C.S.H.B. 1639 78(R) BILL ANALYSIS C.S.H.B. 1639 By: Bailey Urban Affairs Committee Report (Substituted) BACKGROUND AND PURPOSE The consequences of failing to maintain high standards in the area of fire protection can be tragic, as the recent night-club fires in Chicago and Rhode Island have shown. HB 1639 seeks to ensure that Texans are protected to the fullest extent possible from fire-related tragedies by ensuring not only that the companies who provide fire protection sprinkler systems are properly licensed, but that all of their employees are also properly trained and educated and fully qualified to install, repair, inspect and maintain these systems. RULEMAKING AUTHORITY It is the committee's opinion that rulemaking authority is expressly granted to the State Board of Insurance in SECTION 4, Article 5.43-3, Insurance Code, of this bill. SECTION BY SECTION ANALYSIS SECTION 1: Amends Section 1, Article 5.43-3 of the Insurance Code by adding language to Subdivision (12) expanding the meaning of the term "license" to include authorization documents issued to fire protection sprinkler system contractor employees in addition to responsible managing employees. Subdivisions (15) and (16) are new and define the terms "Fire protection sprinkler system apprentice" and "Fire protection sprinkler system journeyman", respectively, as persons who install, alter, maintain, service or inspect a fire protection sprinkler system or any part of the system as an employee of a fire protection sprinkler system contractor and have less than five years of experience (apprentice) or at least five years of experience (journeyman). SECTION 2: Lists exemptions from this article as provided by Section 2 (b), Article 5.43-3, Insurance Code. This section adds an exemption for employees of a fire protection sprinkler system contractor who install, alter, maintain, service or inspect a fire sprinkler protection system in one or two family dwellings as provided by the 2002 edition of the National Fire Protection Association (NFPA) Standard 13D. SECTION 3: Amends Section 3(a), Article 5.43-3 of the Insurance Code by striking the words "may create" and replacing them with the words "shall operate", thereby requiring rather than simply allowing that the State Board of Insurance operate a specialized licensing or registration program for fire protection sprinkler system contractors. It also adds journeymen and apprentices of fire protection sprinkler system contractors to the class of entities for whom the board must operate such licensing and registration programs. SECTION 4: Amends Section 4, Article 5.43-3 of the Insurance Code by adding Subsections (c-1), (c-2), and (d-1) and amending Subsection (d). Subsection (c-1) requires that any employee of a fire protection sprinkler system contractor who installs, alters, maintains, services or inspects a fire protection sprinkler system and who has at least five years of documented experience in these activities obtain a license, which shall be issued upon the successful completion of the requirements adopted by the board, and upon payment of an examination fee of no more than $50.00. Subsection (c-2) requires that any employee of a fire protection sprinkler system contractor who installs, alters, maintains, services or inspects a fire protection sprinkler system and who has less than five years of experience meet the requirements prescribed by the rules adopted under this article and submit a nonrefundable registration fee in an amount not to exceed $15. Subsection (d) is amended to provide that contractor certificates of registration and managing employee licenses are valid for one year from the date of issuance and renewable upon payment of the renewal fee. Language that previously provided for prorated fees for certificates and licenses issued after September 1, 1983 for periods of less than one year is stricken Subsection (d-1) provides that journeyman licenses and apprentice certificates of registration are valid for one year from the date of issuance and renewable annually on the anniversary of the date of issuance on payment of the applicable renewal fee. The renewal fee for a journeyman license is $20. The renewal fee for an apprentice certificate of registration is $15. SECTION 5: Amends Sections 5(a) and (c) of Article 5.43-3 of the Insurance Code by inserting the word "contractor" in front of the term "certificate of registration", thereby restricting the class of entities subject to the provisions therein to contractors. The board may not issue contractor certificates of registration unless the applicant has provided evidence of general liability insurance, and failure to maintain liability insurance constitutes grounds for denial suspension or revocation of a contractor certificate of registration. SECTION 6: Amends Section 5A(a) of Article 5.43-3 of the Insurance Code by adding the terms "managing employee" "fee" and "contractor", thereby specifying that annual fees for renewing managing employee licences or contractor certificates of registration must be paid on renewal every two years. SECTION 7: Amends Section 5B, Article 5.43-3 of the Insurance Code by subdividing the current language into Subsections (a), (b) and (c) and adding new language under Subsection (d) prohibiting a person who fails an examination for a fire protection sprinkler system journeyman license from retaking the examination before the 90th day after the date of the initial examination. SECTION 8: Amends section 5C, Article 5.43-3 of the Insurance Code by enumerating the existing language as Subsection (a) and adding the words "Except as provided by Subsection (b) of this section" of the language allowing the board to adopt procedures for certifying continuing education programs. Subsection (b) is entirely new and mandates that the board adopt procedures for and engage in certifying continuing education programs for fire protection sprinkler system journeymen. It also mandates that journeymen complete six hours of continuing education courses on the laws and code governing fire protection sprinkler systems to be eligible to renew their licenses. SECTION 9: Amends Section 8, Article 5.43-3 of the Insurance Code by including journeymen and apprentices for fire protection sprinkler system contractors among the entities that are prohibited from acting in their official fire protection sprinkler system capacities without a valid license or certificate of registration. SECTION 10: Provides language for facilitating the transition from the current provisions to the new provisions, establishing July 1, 2004 as the deadline for the adoption of rules by the Department of Insurance and the state fire marshal, and as the date upon which journeymen and apprentices become subject to the new licensing and registration requirements. EFFECTIVE DATE: Upon adoption, or if the measure fails to receive the necessary vote, September 1, 2003. COMPARISON OF ORIGINAL TO SUBSTITUTE The following changes were made to HB 1639 which are now provided for in CSSB 1639. Please note the following changes: 1) CSHB 1639 inserts a new SECTION 2 which provides a list of exemptions from this article and then renumbers the remaining sections to conform to the body of the bill. 2) HB 1639 (SECTION 3) amends Section 4, Article 5.43-3, Insurance Code by adding a new Subsection (c-2) that requires that any employee of a fire protection sprinkler system contractor who installs, alters, maintains, services or inspects a fire protection sprinkler system and who has less than five years of experience register as an apprentice, enroll in a certified apprenticeship program and meet any other requirements prescribed by rules adopted by the board under this article. The apprenticeship registration fee many not exceed $40.00. CSHB 1639 (SECTION 4) amends Section 4, Article 5.43-3, Insurance Code by adding a new Subsection (c-2). The difference between the substitute and the original bill in this section is that the requirement to enroll in a certified apprenticeship program is removed and the non-refundable registration fee has been changed to not exceed $15.00. 3) HB 1639 (SECTION 3) amends Section 4, Article 5.43-3, Insurance Code by adding a new Subsection (d-1) that provides that journeyman licenses and apprentice certificates of registration are valid for two years from the date of issuance and renewable on payment of the renewal fee of $50.00 for journeyman licenses and $40.00 for apprentice certificates of registration. CSHB 1639 (SECTION 4) amends Section 4, Article 5.43-3, Insurance Code by adding a new Subsection (d-1). The difference between the substitute and original bill in this section is that the validity of journeyman licenses and apprentice certificates of registration has been changed from two years from the date of issuance to one year from the date of issuance. CSHB 1639 changes the renewal fees for journeyman licenses from $50.00 to $20.00. CSHB 1639 also changes the renewal fees for an apprentice certificate of registration from $40.00 to $15.00.