[Federal Register Volume 60, Number 217 (Thursday, November 9, 1995)]
[Notices]
[Pages 56642-56645]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27518]




[[Page 56641]]

_______________________________________________________________________

Part II





Department of Housing and Urban Development





_______________________________________________________________________



Manufactured Home Construction and Safety Standards; Notice of 
Settlement

  Federal Register / Vol. 60, No. 217 / Thursday, November 9, 1995 / 
Notices  

[[Page 56642]]


DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner
[Docket No. FR-3969-N-01]


Manufactured Home Construction and Safety Standards; Notice of 
Settlement

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

ACTION: Notice of Settlement.

-----------------------------------------------------------------------

SUMMARY: Pursuant to a Stipulation and Order of Settlement and 
Dismissal issued by the United States District Court for the Southern 
District of New York on September 7, 1995, HUD is providing notice of a 
settlement of the case entitled and numbered Thinking Vents, Inc. v. 
Henry Cisneros, Secretary of Housing and Urban Development, 94 Civ. 
8488 (AGS).

DATES: November 9, 1995.

FOR FURTHER INFORMATION CONTACT: Philip W. Schulte, Acting Director, 
Manufactured Housing and Construction Standards Division, Department of 
Housing and Urban Development, 451 Seventh Street, SW., Room B-133, 
Washington, DC 20410-8000. Telephone: (voice) (202) 755-7420; (TDD) 
(202) 708-4594. (These are not toll-free numbers.)

SUPPLEMENTARY INFORMATION: Accordingly, the following attachment is the 
Stipulation and Order of Settlement and Dismissal issued by the United 
States District Court for the Southern District of New York on 
September 7, 1995 in the case entitled and numbered Thinking Vents, 
Inc. v. Henry Cisneros, Secretary of Housing and Urban Development, 94 
Civ. 8488 (AGS).

    Dated: October 6, 1995.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.

Attachment--United States District Court Southern District of New 
York

94 Civ. 8488 (AGS).

    Thinking Vents, Inc., Plaintiff, v. Henry Cisneros, Secretary of 
Housing and Urban Development, in his official capacity, Defendant.

Stipulation and Order of Settlement and Dismissal

    Whereas, plaintiff THINKING VENTS, Inc. (``TVI'') commenced this 
action in the United States District Court for the Southern District of 
New York, seeking injunctive and monetary relief from defendant HENRY 
CISNEROS, SECRETARY OF HOUSING AND URBAN DEVELOPMENT (``HUD''); and
    Whereas, the parties to this Stipulation and Order of Settlement 
and Dismissal (``Stipulation and Order'') seek to resolve this action 
without resort to further litigation;
    It is hereby stipulated and agreed, by and between plaintiff TVI, 
and defendant HUD, as follows:
    1. Plaintiff hereby dismisses this action with prejudice and 
without costs, disbursements, or attorneys' fees.
    2. Upon this Stipulation being So Ordered by the Court, HUD shall 
issue a letter in the form annexed hereto as Exhibit A. Said letter 
shall be effective as of the date the Court signs this Stipulation and 
Order, and HUD shall forward the letter to all Design Approval 
Inspection Agencies and publish it, along with this Stipulation and 
Order, in the Federal Register as soon as practicable.
    3. HUD shall, it its own cost, conduct field inspections of 100 
homes that, subsequent to the Court's signing of this Stipulation and 
Order, have been fitted with the Thinking Cap Ventilation System 
(``TCVS'') and sold. Such field inspections shall be conducted in the 
manner provided by the testing protocol annexed hereto as Exhibit B, 
provided, however, that a home shall not be eligible for a field test 
unless: (a) all clothes dryers are vented directly to the outside and 
not vented under the home; (b) no open flame heaters are used in the 
home unless vented directly outside; (c) the ground under the home does 
not have standing water; (d) skirting or underpinning has a minimum of 
one foot of ventilation for every 150 square feet of ground area; and 
(e) the ground beneath the home has a vapor barrier if the applicable 
home owner's manual so requires. The homes inspected shall be selected 
by a method of random selection set forth in paragraph 4, with 50 of 
the homes located in thermal Zone 3 (the ``North Zone'') and 50 of the 
homes located in thermal Zones 2 and 1 (the ``South Zone''). HUD shall 
make every effort to complete the inspections within 18 months of the 
date this Stipulation and Order has been signed by the Court. However, 
in no event shall the inspection period exceed 30 months (``the testing 
period'').
    4. The homes shall be selected for inspection pursuant to a two-
step process. (a) First, HUD will randomly select on a quarterly basis 
two pools of homes in which the TCVS has been installed subsequent to 
the Court's signing of this Stipulation and Order from lists of homes 
sold in each of the North and South Zones in the previous three months. 
One pool shall be for the North Zone and one pool for the South Zone. 
Such random selection shall be based on the serial numbers of the homes 
on the lists. HUD shall randomly select 10% of the homes on the South 
Zone list for the South Zone pool, and 25% of the homes on the North 
Zone List for the North Zone pool. In the event that, at the time of a 
particular selection, there are fewer than 250 homes sold using the 
TCVS, the percentages will be increased to 20% in the South Zone and 
40% in the North Zone. TVI shall have the right to be present at such 
random selection. (b) Second, from the North and South Zone pools of 
homes, HUD will select the homes to be inspected until a sufficient 
number of homes that meet the testing conditions set forth in paragraph 
3 above have been selected. HUD will select homes based on 
considerations of obtaining a representative geographic sampling and 
limiting the costs of such inspections. If, however, there is any state 
that is not represented by either pool but contains homes in which the 
TCVS has been installed, HUD may randomly select up to two homes in 
that state for inspection. HUD will give TVI notice of any selections 
made.
    5. At its option, TVI shall have the right, at its own cost, to 
conduct field inspections of the same 100 homes described in paragraphs 
3 and 4, above. Such field inspections shall be conducted in the manner 
provided by the testing protocol annexed hereto as Exhibit C. If TVI 
chooses to conduct its inspection of a particular home on a different 
date or time than that designated by HUD, TVI shall give HUD 5 days 
notice of the date, time and location of the inspection, and HUD shall 
be entitled to attend any such inspection.
    6. HUD shall give 5 days notice to TVI of the date, time and 
location for each of the field inspections described in paragraph 3, 
above, in order to enable TVI to exercise its right to be present at 
such inspections. No such inspections shall take place on a Friday, 
Saturday or Jewish Holiday. Such Jewish holidays will include those 
listed on the schedule annexed hereto as Exhibit D. For subsequent 
years, TVI will supply such list to HUD not later than January 31 of 
that year.
    7. In the event that a home passes TVI's field inspection but fails 
HUD's field inspection, TVI may petition the Court to appoint an 
arbiter (the ``arbiter'') to determine whether such home passes or 
fails the field inspection. At the arbiter's discretion, said arbiter 
may visit the subject home(s) to assist the arbiter in reaching 

[[Page 56643]]
a determination. The costs associated with the arbiter's work will be 
agreed upon by the arbiter with the parties prior to the arbiter 
performing any work, and will be borne by the party against which the 
arbiter finds.
    8. TVI and HUD hereby stipulate and agree that the arbiter, and any 
persons duly designated to act on the arbiter's behalf, shall be immune 
from personal liability for any conduct undertaken pursuant to this 
Stipulation and Order in any action brought by TVI or HUD or by anyone 
acting on their behalf, at their behest, or in their interest. TVI and 
HUD hereby agree that they will not sue the arbiter, or any persons 
duly designated to act on the arbiter's behalf, on account of any 
action taken pursuant to the Stipulation and Order.
    9. The Court may appoint an arbiter jointly recommended by the 
parties. To assist in such appointment, within 15 days of the date the 
Court signs this Stipulation and Order, the parties will each nominate 
five candidates to be recommended as arbiter, and the parties will use 
best efforts to agree upon and jointly recommend such arbiter from such 
candidates to the Court.
    10. In the event that 94 or more of the homes inspected pass HUD's 
field inspection or the determination by the arbiter, then the TCVS 
shall be deemed to have passed the test and the letter in the form 
annexed hereto as Exhibit A shall remain in effect.
    11. In the event that 7 or more of the homes inspected fail HUD's 
field inspection and, if such determination is sought, the arbiter's 
determination, then the TCVS shall be deemed to have failed the test, 
the letter in the form annexed hereto as Exhibit A may be revoked, and 
HUD's obligation under paragraph 3 of this Stipulation and Order to 
test homes shall terminate. Revocation pursuant to this paragraph and 
paragraph 14 below are the only circumstances under which the letter in 
the form annexed as Exhibit A may be revoked.
    12. In the event that the TCVS fails the test, HUD shall provide 
notice to all owners of homes in which the TCVS has been installed that 
the TCVS has failed the test; that their homes do not comply with the 
applicable Federal Manufactured Home Construction and Safety Standards; 
that if there is any moisture damage, TVI will, during the two-year 
period following the date of failure of the test, repair, without cost 
to the owner, the home and replace the TCVS with a system that meets 
the standards; that the TCVS is under a ten year warranty from TVI for 
the operation of the TCVS; and that if there are any questions about 
the ventilation systems or the notice, the owners can call HUD or the 
applicable State Administrative Agency. If, during the testing period 
or within two years from the date of the failure of the test as 
described in paragraph 11, a notified homeowner's home shows evidence 
of damage caused by the TCVS or the homeowner requests that the home be 
retrofitted, the home shall be retrofitted, at TVI's cost, with a 
ventilation system that brings the home into compliance with the 
applicable Federal Manufactured Home Construction and Safety Standards 
relating to ventilation, and TVI shall repair, without cost to the 
homeowner, any and all damage to the home caused by the installation 
and use of the TCVS.
    13. During the testing period, TVI shall, on a monthly basis, 
provide HUD with two lists, one for the North Zone and one for the 
South Zone, of all consumers known to TVI who purchased homes 
containing the TCVS during the testing period. Each list shall include 
the consumer's address and telephone number, as well as the consumer's 
home's serial and HUD label numbers and the dates the consumer's home 
was produced and sold. The failure of TVI to provide all such 
information for a given home on an occasional basis shall not be a 
reason to exclude such home from the selection process if the 
information provided is otherwise sufficient to include such home in 
the selection process. If necessary to complete the testing within the 
testing period, TVI shall provide the consumer lists described above on 
a bi-weekly basis.
    14. In the event that the random selection procedure described in 
paragraph 4 above does not yield 100 homes overall that meet the 
conditions for testing set forth in paragraph 3 above, then HUD will 
randomly select additional homes for the pools using the procedures set 
forth in paragraph 4 until 100 homes have been obtained. If, after 
exhaustion of the pools and lists using the procedures set forth above, 
there are still not 100 homes that meet the conditions for testing, 
then TVI may waive all the conditions set forth in paragraph 3, and HUD 
may select such homes to be tested based on considerations of obtaining 
a representative geographic sampling and limiting the costs of such 
inspections. In the event that TVI fails to grant such wavier, or, if 
upon such waiver there are still not 100 homes available for testing, 
the letter in the form annexed as Exhibit A may be revoked. In the 
event that a minimum of 400 homes containing the TCVS are not sold 
during the first 12 months of the testing period, or 200 homes are not 
sold in each 6 month period thereafter, than the letter in the form 
annexed as Exhibit A may be revoked.
    15. TVI shall maintain a general liability insurance policy with 
coverage of $2,000,000.00. No later than 60 days after the date this 
Stipulation and Order is signed by the Court, TVI shall secure a 
product recall policy with coverage of $500,000.00. Within one year of 
the date this Stipulation and Order is signed by the Court, TVI shall 
secure an umbrella coverage to increase the general liability coverage 
to $5,000,000.00, and within two years of the date this Stipulation and 
Order is signed by the Court, TVI shall increase the general liability 
coverage to $10,000,000.00.
    16. TVI shall, during the testing period, provide customers with a 
ten year limited warranty as set forth in Exhibit E.
    17. TVI shall, no later than 60 days after the date this 
Stipulation and Order is signed by the Court, post a bond in the amount 
of $50,000.00 to be used in the event that damage occurs or 
retrofitting is need or requested that is not covered by the above-
described insurance policies. During the testing period, TVI shall 
place 5% of its receipts derived from sales of the TCVs in an escrow 
account with an independent financial institution, which sums shall be 
available to augment the bond (the ``set aside sum''). A portion of the 
set aside sum may be used to administer the escrow account. TVI will 
provide HUD with a monthly accounting of the set aside sum.
    18. In the event that the TCVs passes the test as set forth in 
paragraph 10 above, the bond, and set aside sum, including accrued 
interest, will be the property of TVI. TVI will continue to provide a 
10-year limited warranty as set forth in Exhibit E for the operation of 
the TCVSs it sells in the future. In the event that the TCVS fails the 
test as set forth in paragraph 11, the insurance, bond and set aside 
sum, and accrued interest, will remain in place for two years following 
the determination that TVI has failed the test as set forth in 
paragraph 11, and thereafter any sums remaining shall be in the 
property of TVI.
    19. This Stipulation and Order constitutes the entire understanding 
and agreement between the parties with respect to the subject matter of 
this Stipulation and Order. All prior or contemporaneous 
understandings, discussions, agreements and/or representations with 
respect to the said subject matter, whether oral or written, including 
the Agreement dated October 22, 1987, and the Alternative Construction 
letter issued to Horton 

[[Page 56644]]
Homes, are expressly superseded by this Stipulation and Order.
    20. This Stipulation and Order will be binding on and will inure to 
the benefit of the parties and their respective agents, servants, 
employees, successors, assigns, and related, affiliated and subsidiary 
entities.
    21. This Stipulation and Order will be interpreted and otherwise 
governed under the laws of the United States.
    22. The Court shall retain jurisdiction over this matter and over 
the parties for the purpose of enforcing the terms of the Stipulation 
and Order and any Order entered by the Court thereupon. In the event 
either party to this Stipulation and Order fails to fulfill is 
obligations as set forth herein, the sole remedy will be an application 
brought before this Court. Any controversies between the parties 
regarding the terms of this Stipulation and Order shall be resolved by 
the Court employing such procedures as the Court deems appropriate.

    Dated: September 5, 1995, New York, New York.

Thinking Vents, Inc.
    By:
Stanley Kolt,
President.
    Dated: September 5, 1995, New York, New York.

Laufer & Farkash
    Attorneys for Plaintiff
    By:
Jacob Laufer (JL 2846)
101 East 52d Street, New York, NY 10022, (212) 308-8500.
    Dated: September 5, 1995, Washington, DC.
United States Department of Housing and Urban Development.

    By:
Nicholas Retsinas,
Assistant Secretary for Housing.
    Dated: September 6, 1995, New York, New York.
Mary Jo White,
United States Attorney for the Southern District of New York Attorney 
for Defendant.
    By:
Beth E. Coldman (BG-6247),
Assisant United States Attorney, 100 Church Street--19th Floor, New 
York, New York 10007, Tel. No.: (212) 385-6225.
    So Ordered:
Allen G. Schwartz,
United States District Judge.

Exhibit A

Mr. Stanley Kolt, Chief Executive Officer
Thinking Vents, Inc.
P.O. Box 752
Mamaroneck, New York 10543-0752

    Dear Mr. Kolt: Subject to the terms and conditions of the 
Stipulation and Order dated September 1, 1995, entered in the case 
captioned Thinking Vents, Inc. v. Henry Cisneros, 94 Civ. 8488 
(AGS), in the Southern District of New York (the ``Stipulation''), 
the U.S. Department of Housing and Urban Development 
(``Department'') will take no action with regard to any possible 
violations of the provisions of the Manufactured Home Construction 
and Safety Standards (``Standard'') and Manufactured Home Procedural 
and Enforcement Regulations (``Regulations'') listed below against 
any manufactured home manufacturer that installs and utilizes the 
Thinking Cap Ventilation System (``TCVS'') in any of its homes. 
Accordingly, all Design Approval Primary Inspection Agencies 
(``DAPIAs'') are authorized to approve designs utilizing the TCVS, 
notwithstanding that said homes are not constructed to the precise 
specifications of the following provisions of the Standards and 
regulations:
    1. 24 C.F.R. Sec. 3280.103(b)(4), ``Whole House Ventilation,'' 
insofar as interior air will be ventilated through the roof cavity.
    2. 24 C.F.R. Sec. 3280.504(c)(1), ``Attic and Roof 
Ventilation,'' insofar as neither the minimum free ventilation area 
nor a mechanical ventilation system will be installed.
    3. 24 C.F.R. Sec. 3280.504(c)(2), ``Attic and Roof 
Ventilation,'' insofar as certain single section manufactured homes 
that are excepted from attic ventilation required by 24 C.F.R. 
Sec. 3280.504(c)(1), have air leakage paths to the attic space that 
are not sealed.
    4. 24 C.F.R. Sec. 3282.205(c), ``Certification Requirements,'' 
insofar as the label, in the form required by 24 C.F.R. 
Secs. 3280.11 and 3280.362(c)(2), may be placed on each affected 
home even though the home is not constructed to the precise 
specifications of the Standards set forth above.
    A copy of this letter will be forwarded to all DAPIAs. Upon 
receipt of this letter, DAPIAs are authorized to approve designs 
utilizing the TCVS under the conditions set forth herein. DAPIAs 
shall provide the National Conference of States Building Codes and 
Standards, Inc. (``NCSBCS'') with a set of approved plans for all 
designs to be covered by this letter within 5 days of the date of 
approval of such designs. The failure of any manufactured home 
design to comply with the precise specifications of the Standards 
and Regulations set forth above is not grounds for a DAPIA to deny 
approval of any manufactured home design.
    Sincerely,
David C. Nimmer,
Director, Office of Manufactured Housing and Regulatory Functions.

Exhibit B--Inspection Protocol Thinking Cap Ventilation System

Purpose of Inspection

    To determine if the presence of moisture in the ceiling/roof cavity 
is at a level which is known to affect material and structural 
degradation.

Method of Inspection

    The primary method of inspection is to visually examine the 
interior of the ceiling/roof cavity for signs that the wood and wood 
based products have reached fiber saturation and for signs of surface 
moisture on metal surfaces and other materials of low permeability.

Failure Level of Moisture

    The failure level of moisture content shall be fiber saturation 
point of the material being evaluated.
    The failure level of surface moisture will be when wetting occurs 
and/or evidence of moisture accumulation exist.

Indicators That Fiber Saturation is Exceeded For Wood and Wood-Based 
Products

    Warping, bowing, buckling, delamination, swelling, visible mold, 
smell of mold, water marks, wet-to-touch, moisture droplets, ice and 
frost build-up, wood rotting or other signs of material decomposition.

Indicators of Excessive Accumulating Surface of Moisture

    Ice and frost build-up, puddling of water on vapor retarder, wet 
insulation frost and ice on insulation, under surfaces, wet-to-touch, 
mold smell, visible mold, water marks on ceiling. Deterioration of 
ceiling. Evidence of moisture dripping into walls.

Pass/Fail Criteria

    A failure would occur if any of the following conditions are 
present:
    I. Fiber saturation levels are exceeded as shown by any of the 
indicators identified above.
    II. Moisture is Accumulating in the Ceiling/Roof cavity as shown by 
any of the indicators identified above.

Other Conditions

    1. The homes will be set-up in accordance with the Manufactured 
Housing Construction and Safety Standards and comply in all relevant 
respects with the standards.
    2. The Thinking Cap will be inspected to note if the system is open 
or closed and the attic and outdoor temperature at the time of the 
inspection should be noted on the inspection report.
    3. The moisture content of wood framing members may be tested in 
accordance in ASTM D4444-94, Standard Test Methods for Use and 
Calibration of Hand-Held Moisture Meters.

Exhibit C--Testing Protocol for Thinking Cap Ventilation System

    The testing shall consist of an on-site investigation of each of 
100 manufactured homes that are equipped with the Thinking Cap 
Ventilation System (``the subject homes'').
    Stanley Kolt or his representative shall conduct a test to 
determine the 

[[Page 56645]]
level of moisture in the home. Such test shall be conducted by exposing 
the wood members of the attic by removing a single ceiling vent and 
determining the quantity of water in the wood. Said quantity shall be 
determined by the use of a wood moisture detector. A wood moisture 
detector reading of 19 percent or less shall be an acceptable level of 
moisture in the wood members of the attic. Should the wood moisture 
detector reading be 19 percent or less then the subject home shall be 
deemed to have passed the investigation. Should the wood moisture 
detector reading be greater than 19 percent, then the subject home 
shall be deemed to have failed the investigation.

Exhibit D--Jewish Holidays 1995-96

1995: September 24, 25, 26, 27; October 3, 4, 5, 8, 9, 10, 11, 15, 16, 
17, 18.
1996: March 3, 4, 5; April 2, 3, 4, 9, 10, 11; May 23, 24; July 25; 
September 15, 16, 22, 23, 24, 30.

Exhibit E--Thinking Vents, Inc.

    The ``Thinking Cap'' is a fully automatic natural passive total 
home ventilation system. It operates continually without using 
electricity. This system improves the ventilation of the occupied space 
of the home and attic. To maintain the optimum utilization of the 
system with respect to ventilation and therma efficiency, do not block 
or impair the automatic operation of the ceiling vents of your home or 
the roof. ``Thinking Caps''.

Limited Warranty

    Thinking Vents, Inc. warrants each ``Thinking Cap'' ventilation 
system against defects in materials and factory workmanship for a 
period of ten (10) years from the date of manufacture. If under normal 
use and service the ``Thinking Cap'' discloses such defect within the 
warranty period, the homeowner may ship the entire unit or any 
defective part or parts to the manufacturer, freight prepaid by the 
purchaser and the manufacturer shall repair or replace such defective 
part or parts as may, in its judgment, be required to return the unit 
to full and proper working order.

Consumer Information and Comment Card

1. Owner's: Name-------------------------------------------------------
Address----------------------------------------------------------------
City, State & Zip------------------------------------------------------
Telephone No-----------------------------------------------------------
2. Manufacturer's Name____________ Date Purchased____________
3. Home Model____________ Serial No.____________
4. Date of Manufacture____________ HUD No.____________
5. SQ FT of Home______ Single____ Double____ Triple____Wide
6. How many in household____ Shingle Roof____ Metal Roof____
7. What is your heating system type______________
8. Do you have central air conditioning______________
9. Is this the first ``thinking Cap'' system in any home you have 
owned or occupied________
10. Comments-----------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
    Please return card so we can best service your ten year 
warranty.
[FR Doc. 95-27518 Filed 11-9-95; 8:45 am]
BILLING CODE 4210-27-M