Homes

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

ACTION: Final rule.

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SUMMARY: This final rule establishes a procedure whereby construction 
of new manufactured housing that is substantially completed in the 
factory can be completed at the installation site, rather than in the 
plant. Before this rule, a manufacturer would first be required to 
obtain HUD approval for on-site completion of each of its designs using 
the alternate construction provisions of HUD's regulations. This final 
rule simplifies this process by establishing uniform procedures by 
which manufacturers may complete construction of their homes at the 
installation site without having to obtain advance approval from HUD. 
This final rule applies only to the completion of homes subject to the 
Manufactured Home Construction and Safety Standards, not to the 
installation of homes subject to the Model Manufactured Home 
Installation Standards. Moreover, this final rule would not apply when 
a major section of a manufactured home is to be constructed on-site.

DATES: Effective Date: March 7, 2016

FOR FURTHER INFORMATION CONTACT: Pamela B. Danner, Administrator, 
Office of Manufactured Housing Programs, Department of Housing and 
Urban Development, 451 7th Street SW., Room 9168, Washington, DC 20410; 
telephone 202-708-6423 (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 1-800-877-8389 (this is a toll-free 
number).

SUPPLEMENTARY INFORMATION:

I. Background

    The National Manufactured Housing Construction and Safety Standards 
Act of 1974 (42 U.S.C. 5401 et seq.) (the Act), as amended, authorizes 
HUD to establish and amend the Manufactured Home Construction and 
Safety Standards (the Construction and Safety Standards, or Standards). 
The Construction and Safety Standards established by HUD are codified 
in 24 CFR part 3280. The Act also authorizes HUD to conduct inspections 
and investigations necessary to enforce the Standards, to determine 
whether a manufactured home fails to comply with an applicable standard 
or contains a defect or an imminent safety hazard, and to direct the 
manufacturer to furnish notification of such failure, defect, or 
hazard, and, in some cases, to remedy the defect or imminent safety 
hazard through established procedures necessary to ensure compliance 
with the Construction and Safety Standards and the related enforcement 
and monitoring provisions of the Act. These procedures are codified in 
24 CFR part 3282. As provided in Sec.  3282.1(b), HUD's policy is to 
work in partnership, especially with State agencies, in the enforcement 
of the Construction and Safety Standards, consistent with the public 
interest.
    This final rule establishes procedures to permit completion of new 
manufactured housing at the installation site, rather than in the 
factory, under certain circumstances. Prior to this rule, manufacturers 
were required to request and obtain advanced HUD approval to permit 
alternative construction (AC) under Sec.  3282.14(b), for each model of 
home that it wanted to complete on-site rather than in the production 
facility. Among other things, manufacturers

[[Page 53713]]

were required to include in their requests information regarding how 
the construction work completed on-site would bring the home into 
conformance with the Construction and Safety Standards. This final rule 
establishes simplified procedures that eliminate the requirement for 
the manufacturer to obtain advance HUD approval and permits certain 
construction to be completed on-site rather than in the factory when 
the completed site work will bring the home into conformance with the 
Manufactured Home Construction and Safety Standards.
    This final rule follows a proposed rule published on June 23, 2010 
(75 FR 35902), and takes into account public comments received on the 
proposed rule. In preparing this final rule, HUD also reconsidered and 
incorporated some of the earlier comments provided by the Manufactured 
Housing Consensus Committee (MHCC) during the development of the 
proposed rule. The MHCC is a Federal Advisory Committee authorized by 
the Manufactured Housing Improvement Act of 2000 (Pub. L. 106-569) (42 
U.S.C. 5403). The MHCC was established to provide HUD with periodic 
recommendations regarding Federal Manufactured Housing Construction and 
Safety Standards and related procedural and enforcement regulations.

II. Changes and Clarifications Made in This Final Rule

    This final rule follows publication of the June 23, 2010, 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, the 
Department is making the following changes at this final rule:
     Section 3280.5 has been revised to conform to this final 
rule to require that the manufacturer's data plate contain information, 
if applicable, stating that, except for the components completed on-
site, the home has been substantially completed in accordance with an 
approved design and has been inspected in accordance with the 
Construction and Safety Standards.
     Section 3280.305 has been revised to provide that the 
attic floor of homes with high-pitched roofs (with slopes of 7:12 or 
greater), completed on-site, be designed to support live loads of 40 
pounds per square inch. The attic floor of homes with roofs with slopes 
less than 7:12 that contain an attic space that can be used for storage 
must be designed for a storage live load of 20 pounds per square foot.
     Section 3282.603(d) has been revised to provide that the 
contents of the Design Approval Primary Inspection Agency (DAPIA) 
approval, in addition to items listed in this section in the proposed 
rule, must include a unique site completion numeric identification for 
each approval for each manufacturer (i.e., manufacturer name or 
abbreviation, SC-XX) and a quality control checklist to be used by the 
manufacturer and Production Inspection Primary Inspection Agency (IPIA) 
and approved by the DAPIA to verify that all required components, 
materials, labels, and instructions needed for site completion are 
provided in each home prior to shipment.
     Section 3282.604(c) of the proposed rule which would have 
required the DAPIA to determine if complex work requires special 
criteria or qualification for the IPIA inspector has been removed in 
this final rule.
     Section 3282.605(a) has been revised to permit the ``SC'' 
designation to be used as either a prefix or suffix in the serial 
number for homes or sections of homes completed on-site.
     Section 3282.605(b) has been revised to remove the 
requirement that the manufacturer include a green, on-site 
certification label of the same size, location, material, and fastening 
as provided by Sec.  3280.11. Rather, this final rule provides that the 
manufacturer have a label affixed to the home, in accordance with Sec.  
3282.362(c)(2).
     Section 3282.605(d)(4) has been revised to provide that 
the manufacturer must, within 5 business days after receiving 
notification from the IPIA regarding acceptance of its final site 
inspection report, provide the purchaser or lessor, as applicable, the 
manufacturer's final site inspection report.
     Section 3282.607 has been revised to provide that the IPIA 
is responsible for reporting to HUD, the DAPIA, and manufacturer if one 
or more homes has not been site inspected prior to occupancy or when 
arrangements for one or more manufactured homes to be site inspected 
have not been made.
     Section 3282.608 has been revised in several ways. First, 
HUD removed the requirement that the manufacturer certify the home by 
affixing the on-site completion certification label as proposed at 
paragraph (f), and that the manufacturer notify a State or local 
jurisdiction of any add-on to the home as proposed by paragraph (n). 
HUD also revised paragraph (e) by adding the requirement that the 
manufacturer maintain a copy of any applicable DAPIA-approved quality 
assurance manual for on-site completion, the approved instructions for 
completing the construction work on-site, and the approved inspection 
checklist at the job site until all on-site work is completed and 
accepted by the IPIA. HUD also added paragraph (f) which makes the 
manufacturer responsible for the satisfactory completion of all on-site 
construction and required repairs and for authorizing a licensed 
contractor or a similarly qualified person to complete site 
construction and needed repairs. HUD also added paragraph (g) to 
require that the manufacturer provide a written certification to the 
lessor or purchaser when all site construction work is completed that 
each home, to the best of the manufacturer's knowledge and belief, is 
constructed in conformance with the Federal Manufactured Home 
Construction and Safety Standards. Finally, HUD revised paragraph (m) 
of the final rule to require the manufacturer to provide a copy of the 
site report to a State Administrative Agency (SAA), upon request.
     Section 3285.801(f)(2) has been revised to provide that 
homes with roof slopes of less than 7:12, including any designs 
incorporating peak cap construction or peak flip construction, are 
exempt from IPIA inspection and are to be inspected in accordance with 
24 CFR part 3286.

III. The Public Comments

    The public comment period for the June 23, 2010 (75 FR 35902), 
proposed rule closed August 23, 2010. In addition to soliciting 
comments on the proposal as a whole, HUD invited comments on 26 
specific questions. HUD received 20 public comments. Comments were 
submitted by individuals; a housing alliance; a housing and community 
development organization; a vertically integrated manufactured housing 
company; a marketer of factory-built homes; a fire, building, and life-
safety organization; manufactured housing associations; an industry 
trade journal; a State licensed installer/manager; a producer of 
manufactured housing; and a trade association representing all segments 
of the factory-built housing industry. The following section of this 
preamble summarizes the significant issues raised by the commenters on 
the June 23, 2010, proposed rule and HUD's responses to these comments.

A. General Comments

Consistency of the Rule With the Act
    Comment: Several commenters stated that properly implemented, the 
rule supports the goals of the Manufactured

[[Page 53714]]

Housing Improvement Act of 2000 to ``facilitate the availability of 
affordable manufactured homes'' and ``encourage innovative and cost-
effective construction techniques for manufactured homes.'' These 
commenters stated that allowing selected completion of construction 
after the home is transported to the site will also encourage the use 
of designs and techniques that will demonstrate the adaptability and 
versatility of manufactured housing. The commenters stated that the 
current process of HUD approval of AC requests on a case-by-case basis 
is time consuming, unduly costly, and ultimately unnecessary given the 
third-party design approval and quality control inspection 
infrastructure that the program already has in place.
    HUD Response: HUD agrees with the commenters that allowing selected 
completion of homes to conform to the Manufactured Home Construction 
and Safety Standards after the homes have been transported to the site 
will encourage and facilitate use of innovative designs and 
construction methods and that its current method of approving AC 
requests has been time consuming.
    Comment: Another commenter stated, however, that the manufactured 
home program appears to be expanding beyond the scope of the Act. 
Specifically, the commenter stated that the manufactured home industry 
of today appears to be competing with site-built and modular homes 
constructed to site-built codes. Rather than providing affordable, 
safe, durable, low-cost housing, the manufactured housing industry is 
trying to outdo site-built homes while trying to avoid the site-built 
codes and regulations adopted by most States with preemptive and 
weakened Federal regulations that are not strictly enforced to ensure 
safe, durable housing for consumers.
    HUD Response: The scope of HUD's authority to regulate the 
manufacture of manufactured homes is established by the Manufactured 
Housing Construction and Safety Act, as amended. Under the Act, HUD is 
responsible for establishing construction and safety standards that, 
among other things, protects residents of manufactured homes, while 
encouraging innovation and cost-effective construction techniques. This 
rule recognizes that manufactured housing is evolving in ways that may 
not have been contemplated when the Act was enacted. Nevertheless, this 
rule remains consistent with the Act and its goals and reflects HUD's 
efforts to encourage innovative designs, while ensuring that high 
construction standards continue to be met.
Overall Purpose of the Rule is Too Broad
    Comment: One commenter stated that under the proposed rule, there 
are many situations that would require extensive approval, reporting, 
and notification procedures and that there is not a clear ``trigger'' 
for when this new process would be required. The commenter stated, for 
example, that there are a number of existing DAPIA approvals that 
currently allow site installation of certain components, such as the 
field installation of double exterior doors (to prevent damage during 
transportation) and the field installation of fireplace hearths that 
cross the mating lines. These on-site installations are minor in nature 
and are already a natural part of the current process. The commenter 
asked, therefore, whether they would fall under the new proposal.
    HUD Response: Yes, the field completion and installation of these 
components would be allowed under Sec.  3282.602(a)(4) and (a)(5) of 
the final rule.
Rule Will Create Confusion for Consumers
    Comment: One commenter stated that the proposed rule would 
significantly change the procedure for the on-site assembly of 
manufactured homes and will create confusion with consumers and 
retailers and may add unnecessary cost. The commenter stated that the 
completion of manufactured homes on-site should be left to the State or 
local authority having jurisdiction, working from manufacturer and 
DAPIA-approved methods of site assembly.
    HUD Response: HUD believes that this rule will not create confusion 
with consumers and retailers or add to costs currently incurred by 
manufactures under the AC procedure for similar site-completion work. 
The final rule continues to require the IPIA rather than a State or 
local authority having jurisdiction to conduct the inspection. HUD does 
not agree with the commenter's suggestion that entities other than 
IPIAs conduct the final site inspection, as State or local 
jurisdictions are often unfamiliar with the requirements of the 
Standards and are not authorized to conduct these inspections on HUD's 
behalf.
Rule Shifts Regulatory Burden to Retailers and Installers
    Comment: Several commenters recommended that HUD withdraw the 
proposed rule given its lack of accountability, oversight, and 
enforcement, coupled with its failure to recognize the concerns of the 
retailers, installers, and home buying public. Another commenter stated 
that the views and concerns of retailers and certified installers in 
States that have approved programs have not been considered. One 
commenter described the on-site rule as the manufactured housing 
industry trying to shift the burden to retailers and installers. Other 
commenters claimed that the rule adds unnecessary administrative 
paperwork that will restrict the manufacturer and retailer's ability to 
use the new process effectively.
    HUD Response: Rather than adding layers of administrative 
paperwork, HUD believes that this final rule streamlines the approval 
process for on-site construction. This final rule adds only minimal 
burdens for retailers and installers. The final rule requires retailers 
to provide a copy of the consumer notice to prospective purchasers 
before sale; however, under current AC practices, they are already 
required to provide such a notice to purchasers. The only burden 
shifted to installers is the inclusion of the completion of peak flip 
and peak cap construction as installation, rather than construction, 
when the roof pitch is less than 7:12 and the home is designed to be 
located in Wind Zone I. Manufacturers continue to remain responsible 
for successful completion of all site work to conform to HUD's 
standards and regulations.
Rule Should Clearly Identify Excluded Close-up and Related Work
    Comment: Several commenters, citing language in the preamble of the 
proposed rule, agreed with the exclusion of close-up work from the 
proposed rule but recommended that the rule specify the types of close-
up work that would be excluded from the rule. These commenters 
recommended that close-up work excluded from the rule include: (1) Duct 
connection from half to half and additional crossovers; (2) dryer vent, 
range cook-top exhaust termination vents; (3) ridge vents; (4) plumbing 
connections in the attic; (5) gas line connections between the halves; 
(6) the main power supply connection; (7) electrical crossover 
connections; (8) front and rear siding; and (9) floor and roof 
connections (e.g., lags, straps, etc.). According to the commenters, 
specifying the types of close-up work excluded from the rule will avoid 
future disputes regarding the scope of on-site completion and reduce 
unnecessary costs for manufacturers and consumers.
    HUD Response: HUD agrees that specifying the types of close-up work

[[Page 53715]]

excluded from the rule will avoid future disputes; however, the 
specific types of close-up work cited by the commenters are already 
covered under various provisions of HUD's Model Manufactured Home 
Installation Standards, or would be considered as components for 
construction qualifying for on-site completion under Sec.  3282.602(a) 
of this final rule.
    Comment: A commenter recommended that HUD remove terms such as 
``reasonably'' and ``practically'' from the final rule since these 
terms are not quantifiable and meaningless in the regulation.
    HUD Response: HUD agrees with the commenter and has removed the 
terms ``reasonably'' and ``practicably'' from the final rule.
Rule Should Adopt a More Streamlined and Less Redundant Labeling and 
Reporting Method
    Comment: Several commenters described HUD's method of designating 
homes constructed on-site with an ``SC'' designation as a prudent and 
necessary requirement. These commenters recommended, however, that 
manufacturers should have the flexibility of including the ``SC'' 
designation as either a prefix or a suffix, or in the middle of the 
serial number. According to these commenters, many manufacturers use 
the serial number for various types of recordkeeping and invoicing. 
Requiring manufacturers to use the ``SC'' designation as a prefix is 
unnecessarily restrictive and will necessitate cumbersome and extensive 
changes to current database programs and recordkeeping practices.
    HUD Response: HUD agrees with the commenters and has revised Sec.  
3282.605(a) of the final rule to permit the ``SC'' designation to be 
used as either a prefix or suffix in the serial number for homes or 
sections of homes completed under this rule.
    Comment: Several commenters strongly opposed the use of a green on-
site completion certification label. These commenters stated that use 
of a different color permanent label for a home completed on-site will 
lead to significant disorder in the market, which already suffers from 
confusion between manufactured homes, modular homes, and park models. 
According to these commenters, the label is utilized by consumers, code 
inspectors, zoning officials, lenders, and appraisers as the primary 
distinguishing feature to differentiate between these different types 
of factory-built housing. The commenters recommended that the proposal 
to require a data plate with an ``SC'' designation, combined with a 
notice to the consumer, would be sufficient to meet the objectives of 
this proposal. These commenters also stated that consumer notice should 
be provided at the time the buyer enters into a contract to purchase 
the home rather than requiring it to be posted in the home. This will 
ensure that the buyer has complete knowledge of the status of the home 
and knows that it will not be complete until a certificate of occupancy 
is provided. Another commenter stated that there is no way to get the 
text required by Sec.  3282.605(b)(2) on a 2in x 4in label and make it 
legible.
    HUD Response: HUD agrees with the commenters and is revising Sec.  
3282.605(b) of the final rule to remove the requirement that the 
manufacturer include a green, on-site certification label. Rather, the 
current label required by Sec.  3282.362(c)(2) will be required for 
homes completed on-site. The final rule continues to require, however, 
that the consumer notice be provided to prospective purchasers before 
sale of the home is completed.
    Comment: A commenter stated that HUD's existing label method should 
be viewed to signify compliance of the home prior to delivery from the 
factory. According to the commenter, a label placed on the unit at the 
factory cannot signify more because future on-site construction and 
inspections have not yet occurred.
    HUD Response: The placement of the label on the home at the factory 
is consistent with the current AC process, which requires the IPIA to 
inspect the unit at the site to verify that all work that could not be 
completed at the factory is satisfactorily completed on-site. This 
final rule requires the IPIA to inspect all work that could not be 
completed at the factory and to verify that the home complies with the 
Department's Standards when completed on-site. Further, under this 
final rule, a home cannot be occupied until a successful inspection has 
been completed by the IPIA.
    Comment: Several commenters questioned the requirement that the 
manufacturer notify the appropriate State or local jurisdiction of any 
add-on to the home that has not been inspected by the State or local 
jurisdiction as unnecessary and inappropriately placing responsibility 
on the manufacturer to certify that the home meets the Federal 
Manufactured Home Construction Safety Standards. The commenters 
suggested that this requirement may raise liability issues by extending 
responsibility for construction issues not covered by the Construction 
and Safety Standards to the manufacturer.
    HUD Response: The requirement in Sec.  3282.608(n) of the proposed 
rule for the manufacturer to notify the State or local jurisdiction of 
any add-on to the home has been removed from this final rule.
Frequency of On-site Inspections
    Comment: Several commenters expressed concern regarding the 
provision requiring an on-site inspection to be completed by the IPIA 
for every home prior to occupancy. According to the commenters, the 
reporting requirements in the proposed rule are redundant and have the 
potential to cause unnecessary, costly delays in loan closings and 
settlements; increase costs for the homebuyer; and reduce consumer 
satisfaction. The commenters questioned, for example, whether it was 
necessary to require both the IPIA and the manufacturer to prepare a 
site inspection report. According to the commenters, the required DAPIA 
approved ``on-site'' inspection checklist can be used by all parties to 
provide the necessary information and assurances that the on-site work 
was completed in accordance with the DAPIA approved design. The 
checklist can be expanded to include the necessary manufacturer's 
certification, and the identifying items specified in Sec.  
3282.605(d)(2) of the proposed rule, e.g., serial numbers, names and 
addresses, etc. This expanded inspection checklist can be used for the 
necessary reporting requirements and can be used to obtain the 
certificate of occupancy and can serve as the necessary documentation 
for lenders, settlement agents, State Administrative Agencies (SAA's) 
and HUD.
    HUD Response: HUD does not agree with the commenters and a 
successful on-site inspection must be independently completed by the 
IPIA prior to occupancy for all site completed homes, as required by 
this final rule.
    Comment: Several commenters recommended that site work be treated 
as yet another ``stage of production'' whereby each unit is inspected 
in at least one stage of its production. The commenters recommended 
that the rule be changed to reflect current inspection practices and 
extend flexibility to the IPIA for determining frequency of on-site 
inspections as they deem necessary based on complexity of the design 
and history of past inspections. As an option, the commenters 
recommended that HUD modify the rule to allow a manufacturer to elect 
either 100 percent on-site inspection offset by reduced in-

[[Page 53716]]

plant inspections, or audit type inspections subject to frequency 
adjustments based on demonstrated compliance levels.
    HUD Response: HUD believes that the construction completed on-site 
is part of the final production necessary to complete the home. HUD 
believes that IPIA inspection of each home completed on-site is 
required to ensure compliance with its Safety and Construction 
Standards since on-site construction necessarily involves the 
completion of a variety of unique design specification and quality 
control procedures that may be performed by staff or representatives 
assigned by retailers or manufacturers for which there is no way for 
HUD to ensure their knowledge and qualifications.
    Comment: One commenter stated that the proposed rule allows 10 days 
after IPIA approval for the manufacturer to provide the report to the 
consumer. According to the commenter, this time frame is unrealistic 
and contrary to a number of State laws defining completion of sale.
    HUD Response: HUD agrees with the commenter and has revised Sec.  
3282.605(d)(4) of the final rule to require that the report be provided 
5 days after IPIA approval to facilitate the completion of sale.
Non-IPIA Inspections of On-site Work
    Comment: Several commenters supported provisions in the proposed 
rule prohibiting non-IPIA inspections of on-site work. According to 
these commenters, allowing non-IPIA inspections of the on-site work 
would erode HUD's authority and is contrary to the existing and 
effective inspection process in the current regulations. In addition, 
it would be a disincentive for States to become HUD-approved State 
IPIAs under the current regulations, and would complicate the current 
inspection process. These commenters stated that if SAAs wish to become 
IPIAs as provided under the current procedural and enforcement 
regulations, they have every opportunity to do so through the 
appropriate approval process.
    HUD Response: HUD agrees with the commenters. As previously 
indicated, only IPIAs or representatives of IPIAs are authorized to 
perform on-site completion inspections under this final rule.
    Comment: Another commenter stated that completion of manufactured 
homes on-site should be left to the State or local authority having 
jurisdiction over the work site, working from manufacturer/DAPIA 
approved methods of site assembly. According to the commenter, if State 
or local authorities having jurisdiction are not allowed to inspect on-
site construction, a large segment of the consumer protection will have 
been lost from the manufactured housing program and it may increase the 
cost to consumers as local authorities having jurisdiction will still 
invoice, issue permits, and inspect other on-site work.
    HUD Response: HUD disagrees with the commenter. Using State or 
local jurisdictions to perform the on-site inspections would be both 
outside of HUD's regulatory system, as established under 24 CFR part 
3282, and would create inconsistencies in interpretation, tracking, and 
reporting between those entities and the Department and may result in 
unnecessary costs for consumers. In addition, some State or local 
jurisdictions may not have the ability or resources to perform the 
inspection.
Rule Imposes Additional Burdens and Confusion on Local and State 
Building Code Enforcers
    Comment: Several comments stated that the rule will cause many 
local municipalities and State building code enforcers to reexamine 
their current programs. According to these commenters, current building 
codes were enacted under the assumption that every section of 
manufactured housing would be constructed in accordance with approved 
designs and inspected under an approved quality assurance program. On-
site completion would change this and shift compliance responsibilities 
to local and State officials who will have to reexamine their current 
programs to include these responsibilities.
    HUD Response: HUD does not believe that the rule will impact 
current programs of State or local building code enforcers or create 
additional confusion for consumers. The final rule makes no changes 
from current AC procedures for inspection or acceptance of the work 
being completed on-site and therefore should not impact current 
programs of State or local building code enforcers.

B. Specific Issues for Comment

    To assist in HUD's development of this final rule, HUD solicited 
feedback on specific questions and issues associated with its on-site 
completion procedures. Each question will be followed by the comments 
received and HUD's responses to those commenters in developing this 
final rule.
1. How should the rule define the limits on the construction work that 
may be completed on-site
    Comment: Several commenters recommended that the rule retain a 
broad definition of ``substantial completion'' to not limit future 
technological advances. One commenter, for example, suggested that an 
external heating/cooling technology may become available that would 
differ based upon the geography or other physical feature of the job 
site, which might go beyond the ``box'' of the home. As a result, the 
commenter stated that HUD's final rule should maintain flexibility in 
defining the type of work that may be completed on-site. Other 
commenters agreed stating that there should not be a defined limit due 
to the infinite combinations of on-site construction. The commenters 
suggest that limits be left to the DAPIAs and manufacturers, who are 
well-suited to determine and clarify on-site construction. Other 
commenters stated that Sec.  3283.602 provides adequate examples that 
qualify for on-site completion and provide adequate direction to enable 
manufacturers and DAPIAs to determine when on-site construction 
protocol is warranted. Another commenter stated that extending on-site 
completion to certain installation work, such as a hinged roof, is 
appropriate since this work is performed under the guidance of the 
manufacturer.
    HUD Response: HUD shares an interest in promoting technological 
advances in the design and manufacture of manufactured housing and 
agrees that manufacturers and manufacturer's DAPIAs and IPIAs should 
have flexibility in determining the scope of construction that may be 
approved to be completed on-site. HUD also agrees that Sec.  
3282.602(a) of this final rule contains adequate examples to determine 
whether a particular type of construction may qualify for on-site 
completion. This flexibility should encourage and not inhibit future 
technological advancements. Further, the final rule does not change 
current practice with regard to which site work is considered 
construction and which is considered installation, except for the 
inclusion of peak flip or peak cap construction with roof slopes less 
than 7:12, when homes are designed to be located in Wind Zone I.

[[Page 53717]]

2. Should the proposed requirements applicable to on-site completion in 
accordance with the construction and safety standards be extended to 
repairs of homes in the hands of retailers or distributors or to work 
proposed to be defined as installation, especially close-up details for 
multiple and single sections?
    Comment: Several commenters stated that repairs should not be 
included in the rule. These commenters submitted that repairs do not 
fit the scope of this rule and including them will inevitably lead to 
consumer dissatisfaction. The commenters stated that subjecting repairs 
to the on-site process would also result in increased cost to consumers 
where there has been no indication of changes required from present 
practice.
    HUD Response: HUD agrees. This final rule does not include any 
additional requirements for repairs of manufactured homes in the 
possession of retailers or distributors beyond those requirements 
currently in effect under 24 CFR part 3282, subpart F.
3. Has HUD drawn the proper lines between aspects of work on the home 
to be finalized as part of installation and those aspects that would be 
considered completion of construction under a special approval for 
either on-site or AC?
    Comment: Several commenters stated that the distinction between on-
site construction work and installation work should be clarified. 
According to these commenters, more clearly defining the work subject 
to on-site construction process would provide greater flexibility in 
the on-site inspection process and ensure uniform, preemptive Federal 
regulation and oversight of on-site work.
    HUD Response: HUD believes that the distinction between on-site 
construction work and installation work is adequately provided by Sec.  
3282.602 of this final rule and related provisions in HUD's Model 
Manufactured Home Installation Standards, 24 CFR part 3285. In 
addition, HUD clarified the distinction for certain types of roof 
construction by allowing peak flip and peak cap construction with a 
roof pitch of less than 7:12, when located in Wind Zone I, to be 
considered as installation.
    Comment: Another commenter stated that the rule cites examples of 
work to which the new rule would apply (e.g., completion of dormer 
windows, additions of sidings/stone/stucco, certain types of hinged 
roofs, and assembly of multistory designs) which would be part of the 
construction standards if factory installed. The commenter continued, 
however, that this work also becomes part of the home installation if 
it is to performed on-site. According to the commenter, the rule does 
not clearly distinguish ``on-site construction'' from ``installation.'' 
As a result, it may be difficult to determine whether HUD's 
Construction and Safety or Installation Standards apply.
    HUD Response: HUD does not agree with the commenter, and believes 
that this final rule distinguishes between on-site construction work 
that could or should have been completed in the factory and work that 
is considered part of the installation of the home.
    Comment: Several commenters stated that including the on-site 
installation of certain components such as the field installation of 
double exterior doors and of fireplace hearths that cross the mating 
line are too broad and should be questioned. According to the 
commenters, allowing unregulated entities to provide alternate or 
additional building components without the benefit of proper oversight 
should not be permitted. The commenters stated that some appliances are 
likely to be installed in new manufactured homes that will not only 
take the home out of compliance, but also defeat some of the safeguards 
provided in the present Construction and Safety Standards.
    HUD Response: As stated in response to a previous comment, the 
field completion and installation of these components are permitted 
under Sec.  3282.602(a)(4) and (a)(5) of this final rule. Site 
installation of these types of building components, including 
appliances and fireplaces, are subject to final inspection and 
oversight by the IPIA under this final rule.
    Comment: Several commenters expressed disagreement with HUD's 
decision to codify the Model Manufactured Home Installation Standards 
in part 3285 rather than incorporating them in the Construction and 
Safety Standards in part 3280 of the Code of Federal Regulations. 
However, despite this disagreement, the commenters agreed with HUD that 
on-site work covered by the proposed rule clearly entails final 
``construction'' of the home and is subject to the Federal preemption.
    HUD Response: The National Manufactured Home Construction and 
Safety Standards Act does not permit ``installation'' to be considered 
as ``construction'' and does not authorize codification of the Model 
Installation Standards under the preemptive provisions of 24 CFR part 
3280.
4. What is the best method for assuring that the on-site construction 
work is inspected for compliance with the construction and safety 
standards prior to occupancy?
    Comment: Several commenters stated that on-site inspection is a 
natural extension of the manufacturing process and, as a result, the 
inspection process should do the same. According to these commenters, 
each unit in the factory is inspected by an IPIA in at least one stage 
of its production. Further, manufacturer's personnel are responsible 
for inspection of all stages of production. The commenters submitted 
that this process should be applied to on-site construction and that 
the manufacturer's personnel certify completion, subject to sampling by 
the IPIA and that the frequency of inspections would be determined by 
the IPIA, based on the manufacturer's performance.
    HUD Response: As the personnel and work crew at each home site 
typically varies, HUD considers the on-site construction work at each 
site to be similar to conducting a plant certification during which 
both the manufacturer and IPIA are responsible for inspecting each 
phase of the production to ensure the quality assurance system is 
properly functioning and the work performed conforms to the Standards. 
As such, the final rule makes the manufacturer responsible for 
satisfactory completion of all on-site work for each home and requires 
the IPIA to inspect all of the on-site construction work for each home.
5. Should the IPIA be the only entity permitted to conduct the on-site 
inspections required under this rule or should the rule be amended to 
permit a State to conduct the on-site inspections?
    Comment: Several commenters stated that the inspection process 
needs to be uniform nationally, and recommend that only HUD-approved 
IPIAs be permitted to conduct on-site inspections. These commenters 
supported the provisions in the rule prohibiting parties other than the 
plant's IPIA from being responsible for inspections of on-site work 
performed by individuals that may be unqualified since to do otherwise 
may result in insufficient oversight. Several commenters opposed 
requiring or permitting on-site inspections by any State entity other 
than an approved State stating that such an approach would discourage 
States from becoming SAAs and, thereby, weakening and undermining the 
Federal-State partnership envisioned by the Act.

[[Page 53718]]

According to the commenters, a State option or mandate could also allow 
States to exercise IPIA-type enforcement powers without meeting all the 
requirements for HUD approval as an IPIA, thereby undermining HUD 
superintendence and control of the regulation of manufactured housing 
as provided by Federal law.
    HUD Response: HUD agrees with these commenters. Inspections need to 
be uniform nationally and performed by entities that are knowledgeable 
with the requirements of the Standards. As a result and as stated in 
response to a previous comment, only IPIAs are authorized to conduct 
site completion inspections under this final rule.
    Comment: Several commenters also stated that allowing non-IPIA 
agencies to regulate inspections of the on-site work would erode HUD's 
authority and is contrary to the existing and effective inspection 
process established by the current regulations. These commenters stated 
that inspections by non-IPIA agencies may expose consumers to 
inconsistent, ineffective, and more costly and/or improper regulation.
    HUD Response: HUD agrees with these commenters and reiterates that 
only IPIAs are authorized to conduct site completion inspections under 
this final rule.
    Comment: Other commenters, however, suggested that the final rule 
allow manufacturers to elect between on-site inspections by IPIAs or by 
other HUD-approved, non-IPIA licensed and insured individuals or 
entities, such as Registered Professional Engineers or Certified 
Architect-Engineers. According to the commenters, permitting on-site 
inspections by HUD-approved, independent, licensed professionals would 
result in more effective competition and more affordable inspection 
prices and ensure proper accountability for errors or omissions.
    HUD Response: HUD's interest in ensuring that inspections are 
conducted by entities knowledgeable with the Construction and Safety 
Standards requires that it authorize only IPIAs to conduct site 
completion inspections under this final rule. However, an IPIA may 
authorize or designate a professional engineer or architect or other 
inspection professionals to conduct inspections on their behalf.
6. Should the IPIA inspect all homes completed on-site, or should the 
IPIA undertake inspections only for a certain number or percentage of 
homes completed on-site?
    Comment: Several commenters stated that not every home needs to be 
inspected and recommended that the IPIA should inspect a percentage of 
homes that convinces them that the process is being completed as 
directed. They suggested that the IPIA determine how many inspections 
should be performed, based on the complexity and multiple uses of an 
approval across different models and in accordance with the 
regulations. The commenters based their recommendation on the fact that 
IPIA personnel do not inspect each home at every stage of production 
and are not required to inspect homes at any specific stage of 
production, or specifically upon completion in a production facility.
    HUD Response: As noted in response to a previous comment, HUD 
believes that construction completed on-site is part of the final 
production necessary to complete the home. Notwithstanding, on-site 
construction necessarily involves the completion of a variety of unique 
design specification and quality control procedures which may be 
performed by staff or representatives assigned by the retailer or 
manufacture. HUD does not have a means to ensure that such staff has 
the proper qualifications and knowledge to perform the work. As a 
result, HUD believes that IPIA inspection of each home completed on-
site is required to ensure compliance with the Safety and Construction 
Standards.
    Comment: Commenters also suggested that manufacturers be allowed to 
exercise an election regarding the inspection of homes completed on-
site, in place of the one-size-fits-all, 100 percent inspection 
mandated by the proposed rule. According to the commenters, such an 
approach would reduce costs and create flexibility for the IPIA and HUD 
to increase the frequency of inspection as warranted by a particular 
manufacturer's compliance with its DAPIA approved on-site design and 
the Standards. One commenter recommended that HUD modify the rule to 
permit manufacturers to elect 100 percent on-site inspection, offset by 
reduced in-plant inspections, or audit type inspections subject to 
frequency adjustments based on demonstrated compliance levels.
    HUD Response: HUD does not agree with the commenters. Initially, 
given the scope and complexity of construction that may be completed 
on-site, inspection of each home at the construction site is not a 
``one-size-fits-all'' procedure. Further, providing manufacturers the 
option of reducing in plant inspections for each on-site inspection 
misses the fact that inspections on-site differ in scope and purpose 
from in plant inspections. Consequently, IPIA inspection of each home 
completed on-site is required by this final rule to ensure conformance 
to the Standards and the manufacturer's designs and specifications.
    Comment: Some commenters expressed concern that requiring an on-
site inspection to be completed by the IPIA for every home prior to 
occupancy will result in lengthy delays in the construction and sales 
process, add unnecessary costs for the homebuyer, and reduce consumer 
satisfaction. Other commenters suggested that the rule be changed to 
reflect current inspection practices and extend flexibility to the IPIA 
for determining the frequency of on-site inspections as they deem 
necessary based on complexity of the design and history of past 
inspection.
    HUD Response: HUD does not anticipate that the inspection of each 
home completed on-site will result in any additional time or delay than 
is currently required for IPIAs to conduct inspections under AC 
procedures.
7. Should authorized inspectors be limited to State and local 
inspection officials, rather than permitting IPIAs to choose some other 
qualified independent inspector?
    Comment: Several commenters stated that the IPIA should designate 
who may act on its behalf. They also stated that the qualifications of 
individuals selected to act on behalf of the IPIA should be no 
different than those required of individuals conducting in-plant 
inspections.
    HUD Response: Each IPIA may designate and authorize independent 
inspection professionals to conduct inspections on their behalf, as 
permitted by Sec.  3282.607(d) of this final rule. Any IPIA that 
permits others to act on its behalf assumes full regulatory 
responsibility for those individuals.
8. Does HUD need to identify those aspects of completion of the home 
that are not subject to Federal Construction and Safety Standards and 
inform local inspectors that they may inspect those aspects?
    Comment: Some commenters stated that designating those aspects 
subject to local inspection would be helpful as long as some 
consistency is maintained. However, other commenters stated that there 
should be no need for HUD's involvement in on-site work items that are 
not covered by or subject to the Standards. In addition, commenters 
also stated that when permits are required, those items are covered and 
inspected by the jurisdiction issuing the permit and these construction 
elements are the responsibility of others and outside the

[[Page 53719]]

control of the manufacturer. Other commenters stated that this is not 
part of the regulatory responsibility of manufacturers under 
Manufactured Home Construction and Safety Standards and should not be 
required.
    HUD Response: The final rule requires the IPIA, rather than a State 
or local authority having jurisdiction, to conduct the inspection. HUD 
does not agree with the commenters' suggestion to permit entities other 
than IPIAs to perform the final site inspection. HUD believes that 
entities such as State or local jurisdictions are often unfamiliar with 
the requirements of the Construction and Safety Standards and are not 
are authorized to conduct these inspections on HUD's behalf.
9. Should the DAPIA be permitted to determine whether the complex work 
also requires special criteria or qualification for the IPIA inspector 
in order to perform the on-site inspection?
    Comment: One commenter stated that the manufacturer, not the DAPIA, 
is responsible for the proper completion of all on-site work and, in 
conjunction with its IPIA, should be responsible for the proper 
inspection of such work. According to the commenter, 24 CFR part 3282, 
subpart I, makes the manufacturer responsible for noncompliances and 
defects in the home. As a result, the commenter recommended that the 
manufacturer and IPIA determine the appropriate qualifications for the 
on-site inspector in a given situation.
    HUD Response: HUD agrees with the commenter. As a result, HUD has 
removed from this final rule the requirement proposed by Sec.  
3282.604(c) that would have made the DAPIA responsible for determining 
whether the on-site inspection required special testing or that the 
IPIA inspector have special qualifications to perform the on-site 
inspection.
    Comment: Other commenters stated that the qualifications of 
individuals conducting on-site inspections should not be different than 
those of an IPIA inspector, and that the manufacturer and the IPIA 
should have responsibility for determining the appropriate 
qualifications of the on-site inspector in a given situation. Other 
commenters stated that the functions of the DAPIA and IPIA should 
complement each other rather than have barriers that prevent direct and 
open communication. As a result, these commenters stated that DAPIA 
oversight functions should not include responsibility for determining 
the specific skills necessary for an individual to conduct the on-site 
inspections.
    HUD Response: As stated in the preceding response, HUD agrees with 
those comments and has removed from this final rule the provision that 
would have made the DAPIA responsible for determining whether the IPIA 
inspector requires special skills to conduct on-site inspections.
10. Should the rule establish, or provide that the DAPIA may establish 
in its approval a deadline for completion of the work on-site and final 
inspection?
    Comment: Several commenters stated that the rule should address 
completion timelines and not permit nonuniform deadlines. However, 
other commenters disagreed and stated that completion time deadlines 
have no place in a construction standard. These commenters stated that 
unforeseen circumstances may arise which, if addressed in the rule, 
would subject the manufacturer and the IPIA to legal liability or 
regulatory consequences. Another commenter stated that time frame 
deadlines are almost always a part of the contractual negotiation with 
the consumer. Another commenter stated that for display models, 
deadlines for completion would not be possible to predict.
    HUD Response: HUD believes that the deadlines for completion should 
be negotiated by the parties to the transaction. As a result, HUD has 
not added completion timelines or deadlines to this final rule.
11. Should HUD specify requirements for the retailer to notify the 
manufacturer that a home subject to the on-site completion process is 
ready for the manufacturer's final inspection, or should the 
requirements be left to private arrangements?
    Comment: Several commenters suggested that arranging for the final 
inspection be left to private arrangements. Another commenter stated 
that HUD should specify that the retailer is responsible for notifying 
the manufacturer that a home is ready for final inspection.
    HUD Response: HUD agrees with the commenter that recommended that 
arranging for the final inspection be left to private arrangements.
12. Should the regulations in 24 CFR 3282 subpart F be extended to 
provide that some or all of the procedures for manufacturer and IPIA 
inspection of the work on-site also apply to repairs, on-site or in 
retailer lots, of manufactured homes that are completed and labeled in 
the factory, but that are substantially damaged before being sold by a 
retailer?
    Comment: Several commenters stated that the retailer is responsible 
for such items and the manufacturer should not be held responsible. 
Other commenters state that repairs should be left to the private 
arrangements between the manufacturer and the retailer.
    HUD Response: If a home is damaged on a retailer's lot, it cannot 
be sold by the retailer to a consumer until the home is brought into 
compliance with the Standards. If the manufactured home is damaged on-
site by some other entity, the manufacturer of the home remains 
responsible for its required repairs. Under the final rule, the 
manufacturer is to complete the work and any repairs and may authorize 
a licensed contractor or similarly qualified person to complete the 
work or repairs.
13. Should the rule address more explicitly what happens if the 
manufactured home does not pass the on-site inspection?
    Comment: One commenter stated that it should be left to the IPIA 
and the manufacturer to determine what happens if a home does not pass 
inspection and if they cannot reach consensus in a timely manner then 
the homeowner has legal rights to remedy the situation. Another 
commenters stated that, this should be left to private arrangements and 
noted that the rule is clear that the home may not be occupied absent a 
satisfactory inspection.
    HUD Response: This final rule requires that each home must 
successfully pass a final on-site completion inspection. The rule 
leaves it to the IPIA and manufacturer to determine how to resolve any 
areas that do not pass inspection so that a successful final inspection 
can be completed.
14. Is the proposed labeling procedure workable?
    HUD responded to comments submitted in response to this question in 
Section A, General Comments, of this preamble.

[[Page 53720]]

15. What mechanism can be used to ensure that the prospective purchaser 
is provided with the Consumer Information Notice?
    Comment: Several commenters stated that the retailer or 
manufacturer will advise the customer of any requirements applicable 
under the on-site construction approval during contract negotiations. 
Commenters recommended that the Consumer Information Notice be provided 
to the consumer when the contract is signed and that the homebuyer be 
required to sign the notice. Commenters stated that there is no need 
for notice to be posted in the home because this does not ensure that 
the consumer has read or will read the notice.
    HUD Response: HUD believes the value in displaying the notice in 
the home is that it alerts perspective purchasers at the earliest 
opportunity that additional construction needs to be completed at the 
site before the home can be occupied. The final rule requires that the 
notice be both prominently displayed in the home and that a copy of the 
notice be given to prospective purchasers before the purchasers enter 
into a sales agreement to purchase the home. Removal or failure to 
provide the notice by any entity constitutes a violation of the 
regulations.
    Comment: One commenter stated that times have changed and that 
unlike in the past, when retailers would purchase inventory to be sold 
off the lot, today's process is much different. According to the 
commenter, with few exceptions a potential customer will visit a model 
center and make decisions about floor plans, colors, exteriors, etc., 
and then have their home built. This is the point, according to the 
commenter, when the consumer needs to be informed about any SC 
approvals and the possible delay of their expected move[hyphen]in. The 
commenter also stated that the display of the notice in the unit is 
unnecessary and of little value since it is unlikely that a retailer 
would display a unit that required SC approval.
    HUD Response: Under the final rule it is the responsibility of the 
retailer to provide the notice to all prospective purchasers before the 
prospective purchaser enters into an agreement to purchase the home, as 
required by Sec.  3282.606(c).
16. Should the rule clarify what is the ``date of manufacture'' for 
units completed under this procedure, for purposes of the information 
required to be included in the data plate?
    Comment: One commenter stated that the rule should provide guidance 
on the issue to ensure uniformity and an even playing field for all 
regulated parties. Other commenters stated that regardless of what 
method HUD decides to use, the date of manufacture should be the date 
the label is affixed at the factory, prior to shipment, to allow 
completion of all paperwork that goes with the home. This will 
eliminate the need for additional paperwork, avoid miscommunications 
between the factory and the site, and ensure uniformity.
    HUD Response: HUD agrees with the commenters that the date of 
manufacture is the date the label is affixed to a manufactured home at 
the factory, as specified in Sec.  3282.7(h).
17. Can monthly reporting to HUD of on-site production be achieved 
better, such as through the use of individual reports, rather than 
combining the required extra information with the existing production 
report (Form 302) information?
    Comment: One commenter stated that the current AC reporting process 
(quarterly) be applied to this rule. Another commenter stated that any 
new paperwork and related costs under the rule should be minimized to 
the greatest degree possible, consistent with safety. The commenter 
agreed, however, that the existing form be used.
    HUD Response: The final rule has been revised to require an SC 
numeric identification with the monthly 302 production form, in lieu of 
the brief description of the work performed that was indicated in the 
proposed rule. This will provide HUD with the most up-to-date 
information with regard to homes produced for site completion. Under 
the final rule, each IPIA is required to maintain complete inspection 
records of all on-site inspections for at least 5 years.
18. Are there special concerns about the ability of a State PIA to 
conduct out-of-state inspections and about the costs for those State 
PIA inspections that should be addressed in the rule?
    Comment: Some commenters indicated that IPIAs will be challenged to 
perform on-site inspections, especially those conducted out of State. 
These commenters also stated that any such concerns should be addressed 
outside of this rule, either in the regulations relating to State plans 
or as part of the regulations governing the qualification and approval 
of State IPIAs. Other commenters suggested that this issue be left to 
private arrangements between the State IPIA and the manufacturer. These 
commenters stated the IPIA, whether a State or private agency, must 
have the flexibility to select other qualified third-party inspectors 
for any on-site inspections.
    HUD Response: HUD agrees that these arrangements are best addressed 
outside of the rule through private arrangements as suggested by some 
of the commenters. As a result, the final rule provides that the IPIA, 
whether State or private, is responsible for conducting the required 
on-site inspections by using its own inspectors or by independent 
qualified inspectors acceptable to the IPIA as its representative. The 
manufacturer is responsible for coordinating for these required 
inspections by the IPIA.
19. If the inspection requirements for on-site approvals are changed 
from the levels proposed, should the inspection requirements vary 
according to the kind of work involved?
    Comment: Some commenters suggested that inspection requirements 
should be left to the manufacturer designing and the DAPIA approving 
the design, who are the most qualified to determine the appropriate 
inspection levels on-site. Other commenters suggested that changing 
inspection requirements might reduce compliance costs but that it would 
also create confusion, disputes, and need for a more intricate 
inspection system.
    HUD Response: HUD agrees with those commenters that stated that 
multiple inspection requirements would add unnecessary complexity to 
the rule and create confusion for the public. As a result, under the 
final rule, the inspection requirements are the same regardless of the 
type of site construction work that is being completed.
20. Are there any special processing or inspection requirements that 
should be included in a final rule if HUD permits completion on-site of 
multistory and high-slope-roof style homes designed to be located in 
Wind Zones II and III?
    Comment: Commenters stated that special inspection requirements 
have no place in a construction standard and reiterate that inspection 
requirements should be left to the manufacturer and the DAPIA. Other 
commenters stated that there is no evidence that this issue would 
require special processing or inspection requirements.
    HUD Response: There are no provisions in the final rule for the 
DAPIA to require special processing or inspection requirements. At the 
option of the DAPIA, it may determine whether any special processing or 
inspection requirements are needed for site completion of the home. In 
addition, this final rule is not applicable to

[[Page 53721]]

completion of multistory homes and does not apply to attached garages 
as this subject is under current review by the MHCC and is expected to 
be addressed in future rulemaking by HUD.
21. Are there other jurisdictional concerns about the monitoring of the 
work completed on-site being the continuing responsibility of the 
manufacturer's IPIA?
    Comment: A commenter stated that the manufacturer's IPIA must be 
allowed to use alternate, qualified inspectors outside their 
organization.
    HUD Response: Section 3282.607(d) of the final rule allows 
independent, qualified inspectors acceptable to the IPIA to act as its 
representative or designee in making the required inspections.
22. What procedures should be established if an exclusive State IPIA is 
unable to conduct out-of-State inspections on homes approved for 
completion under this new process?
    Comment: Several commenters stated that the manufacturer's IPIA 
must be allowed to use alternate, qualified inspectors outside their 
organization. These commenters stated that if the IPIA is unable or 
unwilling to help select a qualified party for the inspection, the 
manufacturer should be given the authority to select the inspection 
agent.
    HUD Response: Please see HUD's prior responses regarding the use of 
other professionals to conduct inspections on behalf of the IPIA.
23. Should the manufacturer be required to provide a copy of the final 
site inspection report, or any other information about the on-site 
approval, to the SAA of the State in which the home is sited?
    Comment: Several commenters stated that submitting related 
paperwork prior to a consumer complaint should not be necessary and 
that additional paperwork is a barrier to streamlining the process and 
is contrary to HUD's intention in issuing this rule. A commenter also 
stated that SAAs can request service records from the manufacturer when 
they receive a consumer complaint. Other commenters stated that 
additional paperwork would unnecessarily increase costs without 
providing corresponding benefits for consumers.
    HUD Response: In response to these comments, HUD has revised Sec.  
3282.608(m) of the final rule to require the manufacturer to provide a 
copy of the site report to an SAA, upon request.
24. Should the rule extend authority to revoke or amend an approval to 
the SAA in the State where the factory is located, the SAA in the State 
where the home is sited, both, or neither?
    Comment: Commenters stated that SAAs do not need to be involved in 
the SC process, unless, and until, they receive a consumer complaint. 
These commenters stated that the appropriate role of the SAA is to 
address consumer complaints and conduct monitoring as per the current 
procedural enforcement regulations.
    HUD Response: HUD agrees. SAAs are not authorized to revoke or 
amend site construction approvals. Section 3282.609 of the final rule 
provides regulatory remedies if manufacturers fail to comply with the 
provisions of this final rule.
25. Should the final rule limit the on-site installation of all 
appliances except furnaces and water heaters due to problems 
experienced with improper venting and installation of these appliances?
    Comment: Several commenters suggested that the rule only require SC 
for fuel-burning, built-in appliances and be limited to those 
appliances furnished by the manufacturer. The commenters also stated 
that a customer who decides to furnish his own appliances should assume 
responsibility for installing them properly.
    HUD Response: HUD considered these comments and concluded that the 
final rule should continue to allow for the installation of all 
appliances, subject to a final site inspection by the IPIA.
26. Are the manufacturer's inspection responsibilities as outlined in 
Sec.  3282.605(c) sufficiently clear?
    Comment: Several commenters stated that the manufacturer's 
responsibilities are clearly outlined in Sec.  3282.605(c)
    HUD Response: HUD agrees that the manufacturer's responsibilities 
are clearly delineated in the final rule.

C. Comments on Specific Sections of the Regulation

    Comment on Sec.  3282.252(b): One commenter stated that the 
proposed amendment attempts to redefine when the ``completion of the 
entire sales transaction'' occurs and refers to the term ``set-up,'' 
which is not defined in either the Manufactured Home Procedural and 
Enforcement Regulations or this proposed rule.
    HUD Response: HUD appreciates this comment and has changed the term 
``set-up'' to ``installation'' in the final rule to be consistent with 
the terminology used in other parts of the rule.
    Comment on Sec.  3282.603(d): One commenter stated that this 
section would provide that all nine items delineated in paragraphs 
(d)(1) to (d)(9) must be included with each request for approval. 
According to the commenter, this is overly cumbersome. More 
specifically, the commenter recommended that paragraphs (d)(3), (d)(4), 
and (d)(6), be generalized and applicable to the process of SC as a 
whole and not be specific to and for any individual approval.
    HUD Response: HUD does not agree with commenter. All items are 
needed and must be provided to the DAPIA for each site construction 
approval request to ensure that all site work can be completed in 
accordance with the manufacturers' designs, quality control procedures, 
standards, and regulations.
    Comment on Sec.  3282.605(d)(1): A commenter stated that there is 
no time limit for the IPIA to notify the manufacturers of the IPIA's 
final site inspection report.
    HUD Response: HUD has revised Sec.  3282.605(f) of the final rule 
to require the IPIA to notify the manufacturer within 5 business days 
of its acceptance of the manufacturer's final site inspection report.
    Comment on Sec.  605(d)(3)(i) to (iii): One commenter questioned if 
the IPIA must inspect the on-site completed work concurrently with the 
manufacturer, why would the IPIA have to ``formally'' accept or reject 
the inspection report. According to the commenter, waiting for the IPIA 
to issue a written acceptance delays the ability of the owner to move 
in and will inevitably lead to customer dissatisfaction.
    HUD Response: As discussed in response to other comments in this 
preamble, HUD does not believe that issuance of a written acceptance by 
the IPIA will result any additional delays as that currently required 
by the AC procedures. Under the current AC procedures and the on-site 
procedures provided by this final rule, the IPIA must verify that all 
site completion work has been successfully completed by the 
manufacturer.
    Comment on Sec.  3285.801(f): Several commenters expressed concerns 
about moving single-hinged-roof designs from ``installation'' to 
``construction.'' According to the commenters, the proposed rule would 
require that any hinged roof with a ridge box (peak cap) or peak flip 
(second hinge) be included under the on-site completion regime 
established by this final rule and, thereby, subject to inspection by 
the IPIA. They also suggested that this will

[[Page 53722]]

subject nearly every home with a hinged roof to fall under this 
rulemaking and add significant cost to consumers. The commenters urged 
HUD to leave this section unchanged, enabling hinged roofs to be 
regulated by the installation standards.
    HUD Response: The revisions HUD is making to Sec.  3285.801(f) do 
not change current practice used to determine which types of hinged 
roofs are covered by HUD's Model Installation Standards and will only 
extend these requirements to peak cap or peak flip construction for 
roof slopes less than 7:12, as suggested by the commenters, when the 
home is designed to be located in Wind Zone I. Otherwise, the final 
rule does not change the type of hinged roofs considered as 
construction and subject to AC under current procedures.

IV. This Final Rule

    Prior to this rule, HUD reviewed and approved requests for on-site 
completion of construction of manufactured homes under Sec.  3282.14. 
This procedure can be lengthy and, when originally implemented, was not 
intended to address the evolution and sophistication of the current 
modern manufactured housing construction techniques. Manufactured homes 
now include home design features, such as stucco or brick, that cannot 
reasonably be completed in the factory and which are currently being 
completed on-site under the AC process. HUD also recognizes that many 
parts of modern manufactured homes, such as components of smoke alarm, 
heating, ventilation, air conditioning, and plumbing systems, are 
typically shipped loose with the home. It is only when these systems 
are completed that the homes comply with the Construction and Safety 
Standards.
    This final rule establishes simplified, uniform procedures at 24 
CFR part 3282, subpart M, that permit manufacturers to complete the 
construction of manufactured housing on-site, rather than in the 
factory, under certain circumstances, without obtaining advance 
approval from HUD. Under this final rule, HUD's approved DAPIAs and 
IPIAs (collectively known as Primary Inspection Agencies (PIAs) are 
authorized to approve and inspect certain construction for manufactured 
homes designed to be completed on-site. Delegating this responsibility 
to HUD's PIAs is consistent with HUD's policy to expand regulatory 
flexibility, encourage innovation in the construction of manufactured 
homes, and facilitate the timely completion of manufactured homes on-
site.
    As a result of this final rule, manufacturers may now complete the 
home in the factory, in accordance with the Construction and Safety 
Standards and an approved quality assurance manual, or may complete 
work on certain aspects of the home on-site in accordance with 
procedures established by this rule, which bring the home in 
conformance with the Construction and Safety Standards. The designs for 
construction work to be done on-site in accordance with the procedures 
in this final rule are subject to Construction and Safety Standards; 
accordingly, State and local jurisdictions are preempted from 
establishing their own design requirements for these aspects of the 
home, unless the requirements are identical to the Construction and 
Safety Standards. Manufacturers also may continue to seek approval 
through the AC process under the procedures established by Sec.  
3282.14 for construction that does not comply with the Construction and 
Safety Standards.
    The Federal Manufactured Housing program is based upon national 
Construction and Safety Standards that are enforced through the 
manufacturer's quality control systems, in-plant compliance inspections 
by HUD-approved third-party agencies, and performance monitoring of 
those agencies in the plant. Given these conditions, this final rule 
does not permit major portions of a home to be completed beyond the 
plant, as that would avoid the normal inspection and certification 
process, and may frustrate legitimate local and State code enforcement 
efforts. Notwithstanding, Sec.  3282.602 of this final rule lists 
aspects of construction of a manufactured home that may be approved to 
be completed on-site. Examples of the types of work that are not 
considered to involve substantial completion and which cannot be 
reasonably expected to be completed in the factory and to which the 
final rule applies include:
    (a) Completion of roof dormers;
    (b) Addition of stucco, stone, brick, or other siding that is 
subject to damage in transit;
    (c) Retailer changes to the home on-site (such as add-ons subject 
to requirements established by the local authority having 
jurisdiction), when the home is taken out of compliance with the 
Construction and Safety Standards and then is brought back into 
compliance with the Standards. However, this provision does not apply 
to attached garages as this subject is under current review by the MHCC 
and is expected to be addressed in future rulemaking by HUD;
    (d) Any hinged roof that is not considered part of the installation 
of the home (see Sec.  3285.801(f)). Based on the recent 
recommendations of the MHCC and the comments received, the final rule 
now allows peak flip and peak cap construction in which the roof pitch 
of the hinged roof is less than 7:12, when located in Wind Zone I, to 
be deemed part of installation and exempt from IPIA inspection under 
the Regulations;
    (e) Site installed appliances that are listed or certified for use 
in manufactured homes, such as a cooking range, furnace, or water 
heater; and
    (f) Completion of any high-pitch (i.e., roof pitch equals or 
exceeds 7:12) hinged roof construction that conforms to the 
construction and safety standards when finished. Completion of lower-
pitched hinged roofs that are not penetrated above the hinge and are 
designed for Wind Zone I would be considered installation and are not 
covered by this final rule.
    The procedures established by this final rule eliminate much of the 
reporting for site inspections of completed homes previously required 
under the AC process. Under this final rule, the manufacturer is only 
required to report, to HUD or its agent, the State of first location of 
the home, its serial number, and a brief description of the work done 
on-site. This information is to be included on an updated HUD 
Manufactured Home Monthly Production Report (Form 302), which 
manufacturers have in the past used to report to their IPIA and to HUD 
(or their monitoring contractor) certain completion and shipping 
information on labeled units.
    As stated in this preamble, manufacturers may continue to seek 
approval through the AC process, under the procedures established by 
Sec.  3282.14, for construction that does not comply with the 
Construction and Safety Standards. HUD will utilize Sec.  3282.14, as 
originally intended, to encourage innovation and the use of new 
technology that are not in conformance with the Construction and Safety 
Standards. The AC process is limited to specific circumstances and 
requires the manufacturer to submit a formal request to HUD and show 
that the construction it proposes provides performance that is 
equivalent or superior to that required by the Construction and Safety 
Standards. Examples of designs in which the completed home does not 
comply with the Construction and Safety Standards when finished and 
would therefore continue to require an AC approval include:
    (a) Multistory homes that do not comply with the standards because 
of

[[Page 53723]]

distance requirements to reach an exterior door for egress from a 
bedroom or other requirements;
    (b) A home installed without floor insulation over a basement; that 
is, the existence of a basement will not substitute for insulation 
under the construction and safety standards (however, if the floor is 
properly insulated at the factory, it may be installed over a basement 
without having to use either the on-site or AC approval processes); and
    (c) Attached garages, as this subject is under current review by 
the MHCC and is expected to be addressed in future rulemaking by HUD.
    The procedures established by this final rule for on-site 
completion differ from the AC. Initially, this final rule applies to 
homes that can be certified as substantially meeting the requirements 
of the Construction and Safety Standards when labeled in the factory 
and that comply fully with those Standards when completed on-site. In 
addition, the on-site completion procedures established by this rule 
eliminate the direct HUD review and approval currently required under 
the AC process. Rather, this rule requires that manufacturers work 
directly with their DAPIAs and IPIAs to obtain approval to complete 
aspects of construction at the final home site.
    This final rule will encourage the use of innovative designs and 
techniques that will further demonstrate the adaptability and 
versatility of manufactured housing. As manufacturers continue to make 
significant improvements to both the quality and the aesthetics of such 
homes, providing for simplified, uniform procedures that permit 
manufacturers to complete the construction of manufactured housing on-
site, rather than in the factory, will support the increased 
recognition of manufactured homes as a viable source of unsubsidized, 
affordable housing and encourage zoning policies that do not 
discriminate against manufactured housing.

A. Section by Section Discussion of 24 CFR Part 3282, Subpart M, of the 
Final Rule

    1. Purpose and applicability (Sec.  3282.601). Section 3282.601 
establishes a procedure that allows manufacturers to deviate from 
existing completion requirements when an aspect of construction cannot 
reasonably be completed in the manufacturer's production facility. 
Manufacturers may utilize this procedure when all requirements of 
Subpart M are met. Generally, to be applicable a manufactured home must 
be: (1) Substantially completed in the factory; (2) meet the 
requirements of the Construction and Safety Standards upon completion 
of the site work; and (3) inspected by the manufacturer's IPIA, as 
provided in this subpart, unless specifically exempted as installation 
under HUD's Model Installation Standards, 24 CFR part 3285. These 
special procedures would be available only when the manufacturer, its 
DAPIA, and its IPIA agree to follow them, and can only be used if all 
affected homes are substantially completed in the factory, as defined.
    2. Qualifying construction (Sec.  3282.602). Section 3282.602 
describes those aspects of the construction of a manufactured home that 
may be completed on-site, under the Construction and Safety Standards, 
in accordance with the requirements of this subpart. Generally, the on-
site approval process is available for work to complete a partial 
structural assembly or system that cannot reasonably be done in the 
factory. The reasons for this difficulty may result, for example, from 
transportation limitations, design requirements, or delivery of an 
appliance ordered by a homeowner. This final rule clarifies when work 
on certain hinged roofs can be completed under the installation 
standards, rather than through the on-site process under the 
Construction and Safety Standards.
    3. Request for approval; DAPIA approval (Sec.  3282.603). Under 
this final rule, the manufacturer must request and obtain DAPIA 
approval to complete, on-site, the final, limited aspects of 
construction of a manufactured home that would be substantially 
completed in the factory (i.e., the home leaving the factory must 
include: (1) A complete chassis; and (2) structural assemblies and 
plumbing, heating, and air conditioning systems that are complete 
except for limited construction that cannot reasonably be completed in 
the manufacturer's production facility and that the DAPIA has approved 
for completion on-site). Among other things, in the approval, the DAPIA 
will identify what work will be completed on-site through use of a 
unique site completion numeric identification for each manufacturer and 
will authorize a notice that includes a description of this work, 
identify instructions authorized for completing the work on-site 
(including any special conditions and requirements), and list all 
models for which the DAPIA approval is applicable.\1\ As part of its 
approval, the DAPIA will stamp or sign each page of any set of designs 
accepted for completion on-site, and will include an ``SC'' designation 
on each page that includes an element of construction that is to be 
completed on-site.
---------------------------------------------------------------------------

    \1\ As with the AC process, an approval for on-site completion 
may be made more flexible when the DAPIA and manufacturer agree that 
the approval is not model-specific, but may be extended to 
additional models. See Sec.  3282.14(c)(3).
---------------------------------------------------------------------------

    In addition, the DAPIA must approve the part of the manufacturer's 
written quality assurance manual that is applicable to completing the 
manufactured homes on-site under the Construction and Safety Standards. 
When the part of the quality assurance manual applicable to the on-site 
completion also has received the concurrence of the IPIA, the system 
may be approved as part of the manufacturer's quality assurance manual. 
If this approval is not done as part of the initial approval of the 
entire quality assurance manual, the pertinent part of the 
manufacturer's manual will be deemed a change to be incorporated into 
the manual in accordance with established procedures (see Sec. Sec.  
3282.203(e) and 3282.361(c)(4)). The approval will also include other 
requirements, such as a quality control checklist to verify that all 
required components, materials, labels, and instructions needed for 
site completion are provided by the manufacturer and an inspection 
checklist, developed by the manufacturer and approved by the DAPIA, to 
be used in the manufacturer's and IPIA's final inspections. As with the 
procedures followed under an approval for AC, the manufacturer's IPIA 
is responsible for ensuring that the homes the IPIA inspects under the 
new procedures comply with the changes in the quality assurance manual, 
as provided in Sec.  3282.362(a) of the existing regulations, and with 
the approved design or, where the design is not specific, to the 
Construction and Safety Standards.
    4. DAPIA responsibilities (Sec.  3282.604). In addition to the 
DAPIA's regular duties under Sec.  3282.361, this section provides that 
the DAPIA is also responsible for:
    (a) Verifying that the manufacturer submits all required 
information, when a manufacturer seeks a DAPIA's approval to complete 
any aspect of construction on-site under Sec.  3282.603;
    (b) Reviewing and approving the manufacturer's designs, site 
completion instructions, and quality assurance manuals for the site 
work that is to be performed;
    (c) Determining whether there are any other requirements or 
limitations deemed necessary or appropriate; and

[[Page 53724]]

    (d) Revoking or amending its approval for on-site construction, as 
provided in Sec.  3282.609, after determining that the manufacturer is: 
(1) Not complying with the terms of the approval or the requirements of 
Sec.  3282.610; (2) the approval was not issued in conformance with the 
requirements of Sec.  3282.603; (3) a home produced under the approval 
fails to comply with the Federal construction and safety standards or 
contains an imminent safety hazard; or (4) the manufacturer failed to 
make arrangements for one or more manufactured homes to be inspected by 
the IPIA prior to occupancy. Upon revocation or amendment of a DAPIA 
approval, the DAPIA must immediately notify the manufacturer, the IPIA, 
and HUD.
    5. Requirements applicable to completion of construction (Sec.  
3282.605). After an acceptable final inspection of work completed on-
site, the manufacturer must report to HUD or its agent the serial 
number and a brief description of the work done on-site for each home 
produced under these procedures. This report must be consistent with 
the DAPIA approval and is to be submitted, in part, on the updated 
production Form 302. A copy of this report also must be submitted to 
the SAAs of the States where the home is substantially completed in the 
factory and where the home is sited, upon request. The serial numbers 
as provided by the manufacturer must contain the prefix or suffix 
``SC,'' for site construction.
    Based on the comments received, the final rule does not require a 
unique on-site completion label as indicated in the proposed rule, but 
instead requires that homes or sections of such homes have a label 
affixed in accordance with Sec.  3282.362(c)(2) and be shipped with a 
Consumer Information Notice that meets the requirements of Sec.  
3282.606. Approved designs for completion of aspects of construction 
outside of the manufacturer's plant must be marked with the 
identification code for the appropriate approved set of designs, and 
must be included as a separate part of the manufacturer's approved 
design package. All aspects of construction that are completed on the 
final home site remain the responsibility of the manufacturer, which 
must ensure that the home is properly labeled and, as part of its final 
on-site inspection report provided to the IPIA, certify that the work 
is consistent with DAPIA-approved instructions and conforms with 
approved designs or, as appropriate under Sec.  3282.362(a)(1)(iii), 
conforms to the Construction and Safety Standards. The IPIA is required 
to review all of the manufacturer's final on-site inspection reports 
and to inspect all on-site work completed pursuant to an approval under 
this new process. If the IPIA determines that the manufacturer is not 
performing adequately in conformance with the approval, the IPIA may 
require reinspections, until it is satisfied that the manufacturer is 
conforming to the conditions included in the approval. Based on public 
comments HUD has revised Sec.  3282.605(d)(4) to require that the 
manufacturer provide the purchaser or lessor a copy of the final site 
inspection report within 5 business days of the IPIA's notification of 
its acceptance of the report.
    6. Consumer information (Sec.  3282.606). In addition to the on-
site completion certification label, this section requires that the 
home must be shipped with a ``NOTICE'' that explains that the home will 
comply with the requirements of the Construction and Safety Standards 
only after all of the limited on-site work has been completed in 
accordance with detailed instructions provided by the manufacturer, and 
the home has been inspected. The ``NOTICE'' is to be displayed in a 
prominent and highly visible location within the home (e.g., a kitchen 
countertop or front door), and include information instructions for 
those aspects of construction to be completed on-site and provided with 
the home. The notice may only be removed after the final inspection 
report is completed and the purchaser or lessor is provided with a copy 
of the report.
    The sale or lease of the manufactured home to the purchaser will 
not be considered complete (see Sec.  3282.252(b)) until the purchaser 
has been provided with a copy of the manufacturer's final site 
inspection report, including the certification of completion that has 
been reviewed and accepted by the IPIA. However, HUD does not intend 
that failure to provide this report within 5 days of the date of the 
IPIA's notification will constitute a breach of contract. The 
manufacturer must maintain in its labeling records an indication that 
the final on-site inspection report and certification of completion has 
been provided to the purchaser and the retailer.
    7. Responsibilities of the IPIA (Sec.  3282.607). The 
responsibilities of the IPIA include, in addition to the IPIA's regular 
duties under Sec.  3282.362:
    (a) Working with the manufacturer and the manufacturer's DAPIA to 
ensure that the manufacturer's quality control system has the proper 
procedures and controls to assure that the on-site construction work 
will conform to DAPIA-approved designs and HUD's construction and 
safety standards;
    (b) Providing the certification labels that the manufacturer may 
use to label a home that has been substantially completed in the 
factory;
    (c) Monitoring the manufacturer's system for tracking the status of 
homes built under the approval until the on-site work and necessary 
inspections have been completed, to assure that the work is being 
performed properly on all applicable homes;
    (d) Performing the required inspections of the manufacturer's 
reports and site work, to verify compliance with the manufacturer's 
quality control system, the approved designs, and, as appropriate, the 
Construction and Safety Standards. Only the IPIA, or other qualified 
independent inspector acceptable to and acting on behalf of the IPIA, 
may perform these inspections. The inspector must be free of any 
conflict of interest (see Sec.  3282.359) and not be involved in the 
sale or site completion of the home; and
    (e) Maintaining a copy of each final site inspection report 
submitted by a manufacturer and each inspection report prepared or 
accepted by the IPIA, and reporting to HUD, the DAPIA, and manufacturer 
if one or more manufactured homes has not been site inspected prior to 
occupancy or if arrangements have not been made to site inspect one or 
more manufactured homes.
    8. Manufacturer's responsibilities (Sec.  3282.608). The 
manufacturer's responsibilities include:
    (a) Certifying the completed home is constructed in conformance 
with the Federal Manufactured Home Construction and Safety Standards, 
as indicated on the label, in Sec.  3282.362(c)(2) of the Manufactured 
Home Procedural and Enforcement Regulations;
    (b) Completing all work performed on a home that is necessary to 
assure compliance with the Construction and Safety Standards, 
regardless of who does the work or where it is completed. Such 
responsibility would not extend to any limited close-up work for 
multiple-section homes, as defined as installation work in the model 
installation standards;
    (c) Working with the DAPIA and IPIA to obtain approval and 
concurrence on the quality control system the manufacturer will use to 
assure that the on-site work is performed according to DAPIA-approved 
designs, and to incorporate this system into the manufacturer's quality 
assurance manual;

[[Page 53725]]

    (d) Working with the DAPIA to develop an approved checklist, 
providing the IPIA with the checklist to be used when the IPIA inspects 
the home after completion on-site, and notifying the IPIA that the home 
is ready to be inspected;
    (e) Maintaining a system for tracking the status of homes built 
under the approval, to ensure that each home installed on a building 
lot has the on-site work and necessary inspections completed;
    (f) Paying IPIA costs for performing on-site inspections;
    (g) Providing inside the home and to the IPIA, a copy of the 
instructions for completing the work on-site, for monitoring/inspection 
purposes (the copy provided in the home may be provided with the 
installation instructions in the home). Either before, or at the time 
on-site work commences, the manufacturer must provide the IPIA with a 
copy of any applicable, DAPIA-approved quality assurance manual for on-
site completion changes; the approved instructions for completing the 
construction work on-site; and the approved inspection checklist;
    (h) Satisfactory completion of all on-site work construction and 
required repairs or authorizing a licensed contractor or similarly 
qualified person to complete all site inspection and repairs.
    (i) Providing a copy of the final site inspection report and 
certificate of completion to the IPIA; first purchaser or lessor of the 
home, prior to occupancy; to the appropriate retailer, and to the SAA 
upon request;
    (j) Maintaining a copy of the site inspection report and the 
notification of the IPIA's approval or acceptance of this report;
    (k) Notifying the appropriate State or local jurisdiction of any 
add-on to the home, as referenced in Sec.  3282.8(j), that is not 
covered by the manufacturer's inspection and certification of 
completion, but about which the manufacturer knows or reasonably should 
have known. The manufacturer is not required to provide this 
notification if the manufacturer knows that the State or local 
jurisdiction has already inspected the add-on; and
    (l) Providing cumulative quarterly production inspection reports to 
HUD or its agent.
    9. Enforcement (Sec. Sec.  3282.609, 3282.610, and 3282.611). A 
manufacturer or IPIA found to be in violation of the requirements for 
this procedure may lose the discretion to utilize the on-site 
completion procedure in the future. HUD or the DAPIA also may withdraw 
or amend an approval for on-site construction if the manufacturer does 
not comply with the requirements for the approval or produces a home 
that does not comply with the Federal Construction and Safety 
Standards. Other remedies provided separately under the Act and HUD's 
regulations will also continue to be available, as applicable, but HUD 
would consider a manufacturer or IPIA that complies with the 
requirements for on-site completion to be in compliance with the 
certification requirements of the Act and regulations for aspects of 
construction that are covered by the on-site completion approval.

B. Conforming Changes

    This final rule includes conforming changes to 24 CFR part 3280. 
Initially, HUD is revising Sec.  3280.5 to require that the 
manufacturer's data plate contain information, if applicable, stating 
that, except for the components completed on-site, the home has been 
substantially completed in accordance with an approved design and has 
been inspected in accordance with the Construction and Safety 
Standards.
    In addition, and as discussed in the preamble of the proposed rule, 
HUD is revising the structural design requirements in Sec.  3280.305 
for attic areas with high- or low-pitched roofs. As discussed in the 
preamble of the June 23, 2010, proposed rule, HUD stated that this rule 
as proposed would apply to the completion of any high-pitched (i.e., 
the roof pitch equals or exceeds 7:12), hinged roof construction that 
conforms to the Construction and Safety Standards when finished. HUD 
sought public comment on whether different treatment for high-pitched 
roofs was needed since a portion of the attic would meet the ceiling-
height/living-spaces requirements of the Construction and Safety 
Standards and, as such, would require the attic floor to be designed 
for floor live loads of 40 pounds per square inch. In response to this 
request, most commenters stated that extending on-site completion to 
certain installation work, such as a hinged roof, would be appropriate 
since this work is done under the guidance of the manufacturer. Another 
commenter stated that HUD should not allow the inspection of certain 
roof pitches to be under the installation standards, while requiring 
inspection of others under the provisions of the on-site construction 
rule. No commenter addressed whether HUD should conform the 
Construction and Safety Standards for high-pitched roofs that create 
attic space to be designed to resist a minimum design live load of 40 
pounds per square foot, in accordance with 3280.305(g) of the 
standards, the design standard for floors, or that roofs with slopes of 
less than 7:12 that contain an attic area for storage be required to be 
designed for a storage live load of 20 pounds per square foot. As a 
result, as provided in the June 23, 2010, proposed rule, HUD is 
conforming the Construction and Safety Standards to address these 
elements of the home that results when the roof is raised via 
construction on-site in this final rule.
    The final rule includes conforming changes to three other sections 
of 24 CFR part 3282. A conforming amendment is made to Sec.  3282.252 
(b) to change the term ``dealer'' to ``retailer.'' HUD is also 
conforming this section to this final rule by providing that the sale 
is complete upon delivery to the site, except that sales under this 
final rule will not be considered complete until the purchaser or 
lessor has been provided with a final site inspection report. A 
conforming amendment is also made to Sec.  3282.552 to specify the 
information that is included on the reports currently submitted under 
24 CFR part 3282. Finally, HUD is also using this rulemaking to make a 
technical correction to the heading of Sec.  3282.8(a), which would be 
updated from ``mobile homes'' to ``manufactured homes''.

V. Findings and Certifications

Executive Order 12866 and Executive Order 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if the 
regulation is necessary, to select the regulatory approach that 
maximizes net benefits. Because this final rule allows manufactured 
housing manufacturers to complete construction of certain homes at the 
installation site without seeking advance approval from HUD, and 
thereby eliminating costly processing and construction delays, the rule 
was determined to not be a significant regulatory action under section 
3(f) of Executive Order 12866, Regulatory Planning and Review, and 
therefore was not reviewed by the Office of Management and Budget 
(OMB).
    This final rule establishes simplified, uniform procedures at 24 
CFR part 3282, subpart M, that permit manufacturers to complete the 
construction of manufactured housing on-site, rather than in the 
factory, under certain circumstances, without obtaining advanced 
approval from HUD. Given the objective of the Federal Manufactured 
Housing program, this final rule does not permit major

[[Page 53726]]

portions of a home to be completed beyond the plant, as that would 
avoid the normal inspection and certification process, and may 
frustrate legitimate local and State code enforcement efforts. 
Notwithstanding, this final rule lists numerous aspects of construction 
of a manufactured home that may be approved to be completed on-site.
    This final rule will encourage the use of innovative designs and 
techniques that will further demonstrate the adaptability and 
versatility of manufactured housing and eliminate the need for 
manufactures to apply for advance approval to complete construction of 
a manufactured home on-site. Easing the process for on-site 
construction of manufactured homes supports achievement of the goal of 
widely available safe, durable, and affordable manufactured housing.

Paperwork Reduction Act

    This final rule contains provisions that are subject to review by 
the OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520). As required by the Paperwork Reduction Act, HUD published a 
description of these provisions, with estimates of annual reporting, 
recordkeeping, and notice requirements, on June 15, 2015, at 80 FR 
34165. Interested persons are encouraged to review and provide comment 
on HUD's proposed information collection. The 180-day delayed effective 
date for this rule will provide HUD the opportunity to complete the 
approval process for this final rule prior to its effective date. In 
accordance with the Paperwork Reduction Act, an agency 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.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) 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 governments 
or the private sector within the meaning of UMRA.

Environmental Review

    A Finding of No Significant Impact (FONSI) with respect to the 
environment was approved 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 FONSI is available for public inspection between the hours of 8 
a.m. and 5 p.m., weekdays, in the Regulations Division, Office of 
General Counsel, Department of Housing and Urban Development, 451 7th 
Street SW., Room 10276, Washington, DC 20410-0500. Due to security 
measures at the HUD headquarters building, please schedule an 
appointment to review the FONSI 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 through TTY by calling 
the Federal Information Relay Service at 800-877-8339 (this is a toll-
free 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. 
It is HUD's position that this final rule does not have a significant 
economic impact on a substantial number of small entities. HUD and MHCC 
have recognized the benefit of maximizing opportunities for housing 
manufacturers to complete construction of some homes at the 
installation site without seeking advance approval from HUD. This final 
rule promotes this shared goal. The manufactured housing industry is 
rapidly expanding its offerings, and the inclusion of new design 
elements is viewed as key to the growth of this industry. On-site 
installation of innovative design elements will improve the aesthetic 
quality and overall attractiveness of the manufactured housing product, 
increasing the appeal of these homes to the public and improving cost 
effectiveness for the manufacturers, by allowing them to complete these 
structures at the construction site by installing these features there.
    This rule also alleviates burden for all manufacturers, large and 
small, because it makes tangible streamlined improvements to the system 
regulating on-site construction of manufactured homes. This rule 
establishes procedures whereby manufacturers could complete 
construction of new manufactured housing on-site without being required 
to apply for HUD approval for on-site construction. This rule would 
apply only to work done to complete the manufacturing process required 
by the Manufactured Home Construction and Safety Standards. It would 
not affect the installation of homes subject to the model Manufactured 
Home Installation Standards, or apply in instances where a major 
portion of the home is to be constructed on site. In addition, this 
rule applies only to a subset of the total number of manufactured 
housing manufacturers--those that decide to incorporate the new design 
elements into their products. It is not a requirement that all 
manufacturers do so.
    Finally, this final rule will have a beneficial effect by reducing 
the paperwork burden and costs of construction delays for all housing 
manufacturers, large or small. These manufacturers will no longer be 
required to apply repeatedly for variances regarding on-site 
construction utilizing design elements and innovations that are 
expected to become commonplace over time. Easing the process for on-
site construction of manufactured homes supports achievement of the 
goal of widely available safe, durable, and affordable manufactured 
housing.
    Accordingly, the undersigned certifies that this rule would not 
have a significant economic impact on a substantial number of small 
entities.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on State and local 
governments and is not required by statute or the rule preempts State 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive order. This final rule does not have 
federalism implications and would not impose substantial direct 
compliance costs on State and local governments or preempt State law 
within the meaning of the Executive order.

List of Subjects

24 CFR Part 3280

    Fire prevention, Housing standards.

24 CFR Part 3282

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

24 CFR Part 3285

    Housing standards, Incorporation by reference, Installation, 
Manufactured homes.

[[Page 53727]]

    Accordingly, for the reasons discussed in this preamble, HUD amends 
24 CFR parts 3280, 3284 and 3285 as follows:

PART 3280--MANUFACTURED HOME CONSTRUCTION AND SAFETY STANDARDS

0
1. The authority citation for parts 3280 continues to read as follows:

    Authority: 42 U.S.C. 3535(d), 5403, and 5424.


0
2. In 3280.5, revise paragraph (c) to read as follows:


Sec.  3280.5  Data plate.

* * * * *
    (c) The applicable statement:
    This manufactured home is designed to comply with the Federal 
Manufactured Home Construction and Safety Standards in force at the 
time of manufacture.or
    This manufactured home has been substantially completed in 
accordance with an approved design and has been inspected (except for 
the components specifically identified in the instructions for 
completion on-site) in accordance with the Federal Manufactured Home 
Construction and Safety Standards and the requirements of the 
Department of Housing and Urban Development (HUD) in effect on the date 
of manufacture.
* * * * *

0
3. In 3280.305 add paragraph (k) to read as follows:


Sec.  3280.305  Structural design requirements.

* * * * *
    (k) Attics. (1) For roofs with slopes 7:12 or greater, the area of 
the attic floor that meets the ceiling-height/living-space requirements 
of these construction and safety standards must be designed to resist a 
minimum design live load of 40 pounds per square foot (psf) in 
accordance with paragraph (g) of this section.
    (2) For roofs with slopes less than 7:12 that contain an attic area 
or for portions of roofs with slopes 7:12 or greater that do meet the 
ceiling height/living space requirements of the standards, the attic 
floor must be designed for a storage live load of 20 pounds per square 
foot (psf).

PART 3282--MANUFACTURED HOME PROCEDURAL AND ENFORCEMENT REGULATIONS

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

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

0
5. In Sec.  3282.7, redesignate paragraph (kk) as paragraph (ll) and 
add new paragraph (kk) to read as follows:


Sec.  3282.7  Definitions.

* * * * *
    (kk) Substantial completion. A manufactured home is substantially 
completed if all aspects of construction that can be finished in the 
manufacturer's plant are completed, except as provided in Sec.  
3282.603.
* * * * *

0
6. In Sec.  3282.8, revise the heading to paragraph (a) read as 
follows:


Sec.  3282.8  Applicability.

    (a) Manufactured homes.
* * * * *

0
7. In Sec.  3282.203, add a sentence at the end of paragraph (e) to 
read as follows:


Sec.  3282.203  DAPIA services.

* * * * *
    (e) * * * When applicable under Sec.  3282.605, the IPIA must 
concur in the change before it can be approved by the DAPIA.
* * * * *

0
8. In Sec.  3282.252, revise paragraph (b) to read as follows:


Sec.  3282.252  Prohibition of sale.

* * * * *
    (b) This prohibition applies to any affected manufactured homes 
until the completion of the entire sales transaction. A sales 
transaction with a purchaser is considered completed when all the goods 
and services that the retailer agreed to provide at the time the 
contract was entered into have been provided. Completion of a retail 
sale will be at the time the retailer completes installation of the 
manufactured home, if the retailer has agreed to provide the 
installation, or at the time the retailer delivers the home to a 
transporter, if the retailer has not agreed to transport or install the 
manufactured home. The sale is also complete upon delivery to the site 
if the retailer has not agreed to provide installation as completion of 
sale, except that any sale or lease under subpart M and as provided in 
Sec.  3286.117(a) will not be considered complete until the purchaser 
or lessor, as applicable, has been provided with a final site 
inspection report.
* * * * *

0
9. In Sec.  3282.361, revise the first sentence of paragraph (c)(4) to 
read as follows:


Sec.  3282.361  Design Approval Primary Inspection Agency (DAPIA).

* * * * *
    (c) * * *
    (4) Manual change approval. Each change the manufacturer wishes to 
make in its quality assurance manual must be approved by the DAPIA, 
and, when subject to Sec.  3282.604, concurred in by the IPIA. * * *
* * * * *

0
10. Amend Sec.  3282.362 by adding paragraph (d)(5), to read as 
follows:


Sec.  3282.362  Production Inspection Primary Inspection Agencies 
(IPIAs).

* * * * *
    (d) * * *
    (5) Records of all site inspections made as required under 
procedures applicable to approval of AC or on-site completion pursuant 
to Sec. Sec.  3282.14 or 3282.610.
* * * * *

0
11. Revise Sec.  3282.552 to read as follows:


Sec.  3282.552  Manufacturer reports for joint monitoring fees.

    The manufacturer must submit to the IPIA in each of its 
manufacturing plants, and to HUD or to the Secretary's agent, a monthly 
production report that includes the serial numbers of each manufactured 
home manufactured and labeled at that plant during the preceding month. 
The report must also include the date of manufacture, State of first 
location of these manufactured homes after leaving the plant, type of 
unit, and any other information required under this part. For all homes 
to be completed pursuant to subpart M of these regulations, the 
production report must also include a brief description of the work to 
be completed on site. The State of first location is the State of the 
premises of the retailer or purchaser to whom the manufactured home is 
first shipped. The monthly report must be submitted by the 10th day of 
each month and contain information describing the manufacturer's 
previous month's activities. The manufacturer is encouraged to submit 
the report electronically, when feasible.

0
12. Add a new subpart M to read as follows:

Subpart M--On-Site Completion of Construction of Manufactured Homes

Sec.
3282.601 Purpose and applicability.
3282.602 Construction qualifying for on-site completion.
3282.603 Request for approval; DAPIA review, notification, and 
approval.
3282.604 DAPIA responsibilities.
3282.605 Requirements applicable to completion of construction.
3282.606 Consumer information.
3282.607 IPIA responsibilities.
3282.608 Manufacturer responsibilities.

[[Page 53728]]

3282.609 Revocation or amendment of DAPIA approval.
3282.610 Failure to comply with the procedures of this subpart.
3282.611 Compliance with this subpart.


Sec.  3282.601  Purpose and applicability.

    (a) Purpose of section. Under HUD oversight, this section 
establishes the procedure for limited on-site completion of some 
aspects of construction that cannot be completed at the factory.
    (b) Applicability. This section may be applied when all 
requirements of this subpart are met. To be applicable a manufactured 
home must:
    (1) Be substantially completed in the factory;
    (2) Meet the requirements of the Construction and Safety Standards 
upon completion of the site work; and
    (3) Be inspected by the manufacturer's IPIA as provided in this 
subpart, unless specifically exempted as installation under HUD's Model 
Installation Standards, 24 CFR part 3285. This subpart does not apply 
to Alternative Construction (see Sec.  3282.14) that does not comply 
with the Manufactured Home Construction and Safety Standards.


Sec.  3282.602  Construction qualifying for on-site completion.

    (a) The manufacturer, the manufacturer's DAPIA acting on behalf of 
HUD, and the manufacturer's IPIA acting on behalf of HUD may agree to 
permit certain aspects of construction of a manufactured home to be 
completed to the Construction and Safety Standards on-site in 
accordance with the requirements of this subpart. The aspects of 
construction that may be approved to be completed on-site are the 
partial completion of structural assemblies or systems (e.g., 
electrical, plumbing, heating, cooling, fuel burning, and fire safety 
systems) and components built as an integral part of the home, when the 
partial completion on-site is warranted because completion of the 
partial structural assembly or system during the manufacturing process 
in the factory would not be practicable (e.g., because of the home 
design or which could result in transportation damage or if precluded 
because of road restrictions). Examples of construction that may be 
completed on-site include:
    (1) Hinged roof and eave construction, unless exempted as 
installation by Sec.  3285.801(f) of the Model Manufactured Home 
Installation Standards and completed and inspected in accordance with 
the Manufactured Home Installation Program;
    (2) Any work required by the home design that cannot be completed 
in the factory, or when the manufacturer authorizes the retailer to 
provide an add-on, not including an attached garage, to the home during 
installation, when that work would take the home out of conformance 
with the construction and safety standards and then bring it back into 
conformance;
    (3) Appliances provided by the manufacturer, installer, retailer, 
or purchaser, including fireplaces to be installed on site;
    (4) Components or parts that are shipped loose with the 
manufactured home and that will be installed on-site, unless exempted 
as installation by the installation standards;
    (5) Exterior applications such as brick siding, stucco, or tile 
roof systems; and
    (6) Other construction such as roof extensions (dormers), site-
installed windows in roofs, removable or open floor sections for 
basement stairs, and sidewall bay windows.
    (b) The manufacturer or a licensed contractor or similarly 
qualified professional with prior authorization from the manufacturer 
may perform the on-site work in accordance with the DAPIA approvals and 
site completion instructions. However, the manufacturer is responsible 
for the adequacy of all on-site completion work regardless of who does 
the work, and must prepare and provide all site inspection reports, as 
well as the certification of completion, and must fulfill all of its 
responsibilities and maintain all records at the factory of origin as 
required by Sec.  3282.609.


Sec.  3282.603  Request for approval; DAPIA review, notification, and 
approval.

    (a) Manufacturer's request for approval. The manufacturer must 
request, in writing, and obtain approval of its DAPIA for any aspect of 
construction that is to be completed on-site under this subpart. The 
manufacturer, its IPIA, and its DAPIA must work together to reach 
agreements necessary to enable the request to be reviewed and approved.
    (b) DAPIA notification. The DAPIA, acting on behalf of HUD, must 
notify the manufacturer of the results of the DAPIA's review of the 
manufacturer's request, and must retain a copy of the notification in 
the DAPIA's records. The DAPIA shall also forward a copy of the 
approval to HUD or the Secretary's agent as provided under Sec.  
3282.361(a)(4). The notification must either:
    (1) Approve the request if it is consistent with this section and 
the objectives of the Act; or
    (2) Deny the proposed on-site completion and set out the reasons 
for the denial.
    (c) Manner of DAPIA approval. Notification of DAPIA approval must 
include, by incorporation or by listing, the information required by 
paragraph (d) of this section, and must be indicated by the DAPIA 
placing its stamp of approval or authorized signature on each page of 
the manufacturer's designs submitted with its request for approval. The 
DAPIA must include an ``SC'' designation on each page that includes an 
element of construction that is to be completed on-site and must 
include those pages as part of the approved design package.
    (d) Contents of DAPIA approval. Any approval by the DAPIA under 
this section must:
    (1) Include a unique site completion numeric identification for 
each approval for each manufacturer (i.e., manufacturer name or 
abbreviation, SC-XX);
    (2) Identify the work to be completed on-site;
    (3) List all models to which the approval applies, or indicate that 
the approval is not model-specific;
    (4) Include acceptance by the DAPIA of a quality assurance manual 
for on-site completion meeting the requirements of paragraph (e) of 
this section;
    (5) Include the IPIA's written agreement to accept responsibility 
for completion of the necessary on-site inspections and accompanying 
records;
    (6) Identify instructions authorized for completing the work on-
site that meet the requirements of paragraph (f) of this section;
    (7) Include the manufacturer's system for tracking the status of 
homes built under the approval until the on-site work and necessary 
inspections have been completed, to assure that the work is being 
performed properly;
    (8) Include a quality control checklist to be used by the 
manufacturer and IPIA and approved by the DAPIA to verify that all 
required components, materials, labels, and instructions needed for 
site completion are provided in each home prior to shipment;
    (9) Include an inspection checklist developed by the IPIA and 
manufacturer and approved by the DAPIA, that is to be used by the final 
site inspectors;
    (10) Include a Consumer Information Notice developed by the 
manufacturer and approved by the DAPIA that explains the on-site 
completion process and identifies the work to be completed on-site; and
    (11) Include any other requirements and limitations that the DAPIA 
deems

[[Page 53729]]

necessary or appropriate to accomplish the purposes of the Act.
    (e) Quality assurance manual for on-site completion requirements. 
The portion of the quality assurance manual for on-site completion 
required by paragraph (d)(3) of this section must receive the written 
concurrence of the manufacturer's IPIA with regard to its acceptability 
and applicability to the on-site completion of the affected 
manufactured homes. It must include a commitment by the manufacturer to 
prepare a final site inspection report that will be submitted to the 
IPIA for its review. When appropriate, this portion of the quality 
assurance manual for on-site completion will be deemed a change in the 
manufacturer's quality assurance manual for the applicable models, in 
accordance with Sec. Sec.  3282.203 and 3282.361.
    (f) Instructions for completion on-site. The DAPIA must include 
instructions authorized for completing the work on-site as a separate 
part of the manufacturer's approved design package. The manufacturer 
must provide a copy of these instructions and the inspection checklist 
required by paragraph (d)(9) of this section to the IPIA for monitoring 
and inspection purposes.


Sec.  3282.604  DAPIA responsibilities.

    The DAPIA, acting on behalf of HUD, for any manufacturer proceeding 
under this section is responsible for:
    (a) Verifying that all information required by Sec.  3282.603 has 
been submitted by the manufacturer;
    (b) Reviewing and approving the manufacturer's designs, quality 
control checklist, site inspection checklist, site completion 
instructions, and quality assurance manuals for site work to be 
performed;
    (c) Maintaining all records and approvals for at least 5 years;
    (d) Revoking or amending its approvals in accordance with Sec.  
3282.609; and
    (e) Reviewing its approvals under this section at least every 3 
years or more frequently if there are changes made to the Manufactured 
Home Construction and Safety Standards, 24 CFR part 3280, to verify 
continued compliance with the Standards.


Sec.  3282.605  Requirements applicable to completion of construction.

    (a) Serial numbers of homes completed on-site. The serial number of 
each home completed in conformance with this section must include the 
prefix or suffix ``SC''.
    (b) Labeling. A manufacturer that has received a DAPIA approval 
under Sec.  3282.604 may certify and label a manufactured home that is 
substantially completed in the manufacturer's plant at the proper 
completion of the in-plant production phase, even though some aspects 
of construction will be completed on-site in accordance with the 
DAPIA's approval. Any such homes or sections of such homes must have a 
label affixed in accordance with Sec.  3282.362(c)(2) and be shipped 
with a Consumer Information Notice that meets the requirements of Sec.  
3282.606.
    (c) Site inspection. Prior to occupancy, the manufacturer must 
ensure that each home is inspected on-site. The manufacturer is 
responsible for inspecting all aspects of construction that are 
completed on-site as provided in its approved designs and quality 
assurance manual for on-site completion.
    (d) Site inspection report. (1) In preparing the site inspection 
report, the manufacturer must use the inspection checklist approved by 
the DAPIA in accordance with Sec.  3282.603(d)(9), and must prepare a 
final site inspection report and provide a copy to the IPIA within 5 
business days of completing the report. Within 5 business days after 
the date that the IPIA notifies the manufacturer of the IPIA's approval 
of the final site inspection report, the manufacturer must provide a 
copy of the approved report to the lessor or purchaser prior to 
occupancy and, as applicable, the appropriate retailer and any person 
or entity other than the manufacturer that performed the on-site 
construction work.
    (2) Each approved final site inspection report must include:
    (i) The name and address of the manufacturer;
    (ii) The serial number of the manufactured home;
    (iii) The address of the home site;
    (iv) The name of the person and/or agency responsible for the 
manufacturer's final site inspection;
    (v) The name of each person and/or agency who performs on-site 
inspections on behalf of the IPIA, the name of the person responsible 
for acceptance of the manufacturer's final on-site inspection report on 
behalf of the IPIA, and the IPIA's name, mailing address, and telephone 
number;
    (vi) A description of the work performed on-site and the 
inspections made;
    (vii) When applicable, verification that any problems noted during 
inspections have been corrected prior to certification of compliance; 
and
    (viii) Certification by the manufacturer of completion in 
accordance with the DAPIA-approved instructions and that the home 
conforms with the approved design or, as appropriate under Sec.  
3282.362(a)(1)(iii), the construction and safety standards.
    (3) The IPIA must review each manufacturer's final on-site 
inspection report and determine whether to accept that inspection 
report.
    (i) Concurrent with the manufacturer's final site inspection, the 
IPIA or the IPIA's agent must inspect all of the on-site work for homes 
completed using an approval under this section. The IPIA must use the 
inspection checklist approved by the DAPIA in accordance with Sec.  
3282.603(d)(9).
    (ii) If the IPIA determines that the manufacturer is not performing 
adequately in conformance with the approval, the IPIA must redtag and 
reinspect until it is satisfied that the manufacturer is conforming to 
the conditions included in the approval. The home may not be occupied 
until the manufacturer and the IPIA have provided reports, required by 
this section, confirming compliance with the Construction and Safety 
Standards.
    (iii) The IPIA must notify the manufacturer of the IPIA's 
acceptance of the manufacturer's final site inspection report. The IPIA 
may indicate acceptance by issuing its own final site inspection report 
or by indicating, in writing, its acceptance of the manufacturer's site 
inspection report showing that the work completed on-site is in 
compliance with the DAPIA approval and the Construction and Safety 
Standards.
    (4) Within 5 business days of the date of IPIA's notification to 
the manufacturer of the acceptance of its final site inspection report, 
the manufacturer must provide to the purchaser or lessor, as 
applicable, the manufacturer's final site inspection report. For 
purposes of establishing the manufacturer's and retailer's 
responsibilities under the Act and subparts F and I of this part, the 
sale or lease of the manufactured home will not be considered complete 
until the purchaser or lessor, as applicable, has been provided with 
the report.
    (e) Report to HUD. (1) The manufacturer must report to HUD through 
its IPIA, on the manufacturer's monthly production report required in 
accordance with Sec.  3282.552, the serial number and site completion 
numeric identification (see Sec.  3282.603(d)(1)) of each home produced 
under an approval issued pursuant to this section.
    (2) The report must be consistent with the DAPIA approval issued 
pursuant to this section.
    (3) The manufacturer must submit a copy of the report, or a 
separate listing

[[Page 53730]]

of all information provided on each report for homes that are completed 
under an approval issued pursuant to this section, to the SAAs of the 
States where the home is substantially completed in the factory and 
where the home is sited, as applicable.


Sec.  3282.606  Consumer information.

    (a) Notice. Any home completed under the procedures established in 
this section must be shipped with a temporary notice that explains that 
the home will comply with the requirements of the construction and 
safety standards only after all of the site work has been completed and 
inspected. The notice must be legible and typed, using letters at least 
1/4 inch high in the text of the notice and 3/4 inch high for the 
title. The notice must read as follows:

IMPORTANT CONSUMER INFORMATION NOTICE

    WARNING: DO NOT LIVE IN THIS HOME UNTIL THE ON-SITE WORK HAS 
BEEN COMPLETED AND THE MANUFACTURER HAS PROVIDED A COPY OF THE 
INSPECTION REPORT THAT CERTIFIES THAT THE HOME HAS BEEN INSPECTED 
AND IS CONSTRUCTED IN ACCORDANCE WITH APPROVED INSTRUCTIONS FOR 
MEETING THE CONSTRUCTION AND SAFETY STANDARDS.
    This home has been substantially completed at the factory and 
certified as having been constructed in conformance with the Federal 
Manufactured Home Construction and Safety Standards when specified 
work is performed and inspected at the home site. This on-site work 
must be performed in accordance with manufacturer's instructions 
that have been approved for this purpose. The work to be performed 
on-site is [insert description of all work to be performed in 
accordance with the construction and safety standards].
    This notice may be removed by the purchaser or lessor when the 
manufacturer provides the first purchaser or lessor with a copy of 
the manufacturer's final site inspection report, as required by 
regulation. This final report must include the manufacturer's 
certification of completion. All manufactured homes may also be 
subject to separate regulations requiring approval of items not 
covered by the Federal Manufactured Home Construction and Safety 
Standards, such as installation and utility connections.

    (b) Placement of notice in home. The notice required by paragraph 
(a) of this section must be displayed in a conspicuous and prominent 
location within the manufactured home and in a manner likely to assure 
that it is not removed until, or under the authorization of, the 
purchaser or lessor. The notice is to be removed only by the first 
purchaser or lessor. No retailer, installation or construction 
contractor, or other person may interfere with the required display of 
the notice.
    (c) Providing notice before sale. The manufacturer or retailer must 
also provide a copy of the Consumer Information Notice to prospective 
purchasers of any home to which the approval applies before the 
purchasers enter into an agreement to purchase the home.
    (d) When sale or lease of home is complete. For purposes of 
establishing the manufacturer's and retailer's responsibilities for on-
site completion under the Act and subparts F and I of this part, the 
sale or lease of the manufactured home will not be considered complete 
until the purchaser or lessor, as applicable, has been provided with a 
copy of the final site inspection report required under Sec.  
3282.605(d) and a copy of the manufacturer's certification of 
completion required under Sec.  3282.609(k) and (l). For 5 years from 
the date of the sale or lease of each home, the manufacturer must 
maintain in its records an indication that the final on-site inspection 
report and certification of completion has been provided to the lessor 
or purchaser and, as applicable, the appropriate retailer.


Sec.  3282.607  IPIA responsibilities.

    The IPIA, acting on behalf of HUD, for any manufacturer proceeding 
under this section is responsible for:
    (a) Working with the manufacturer and the manufacturer's DAPIA to 
incorporate into the DAPIA-approved quality assurance manual for on-
site completion any changes that are necessary to ensure that homes 
completed on-site conform to the requirements of this section;
    (b) Providing the manufacturer with a supply of the labels 
described in this section, in accordance with the requirements of Sec.  
3282.362(c)(2)(i)(A);
    (c) Overseeing the effectiveness of the manufacturer's quality 
control system for assuring that on-site work is completed to the 
DAPIA-approved designs, which must include:
    (1) Verifying that the manufacturer's quality control manual at the 
installation site is functioning and being followed;
    (2) Monitoring the manufacturer's system for tracking the status of 
each home built under the approval until the on-site work and necessary 
inspections have been completed;
    (3) Reviewing all of the manufacturer's final on-site inspection 
reports; and
    (4) Inspecting all of the on-site construction work for each home 
utilizing an IPIA inspector or an independent qualified third-party 
inspector acceptable to the IPIA and acting as the designee or 
representative:
    (i) Prior to close-up, unless access panels are provided to allow 
the work to be inspected after all work is completed on-site; and
    (ii) After all work is completed on-site, except for close-up;
    (d) Designating an IPIA inspector or an independent qualified 
third-party inspector acceptable to the IPIA, as set forth under Sec.  
3282.358(d), who is not associated with the manufacturer and is not 
involved with the site construction or completion of the home and is 
free of any conflict of interest in accordance with Sec.  3282.359, to 
inspect the work done on-site for the purpose of determining compliance 
with:
    (1) The approved design or, as appropriate under Sec.  
3282.362(a)(1)(iii), the Construction and Safety Standards; and
    (2) The DAPIA-approved quality assurance manual for on-site 
completion applicable to the labeling and completion of the affected 
manufactured homes;
    (e) Notifying the manufacturer of the IPIA's acceptance of the 
manufacturer's final site inspection report (see Sec.  
3282.605(d)(3)(iii));
    (f) Preparing final site inspection reports and providing 
notification to the manufacturer of its acceptance of the 
manufacturer's final site inspection report within 5 business days of 
preparing its report. The IPIA is to maintain its final site inspection 
reports and those of the manufacturer for a period of at least 5 years. 
All reports must be available for HUD and SAA review in the IPIA's 
central record office as part of the labeling records; and
    (g) Reporting to HUD, the DAPIA, and the manufacturer if one or 
more homes has not been site inspected prior to occupancy or when 
arrangements for one or more manufactured homes to be site inspected 
have not been made.


Sec.  3282.608  Manufacturer responsibilities.

    A manufacturer proceeding under this section is responsible for:
    (a) Obtaining DAPIA approval for completion of construction on-
site, in accordance with Sec.  3282.603;
    (b) Obtaining the IPIA's agreement to perform on-site inspections 
as necessary under this section and the terms of the DAPIA's approval;
    (c) Notifying the IPIA that the home is ready for inspection;
    (d) Paying the IPIA's costs for performing on-site inspections of 
work completed under this section;
    (e) Either before or at the time on-site work commences, providing 
the IPIA

[[Page 53731]]

with a copy of any applicable DAPIA-approved quality assurance manual 
for on-site completion, the approved instructions for completing the 
construction work on-site, and an approved inspection checklist, and 
maintaining this information on the job site until all on-site work is 
completed and accepted by the IPIA;
    (f) Satisfactorily completing all on-site construction and required 
repairs or authorizing a licensed contractor or similarly qualified 
person to complete all site construction and any needed repairs;
    (g) Providing a written certification to the lessor or purchaser, 
when all site construction work is completed, that each home, to the 
best of the manufacturer's knowledge and belief, is constructed in 
conformance with the Construction and Safety Standards;
    (h) Ensuring that the consumer notification requirements of Sec.  
3282.606 are met for any home completed under this subpart;
    (i) Maintaining a system for tracking the status of homes built 
under the approval until the on-site work and necessary inspections 
have been completed, such that the system will assure that the work is 
performed in accordance with the quality control manual and other 
conditions of the approval;
    (j) Ensuring performance of all work as necessary to assure 
compliance with the Construction and Safety Standards upon completion 
of the site work, including Sec.  3280.303(b) of this chapter, 
regardless of who does the work or where the work is completed;
    (k) Preparing a site inspection report upon completion of the work 
on-site, certifying completion in accordance with DAPIA-approved 
instruction and that the home conforms with the approved design or, as 
appropriate under Sec.  3282.362(a)(1)(iii), the construction and 
safety standards;
    (l) Arranging for an on-site inspection of each home upon 
completion of the on-site work by the IPIA or its authorized designee 
prior to occupancy to verify compliance of the work with the DAPIA-
approved designs and the Construction and Safety Standards;
    (m) Providing its final on-site inspection report and certification 
of completion to the IPIA and, after approval, to the lessor or 
purchaser and, as applicable, the appropriate retailer, and to the SAA 
upon request;
    (n) Maintaining in its records the approval notification from the 
DAPIA, the manufacturer's final on-site inspection report and 
certification of completion, and the IPIA's acceptance of the final 
site inspection report and certification, and making all such records 
available for review by HUD in the factory of origin;
    (o) Reporting to HUD or its agent the serial numbers assigned to 
each home completed in conformance with this section and as required by 
Sec.  3282.552; and
    (p) Providing cumulative quarterly production reports to HUD or its 
agent that include the site completion numeric identification number(s) 
for each home (see Sec.  3282.603(d)(1)); the serial number(s) for each 
home; the HUD label number(s) assigned to each home; the retailer's 
name and address for each home; the name, address, and phone number for 
each home purchaser; the dates of the final site completion inspection 
for each home; and whether each home was inspected prior to occupancy.
    (q) Maintaining copies of all records for on-site completion for 
each home, as required by this section, in the unit file to be 
maintained by the manufacturer.


Sec.  3282.609  Revocation or amendment of DAPIA approval.

    (a) The DAPIA that issued an approval or the Secretary may revoke 
or amend, prospectively, an approval notification issued under Sec.  
3282.603. The approval may be revoked or amended whenever the DAPIA or 
HUD determines that:
    (1) The manufacturer is not complying with the terms of the 
approval or the requirements of this section;
    (2) The approval was not issued in conformance with the 
requirements of Sec.  3282.603;
    (3) A home produced under the approval fails to comply with the 
Federal construction and safety standards or contains an imminent 
safety hazard; or
    (4) The manufacturer fails to make arrangements for one or more 
manufactured homes to be inspected by the IPIA prior to occupancy.
    (b) The DAPIA must immediately notify the manufacturer, the IPIA, 
and HUD of any revocation or amendment of DAPIA approval.


Sec.  3282.610  Failure to comply with the procedures of this subpart.

    In addition to other sanctions available under the Act and this 
part, HUD may prohibit any manufacturer or PIA found to be in violation 
of the requirements of this section from carrying out their functions 
of this Subpart in the future, after providing an opportunity for an 
informal presentation of views in accordance with Sec.  3282.152(f). 
Repeated infractions of the requirements of this section may be grounds 
for the suspension or disqualification of a PIA under Sec. Sec.  
3282.355 and 3282.356.


Sec.  3282.611  Compliance with this subpart.

    If the manufacturer and IPIA, as applicable, complies with the 
requirements of this section and the home complies with the 
construction and safety standards for those aspects of construction 
covered by the DAPIA approval, then HUD will consider a manufacturer or 
retailer that has permitted a manufactured home approved for on-site 
completion under this section to be sold, leased, offered for sale or 
lease, introduced, delivered, or imported to be in compliance with the 
certification requirements of the Act and the applicable implementing 
regulations in this part 3282 for those aspects of construction covered 
by the approval.

PART 3285--MODEL MANUFACTURED HOME INSTALLATION STANDARDS

0
13. The authority citation for 24 CFR part 3285 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d), 5403, 5404, and 5424.


0
14. In Sec.  3285.5, in alphabetic order, add definitions for ``peak 
cap construction'' and ``peak flip construction'' to read as follows:


Sec.  3285.5  Definitions.

* * * * *
    Peak cap construction means any roof peak construction that is 
either shipped loose or site constructed and is site installed to 
complete the roof ridge/peak of a home.
    Peak flip construction means any roof peak construction that 
requires the joining of two or more cut top chord members on site. The 
cut top chords must be joined at the factory by straps, hinges, or 
other means.
* * * * *

0
15. In Sec.  3285.801, revise paragraph (f)(2) to read as follows:


Sec.  3285.801  Exterior close-up.

* * * * *
    (f) * * *
    (2) In which the roof pitch of the hinged roof is less than 7:12, 
including designs incorporating peak cap construction or peak flip 
construction; and
* * * * *


[[Page 53732]]


    Dated: August 25, 2015.
Edward L. Golding,
Principal Deputy Assistant Secretary for Housing.
    Approved: August 25, 2015.
Laura H. Hogshead,
Chief Operating Officer.
[FR Doc. 2015-21774 Filed 9-4-15; 8:45 am]
 BILLING CODE 4210-67-P