Proposed Rule: Manufactured Housing Dispute Resolution Program

Thursday,
October 20, 2005
Part II
Department of
Housing and Urban
Development
24 CFR Parts 3280, 3282 and 3288
Manufactured Housing Dispute Resolution
Program; Proposed Rule
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61178 Federal Register / Vol. 70, No. 202 / Thursday, October 20, 2005 / Proposed Rules
DEPARTMENT OF HOUSING AND (this is not a toll-free number). Copies or full approval status. Section 623(g)(2)
URBAN DEVELOPMENT of the public comments are also of the Act also requires HUD to
available for inspection and implement, beginning on December 27,
24 CFR Parts 3280, 3282 and 3288 downloading at http://www.epa.gov/ 2005, a HUD Manufactured Housing
[Docket No. FR–4813–P–02; HUD–2005– feddocket. Dispute Resolution Program that will
0038] FOR FURTHER INFORMATION CONTACT: meet the above requirements in any
William W. Matchneer III, state that has not established a program
RIN 2502–AH98 that complies with the Act.
Administrator, Office of Manufactured
Manufactured Housing Dispute Housing Programs, Department of Advance Notice of Proposed
Resolution Program Housing and Urban Development, 451 Rulemaking
Seventh Street, SW., Room 9164,
AGENCY: Office of the Assistant Washington DC 20410; telephone (202) On March 10, 2003 (68 FR 11452),
Secretary for Housing-Federal Housing 708–6401 (this is not a toll-free HUD issued an Advance Notice of
Commissioner, HUD. number). Persons with hearing or Proposed Rulemaking (the ANPRM)
ACTION: Proposed rule. speech impairments may access this asking for comments on how the federal
number via TTY by calling the toll-free manufactured housing dispute
SUMMARY: This proposed rule would Federal Information Relay Service at resolution program should be structured
establish a federal manufactured (800) 877–8389. and implemented. Seven state agencies,
housing dispute resolution program and SUPPLEMENTARY INFORMATION:
several statewide and national
guidelines for the creation of state- manufacturing housing associations,
administered dispute resolution I. Background individuals, the Manufactured Housing
programs. Under the National Requirement for a Dispute Resolution Consensus Committee (MHCC), and
Manufactured Housing Construction Program other organizations, such as consumer
and Safety Standards Act of 1974, as groups and dispute resolution
amended by the Manufactured Housing The National Manufactured Housing organizations, submitted comments.
Improvement Act of 2000, HUD is Construction and Safety Standards Act References to the comments received on
required to establish a program for the of 1974 (the Act) (42 U.S.C. 5401–5426) a particular issue are made throughout
timely resolution of disputes among is intended, in part, to protect the this preamble.
manufacturers, retailers, and installers quality, safety, durability, and
affordability of manufactured homes. II. Principle Behind Proposed Rule For
of manufactured homes regarding
The Act was amended on December 27, the HUD-Administered Program
responsibility, and the issuance of
appropriate orders, for the correction or 2000, by the Manufactured Housing General
repair of defects in manufactured homes Improvement Act of 2000, Public Law
106–569, to require HUD, among other In designing the HUD Manufactured
that are reported during the one-year Housing Dispute Resolution Program to
period beginning on the date of things, to establish and implement a
new manufactured housing dispute operate in HUD-administered states,
installation. HUD considered the approaches of
resolution program for states that choose
DATES: Comment Due Date: December not to operate their own dispute existing state dispute resolution
19, 2005. resolution programs and to establish programs, examined various dispute
ADDRESSES: Interested persons are guidelines for the creation of state- resolution processes, and consulted
invited to submit comments regarding administered dispute resolution with experts at the Department of
this rule to the Regulations Division, programs. Specifically, section Justice. Many commenters, including
Office of General Counsel, Department 623(c)(12) of the Act (42 U.S.C. the MHCC, encouraged the creation of a
of Housing and Urban Development, 5422(c)(12)) calls for the dispute resolution process that
451 Seventh Street, SW., Room 10276, implementation of ‘‘a dispute resolution incorporated the widely accepted
Washington, DC 20410–0500. Interested program for the timely resolution of processes of mediation, negotiation, and
persons may also submit comments disputes between manufacturers, arbitration. HUD considered these
electronically through either: retailers, and installers of manufactured processes carefully, as well as
• The Federal eRulemaking Portal at: homes regarding responsibility, and for alternative approaches used in some
http://www.regulations.gov; or the issuance of appropriate orders, for state programs. HUD proposes the
• The HUD electronic Web site at: the correction or repair of defects in program described below as a way to
http://www.epa.gov/feddocket. Follow manufactured homes that are reported achieve several goals. First, the dispute
the link entitled ‘‘View Open HUD during the 1-year period beginning on resolution program should be based on
Dockets.’’ Commenters should follow the date of installation.’’ A state is not processes widely accepted by the
the instructions provided on that site to required to be a state administrative alternative dispute resolution
submit comments electronically. agency (SAA) under HUD’s community and that have been proven
Facsimile (fax) comments are not manufactured housing program to to be successful in resolving disputes.
acceptable. In all cases, communications administer its own dispute resolution Second, the program must be fair and
must refer to the above docket number program. However, any state submitting expeditious. Third, the dispute
and title. All comments and a state plan to change its status from a resolution program must be easily
communications submitted will be nonparticipating state to a conditionally accessible to all likely users.
available, without charge, for public or fully approved SAA after December Specifically, the program should
inspection and copying between 8 a.m. 26, 2005, must provide for such a include homeowners, as well as
and 5 p.m. weekdays at the above dispute resolution program as part of its manufacturers, retailers, and installers
address. Due to security measures at the plan. Any state that is conditionally or that are mentioned in the Act. The
HUD Headquarters building, please fully approved on December 26, 2005, proposed program establishes
schedule an appointment to review the will not be required to include a dispute procedures to resolve disputes among
public comments by calling the resolution program in its state plan as manufacturers, retailers, and installers.
Regulations Division at (202) 708–3055 long as the state maintains conditional Although the Act does not require their
Federal Register / Vol. 70, No. 202 / Thursday, October 20, 2005 / Proposed Rules 61179
participation, HUD views homeowners of mediation and arbitration for the Section 615 imposes upon
as an integral part of the dispute federal program. manufacturers certain specific
resolution process. The MHCC and the Mediation is a process that uses a requirements for notification and
majority of commenters favored the neutral party or mediator to facilitate correction when a manufactured home
participation of homeowners. Virtually discussion between disputing parties. does not comply with the Manufactured
all commenters acknowledged a role for The primary goal of mediation is to have Home Construction and Safety
the homeowners in initiating the parties reach a mutually agreeable Standards in part 3280 or contains an
dispute resolution process and the value solution to their dispute. The mediator imminent safety hazard. Section 613 of
of homeowner input in the process. In acts as a guide throughout the process the Act requires manufacturers to
its comments, the MHCC recommended and helps the parties to focus on the correct or replace homes sold to retailers
that ‘‘Any party to the process (the issues in order to reach an agreement. that have not yet been sold to
consumer, manufacturer, retailer or The mediator does not have final purchasers. Nothing in section 623 of
installer) should be permitted to initiate decision-making authority. Arbitration the Act changes the requirements in
the dispute resolution process.’’ The is an adjudicative process in which a sections 613 and 615.
MHCC also stated that ‘‘Consumers are neutral person, or a panel of neutral If this proposed rule is implemented,
eligible to participate in the process if persons, makes a ruling after manufacturers would continue to be
they desire.’’ Fourth, the program considering written evidence, oral responsible for compliance with
should conserve the resources and argument, or both. Subpart I, and HUD and the SAAs
expenses of all of the parties and the The objective of the dispute would continue to have authority to
Department. resolution program proposed by HUD is assure and enforce manufacturers’
The degree to which HUD has to resolve most requests for dispute compliance with Subpart I. Sections 613
resolution before arbitration and thereby and 615 of the Act do not provide
authority to use additional approaches
minimize the cost to parties. HUD authority for any consumer enforcement
to meet this last goal is currently being
expects that a substantial number of of the notification and correction
examined. For example, the MHCC and
potential disputes would be resolved requirements, and are distinguishable
commenters have recommended that
through the Commercial Opt-Out from section 623 of the Act, which
parties that use and receive the benefits
Option. At appropriate times after the provides authority for the dispute
of the dispute resolution process in
federal program is implemented, the resolution program. If a manufacturer
specific cases pay at least a portion of
Secretary will review the structure of receives a homeowner complaint about
the direct costs associated with the
the program and make modifications as a manufactured home, the manufacturer
program in those cases. This is an
necessary, using notice-and-comment has received information that triggers its
approach used by many states that rule-making procedures. The Secretary Subpart I responsibilities. However, a
currently have dispute resolution will check for any indication that the homeowner does not trigger the dispute
programs. Such user charges would program discourages or impedes direct resolution process unless the
generally not be intended to cover the negotiation among the affected parties homeowner follows the specific steps
purely administrative costs to HUD of themselves and, if so, will try to modify provided in this proposed rule. Thus,
implementing the program, but might the program to avoid this undesirable the dispute resolution program provides
include a filing fee to initiate a dispute consequence. The proposed program an additional homeowner protection
resolution process, a fee to initiate reflects the Executive Branch’s mechanism.
arbitration, and the assessment of emphasis on utilizing dispute resolution
arbitration costs to a losing party. Other processes to resolve conflicts in a cost- III. Program Administration for the
administrative costs of the program in effective and expeditious manner, as HUD-Administered Program
HUD-administered states would be well as on fostering good government by HUD interprets the language set forth
funded as general program expenses. giving parties the opportunity to resolve in section 623(g)(3) of the Act (42 U.S.C.
HUD is currently reviewing this disputes amicably and creatively 5422(g)(3)) as permitting the use of
approach and will not introduce a user- through alternative dispute resolution. It contractors in the implementation of the
fee approach until HUD’s authority on also dovetails with Congress’ active dispute resolution program in HUD-
the approach is clear. Nevertheless, promotion of alternative dispute administered states. HUD anticipates
HUD is requesting comments on the resolution as set forth in the using contractors as screening neutrals,
advisability of incorporating such fees Administrative Dispute Resolution Act mediators, and arbitrators. HUD also
in HUD-administered states. If user fees of 1996 (5 U.S.C. 571 et seq.). anticipates that the contractors used
are incorporated, what are appropriate would be required to become familiar
amounts to be paid for what services? Relationship With Notification and with HUD’s manufactured housing
Should homeowners be required to pay Correction Requirements program, as many commenters,
any fees? If the dispute goes to The proposed program is also not including the MHCC, recommended.
arbitration, should all fees be paid by inconsistent with other requirements of HUD acknowledges, however, that
the party or parties determined to be the Act. For example, nothing in these dispute resolution experts emphasize
responsible for the defect? regulations absolves the manufacturer of that a primary consideration for
For the Federal program, HUD its notification and correction selecting neutrals, mediators, and
proposes the use of two widely accepted requirements under subpart I of 24 CFR arbitrators should be their background
methods of dispute resolution, as well part 3282 (Subpart I). Nothing in either and experience in dispute resolution.
as an opt-out provision that would a state or the Federal Dispute Resolution Independence is also an important
allow commercial entities an Program will interfere with Subpart I. factor.
opportunity to resolve disputes outside Subpart I is based on the statutory The HUD Manufactured Housing
the federal program. The program would requirements in sections 613 and 615 of Dispute Resolution Program would be
employ elements of mandatory the Act (42 U.S.C. 5412 and 5414), governed by the Administrative Dispute
mediation and nonbinding arbitration. while the authority for the dispute Resolution Act, 5 U.S.C. 571 et seq. The
Several commenters, including the resolution program is found under proposed dispute resolution program
MHCC, suggested using a combination section 623 of the Act (42 U.S.C. 5422). consists of six parts, in addition to the
opt-out option. The six components are: the definition in § 3282.7(j). For Screening Neutral would review the
Initial Notification of a Problem, purposes of the dispute resolution sufficiency of the information provided
Initiating Dispute Resolution, Intake and program, however, a defect is any with the request for initiation of a
Screening, Mediation, Nonbinding problem in the performance, dispute resolution process. If a defect is
Arbitration, and Secretarial Review. construction, components, or material of properly alleged, the Screening Neutral
Commercial entities, when they are the the home that renders the home or any would forward the request for
only parties involved in a dispute part of it not fit for the ordinary use for mediation. If the Screening Neutral
concerning who is responsible for which it was intended, including but determines there is sufficient
correcting a defect, may elect to opt out not limited to a defect in the documentation of a defect presenting an
of the HUD Manufactured Housing construction, safety, or installation of unreasonable risk of injury or death, a
Dispute Resolution Program. The the home. In reviewing this proposed copy of the request would be sent to
commercial entities would then engage rule and preparing comments, HUD. If a request is lacking any of the
in a neutral evaluation process of their commenters should be mindful of the required information, the Screening
own design. The dispute resolution broader use of the term as it applies to Neutral would contact the requester in
program will be applicable to rights and responsibilities established order to supplement the initial request.
manufactured homes installed after under this new part 3288, as The specific time periods for intake and
December 27, 2005, or the effective date distinguished from the term’s historical screening are not codified because the
of a final rule, whichever is later. Under use in the program in part 3282. Department anticipates establishing
the HUD Manufactured Housing As previously discussed, alleged these directly as part of the contracting
Program, alleged defects must be defects must be reported within one process with the third-party dispute
reported to the manufacturer, retailer, year of the date of home installation. resolution provider. HUD will, however,
installer, or HUD within one year of the The Department strongly encourages the publicize these time periods on its
date of installation of the manufactured parties, especially homeowners, to seek website. The Department is interested in
home, in order to be eligible for the to resolve disputes directly with the comments on this plan for establishing
dispute resolution program. party or entities that they believe to be and announcing the intake and
responsible before initiating the federal screening schedules.
IV. HUD Manufactured Housing manufactured housing dispute
Dispute Resolution Program in HUD- resolution process. Nevertheless, all D. Mandatory Mediation
Administered States parties, including homeowners, must The second stage in the process is
As noted previously, HUD will report the existence of possible defects mandatory mediation. The dispute
administer its dispute resolution within the one-year period in order to resolution provider would select a
program only in states that choose not preserve the option of initiating the mediator, who would be a different
to operate their own dispute resolution federal manufactured housing dispute individual from the Screening Neutral
programs. The following discussion of resolution process. The Department used during the intake and screening
the HUD-administered program will not recommends that reports of defects be process. The mediator would mediate
be germane in any state that through made in writing, including but not the dispute and attempt to facilitate a
state law adopts and implements its limited to email, written letter, certified settlement. The parties would be given
own qualifying dispute resolution mail, or fax. Reports would also be 30 days to reach a settlement. For cases
program and certifies its program to permitted by telephone. A report of a involving defects presenting an
HUD as described in Section VI of this defect should, at a minimum, include a unreasonable risk of injury, death, or
preamble. description of the alleged defect. Parties significant loss or damage to valuable
alleging defects are encouraged to send personal property, the parties would
A. Initial Notification of a Problem
any written correspondence via certified have a maximum of 10 days to reach an
As previously discussed, alleged or express mail, so that there would be agreement. Sample agreements would
defects that can be referred into the proof of date of delivery. The be made available to the parties as
dispute resolution program must be Department welcomes comments on drafting guidance. Upon reaching and
reported within the first year after the effective ways for homeowners to report signing an agreement, copies of any
date of home installation. As used in the existence of defects. After reporting settlements reached would be forwarded
HUD’s Manufactured Housing Dispute a defect, the reporting party would be to the parties and to HUD by the
Resolution Program and this new part encouraged to allow time for a mediator. All other documents and
3288, the term ‘‘defect’’ is defined to satisfactory response before initiating communications used in the mediation
parallel its definition in the Act. the HUD Manufactured Housing Dispute would be confidential, in accordance
Accordingly, the proposed rule also Resolution Program after having with the Administrative Dispute
makes clear for the dispute resolution reported a problem. Resolution Act of 1996 (5 U.S.C. 571 et
program that the term ‘‘defect’’ covers seq.). Once the settlement agreement is
each defect in the installation, B. Initiating the Process signed, the corrective repairs must be
construction, or safety of the home. Parties may initiate the federal completed within 30 days, unless a
Commenters familiar with HUD’s long- manufactured housing dispute longer period is agreed to by the
established program for manufactured resolution process by submitting a homeowner and the parties. The MHCC
housing construction and safety request for dispute resolution to the commented that a 30-day period seemed
standards are likely to be accustomed to dispute resolution provider or by calling an appropriate time in which to
using the term ‘‘defect’’ in a narrower a toll-free number. Requests for dispute complete corrective repairs. Additional
way. In regulations implementing the resolution may come from homeowners, comments on the reasonableness of the
historical aspects of HUD’s retailers, manufacturers, or installers. periods are requested.
manufactured housing program, the
term has been defined to encompass C. Intake and Screening E. Nonbinding Arbitration
only construction and safety standards, Once the request for dispute The third stage that may be invoked
and to exclude matters that implicated resolution has been received by the is nonbinding arbitration. If the parties
significant health and safety issues. See dispute resolution provider, the fail to reach a settlement during
mediation, a party may, within 15 days procedures outlined in Sections IV.C administered states. The Department is
of the expiration of the mediation through IV.F of this preamble, soliciting comments on the Commercial
period, request nonbinding arbitration. particularly on whether the proposed Opt-Out Option, and specifically on
The party requesting nonbinding time limits are reasonable. Comments whether the option would ensure that
arbitration would be required to submit are also welcome on whether or not homeowners’ problems are adequately
a written request for arbitration to the there should be a time limit for Section addressed and remedied. Comments are
dispute resolution provider. The dispute IV.F and, if so, what a reasonable limit also welcomed on the reasonableness of
resolution provider would determine should be. the 5-day time period in which parties
how an arbitrator would be selected for must opt out after receiving notice of a
G. Commercial Opt-Out Option When
each case. The parties may request an request for dispute resolution.
Homeowners Are Not Responsible
in-person hearing, to be held at the
discretion of the arbitrator, after Manufacturers, retailers, and V. Informing Homeowners About
considering factors such as cost. If such installers (‘‘commercial parties’’) who Manufactured Housing Dispute
a request is not made by all parties have been unable to resolve a dispute Resolution
within 5 days of the dispute resolution involving a defect among themselves
provider’s receipt of the request for and who certify that the homeowner is One key component of the HUD
arbitration, the arbitrator may conduct not responsible for the defect would Manufactured Housing Dispute
either a record review or a telephonic have the option to opt out of the HUD Resolution Program will be notifying
hearing. If a party chooses not to Manufactured Housing Dispute homeowners about the availability of
participate in the arbitration, the Resolution Program completely, in order dispute resolution in HUD-administered
process would continue without input to seek neutral evaluation outside of the states through the HUD Manufactured
from that party. The arbitrator would structure of the HUD Manufactured Housing Dispute Resolution Program
have the authority to issue orders to Housing Program. To participate in the and in all other states through state
compel the completion of the record, Commercial Opt-Out Option, any of the dispute resolution programs. In its
conduct onsite inspections, dismiss commercial parties must submit a comments, the MHCC suggested that
frivolous allegations, and set hearing written notification to the dispute information about the HUD
dates and deadlines. The arbitrator resolution provider after it has reported Manufactured Housing Dispute
would be required to complete the an alleged defect or has been informed Resolution Program be made available
arbitration within 21 days of receipt of that an alleged defect has been reported in a standard notice that the retailer
the request for arbitration. After to another party. Parties must opt out no would provide to each homeowner at or
conducting a hearing, the arbitrator more than 5 days after receiving notice before the signing of the sales contract.
would provide HUD with a written from the Screening Neutral of a request The homeowner would be required to
nonbinding recommendation as to who for dispute resolution and before the sign a notice evidencing receipt. The
the responsible party or parties are and HUD Manufactured Housing Dispute Department is also considering notifying
what actions should be taken. The Resolution Program has commenced. the homeowner by requiring a one-page
contents of the recommendation would Participants who elect to opt out must informational document on the HUD
only be made available to the Secretary. agree to engage a neutral expert. The Manufactured Housing Dispute
Comments are requested on whether 21 selected neutral expert would evaluate Resolution Program to be included with
days is sufficient time for the arbitration the dispute and make an assignment of the closing materials. The one-page
and whether additional time should be responsibility for correction and repair. informational document would mention
allowed for special circumstances. The actual process followed would be that HUD will maintain a list of states
designed and agreed to by the that are operating state programs at
F. Secretarial Review participants; there are no particular http://www.hud.gov, to help
The final stage of the process is procedural requirements, such as homeowners determine whether their
Secretarial Review. After the arbitrator witnesses or formal evidence. The state has a program or if their state is a
makes a recommendation, it would be participants may elect to memorialize HUD-administered state and they
forwarded to the Secretary. The the assignment of responsibility in should use the HUD Manufactured
Secretary would review the writing. The participants must agree to Housing Dispute Resolution Program.
recommendation and the record. The allow the homeowner or the Additional comments on homeowner
Secretary would accept, modify, or homeowner’s representative to be notification are welcomed.
reject the recommendation. Once the present at any meetings and to be
Secretary acts, he or she would issue an informed of the outcome. The In addition, the Department proposes
order that assigns responsibility. In the participants may inform the Department notifying the public about the HUD
order for correction, the Secretary of the outcome. At any time after 30 Manufactured Housing Dispute
would include a date by which the days of the Opt-Out Option notification, Resolution Program through the
correction of all defects must be any party, including the homeowner, Consumer Manual that 42 U.S.C. 5416
completed, taking into consideration the may invoke the HUD Manufactured and 24 CFR 3282.207 currently require
seriousness of the defect. A party’s Housing Dispute Resolution Program to be provided with each manufactured
failure to comply with an order of the and proceed to mediation by following home. The manufacturer would be
Secretary would be considered a the established procedures. required to include in the Consumer
violation of section 610(a)(5) of the Act The Commercial Opt-Out Option was Manual the specific language, or its
(42 U.S.C. 5409(a)(5)). designed taking into account MHCC equivalent, that is set out in the
The responsible party or parties comments endorsing an alternate proposed revision of § 3282.207 in the
would be required to pay for or provide simplified process with minimal HUD proposed rule. The language would give
any repair of the home. The Secretary involvement. HUD expects that the detailed information about the dispute
may apportion the costs for correction Commercial Opt-Out Option would resolution program. The Department
and repair if culpability rests with more allow for the resolution of disputes also welcomes comments on the specific
than one party. The Department is concerning defects in a cost-effective, proposal and language for notification
interested in comments on the expeditious, and fair manner in HUD- in the Consumer Manual.
VI. State Dispute Resolution Programs program provides for the timely when there is any significant change to
in Non-HUD-Administered States resolution of disputes and the issuance the state program, whichever is the
The HUD Manufactured Housing of appropriate orders. HUD intends to earlier. If the Secretary becomes aware
Dispute Resolution Program would not put information about states that are at any time that a state no longer meets
be implemented in states that request to certified, including each state’s contact the minimum requirements set forth
be certified and that have dispute information, on its Web site. under § 3288.205, or failed to properly
resolution programs that comply with The minimum requirements for self- recertify, the acceptance of the
the minimum requirements set out in certification are set forth in Part II of the Certification may be revoked after an
these regulations. These states would proposed Certification and include: (1) opportunity for a hearing. HUD
administer their own dispute resolution The timely resolution of disputes welcomes comments especially from the
regarding responsibility for correction states on the certification requirements.
programs. The responses to the ANPRM
and repair of defects in manufactured HUD seeks comments from states that
showed the diversity and innovation of
homes involving manufacturers, currently have dispute resolution
state dispute resolution programs.
retailers, or installers; (2) provisions for programs on whether their programs
Among HUD’s goals in the
issuance of appropriate orders for include the homeowner. If such a state
implementation of the HUD
correction and repairs of defects in the does not, the commenter is asked to
Manufactured Housing Dispute
homes; (3) a coverage period for identify any homeowner protections
Resolution Program proposed in this
disputes involving defects that are that are in place and to address the
rule is to encourage the growth and
reported within at least one year from feasibility of adding the homeowner to
continued innovation of state programs.
the date beginning on the date of its program.
In furtherance of this goal, this rule installation; (4) provisions for
would establish a self-certification homeowners to initiate complaints for VII. Specific Issues for Comment
process for each state. A state dispute resolution and to have homeowner
resolution program would be required to In addition to commenting on the
interests protected; (5) provisions for specific provisions included in this
meet criteria listed in the self- adequate funding and personnel; and (6)
certification form, but the rule proposed rule, the public is invited to
provisions for conflict of interest comment on the following questions,
establishing this form would not specify safeguards that ensure that a dispute
how the criteria are to be met. In this and any other related matters or
resolver does not have a significant suggestions:
way, states will have more flexibility to interest in the outcome of a particular
design dispute resolution programs or (1) What other methods should be
dispute or a significant relationship to a used to notify and educate the
modify existing ones according to their person involved in a particular dispute.
individual preferences and homeowner about the HUD
Any state that certifies that its program Manufactured Home Dispute Resolution
circumstances. Comments received from meets these six minimum requirements
the MHCC strongly supported states Program and the availability of state
would be accepted and permitted to programs in non-HUD-administered
creating and operating their own implement its own program.
programs. states? Should a temporary notice be
A state that meets the minimum required to be posted in each home?
Under the rule as proposed, each state requirements set forth under § 3288.205
wishing to implement its own dispute (2) What criteria should be used for
(e) and (f), and three of the four conditional acceptance of state dispute
resolution program must certify minimum requirements under
compliance with the minimum resolution programs?
§ 3288.205(a)–(d), may be conditionally (3) What should be the criteria for
requirements by submitting a completed accepted by the Secretary. A state that
Dispute Resolution Certification Form to determining whether there is adequate
is conditionally accepted would be staffing and resources?
HUD for review and acceptance. In part, permitted to implement its own
the form would serve as a self- (4) What type of conflict-of-interest
program for a period of not more than
certification very similar to the self- provision should states administering
3 years absent extension of this period
certification process the MHCC and their own dispute resolution program be
by HUD. Part III of the proposed
other commenters proposed in their required to have?
Certification requires more detailed
responses to the ANPRM. The Dispute information about the state’s program. VIII. Conforming Amendments
Resolution Certification Form HUD anticipates that Part III, as well as
developed by HUD and attached as an Since HUD is using the term
the other parts of the Certification, ‘‘manufactured home’’ in this proposed
Appendix to this proposed rule directs would be used to assess whether future
respondents to answer questions rule, HUD is taking this opportunity to
modification of the HUD Manufactured correct the definition in 24 CFR 3280.2
specifically related to how their dispute Housing Dispute Resolution Program
resolution programs comply with the by adding the reference to self-propelled
will be necessary.
requirements stated in the Act and this vehicles found in section 603(6) of the
In reviewing a state’s certification,
regulation. The Certification Form HUD may contact the state to request Act (42 U.S.C. 5402(6)). HUD is also
would require identification of the state additional clarification or information clarifying the methodology for the
agency that administers the dispute as necessary. States that are rejected calculation of square footage that is
resolution program, the director of that would be notified and given 30 days to included in the current regulatory
agency, and the person who directly submit a revised Certification. States definition. This action will result in
supervises the administration of the that fail to submit a revised Certification consistent usage of the term for all parts
program. A brief written description of or are otherwise still rejected would of the manufactured housing program.
the state’s dispute resolution program have a right to a hearing on the rejection IX. Findings and Certifications
would be required, including using the procedures set forth under
information on how disputes are subpart D of Part 3282. If a state has a Regulatory Planning and Review
resolved regarding responsibility for dispute resolution program as part of its The Office of Management and Budget
correction and repair of defects in state plan, it would be reviewed as part (OMB) reviewed this rule under
manufactured homes involving retailers, of the state plan. Accepted states would Executive Order 12866 (entitled
manufacturers, or installers and how the be required to recertify every 3 years or ‘‘Regulatory Planning and Review’’).
OMB determined that this rule is a schedule an appointment to review the required to respond to, a collection of
‘‘significant regulatory action’’ as docket file by calling the Regulations information unless the collection
defined in section 3(f) of the Order Division at (202) 708–3055 (this is not displays a valid control number.
(although not an economically a toll-free number). The public reporting burden for this
significant regulatory action under the Paperwork Reduction Act collection of information is estimated to
Order). The docket file is available for include the time for reviewing the
The proposed information collection
public inspection in the Regulations instructions, searching existing data
requirements contained in this rule have
Division, Office of General Counsel, sources, gathering and maintaining the
been submitted to the Office of
Department of Housing and Urban Management and Budget (OMB) for data needed, and completing and
Development, 451 Seventh Street, SW., review under the Paperwork Reduction reviewing the collection of information.
Room 10276, Washington, DC 20410– Act of 1995 (44 U.S.C. 3501–3520). The following table provides
0500. Due to security measures at the Under this Act, an agency may not information on the estimated public
HUD Headquarters building, please conduct or sponsor, and a person is not reporting burden:
Responses
Number of Total annual Hours per
Information collection per Total hours
respondents responses response
respondent
State Certification for Manufactured Housing Dispute Res-

olution ............................................................................... 17 1 17 1 17
Federal manufactured housing dispute resolution
information* ...................................................................... 3,600 1 3,600 1 3,600
* Almost all of the details of the requests for federal dispute resolution will follow initial complaints already sent to the manufacturer or to the
federal manufactured housing program.
In accordance with 5 CFR Management and Budget, New Impact on Small Entities
1320.8(d)(1), HUD is soliciting Executive Office Building, Washington,
comments from members of the public DC 20503 and Kathleen O. McDermott, The Regulatory Flexibility Act (5
and affected agencies concerning the Reports Liaison Officer, Office of the U.S.C. 601 et seq.) requires that a
proposed collection of information to: Assistant Secretary for Housing-Federal regulation that has a significant
(1) Evaluate whether the proposed Housing Commissioner, Department of economic impact on a substantial
collection of information is necessary Housing and Urban Development, 451 number of small entities, small
for the proper performance of the Seventh Street, SW., Room 9116, businesses, or small organizations
functions of the agency, including Washington, DC 20410–8000. include an initial regulatory flexibility
whether the information will have analysis describing the regulation’s
practical utility; Unfunded Mandates Reform Act impact on small entities. Such an
(2) Evaluate the accuracy of the analysis need not be undertaken if the
Title II of the Unfunded Mandates
agency’s estimate of the burden of the agency has certified that the regulation
Reform Act of 1995 (2 U.S.C. 1531–
proposed collection of information; will not have a significant economic
(3) Enhance the quality, utility, and 1538) establishes requirements for
federal agencies to assess the effects of impact on a substantial number of small
clarity of the information to be entities.
collected; and their regulatory actions on state, local,
(4) Minimize the burden of the and tribal governments and the private HUD has conducted a labor and travel
collection of information on those who sector. This rule, which implements a cost impact analysis for this rule. The
are to respond, including through the statutory mandate to establish a program cost analysis determines the cost
use of appropriate automated collection for the resolution of a narrow category difference between a typical dispute
techniques or other forms of information of disputes, will not impose any federal resolution process (the process)
technology, e.g., permitting electronic mandates on any state, local, or tribal involving manufactured housing and
submission of responses. government or the private sector within the civil litigation costs between one or
Interested persons are invited to the meaning of the Unfunded Mandates more parties involved in a
submit comments regarding the Reform Act of 1995. manufactured housing dispute. A
information collection requirements in typical dispute resolution method is a
Environmental Review two-step process: Mediation and then
this proposal. Under the provisions of 5
CFR 1320, OMB is required to make a This proposed rule does not direct, for a small percent of unsuccessful
decision concerning this collection of provide for assistance or loan and Mediation cases, arbitration.
information between 30 and 60 days mortgage insurance for, or otherwise The potential cost impact of the
after today’s publication date. Therefore, govern or regulate, real property mediation step for manufacturers would
any comment on the information acquisition, disposition, leasing, be approximately $1,550 per dispute
collection requirements is best assured rehabilitation, alteration, demolition, or and $237 for retailers and $177 for
of having its full effect if OMB receives new construction, or establish, revise or installers. HUD anticipates that it may
the comment within 30 days of today’s provide for standards for construction or be administering the dispute resolution
publication. This time frame, however, construction materials, manufactured process in 26 states where
does not affect the deadline for housing, or occupancy. Accordingly, approximately 37,800 homes are
comments to the agency on the under 24 CFR 50.19(c)(1), this proposed expected to be installed annually.
proposed rule. Comments must refer to rule is categorically excluded from Currently 45 manufacturing corporate
the proposal by name and docket environmental review under the entities ship into those states, while
number (FR–4813–P–02) and must be National Environmental Policy Act of 1,719 retailers sell homes and
sent to: HUD Desk Officer, Office of 1969 (42 U.S.C. 4321). approximately 5,000 individuals or
businesses install manufactured homes more certain resolution of disputes 24 CFR Part 3288
in those states. should help the affected businesses.
Based on the preceding data, HUD The Secretary, in accordance with the Administrative practice and
anticipates taking action on 1,890 Regulatory Flexibility Act (5 U.S.C. procedure, Consumer protection,
complaints under the federal 605(b)), has reviewed and approved this Intergovernmental relations,
manufactured housing dispute proposed rule and, in so doing, certifies Manufactured homes, Reporting and
resolution process in the year 2006. that the rule would not have a recordkeeping requirements.
Presuming that the average cost of this significant economic impact on a Accordingly, for the reasons stated in
action ($1,964) will be incorporated into substantial number of small entities. the preamble, HUD proposes to amend
the home price or related service fees of The proposed rule does not provide an parts 3280 and 3282 and add a new part
every installed home in the 26 states exemption for small entities. This 3288 in chapter XX of title 24 of the
(37,800), the cost impact to each proposed rule does not establish any Code of Federal Regulations as follows:
installed home would be $98. responsibilities for all parties, but rather
If all 1,890 cases were settled through establishes a process whereby all may PART 3280—MANUFACTURED HOME
litigation rather than dispute resolution, come to an amicable solution. CONSTRUCTION AND SAFETY
the cost of litigating 1,890 cases would Notwithstanding HUD’s STANDARDS
total $18.9 million. Averaged across determination that this rule would not
37,800 homes, the average cost of have a significant economic effect on a 1. The authority citation for part 3280
litigation incorporated into each home substantial number of small entities, continues to read as follows:
price would be $500 per home, HUD specifically invites comments Authority: 42 U.S.C. 3535(d), 5403, and
compared to the average cost of dispute regarding any less burdensome 5424.
resolution of $98 per home. This would alternatives to this rule that will meet
2. In § 3280.2, the definition of
provide a savings of $402 or 75 percent HUD’s objectives as described in this
‘‘manufactured home’’ is revised to read
per home. preamble.
The small increase in total cost as follows:
associated with this proposed rule Executive Order 13132, Federalism
§ 3280.2 Definitions.
would not impose a significant burden Executive Order 13132 (entitled
* * * * *
for a small business. The rule would ‘‘Federalism’’) prohibits, to the extent
regulate establishments primarily practicable and permitted by law, an Manufactured home means a
engaged in the production of agency from promulgating a regulation structure, transportable in one or more
manufactured homes (NAICS 32991) that has federalism implications and sections, which in the traveling mode is
and the sale of manufactured homes either imposes substantial direct 8 body feet or more in width or 40 body
(NAICS 453930). In addition, compliance costs on state and local feet or more in length or which when
manufactured home set-up and tie- governments and is not required by erected on site is 320 or more square
down establishments (installers) would statute, or preempts state law, unless the feet, and which is built on a permanent
be included within the definition of all relevant requirements of section 6 of the chassis and designed to be used as a
other special trade contractors (NAICS Executive Order are met. This rule does dwelling with or without a permanent
23599). Of the 222 firms included under not have federalism implications and foundation when connected to the
the NAICS 32991 definition, 198 are does not impose substantial direct required utilities, and includes the
small manufacturers, which fall below compliance costs on state and local plumbing, heating, air-conditioning, and
the small business threshold of 500 governments or preempt state law electrical systems contained in the
employees. There are 10,691 retailers within the meaning of the Executive structure. This term includes all
included under NAICS 453930; all of Order. State and local governments are structures that meet the above
the firms fall below the $11 million not required to establish dispute requirements except the size
annual income rate. Of the 31,320 firms resolution programs, but the rule requirements and with respect to which
included under NAICS 23599 provides a mechanism to recognize state the manufacturer voluntarily files a
definitions, only 53 firms exceed the programs that meet the statutory certification pursuant to § 3282.13 of
small business threshold of 500 elements of a dispute resolution this chapter and complies with the
employees and none of these is program to operate in lieu of the federal construction and safety standards set
primarily a manufactured home set-up manufactured housing dispute forth in this part 3280. The term does
and tie-down establishment. The rule, resolution program. not include any self-propelled
therefore, would affect a substantial recreational vehicle. Calculations used
Catalog of Federal Domestic Assistance to determine the number of square feet
number of small entities. However, the
home manufacturers, retailers, and The Catalog of Federal Domestic in a structure will include the total of
installers would only be subject to an Assistance number for Manufactured square feet for each transportable
associated labor cost and travel expense Housing is 14.171. section comprising the completed
necessary to attend the mediation List of Subjects structure and will be based on the
process and labor costs to participate in structure’s exterior dimensions
the expected record review and possible 24 CFR Part 3280 measured at the largest horizontal
telephonic or face-to-face meeting for Housing standards, Incorporation by projections when erected on site. These
arbitration. Moreover, because the great reference, Manufactured homes. dimensions will include all expandable
majority of manufacturers, retailers, and rooms, cabinets, and other projections
installers are considered small entities, 24 CFR Part 3282 containing interior space, but do not
there would not be any disproportional Administrative practice and include bay windows. Nothing in this
impact on them. Therefore, although procedure, Consumer protection, definition should be interpreted to mean
this rule would affect a substantial Intergovernmental relations, that a manufactured home necessarily
number of small entities, it would not Investigations, Manufactured homes, meets the requirements of HUD’s
have a significant economic impact on Reporting and recordkeeping Minimum Property Standards (HUD
them. In addition, the speedier and requirements, Warranties. Handbook 4900.1) or that it is
automatically eligible for financing that the report was made within one year outside of the HUD Manufactured Housing
under 12 U.S.C. 1709(b). after the date of installation, homeowners Dispute Resolution Program by exercising the
should report defects in a manner that will Commercial Opt-Out Option. Homeowners
* * * * * create a dated record of the report, for will maintain the right to be present at any
example, by certified mail, fax or e-mail. meetings and to be informed of the outcome
PART 3282—MANUFACTURED HOME When making a report by telephone, when the Commercial Opt-Out Option is
PROCEDURAL AND ENFORCEMENT homeowners are encouraged to make a note exercised. At any time after 30 days of the
REGULATIONS of the phone call, including names of Opt-Out Option notification, any participant
conversants, date, and time. No particular or the homeowner may invoke the HUD
3. The authority citation for part 3282 format is required to submit a report of an Manufactured Housing Dispute Resolution
continues to read as follows: alleged defect, but any such report should at Program and proceed to mediation.
Authority: 42 U.S.C. 3535(d) and 5424. a minimum include a description of the * * * * *
alleged defect or problem. 5. In chapter XX, add a new part 3288,
4. In § 3282.207, redesignate Homeowners are encouraged to send to read as follows:
paragraph (e) as paragraph (f), and add reports of an alleged defect to the
a new paragraph (e) to read as follows: manufacturer, retailer, or installer of the PART 3288—MANUFACTURED HOME
manufactured home. Reports of alleged
§ 3282.207 Manufactured home consumer DISPUTE RESOLUTION PROGRAM
defects may also be sent to HUD at: HUD,
manual requirements. Office of Regulatory Affairs and Subpart A—General
* * * * * Manufactured Housing, Attn: Dispute
Resolution, 451 Seventh Street, SW., Sec.
(e) The manufacturer must include 3288.1 Purpose and scope.
the following language or its equivalent Washington, DC 20410–8000; faxed to (202)
3288.3 Definitions.
708–4213; or e-mailed to mhs@hud.gov.
in the consumer manual: If, after taking the steps outlined above, the
3288.5 Effective date.
Many states have a dispute resolution homeowner does not receive a satisfactory Subpart B—HUD Manufactured Housing
program that homeowners may use to resolve response from the manufacturer, retailer, or Dispute Resolution Program in HUD-
problems with manufacturers, retailers, or installer, the homeowner may file a dispute Administered States
installers concerning defects in their resolution request with the dispute 3288.10 Applicability.
manufactured homes. In states where there is resolution provider in writing, or by making 3288.15 Eligibility for dispute resolution.
not a dispute resolution program that meets a request by phone. No particular format is 3288.20 Reporting a defect.
the federal requirements, the HUD required to make a request for dispute 3288.25 Initiation of dispute resolution.
Manufactured Housing Dispute Resolution resolution, but the request must include the 3288.30 Screening of dispute resolution
Program will operate. These are ‘‘HUD- following information: request.
administered states.’’ You may contact HUD (1) The name, address, and contact 3288.35 Mediation.
at (202) 708–6423 or (800) 927–2891, or visit information of the homeowner; 3288.40 Nonbinding arbitration.
the HUD Web site at http://www.hud.gov to (2) The name and contact information of 3288.45 Secretarial review and order.
determine whether you have a state program the manufacturer, retailer, and installer of the
or should use the HUD Manufactured manufactured home; Subpart C—Commercial Opt-Out Option in
Housing Dispute Resolution Program. (3) The date the report of alleged defect or HUD-Administered States
Contact information for state programs is also problem notification was made; 3288.100 Scope and applicability.
available on the HUD website. If you have a (4) Identification of the entities or persons 3288.105 Time when Commercial Opt-Out
state program, please contact the state for to whom the report of the alleged defect was Option available.
information about the program, how it sent, and the method that was used to make 3288.110 Opt-out agreements.
operates, and what steps to take to request the report;
dispute resolution. When there is no state (5) The date of installation of the Subpart D—State Dispute Resolution
dispute resolution program, homeowners manufactured home affected by the defect; Programs in Non-HUD-Administered States
may use the HUD Manufactured Housing and 3288.200 Applicability.
Dispute Resolution Program to resolve (6) A description of the alleged defect. 3288.205 Minimum requirements.
disputes among manufacturers, retailers, or Information about the dispute resolution 3288.210 Acceptance and recertification
installers for the correction or repair of provider and how to make a request for process.
defects in their manufactured home that were dispute resolution will be available at 3288.215 Effect on other manufactured
reported during the one-year period starting http://www.hud.gov or by contacting the housing program requirements.
at the date of installation. Even after the one- Office of Manufactured Housing Programs at Authority: 42 U.S.C. 3535(d), 5422 and
year period, manufacturers have continuing (202) 708–6423 or (800) 927–2891. 5424.
responsibility to review certain problems that A screening agent from a dispute
affect the intended use of the manufactured resolution provider will review the request Subpart A—General
home or its parts, but correction of those and, if appropriate, forward the request to a
problems may no longer be required under mediator. The mediator will mediate the § 3288.1 Purpose and scope.
federal law. The HUD Manufactured Housing dispute and attempt to facilitate a settlement. The National Manufactured Housing
Dispute Resolution Program is not for If the parties are unable to reach a settlement, Construction and Safety Standards Act
cosmetic or minor problems in the home. It any party may request nonbinding
is for problems that make the home or arbitration. Should any party refuse to
of 1974 (the Act) (42 U.S.C. 5401–5426),
components of the home not fit for the participate, the arbitration shall proceed is intended, in part, to protect the
ordinary use for which they were intended. without that party’s input. Once the quality, safety, durability, and
The steps and information outlined below arbitrator makes a determination, the affordability of manufactured homes.
apply only to the HUD Manufactured arbitrator will forward it to the Secretary of Section 623(c)(12) of the Act (42 U.S.C.
Housing Dispute Resolution Program that HUD, who may then adopt, modify, or reject 5422(c)(12)) requires the
operates in HUD-administered states. Under the recommendation. The responsible party implementation of ‘‘a dispute resolution
the HUD Manufactured Housing Dispute or parties will be required to pay for or program for the timely resolution of
Resolution Program, homeowners must first provide any repair of the home. disputes between manufacturers,
report defects to the manufacturer, retailer, In circumstances where manufacturers,
installer, or HUD. Homeowners are retailers, and/or installers are involved and
retailers, and installers of manufactured
encouraged to report defects in writing, agree that one of them and not the homes regarding responsibility, and for
including but not limited to e-mail, written homeowner is responsible for the alleged the issuance of appropriate orders, for
letter, certified mail, or fax and may also defect, these commercial entities will have the correction or repair of defects in
make a report by telephone. To demonstrate the opportunity to resolve the dispute manufactured homes that are reported
during the one-year period beginning on construction, safety, or installation of HUD Manufactured Housing Dispute
the date of installation.’’ Subpart A of the home. Resolution Program. The matter eligible
this part establishes general provisions Dispute resolution provider means a for dispute resolution is the defect
applicable to HUD’s implementation of person or entity providing dispute alleged in a timely report and any
a dispute resolution program as required resolution services for HUD. related issues.
by the Act. Subpart B of this part Homeowner means the first person to
§ 3288.20 Reporting a defect.
establishes the HUD Manufactured purchase or lease the home in good faith
Housing Dispute Resolution Program for purposes other than resale. (a) Form of report. It is recommended
that HUD will administer in any state Manufactured home has the same that defects be reported in writing,
that does not establish a program that meaning as ‘‘manufactured home’’ as including but not limited to e-mail,
complies with the Act. Subpart C of this defined at 24 CFR 3280.2. written letter, certified mail, or fax.
part provides an option for parties that Party or parties means, individually Defects may also be reported by
are not homeowners to resolve disputes or collectively, the manufacturer, telephone.
(b) Content of report. No particular
outside of the HUD Manufactured retailer, or installer of a manufactured
form or format is required to report a
Housing Dispute Resolution Program home in which a defect has been
defect, but any such report should at a
under subpart B. Subpart D of this part reported.
minimum include a description of the
establishes the minimum requirements Timely reporting means the reporting
alleged defect or problem.
that must be met by a state wishing to of an alleged defect within one year (c) Record of report. (1) Report made
implement its own dispute resolution after the date of installation of a to parties. (i) To evidence timeliness. To
program that complies with the Act, and manufactured home. avoid issues of lack of timely reporting,
the procedure for determining whether Timely resolution means the the report of a defect that is made to the
the requirements for complying have resolution of disputes among manufacturer, retailer, or installer of the
been met. The purpose of this part is to manufacturers, retailers, and installers manufactured home should be done in
provide a dispute resolution process for within 120 days of the time a request for a manner that will create a dated record
the timely resolution of disputes among dispute resolution is made, except that of the report to demonstrate that the
manufacturers, retailers, and installers if the defect presents an unreasonable report was made within one year after
regarding the responsibility for risk of injury, death, or significant loss the date of installation, for example, by
correction or repair of defects reported or damage to valuable personal certified mail, fax, or e-mail. For reports
by the homeowner or others and property, the resolution must be within made by telephone, making a
reported in the 1-year period after 60 days of the time a request for dispute contemporaneous note of the phone call
installation in manufactured homes. In resolution is made. is recommended.
carrying out this purpose, it is assumed (ii) Obligation to retain. For purposes
that if a manufactured home contains a § 3288.5 Effective date.
of this part, each report of a defect,
defect that was not caused by the The requirements of this part are including logs of telephonic complaints
homeowner, the manufacturer, retailer, applicable to manufactured homes received by a manufacturer, retailer,
or installer is responsible for the defect installed after December 27, 2005, or and/or installer, must be maintained for
and the dispute resolution process is an after the initial effective date of this three years from the date of receipt, if
appropriate means to resolve issues of part, whichever is later. the report is made within one year after
responsibility for correction and repair the date of installation.
of the home. Subpart B—HUD Manufactured (2) Reports made to HUD. (i) Reports
Housing Dispute Resolution Program of alleged defects that arise in the
§ 3288.3 Definitions. in HUD-Administered States manufactured home in the first year
The following definitions apply in § 3288.10 Applicability. after its installation can be sent to HUD:
this part: (A) In writing at: HUD, Office of
The requirements of the HUD
Appropriate order means an order Regulatory Affairs and Manufactured
Manufactured Housing Dispute
issued by the Secretary or an order that Housing, Attn: Dispute Resolution, 451
Resolution Program established in this
is enforceable under state law. Seventh Street, SW., Washington, DC
subpart B apply in each state that does
Date of installation means the date all 20410–8000;
not establish a state dispute resolution (B) By telephone at: (202) 708–6423 or
utilities are connected and the program that complies with the Act and
manufactured home is ready for (800) 927–2891;
has been accepted by HUD as provided (C) By fax at: (202) 708–4213; and
occupancy as established, if applicable, in subpart D of this part.
by a certificate of occupancy, except as (D) By e-mail at mhs@hud.gov.
(d) Effect of report. The reporting of
follows: if the manufactured home has § 3288.15 Eligibility for dispute resolution.
a defect does not initiate the dispute
not been sold to the first person (a) Eligible parties. Manufacturers, resolution process, but only establishes
purchasing the home in good faith for retailers, and installers of manufactured whether the requirement of timely
purposes other than resale by the date homes are eligible to initiate action reporting in accordance with
the home is ready for occupancy, the under and participate in the HUD § 3288.15(b) has been met.
date of installation is the date of the Manufactured Housing Dispute
purchase agreement or sales contract for Resolution Program. Homeowners may § 3288.25 Initiation of dispute resolution.
the manufactured home. also initiate and participate in the HUD (a) Preliminary effort. HUD strongly
Day means a calendar day. Manufactured Housing Dispute encourages the party reporting the
Defect includes any defect in the Resolution Program. defect to seek to resolve the dispute
performance, construction, components, (b) Eligible disputes. Only disputes directly with the party or parties that
or material of a manufactured home that concerning alleged defects that have they believe are responsible before
renders the home or any part of the been reported to the manufacturer, initiating the federal dispute resolution
home not fit for the ordinary use for retailer, installer, or HUD within one process.
which it was intended, including but year after the date of installation of the (b) Request for dispute resolution.
not limited to a defect in the manufactured home are eligible for the Any of the parties may initiate the HUD
Manufactured Housing Dispute will not be the person who screened the (iii) A copy of the request for dispute
Resolution Program process at any time dispute resolution request. The selected resolution.
after a defect has been reported by mediator will then mediate the dispute (c) Appointment and authority of
requesting dispute resolution as follows: and attempt to facilitate a settlement. arbitrator. Upon receipt of the request,
(1) By mailing, e-mailing, or otherwise (b) Time. (1) For reaching settlement. the dispute resolution provider will
delivering a written request for dispute Except as provided in paragraph (b)(2) provide for the selection of an arbitrator.
resolution to the dispute resolution of this section, the parties are allowed The arbitrator will have the authority to:
provider at the address or e-mail 30 days from the commencement of the (1) Set hearing dates and deadlines;
address provided either at http:// mediation to reach a mediated (2) Conduct onsite inspections;
www.hud.gov or HUD’s Office of settlement. (3) Issue orders to compel the
Regulatory Affairs and Manufactured (2) Defects presenting an completion of the record;
Housing at (202) 708–6423 or (800) 927– unreasonable risk of injury, death, or (4) Dismiss frivolous allegations;
2891; significant loss or damage to valuable (5) Make a disposition
(2) By faxing a request for dispute personal property. For mediations recommendation to the Secretary; and
resolution to the fax number provided involving defects that appear to present (6) Recommend apportionment of the
either at http://www.hud.gov or HUD’s an unreasonable risk of injury, death, or responsibility of paying for or providing
Office of Regulatory Affairs and significant loss or damage to valuable any repair of the home when culpability
Manufactured Housing at (202) 708– personal property, the parties have a is assessed to more than one party.
6423 or (800) 927–2891; or (d) Proceedings. (1) The arbitrator
maximum of 10 days to reach a
(3) By phoning in a request for may conduct either a record review or
mediated settlement.
dispute resolution at the phone number a telephonic hearing if the parties do not
(3) For corrective repairs. Unless a
provided either at http://www.hud.gov request an in-person hearing under
longer period is agreed to in writing by
or HUD’s Office of Regulatory Affairs paragraph (d)(2) of this section within 5
the parties to the mediated settlement
and Manufactured Housing at (202) days of the dispute resolution provider’s
and the homeowner, corrective repairs
708–6423 or (800) 927–2891. receipt of the request for arbitration, or
must be completed no later than 30 days
(c) Required information. The dispute if the arbitrator rejects the request for an
after the settlement agreement.
resolution provider will request at least in-person hearing.
(c) Written settlement agreement. (2) If any party wants to request an in-
the following information to initiate the Upon reaching an agreement, the parties
dispute resolution process: person hearing, in which the parties or
will sign a written settlement their representatives personally appear
(1) The name, address, and contact agreement. The dispute resolution
information of the homeowner; before the arbitrator, the arbitrator will
provider will forward copies of the consider such a request if it is made by
(2) The name and contact information agreements with the original signatures
of the manufacturer, retailer, and all of the parties that are participating in
of the parties to the parties and to HUD. the arbitration. Such an in-person
installer of the manufactured home; (d) Confidentiality. Except for the
(3) The date the report of the alleged hearing will be held at the discretion of
report of an alleged defect, any request the arbitrator, after considering
defect was made; for dispute resolution, any agreement to
(4) The name and contact information appropriate factors, such as cost.
mediate, and any written settlement (e) Effect on nonparticipating parties.
of the recipient or recipients of the agreement, all other documents and
report of the alleged defect; If a party chooses not to participate in
communications used in the mediation the arbitration, the process will
(5) The date of installation of the will be confidential, in accordance with
manufactured home affected by the continue without further input from that
the Administrative Dispute Resolution party. In such a case, the arbitrator may
defect; and Act of 1996 (5 U.S.C. 571 et seq.).
(6) A description of the alleged defect. rely on the record developed through
§ 3288.40 Nonbinding arbitration. the arbitration to find a nonparticipating
§ 3288.30 Screening of dispute resolution party responsible for correcting a defect.
request. (a) When initiated. If the parties fail (f) Completion of arbitration. Within
(a) Review for sufficiency. Once the to reach a settlement through mediation 21 days of the dispute resolution
request for dispute resolution has been under § 3288.35, any party may, within provider’s receipt of the request for
received by the dispute resolution 15 days of the expiration of any time arbitration, the arbitrator will complete
provider, a Screening Neutral will permitted under § 3288.35(b), initiate the arbitration process and provide HUD
review the sufficiency of the nonbinding arbitration. with a written, nonbinding
information provided in the request for (b) Written request. (1) Submission to recommendation as to which party or
dispute resolution and determine if the HUD. A written request for arbitration parties are responsible for the defect,
dispute resolution process should must be submitted to the dispute and what corrective actions should be
proceed. If a defect is properly alleged, resolution provider. Information about taken.
the request will be forwarded for the dispute resolution provider and how
mediation. to make a request for dispute resolution § 3288.45 Secretarial review and order.
(b) Insufficient information. If a will be available at http://www.hud.gov (a) Appropriate order. The Secretary
request for dispute resolution is lacking or by contacting HUD’s Office of will review the arbitrator’s
any information required to determine if Manufactured Housing Programs at recommendation provided in
the dispute resolution process should (202) 708–6423 or (800) 927–2891. accordance with § 3288.40(f) and the
proceed, the Screening Neutral will (2) Contents of request. The written record, if any, of the arbitration, and
contact the requester in order to request for arbitration must include: will issue an order accepting,
supplement the initial request. (i) The names and addresses of all modifying, or rejecting the
relevant parties, including the party recommendation. The Secretary will
§ 3288.35 Mediation. making the request; forward a copy of the order to the
(a) Mediator. The dispute resolution (ii) A brief description of the alleged arbitrator and to each of the parties,
provider will provide for the selection defect or a copy of the report of the whether or not a party participated in
of a mediator. The selected mediator defect; and the arbitration.
(b) Contents of order. If the Secretary efforts to include the following program that provides for the following
finds that a defect exists, the order will information: minimum requirements:
include the following: (1) The name, address, and contact (a) The timely resolution of disputes
(1) Assignment of responsibility for information of the homeowner; regarding responsibility for correction
the correction and repair of all defects (2) The name and contact information and repair of defects in manufactured
and associated costs; and of the manufacturer, retailer, and homes involving manufacturers,
(2) A date by which the correction of installer of the manufactured home; retailers, or installers;
all defects must be completed, taking (3) The date the report of the alleged (b) The issuance of appropriate orders
into consideration the seriousness of the defect was made; for correction and repairs of defects in
defect. (4) The name and contact information the homes;
(c) Failure to comply. A party’s failure of the recipient or recipients of the (c) A coverage period for disputes that
to comply with an order issued report of the alleged defect; includes at least defects that are
pursuant to this part will be considered (5) The date of installation of the reported within one year from the date
a violation of section 610(a)(5) of the manufactured home affected by the of installation;
Act (42 U.S.C. 5409(a)(5)). defect; and (d) Provisions for homeowners to
(6) A description of the alleged defect. initiate complaints for resolution and to
Subpart C—Commercial Opt-Out have homeowner interests protected;
Option in HUD-Administered States § 3288.110 Opt-out agreements. (e) Provisions for adequate funding
(a) Required agreement. To use the and personnel; and
§ 3288.100 Scope and applicability. (f) Provisions for conflict of interest
Commercial Opt-Out Option, as
The requirements of this subpart C appropriate, the manufacturer, retailer, safeguards which ensure that a dispute
may be followed in lieu of the and installer of the manufactured home resolver does not have a significant
requirements of subpart B of this part to at issue must agree: interest in the outcome of a particular
resolve disputes among manufacturers, (1) That there is a defect in the dispute or a significant relationship to a
retailers, and installers of manufactured manufactured home; person involved in a particular dispute.
homes in any state where subpart B of (2) That the manufacturer, retailer, or
this part would otherwise apply. In § 3288.210 Acceptance and recertification
installer is responsible for the defect; process.
limited circumstances, this subpart (3) That the homeowner is not
permits manufacturers, retailers, and responsible for the defect; (a) Submission of certification. A State
installers of manufactured homes to use (4) To engage a neutral expert to seeking certification must submit to
expert neutrals of their choosing to evaluate the dispute and make an HUD for review and acceptance a
resolve disputes concerning defects in assignment of responsibility for completed Dispute Resolution
manufactured homes. The Commercial correction and repair; and Certification Form as provided by HUD.
Opt-Out Option may be initiated after a (5) To notify the homeowner of, and The certification may be submitted as a
defect has been reported, but no more allow the homeowner to be present at, part of, or independent of, a State plan
than 5 days after notification from the any meetings, and to inform the under § 3282.302 of this chapter.
Screening Neutral of a request for (b) HUD review and action. (1) HUD
homeowner of the outcome.
dispute resolution and before the HUD will review the Dispute Resolution
(b) Additional element of agreement.
Manufactured Housing Dispute Certification Form submitted by a State
In addition, the parties should agree to
Resolution Program has commenced. and may contact the State to request
act upon the neutral expert’s assignment
Once the Opt-Out Option is initiated, additional clarification or information
of responsibility for correction and
none of the opt-out participants or the as necessary. Upon completing its
repair.
homeowner can invoke the HUD review, HUD will provide the State with
Manufactured Housing Dispute Subpart D—State Dispute Resolution notice of acceptance, conditional
Resolution Program for 30 days. Programs in Non-HUD Administered acceptance, or rejection of its dispute
States resolution program.
§ 3288.105 Time when Commercial Opt- (2) A notice of acceptance will
Out Option available. § 3288.200 Applicability. include the date of acceptance.
(a) The Commercial Opt-Out Option This subpart D establishes the (3) If HUD rejects a State’s dispute
may be initiated after a defect has been minimum requirements that must be resolution program, HUD will provide
reported, but no more than 5 days after met by a state to implement its own an explanation of what is necessary to
notification from the Screening Neutral dispute resolution program and obtain full acceptance. A revised
of a request for dispute resolution and therefore not be covered by the HUD Dispute Resolution Certification Form
before the HUD Manufactured Housing Manufactured Housing Dispute may be submitted within 30 days of
Dispute Resolution Program has Resolution Program established in receipt of such notification. If the
commenced, by a written notification to accordance with subpart B. The subpart revised Dispute Resolution Certification
HUD’s dispute resolution provider. The also establishes the procedure for Form is inadequate or if the State fails
notification may be made to the dispute determining whether the state dispute to resubmit within the 30-day period or
resolution provider by mail, fax, e-mail, resolution program meets the otherwise indicates that it does not
or other delivery at the address requirements of the Act for operating in intend to change its Dispute Resolution
provided at http://www.hud.gov. lieu of the federal dispute resolution Certification Form, HUD will notify the
(b) No particular form or format is program. State that the dispute resolution
required to provide notification for the program is not accepted and that it has
Commercial Opt-Out Option, but the § 3288.205 Minimum requirements. a right to a hearing on the rejection
party or parties submitting the The HUD Manufactured Housing using the procedures set forth under
notification must include a statement Dispute Resolution Program will not be subpart D of part 3282 of this chapter.
from the parties stating that the implemented in any state that complies (c) Conditional acceptance. A State
homeowner is not responsible for the with the procedures of this subpart D meeting the minimum requirements set
alleged defect and make reasonable and that has a dispute resolution forth under § 3288.205(e) and (f), and
three of the four minimum requirements (e) Recertification. To maintain its of HUD’s Manufactured Housing
under § 3288.205(a) through (d) may be accepted status, a State must submit a Dispute Resolution Program established
conditionally accepted by the Secretary. current Dispute Resolution Certification under subpart B of this part 3288. A
If HUD conditionally accepts a State’s Form to HUD for review and State dispute resolution program, even
dispute resolution program, HUD will acceptance: if it is an accepted dispute resolution
provide an explanation of what is (1) Every three years within 90 days program under this part, does not
necessary to obtain full acceptance. A of the day and month of its most recent supersede the requirements applicable
revised Dispute Resolution Certification date of acceptance; or to any other aspect of HUD’s
(2) Whenever there is a significant manufactured housing program. Any
Form may be submitted within 30 days
change to the program, whichever is the responsibilities, rights, and remedies
of receipt of such notification. Any State earlier. A State that is conditionally
conditionally accepted will be applicable under the Manufactured
accepted will be permitted to
permitted to implement its own dispute Home Construction and Safety
implement its own program for a period
resolution program for a period of not Standards in part 3280 of this chapter
of not more than three years absent
more than 3 years absent extension of extension of this period by HUD. and the Manufactured Home Procedural
this period by HUD. (f) Inclusion in State plan. If a State and Enforcement Regulations in part
dispute resolution program is part of a 3282 of this chapter continue to apply
(d) Revocation. If the Secretary
State plan, it will be reviewed annually as provided in those parts in all States.
becomes aware at any time that a State
no longer meets the minimum as part of the State plan. Dated: September 27, 2005.
requirements set forth under § 3288.205, § 3288.215 Effect on other manufactured Brian D. Montgomery,
the acceptance of the Certification may housing program requirements. Assistant Secretary for Housing-Federal
be revoked after an opportunity for a A State with an accepted dispute Housing Commissioner.
hearing. resolution program will operate in lieu BILLING CODE 4210–27–P
EP20OC05.000</GPH>
[FR Doc. 05–20953 Filed 10–19–05; 8:45 am]

BILLING CODE 4210–27–C
EP20OC05.001</GPH>

Proposed Rule: Manufactured Housing Dispute Resolution Program

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Proposed Rule: Manufactured Housing Dispute Resolution Program

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State Certification for Manufactured Housing Dispute Res-

[FR Doc. 05–20953 Filed 10–19–05; 8:45 am]

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