[Federal Register Volume 68, Number 143 (Friday, July 25, 2003)]
[Proposed Rules]
[Pages 43987-43989]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-18908]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 3282

[Docket No. FR-4867-N-02]


Manufactured Housing Consensus Committee--Rejection of Consumer 
Complaint Handling Proposal

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

ACTION: Denial for recommendation for proposed regulatory changes.

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SUMMARY: The Secretary has rejected a proposed recommendation by the 
Manufactured Housing Consensus Committee to revise regulations 
concerning how manufacturers are required to handle reports of problems 
with manufactured homes. The Secretary has determined that the proposal 
conflicts in several ways with the requirements of the National 
Manufactured Housing Construction and Safety Standards Act of 1974.

FOR FURTHER INFORMATION CONTACT: William W. Matchneer III, 
Administrator, Manufactured Housing Program, U.S. Department of Housing 
and Urban Development, 451 Seventh Street, SW., Washington, DC 20410-
8000; telephone (202) 708\6401 (this is not a toll-free number). 
Hearing- or speech-impaired individuals may access this number at TTY 
by calling the toll-free Federal Information Relay Service at (800) 87-
8339.

SUPPLEMENTARY INFORMATION: The Manufactured Housing Consensus Committee 
(MHCC) has transmitted to the Secretary a recommendation dated March 
26, 2003 (MHCC proposal), that the Manufactured Home Procedural and 
Enforcement Regulations, 24 CFR part 3282, be amended by revising 
Subpart I, Consumer Handling and Remedial Actions (24 CFR 3282.401-416) 
(Subpart I).

Background

    The MHCC as established by the National Manufactured Housing 
Construction and Safety Standards Act of 1974, 42 U.S.C. 5401-5426 (the 
Act) for the purpose of providing periodic recommendations to the 
Secretary to adopt, revise, and interpret the federal manufactured 
housing construction and safety standards and the procedural and 
enforcement regulations. 42 U.S.C. 5403(a)(3)(A). It may submit to the 
Secretary proposed procedural and enforcement regulations and 
recommendations for the revision of the regulations. 42 U.S.C. 
5403(b)(1). To be promulgated by HUD, the regulation and revisions 
recommended by the MHCC must be consistent with the Act.
    Within 120 days from the date on which the Secretary receives a 
proposed procedural or enforcement regulation from the MHCC, the 
Secretary approve a reject the proposal. If the Secretary rejects the 
proposal, HUD must provide to the MHCC a written explanation of the 
reasons for rejection and publish in the Federal Register the rejected 
proposal and the reasons for the rejection. 42 U.S.C. 5403(b)(4).

Procedural Explanation

    The Secretary recognizes and appreciates that the members of the 
MHCC are working hard to implement the role of the MHCC in the federal 
manufactured housing program. Although this proposal is inconsistent 
with the authority granted to the MHCC under the Act, HUD is publishing 
this proposal (Appendix A) and the Secretary's reasons for rejecting 
the proposal, as if the proposal were subject to the procedures in 
section 604(b).

Decision of the Secretary

    The Secretary rejects the MHCC's proposal for the revision of 
regulations in Subpart I for the handling of reports of problems in 
manufactured housing for reasons that include the following:
    The MHCC proposal is in direct conflict with parts of the Act. In 
section 615 of the Act (42 U.S.C. 5414), Congress placed 
responsibilities for the correction and notification of defects in 
manufactured homes on manufacturers, and set guidelines for 
manufacturers to meet these responsibilities. Section 613 of the Act 
(42 U.S.C. 5412) imposes additional repair and repurchase requirements 
on manufacturers. Subpart I, which the MHCC proposal would amend, 
contains the regulations by which the Department has implemented the 
intent to Congress with respect to notification and correction 
requirements.
    The MHCC proposal seeks to limit the statutory responsibilities of 
manufacturers while imposing similar duties on parties on whom Congress 
did not place these responsibilities, such as retailers, distributors, 
transporters, and landscapers. HUD does not have authority to shift 
statutory responsibilities away from manufacturers. The MHCC has not 
established that HUD has authority to hold these newly identified 
parties responsible for correction and notification of defects in 
manufactured homes.
    The MHCC proposal adds significantly to the administrative 
responsibilities of HUD and the states, by making HUD and the State 
Administrative Agencies (SAA's) the initial arbiters of responsibility 
on all complaints and information about problems in manufactured homes. 
The proposal does not take into account the self-policing 
responsibilities of the manufacturers set out in section 615 of the Act 
(42 U.S.C. 5414). The concern about additional administrative burdens 
also applies to the provisions that make SAA's responsible for assuring 
that all notifications are sent and all concerns are made. In addition, 
the MHCC proposal may define roles for HUD and the SAAs that require 
them to interfere in matters that are traditionally settled through 
private contracts. Further, HUD cannot permit voluntary undertakings by 
private parties to constitute governmental action for purposes of 
judicial review.
    The MHCC proposal would, in effect, create a warranty for products 
found in the home, and would then limit the applicable time of the 
warranty. There is not authority in the Act to create a warranty. In 
fact, during consideration of the most recent amendments to the Act, 
Congress heard testimony suggesting a statutory warranty but declined 
to adopt this approach. Instead, the Act was amended in section 623 (42 
U.S.C. 5422) to establish an additional protection for consumers 
through a dispute resolution program that covers problems reported in 
the

[[Page 43988]]

first year after a manufactured home is installed.
    The MHCC proposal does not adequately implement the provision in 
section 615(h) of the Act (43 U.S.C. 5414(h)), which requires 
manufactures to submit a notification and correction plan to the 
Secretary for approval before the plan is implemented. Under the MHCC 
proposal, a party would be permitted to correct a home without first 
having a plan of correction approved.
    The MHCC proposal seeks to establish time limits for a 
manufacturer's responsibilities under section 615 (42 U.S.C. 5414) that 
are not consistent with the Act. Section 615 contemplates enforcement 
authority over certain defects about which the consumer would not have 
knowledge unless notified or until his or her safety is compromised. 
While the Act places affirmative notification and correction 
requirements on manufacturers for defects as a protective measure even 
if an affected consumers has not yet complained, the MHCC proposal 
would limit a manufacturer's responsibility to act until after a 
consumer complains. Further, the MHCC proposal would limit the 
responsibility of manufacturers and retailers to those defects 
discovered within 5 years from the date of the first sale. An even 
shorter period of 2 years would be established for defects that could 
be attributed to other parties. Section 615 includes no such limits.
    The MHCC proposal raises further questions relating to section 623 
of the act (42 U.S.C. 5422). Section 623 requires HUD to implement a 
dispute resolution program by December 2005, which would be used to 
resolve disputes among manufacturers, retailers, and installers about 
responsibilities for the correction of defects reported in the first 
year after a manufactured home is installed. The MHCC proposal is not 
in agreement with the section 623 process because the proposal; adds 
potentially responsible parties (e.g., landscapers, contractors, 
product suppliers); creates the limits that are inconsistent with 
section 623; and fails to provide for a forum in which the disputes are 
to be resolved.

Text of MHCC Proposal

    The text of the rejected proposal submitted by the MHCC is 
published as Appendix A.

    Dated: July 17, 2003.
John C. Weicher,
Assistant Secretary for Housing-Federal Housing Commissioner.

Appendix A--Manufactured Housing Consensus Committee Proposal To Amend 
Manufactured Housing Home Procedural and Enforcement Regulations 24 CFR 
Part 3282

March 26, 2003.


Sec.  3282.7  Definitions.

    (i) Dealer--See Retailer.
    (j) Defect means a failure to comply, or the failure of a 
component used to comply with an applicable Federal Manufactured 
home safety and construction standard that renders the manufactured 
home or any part thereof not fit for the ordinary use for which it 
was intended, but does not result in an unreasonable risk of injury 
or death to occupants of the affected manufactured home. See related 
definitions of imminent safety hazard (definition q), non-compliance 
(definition x), and serious defect (definition ff).
    (dd) Retailer means any person engaged in the sale, leasing, or 
distribution of new manufactured homes primarily to persons whom in 
good faith purchase or lease a manufactured home for purposes other 
than resale.
    (ee) Responsible party means any of the following: manufactured 
home manufacturers, retailers, distributors, contractors, product 
suppliers, product distributors, installers, transporters, 
developers, landscapers, and/or homeowners.

Subpart--Consumer Complaint Handling and Remedial Actions


Sec.  3282.401  Purpose and scope.

    (a) The purpose of this subpart is to establish a system under 
which the protections of the Act are provided with a minimum of 
formality and delay, but in which the rights of all parties are 
protected.
    (b) This subpart sets out the procedures to be followed by 
responsible parties, State Administrative Agencies, primary 
inspection agencies, and the Secretary to assure proper notification 
and/or correction with respect to manufactured homes as required by 
the Act. Notification and correction may be required to be provided 
with respect to manufactured homes that have been sold or otherwise 
released by the manufacturer to another party when the responsible 
party, an SAA or the Secretary determines that an imminent safety 
hazard, serious defect, or defect may exist in those manufactured 
homes as set out herein. For non-compliances, correction shall be 
required to the single home it's reported in.
    (c) This subject sets out the rights of retailers under section 
613 of the Act, 42 U.S.C. 5412, to obtain remedies from 
manufacturers in certain circumstances.


Sec.  3282.402  General principles.

    (a) Nothing in this subpart or in these regulations shall limit 
the rights of the purchaser under any contract or applicable law.
    (b) The liability of manufactured home manufacturers to provide 
remedial actions under this subpart is limited by the principle that 
manufacturers are not responsible for failures that occur in 
manufactured homes or parts thereof as the result of the actions of 
other responsible parties, normal wear and aging, gross and 
unforeseeable consumer abuse, or unforeseeable neglect of 
maintenance.
    (c) Responsibility for remedial actions under this subpart may 
also be assessed to responsible parties to the extent that they have 
contributed to or caused the failure.
    (d) The extent of a responsible party's responsibility for 
providing notification and/or correction depends upon the 
seriousness of problems for which they may be responsible under this 
subpart.
    (e) It is the policy of these regulations that all consumer 
complaints or other information indicating the possible existence of 
an imminent safety hazard, serious defect, defect, or non-compliance 
should be referred to the manufacturer and/or retailer and/or other 
responsible party of the potentially affected manufactured home as 
early as possible so that the manufacturer or other responsible 
party can begin to timely respond to the consumer and take any 
necessary remedial actions. If the responsible party receiving the 
notice believes the issue is the responsibility of another 
responsible party, the information may be forwarded to that party.


Sec.  3282.403  Limitations

    This shall limit the requirements under this subpart for 
notification or correction to the time frames listed below;
    (a) By a manufactured home manufacturer or retailer, to a period 
of five (5) years from the date of first sale and completion of set-
up of the manufactured home to the first purchaser. Any home over 
five (5) years in age from the date of sale and delivery to the 
first purchaser is exempt from these regulations or requirements for 
notification or correction by a manufactured home manufacturer or 
retailer;
    (b) By an installer, contractor, product supplier, product 
distributor, transporter, developer, or landscaper for work 
completed and/or product supplied, to a period of two (2) years from 
the date such work is completed or such product is supplied. Any 
home over two (2) years after the date of completion of such work is 
exempt from these regulations by an installer, contractor, product 
supplier, product distributor, transporter, developer, or 
landscaper.
    (c) The homeowner has a continuing obligation for providing 
adequate upkeep and maintenance of their manufactured home.
    (d) Manufacturers and/or other responsible parties are not 
liable for the notification and correction of work done by others.


Sec.  3282.404  Consumer complaint and information referral.

    When a consumer complaint or other information indicating the 
likely existence of a non-compliance, defect, serious defect, or 
imminent safety hazard is received by a State

[[Page 43989]]

Administrative Agency or the Secretary, the SAA or the Secretary 
shall forward the complaint or other information to the responsible 
party. The responsibility to assure proper investigation and 
assignment of responsible party belongs to the SAA in the state in 
which the home is located. The SAA or the Secretary may, when it 
appears from the complaint or other information that more than one 
manufactured home may be involved, simultaneously send a copy of the 
complaint or other information to the SAA of the state where the 
manufactured home was manufactured or to the Secretary if there is 
no such SAA. When it appears that an imminent safety hazard or 
serious defect may be involved, the SAA shall send a copy to the 
Secretary. The SAA in the state of production of the manufactured 
home shall assist the SAA in the state in possession of the 
manufactured home as needed. The SAA in the state of production 
shall be responsible to assure the manufacturer's records reflect 
the proper investigation, record keeping, corrective action, and 
responses of manufacturer actions.


Sec.  3282.405  Investigation, determination, repair and notification 
by responsible parties.

    (a) The manufacturer shall review its records to determine 
whether or not a defect, serious defect, or imminent safety hazard 
is indicated as set out in this subpart with respect to all 
manufactured homes produced by the manufacturer within five (5) 
years of the date of sale to the first purchaser, in which there 
likely exists an imminent safety hazard, serious defect, or defect.

[FR Doc. 03-18908 Filed 7-24-03; 8:45 am]
BILLING CODE 4210-27-M