Part 4. TEXAS DEPARTMENT OF LICENSING AND REGULATION

Chapter 70. INDUSTRIALIZED HOUSING AND BUILDINGS

16 TAC §§70.10, 70.60, 70.103

The Texas Department of Licensing and Regulation ("Department") proposes amendments to existing rules at 16 Texas Administrative Code, §§70.10, 70.60, and 70.103 regarding the industrialized housing and buildings (IHB) program. The purposes of the proposed amendments are to minimize conflicts of interest for third parties participating in certification inspections and to streamline the process for approving alternative materials and methods of construction. The substance of these rule changes was recommended by the Industrialized Building Code Council ("Council") at its meeting on November 13, 2007.

Section 70.10 is amended to define certain acronyms that are used in proposed amendments to §70.103, related to the Council's approval of alternative materials and methods of construction. Additionally, an unnecessary reference to an address for the International Code Council, Inc. is eliminated.

In §70.60(a) a sentence is deleted concerning the prohibition on the certification team leader being personnel of the third party inspection agency responsible for regular in-plant inspections of the manufacturer or the design review agency responsible for review of the manufacturer's design package. That sentence is moved to new subsection (b), and the words "an employee" are substituted for "personnel." This change clarifies that the prohibition applies only to employees of the third party inspection agency or design review agency. New language is added to subsection (b) to prohibit agencies and team members from soliciting, offering, or agreeing to provide future design review or in-plant inspection services for the manufacturer prior to the manufacturer completing all certification requirements. The prohibition does not apply to the manufacturer's current third party inspection agency or design review agency or to a team member that is employed by the manufacturer's current third party inspection agency or design review agency.

Under the current rule, the Department may use third parties, individuals who are not Department employees, as personnel for the certification teams that perform certification inspections of IHB manufacturing facilities. These individuals are typically employed by or associated with one of two types of entities: third party inspection agencies that perform regular, in-plant inspections of IHB manufacturers or design review agencies that review the design packages of IHB manufacturers. In either case, a potential conflict of interest exists for the individual on the certification team. The agency for whom the individual works may be seeking the business of the manufacturer undergoing the certification inspection, either to perform regular, in-plant inspections for the manufacturer or to perform design review services. The Department has a strong interest in ensuring that such potential business opportunities do not unduly influence the members of the certification team. The Council has expressed concern about such potential conflicts of interest. The proposed rule addresses these concerns by temporarily restricting the team members and agencies providing those team members from soliciting business from that manufacturer. This approach should protect against conflicts of interest while not significantly interfering with agencies' ability to acquire new business.

Section 70.60(e)(9) is amended to specify that the plant certification report must be signed by an authorized Department employee, rather than the certification team leader. This change is necessary because the certification team leader may not be a Department employee, and the Department needs to retain control over the issuance of the report and the final approval of whether the manufacturer meets certification requirements.

Section 70.103(b) is amended to allow manufacturers or builders the additional option of submitting documentation of alternate materials and methods of construction electronically. New subsection (c) specifies two instances in which alternate materials or methods of construction have been pre-approved by the Council and do not require descriptions to be submitted to the Council for approval. The first instance is where there is a current code evaluation report from International Code Council Evaluation Services (ICC ES). The second is where there is a current product evaluation report or listing from a product certification agency accredited by the International Accreditation Service (IAS) that shows compliance with the applicable mandatory building codes. In these instances, the Department and the Council believe that the evaluation report or listing will provide sufficient evidence of compliance with the mandatory building codes and that no further scrutiny by the Council is needed. The rule clarifies that an industrialized house or building with an evaluation report or listing is not exempt from the requirements of Texas Occupations Code, Chapter 1202.

William H. Kuntz, Jr., Executive Director, has determined that for the first five-year period the proposed amendments are in effect there will be no change in costs or revenue to the State or Department from implementing and enforcing the rules. There will be no fiscal implications to local government.

Mr. Kuntz also has determined that for each year of the first five-year period the amendments are in effect, the public benefit will be added protection against potential conflicts of interest for third parties assisting the Department in certification inspections. The rule will protect public health and safety by helping to ensure that the third parties are not unduly influenced by potential business opportunities with the manufacturer undergoing certification. An additional public benefit will be increased efficiency in the approval process for alternate materials and methods of construction, while not compromising public safety.

Mr. Kuntz also has determined that for each year of the first five-year period the amendments are in effect, there will be some economic costs to persons required to comply with the amended rules. Section 70.60(b) places an additional restriction on third parties and agencies involved in certification inspections, by temporarily prohibiting solicitation of business from the manufacturer undergoing certification. As a result of this prohibition, there is some possibility that third party inspection agencies and design review agencies who supply a certification team member could lose business opportunities. However, the Department believes that, because of the temporary nature of the prohibition, any loss of potential revenue to these businesses will not be significant. Mr. Kuntz has determined that there may be some adverse economic effect on small and micro-businesses as a result of the proposed amendments; therefore, the Department has prepared the following economic impact statement and regulatory flexibility analysis.

Economic Impact Statement and Regulatory Flexibility Analysis

The Department has seven companies registered as both third party inspection agencies and design review agencies. Based on research conducted by the Department's Compliance Division, it is estimated that two to four of the companies are small businesses, and one is a micro-business. The potential adverse economic effect on these businesses results from the prohibition in proposed §70.60(b) on soliciting business from a manufacturer during the certification process. As a result of this prohibition, there is some possibility that third party inspection agencies and design review agencies, including the small and micro-businesses, who supply a certification team member could lose business opportunities. However, the Department believes that because of the temporary nature of the prohibition any loss of potential revenue to these businesses will not be significant. In preparing this proposed rule, the Department considered several alternative methods of achieving the purpose of the rule. One alternative the Department considered was to prohibit the individual team member from soliciting the manufacturer but allow the agency that supplies the team member to do so. The Department rejected this alternative as failing to address sufficiently the conflict of interest problem. If the agency were allowed to actively seek other business from the manufacturer during the certification process, this could exert undue pressure or influence on the team member who works for that agency. The Department did not find other alternatives to be consistent with the health, safety, and environmental and economic welfare of the state. For example, having no prohibition at all on solicitation or exempting small and micro-businesses from the prohibition would fail to address the conflict of interest problem and so would not be consistent with protecting public health and safety. Furthermore, having no prohibition on solicitation could have some adverse economic effect on the manufacturer's current third party inspection agency or design review agency. The agency supplying a certification team member would have special access to the manufacturer, by virtue of participating in the certification inspection, and would arguably have an unfair advantage in competing for the manufacturer's business if allowed to solicit the manufacturer's business during the certification process. The Department and the Council selected the proposed rule because the benefit to public health and safety, from minimizing conflicts of interest in certification inspections, outweighed the small cost or potential revenue loss to affected businesses. The Council considered and rejected an alternative that would have been more burdensome to the businesses. This alternative would have prohibited the team leader and an agency that provides the team leader from soliciting, offering, or agreeing to provide future design review or in-plant inspection services for the manufacturer for 12 months after the manufacturer's certification date. This alternative was considered too restrictive and would have limited the Department's ability to find qualified individuals to serve as certification team leaders.

Comments on the proposal may be submitted to Caroline Jackson, Legal Assistant, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, Texas 78711, or facsimile (512) 475-3032, or electronically: erule.comments@license.state.tx.us. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Occupations Code, Chapter 51, which authorizes the Department to adopt rules as necessary to implement that chapter and any other law establishing a program regulated by the Department, and Texas Occupations Code, Chapter 1202. In particular, §1202.101(a) directs the Texas Commission of Licensing and Regulation to adopt rules as necessary to ensure compliance with the purposes of Texas Occupations Code, Chapter 1202 and provide for uniform enforcement of this chapter.

The statutory provisions affected by the proposal are those set forth in Texas Occupations Code, Chapters 51 and 1202. No other statutes, articles, or codes are affected by the proposal.

§70.10.Definitions.

(a) The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) - (13) (No change.)

(14) IAS--International Accreditation Service.

(15) [ (14) ] ICC--International Code Council, Inc.[ , 5203 Leesburg Pike, Suite 708, Falls Church, Virginia 22041-3401 ].

(16) ICC ES--International Code Council Evaluation Services.

(17) [ (15) ] Industrialized builder--A person who is engaged in the assembly, connection, and on-site construction and erection of modules or modular components at the building site or who is engaged in the purchase of industrialized housing or buildings or of modules or modular components from a manufacturer or from another industrialized builder for sale or lease to the public; a subcontractor of an industrialized builder is not a builder for purposes of this chapter.

(18) [ (16) ] Insignia--The approved form of certification issued by the department to the manufacturer to be permanently affixed to the modular component indicating that it has been constructed to meet or exceed the code requirements and in compliance with the sections in this chapter.

(19) [ (17) ] Installation--On-site construction (see paragraph (29) [ (27) of this section ]).

(20) [ (18) ] Installation permit--A registration issued by the department to a person who purchases an industrialized house or building for his/her own use and who assumes responsibility for the installation of the industrialized house or building. A person who applies for an installation permit may not be engaged in the purchase of industrialized housing or buildings or of modules or modular components for sale or lease to the public. A subcontractor of an installation permit holder is not an industrialized builder for the purposes of this chapter.

(21) [ (19) ] Lease, or offer to lease--A contract or other instrument by which a person grants to another the right to possess and use industrialized housing or buildings for a specified period of time in exchange for payment of a stipulated price.

(22) [ (20) ] Local building official--The agency or department of a municipality or other local political subdivision with authority to make inspections and to enforce the laws, ordinances, and regulations applicable to the construction, alteration, or repair of residential and commercial structures.

(23) [ (21) ] Manufacturer--A person who constructs or assembles modules or modular components at a manufacturing facility which are offered for sale or lease, sold or leased, or otherwise used.

(24) [ (22) ] Manufacturing facility--The place other than the building site, at which machinery, equipment, and other capital goods are assembled and operated for the purpose of making, fabricating, constructing, forming, or assembly of industrialized housing, buildings, modules, or modular components.

(25) [ (23) ] Model--A specific design of an industrialized house, building, or modular component which is based on size, room arrangement, method of construction, location, arrangement, or size of plumbing, mechanical, or electrical equipment and systems therein in accordance with an approved design package.

(26) [ (24) ] Module--A three dimensional section of industrialized housing or buildings, designed and approved to be transported as a single section independent of other sections, to a site for on-site construction with or without other modules or modular components.

(27) [ (25) ] NFPA--National Fire Protection Association, Batterymarch Park, Quincy, Massachusetts 02269.

(28) [ (26) ] Nonsite specific building--An industrialized house or building for which the permanent site location is unknown at the time of construction.

(29) [ (27) ] On-site construction--Preparation of the site, foundation construction, assembly and connection of the modules or modular components, affixing the structure to the permanent foundation, connecting the structures together, completing all site-related construction in accordance with designs, plans, specifications, and on-site construction documentation.

(30) [ (28) ] Open construction--That condition where any house, building, or portion thereof is constructed in such a manner that all parts or processes of manufacture can be readily inspected at the building site without disassembly, damage to, or destruction thereof.

(31) [ (29) ] Permanent foundation system--A foundation system for industrialized housing or buildings designed to meet the applicable building code as set forth in §§70.100, 70.101, and 70.102.

(32) [ (30) ] Permanent industrialized building--An industrialized building that is not designed to be transported from one commercial site to another commercial site.

(33) [ (31) ] Person--An individual, partnership, company, corporation, association, or any other legal entity, however organized.

(34) [ (32) ] Price--The quantity of an item that is exchanged or demanded in the sale or lease for another.

(35) [ (33) ] Public--The people of the state as a whole to include individuals, companies, corporations, associations or other groups, however organized, and governmental agencies.

(36) [ (34) ] Registrant--A person who, or which, is registered with the department pursuant to the rules of this chapter as a manufacturer, builder, design review agency, third party inspection agency, or third party inspector.

(37) [ (35) ] Residential structure--Industrialized housing designed for occupancy and use as a residence by one or more families.

(38) [ (36) ] Sale, sell, offer to sell, or offer for sale--Includes any contract of sale or other instrument of transfer of ownership of property, or solicitation to offer to sell or otherwise transfer ownership of property.

(39) [ (37) ] Site or building site--A lot, the entire tract, subdivision, or parcel of land on which industrialized housing or buildings are sited.

(40) [ (38) ] Special conditions and/or limitations--On-site construction documentation which alerts the local building official of items, such as handicapped accessibility or placement of the building on the property, which may need to be verified by the local building official for conformance to the mandatory building codes.

(41) [ (39) ] Structure--An industrialized house or building that results from the complete assemblage of the modules or modular components designed to be used together to form a completed unit.

(42) [ (40) ] Third party inspector--An approved person or agency, private or public, determined by the council to be qualified by reason of facilities, personnel, experience, demonstrated reliability, and independence of judgment to inspect industrialized housing, buildings, and portions thereof for compliance with the approved plans, documentation, compliance control program, and applicable code.

(b) - (c) (No change.)

§70.60.Responsibilities of the Department--Plant Certification.

(a) Prior to being issued decals or insignia, each manufacturing facility will undergo a certification inspection. The plant certification inspection will be conducted by a certification team designated by the department. [ The team leader may not be personnel of the third party inspection agency responsible for regular in-plant inspections of the manufacturer or the design review agency responsible for review of the manufacturer's design package. ] The team shall consist of:

(1) a team leader, who is either a department employee, an engineer, or other qualified person as determined by procedures established by the Texas Industrialized Building Code Council; and

(2) one or more department inspectors or third party inspectors.

(b) The team leader may not be an employee of the third party inspection agency (TPIA) responsible for regular in-plant inspections of the manufacturer or the design review agency (DRA) responsible for review of the manufacturer's design package. The following persons may not solicit, offer, or agree to provide future design review or in-plant inspection services for the manufacturer prior to the manufacturer completing all certification requirements:

(1) an agency other than the manufacturer's current TPIA or DRA that provides a certification team member; and

(2) any team member that is not employed by the manufacturer's current TPIA or DRA.

(c) [ (b) ] The inspection shall be conducted in accordance with the procedures established by the Texas Industrialized Building Code Council. A certification inspection has two primary purposes:

(1) to verify that the manufacturer is capable of producing modules or modular components that comply with the law and the rules, mandatory building codes, and approved design package; and

(2) to verify that the manufacturer's approved compliance control program will ensure compliance now and in the future.

(d) [ (c) ] The team will become familiar with all aspects of the manufacturer's approved design package. Structures on the production line will be checked to assure that failures to conform located by the certification team are being located by the plant compliance control program and are being corrected by the plant personnel. The certification team will work closely with the plant compliance control personnel to assure that the approved design package and compliance control manuals for the facility are clearly understood and followed. If deemed necessary by the certification team, a representative of the design review agency must be present during the inspection. At least one module or modular component containing all systems, or a combination of modules or modular components containing all systems, shall be observed during all phases of construction. The team must inspect all modules or modular components in the production line for Texas during the certification. The plant certification inspection will terminate when the certification team has fully evaluated all aspects of the manufacturing facility.

(e) [ (d) ] The certification team will issue a plant certification, or facility evaluation, report to the manufacturer when the department has determined that the manufacturer has met the requirements for certification. A copy of the plant certification report will also be forwarded to the third party inspection agency responsible for in-plant inspections. The manufacturer and third party inspection agency will be responsible for ensuring that all conditions of certification as outlined in the certification report are met. The manufacturer must keep a copy of this report in their permanent records. The report will contain, at a minimum, the following information:

(1) the name and address of the manufacturer;

(2) the names and titles of personnel performing the certification inspection;

(3) the serial or identification numbers of the modules or modular components inspected;

(4) a list of nonconformances observed on the modules or modular components inspected (with appropriate design package references) and corrective action taken in each case;

(5) a list of deviations from the approved compliance control procedures (with section or manual references) observed during the certification inspection with the corrective action taken in each case;

(6) a list of conditions of certification with which the manufacturer must comply to maintain the certification;

(7) the date of certification;

(8) the following statement: "This report concludes that (name of agency), after evaluating the facility, certifies that (name of factory) of (city) is capable of producing (industrialized housing and buildings or modular components) in accordance with the approved building system and compliance control manuals on file in the manufacturing facility and in compliance with the requirements of the Texas Industrialized Building Code Council"; and

(9) the signature of an authorized department employee [ the certification team leader ].

(f) [ (e) ] If the department determines that the manufacturer is not capable of meeting the certification requirements or that the manufacturer is unable to complete the certification inspection requirements, then the certification team will issue a non-compliance report. The non-compliance report will detail the specific areas in which the manufacturer was found to be deficient and may make recommendations for improvement.

(g) [ (f) ] If any personnel of a design review agency or third party inspection agency participate as members of a certification team, the agency is considered a participant in the certification team and is responsible for compliance with Texas Occupations Code, Chapter 1202, rules adopted by the commission, and decision, actions, and interpretations of the council in performing the certification, inspection and related activities.

§70.103.Alternate Materials and Methods.

(a) Alternate materials or methods of construction other than as authorized by the mandatory codes set forth in §70.100 must be approved by the council.

(b) Manufacturers or industrialized builders shall submit descriptions of alternate methods or materials required to be approved by the council to the executive director for consideration by the council. The submittal shall include either 15 legible hard copies of drawings, specifications, and substantiating evidence for each such alternate method or material or all supporting documentation shall be submitted electronically and be in a format that will allow for electronic disbursement of these materials to the council .

(c) The following types of alternate materials or methods of construction have been approved by the council and do not require the manufacturer or industrialized builder to submit descriptions to the council for approval. Materials or methods of construction shall be used and identified in accordance with the applicable code or product evaluation report or listing.

(1) Alternate materials or methods with a current code evaluation report from ICC ES. An industrialized house or building with a code evaluation report is not exempt from the requirements of Texas Occupations Code, Chapter 1202.

(2) Alternate materials or methods of construction with a current product evaluation report or listing from a product certification agency accredited by the IAS that shows compliance with the applicable mandatory building codes. An industrialized house or building with a product evaluation report or listing is not exempt from the requirements of Texas Occupations Code, Chapter 1202.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 4, 2008.

TRD-200800671

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Earliest possible date of adoption: March 16, 2008

For further information, please call: (512) 463-7348

16 TAC §74.80

The Texas Department of Licensing and Regulation ("Department") proposes amendments to 16 Texas Administrative Code ("TAC"), Chapter 74, §74.80 regarding the Elevators, Escalators, and Related Equipment program application fees for initial and renewal inspector registrations, fees for certificates of compliance, and fees for initial and renewal contractor registrations.

The amendments to §74.80(a) propose to lower the application fee for an initial and a renewal inspector registration from $100 to $50. The amendment to §74.80(b)(1) proposes to lower the fee for a certificate of compliance from $30 to $20. The amendments to §74.80(e) propose to lower the fees for an original and renewals of contractor registrations from $300 to $115.

The Department is required to set fees in amounts reasonable and necessary to cover the costs of administering the programs under its jurisdiction. Pursuant to the Department's annual fee review, the fees currently in place are above the amount required by the Department to cover costs. The decrease in fees would not adversely affect the administration and enforcement of the Elevators, Escalators, and Related Equipment program.

William H. Kuntz, Jr., Executive Director, has determined that for the first five-year period the proposed amendments are in effect there will be no cost to state or local government as a result of enforcing or administering the proposed rule.

Mr. Kuntz also has determined that for each year of the first five-year period the amendments are in effect, the public benefit will be lower fees for annual license applications and renewals.

The anticipated economic effect on small or micro-businesses or to persons who are required to comply with the rule as amended will be lower fees for annual license applications and renewals. There will be no additional costs to small or micro-businesses or to persons who may be required to comply with the section as proposed. Since the agency has determined that the rule will have no adverse economic effect on small businesses, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, is not required.

Comments on the proposal may be submitted by mail to Caroline Jackson, Legal Assistant, General Counsel's Office, Texas Department of Licensing and Regulation, P.O. Box 12157, Austin, Texas 78711; by facsimile to (512) 475-3032; or by email to erule.comments@license.state.tx.us. The deadline for comments is 30 days after publication in the Texas Register.

The amendments are proposed under Texas Health and Safety Code, Chapter 754, Subchapter B, and Texas Occupations Code, Chapter 51, which authorizes the Department's governing body, the Texas Commission of Licensing and Regulation, to adopt rules as necessary to implement this chapter and any other law establishing a program regulated by the Department.

The statutory provisions affected by the proposal are those set forth in Texas Health and Safety Code, Chapter 754, Subchapter B, and Texas Occupations Code, Chapter 51. No other statutes, articles, or codes are affected by the proposal.

§74.80.Fees.

(a) Inspector registration fees.

(1) original-- $50 [ $100 ]

(2) renewal application-- $50 [ $100 ]

(3) Revised/Duplicate registration card--$25

(b) Certificate of Compliance filing fees:

(1) submitted by building owner with a copy of inspection report within 60 days of the equipment inspection date-- $20 [ $30 ] per unit of equipment;

(2) $10 late filing fee per each unit for every thirty (30) day period if the inspection report, filing fees, and verification about correcting deficiencies in the inspection report are filed after the 90th day from the equipment inspection date, and

(3) $25 per Revised/Duplicate Certificate.

(c) - (d) (No change.)

(e) Contractor Registration fees

(1) original-- $115 [ $300 ]

(2) renewal application-- $115 [ $300 ]

(3) Revised/Duplicate registration card--$25

(f) - (i) (No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 4, 2008.

TRD-200800672

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Earliest possible date of adoption: March 16, 2008

For further information, please call: (512) 463-7348