To: File 

From: Michael Jensen, DOE GC-71 

Date: August 16, 2010 

Re: Ex parte discussion with Michael Lubliner 

On July 28, 2010, Michael Jensen (GC-71), Harry Indig (EE-2J), and Bob Lucas (PNL) 

spoke with Michael Lubliner regarding his views on DOE’s proposed rulemaking to 

develop energy efficiency standards for manufactured housing. 

Mr. Lubliner was supportive of HUD’s initiatives to regulate manufactured housing and 

was enthusiastic about DOE’s mission to improve the energy efficiency of homes. He 

supported the idea, in theory, of having one process—via design approval primary 

inspection agencies (DAPIAs) and production inspection primary inspection agencies 

(IPIAs)—to ensure compliance with both the HUD Code and proposed DOE regulations. 

However, he noted that the HUD process of third-party certification of manufactured 

homes had room for improvement. He also noted the discussions on the manufactured 

housing consensus committee and at HUD regarding perceptions of inherent conflict of 

interest in the manufacturer-DAPIA/IPIA relationship (see attached HUD May 20, 2008, 

memorandum). 

 

Mr. Lubliner suggested that it would be useful for DOE to perform an independent 

assessment of how well the DAPIA/IPIA process is working for HUD before deciding 

whether to adopt a similar DOE inspection program. Mr. Lubliner recommended that 

DOE conduct a random survey of how to adjust the quality assurance (Q/A) process to 

ensure compliance with DOE’s proposed energy efficiency standards. He identified that 

the DAPIAs and IPIAs often do not have clear guidance on how to perform inspections 

(e.g., there currently is no clear guidance on how ducts, envelope penetration, etc. should 

be sealed). 

Mr. Lubliner also advocated that DOE implement factory and after set-up Q/A protocols 

for the testing of manufactured homes, using common building science testing tools 

employed in DOE and EPA residential energy efficiency programs. Mr. Lubliner noted 

DOE Building America, NIST, and other research suggesting that implementation of 

these protocols will help ensure healthier, more durable, and energy efficient homes in 

accordance with existing and future MHCSS requirements. These tools include: 

1) Blower doors and thermal imaging equipment to help confirm the correct installation 

of insulation and air leakage control systems associated with the home’s thermal 

envelope. 

2) Duct leakage testing equipment to ensure duct tightness Q/A targets are met. 

3) HVAC air flow testing/commissioning of mechanical ventilation systems to ensure 

that Q/A targets for bath and whole house fans air flow rates are met. 
4) Heating and AC system air flow rate testing to ensure that Q/A targets for return and 

supply register air flow requirements are met. 

He also suggested that DOE consider providing technical assistance to state 

administrative agencies responsible for after-market consumer complaints on how to 

check for energy efficiency problems in homes. 

Mr. Lubliner also mentioned that DOE consider discussions with HUD’s contractor 

responsible for DAPIA/IPIA Q/A processes (i.e., IBTS) to oversee certain energy 

efficiency inspections. He noted that the manufactured housing industry is not selfsupporting, as Congress envisioned, since labeling fees amount only to $39 per floor and 

there are currently low production rates, hence less revenue to implement all aspects of 

HUD’s manufactured housing program. He suggested that, if costs were increased, 

money could be put towards enhancing the Q/A process. Finally, Mr. Lubliner re-stated 

that he was supportive of the DAPIA/IPIA inspection process in conjunction with DOE 

performing random third-party and manufacturer audits and inspections. 

End of conversation. 
MAY 2 0 2008

OFFICE OF HOUSING

MEMORANDUM FOR: Committee

FROM: William W. Matchneer III, Associate Deputy Assistant Secretary

Regulatory Affairs and Manufactured Housing

SUBJECT: PIA Related Issues for the Consensus Committee to Consider

In recent months, the program office at HUD has been analyzing its working relationships

with the various HUD-approved Primary Inspection Agencies (pIAs), especially the private PIAs

that are in contract with and paid directly by the manufacturers. We believe that the PIAs'

performance as inspection agencies for HUD, as well as HUD's working relationships with these

PIAs, could be significantly improved if the regulations regarding PIAs were revised. HUD is

asking the committee to consider the following issues to help it develop potential regulatory

changes to address them. At this time we are not proposing specific regulatory language, only

asking that the committee.members think these issues through with us.

Background Summary

As authorized by the National Manufactured Housing Construction and Safety Standards

Act of 1974 (the Act), HUD published the procedural and enforcement regulations in 1976

(24 C.F .R. § 3282). These regulations set forth procedures by which the Secretary ofHUD

"conduct[ s] inspections and investigations necessary to enforce the standards, to detennine 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 thereof, and in some cases, to

remedy the defect or imminent safety hazard." 24 C.F.R. § 3282.1(b). One of the key listed

purposes of the Act is "to ensure uniform and effective enforcement of Federal construction and

safety standards for manufactured homes." 42 V.S.C. § 5401(b )(7).

The general purpose of the Act is to provide for a single unifonn standard for manufactured

housing safety and construction throughout the United States. Accordingly, HOD published the

Manufactured Home Construction and Safety Standards (construction and safety standards) in 1976

(24 C.F .R. § 3282). In the Manufactured Housing hnprovement Act of2000, Congress codified

definitions of the two types of "Primary Inspection Agencies" (FlAs) that were originally created by

the regulations to perfonn certain regulatory tasks. First, Congress defined "Production Inspection

Primary Inspection Agencies" (1PIAs:) as "[ s ]tate agenc[ ies] or private organization[ s] that ha[ ve]

been approved by the Secretary to evaluate the ability of manufactured home manufacturing plants

www.hud.gov espanol.hud.gov

u.s. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

WASHINGTON, DC 20410-8000
2

to comply with approved quality control procedures and with the Federal manufactured home

construction and safety standards promulgated hereunder, including the inspection of homes in the

plant."l Second, Congress defined "Design Approval Primary Inspection Agencies" (DAPIAs) as

"[ s ]tate agenc[ ies] or private organization[ s] that ha[ ve] been approved by the Secretary to evaluate

and either approve or disapprove manufactured home designs and quality control procedures.,,2

As mentioned above, PIAs Wt:re originally created by HUD regulations to perform

necessary regulatory tasks that HUD would not have the staff or budget to perform itself Once

approved by HUD, these third-party agencies are responsible for day-to-day oversight of design

and construction of manufactured homes. The regulations allow states to serve as PIAs. The

regulations also allow private organizations to serve as PIAs, and specifically allow manufacturers

to hire and pay those organizations without any restrictions. While this delegation of inspection

responsibility has reduced program costs for the government, it is the program office's opinion

that the regulations have also established a system of often conflicting interests that in HUD's

experience have discouraged private PIAs from performing in the best interest of the consumer

and prevented private PIAs from providing HUD with inspection information it needs to ensure

uniform and effective enforcement of the construction and safety standards.

The Current Regulations

PlAs are specifically responsible to HUD for assuring compliance with the construction

and safety standards by: reviewing and approving all manufactured home designs; reviewing and

approving all plant quality control plans; and performing regular production surveillance of all

plants. At the same time, private PlAs must compete for contracts with several manufacturers, and

the manufacturers have absolute authority to hire or fire them. It should, perhaps, come as no

surprise that no private PIA has ever come forward voluntarily to HUD with information regarding

defects in design or production. Furthermore, the direct employment relationship between

manufacturers and PlAs h"as led some in the industry to believe that the interests of the PIA and

manufacturer are actually joined. For example, some attorneys have found it acceptable to represent

both a manufacturer and its PIA with regard to the same compliance issue.

Without compliance infoffi1ation from the PlAs, HUD must rely on an independent

contractor for most of its fact gathering and other oversight infoffi1ation. However, this contract is

only for monitoring of PIA perfoffi1ance, and the monitoring is only done on an occasional basis.

The contractor is not in a position to provide HUD with the first-hand compliance infoffi1ation it

needs to fully discharge its statutory r~:sponsibility for industry oversight. HUD has found that,

in practice, private PlAs are more likely to act as referees between their manufacturers and the

contractor than as regulatory inspectors. HUD has also found that some private PlAs believe they

have independent discretion to decide compliance issues. For example, Section 3282.362(c)

allows IPlAs to distribute HUD compliance labels and to make determinations as to whether a

manufacturer is properly perfoffi1ing under its approved quality assurance manual. Some IPlAs

142 U.S.C. § 5402(21).

242 U.S.C. § 5402(18).
3

believe that this authority is independc~nt ofHUD and that HUD cannot direct an IPIA to take

specific actions when performing these duties. While the regulations allow IPIAs to engage in

these actions, the ultimate decision on all compliance issues plainly remains with HUD as the

statutory regulator.

Some Possible Revisions to the Regulations to Address the Concerns

Congress was obviously concerned about the identification of defective and unsafe homes, as

Section 621 of the Act establishes civil and criminal penalties for any failure to report violations of

the construction and safety standards. Despite this strong statement from Congress, HUD regulations

do not require PlAs to infonn HUD of defects they find in the homes they inspect or deficiencies in a

plant's quality control. The only PIA reporting requirement is found in 3282.553( c), which simply

requires IPlAs to submit monthly reports of the number of homes with a failure to confonn or an

imminent safety hazard found in each plant.

In order to encourage PlAs to provide HUD with compliance information, the program

office has been considering revisions to the procedural and enforcement regulations to ensure

that PlAs both can and will provide HUD with objective and independent evaluations of a

manufacturer's operations without risk of retaliation. Specifically, HUD suggests strengthening

24 C.F .R. §§ 3282.362 and 3282.366(a) to include the requirement that PlAs provide timely reports

of violations of the construction and safety standards and imminent safety hazards to HUD.

The program office welcomes recommendations from the Committee with regard to how

the regulations can be amended to address the conflicting interests HUD established in the current

system. Options might include new provisions regulating how PIAs can be hired, fired and/or paid

by the manufacturers. The regulations could be amended to require the approval ofHUD before a

manufacturer hires a new PIA or to place restrictions on the firing ofPIAs by limiting the reasons

that a manufacturer can end its emplo:yment relationship with a PIA at a given plant. This second

option might require that PIAs can only be fIred for cause on a plant-by-plant basis, and remove the

PIAs' concern that they could be fired. in retaliation for reporting violations at one plant.

The program office also sugge:sts amending the regulations to impose more stringent

reporting requirements regarding clas~; determinations. Pursuant to 24 C.F.R. § 3282.366(a), IPIAs

are responsible for assisting the Secretary in identifying classes of homes that have been affected

where the Secretary makes or may be contemplating making a preliminary detennination with

respect to the homes for which the IPIA provided the plant inspections. Additionally, the IPIA is

responsible for reviewing manufacturer detenninations of a class of affected homes when the

manufacturer acts pursuant to 24 C.F .R. § 3282.404, and the IPIA must concur in the method used

to detennine the class of potentially affected homes or state the reasons for its nonconcurrence.3

In practice, IPIAs generally concur with the class detennination methods of the manufacturer.

However, HUD has found that the methods used have frequently been inadequate and that the IPIA

had not reviewed the determinations with a critical eye. Though the regulations currently require

3 24 C.F .R. § 3282.366(b).
4

IPIAs to state why a method is inadequate the regulations could be amended to require an IPIA to

report in detail the reasons it believes that a manufacturer's class determination method is either

adequate or inadequate. ~ addition, an IPIA could be required to concur or non-concur on the class

of homes identified in addition to the methods used to determine that class.

Plant Certification

The regulations set forth the process by which an IPIA perfonns the initial evaluation of

the quality control in a plant to detennine whether the manufacturer is capable of producing

homes in confonnance with the approved design and the standards and to detennine whether the

manufacturer's quality control procedures will assure that such confonnance continues.4 However,

HUD's review of recent plant certifications indicates that IPIAs are focusing their quality control

evaluations on a single unit passing through the production process without design or production

defects being observed. The current regulations recognize this as only one measurement of a plant's

quality control procedures, and HUD believes the regulations should make it clear that IPIAs are

required to evaluate all aspects of a plant's quality operations during the certification process.

Once an evaluation is completed to the IPIA' s satisfaction, the regulations require the IPIA

to prepare and deliver a "certification report" to the manufacturer, HUD and HUD's monitoring

contractor.5 Once this certification report is delivered, ordinary production can begin under the

IPIA's surveillance, even though HUI) has had no opportunity to review and approve the

certification report or determine if the level of production and staffing under which the certification

report was issued have been included. Although some in the industry have interpreted this to mean

that IPIAs have independent plant licensing authority, statutory authority for plant licensing is

ultimately retained by HUD. While HUD believes that it has the inherent right to review and

approve certification reports, we would recommend potentially amending the regulations to

specifically condition plant certification on HUD's review and approval of the certification report.

HUD also suggests amending the regulations to clarify that although ordinary production can begin

upon the delivery of an IPIA' s certification report, HUD retains the right to review the certification

report and conduct an in-plant certification audit. The regulations would then clearly state that

HUD will either approve the certification or require specific improvements to the plant's quality

control. Finally, consideration should be given to amending the regulations to specifically condition

plant certification on the level of production and staffing that was in place and observed by the IPIA

during the certification process.

4 24 CoF oR. § 3282.362(b )(1).

5 24 C.F .R. § 3282.362(b )(2).
5

Potential RI~medies for Underperforming PIAs

Under the Regulations, if an IPIA or DAPIA is underperforming, HUD can revoke its

certification and prohibit it from participating in the Manufactured Housing Program. However, if

an IPIA is only performing poorly at one or two manufacturing plants, or a DAPIA is performing

poorly on only one or two design paclcages, it may not always be prudent to revoke that PIA's

approval to participate in the program. Not only would this require all manufacturers to hire new

PlAs, but it would also require manufacturers to bear the expense of recertifying all affected plants

and/or design packages. HUD would prefer to hold PlAs accountable for the individual plants and

design packages for which they are responsible. HUD already has broad authority to monitor a

PIA's performance and determine whether the PIA should be disqualified from the program or that

the PIA make specific improvements to their operations in order to continue to be approved.

Though HUD believes this authority is inherent to the Act and current regulations, consideration

should be given to amending the regulations to set forth the specific actions that HUD could take

against an underperforming IPIA or DAPIA. Examples of specific forms of action could include:

assessment of civil penalties; restriction on client growth; requiring IPlAs to perform increased

inspections in problem plants; removal ofDAPlAs from specific design packages that contain

numerous errors; and removal oflPIAs from specific plants where their production oversight is

ineffective.

Label Recovery

The regulations currently have no procedures assigning responsibility for the recovery of

HUD labels. This recently became a problem when several new manufactured homes that were

severely damaged by flooding caused by Hurricane Katrina were purchased from insurance salvage

and sold as used homes to unwary purchasers. Though the manufacturer was on notice that the

homes had been severely damaged and treated as total losses by the insurance carrier, the

regulations did not require the labels be removed. The program office suggests amending the

regulations to stipulate that retailers, distributors, or other parties cannot sell such homes and that to

do so would subject the party to civil and criminal penalties under the Act. This would include

homes that are known to be severely damaged in a natural disaster or during transportation and

cannot be repaired, and homes from manufacturers who have lost their plant certifications or gone

out of business. Manufacturers, retailers, or distributors should be required to notify HUD and the

IPIA that issued the label that it has a home or group of homes in its possession that meets the above

criteria. The IPIA or its designee would then be required to remove the label and return it to HUD

or to HUD's agent.