To: File From: Michael Jensen, DOE GC-71 Date: August 17, 2010 Re: Ex parte discussion with State of Georgia Manufactured Housing Division

On August 17, 2010, Michael Jensen (GC-71), Sa ralyn Bunch (EE-2J), Harry Indig (EE2J), Bob Lucas (PNL), and Dave Conover (PNL) spoke with Chris Stephens, Commissioner of Insurance in the Georgia Manufactured Housing Section, and Nolan Courson, the Georgia Production Inspection Pr imary Inspection Agency (IPIA) designee, on Georgia’s role as both a State Administra tive Agency (SAA) and as an IPIA under the U.S. Department of Housing and Urba n Development (HUD) manufactured housing

program.

First, Mr. Stephens explained that Georgia fu lfills three general responsibilities as an SAA: (1) monitoring the industry and assis ting consumers in remedying defects in the construction of manufactured homes; (2) en suring that homes comply with designs approved by design approval primary inspecti on agencies (DAPIAs); and (3) performing installation inspections. Mr. Stephens noted that each manufactured home sold contains a manual, which the public can use to contact a particular SAA to report a complaint with

the home. He further noted that consumer s often will contact th e manufacturer or HUD with a complaint, but that the consumer is then referred to the SAA. Mr. Stephens mentioned that Georgia will perform site insp ections based on complaints received and had investigated 128 of the 143 complaints to da te that the state has received this year. Mr. Stephens noted that Geor gia used to receive 700 to 800 consumer complaints in a year, but that this number had decreased to an average of 150 complaints per year due to decreases in manufactured home producti on. He noted that the two most common energy-related complaints were that HVAC sy stem piping was not insulated or sealed properly and that the sections of multi-section homes were not placed together properly. Finally, Mr. Stephens mentioned that Georgia also performs m onthly IPIA file reviews to ensure that manufacturers are adequately res ponding to in-state and out-of-state consumer complaints.

Mr. Stephens acknowledged that Georgia ha s not undertaken an official enforcement action in roughly five years and that three enforcement ac tions had been pursued since 1997. He explained that the low numbers were due to the ease with which problems were resolved in the state due, in part, to Georgi a’s ability to fine manufacturers, revoke their licenses, and to mandate that a manufacturer perform multiple inspections of manufactured homes. Mr. Stephe ns stated that Georgia is requ ired to inspect at least one home per year of a manufactured home licen se-holder. He noted that Georgia also requires installers to submit monthly reports of all homes installed wi thin the state.

Regarding the certification process, Mr. Stephe ns noted that manufact ured homes have to meet stringent standards and that many manuf acturers participate in the ENERGY STAR program. He suggested that, if DOE were to require third- party inspections , the agency should consider requiring manuf acturers to submit designs to DOE for approval so that the agency could ensure that the manufacturer would build homes consistent with DOE’senergy standards. Mr. Stephens mentioned th at the greatest cost to manufacturers is having to make repairs in the field and that a system where DOE would assess fines after performing random site inspections would give a strong incentive to the manufactured housing industry to comply quickly with DOE’s energy efficiency standards. Mr. Stephens also noted that Ge orgia performs joint SAA-IPIA site inspections and also authorizes other IPIAs to inspect manufactured homes as part of HUD’s alternative construction certification process.

Mr. Stephens then discussed the issue of f ees assessed both by HUD and by Georgia. He noted that HUD pays Georgia $2.50 for every manufactured home produced within the state and pays the state $9.00 for every ma nufactured home shipped to Georgia from

another state. He also explained that manufacturers pa y Georgia $30.00 per certification label (with a $15.00 re-inspection fee) per manufactured home floor and that Georgia assesses a fee of $60.00 per permit for every manuf actured home that is installed in the

state. He also noted that Georgia’s annual license f ee for manufacturers is $440.00, the

annual license fee for installe rs is $300.00, and that the annu al license fee for retailers
and retail brokers is $300.00 for each retail location. Mr. Stephens noted that, in total, Georgia received roughly $340,000 in fees to fund the SAA program and approximately $300,000 from manufacturers as part of Georgia’s role as an IPIA. Mr. Stephens stressed that Georgia has had difficulty operating unde r this purported self -sustaining budget and noted that private IPIAs often charge much higher inspection f ees than does Georgia. He recommended that DOE ensure that any fees charged by the agency for its program

would offset the costs of services in order to attract state agencies and state third-party inspectors to the DOE program.

Mr. Stephens noted that six production lines and manufacturi ng facilities currently are in operation within the state, down from 48 pr oduction lines in 33 facilities in 1997. Mr. Stephens explained that ever y manufacturer must be certifie d by the Georgia IPIA before building manufactured homes, such that the state is responsible for certifying that manufacturers can build homes in complian ce with the HUD Code. He explained that Georgia performs an initial ce rtification of plants and requi res recertification if certain changes are made in the plant or if the IPIA discovers that a manufacturer is incapable of building homes to the HUD standards. Mr. Step hens mentioned that Georgia currently is in the process of reevaluating each plant with in the state. Mr. Stephens stated that installers in the state are required to undert ake an initial training class and pass an exam given by the state. Installers also are re quired to perform a minimum of eight hours of continuing education each year based on commo n problems that Georgia has found in the field. Finally, Mr. Stephens noted that states that part icipate in the HUD program (as well as IBTS) are meeting in Washington, DC, in mid-September 2010, and that DOE might consider attending the conference in order to meet with and learn from other HUD

program states.

End of conversation.