### “I‘WEA OMNEP GENERAL,
OF TEXAS

PRICE DANIEL AUHTIN 11. -rExAm

ATTORNEY

GENERAL

August 6, 1949

Hon. William J. Murray, Jr., Chairman Railroad Commission of Texas Austin, Texas
Attention: Mr. S. C. McIntosh

Dear Mr. Murray: OpinionNo. v-875

Re: Several questions relative to the provisions of S. B. 481, 5lst Legislature.

You recently requested the opinion of the Attorney General as to whether or not the Railroad Commission can accept a bond, or bonds, in lieu of the insurancepolicies required by the provisions of the second paragraph of Section 11, Article 6053, V.C.S,, as amended by S. B. 481, 51st Legislature. By letter dated July 27th, you requested our opinion
on several other questions relative to theprovisions of S.B. 481, as follows:

"Therequest forwarded to you on July 14, for an opinion regarding S. B. 481, amending Settion 11 of Chapter 358, Acts of the 49th Legislature, did not include three points on which we now desire your considerationand opinion.

1. S. B. 481 sets out that Manufacturer's and Contractor'sLiability IS one of the policieswhich a licensee shall carry. The Manufacturer's and Contractors liability policy form, which has been approved by the Board of InsuranceCommissioners, under Definition of Hazards show five divisions as follows:

1. Premises 2. Elevators 3. Independent Contractors

2: Products Contractual "Obviouslya L. P. Gas licensee's opera-Honorable William J. Murray, Jr., page 2 (V-875)

tlons would not embraceall of the hazards above mentioned. However, since S. B. 481 does not exclude any of the named hazards, and since a licensee In making an installation of a L. P. Gas container and/or L. P. Gas piping system,which If carelessly,negligently or improperly installed,may be the cause of an accident after the licensee's workmen have completed,the installationand left the customer'spremises, is it mandatory on the Railroad Commission to require the filing of evidence of Products Liability coverage?
2. The licensed manufacturer of L. P. Gases or L. P. Gas containers, or L. P. Gas equipment has heretoforebeen required to carry Products Liability insurance. Under the provisions of S. B. 481, is it mandatory
on the Commission to require the filing of Products Liabilityby suchmanufacturers?

3. S. B. 7, 8, and 10 256, amending Subsections 6,

'ofSection 1 of S. B. 269, Chaoter 358. in Section 7, Par. (b) created a Limited-Licensewherein licensees'areauthorized to service and/or repair, and/or connect and/or adjust ranges and/or cookIng appliances, and/or space heaters, floor furnaces and water heaters excepted.
"Under the provlsions of S. B. 481,what insurancemay the ConmissIon legally require such limited licensees to carry?"

Senate Bill No. 481, 51st Legislature,amending Section 11,Article 6053, V. C. S., reads as follows:

"No license shall be issuedpursuant to this sectionunless such licensee shall first file with the Commissiona suretybond in the sum of Two Thousand ($2,000.00)Dollars with
a bonding company authorized to do business in Texas. All such bonds shall provide that the obligator thereinwill indemnifyand pay the State of Texas, to the extent of the face amount thereof, all judgmentswhich may be recovered In the name of the State of Texas against such licensee,during the termof such bond and proximately caused by any violation,Honorable William J. Murray, Jr., page 3 (V-875)

by said licensee, of the terms of thisAct or any orders or rules promulgatedby theRailroad Commissionas authorized by thisAct.

"Inaddition to the bond herein required, such licensee shallbe obligated to procure from some reliable insurance carrier qualified to do business in the State of Texas, and keep same in force so long as they shall continue in business,policies of insurance in the following kinds and amounts, saidpolicies to guarantee payment of damages which,proximately result from acts of negligence,while said licensee Is engaging in any of the activlties as hereln provided:

"1

. A public liabilityand property damage insurancepolicy on each and every motor vehicle, including trailersdesigned for use therewith on highways,used in the transportationof liquefiedpetroleumgases, of Five Thousand ($5,000.00)Dollars for bodily Injuries to any one' erson, or a total of TB~ Thousand ($10,000.00 P Dollars for bodily injuries for any one accident involving two or more persons, and property damage for any one accident of Five Thousand ($5,000.00)Dollars.

"2

. A manufacturess and contractors liabilitypolicy of Five Thousand ($5,000.00) Dollars for an Ten Thousand (

i one~person,and not to exceed lO,OOO.OO)Dollars for any one accident inwhich two or more persons'are insjured,and of Five Thousand ($5,000.00)Dollars total property damage for any one accident. “3

. A workmen's compensation or employers' liabilitypolicy. "Provided,however, that this section shall not be applicable unless and until such policies are available for purchase; and further provided, that such policies of insurante shall be approved by theRailroad CommlssIon of Texas. Provided further, however, that nothing in this Act shallprevent or prohlbit such licensee from purchasingpolicies of insurance of a greater coverage than the amounts specified herein."Honorable William J. Murray, Jr., page 4 (v-875)

We shall answer your ted. questions in the order submit1. Can the Railroad Commissionaccept a bond or bonds in lieu of the insurancepolicies required by the second paragraph of Section 11 Article 6053, V.C.S., as amended by S. B. 481, 51st Legislature?

S. B. No. 481, quoted above,provides that licensees under Article 6053 shall be obltgated to procure from some reliable insurance carrier specifiedpolicies of Insurance. No provision Is made in said bill for such licensees to procure a bond or bonds in lieu of the specified Insurancepolicies. The bill is clear and unambiguous and not, therefore, subject to construction. 39 Tex. Jur. 1.61, Statutes, Section 88.

We cannot by departmental constructionamend the bill so as to allow licensees to procure bonds in lieu of insurance policies. The very purpose of S. B. 481, as evidencedby the title thereof, is to "clarifyand specify the kind and amounts of insurance coverage to be carried by every licensee." To amend the bill by departmental construction so as to allow bond coverage in lieu of Insurancewould defeat the express purpose of the Legislature ln enacting the bill.

You are accordingly advised that the Rallroad Commission cannot accept a bond or bonds in lieu of the Insurance policies required by the provlsions of the second,paragraph of Section 11, Article 6053, as amended by 5. B. 481, 51st Legislature.

2. Since the licensee inmaking an installation of a liquefiedpetroleum gas container and/or liquefied petroleum gas piping system,which if carelessly,negligently, or improperly installed,may be the cause of an accident after the licensee'sworkmen have completed the Installationand left the cus' tamer's premises, is it mandatory for the Railroad Commission to require the filing of evidence of products liability coverage?
The secondparagraph of S. B. 481 provides in part:
I!

....suchlicensee shall be obligated to procure .*.polI,cies of insurance in the following kinds and amounts, said policies to guarantee payment of damages which proximately result fromHonorableWilliam J. Murray, Jr., page 5 (V-875)

acts of negligence,while said licensee is engaging in any of the activities as herein provided......" (Underscoringours)
The installationof liquefied petroleumgas containers and/or piping system are activities provided for in Article. 6058. (Section7 (a),Article-6053, as amended by S. B. 256, Acts of 51st Legislature, 1949, Chapter 220, p. 411.) Products liability coverage would cover damages arising from accidents occurringafter the Insuredhas completed lnstallation and left the customer'spremises. It cannotbe disputed that accidents canand do occur after completion of installation and after the licensee has left the premises, causing damages which proximately result from acts of negligence committed by the licenseewhilehe was engaged in Installing the equipment and/or piping system. In fact, Itwould be safe to say that a great portion of all damages which,proximately result from acts of negligencewhile the licensee Is engaged in installing the equipment and/or piping system~111 arise from accidents occurringafter the licensee has left the premises of the customer.

S. B. 481 obligates licensees to procure only three policies of insurance. Those are: (1)public liability and property damage on motor vehiclesused in the transportation of liquefiedpetroleum gases; (2)a manufacturer'sand contractor's liabilitypolicy; and (3)a Workmen's Compensation
or Employer's liabilitypolicy. Clearly, the public liability and property damage policy on automobiles used in the transportation of liquefiedpetroleum gases, and Workmen's Compensation or employer's liabilitypolicy,do not provide products liability coverage. You state in your letter and have furnished evidence that the Board of InsuranceCommissioners have approved a manufacturer's and contractor's liability policywhich Includesproducts liability coverage. If such a manufacturer's and contractor's liabilitypolicy IS in fact available for purchase, it is the duty of the Railroad Commission to require licensees to procure such a policy. The products liability coverage contained therein is necessary In order to guarantee payment of damages which proximately result from acts of negligence,while the licensee is engaging in an activity provided for in Article 6053.

You are accordingly advised that the Railroad Commission shouldnot approve a manufacturer'sand contractor's liabillty policy from licensees engaged in Installing liquefied petroleum gas containersand piping systemswhich does not provide products liability coverage, if suchpolicy is available for purchase.Honorable William J. Murray, Jr., page 6 (V-875)

3. Is itmandatory for the Railroad Commlsslon to require the filing of evidence of products liability coverage by manufacturer's of liquefiedpetroleum gases or liquefiedpetroleum gas containers or liquefiedpetroleumgas equipment?
The manufacture of liquefiedpetroleum gases is not an activity provided for inArticle 6053. Accordingly, such manufacturersare not requiredto procure products llabillty coveragewhich would cover damages arising from an accident occurringafter the gases had passed into the possession of a customer,which proximately resulted from negligence of the manufacturerwhile manufacturing the gases.

However, the manufacture of liquefiedpetroleumgas containers and e uipment is an activityprovided for inArticle 6053 (Section7 a), Article 6053, as amended-by Senate Bill

9- 256, Acts 51st Leglslature,,l949,Chapter 220, page 441). Section 11 thereof requires suchmanufacturers to provide coverage for damages proximatelyresulting from an act of negligence,while engaged in an activity provided for ln Article 6053. Manufacturers of liquefiedpetroleum gascontalners and equipmentmust, therefore,procure a manufacturers and products liabilitypolicy which provides products liability coverage.

We inviteyour attention to the fact that Section 6 of Article 6053, V.C.S., as amended by S. B. 256, Acts 51st Legislature, 1949, Chapter 220, page 411, provides as follows:

"(b)

. Nothing contained in this Act shall apply to the sale in the ordinary courseofbusinessof any part or any appliancewhich may be employed for uses other than as an integralpart of a liquefied gas systemwhen the sellerdoes not service,make repairs or permanent connection to any such liquefiedgas system, as long as said appliance or container is approved under the standards set by the Railroad Commission of Texas. Nor shall this Act apply to containersused in accordancewith and subject to the regulation of the InterstateCommerce Commission,and containers which are owned and used by the Federal Government."
Those engaged solely in the activities provided in this sectionwould not be required to secure a license from the Railroad Commissionand would not, therefore,be required to comply with Section 11.- . . I

Honorable William J. Murray, Jr., page 7 (V-875)

4.~ S.B. 256, Acts 51st Legislature, 1949; Ch."220, p. 411, amended Article 6053, V.C.S., so as to authorize the Railroad Commission to issue a limited license. Under the provisions of 5. B. 481,what insurancemay the Commission legally require such limited licensees to carry?

S. B. 256 Acts,5lst Legislature 1949 Ch. 220 .p. 411. amended Artiile 6053 by adding the&o Seition 7(bf, whi;h reads as follows:

"(b)

. There is hereby created a limited license under the provisions of this Act, wherein persons, firms, corporations or associations are authorized to service and/or repair and/or connect and/or adjust ranges and/or cooking appliances, and/or space heaters, floor furnaces and water heaters excepted,when done with approved llquefiedpetroleum gas connectors,and when connected to existing piping outlets of approved llquefledpetroleum gas facilities,and when such appliances as specifiedherein meet the requirements of the RaIlroad Commission of Texas for use with liquefiedpetroleum gas as a fuel.
"Persons,firms, corporations or associations qualifying under the provlslons of the limited licenseprovided for herein, shall apply to the Railroad Commission of Texas for a license so to do, such application to be inwrltlng,and shall contain such informationas the Rallroad Commission shall prescribe. No such license shallbe issueduntil the Commissions has determined that the applicant has made good and sufficientproof that he can and will meet all safety requirements provided In this Act and by the rules and regulations of the Railroad Commission, and the Commlssion finds that such applicant is qualified and the evidence adduced justifies issuance of such lImited license."
Such limited l~icensees are licensedunder the provisIons of Article 6053 and are therefore required to carry the policies of insurance set forth in Section 11 of saidArticle,
as amended by S. B. 481, 51st Legislature, that are applicable to their activities. You are accordingly advised that such limited llcenseeesmust procure the insurancepolicieswhich
are applicable to the service to be performed~bgthem. As l-lmlted

licenseeswill not be transporting liquefI.ed petroleum gases, they will not be required to obtain the public liabilityBonorable William J. Murray, Jr., page 8 (v-875)

and propertydamage insurancepollcg on motor vehicles. ROWever, it Is readily seen thatthemanufacturer'sand contractor's liabilitypollcg and Workmen's Compensationor Employer's Liability policy will be applicable to such licenseesand must be procured by them.

SUMMARY

The Railroad Commissionhas no authority to accept bonds in lieu of the insurancepolicies required by the provisions of the second paragraph of Sectionll; Article 6053,V.C.S., as amended by S. B. 481, 51st Legislature.
Llcensees engaged in business of'manufacturing liquefiedpetroleum containersand equipment, and licenseees engaged.In the installation of such containers and equipmentmust procure a manufacturer'sand contractor's liabilitypol-- Icy which provides'productsliability coverage, if such policy Is available for purchase.
Limited licenseesunder the prov'lsion of Section 7(b); Article 6053, V.C.S., as amended bg.S. B, 256, Acts 51st Legislature, 1949, ch. 220, p- 441,must procure the insurancepolicies provIdea for in Section 11,Article 6053, as amended,which are applicable to the activities engaged in by them.

Yours very truly

ATTORNEY GENERAL OF TEXAS

By s/lhrwarcl

M. Goolsby Durwara M. Goolsbg Assistant DMG:db:wc

APPROVED: s/JoeR. Greenhill FXRST ASST. ATTORNEY GENERAL