Part VI

Inspections and Enforcement

We already know from Section III what lawmakers thought about the States when it came to this. Research indicates that the problems with State inspection and enforcement today are pretty much the same as described by lawmakers in 1973. While the States carry some responsibility for this, the vast majority of the blame belongs with HUD/FHA and the manufacturers of this product.

What you might not have known is that lawmakers wanted the States to handle the inspections and enforcement of this federal program and all of it if they wanted. The Congressional intent was to create minimum requirements for this and to provide the States with the incentive to take care of this. To safeguard the public if the States did not do the inspections required or enforce the standards and regulations, a system of checks to be carried out by the Secretary of HUD was put in place to insure that the States were doing the job that they said they would. If they didn't it would be the Secretary of HUD's job to carry out these duties within any State that did not participate in the program or was not carrying out their responsibility to inspect and enforce the standards and regulations (See 3282.502). What is the States role, if they choose, in this national manufactured housing program? To understand this we must first understand what is the scope of inspections as written in this Act. This section also will contain one of the most serious abuses of power, and most likely illegal by the Secretary of HUD, which is primarily responsible for the ineffectiveness of this program.

Title VI §614 Inspection of Mobile Homes and Records
(a) The Secretary is authorized to conduct such inspections and investigations as may be necessary to PROMULGATE or enforce Federal mobile home construction and safety standards established under this title or otherwise to carry out his duties under this title.

All of the underlined terms are a part of inspections. The term "Promulgate" is especially important to inspections. Promulgate means to make known the terms of. Congress knew that in-order for this program to succeed it was going to be necessary to educate people as to what exactly was their role or responsibility in this program. Without knowing, what they were inspecting and why they were inspecting there would be no reason to inspect. If you could not effectively inspect then you would be unable to effectively enforce the standards and regulations. So Congress made the education of those responsible for carrying out this Act a part of the inspection process. One of the reasons held out and promoted to lawmakers by both HUD/FHA and the industry, as one of the needs for this currently proposed amendment to the Act is the need for funding for exactly the same reason as what this Act already allows for.

HUD has the authority now and doesn't bother to use it and this proposed legislation should it pass will not change this, but it will legitimize the fact that they haven't done it up to now and allow them to start the clock all over again on not doing it again. Only this time HUD/FHA will be legally taking the States money to not accomplish carrying out the education of the people responsible for inspections and enforcement. One must know that the proposed legislation makes the promotion of this product in the private market place the priority use of the inspection fees with what is left over if any to be applied to actual inspection and enforcement functions. Under the proposed amendment raising the inspection fees to provide more funding for enforcement and inspections would be an assault on affordability and could cause HUD/FHA to reject any efforts to raise the inspection fees to pay for this vital purpose. This will mean that the States will get from the Secretary of HUD whatever is leftover if anything. Don't lull yourself into believing any promises from HUD/FHA about giving the States there fair share, their word is worthless just as the manufacturers is. If it is not in writing, it will not happen.

Title VI §614(b)(1) For the purposes of enforcement of this title persons duly designated by the Secretary, upon presenting appropriate credentials to the owner, operator, or agent in charge, are authorized,

(A) To enter, at reasonable times and without advance notice, any factory, warehouse, or establishment in which manufactured homes are manufactured, stored, or held, for sale; and

(B) To inspect, at reasonable times and within reasonable limits and in a reasonable manner, any such factory, warehouse, or establishment, and to inspect such books, papers, records, and documents as are set forth in subsection (c) of this section. Each such inspection shall be commenced and completed with reasonable promptness.

(2) The Secretary is authorized to contract with State and local governments and private inspection organizations to carry out his functions under this subsection.

Section 614 (b)(2) is another section that has been abused by the Secretary of HUD and this abuse has caused damage to this program and likewise to consumers to what extent we may never know since the record keeping chain has been broken. We will need to go to the regulations to understand how it is being done.

3282.202 Primary inspection agency contracts.
Each manufacturer shall enter into a contract or other agreement with as many Design Inspection Primary Inspection Agencies (DAPIAs) as it wishes and with enough Production Inspection Primary Inspection Agencies (IPIAs) to provide IPIA services for each manufacturing plant as set out in this subpart and in subpart H of this part. In return for the services provided by the DAPIAs and IPIAs, each manufacturer shall pay such reasonable fees as are agreed upon between the manufacturer and the primary inspection agency or, in the case of a State acting as an exclusive IPIA under Sec. 3282.3 such fees as may be established by the State.

NO WHERE WITHIN THE FEDERAL MANUFACTURED HOUSING CONSTRUCTION AND SAFETY STANDARDS ACT IS THE SECRETARY OF HUD AUTHORIZED TO ALLOW THE MANUFACTURERS OF THIS PRODUCT TO CONTRACT FOR SERVICES, SELECT SERVICES, OR DIRECT PAY FOR SERVICES FOR THE PURPOSES OF CARRYING OUT ANY OF THE SECRETARY'S DUTIES UNDER THIS TITLE. THIS IS ESPECIALLY TRUE FOR INSPECTIONS. Only the Secretary of HUD can contract for these services and the Act makes this quite clear! There are no provisions in this act for OTHER AGREEMENTS and is a ludicrous idea for more than obvious reasons.

Generally, common sense would answer the question of why this would be a bad idea and is why the Act authorizes only the Secretary of HUD to enter into contract for carrying out inspections prescribed under this Act. However, with HUD, laziness comes first and common sense is tossed out the window to accomplish objective number one.

This is a result once again of statements made by Lynda McDonnell. At the time of these statements the Bill contained no provisions that dealt with who the Secretary could authorize to carry out the inspections or how such inspections would be paid for. Title VI §614(b)(1) closed this loophole, although once again the Secretary of HUD has ignored the law as evidenced by 3282.202

Lynda McDonnell, Center for Auto Safety

"I would also like to point out a few potential problems in having third party agencies conduct inspections. In States where third-party inspection is used, the agencies are usually selected by the manufacturers.
There are three major testing laboratories that do this sort of inspection and the manufacturer has the option, in the States that I am familiar with, to choose which of those agencies, he wants to inspect his plant. There is one official of U.S. Testing Laboratory who told us his company's contract with one manufacturer was canceled because the manufacturer told him he could get by with using cheaper materials by hiring another third part agency.
This is not the sort of uniform quality of inspections that this Bill mandates.
I think the bill must provide for that sort of abuse.
If a third part is being paid for by the manufacturer you are going to have to cope with the third party behaving as though he is an employee of the manufacturer, rather than serving the consumers and the State agency".

Senator Brock, in response to charges by others who testified
"Secondly, with regard to the inspection program in Wisconsin that was mentioned in questioning Mr. Fosdick, you charge a $25 manufacturer's fee, and my bill provided for a Federal inspection to be paid for by the government, of course". (Mr. Fosdick was from the Lt. Governors office of Wisconsin and part of the same delegation as Lynda McDonnell)(Note the $25.00 inspection fee, this fee is actually one dollar cheaper today under HUD's leadership).

There is nothing in the regulations that require the manufacturer to show good cause for changing inspection services. There is a regulation that makes it easy to transition from one to another inspection service, but NO REQUIREMENT TO SHOW GOOD CAUSE FOR THIS CHANGE. Other agreement allows no binding contract to exist between the inspection agency and the manufacturer (See 3282.202). Folks, this is a program with Federal Standards that carry NATIONAL PREEMPTION and you cannot grant this kind of power to the person(s) being regulated to hire and fire their regulator. The truth is that HUD/FHA has done everything possible to gut this program and unless someone of authority steps in and puts a stop to it, this program needs to go away altogether. At least then, the consumer would not believe that the government was watching out for them, when in FACT THEY ARE NOT. This has turned this program into what amounts to a self-certification program, which Senator Brock said strongly that this legislation would not allow for nor would lawmakers ever pass such legislation that would allow for self-certification. He made this statement just after accusing the North Carolina delegation of presenting testimony that was at best misleading and at its worse demagogic.

What should be noted is that the manufacturers have been talking about how they are moving towards an ISO 9000 certification program. If the wildly varying degree of quality that is being turned out by these manufacturers under what already amounts to a self certification program is any sign of what is to come under a self certification program with no government controls, lawmakers can never allow this to happen.

Below is how the HUD/FHA gutted the conflict of Interest laws that prohibit such an arrangement between private parties to exist for the purposes of carrying out government activities, pay special attention to (b)(3). They might have just as well not bothered to publish this regulation; it is useless as published and only provides the appearance that HUD is not allowing illegal activity to take place.

3282.359 Conflict of interest.

(a) All submissions by private organizations shall include a statement that the submitting party is independent in that it does not have any actual or potential conflict of interest and is not affiliated with or influenced or controlled by any producer, supplier, or vendor of products in any manner which might affect its capacity to render reports of findings objectively and without bias.

(b) A private organization shall be judged to be free of conflicting affiliation, influence, and control if it demonstrates compliance with all of the following criteria:

(3) Its directors and other management personnel and its engineers and inspectors involved in certification activities hold no stock in and receive no stock option or other benefits, financial, or otherwise, from any producer, supplier, or vendor of the product involved, other than compensation under Sec. 3282.202 of this part;

(c) All submissions by States shall include a statement that personnel who will be in any way involved in carrying out the State plan or PIA function are free of any conflict of interest except that with respect to members of councils, committees or similar bodies providing advice to the designated agency are not subject to this requirement.

It sounds funny that the a State would have to include a statement concerning employees being free of any conflict of interest, when a third part agency is not only allowed to have a conflict of interest but is by virtue of the paycheck, under the control of the manufacturer. The directors and other management personnel and engineers of a state agency cannot have a conflict of interest with the manufacturers, when the directors and other management personnel and engineers of a third party agency can have a conflict of interest with the manufacturer. It really does not matter how HUD/FHA want to explain this, it is what it is and calling an apple an orange does not make it an orange.

The regulations exclude Section 621 or at least we can find no reference to it or no use of the language contained within the regulations. Why is this, well the Act still means what it means, and therefore it is not necessary to repeat it. The problem with this is that HUD does not follow the Act only the regulations that they wrote that gutted the most central provisions of this Act intended to insure the public's safety and this was government inspections and enforcement. No reasonable person can look at what this regulation does and call this a government inspection, the government has subrogated its authority in the inspection process to the manufacturers by allowing the manufacturer to select and pay for inspection services that are outside of government control by this fact.

HUD may come up with excuses for this as if their monitoring these agencies and only a member of Congress can obtain the records for this monitoring since HUD/FHA claim that this is precluded from public disclosure by trade secret clauses contained within the Act. They also refuse to turn this information over to State approved SAA organizations, which is authorized by this Act. Section 614(h); nothing in this section shall authorize the withholding of information by the Secretary or any officer or employee under his control from the duly authorized committees of the Congress. [42 U.S.C. 5413] It would seem that HUD/FHA only choose to follow the Act when it provides them with a shelter to hide what they have been doing.

Section 621 Penalties on Inspections.
Any person, other than an officer or employee of the United States, or a person exercising inspection functions under a State plan pursuant to section 5422 of this title, who knowingly and willfully fails to report a violation of any construction or safety standard established under section 5403 of this title may be fined up to $1,000 or imprisoned for up to one year, or both.

There is no reference in the regulations to this Section of the Act.

How are all of these inspection services supposed to be paid for?