Untitled Texas Attorney General Opinion ( 1987 )

May 6. 1987
Eouorable Lloyd Criss Opinion No. JM-689
Chairman
Committee on Labor and Re: Authority of the State
Employment Relations Fire Marshal to promulgate
Texas House of Representatives rules regarding fire protec-
P. 0. Box 2910 tion sprinkler contractors
Austin, Texas 70769
Dear Representative CriSS:
As Chairman of the House Committee on Labor and Employment
Relations, you ask several questions about article 5.43-3 of the Texas
Insurance Code. The purpose of article 5.43-3 is to protect the
public from the installation of unsafe fire protection sprinkler
systems. The act has three main requirements: first. each fire
protection sprinkler system contractor must register vith the State
Board of Insurance; second, each fire protection sprinkler system
contractor must employ at least one full-time licensed responsible
managing employee; and finally, each managing employee must obtain a
license by complying vich requirements Imposed by the State Board of
Insurance. see 554. 0. You ask whether article 5.43-3 prohibits a
registered &&actor or licensed individual from subcontracting an
entire project or part of a project to an unregistered subcontractor.
or unlicensed individual. You also ask vhether, if article 5.43-3
does not prohibit this subcontracting. the State Board of Insurance
.may promulgate rules to prohibit such conduct.
Article 5.43-3 requires all contractors, whether they are primary
contractors or subcontractors. for the plan, sale, installation,
maintenance, or servicing of all or part of a fire protection
sprinkler system to obtain a certificate of registration from the
board and to employ at least one full-time, licensed, responsible,
managing employee. Section 4 of article 5.43-3 requires, in part:
(a) A fire
protection sprinkler system con-
tractor must to the board for a certificate
apply
of registration on a form prescribed by the board.
If the contractor is a partnership or joint
venture, it need not register in its own name if
each partner or joint venturer 1s registered. . . .
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Honorable Lloyd Crlss - Page 2 (JM-689)
(b) Each fire protection sprinkler system
contractor must employ at least oue licensed
responsible managing employee ou a full-time basis.
(c) Each responsible managing employee must
obtain a license issued by the board and condi-
tioned on the successful completion of the
examination requirement and other requirements
prescribed by the rules adopted under this
article. . . . (Emphasis added).
See also 58.._ Section l(g) defines a "fire protection sprinkler system
contractor" as
a person or organization that offers to undertake,
represents itself as being able to undertake, or
does undertake the plan. sale, installation,
maintenance, or servicing of a fire protection
sprinkler system or any part of such a system.
(Emphasis added).
This definition clearly reaches subcontractors.
Section 2(b) of article 5.43-3 contains several narrow exceptions
vhich may apply to some subcontractors. Subsection (b) of section 2
provides, in part, that article 5.43-3 does not apply to:
(4) a person or organization that sells or
supplies products or materials to a registered
fire protection sprinkler system contractor;
(5) an installation, maintenance, or service
project for which the total contract price for
labor, materials, and all other services is less
than $100, if:
(A) the project is not a part of a complete
or more costly project, whether the complete
project is to be undertaken by one or more fire
protection sprinkler system contractors; or
(B) the project is not divided into con-
tracts of less than $lCO for the purpose of
evading this article;
. . . .
(7) a regular employee of a registered fire
protection sprinkler system contractor.
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Eouorable Lloyd Criss - Page 3 (m-689)
These exceptions, however, particularly subsections Z(b)(5)(A) and
2(b)(5)(B). emphasize that article 5.43-3 was intended to reach
subcontractors.
Because you ask whether article 5.43-3 prohibits a registered
contractor or a licensed individual from subcontractiug with an
uuregisteredyontractor or ao unlicensed individual, a preliminary
clarification of article 5.43-3's requirements is necessary. The
registration and licensing provisions of article 5.43-3 serve
different purposes. Subsection 2(b)(7) provides that article 5.43-3
does not apply to "a regular employee of a registered fire protection
sprinkler system contractor." This exception, however, logically
applies only while the employee acts as au employee of a registered
contractor. If a licensed employee acts independently, i.e.. apart
from his registered contractor employer, and offers to undertake or
undertakes "the plan, sale, installation, malatenance. or servicing of
a fire protection sprinkler system or any part of such a system," the
licensed employee must also obtain a certificate of registration from
the board. The act’s requirement that a contractor employ a licensed
managing employee is one of the requirements for obtaining a certi-
ficate of registration; it is not a substitute for registration.
Cousequently, this opinion addresses your questions in the context of
registered and unregistered contractors.
As indicated, subcontractors fall within the definition of
persons or organizations that must obtain certificates of registra-
tion. The more difficult question is whether article 5.43-3 prohibits
the actual act of subcontracting as well. You ask whether article
5.43-3 prohibits registered contractors from subcontracting with a
person or organization who has oat complied with the act. If it does
not prohibit such subcontracting, you ask 'whether the board may
promulgate rules prohibiting such conduct.
Section 8 provides that a person or organization may not:
(1) plan, sell, install, maintain. or service
a fire protection sprinkler system without a valid
certificate of registration;
(2) act as a fire protection sprinkler system
contractor under a certificate of registration
without having at least oae full-time employee who
holds a valid responsible sianaging employee
license . . . ;
(3) act as a responsible managing employee for
a fire protection sprinkler system contractor
without a valid license:
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Eonorable Lloyd Criss - Page 4 (JM-689)
(4) obtain or attempt co obtain a certificate
of registration or license by fraudulent represen-
tation; or
(5) plan. sell. install. maintain, or service
a fire protection sprinkler systesl in violation Of
this article or the rules adopted under this
article.
Although this section applies to subcontractors, it does not expressly
make the act of subcontracting a prohibited act.
Section 10 of article 5.43-3 provides that a person commits a
criminal offense if the person knowingly or intentionally violates
section 0 of article 5.43-3. Although section 8. in conjunction with
section 10, does not directly make the act of subcontracting a
criminal offense, general provisions of the Texas Penal Code may apply
to the act of subcontracting with a person or organization that
violates section 0 of article 5.43-3. Chapter 7 of the Penal Code
imposes criminal responsibility for the conduct of another under
certain circumstances. For example, section 7.02 of the code
provides, in part:
(a) A person is criminally responsible for an
offense committed by the conduct of another if:
(1) acting with the kind of culpability
required for the offense, he causes or aids an
innocent or nonresponsible person to engage in
conduct prohibited by the definition of the
offense;
(2) acting with intent to promote or assist
the commission of the offense, he solicits,
encourages, directs, aids, or attempts to aid
the other person to commit the offense; or
(3) having a legal duty to prevent commis-
sion of the offense and acting with intent to
promote or assist its commission. he fails to
make a rrasonable effort to prevent commission
of the offense. (Emphasis added).
See also 57.01. General provisions of the Penal Code, such as section
.7.02, apply to offenses defined outside the code unless the statute
defining the offense provides otherwise. See Penal Code 91.03;
Roneycutt v. State, 627 S.W.2d 417 (Tex. Crim.Fp. 1981).
Consequently, sections 8 and 10 of article 5.43-3 could be
applied in conjunction with section 7.02 of the Penal Code to
contractors who knowingly or intentionally contract with a
p. 3193
.
Bonorable Lloyd Criss - Page 5 (JM-689)
subcontractor who violates section 8 of article 5.43-3. Of course,
section 7.02, which makes an accused vicariously responsible for
assisting another to commit an offense, requires proof of conduct
constituting an offense plus an intentional act by the accused to
oromote or assist such conduct. See general* Ho~neEutt v. State.
&; Herring v. State, 633 S.W.: !d 905 (Tex. App. - Dallas 1982).
aff'd, 659 S.W.2d 391 (Tex. Grim. App. 1983). Proof of the elements
ofcriminal offense depends 011 the facts in each individual case.
Pou also ask whether the State Board of Insurance may promulgate
rules pursuant to section 3 of article 5.43-3 to prohibit registered
coutractors from subcontracting with persons or organizations which
are themselves in violation of article 5.43-3. Section 3(a) of
article 5.43-3 provides that "[tlhe board shall administer this
article and may issue rules necessary to its administration through
the State Fire Marshal." Administrative agencies may exercise only
those powers granted by law, together with those powers necessarily
implied from an authority conferred or duty imposed by statute. City
of Sherman v. Public Utility Commission of Texas. 643 S.W.2d 681, 686
(Tex. 1983). A licensing agency for a lawful business or profession
cannot enforce standards which are inconsistent with those of rhe
controlling statute. Bloom v. Texas State Board of Examiners of
Psychologists, 492 S.W.2d 460 (Tex. 1973). As indicated, article
5.43-3 does not expressly prohibit a registered contractor from
subcontracting with a subcontractor that is in violation of article
5.43-3. Consequently, the dispositive issues are whether such rule-
making authority may be "necessarily implied" from article 5.43-3 or
whether such rulemaking authority Is inconsistent with article 5.43-3.
Section 4 of article 5.43-3 contains three basic requirements:
first, each fire protection sprinkler system contractor must register
with the board; second, each contractor must employ at least one
full-time licensed responsible managing employee: and finally, each
managing employee must obtain a license through the board. Section a
prohibits acts which violate these basic requirements. Section 3
grants the board rulemaking authority to administer these require-
ments. Additionally, section 7(a) authorizes the board to delegate
certain of its functions, powers, and duties to the State Fire
Harshal. If the board can prohibit a person or organization from
planning, selling, installing, maintaining. or servicing a fire
protection sprinkler system without complying with certain require-
ments , it would be anomalous to determine that the board cannot
prohibit a registered contractor from knowingly assisting or promoting
a violation of the act's requiremenrs by another person or organiza-
tion. Article 5.43-3 requires registered contractors to assume
certain responsibilities for safe fire protection sprinkler systems.
See 15 (bond and insurance are requisites for certificate of registra-
tion) , The act also requires contractors to employ at least one
full-time licensed responsible managing employee. The obvious purpose
for this requirement is co have a licensed employee responsible for
actually managing or supervising the work performed. Additionally,
p. 3194
Honorable Lloyd Criss - Page 6 (JM-689)
section 4(h) provides that "[a] certificate of registration or license
issued under this article is not transferable." If registered
contractors were free to subcontract all or part of a project to a
person or organization that did not comply with these requirements.
the requirements would be meaningless.
Consequently, article 5.43-3 contains the nscessary authority for
the board to promulgate rules forbidding registered contractors from
subcontracting with persons or organizations that are in violation of
article 5.43-3. This does not, however, mean the board may designate
the act of subcontracting as a prohibited act under section 0 for
purposes of criminal liability under section 10. Although rules
validly adopted pursuant to a statute may in some instances designate
certain conduct as a criminal offense, see Penal Code Sl.O3(a).
article 5.43-3 does not authorize the boardto create new criminal
offenses. Oo the other hand, this does not leave the board without
enforcement power. Subsection (a) of section 9 provides:
[Vliolation of this article or a rule adopted
under this article is a ground for the denial,
suspension, or revocation of a certificate of
registration or a license issued under this
article. (Emphasis added).
Rules of the board say only be adopted according to legally applic-
able procedural requirements. See generally V.T.C.S. art. 6252-13s
(Administrative Procedure and Texas Register Act).
SUMMARY
Article 5.43-3 of the Texas Insurance Code
requires contractors, whether primary contractors
or subcontractors, for the plan, sale, installa-
tion, maintenance, or servicing of all or part of a
fire protection sprinkler system to obtain a
certificate of registration from the State Board of
Insurance. Additionally, article 5.43-3 authorizes
the board to promulgate rules forbidding registered
contractors from subcontracting with persons or
organizations that are in violation of article
5.43-3.
J-/h
Very truly yours,
a
JIM MATTOX
Attorney General of Texas
JACK MGRTOWRR
First Assistant Attorney General
p. 3195
Honorable Lloyd Criss - Page 7 (JU-689)
MARYKELLER
Executive Assistant Attorney General
JUDGEZOLLIE STEAKLEY
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Jennifer Riggs
Assistant Attorney General
p. 3196