There were a total of 35 commenters on the June 14, 2006, proposed rule. Twentyseven of the commenters were from the manufactured home industry, including manufacturers, component suppliers, retailers, installers, trade associations, and community operators. Five commenters were from State Administrative Agencies (SAAs). The remaining commenters included one member of the insurance industry, a consumer group, and the Manufactured Housing Consensus Committee (MHCC).

None of the comments received addressed the IRFA. However, the Department did receive two general comments regarding the Regulatory Flexibility Analysis summary in the preamble of the proposed rule. The comments were:

In developing the proposed rule, the Department developed an installation program that implemented the statutory requirements outlined in the Act, while balancing protection for the consumer with the economic impact on small entities. Appendix A of the IRFA indicates that the five regulatory requirements in the proposed rule with the largest individual economic impact account for approximately 86 percent of total estimated cost increase of a manufactured home. The information in Table 1 summarizes these findings and a discussion follows for each summary:
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Table 1
Cost impact Cost impact

Summary of regulatory requirement per single per multi Regulation establishing liability $302.52 $302.52 insurance for installers in states
without a qualifying installation
program................................
Regulation requiring the inspection of 300.00 350.00 every manufactured home installation in
states without a qualifying
installation program...................
Regulation establishing initial training 102.86 102.86 for installers in states without a
qualifying installation program........
Regulation establishing continuing 71.09 71.09 education for installers in states
without a qualifying installation
program................................
Regulation establishing recordkeeping 62.02 62.02 requirements for installers in states
without a qualifying installation
program. Requires that all information

must be kept for 5 years...............

1. Liability InsuranceSection 3286.205(d) of the proposed rule required an applicant for an installation license to provide evidence of general liability insurance in the amount of at least $1 million. The Department received comments suggesting eliminating or reducing the limits on the provision. Additional commenters suggested including a surety or insurance bond to protect the consumers from faulty installation designs or incomplete work.

The Department agrees with the commenters that surety or insurance bonds would provide better protection to the consumer than the liability insurance requirement. Therefore, the Department replaced the liability insurance requirement in the proposed rule with a surety bond/insurance requirement that is sufficient to cover the cost of repairing all damage to the home and its supports caused by the installer during the installation of the home. (See Sec. 3286.205(d) in the final rule). This change also reduced the burden on small entities.

2. InspectionsSection 3286.505 of the proposed rule required each manufactured home installed in states where HUD administers the installation program to be inspected. Section 605 of the Act (42 U.S.C. 5404) calls for the establishment of an installation program that includes inspection of the installation of manufactured homes. Many commenters suggested inspecting less than 100 percent of all installations. The Department does not have any evidence that suggests such an inspection program would provide sufficient consumer protection; therefore, the final rule remains unchanged.

3. Installer TrainingSection 3286.205(b)(1) of the proposed rule required an applicant for an installation license to complete 12 hours of training in states where HUD administers the installation program. Section 605 of the Act (42 U.S.C. 5404) calls for the establishment of an installation program that includes installer training. The Department did not receive any comments regarding the initial training of installers; therefore, the final rule remains unchanged.

4. Installer Continuing EducationSection 3286.205(b)(2) of the proposed rule required the licensed installer in states where HUD administers the installation program to complete 8 hours of continuing education during the 3year license period to qualify for renewal of an installation license. The Department did not receive any comments regarding the continuing education requirement for installers; therefore, the final rule remains unchanged.

5. Installer RecordsSection 3286.413 of the proposed rule required that installers maintain the required records for 5 years after the installer certifies completion of the home in states where HUD administers the installation program. Fifteen commenters suggested reducing the record retention requirement to 3 years. The Department agreed and changed the record retention requirement to 3 years in the final rule.
Description and Estimated Number of Small Entities Regulated

The final rule will apply to any business that manufactures, sells or leases, or installs manufactured homes. The rule also contains requirements for persons to qualify to provide the training required for installers. This rule also establishes requirements that must be met by a state to implement and administer its own installation program in such a way that the state would not be covered by the HUD administered installation program.

The rule has differing requirements for the regulated entities depending on whether the home is being installed in a state with a qualified installation program or a state covered by the HUD administered program.

The information presented in Table 2 was gathered from data collected by the Office of Manufactured Housing Programs based on the available data for 2006. The number of states expected to administer an installation program is estimated based on close correspondence with state representatives regarding the state's intentions.
Table 2.Regulated Entities and Small Entities Number of Small Business Percentage of North American Industrial Description of regulated Administration Number of regulated Classification Schedule primary entity entities size standard small entities entities All StatesThe requirements in Subpart A are applicable in all states 321991....................... Manufacturers... 222 500 employees.. 198 89 453930....................... Retailers....... 5151 500 employees.. 5151 100 States Without Installation ProgramsThe requirements in Subparts B through H are applicable in these states 453930....................... Retailers....... 340 500 employees.. 340 100 238990....................... Installers...... 1021 $12 million.... 1021 100 611519....................... Trainers........ 50 $6 million..... 50 100 [[Page 35276]]
States With Installation ProgramsThe requirements in Subpart I are applicable in these states States.......... 35 50,000 0 0 population.

Description of the projected reporting, recordkeeping, and other compliance requirements of the final rule, including an estimate of the classes of small entities that will be subject to the requirement and the type of professional skills necessary for preparation of the report or record.

The final rule contains information collection requirements, installer licensing requirements, installer surety bond/insurance requirements, installation inspection requirements, installer trainer registration, and certification of states administering an installation program. Appendix A provides a detailed cost analysis of each section of the final rule.

Identification, to the extent practicable, of all relevant federal rules that may duplicate, overlap, or conflict with the final rule.

The Department is unaware of any conflicting federal rules. The final rule requires similar information to that required in 24 CFR 3282.552, which requires manufacturers to submit monthly label reports to their Production Inspection Primary Inspection Agency (IPIA). Section 3282.553 (24 CFR 3282.553) requires each IPIA to provide the information in the monthly label reports to the Department. This information is currently provided on OMBapproved form HUD302. Section 3286.9 in the final rule requires the manufacturer to provide similar information to the Department for the purposes of installation.

To eliminate the possible duplication of reporting requirements, the Department revised form HUD302 such that the information required in 24 CFR 3282.552 and 3286.9 may be provided in a single form completed by the manufacturer. This revised form is part of the Department's Paperwork Reduction Act submission.

Description of any significant alternatives that accomplish the stated objectives of applicable statutes that minimize any significant economic impact of the proposed rule on small entities, including alternatives considered.

The section Summary of Significant Issues Raised by Public Comment discusses the five regulatory requirements in the proposed and final rules that have the greatest economic impact on small entities. Additional alternatives were also considered during the development of the final rule as a result of the public comment.

Alternative 1. Section 3286.5(b)(2) requires the manufacturer to include instructions for supporting the manufactured home temporarily, pending the first siting of the home for occupancy.

Alternative ConsideredThe Department considered eliminating this requirement as the result of public comment; however, the importance of assuring that the temporary supports will be sufficient to prevent the home and its transportable sections from being brought out of conformance with the Construction and Safety Standards in 24 CFR part 3280 prior to sale is a necessary consumer protection considering the small costs associated with this section. Furthermore, the Department received additional comments stating the provisions are beneficial and should remain in the final rule.

Alternative 2. Section 3286.7(b) requires the retailer to provide the purchaser or lessee with a consumer disclosure prior to the purchase or lease of a manufactured home.

Alternative ConsideredThe Department considered eliminating this requirement as a result of public comment; however, the majority of public comment was in favor of the disclosure because of the importance of consumer protection during the purchase or lease of a manufactured home. This consumer protection justifies the small costs associated with this section.

Alternative 3. Section 3286.9(d) of the proposed rule required the manufacturer to include installation instructions in each home regardless of state.

Alternative ConsideredA single commenter suggested requiring the manufacturer to provide installation instructions only in homes installed in states where HUD administers the installation program. Section 605 of the Act (42 U.S.C. 5404) requires the manufacturer to provide the design and instructions for the installation of each manufactured home, that have been approved by a design approval inspection agency; therefore, the requirement is consistent with the statutory requirement. (See Sec. 3286.9(b) of the final rule.)

Alternative 4. Section 3286.13(a) of the proposed rule required the retailer or distributor to maintain for 5 years a copy of the sales or lease record for all homes sold or leased regardless of state.

Alternative ConsideredThe Department revised the final rule requiring the retailer or distributor to maintain a copy of the sales or lease record for homes sold or leased in states where HUD administers the installation program for 3 years (See section 3286.113(e) of the final rule). This reduces the recordkeeping burden on retailers and distributors.

Alternative 5. Section 3286.103(a) of the proposed rule required retailers and distributors to provide the purchaser with a copy of either:
``(1) The manufacturer's DAPIAapproved installation instructions for the home; or
(2) If the installation requires a design that is different from that provided by the manufacturer, an installation design and instructions that do not take the home out of compliance with the construction and safety standards in part 3280 of this chapter. * * *''

Many commenters agreed that the retailer should provide the purchaser with a copy of the DAPIAapproved installation instructions for every home in states where HUD administers the installation program. However, many commenters said the retailer should not be required to provide an installation design and instructions that differ from the DAPIAapproved installation instruction if the retailer has not agreed to provide any setup in connection with the sale of the home and the installation requires a design that is different from that provided by the manufacturer for the home. HUD agrees that the retailer or manufacturer should provide the installation design and instructions only for installations that require designs that differ from those provided by the manufacturer when the retailer or
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manufacturer agrees to provide any setup in connection with the sale of the home. The proposed rule placed the entire burden of providing the installation instructions on the retailer.

Accordingly, the final rule has been revised to require: (1) The retailer to provide the purchaser with a copy of the DAPIAapproved installation instructions for each manufactured home, and (2) the retailer or manufacturer to provide to the installer the installation design and instructions for installations that require designs that differ from those provided by the manufacturer, when the retailer or manufacturer agrees to provide any setup in connection with the sale of the home (See Sec. 3286.103(b) of the final rule).

Alternative 6. Section 3286.211(a) of the proposed rule set an expiration date of 3 years for installation licenses issued in states where HUD administers the installation program.

A single commenter suggested extending the term of the license to 5 years to reduce the burden on installers. Another commenter suggested reducing the licensing term to one year to ensure installers are knowledgeable of new installation requirements. The term of the license remains 3 years in the final rule to balance the burden on installers and HUD, while ensuring installers are kept up to date on updates to the Model Installation Standards.

Alternative 7. Record Retention RequirementsThe proposed rule requires that installers, retailers, and trainers maintain the required records for 5 years in states where HUD administers the installation program.

Alternative ConsideredThe Department agreed with the 15 commenters that suggested reducing the record retention requirement to 3 years. The Department agreed and changed the record retention requirement to 3 years in the final rule, thereby reducing record retention burden on small entities.
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Appendix A.24 CFR part 3286: Manufactured Housing Installation Program Cost Impact Analysis Matrix Cost Cost Annual Number of impact per impact per cost Total Section Regulated party parties Number of single multi impact per annual Cost impact notes affected homes section section regulated cost home home party impact Sec. 3286.1........... ................... .......... .......... .......... .......... .......... .......... This section sets forth the purpose of Subpart A. The requirements in Subpart A apply to all manufactured homes regardless of the state of installation. There is no cost associated with this section. Sec. 3286.2........... ................... .......... .......... .......... .......... .......... .......... This section sets forth the applicability of all subparts. There is no cost associated with this section. Sec. 3286.3........... ................... .......... .......... .......... .......... .......... .......... This section sets forth terms and definitions in this part. There is no cost associated with this section. Sec. 3286.5........... Manufacturer....... 222 135,000 $0.87 $0.87 $527.03 $117,000 This section provides for an overview of the installation program including the HUD installation program, state installation programs, and manufacturer and retailer requirements. There is no associated cost with this section other than in Sec. 3286.5(c)(2). Section 3286.5(c)(2) requires the manufacturer to include instructions for supporting the manufactured home temporarily and protecting the interior from damage, pending the first installation of the home for occupancy. The instructions must be adequate to assure that the temporary supports used will be sufficient to prevent the home and its transportable sections from being brought out of conformance with the construction and safety standards or its sections if stored on such supports for more than 30 days. This would include costs for thirdparty design review and approval (4 hours of DAPIA review and approval labor). The installation instructions themselves are already required under 24 CFR 3280. However, this review cost is a onetime annualized total cost averaged on a perhome basis. The Department estimates 20 hours to review and revise the instructions at $75 per hour for 78 manuals. This cost is averaged for 135,000 homes and the 78 manuals. (20*75*78)/ 135,000=$0.867/home. Sec. 3286.7(a)........ Manufacturer....... 222 135,000 2.55 2.55 1,551.89 344,520 Requires the manufacturer to put a notice in the consumer manual for reinstalled homes. There will be a cost to the manufacturer for this notice. This notice must be provided for ALL homes. The cost to the manufacturer would include the one time cost of developing the disclosure (one hour at $75 per hour per manual), the initial placement in the consumer manual (one hour at $15 per hour per manual), and the continued placement of the disclosure in the consumer manual (10 minutes at $15 per hour). This cost is averaged for 135,000 homes.{(1*75*78)+(1*15*78)+(0.16 67*15*135,000){time} / 135,000=$2.55/home. Sec. 3286.7(b)........ Retailer........... 5151 135,000 5.36 5.36 140.52 723,825 Requires the retailer to provide the purchaser or lessee with a consumer disclosure. The requirements of this disclosure are also provided for in this section. This notice must be provided for all homes. There will be a cost to the retailer associated with this disclosure. The cost to the retailer would include the onetime cost of developing the disclosure (one hour at $75 per hour) and providing the disclosure to the consumer before the sale of each home (10 minutes at $15 per hour). This cost is averaged for 135,000 homes. {(1*75*5151)+(0.1667*15*135,000) {/135,000=$5.36/home. [[Page 35279]]
Sec. 3286.9(a)........ Manufacturer....... 222 135,000 2.50 2.50 1,520.27 337,500 This section requires manufacturers to provide the initial tracking information about each home to

FOR FURTHER INFORMATION CONTACT William W. Matchneer III, Associate Deputy Assistant Secretary for Regulatory Affairs and Manufactured Housing, Office of Manufactured Housing Programs, Department of Housing and Urban Development, 451 Seventh Street, SW., Room 9164, Washington, DC 20410; telephone number 2027086401 (this is not a tollfree number). Persons with hearing or speech impairments may access this number via TTY by calling the tollfree Federal Information Relay Service at 18008778339.