May6.1987

Eouorable Lloyd Criss Chairman CommitteeonLabor and EmploymentRelations TexasHouseofRepresentatives P. 0. Box2910 **Austin,** Texas 70769 Opinion No.JM-689
Re: Authority of the State Fire Marshal to promulgate rules regarding fire protection sprinkler contractors

DearRepresentative **CriSS:**
As Chairman of the House Committee on Labor and Employment Relations, youaskseveral questions about article 5.43-3 of theTexas 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 managingemployee; andfinally, each managingemployee must obtain a license by complying vich requirements Imposedby the State Board of Insurance. see 554. 0. Youask whether article 5.43-3 prohibits a registered &&actor or licensed individual from subcontracting an entire project or part of aproject to anunregistered subcontractor. or unlicensed individual. You also ask vhether, if article 5.43-3 does not prohibit this subcontracting. the State Board of Insurance .maypromulgate rules toprohibit suchconduct.
Article 5.43-3 requires all contractors, whether theyare 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, managingemployee. Section 4of article 5.43-3 requires, inpart:

(a) **A** fire protection sprinkler system contractor must apply to the board for a certificate of registration onaformprescribed by theboard. If the contractor is a partnership or joint venture, it need not register in its ownnameif eachpartner orjoint venturer 1sregistered.

. . .

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(b) Each fire protection sprinkler system contractor must employ at least oue licensed responsible managingemployee ouafull-time basis. (c) Each responsible managing employee must obtain a license issued by the board and conditioned on the successful completion of the examination requirement and other requirements prescribed by the rules adopted under this article.

. . . (Emphasis added). 

### 58.Section l(g) defines a"fire protection sprinkler system

._ Seealso contractor" as

aperson 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 narrowexceptions vhich mayapply to somesubcontractors. 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, andall other services is less than $100, if:

(A) theproject is not apart of acomplete or more costly project, whether the complete project is tobeundertaken byoneormorefire protection sprinkler system contractors; or (B) the project is not divided into contracts 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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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 aregistered fire protection sprinkler system contractor." This exception, however, logically applies only while the employee acts as au employee of aregistered contractor. If a licensed employee acts independently, i.e.. apart from his registered contractor employer, andoffers to undertake or undertakes "the plan, sale, installation, malatenance. or servicing of afire protection sprinkler system or anypart of such asystem," the licensed employee mustalso obtain acertificate of registration from the board. The **act ’** **s** requirement that acontractor employalicensed managing employee is one of the requirements for obtaining a certificate of registration; it is not a substitute for registration. Cousequently, this opinion addresses your questions in the context of registered andunregistered contractors.
As indicated, subcontractors fall within the definition of persons or organizations that must obtain certificates of registration. Themoredifficult 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 whohas oat complied with the act. If it does not prohibit such subcontracting, you ask 'whether the board may promulgate rules prohibiting suchconduct.
Section 8provides that aperson or organization maynot:

(1) plan, sell, install, maintain. or service afire protection sprinkler systemwithout avalid certificate of registration; (2) act as afire protection sprinkler system contractor under a certificate of registration without having at least oaefull-time employeewho holds a valid responsible sianaging employee license

. . . ; (3) act asaresponsible managingemployee for a fire protection sprinkler system contractor without avalid license:

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(4) obtain or attempt co obtain acertificate of registration or license byfraudulent representation; or (5) plan. sell. install. maintain, or service afire protection sprinkler systesl inviolation Of this article or the rules adopted under this article. Although this section applies to subcontractors, it does not expressly makethe act of subcontracting aprohibited act.
Section 10of article 5.43-3 provides that a person commits a criminal offense if the person knowingly or intentionally violates section 0of 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 theTexas Penal Codemayapply to the act of subcontracting with a person or organization that violates section 0 of article 5.43-3. Chapter 7of the Penal Code imposes criminal responsibility for the conduct of another under certain circumstances. For example, section 7.02 of the code provides, inpart:

(a) Aperson is criminally responsible for an offense committed bythe 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 topromote or assist the commission of the offense, he solicits, encourages, directs, aids, or attempts to aid theother person to committhe offense; or (3) having alegal duty to prevent commission of the offense andacting with intent to promote or assist its commission. he fails to makearrasonable effort to prevent commission of the offense. (Emphasis added).
Seealso 57.01. General provisions of thePenal 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, 627S.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

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subcontractor whoviolates section 8of 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, 659S.W.2d 391 (Tex. Grim. App. 1983). Proof of the elements ofcriminal offense depends 011thefacts in each individual case. Poualso askwhether the State Board of Insurance maypromulgate rules pursuant to section 3of 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 andmayissue rules necessary to its administration through the State Fire Marshal." Administrative agencies mayexercise only those powers granted by law, together with those powers necessarily implied fromanauthority conferred or duty imposedbystatute. City of Shermanv. Public Utility Commission ofTexas. 643S.W.2d 681, 686 (Tex. 1983). Alicensing agency for alawful 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 rulemakingauthority maybe "necessarily implied" from article 5.43-3 or whether suchrulemaking 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 mustregister with the board; second, each contractor must employ at least one full-time licensed responsible managing employee: and finally, each managingemployee mustobtain alicense through theboard. Section 

### a prohibits acts which violate these basic requirements. Section 3 grants the board rulemaking authority to administer these requirements. 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 requirements, it would be anomalous to determine that the board cannot prohibit aregistered contractor fromknowingly assisting orpromoting
aviolation of the act's requiremenrs by another person or organization. Article 5.43-3 requires registered contractors to assume certain responsibilities for safe fire protection sprinkler systems. See 15(bond andinsurance are requisites for certificate of registration)
, The act also requires contractors to employ at least one full-time licensed responsible managingemployee. Theobvious purpose for this requirement is co have a licensed employee responsible for actually managing or supervising the work performed. Additionally,

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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. therequirements wouldbemeaningless. Consequently, article 5.43-3 contains thenscessary authority for the board to promulgate rules forbidding registered contractors from subcontracting with persons or organizations that are inviolation of article 5.43-3. This does not, however, meanthe board maydesignate the act of subcontracting as a prohibited act under section 0 for purposes of criminal liability under section 10. Although rules validly adopted pursuant toastatute mayin someinstances designate certain conduct as a criminal offense, see Penal Code Sl.O3(a). article 5.43-3 does not authorize the boardto create newcriminal offenses. Oothe other hand, this does not leave the board without enforcement power. Subsection (a) of section 9provides:

[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 applicable procedural requirements. See generally V.T.C.S. art. 6252-13s (Administrative Procedure andTexas Register Act).
SUMMARY
Article 5.43-3 of the Texas Insurance Code requires contractors, whether primary contractors or subcontractors, for the plan, sale, installation, maintenance, or servicing of all orpart of a fire protection sprinkler system to obtain a certificate of registration fromthe State Boardof Insurance. Additionally, article 5.43-3 authorizes theboard topromulgate rules forbidding registered contractors from subcontracting with persons or organizations that are in violation of article 5.43-3. Verytruly yours, 

# J-/h

a

JIM MATTOX Attorney General ofTexas
JACKMGRTOWRR First Assistant Attorney General

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MARY KELLER Executive Assistant Attorney General
JUDGE ZOLLIESTEAKLEY Special Assistant Attorney General
RICKGILPIN Chairman, Opinion Committee Prepared byJennifer Riggs Assistant Attorney General

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