[Federal Register Volume 75, Number 120 (Wednesday, June 23, 2010)]
[Proposed Rules]
[Pages 35902-35918]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-15088]



[[Page 35901]]

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Part IV





Department of Housing and Urban Development





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24 CFR Parts 3282 and 3285



On-Site Completion of Construction of Manufactured Homes; Proposed Rule

  Federal Register / Vol. 75 , No. 120 / Wednesday, June 23, 2010 / 
Proposed Rules  

[[Page 35902]]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 3282 and 3285

[Docket No. FR-5295-P-01]
RIN 2502-AI83


On-Site Completion of Construction of Manufactured Homes

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would establish a procedure whereby 
construction of new manufactured housing can be completed at the 
installation site, rather than in the factory. Under current HUD 
regulations, a manufacturer must obtain HUD approval for on-site 
completion of each of its designs. This rule would simplify the 
process, by establishing uniform procedures by which manufacturers 
could complete construction of their homes at the installation site 
without obtaining advance approval from HUD. This rule would apply 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. 
Additionally, the proposed rule would not apply when a major section of 
a manufactured home is to be constructed on-site.

DATES: Comments Due Date: August 23, 2010.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Regulations Division, Office of General 
Counsel, Department of Housing and Urban Development, 451 7th Street, 
SW., Room 10276, Washington, DC 20410-0500. Communications must refer 
to the above docket number and title. There are two methods for 
submitting public comments. All submissions must refer to the above 
docket number and title.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street, SW., Room 10276, 
Washington, DC 20410-0500.
    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
http://www.regulations.gov. HUD strongly encourages commenters to 
submit comments electronically. Electronic submission of comments 
allows the commenter maximum time to prepare and submit a comment, 
ensures timely receipt by HUD, and enables HUD to make them immediately 
available to the public. Comments submitted electronically through the 
www.regulations.gov Web site can be viewed by other commenters and 
interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.

    Note:  To receive consideration as public comments, comments 
must be submitted through one of the two methods specified above. 
Again, all submissions must refer to the docket number and title of 
the rule.

    No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the public comments must be 
scheduled by calling the Regulations Division at 202-708-3055 (this is 
not a toll-free number). Individuals with speech or hearing impairments 
may access this number via TTY by calling the Federal Information Relay 
Service at 800-877-8339. Copies of all comments submitted are available 
for inspection and downloading at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: William W. Matchneer III, Associate 
Deputy Assistant Secretary for Regulatory Affairs and Manufactured 
Housing, Office of Housing, Department of Housing and Urban 
Development, 451 7th Street SW., Room 9156, Washington, DC 20410, phone 
number 202-708-6409 (this is not a toll-free number). Persons with 
hearing or speech impairments may access this number via TTY by calling 
the toll-free Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    The National Manufactured Housing Construction and Safety Standards 
Act of 1974 (42 U.S.C. 5401 et seq.) (Act), as amended, authorizes HUD 
to establish and amend the Manufactured Home Construction and Safety 
Standards (construction and safety 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 that 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 
stated 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 proposed rule would establish procedures to permit completion 
of new manufactured housing at the installation site, rather than in 
the factory, under certain circumstances. Currently, Sec.  3282.14(b) 
requires that manufacturers request and obtain HUD approval to permit 
alternative construction (AC) for each model of home that it wants to 
complete construction at the home site, rather than in the production 
facility. In general, this proposed rule would obviate the need for HUD 
approval in certain circumstances and permit construction on-site, 
rather than in the factory, that, upon completion, meets the 
construction safety standards. The on-site work that would be covered 
by this proposed rule would be limited to work required to bring the 
home into conformance with these standards. This rule would simplify 
on-site construction, by establishing uniform procedures to permit 
manufacturers to construct homes at the installation site without 
seeking advance approval. In developing this proposed rule, HUD 
provided a draft version to the Manufactured Housing Consensus 
Committee (MHCC) and incorporated many of the committee's comments. 
MHCC is a Federal Advisory Committee authorized by the Manufactured 
Housing Improvement Act of 2000 (Pub. L. 106-569) (2000 Act). This 
consensus committee was established to provide HUD with periodic 
recommendations regarding Federal manufactured housing construction and 
safety standards and related procedural and enforcement regulations. 
MHCC is composed of 21 voting members representing manufacturers and 
retailers, consumers, organizations with a general interest in 
manufactured housing, and public officials.
    The MHCC considered the new on-site completion process to be an 
improvement on the existing AC process. As recommended by MHCC,

[[Page 35903]]

HUD has modified the text of its original draft of this proposed rule 
to recognize that some aspects of joining sections of multiple section 
homes constitutes installation, rather than construction. HUD has been 
careful to make this distinction in other recent rules it has 
promulgated. On October 19, 2007 (73 FR 59338), HUD published a final 
rule that establishes model installation standards in 24 CFR part 3285. 
In that final rule, several subparts identify particular kinds of work 
done on-site to join section homes as being within the scope of these 
installation requirements.
    In addition to seeking general comments on this rule, HUD requests 
comments on a number of specific questions regarding how to define the 
scope of work that may be permitted under this proposed rule (see 
Section III of this preamble). Commenters are encouraged to consider 
these distinctions as they prepare their submissions on this proposed 
rule.

II. This Proposed Rule

    Section 3282.14 of HUD's Manufactured Home Procedural and 
Enforcement Regulations permits the sale or lease of manufactured homes 
that are not in compliance with the construction and safety standards 
in circumstances where the public interest is not compromised. That 
section establishes specific AC procedures that allow HUD to approve 
such homes to encourage innovation and the use of new technology. The 
procedure expressly applies when manufacturers seek to use innovative 
designs or techniques that are not in conformance with the construction 
and safety standards. In order to obtain an AC approval, the 
manufacturer must show that the construction it proposes provides 
performance that is equivalent or superior to that required by the 
construction and safety standards.
    The AC process is limited to specific circumstances and requires 
the manufacturer to submit a formal request to HUD. This procedure can 
be lengthy, and, when originally implemented, was not intended to 
address the 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. HUD believes that the individual application and approvals 
required by the AC process limit the availability of safe, durable, and 
affordable manufactured housing.
    This proposed rule would authorize HUD's approved Design Approval 
Primary Inspection Agencies (DAPIAs) and Production Inspection Primary 
Inspection Agencies (IPIAs) (collectively known as PIAs) to approve and 
inspect manufactured homes designed to be completed on-site. The 
proposal is consistent with HUD's policy to expand regulatory 
flexibility and encourage innovation in the construction of 
manufactured homes, and facilitate the timely completion of 
manufactured homes on-site. This proposed rule would also allow HUD to 
better use its existing resources to ensure that manufactured housing 
is durable and safe. This proposed rule would apply only to completion 
of home construction, and thus not apply to the installation of the 
home. Construction of a manufactured home and installation of a 
manufactured home are subject to two separate standards. As noted 
earlier, the HUD standards for the installation of manufactured homes 
are codified at 24 CFR 3285.
    For HUD to allow this variance from the current requirements 
relating to the construction of manufactured housing in the factory, 
manufacturers must establish an adequate quality control and inspection 
process, and must provide for good recordkeeping, in order to ensure 
protection for consumers and the public. In reviewing comments, HUD 
will be responsive to the needs of manufacturers, private inspection 
agencies, state officials, and consumers. HUD emphasizes that the 
procedures that would be permitted under this proposed rule would apply 
only to aspects of construction subject to Federal construction and 
safety standards. Thus, approval of construction completed on-site 
under this new process cannot be extended to requirements imposed under 
state or local authority that are not subject to Federal 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 the objective of the Federal 
manufactured housing program, this rule does not propose to 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. In 
Section III of this preamble (``Specific Issues for Comment''), 
commenters are invited to respond to a number of questions aimed at 
defining the limits for proposed procedures.
    HUD submits that allowing selected completion of construction after 
the manufactured home is transported to the site, without requiring 
prior AC approval, will encourage the use of designs and techniques 
that will demonstrate the adaptability and versatility of manufactured 
housing. Manufacturers continue to make significant improvements to 
both the quality and the aesthetics of such homes. Easing the process 
for on-site construction could lead to increased recognition of 
manufactured homes as a viable source of unsubsidized affordable 
housing and could encourage zoning policies that do not discriminate 
against manufactured housing.

A. Incorporation of Manufactured Housing Consensus Committee 
Recommendations

    This proposed rule has a lengthy history involving collaboration 
with MHCC during the very beginning stages when the actual objectives 
and the concept of on-site completion were being developed. Starting in 
March 2003, MHCC was first provided with the Department's initial 
proposal concerning on-site completion. The concept evolved beginning 
with the MHCC's response in May 2003 and comments in August 2003. 
Additional discussions with MHCC took place in December 2003. From 2004 
through 2007, the HUD continued to update MHCC on the status of the 
proposed rule, and drafts were exchanged. In February 2008, HUD 
provided MHCC with a prepublication draft and spent several hours 
discussing the draft with MHCC in April, July, and August of 2008. 
Additional changes were made as a result of those discussions, and MHCC 
was provided with its last prepublication draft in April 2009.
    As a result of the comments received from MHCC on HUD's draft 
proposal, HUD modified the text of the draft proposed rule and 
accompanying preamble in several fundamental and substantial ways. One 
significant change recommended by MHCC, which HUD incorporated into the 
model installation standards and installation program, was to include 
several specific aspects of the

[[Page 35904]]

close-up work \1\ done on multiple section homes under the scope of 
installation standards, rather than under the scope of the construction 
and safety standards. While HUD does not propose to subject this work 
to the requirements of this proposed rule, such work would be subject 
to all applicable Federal and state installation requirements. Further, 
as a result of being considered installation rather than construction, 
different procedural and remedial requirements would apply to this 
work.
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    \1\ Close-up consists of the work and activities for completing 
the assembly of the manufactured home. It is the work of joining up 
of all sections of a multi-section manufactured home. (See 24 CFR 
part 3285, subpart I.)
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    Through this rule, HUD seeks to establish a clear basis for 
determining the party responsible for the various activities relating 
to producing and siting a manufactured home. By including the close-up 
of multiple section homes within installation standards, rather than 
construction and safety standards, those limited and specifically 
defined aspects of the placement of a manufactured home at a site would 
not be subject to either the on-site completion or AC processes. For 
example, the final work on Wind Zone I low-pitch hinged roofs that are 
not penetrated would generally be governed by state or Federal 
installation standards. HUD stipulates wind loads and design 
requirements at 24 CFR 3280.305(c)(1) and (2). Each manufactured home 
must be designed according to according to these standards; the home 
must be designed and constructed to conform to one of three wind load 
zones.\2\ The appropriate wind zone used in design is dependent upon 
where the home will initially be installed.
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    \2\ In order to ensure that manufactured homes survive the 
threats of hurricanes and other storms, HUD developed Wind Zone 
construction standards. Manufactured homes may be installed only in 
counties where they meet the Wind Zone construction standards that 
apply to that county. Wind Zone I homes have the least stringent 
construction standards and Wind Zone III homes have the most 
stringent construction standards. Homes designed and constructed to 
a higher Wind Zone can be installed in a lower Wind Zone (a Wind 
Zone III home can be installed in a Wind Zone I or II location). 
However, a Wind Zone I home cannot be installed in either a Wind 
Zone II or III area.
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    Even when close-up work is governed by the installation standards, 
the manufacturer remains responsible for assuring that the sections of 
a multiple section home can be joined in a way that will bring the home 
into conformance with the construction and safety standards. The model 
installation standards require manufacturers to provide instructions 
for close-up in their installation instructions (see Sec.  3285.801). 
Therefore, while the installer is responsible for completing the close-
up work, the manufacturer continues to be responsible for providing 
instructions that are acceptable under the construction and safety 
standards.
    Under this proposed rule, work done to complete the home to the 
construction and safety standards would fall within three categories: 
(1) Work done in the factory in accordance with the construction and 
safety standards and an approved quality assurance manual; (2) work 
done that does not comply with the construction and safety standards, 
but has been approved through the AC process; and (3) work done in 
accordance with procedures proposed to be established by this rule, 
which would cover work done beyond that done in the factory to complete 
certain aspects of the home to the construction and safety standards. 
The designs for construction work to be done on-site in accordance with 
the procedures proposed by this rule would be subject only to Federal 
construction and safety standards; 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 
Federal construction and safety standards.
    Examples of the types of work to which the rule would apply 
include:
    (a) Completion of dormer windows;
    (b) Addition of stucco, stone, or other siding that is subject to 
transit damage;
    (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 those standards;
    (d) Assembly of any multistory design that conforms to the 
construction and safety standards when finished; and
    (e) Certain types of hinged roof and eave construction that are not 
exempted as installation by Sec.  3285.801(f). This exemption would 
include certain roof peak cap construction and peak flip construction 
associated with completing the peak/ridge area of the roof. Conforming 
changes to this regulatory section of the Model Manufactured Home 
Installation Standards are also being proposed to clarify that certain 
design elements, including those examples listed above, are to be 
considered construction and, as such, are also not exempted as 
installation regardless of the roof pitch of the hinged roof.
    On-site completion as proposed by this rule would apply to the 
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 proposed to be covered by 
this rule.
    However, HUD is seeking comments on whether different treatment for 
high pitch roofs with slopes 7:12 or greater is needed because for 
higher roof slopes, a portion of the attic meets the ceiling height/
living space requirements of the construction and safety standards and, 
as such, will require the attic floor to be designed for the floor live 
loads of 40 pounds per square foot (psf), in accordance with Sec.  
3280.305(g) of the construction and safety standards. HUD is concerned 
that under the on-site completion process, these floor live loads may 
not be considered, as is the current practice with the AC process. For 
roof slopes of less than 7:12, the ceiling height of the entire attic 
space will be less than 6'-0'' and, as such, does not meet the minimum 
requirements for living space in Sec.  3280.104 of the construction and 
safety standards.
    Further, the reference standard of the American Society of Civil 
Engineers (ASCE), ASCE 7-88, provides that any uninhabitable attic 
space which can be used for storage be designed for a storage live load 
of 20 psf. Manufacturers should note that they remain responsible for 
assuring that a home with a high-pitch hinged roof complies with all 
applicable construction and safety standards if the home is sold with 
indications that the additional space provided under the roof when 
fully erected is suitable for living space. Therefore, when fixed 
stairway access is provided to the attic space, the floor of the attic 
must comply with structural design requirements for floors, either to 
be used as living space or to withstand a 40 psf live load (rather than 
a storage load). The manufacturer must also provide either insulation 
requirements for the floor of the upper living space area or an 
insulated and, where appropriate, weather-tight attic access panel or 
hatch.
    In the final rule that will follow this proposed rule, HUD may 
further clarify these requirements through conforming amendments to the 
design requirements in the construction and safety standards that must 
be met for high-slope hinged roofs below which living space is likely 
to be created when the roof is fully raised.

[[Page 35905]]

    Examples of designs in which the completed home does not comply 
with the construction and safety standards when finished and would 
therefore require an AC approval include:
    (a) Single-family attached construction;
    (b) Multi-story homes that do not comply with the standards because 
of egress or other requirements; and
    (c) A home installed without floor insulation over a basement; 
i.e., the existence of a basement will not substitute for insulation 
under the construction and safety standards. (However, when 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.)
    Another change recommended by MHCC and adopted by HUD in this 
proposed rule concerns the labeling system for homes completed under 
the on-site process. Based on MHCC recommendations, HUD has fashioned 
an on-site labeling system that requires only one permanent label, 
rather than both a temporary, preliminary and a permanent final label, 
as HUD had originally drafted.
    HUD did not incorporate several changes the MHCC recommended to the 
consumer notice required as part of this rule, because the 
recommendations were not consistent with the responsibilities otherwise 
established for all parties in this proposed rule. The text of the 
consumer notice and special permanent label were revised to simplify 
the content, while assuring adequate consumer understanding of the 
construction procedure applicable to any manufactured home completed 
on-site under this special approval process.
    This proposed rule also provides that, as part of the on-site 
completion process, the DAPIA will approve a quality control checklist 
provided by the manufacturer. This checklist will then be used in 
verifying that the required on-site work has been completed to the 
construction and safety standards, and may also be used by the IPIA to 
ensure the effectiveness of the manufacturer's quality control system.
    Another significant change recommended by MHCC that HUD 
incorporated was to limit the performance of the on-site inspections 
required by this rule to the IPIA. HUD's draft proposal included a 
section entitled ``State Agency Inspection.'' This section permitted a 
state to elect to conduct the on-site inspections set forth in this 
rule if the state met certain criteria necessary to become an Accepted 
State Agency.
    There was considerable disagreement about whether such a state 
should conduct on-site inspections ``on behalf of the IPIA.'' MHCC's 
recommendation proposed that even though the IPIA was not performing 
the on-site inspection, the IPIA would still retain the responsibility 
of determining whether or not a manufacturer was performing adequately. 
MHCC's proposal also only permitted the IPIA to require red tagging and 
re-inspection when such a determination was made. MHCC's recommendation 
closely tracked the arrangement that is currently used by IPIAs to 
conduct AC inspections whereby IPIAs contract with third parties to 
conduct the final on-site inspection. However, unlike the AC 
arrangement proposed by this rule, the IPIA was not expected to enter a 
contractual arrangement with state governments; rather, HUD would 
authorize state on-site inspections. HUD suggested that any state that 
met the requirements to perform on-site inspections in the state should 
also be responsible for reviewing each manufacturer's final on-site 
inspection report and determining whether to accept that inspection 
report. For the purposes of this proposed rule, the State Agency 
Inspection section was omitted in its entirety.
    HUD nevertheless remains highly interested in this issue and is 
seeking additional comments on the topic, and, based on comments, will 
further consider the appropriateness of its possible inclusion in this 
section in HUD's regulations.
    MHCC also suggested that the requirement for the DAPIAs to retain 
copies of on-site approvals in their permanent records be limited to 5 
years. Because this suggestion is consistent with the current 5-year 
requirement for DAPIA retention of approved designs and design changes, 
HUD has incorporated the MHCC suggestion into the proposed rule.

B. Procedure for Approval of Completion of Non-Compliant Designs 
(Alternative Construction)

    The proposed procedure to allow limited on-site completion of 
manufactured homes would complement the AC procedure by which HUD now 
approves construction using designs and techniques that do not comply 
with the construction and safety standards. These two procedures (HUD's 
proposed procedure and the existing AC procedure) will address 
different aspects of the final product, though both may be utilized on 
the same home. The on-site completion process proposed by this rule is 
for homes that comply with the requirements of the construction and 
safety standards and would eliminate further use of the AC process for 
this same purpose. The AC process would be reserved for homes with use 
of new designs or techniques that do not comply with the construction 
and safety standards.
    The procedures proposed to be established by this rule for on-site 
completion would differ from the AC process in that:
    (a) On-site completion would apply only 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;\3\
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    \3\ (Later in this preamble, HUD raises a question about whether 
this proposed process for completion on-site also could apply to 
inspection of transportation damaged homes to which substantial 
repairs are performed outside of the factory. In such a case, the 
manufactured home would have been labeled in the factory, but 
because of damage sustained before sale to the purchaser, or 
alterations made as part of the sale, could not be sold by the 
retailer until significant repairs are made under the authority of 
the manufacturer, as provided in 24 CFR 3282.253.)
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    (b) On-site completion would allow a manufacturer to work directly 
with the DAPIA and IPIA for approval to complete aspects of 
construction at the final home site and avoid submissions for approval 
by HUD. The on-site completion process would also eliminate the direct 
HUD review and approval currently required under the AC process; and
    (c) On-site completion would require the manufacturer's quality 
control manual to extend to the on-site work. The process would require 
the IPIA to concur with the manufacturer's quality control manual and 
to accept responsibility for assuring that the system is working and 
that on-site construction is completed in conformance with the 
construction and safety standards and approved designs. Only persons 
authorized by the manufacturer would complete the construction work on-
site, and only the IPIA in the factory of origin, or another qualified 
independent inspector acceptable to and acting on behalf of the IPIA 
(including, possibly, an IPIA in the state where the home is sited), 
would perform oversight tasks, including inspections.
    The process proposed by this rule would eliminate much of the 
reporting for site inspections of completed homes currently required 
under the AC process. The manufacturer would need only report to HUD or 
its agent the location of the home, its serial number,

[[Page 35906]]

and a brief description of the work done on-site. This information is 
proposed to be included on a modified production form that is based on 
the current HUD Manufactured Home Monthly Production Report (Form 302), 
on which each manufacturer already reports to its IPIA and to HUD (or 
its monitoring contractor) certain completion and shipping information 
on labeled units.
    The on-site completion process does not alter in any manner the 
overriding requirement to construct or complete a home in compliance 
with the construction and safety standards. Taking a home out of 
compliance with these standards, regardless of where completion takes 
place, is a violation of the Act. For example, if a retailer agrees to 
make any major change to the home on-site, the home must meet the 
construction and safety standards when that work is completed. The 
retailer continues to be prohibited from selling a home that does not 
comply with the construction and safety standards, and the manufacturer 
continues to be responsible for assuring correction of a nonconforming 
home before sale. To the extent that the alteration involves an aspect 
of the home that is governed by the construction and safety standards, 
the work must be performed in accordance with a DAPIA-approved design 
and must be inspected in accordance with the on-site completion 
requirements that would be established in this rulemaking. State and 
local jurisdictions continue to be permitted to inspect add-ons and, as 
currently provided in Sec.  3282.303(b) of the regulations, to inspect 
retailer alterations.

C. Discussion of Proposed Regulations

    1. Purpose and applicability (Sec.  3282.601). This rule proposes a 
procedure that would allow manufacturers to deviate from existing 
completion requirements when an aspect of construction cannot 
reasonably be completed in the manufacturer's production facility. For 
example, it might not be possible to completely assemble a dormer 
window until the home arrives on-site. In general, the proposed rule 
permits on-site completion under some circumstances, without requiring 
an AC approval from HUD. 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). The on-site approval 
process will be 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 from, for example, 
transportation limitations, design requirements, or delivery of an 
appliance ordered by a homeowner. This proposed rule would clarify when 
work on certain hinged roofs could be completed under the installation 
standards, rather than through the on-site process under the 
construction and safety standards.
    3. DAPIA Approval (Sec.  3282.603). The proposed rule provides that 
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 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.\4\ 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.
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    \4\ As with the AC process, an approval for on-site completion 
may be made more flexible when the IPIAs and manufacturer agree that 
the approval is not model-specific, but may be extended to 
additional models. See Sec.  3282.14(c)(3).
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    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 use of an inspection checklist developed by the 
manufacturer and approved by the DAPIA, in the manufacturer's and 
IPIA's final inspections. As with the procedures followed under an 
approval for AC, the manufacturer's IPIA will then be responsible for 
assuring that the homes the IPIA inspects under the new procedures 
proposed by this rule 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, the DAPIA would be 
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 under 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 to be performed;
    (c) Determining whether there is complex work involved that 
requires special testing or inspections for IPIA inspectors to perform 
the on-site inspections; and
    (d) Revoking or amending its approvals for on-site construction, as 
provided in Sec.  282.609, after determining that the manufacturer is: 
(1) Not complying with the terms of the approval or the requirements of 
Sec.  3282.611; (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 the these procedures. This report must be consistent 
with the DAPIA approval and

[[Page 35907]]

is to be submitted, in part, on the modified production Form 302. A 
copy of this report also must be submitted to the State Administrative 
Agencies (SAAs) of the states where the home is substantially completed 
in the factory and where the home is sited, as applicable. The serial 
numbers as provided by the manufacturer must contain the prefix ``SC'', 
for site construction.
    A home will be shipped from the factory with a special on-site 
completion certification label. This on-site completion certification 
label is in lieu of the traditional manufacturer's certification label 
(see 24 CFR 3280.5 and 3282.362(c)(2)) and will indicate that the 
manufacturer must complete and inspect the authorized on-site work. The 
on-site completion certification label will be a different color, but 
will be the same size as the traditional certification label and will 
be located and affixed in the same manner as required for the 
traditional certification label (see 24 CFR 3280.11). The color green 
has been specified as a requirement for the on-site completion label, 
in order to distinguish it clearly from the traditional red 
manufacturer's label for certification of completion in the factory in 
accordance with the construction and safety standards.
    HUD seeks comment on whether this color distinction between the 
traditional label and the on-site completion label would be helpful to 
state and local regulators or to consumers who might purchase homes 
completed under the on-site completion process.
    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 would be 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.
    6. Consumer Information (Sec.  3282.606). In addition to the on-
site completion certification label, 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 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 includes information instructions for those aspects of 
construction to be completed on-site and provided with the home. The 
notice may be removed only 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. 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 will 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 special on-site completion certification labels 
that the manufacturer may use to label a home that has been 
substantially completed in the factory;
    (c) Monitoring the manufacturer's proposed 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. When the DAPIA deems it 
appropriate, the DAPIA may establish minimum qualifications for the 
inspector who is to perform the final site inspection responsibilities 
of the IPIA (e.g., inspector must be an engineer); 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.
    8. Manufacturer's Responsibilities (Sec.  3282.608). The 
manufacturer's responsibilities will include:
    (a) Certifying the home as required and as evidenced by affixing 
the on-site completion certification label;
    (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 would be defined as installation work in a 
final rule establishing 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;
    (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 a copy of the instructions for completing the work 
on-site, inside the home and to the IPIA, 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-

[[Page 35908]]

approved quality assurance manual for on-site completion changes, the 
approved instructions for completing the construction work on-site, and 
the approved inspection checklist.
    HUD invites commenters to address whether manufacturers should be 
required to comply with this requirement by maintaining these documents 
at the job site;
    (h) Providing a copy of the final site inspection report and 
certificate of completion to the first purchaser or lessor of the home 
prior to occupancy;
    (i) Maintaining a copy of the site inspection report and the 
notification of the IPIA's approval or acceptance of this report; and
    (j) 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.
    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.

D. Comparison of Current and Proposed On-Site Construction Approvals

    1. Current Process vs. On-Site Completion. HUD has allowed certain 
details of manufactured homes to be finalized on-site as an extension 
of the siting process, but without imposing specific requirements for 
the on-site inspection of the work. This work has included, to some 
extent: (1) Final framing and decking of certain hinged roofs that are 
not penetrated for windows or connections, including connections for 
heat-producing appliances and plumbing equipment; (2) close-up details 
for multiple sections; and (3) close-up details for single sections 
(e.g., exterior roof coverings and siding for expandable rooms). Under 
this proposed rule, HUD would continue to allow this type of work to be 
finalized at the home site, but would require the work to be subject to 
better quality control processes, either as part of installation, AC, 
or on-site completion. Other details also could be finished on-site 
under this proposed rule or under the AC process in Sec.  3282.14. For 
example, areas that could not be completed in the factory because of 
transportation height restrictions (e.g., incomplete flue pipe 
installations for high roof slope conditions) would require approval to 
be completed on-site.
    2. Activities Qualifying for On-Site Approval. Construction 
activities that could qualify for approval under the procedures set out 
in this proposed rule 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, to the extent warranted because:
    (a) Any hinged roof that is not considered part of the installation 
of the home (See Sec.  3285.801(f));
    (b) The home design involves work that cannot reasonably be 
completed in the factory (e.g., fireplaces at marriage lines and 
designs that involve such finishing aspects as stucco, brick, or tile). 
This could include work that would be performed by a retailer in 
providing an add-on for the home when that work takes the home out of 
conformance with the construction and safety standards and then brings 
it back into conformance; or
    (c) The homeowner is providing a required appliance, such as a 
furnace, water heater, or cooking range.
    3. Activities Not Qualified for On-Site Approval. The manufacturing 
of the following items would not qualify as limited site completion, 
and therefore would not qualify under the procedures set out in this 
proposed rule for approval outside the certified production facility 
and quality assurance program:
    (a) Complete or substantial construction of structural assemblies 
of a home, except pursuant to an approval received by the manufacturer 
under AC (Sec.  3282.14). Examples of structural assemblies include the 
roof, walls, and the floor. An example of construction that would be 
substantial and, therefore, would not qualify for the on-site 
completion process, is single family attached construction;
    (b) Complete or substantial assembly of systems (e.g., electrical; 
plumbing; heating, cooling, and fuel burning systems; transportation; 
and fire safety) and components that are built as an integral part of 
the home during the manufacturing process and are usually completed in 
the factory, except pursuant to an approval received by the 
manufacturer under Sec.  3282.14 or as allowed to be finalized at the 
site as part of installation; and
    (c) Construction that when completed on-site would not conform to 
the manufactured home construction and safety standards. An example of 
this type of construction would be a multi-story home that did not 
comply with the construction and safety standards because of distance 
requirements to reach an exterior door for egress from a bedroom.

E. Conforming Changes

    The proposed rule includes conforming changes to two other sections 
of 24 CFR part 3282. A conforming amendment is made to Sec.  3282.552 
to specify the information that is included on the reports currently 
submitted under 24 CFR part 3282.
    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.

III. Specific Issues for Comment

    HUD continues to encourage suggestions to improve its 
responsiveness to technological advancements and innovation that foster 
the use of manufactured housing for affordable housing and to enhance 
affordable homeownership opportunities. To assist in HUD's development 
of this proposed rule, HUD has focused and solicited comments on 
certain features of its proposed on-site completion procedure. Further, 
HUD is very interested in the views of manufacturers, retailers, 
consumers, private inspection agencies, installers, and state and local 
governments on the usefulness and practical aspects of such a 
procedure. Therefore, in addition to commenting on the specific 
provisions of this proposed rule, HUD invites comment on the following 
questions and any other related matters or suggestions:
    (1) How should the rule define the limits of the construction work 
that may be completed on-site? Should the definition of a manufactured 
home that is ``substantially completed'' in the factory be clarified? 
If so, how?

[[Page 35909]]

    (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? How can home purchasers be 
assured that this work conforms to the Federal construction and safety 
standards or does not take the home out of compliance? Should other 
special requirements be attached to any of these construction aspects; 
e.g., should hinged roofs be required to be completed by factory-
certified installers?
    (3) Has HUD drawn the proper lines between aspects of work on the 
home to be finalized as part of installation (and, therefore, under the 
responsibility of the installer, rather than the manufacturer) and 
those aspects that would be considered completion of construction under 
a special approval for either on-site or AC?
    (4) Until recently, few on-site inspections were being conducted 
prior to occupancy under the current AC practice. 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? Is it adequate protection to require the manufacturer to 
prepare a final site inspection report that includes a certification of 
completion as required in this proposed rule? Would using a temporary, 
preliminary and a permanent final label instead of the on-site 
completion certification label be a better way of assuring that the 
inspections are performed? With respect to the financing of 
manufactured homes, HUD seeks comments from lenders on better ways to 
ensure that adequate on-site inspections are conducted prior to 
occupancy.
    (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? If yes, what 
criteria should such a state meet in order to perform this function? 
Assuming established criteria were in place, should a state that meets 
the criteria have an exclusive right to perform these on-site 
inspections in its state? If a state were permitted to conduct the on-
site inspections, should the state also review the manufacturer's final 
on-site inspection report and determine whether to accept that 
inspection report, or should the IPIA be responsible for this task? If 
the state is permitted to conduct the on-site inspection, would it 
conduct the inspection independently or on behalf of the IPIA? Is it 
appropriate for a state to be working for an IPIA? Under these 
circumstances should the ability to require red-tagging and re-
inspection of homes rest solely with the IPIA or extend to the state 
performing the on-site inspection?
    (6) Should the IPIA inspect all homes completed on-site, or should 
the IPIA undertake inspections for only a certain number or percentage 
of homes completed on-site? Should there be an initial inspection of a 
certain number of homes and then a random number thereafter? What 
percentage of homes should be inspected to ensure compliance with the 
Federal construction and safety standards for homes completed on-site?
    (7) Should authorized inspectors be limited to state and local 
inspection officials, rather than permitting IPIAs to choose some other 
qualified independent inspector? How should a ``qualified independent 
inspector'' be defined, and should a provision be included to prohibit 
use of inspectors who have been identified as performing inspections 
inadequately?
    (8) Does HUD need to identify those aspects of completion of the 
home that are not subject to Federal construction and safety standards 
(e.g., stairs and handrails) and inform local inspectors that they may 
inspect those aspects? For example, in its request for approval to 
complete construction on-site, should a manufacturer be required to 
identify those design aspects that are not covered by the construction 
and safety standards and, therefore, are subject to local or state 
building codes? Should these design aspects also be listed individually 
on the Notice required to be displayed in the home?
    (9) Section 3282.604 sets forth the DAPIA's responsibilities. In 
addition to determining if there is complex work involved requiring 
special instructions, should the DAPIA be permitted to determine 
whether the complex work also requires special criteria or 
qualifications for the IPIA inspector in order to perform the on-site 
inspections?
    (10) Should the rule establish, or provide that the DAPIA establish 
in its approval, a deadline for completion of the work on-site and 
final inspection? Should protections, in addition to section 622 of the 
Act (42 U.S.C. 5421), be defined for the consumer who has entered into 
an arrangement to purchase a manufactured home that is to be completed 
to the construction and safety standards on-site? How can HUD ensure 
that a purchaser can occupy the home at the earliest time possible, 
consistent with the completion of acceptable inspections? Should 
regulatory protections be defined for a manufacturer or retailer that 
has entered into a contract in which the construction of the home is to 
be completed on-site by a certain date, but where delays have occurred 
outside of the manufacturer's or retailer's control in the construction 
or final inspection?
    (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?
    (12) Under subpart F of HUD's regulations in 24 CFR part 3282, a 
retailer that makes alterations of correction on a home before its sale 
to the first purchaser is acting on behalf of the manufacturer. Should 
the regulations in 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? Should the 
regulations in subpart F be extended to provide that some or all of the 
procedures for inspection apply whenever a retailer, in the process of 
providing alterations or add-ons to a new home, takes the home out of 
compliance with the construction and safety standards? If HUD extends 
the on-site construction approval process to retailer corrections, 
should the required inspections apply to only certain kinds of 
corrections? If so, to which?
    (13) Should the rule address more explicitly what happens if the 
manufactured home does not pass the on-site inspection? If so, what 
additional details would be helpful? For example, should the rule 
require that such a home be removed, repaired, or red-tagged?
    (14) Is the proposed labeling procedure, in which a home to be 
completed using the new procedures is labeled with a special label and 
includes a consumer notice referencing the procedures, workable? Would 
additional protections be necessary if, instead of following the 
proposed process for on-site completion, the IPIA would red-tag the 
labeled home at the factory, and would then itself remove the red tag 
at the site when all work is completed and found satisfactory?
    (15) What mechanism can be used to assure that the prospective 
purchaser is provided with the Consumer Information Notice?

[[Page 35910]]

    (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 on the data plate? If so, what 
should the clarification say? Without such clarification, what date 
would manufacturers use on the data plate?
    (17) Can monthly reporting to HUD of on-site home 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? If so, provide 
recommendations for how to report production information on homes 
completed on-site.
    (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?
    (19) HUD is proposing to allow the final work on certain simple 
hinged roofs to be completed as part of installation, but would require 
all other hinged roofs to be completed as part of the construction of 
the homes. Under the currently effective requirements, hinged roofs 
that are either penetrated or have slopes of 7:12 or greater must be 
approved using the AC process, while certain unpenetrated lower-slope 
hinged roofs remain the responsibility of manufacturers to complete in 
accordance with the construction and safety standards, but without need 
for any special approval. HUD is proposing more flexibility in using 
designs with such roofs because the proposed rule also would require 
all such work to be inspected and that the manufacturers remain 
responsible for the work on the most complicated designs. 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? If so, specify the kinds of work and the 
inspection requirements that should apply.
    (20) Similarly, are there any special processing or inspection 
requirements that should be included in a final rule if HUD permits 
completion on-site of multi-story and high-slope roof style homes 
designed to be located in Wind Zones II and III? To date no multi-story 
homes, or single-story homes with high-slope hinged roofs, have been 
approved under AC procedures for installation in high wind areas. In 
responding to this question, commenters should address the effect of 
significantly higher wind forces that such structures must resist, and 
the more complex connections and construction that is required to 
complete these designs on-site.
    (21) Are there other jurisdictional concerns about the monitoring 
of the work completed on-site being the continuing responsibility of 
the manufacturer's IPIA? Should the rule provide that the IPIA 
responsible under these procedures may agree to allow any other IPIA to 
provide the services required of the responsible IPIA? Would such a 
provision conflict with any state requirements relating to the 
inspection of manufactured homes?
    (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?
    (23) The proposed rule requires the manufacturer to send a copy of 
identifying information on homes completed under an on-site approval to 
HUD and to the State Administrative Agency (SAA) in the states where 
the factory is located and where the home is sited. Should the 
manufacturer also 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?
    (24) The proposed rule authorizes the DAPIA and HUD to revoke or 
amend, prospectively, an on-site completion approval. 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?
    (25) The proposed rule would permit any appliance, including a 
furnace and water heater, to be installed as part of the on-site 
completion process. 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 for use in manufactured homes?
    (26) Are the manufacturer's inspection responsibilities as outlined 
in Sec.  3282.605(c) sufficiently clear? Should the rule clarify the 
manufacturer's inspection responsibilities in relation to those of the 
IPIA?

IV. Areas of Comment on MHCC Suggestions Not Accepted in Proposed Rule

    MHCC suggested other edits to the draft of this proposed regulation 
and accompanying preamble that HUD had submitted for MHCC's review and 
comments. Earlier in this preamble, HUD identified comments from MHCC 
that were accepted and incorporated into this proposal. HUD believes it 
has incorporated the most significant suggestions made by MHCC. HUD did 
not, however, incorporate all comments from MHCC. In other instances, 
HUD has listed specific issues for comment that are related to concepts 
contained in MHCC's comments. Nevertheless, HUD invites comment on the 
following MHCC suggestions and HUD explanations for not adopting the 
suggestions:
    (1) MHCC suggested adding a definition of ``completed'' to 24 CFR 
part 3282. The definition was not adopted because HUD determined that 
it was not necessary, especially with the changes that have been made 
to include some close-up work under the scope of installation, rather 
than construction. In addition, the definition suggested by MHCC 
contained substantive requirements more appropriately included in 
separate provisions, and was not consistent with the definition of 
``substantially completed'' in the proposed rule or the use of the word 
``completed'' throughout the regulation and preamble.
    (2) MHCC suggested changes to the labeling and notification 
proposals in the draft that HUD believes have been improved by the 
clear labeling and consumer notification proposals included in this 
proposed rule. HUD has revised the draft to ensure that the consumer 
would receive notice that will aid in his or her understanding of the 
construction process used for the home, including a broad description 
of the construction work to be done on-site. The consumer notice would 
be included in transactional paperwork, similar to a requirement 
established in Sec.  3282.14(e) for notice required under the AC 
process, and would be placed in a temporary location in the home. HUD 
also was concerned that language included in the temporary notice 
suggested by MHCC would be misleading about the nature of HUD's 
oversight and the responsibilities and authority of various entities 
related to the sales transaction and siting of the home. Finally, HUD 
believes that the use of a permanent label tailored for homes completed 
using the special on-site approval process could provide subsequent 
purchasers with information about the home that might also be of 
interest to them.
    (3) HUD also retained a requirement that a copy of the final site 
inspection report, which would be based on the inspection checklist and 
approved by the IPIA, be given to the purchaser or lessor, as well as 
to the retailer. The manufacturer and IPIA are required to

[[Page 35911]]

retain a copy of the final inspection report in their files. MHCC had 
suggested a 5-year record-retention period which, as explained above, 
HUD has incorporated into the proposed rule for DAPIAs, to which a 5-
year requirement currently applies for other records. Similarly, 
however, manufacturers would be required to retain records relating to 
on-site approval and completion in the home for the same period of time 
that applies to retention of other information in the home files, i.e., 
the life of the home. IPIAs would be required to retain their records 
of actions applicable to on-site (and AC) approvals as part of their 
permanent records in accordance with Sec.  3282.362(d).
    (4) MHCC recommended adding a requirement that the manufacturer's 
site inspection report include the name and address of the installer or 
contractor responsible for performing any on-site work. Because any 
work done on-site in accordance with this proposed rule to bring the 
home into compliance with the construction and safety standards is 
ultimately the responsibility of the manufacturer, HUD has not adopted 
this recommendation, but will leave contracting and agency matters to 
private arrangements.
    (5) For purposes of public comment, HUD retained a requirement that 
every manufactured home completed under an on-site approval process be 
inspected after the construction work performed on-site is completed. 
Although homes completed on-site might no longer have to follow the 
more burdensome AC approval process, HUD has proposed that the homes be 
equally subject to a final compliance review requirement.
    MHCC suggested that the IPIA, DAPIA, and manufacturer decide on how 
the manufacturer's IPIA will review and approve the on-site work after 
the manufacturer completes its final site inspection report. HUD is 
concerned that MHCC's approach to assuring the quality of work 
performed on-site would not verify that on-site workers are capable of 
following the manufacturer's instructions or quality control procedures 
for the final stages of production. Therefore, HUD has retained the 
requirements for IPIA inspection of on-site work. However, HUD would be 
interested in receiving comments about any circumstances that could 
permit a reduced level of inspection of homes that are completed under 
an on-site approval.
    (6) Although the proposed rule provides that a final inspection of 
on-site work is to be done by the IPIA or its independent agents, HUD 
has also retained a provision that allows the DAPIA to establish 
minimal qualifications for an inspector acceptable to the DAPIA. The 
ability to assure a particular level of inspection may encourage a 
DAPIA to approve on-site completion requests that may involve unusual 
circumstances, thus making the process even more flexible.
    (7) HUD retained a requirement that MHCC suggested be eliminated; 
specifically, that the DAPIA include an ``SC'' designation on each page 
of the manufacturer's designs that includes an element of construction 
to be completed on-site. HUD believes that retaining this procedure 
will facilitate easier oversight of the on-site construction process by 
the SAAs and HUD.
    (8) MHCC had suggested language providing that the retailer must 
notify the manufacturer that a home subject to the on-site completion 
approval process is ready for siting at a specific address, or that the 
completed home is ready for the manufacturer's final inspection. 
Instead, because the manufacturer is responsible for the on-site 
completion process under this proposed rule, HUD left the requirements 
for such notification to private arrangements.
    Since the use of private arrangements for notification has not 
proven successful under current regulatory practices for AC, HUD is 
seeking comment on whether the rule should expressly address 
notification to a manufacturer about a retail sale or repair that 
requires on-site construction work. If so, HUD requests that commenters 
address how the rule should address such notification, and what would 
be the ramifications for failure to provide the notification, 
especially in light of the Act's and this proposed rule's requirements 
for manufacturer responsibility for production of homes that comply 
with the construction and safety standards.
    (9) MHCC recommended that HUD not include an initial proposal that 
defined when the responsibilities of the manufacturer and retailer 
shift under the Act and the regulations in Subparts F (24 CFR 3282.251-
3282.256) and I (3282.401-3282.416) of the Manufactured Home Procedural 
and Enforcement Regulations. HUD did not adopt this recommendation. 
Instead, HUD has revised the language of Sec.  3282.605(c) and (d) to 
more clearly establish the purpose of the provision. Because the Act 
and HUD's regulations establish responsibilities and sanctions that are 
defined in terms of point of sale, HUD believes it is important for 
manufacturers and retailers to understand at what point in a 
transaction their responsibilities will change from pre-sale to post-
sale duties. HUD understands, however, the concern that some purchasers 
experiencing ``buyer's remorse'' might try to take inappropriate 
advantage of such a provision. Therefore, HUD also is retaining 
language in the provision to establish that the provision is not 
intended to affect how a contract of sale would be enforced under state 
law.
    (10) MHCC recommended providing additional authority to the 
manufacturer's IPIA, to revoke or amend an approval for on-site 
completion work and to oversee the work of installers. HUD believes 
that neither of these revisions is necessary, and they have not been 
included in this proposed rule. An IPIA that is concerned about a 
manufacturer's performance has authority under current regulations 
(Sec.  3282.362(c)) to red-tag nonconforming homes, and can request 
that the DAPIA or HUD revoke the on-site completion approval for future 
construction. The proposed rule adopts a distinction based on MHCC's 
recommendations to include within the scope of installation, rather 
than construction, more work performed on-site to join sections of 
multiple section homes. As addressed above, the manufacturer continues 
to be responsible for construction work, regardless of who actually 
performs the work. Therefore, authority for an IPIA to review 
manufacturer performance under an on-site construction approval 
encompasses anyone who performs the work on behalf of the manufacturer.
    (11) HUD also has not accepted two MHCC recommendations concerning 
the provision of information to state and local governments that might 
have responsibilities related to manufactured homes when work is 
performed on those homes on-site. HUD has retained a requirement that 
the manufacturer provide to the SAAs and HUD, in the production and 
siting states, the serial number of each home produced under an on-site 
completion approval and a brief description of the work done on-site 
for each of these homes. Further, HUD has modified, but retained, a 
requirement that manufacturers notify the state or local jurisdiction 
of any add-on to the home that is not covered by the manufacturer's 
final on-site inspection and certification of completion, but about 
which the manufacturer knew or reasonably should have known. HUD 
intends this requirement to help the state and local jurisdictions 
identify work performed during the siting of manufactured homes that 
might be subject to state and local, rather than HUD, construction and 
inspection requirements. MHCC had recommended eliminating these 
requirements.

[[Page 35912]]

    (12) Finally, MHCC made other comments that were more editorial 
than substantive in nature. When HUD agreed with those suggestions, 
they have been incorporated into the proposed rule and preamble, as 
appropriate.

Findings and Certifications

Paperwork Reduction Act

    The proposed information collection requirements contained in Sec.  
3282 have been submitted to the Office of Management and Budget (OMB) 
for review under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520). Under that law, 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 valid control number. OMB has issued 
HUD the control number 2502-0253 for the information collection 
requirements under the current Manufactured Housing Construction and 
Safety Standards Program, which requires manufacturer submission AC 
approvals in 24 CFR part 3282.14.
    The public reporting burden for this collection of information is 
estimated to include the time for reviewing current AC approvals and 
gathering, developing, and maintaining necessary data identified in the 
proposed rule and the collection of information. The following table 
provides information on the estimated public reporting burden:

----------------------------------------------------------------------------------------------------------------
                                    Number of     Responses per    Total annual      Hours per
     Information collection        respondents      respondent       responses       response       Total hours
----------------------------------------------------------------------------------------------------------------
Request for DAPIA approval.....              48              1                48           53               2544
Manufacturer inspection report.              48            142             6,800            1              6,800
Instructions...................              48            142             6,800            0.25           1,700
Consumer notice................              48            142             6,800            0.25           1,700
IPIA inspection report.........              15            453.3           6,800            1              6,800
Copy reports...................              48            142             6,800            0.5            3,400
Maintain reports...............              48            142             6,800            0.25           1,700
Report serial numbers..........              48             12               576            0.50             288
Report add-ons.................              48            142             6,800            0.25           1,700
                                --------------------------------------------------------------------------------
    Total hours of all           ..............  ...............  ..............  ..............          26,632
     information collections...
----------------------------------------------------------------------------------------------------------------

    In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments 
from members of the public and affected agencies concerning the 
proposed collection of information to:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated 
collection techniques or other forms of information technology (e.g., 
permitting electronic submission of responses).
    Interested persons are invited to submit comments regarding the 
information collection requirements in this proposal. Under the 
provisions of 5 CFR part 1320, OMB is required to make a decision 
concerning this collection of information between 30 and 60 days after 
today's publication date. Therefore, any comment on the information 
collection requirements is best assured of having its full effect if 
OMB receives the comment within 30 days of today's publication. 
However, this time frame does not affect the deadline for comments to 
the agency on the proposed rule. Comments must refer to the proposal by 
name and docket number (FR-5295-P-01) and must be sent to:

HUD Desk Officer, Office of Management and Budget, New Executive Office 
Building, Washington, DC 20503; and
Reports Liaison Officer, Office of the Assistant Secretary for 
Housing--Federal Housing Commissioner, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Room 9116, Washington, DC 20410-
8000.

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 proposed 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 with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50, 
which implement section 102(2)(C) of the National Environmental Policy 
Act of 1969 (42 U.S.C. 4332(2)(C)). The finding of No Significant 
Impact 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 finding 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.

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 proposed rule would 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 
proposed rule is intended to promote that 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

[[Page 35913]]

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 would alleviate burden for all manufacturers, large and 
small, because it would make tangible streamlined improvements to the 
system regulating on-site construction of manufactured homes. This rule 
would establish 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. Additionally, this 
rule would apply to only 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.
    Further, this proposed rule is intended to have a beneficial effect 
by reducing the paperwork burden and costs of construction delays on 
housing manufacturers; these manufacturers currently must 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. Notwithstanding HUD's view that this rule would not have a 
significant economic impact on a substantial number of small entities, 
HUD specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives and the 
statutory requirements.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has Federalism implications if the rule 
either: (1) Imposes substantial direct compliance costs on state and 
local governments and is not required by statute, or (2) the rule 
preempts state law, unless the agency meets the consultation and 
funding requirements of section 6 of the Executive Order. This proposed 
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 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.
    Accordingly, for the reasons described in the preamble, HUD 
proposes to amend 24 CFR part 3282 and 24 CFR part 3285 to read as 
follows:

PART 3282--MANUFACTURED HOME PROCEDURAL AND ENFORCEMENT REGULATIONS

    1. 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.
    2. 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 reasonably 
finished in the manufacturer's plant are completed, except as provided 
in Sec.  3282.603.
* * * * *
    3. In Sec.  3282.8, revise the heading to paragraph (a) read as 
follows:


Sec.  3282.8  Applicability.

    (a) Manufactured homes. * * *
* * * * *
    4. In Sec.  3282.203, add a new 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.
* * * * *
    5. 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 dealer agreed to provide at the time the contract 
was entered onto have been provided. Completion of a retail sale will 
be at the time the dealer completes set-up of the manufactured home if 
the dealer has agreed to provide the set-up, or at the time the dealer 
delivers the home to a transporter, if the dealer has not agreed to 
transport or set up the manufactured home. The sale is also complete 
upon delivery to the site if the dealer has not agreed to provide setup 
as completion of sale, except that any sale or lease under subpart M of 
this part 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.
* * * * *
    6. 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. * * *
* * * * *
    7. Amend Sec.  3282.362, as follows:
    a. Revise paragraph (c)(2)(i)(A);
    b. Revise the introductory text of paragraph (c)(2)(i)(C); and
    c. Add a new paragraph (d)(5), to read as follows:


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

* * * * *
    (c) * * *
    (2) * * *
    (i) * * *
    (A) The IPIA is to supply the manufacturer with a 2- to 4-week 
supply of the labels described in this paragraph and Sec.  
3282.607(b)(2). The IPIA is to provide the labels in sequentially 
numbered series without any duplication of numbers. The IPIA may

[[Page 35914]]

obtain labels from HUD or HUD's monitoring contractor or, where the 
IPIA obtains the prior approval of HUD, from a label manufacturer. No 
labels may be provided to the manufacturer unless the IPIA reasonably 
believes that the manufacturing plant is producing manufactured homes 
that conform to the DAPIA-approved designs and the construction and 
safety standards. In no event may the IPIA allow a label to be affixed 
to a manufactured home that it knows fails to conform to the design, or 
where the design is not specific to the construction and safety 
standards.
* * * * *
    (C) Except as provided by Sec.  3282.606, the label must read as 
follows:
* * * * *
    (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.
* * * * *
    8. 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 its 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 completion, state of first 
location of these manufactured homes after leaving the plant, type of 
unit, and any other information required under this part. 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.
    9. 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.
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.

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


Sec.  3282.601  Purpose and applicability.

    (a) Purpose of section. 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 applies if the manufactured home is 
substantially completed in the factory. The affected home must meet the 
requirements of the construction and safety standards upon completion 
of the site work and must 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 
section 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, and the 
manufacturer's IPIA 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 probable result in transportation damage or if precluded 
because of road restrictions). Examples of construction that may be 
completed on-site include:
    (1) Multi-story designs;
    (2) 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;
    (3) The home design involves work that cannot reasonably be 
completed in the factory, or when the manufacturer authorizes the 
retailer to provide an add-on to the home during set-up when that work 
would take the home out of conformance with the construction and safety 
standards and then bring it back into conformance; or
    (4) The manufacturer, retailer, installer, or homeowner is 
providing alternative or additional building components or appliances 
including fireplaces to be installed on site.
    (5) Parts shipped loose with the house that will be installed on-
site unless exempted as installation by the installation standards;
    (6) Exterior applications such as brick siding, stucco, or tile 
roof systems; and
    (7) 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) A retailer or licensed contractor with prior authorization from 
the manufacturer may perform the on-site work in accordance with the 
DAPIA approvals and site completion instructions after obtaining 
written concurrence of the acceptance of the quality assurance program 
from the IPIA. However, the manufacturer 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 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

[[Page 35915]]

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) Identify the work to be completed on-site;
    (2) List all models to which the approval applies, or indicate that 
the approval is not model-specific;
    (3) Include acceptance by the DAPIA of a quality assurance manual 
for on-site completion meeting the requirements of paragraph (e) of 
this section;
    (4) Include the IPIA's written agreement to accept responsibility 
for completion of the necessary on-site inspections and accompanying 
records.
    (5) Identify instructions authorized for completing the work on-
site that meet the requirements of paragraph (f) of this section;
    (6) 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;
    (7) 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;
    (8) 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
    (9) Include any other requirements and limitations that the DAPIA 
deems necessary or appropriate to accomplish the purposes of the Act, 
such as any special testing procedures or, inspections, for IPIA 
inspectors performing the on-site inspections.
    (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)(7) of this section to the IPIA for monitoring 
and inspection purposes.


Sec.  3282.604   DAPIA responsibilities.

    The DAPIA for any manufacturer proceeding under this section is 
responsible for:
    (a) Verification that all information required by Sec.  3282.603 
has been submitted by the manufacturer;
    (b) Review and approval of manufacturer's designs, site completion 
instructions, and quality assurance manuals for site work to be 
performed;
    (c) Determining if there is complex work involved requiring special 
testing or inspections that are needed for IPIA inspectors to perform 
the on-site inspections;
    (d) Maintaining all records and approvals for at least 5 years; and
    (e) Revoking or amending its approvals in accordance with Sec.  
3282.610.


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 ``SC''.
    (b) Labeling. (1) 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 home must be shipped with an affixed on-site 
completion certification label and with a Consumer Information Notice 
that meets the requirements of Sec.  3282.606.
    (2) The on-site completion certification label must be green and 
must meet the same location, size, material, and fastening requirements 
established for the certification label in Sec.  3280.11 of this 
chapter. The on-site completion certification label must read as 
follows:

    As evidenced by this ON-SITE COMPLETION CERTIFICATION LABEL No. 
SC-ABC 000 000 001(P), the manufacturer certifies to the best of the 
manufacturer's knowledge and belief that 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 requirements of the Department of Housing and Urban Development 
(HUD) in effect on the date of manufacture (see data plate affixed 
to home). This ON-SITE COMPLETION CERTIFICATION LABEL permits the 
home to be moved to the site where work will be completed. The 
manufacturer is required to complete construction of the home in 
accordance with HUD requirements, arrange for inspection of the on-
site work, and provide an approved final site inspection report to 
the lessor or first person to purchase the home for purposes other 
than resale.

    (c) Site inspection. Prior to occupancy, the manufacturer shall 
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)(7), and must prepare a 
final site inspection report and provide a copy to the IPIA. Within 10 
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 responsible for the manufacturer's 
final site inspection;
    (v) The name of each person 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;

[[Page 35916]]

    (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) Concurrently 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)(7).
    (ii) If the IPIA determines that the manufacturer is not performing 
adequately in conformance with the approval, the IPIA must red-tag and 
re-inspect 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 Manufactured Home 
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 10 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. HUD does 
not intend that failure to provide this report within 10 days of the 
date of the IPIA's notification will constitute a breach of contract.
    (e) Report to HUD. (1) After an acceptable final inspection of work 
completed on-site, 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 of each home produced 
under an approval issued pursuant to this section. The manufacturer 
must also provide a brief description of the work done on-site for each 
of these homes as an attachment to this report.
    (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 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. A manufacturer that receives an 
on-site construction approval under Sec.  3282.603 also must provide, 
or assure that the retailer provides, 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 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);

[[Page 35917]]

    (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 a qualified third-party inspector, as 
appropriate.
    (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 a qualified inspector, 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)); and
    (f) Preparing final inspection reports and maintaining such reports 
and final site inspection reports 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.


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 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;
    (f) Certifying the home by affixing the on-site completion 
certification label, as provided in Sec.  3282.605(b), unless the IPIA 
determines that the quality assurance program is not effective.
    (g) Ensuring that the consumer notification requirements of Sec.  
3282.606 are met for any home completed under this subpart;
    (h) 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;
    (i) 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;
    (j) 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;
    (k) 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;
    (l) 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;
    (m) Reporting to HUD or its agent the serial numbers assigned to 
each home completed in conformance with this section on Form 302; and
    (n) With respect to a home that the manufacturer inspected and 
certified upon completion of the work on-site, notifying the 
appropriate state or local jurisdiction of any add-on to the home, as 
referenced in Sec.  3282.8(j), that has not been inspected by the state 
or local jurisdiction and that is not covered by the manufacturer's 
inspection and certification, but about which the manufacturer knew or 
reasonably should have known.
    (o) 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.

    The DAPIA that issued an approval or the Secretary may revoke or 
amend, prospectively, an approval notification issued under Sec.  
3282.603.
    (a) 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

[[Page 35918]]

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

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

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

    11. In Sec.  3285.5, in alphabetic order, add the 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.
* * * * *
    12. 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 
and does not consist of peak cap construction or peak flip 
construction; and
* * * * *

    Dated: May 20, 2010.
David H. Stevens,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2010-15088 Filed 6-22-10; 8:45 am]
BILLING CODE 4210-67-P