File No. 36157

This rule was published in the June 1, 2012, issue (Vol. 2012, No. 11) of the Utah State Bulletin.


Commerce, Occupational and Professional Licensing

Section R156-55a-602

Contractor License Bonds

Notice of Proposed Rule

(Amendment)

DAR File No.: 36157
Filed: 05/08/2012 04:30:36 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The Division and the Construction Services Commission are proposing amendments to allow a lower license bond amount to be posted by contractors in certain classifications of licensure.

Summary of the rule or change:

The proposed amendments to this section allow contractors with the R100 classification to post a license bond as low as $25,000 instead of the $50,000 minimum in the existing rule. The proposed amendments also allow contractors with lower subclassifications to post a license bond as low as $15,000 instead of the existing $50,000 minimum license bond amount required. The proposed amendments also provide the amount of the license bond may be higher or lower than the amounts identified in particular circumstances.

State statutory or constitutional authorization for this rule:

  • Subsection 58-1-106(1)(a)
  • Subsection 58-1-202(1)(a)
  • Section 58-55-101
  • Subsection 58-55-308(1)(a)
  • Subsection 58-55-102(39)(a)

Anticipated cost or savings to:

the state budget:

The Division will incur minimal costs of approximately $50 to print and distribute the rule once the proposed amendments are made effective. Any costs incurred will be absorbed in the Division's current budget.

local governments:

The proposed amendments only apply to licensed contractors and applicants for licensure as a contractor. As a result, the proposed amendments do not apply to local governments.

small businesses:

The proposed amendments only apply to licensed contractors and applicants for licensure as a contractor. The proposed amendments will allow lower bond costs for a limited number of contractors who must post a license bond in order to qualify for licensure as a contractor. It is impossible for the Division to estimate the amount of savings that will result due to a wide range of circumstances with contractor applicants and licensees.

persons other than small businesses, businesses, or local governmental entities:

The proposed amendments only apply to licensed contractors and applicants for licensure as a contractor. The proposed amendments will allow lower bond costs for a limited number of contractors who must post a license bond in order to qualify for licensure as a contractor. It is impossible for the Division to estimate the amount of savings that will result due to a wide range of circumstances with contractor applicants and licensees.

Compliance costs for affected persons:

The proposed amendments only apply to licensed contractors and applicants for licensure as a contractor. The proposed amendments will allow lower bond costs for a limited number of contractors who must post a license bond in order to qualify for licensure as a contractor. It is impossible for the Division to estimate the amount of savings that will result due to a wide range of circumstances with contractor applicants and licensees.

Comments by the department head on the fiscal impact the rule may have on businesses:

No fiscal impact to businesses is anticipated from this rule filing. However, affected licensees may see a cost savings as a result of the change to license bond amount requirements.

Francine A. Giani, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Commerce
Occupational and Professional Licensing
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY, UT 84111-2316

Direct questions regarding this rule to:

  • Dan Jones at the above address, by phone at 801-530-6720, by FAX at 801-530-6511, or by Internet E-mail at dansjones@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

07/02/2012

Interested persons may attend a public hearing regarding this rule:

  • 06/28/2012 09:00 AM, Heber Wells Bldg, 160 E 300 S, Conference Room 474, Salt Lake City, UT

This rule may become effective on:

07/09/2012

Authorized by:

Mark Steinagel, Director

RULE TEXT

R156. Commerce, Occupational and Professional Licensing.

R156-55a. Utah Construction Trades Licensing Act Rule.

R156-55a-602. Contractor License Bonds.

(1) Pursuant to the provisions of Subsections 58-55-306(1)(b) and 58-55-306(4)(c) and except as provided in Subsection R156-55a-602(4), a contractor shall provide a license bond issued by a surety acceptable to the Division in the amount of $50,000 for the E100 or B100 classification of licensure, $25,000 for the R100 classification of licensure, or $15,000 for other classifications or such higher amount as may be determined by the Division and the Commission as provided for in Subsection R156-55a-602(3). An acceptable surety is one that is listed in the Department of Treasury, Fiscal Service, Circular 570, entitled "Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies" at the date of the bond.

(2) The coverage of the license bond shall include losses that may occur as the result of the contractor's violation of the unprofessional or unlawful provisions contained in Title 58, Chapters 1 and 55 and rules R156-1 and R156-55a including the failure to maintain financial responsibility.

(3) The amount of the bond specified under Subsection R156-55a-602(1) may be increased by an amount determined by the Commission and Division when the financial history of the applicant, licensee or any owner indicates the [$50,000] bond amount specified in R156-55a-602(1) is insufficient to reasonably cover risks to the public health, safety and welfare. The financial history of the applicant, licensee or any owner, as outlined in Section R156-55a-306 may be reviewed in determining the bond amount required.

(4) A contractor may provide a license bond issued by a surety acceptable to the Division in an amount less than [$50,000]the bond amount specified in R156-55a-602(1) if:

(a) the contractor demonstrates by clear and convincing evidence that:

(i) the financial history of the applicant, licensee or any owner indicates the [$50,000] bond amount specified in R156-55a-602(1) is in excess of what is reasonably necessary to cover risks to the public health, safety and welfare;

(ii) the contractor's lack of financial responsibility is due to extraordinary circumstances that the contractor could not control as opposed to general financial challenges that all contractors experience; and

(iii) the contractor's scope of practice will be restricted commensurate with the degree of risk the contract presents to the public health, safety, and welfare; and

(b) the Commission and Division approve the amount.

 

KEY: contractors, occupational licensing, licensing

Date of Enactment or Last Substantive Amendment: [September 12, 2011]2012

Notice of Continuation: October 4, 2011

Authorizing, and Implemented or Interpreted Law: 58-1-106(1)(a); 58-1-202(1)(a); 58-55-101; 58-55-308(1)(a); 58-55-102(39)(a)

 


Additional Information

The Portable Document Format (PDF) version of the Bulletin is the official version. The PDF version of this issue is available at https://rules.utah.gov/publicat/bull-pdf/2012/b20120601.pdf. The HTML edition of the Bulletin is a convenience copy. Any discrepancy between the PDF version and HTML version is resolved in favor of the PDF version.

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For questions regarding the content or application of this rule, please contact Dan Jones at the above address, by phone at 801-530-6720, by FAX at 801-530-6511, or by Internet E-mail at dansjones@utah.gov.