DAR File No. 38736

Commerce, Occupational and Professional Licensing

Rule R156-55a

Utah Construction Trades Licensing Act Rule

Notice of Proposed Rule

(Amendment)

DAR File No.: 38736
Filed: 08/05/2014 01:48:40 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this rule filing is to update rules required by statutory changes as made by S.B. 187 from the 2014 General Legislative Session and S.B. 44 from the 2013 General Legislative Session. This includes adding to the fine schedule for new offenses that have been added to the Construction Trades Licensing Act, Title 58, Chapter 55, since this section was last revised and changing code references that were updated in the statute.

Summary of the rule or change:

In Section R156-55a-306, changes statutory citation reference Subsection 58-55-306(2) to Subsection 58-55-306(5). In Section R156-55a-503, added to the fine schedule tables to add fines for offenses that have been added to the Construction Trades Licensing Act since this section of the rule was last updated. In Section R156-55a-602, deletes reference to statutory citation Subsection 58-55-306(4)(c).

State statutory or constitutional authorization for this rule:

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

Anticipated cost or savings to:

the state budget:

The Division will incur minimal costs of approximately $75 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. The Division may also see an increase in fines collected given that additional unprofessional conduct types are being added to the administrative fine schedule. However, the Division is not able to determine how many new fines or an aggregate of new fines that might be collected as a result of these additions.

local governments:

The proposed amendments only apply to licensed contractors, plumbers, and electricians, and applicants for licensure in those classifications, as well as individuals who may unlawfully engage in the unlicensed practice of those professions. As a result, the proposed amendments do not apply to local governments.

small businesses:

The proposed amendments only apply to licensed contractors, plumbers, and electricians, and applicants for licensure in those classifications, as well as individuals who may unlawfully engage in the unlicensed practice of those professions. Licensees and applicants for licensure may work in a small business; however, the proposed amendments would not directly affect the business. Persons assessed a fine by the amount set pursuant to the proposed amendments to this rule will be affected by the amount of the fine assessed against them. The statute set the maximum amount of the fine that may be assessed, but anticipates that the actual amount of the fine will be determined by the Division after review of aggravating and mitigating circumstances and consideration of the amount of fines assessed for similar offenses. This variation from the maximum fines allowed was anticipated by the statute. Therefore, there is no costs or savings resulting from this proposed rule change beyond the impact anticipated by statute. Moreover, the number of citations that may be issued cannot be anticipated. Therefore, the cost/revenue that could result cannot be anticipated.

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

The proposed amendments only apply to licensed contractors, plumbers, and electricians, and applicants for licensure in those classifications, as well as individuals who may unlawfully engage in the unlicensed practice of those professions. Persons assessed a fine by the amount set pursuant to the proposed amendments to this rule will be affected by the amount of the fine assessed against them. The statute set the maximum amount of the fine that may be assessed, but anticipates that the actual amount of the fine will be determined by the Division after review of aggravating and mitigating circumstances and consideration of the amount of fines assessed for similar offenses. This variation from the maximum fines allowed was anticipated by the statute. Therefore, there is no costs or savings resulting from this proposed rule change beyond the impact anticipated by statute. Moreover, the number of citations that may be issued cannot be anticipated. Therefore, the cost/revenue that could result cannot be anticipated.

Compliance costs for affected persons:

The proposed amendments only apply to licensed contractors, plumbers, and electricians, and applicants for licensure in those classifications, as well as individuals who may unlawfully engage in the unlicensed practice of those professions. Persons assessed a fine by the amount set pursuant to the proposed amendments to this rule will be affected by the amount of the fine assessed against them. The statute set the maximum amount of the fine that may be assessed, but anticipates that the actual amount of the fine will be determined by the Division after review of aggravating and mitigating circumstances and consideration of the amount of fines assessed for similar offenses. This variation from the maximum fines allowed was anticipated by the statute. Therefore, there is no costs or savings resulting from this proposed rule change beyond the impact anticipated by statute. Moreover, the number of citations that may be issued cannot be anticipated. Therefore, the cost/revenue that could result cannot be anticipated.

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

As stated in the rule analysis, this filing updates citations to statutory provisions that have been recently renumbered. In addition, it outlines the civil penalties that may attach to industry conduct that the Legislature has determined to be inappropriate. No fiscal impact to businesses is anticipated beyond that contemplated by the Legislature in determining to further regulate the conduct of entities engaged in the construction trades.

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:

10/01/2014

Interested persons may attend a public hearing regarding this rule:

• 09/24/2014 09:00 AM, Heber Wells Bldg, 160 E 300 S, Conference Room 474 (fourth floor), Salt Lake City, UT

This rule may become effective on:

10/08/2014

Authorized by:

Mark Steinagel, Director

R156. Commerce, Occupational and Professional Licensing.

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

R156-55a-306. Contractor Financial Responsibility - Division Audit.

In accordance with Subsections 58-55-302(10)(c), 58-55-306([2]5), 58-55-306(4)(b), and 58-55-102(19), the Division may consider various relevant factors in conducting a financial responsibility audit of an applicant, licensee, or any owner, including:

(1)(a) judgments, tax liens, collection actions, bankruptcy schedules and a history of late payments to creditors, including documentation showing the resolution of each of the above actions;

(b) financial statements and tax returns, including the ability to prepare or have prepared competent and current financial statements and tax returns;

(c) an acceptable current credit report that meets the following requirements:

(i) for individuals:

(A) a credit report from each of the three national reporting agencies, Trans Union, Experian, and Equifax; or

(B) a merged credit report of the agencies identified in Subsection (A) prepared by the National Association of Credit Managers (NACM); or

(ii) for entities, a business credit report such as an Experian Business Credit Report or a Dun and Bradstreet Report;

(d) an explanation of the reasons for any financial difficulties and how the financial difficulties were resolved;

(e) any of the factors listed in Subsection R156-1-302 that may relate to failure to maintain financial responsibility;

(f) each of the factors listed in this Subsection regarding the financial history of the owners of the applicant or licensee;

(g) any guaranty agreements provided for the applicant or licensee and any owners; and

(h) any history of prior entities owned or operated by the applicant, the licensee, or any owner that have failed to maintain financial responsibility.

 

R156-55a-503. Administrative Penalties.

(1) In accordance with Subsection 58-55-503, the following fine schedule shall apply to citations issued under Title 58, Chapter 55:

 

TABLE II

FINE SCHEDULE

FIRST OFFENSE

                    All Licenses Except        Electrical or
Violation           Electrical or Plumbing     Plumbing
58-55-308(2)             $  500.00                 N/A
58-55-501(1)             $  500.00              $  500.00
58-55-501(2)             $  500.00              $  800.00
58-55-501(3)             $  800.00              $1,000.00
58-55-501(9)             $  500.00              $  500.00
58-55-501(10)            $  800.00              $1,000.00
58-55-501(12)               N/A                 $  500.00
58-55-501(14)            $  500.00                 N/A
58-55-501(19)            $  500.00                 N/A
58-55-501(21)            $  500.00              $  500.00
58-55-501(22)            $  500.00                 N/A
58-55-501(23)            $  500.00                 N/A
58-55-501(24)            $  500.00                 N/A
58-55-501(25)            $  500.00                 N/A
58-55-501(26)            $  500.00                 N/A
58-55-501(27)            $  500.00                 N/A
58-55-501(28)            $  500.00                 N/A
58-55-501(29)            $  500.00                 N/A
58-55-504(2)             $  500.00                 N/A

SECOND OFFENSE

58-55-308(2)             $1,000.00                 N/A
58-55-501(1)             $1,000.00              $1,500.00
58-55-501(2)             $1,000.00              $1,500.00
58-55-501(3)             $1,600.00              $2,000.00
58-55-501(9)             $1,000.00              $1,000.00
58-55-501(10)            $1,600.00              $2,000.00
58-55-501(12)               N/A                 $1,000.00
58-55-501(14)            $1,000.00                 N/A
58-55-501(19)            $1,000.00                 N/A
58-55-501(21)            $1,000.00              $1,000.00
58-55-501(22)            $1,000.00                 N/A
58-55-501(23)            $1,000.00                 N/A
58-55-501(24)            $1,000.00                 N/A
58-55-501(25)            $1,000.00                 N/A
58-55-501(26)            $1,000.00                 N/A
58-55-501(27)            $1,000.00                 N/A
58-55-501(28)            $1,000.00                 N/A
58-55-501(29)            $1,000.00                 N/A
58-55-504(2)             $1,000.00                 N/A

THIRD OFFENSE

Double the amount for a second offense with a maximum amount
not to exceed the maximum fine allowed under Subsection
58-55-503(4)(h).

 

(2) Citations shall not be issued for third offenses, except in extraordinary circumstances approved by the investigative supervisor.

(3) If multiple offenses are cited on the same citation, the fine shall be determined by evaluating the most serious offense.

(4) An investigative supervisor may authorize a deviation from the fine schedule based upon the aggravating or mitigating circumstances.

(5) The presiding officer for a contested citation shall have the discretion, after a review of the aggravating and mitigating circumstances, to increase or decrease the fine amount imposed by an investigator based upon the evidence presented.

 

R156-55a-602. Contractor License Bonds.

Pursuant to the provisions of Subsections 58-55-306(1)(b)[, 58-55-306(4)(c)] and 58-55-306(5)(b)(iii), a contractor shall provide a license bond issued by a surety acceptable to the Division in the amount, form, and coverage as follows:

(1) 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, the failure of the licensee to pay its obligations, and the failure of the owners or a licensed unincorporated entity to pay income taxes or self employment taxes on the gross distributions from the unincorporated entity to its owners.

(3) 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 under this section.

(4) If the licensee is submitting a bond under Subsection 58-55-306(5)(b)(iii)(B), the amount of the bond shall be 20% of the annual gross distributions from the unincorporated entity to its owners. As provided in Subsection 58-55-302(10)(c), the Division, in determining if financial responsibility has been demonstrated, may consider the total number of owners, including new owners added as reported under the provisions of Subsection 58-55-302(10)(a)(i), in setting the amount of the bond required under this subsection.

(5) If the licensee is submitting a bond under any subsection other than Subsection 58-55-306(5)(b)(iii)(B), the minimum amount of the bond shall be $50,000 for the E100 or B100 classification of licensure; $25,000 for the R100 classification of licensure; or $15,000 for other classifications. A higher amount may be determined by the Division and the Commission as provided in Subsection R156-55a-602(6).

(6) The amount of the bond specified under Subsection R156-55a-602(5) 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 bond amount specified in Subsection 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.

(7) A contractor may provide a license bond issued by a surety acceptable to the Division in an amount less than the bond amount specified in Subsection R156-55a-602(5) if:

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

(i) the financial history of the applicant, licensee or any owner indicates the bond amount specified in Subsection 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: [January 21, ]2014

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)