Title of Regulation: 18VAC50-22. Board for Contractors Regulations (amending 18VAC50-22-40, 18VAC50-22-50, 18VAC50-22-60, 18VAC50-22-170).

Statutory Authority: §§ 54.1-201 and 54.1-1102 of the Code of Virginia.

Public Hearing Information:

September 9, 2013 - 5 p.m. - City of Chesapeake Council Chamber, 306 Cedar Road Chesapeake, VA

September 24, 2013 - 1 p.m. - Perimeter Center, 9960 Mayland Drive, 2nd Floor, Richmond, VA

September 25, 2013 - 6 p.m. - South County Library, 6303 Merriman Road, Roanoke, VA

October 3, 2013 - 5 p.m. - Fairfax County Government Center, 12000 Government Center Parkway, Conference Room 2-3, Fairfax, VA

October 24, 2013 - 5 p.m. - City of Bristol, Council Chambers, 300 Lee Street, Bristol, VA

Public Comment Deadline: October 25, 2013.

Agency Contact: Eric L. Olson, Executive Director, Board for Contractors, 9960 Mayland Drive, Suite 400, Richmond, VA 23233, telephone (804) 367-2785, FAX (804) 527-4401, or email contractors@dpor.virginia.gov.

Basis: Section 54.1-1102 of the Code of Virginia provides the authority for the Board for Contractors to promulgate regulations for the licensure of contractors in the Commonwealth. The content of the regulations is pursuant to the board's discretion but shall not be in conflict with the purposes of the statutory authority.

Purpose: The Board for Contractors, along with other regulatory boards, was tasked by the Governor to review its regulations to determine if any provisions could be identified as obsolete, unnecessary, or overly burdensome and subsequently eliminated. The board identified two current provisions of the regulations that can be identified as a burden to its licensees with no measurable level of protection to the health, safety, and welfare of the general public.

Substance: 18VAC50-22-40 requires that the qualified individual, or individuals, of an applicant for a Class C license submit information on any past-due debts, judgments, or defaults on bonds. The proposed amendments remove this requirement.

18VAC50-22-50 requires that the qualified individual, or individuals, of an applicant for a Class B license submit information on any past-due debts, judgments, or defaults on bonds. The proposed amendments remove this requirement.

18VAC50-22-60 requires that the qualified individual, or individuals, of an applicant for a Class A license submit information on any past-due debts, judgments, or defaults on bonds. The proposed amendments remove this requirement.

18VAC50-22-170 currently prohibits the reinstatement of a license if more than one year has passed since the license has expired. The proposed amendments extend the reinstatement period from one year to two years after expiration.

Issues: The proposed amendments remove the burden of compiling and providing documentation of a past adverse financial history for the qualified individual for all three classes of license. Currently, the qualified individual, who may only be an employee of a licensed contractor, is held to the same reporting standard as the responsible managers (owners or officers) and the designated employee (the individual who completed the business examination), both of whom are referenced in §§ 54.1-1106 and 54.1-1108 of the Code of Virginia. While a licensed contractor is required to have a qualified individual who has demonstrated a level of technical expertise, this position is not based on any financial criteria, and the board does not hold this individual accountable for any disciplinary action that relates to the financial status of the company. Often, the applicant must compile this data, which may take several days or weeks to obtain, and submit it to the board for review, all of which can delay the awarding of a license to the business. The elimination of this requirement will result in an immediate reduction in the amount of time it takes for a company, with a qualified individual with an adverse financial history, to obtain its license. There is no reduction in the protection to the public as the individuals held accountable for the financial decisions made by the company (owners and officers) must still report past adverse financial events. This only affects the qualified individual.

The extension of the reinstatement period will allow an individual who may have inadvertently allowed his license to expire for more than one year to bring his license into compliance without the burden of having to complete the education and examination requirements of a new license.

The primary advantage to the Commonwealth is to allow businesses that must comply with the current regulations to obtain their licenses faster, allowing them to go to work faster. The agency will benefit from less documentation having to be tracked and reviewed during the normal course of processing the application. Any decrease in the amount of time currently spent processing applications directly affects the number of applications that may be processed, resulting in an overall decrease in the time it takes to process all applications.

There are no disadvantages to the public or the Commonwealth.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The proposed regulations will no longer require a qualified individual working for a contractor to report past adverse financial history and extend the license reinstatement period for all contractors from one year to two years after expiration.

Result of Analysis. The benefits likely exceed the costs for all proposed changes.

Estimated Economic Impact. The proposed regulations will no longer require a qualified individual to report past adverse financial history such as any past-due debts, judgments, or defaults on bonds for all three classes of contractors license. A qualified individual is the person that has the technical skills in a particular licensing specialty or classification. For example, a contractor business with the home improvement specialty must have a qualified individual who has the requisite years of experience for the class of the license and who has successfully completed the home improvement technical examination. The Department of Professional Occupational Regulation (DPOR) estimates that there are approximately 20,000 persons listed as qualified individuals who do not serve as a member of responsible management or designated employee.

Currently, the qualified individual has been held to the same financial reporting standard as the responsible managers (owner/officers) and the designated employee (the individual who completed the business examination), both of whom are referenced in §§ 54.1-1106 and 54.1-1108 of the Code of Virginia. While a licensed contractor is required to have a qualified individual who has demonstrated a level of technical expertise, this position is not based on any financial criteria and the Board for Contractors (Board) does not hold this individual accountable for any disciplinary action that relates to the financial status of the company.

According to DPOR, compilation and submission of adverse financial history takes three to ten days and delays the awarding of a license to a business. The vast majority of these applications for licensure would have been approved upon initial review. Thus, the elimination of this requirement is expected to result in a reduction in the amount of time it takes for a company, with a qualified individual with an adverse financial history, to obtain its license and start performing work. No significant reduction in the protection afforded to the public by this requirement is expected because currently the Board does not use the adverse financial history of the qualified individual to determine eligibility for licensure. In addition, DPOR is likely to experience some reduction in its administrative costs from less documentation having to be tracked and reviewed during the normal course of processing the application.

Another proposed change will extend the reinstatement period for all contractors from one year to two years after expiration. After the reinstatement period ends, an applicant must apply for a new license and meet education and examination requirements of a new license. According to DPOR, the cost of additional education and examination requirements could reach $1,000. DPOR receives about 50 to 100 reinstatement applications per month, but how many applicants would have waited more than one year to reinstate is not known.

This change will give individuals that let their license lapse an additional year to pay the reinstatement fee to bring their license into compliance. This option will eliminate additional costs and wait time for a new application to be reviewed for those that would have renewed their license within the second year. Additionally, when a license is reinstated, it becomes active back to the last expiration date and, from a legal standpoint, the licensee is considered continually licensed during that time. This provides an additional protection to consumers who may have hired a contractor when the license was expired and, since he would have been considered unlicensed, does not have access to the Transaction Recovery Fund. In short, the extension of the reinstatement date will afford extra time for the licensee to become compliant as well as provide an extra year for the consumers to remain protected.

Businesses and Entities Affected. There are approximately 65,000 licensed contractors and 20,000 persons listed as qualified individuals who are not a member of responsible management or designated employee. Of these contractors, about 50 to 100 apply for a reinstatement every month.

Localities Particularly Affected. The proposed changes apply throughout the Commonwealth.

Projected Impact on Employment. Elimination of the past adverse financial history reporting for the qualified individual is anticipated to speed up the issuance of a license and consequently could have a positive impact on labor supply and demand as the qualified individual and the contractor can start performing work sooner.

The extension of the reinstatement period may allow a contractor to maintain his/her demand for labor for an additional year due to allowing him to reinstate his/her license without additional expense and delay. Elimination of the need for education and exam however is likely to reduce labor demand from providers of these services.

Finally, both changes are expected to decrease demand for labor due to reduced administrative workload at DPOR.

Effects on the Use and Value of Private Property. The compliance costs for the licensed contractors with a qualified individual and those with a lapsed license will be lower. The reduction in compliance costs would have a positive impact on the asset value of such businesses. However, providers of education and exam services for the contractors may experience a negative impact on their asset values due to reduced demand for their services.

Small Businesses: Costs and Other Effects. According to DPOR, the overwhelming majority of businesses licensed by the Board are small businesses, and the majority of those individuals licensed as tradesman are employed by small businesses. All of the economic effects discussed above apply to small businesses.

Small Businesses: Alternative Method that Minimizes Adverse Impact. The proposed regulations are anticipated to have a negative impact on the small businesses that provide education and exam services to contractor license applicants. There is no known alternative to minimize adverse impact on them while accomplishing the same goals.

Real Estate Development Costs. No significant effect on real estate development costs is expected.

Legal Mandate. The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Administrative Process Act and Executive Order Number 14 (10). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, a determination of the public benefit, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has an adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

Agency's Response to Economic Impact Analysis: The Board for Contractors concurs with the analysis with one minor clarification. There are more than 55,000 qualified individuals actively identified in the Board for Contractors licensing database. Of those, it is estimated that 20,000 do not also serve as a member of responsible management or designated employee of the company, therefore it would be those 20,000 individuals and the businesses with whom they are affiliated that would be the most affected by this proposed amendment.

Summary:

The proposed amendments (i) remove the past adverse financial history reporting requirement for the qualified individual for all three classes of contractor license and (ii) extend the reinstatement period for a license from one year to two years after expiration.

Part II
Entry

18VAC50-22-40. Requirements for a Class C license.

A. A firm applying for a Class C license must meet the requirements of this section.

B. For every classification or specialty in which the firm seeks to be licensed, the firm shall name a qualified individual who meets the following requirements:

1. Is at least 18 years old;

2. Has a minimum of two years experience in the classification or specialty for which he is the qualifier;

3. Is a full-time employee of the firm as defined in this chapter or is a member of the responsible management of the firm; and

4. a. Has obtained the appropriate certification for the following specialties:

Blast/explosive contracting (Department of Fire Programs explosive use certification)

Fire sprinkler (NICET Sprinkler III certification)

Radon mitigation (EPA or DEQ accepted radon certification)

b. Has obtained, pursuant to the Individual Licensing and Certification Regulations, a master license for Plumbing, HVAC, Electrical, Gas Fitting, Natural Gas Fitting Provider, and Liquefied Petroleum Gas Contracting.

c. Has obtained, pursuant to the Individual Licensing and Certification Regulations, certification as an Elevator Mechanic for Elevator Escalator Contracting and certification as a Water Well Systems Provider for Water Well/Pump Contracting.

d. Has completed a board-approved examination for all other classifications and specialties that do not require other certification or licensure.

C. The firm shall provide information for the past five years prior to application on any outstanding, past-due debts and judgments; outstanding tax obligations; defaults on bonds; or pending or past bankruptcies. The firm, its qualified individual or individuals, and all members of the responsible management of the firm shall submit information on any past-due debts and judgments or defaults on bonds directly related to the practice of contracting as defined in Chapter 11 (§ 54.1-1100 et seq.) of Title 54.1 of the Code of Virginia.

D. The firm, the qualified individual, and all members of the responsible management of the firm shall disclose at the time of application any current or previous contractor licenses held in Virginia or in other jurisdictions and any disciplinary actions taken on these licenses. This includes but is not limited to any monetary penalties, fines, suspensions, revocations, surrender of a license in connection with a disciplinary action, or voluntary termination of a license in Virginia or in any other jurisdiction.

E. In accordance with § 54.1-204 of the Code of Virginia, each applicant shall disclose the following information about the firm, all members of the responsible management, and the qualified individual or individuals for the firm:

1. All misdemeanor convictions within three years of the date of application; and

2. All felony convictions during their lifetime.

Any plea of nolo contendere shall be considered a conviction for purposes of this subsection. The record of a conviction received from a court shall be accepted as prima facie evidence of a conviction or finding of guilt. The board, in its discretion, may deny licensure to any applicant in accordance with § 54.1-204 of the Code of Virginia.

F. A member of responsible management shall have successfully completed a board-approved basic business course.

18VAC50-22-50. Requirements for a Class B license.

A. A firm applying for a Class B license must meet the requirements of this section.

B. A firm shall name a designated employee who meets the following requirements:

1. Is at least 18 years old;

2. Is a full-time employee of the firm as defined in this chapter, or is a member of responsible management as defined in this chapter;

3. Has passed a board-approved examination as required by § 54.1-1108 of the Code of Virginia or has been exempted from the exam requirement in accordance with § 54.1-1108.1 of the Code of Virginia; and

4. Has followed all rules established by the board or by the testing service acting on behalf of the board with regard to conduct at the examination. Such rules shall include any written instructions communicated prior to the examination date and any oral or written instructions given at the site on the date of the exam.

C. For every classification or specialty in which the firm seeks to be licensed, the firm shall name a qualified individual who meets the following requirements:

1. Is at least 18 years old;

2. Has a minimum of three years experience in the classification or specialty for which he is the qualifier;

3. Is a full-time employee of the firm as defined in this chapter or is a member of the responsible management of the firm;

4. a. Has obtained the appropriate certification for the following specialties:

Blast/explosive contracting (Department of Fire Programs explosive use certification)

Fire sprinkler (NICET Sprinkler III certification)

Radon mitigation (EPA or DEQ accepted radon certification)

b. Has obtained, pursuant to the Individual Licensing and Certification Regulations, a master license for Plumbing, HVAC, Electrical, Gas Fitting, Natural Gas Fitting Provider, and Liquefied Petroleum Gas Contracting.

c. Has obtained, pursuant to the Individual Licensing and Certification Regulations, certification as an Elevator Mechanic for Elevator Escalator Contracting and certification as a Water Well Systems Provider for Water Well/Pump Contracting.

d. Has completed a board-approved examination for all other classifications and specialties that do not require other certification or licensure.

D. Each firm shall submit information on its financial position. Excluding any property owned as tenants by the entirety, the firm shall state a net worth or equity of $15,000 or more.

E. Each firm shall provide information for the five years prior to application on any outstanding, past-due debts and judgments; outstanding tax obligations; defaults on bonds; or pending or past bankruptcies. The firm, its designated employee, qualified individual or individuals, and all members of the responsible management of the firm shall submit information on any past-due debts and judgments or defaults on bonds directly related to the practice of contracting as defined in Chapter 11 (§ 54.1-1100 et seq.) of Title 54.1 of the Code of Virginia.

F. The firm, the designated employee, the qualified individual, and all members of the responsible management of the firm shall disclose at the time of application any current or previous substantial identities of interest with any contractor licenses issued in Virginia or in other jurisdictions and any disciplinary actions taken on these licenses. This includes but is not limited to any monetary penalties, fines, suspension, revocation, or surrender of a license in connection with a disciplinary action. The board, in its discretion, may deny licensure to any applicant when any of the parties listed above have had a substantial identity of interest (as deemed in § 54.1-1110 of the Code of Virginia) with any firm that has had a license suspended, revoked, voluntarily terminated or surrendered in connection with a disciplinary action in Virginia or any other jurisdiction.

G. In accordance with § 54.1-204 of the Code of Virginia, each applicant shall disclose the following information about the firm, designated employee, all members of the responsible management, and the qualified individual or individuals for the firm:

1. All misdemeanor convictions within three years of the date of application; and

2. All felony convictions during their lifetime.

Any plea of nolo contendere shall be considered a conviction for purposes of this subsection. The record of a conviction received from a court shall be accepted as prima facie evidence of a conviction or finding of guilt. The board, in its discretion, may deny licensure to any applicant in accordance with § 54.1-204 of the Code of Virginia.

H. The designated employee or a member of responsible management shall have successfully completed a board-approved basic business course.

18VAC50-22-60. Requirements for a Class A license.

A. A firm applying for a Class A license shall meet all of the requirements of this section.

B. A firm shall name a designated employee who meets the following requirements:

1. Is at least 18 years old;

2. Is a full-time employee of the firm as defined in this chapter or is a member of the responsible management of the firm as defined in this chapter;

3. Has passed a board-approved examination as required by § 54.1-1106 of the Code of Virginia or has been exempted from the exam requirement in accordance with § 54.1-1108.1 of the Code of Virginia; and

4. Has followed all rules established by the board or by the testing service acting on behalf of the board with regard to conduct at the examination. Such rules shall include any written instructions communicated prior to the examination date and any oral or written instructions given at the site on the day of the exam.

C. For every classification or specialty in which the firm seeks to be licensed, the firm shall name a qualified individual who meets the following requirements:

1. Is at least 18 years old;

2. Has a minimum of five years of experience in the classification or specialty for which he is the qualifier;

3. Is a full-time employee of the firm as defined in this chapter or is a member of the firm as defined in this chapter or is a member of the responsible management of the firm;

4. a. Has obtained the appropriate certification for the following specialties:

Blast/explosive contracting (DHCD explosive use certification)

Fire sprinkler (NICET Sprinkler III certification)

Radon mitigation (EPA or DEQ accepted radon certification)

b. Has obtained, pursuant to the Individual Licensing and Certification Regulations, a master license for Plumbing, HVAC, Electrical, Gas Fitting, Natural Gas Fitting Provider, and Liquefied Petroleum Gas Contracting.

c. Has obtained, pursuant to the Individual Licensing and Certification Regulations, certification as an Elevator Mechanic for Elevator Escalator Contracting and certification as a Water Well Systems Provider for Water Well/Pump Contracting.

d. Has completed a board-approved examination for all other classifications and specialties that do not require other certification or licensure.

D. Each firm shall submit information on its financial position. Excluding any property owned as tenants by the entirety, the firm shall state a net worth or equity of $45,000.

E. The firm shall provide information for the five years prior to application on any outstanding, past-due debts and judgments; outstanding tax obligations; defaults on bonds; or pending or past bankruptcies. The firm, its designated employee, qualified individual or individuals, and all members of the responsible management of the firm shall submit information on any past-due debts and judgments or defaults on bonds directly related to the practice of contracting as defined in Chapter 11 (§ 54.1-1100 et seq.) of Title 54.1 of the Code of Virginia.

F. The firm, the designated employee, the qualified individual, and all members of the responsible management of the firm shall disclose at the time of application any current or previous substantial identities of interest with any contractor licenses issued in Virginia or in other jurisdictions and any disciplinary actions taken on these licenses. This includes but is not limited to, any monetary penalties, fines, suspensions, revocations, or surrender of a license in connection with a disciplinary action. The board, in its discretion, may deny licensure to any applicant when any of the parties listed above have had a substantial identity of interest (as deemed in § 54.1-1110 of the Code of Virginia) with any firm that has had a license suspended, revoked, voluntarily terminated, or surrendered in connection with a disciplinary action in Virginia or in any other jurisdiction.

G. In accordance with § 54.1-204 of the Code of Virginia, each applicant shall disclose the following information about the firm, all members of the responsible management, the designated employee and the qualified individual or individuals for the firm:

1. All misdemeanor convictions within three years of the date of application; and

2. All felony convictions during their lifetime.

Any plea of nolo contendere shall be considered a conviction for purposes of this subsection. The record of a conviction received from a court shall be accepted as prima facie evidence of a conviction or finding of guilt. The board, in its discretion, may deny licensure to any applicant in accordance with § 54.1-204 of the Code of Virginia.

H. The designated employee or a member of responsible management shall have successfully completed a board-approved basic business course.

18VAC50-22-170. Reinstatement fees.

Each check or money order should be made payable to the Treasurer of Virginia. All fees required by the board are nonrefundable. In the event that a check, money draft, or similar instrument for payment of a fee required by statute or regulation is not honored by the bank or financial institution named, the applicant or regulant shall be required to remit fees sufficient to cover the original fee, plus an additional processing charge set by the department:

Fee Type	When Due	Amount Due
Class C Reinstatement	with reinstatement application	$405*
Class B Reinstatement	with reinstatement application	$460*
Class A Reinstatement	with reinstatement application	$490*
*Includes renewal fee listed in 18VAC50-22-140.

The date on which the reinstatement fee is received by the Department of Professional and Occupational Regulation or its agent shall determine whether the licensee is eligible for reinstatement or must apply for a new license and meet the entry requirements in place at the time of that application. In order to ensure that licensees are qualified to practice as contractors, no reinstatement will be permitted once one year two years from the expiration date of the license has passed.