51 N.J.R. 910(a)

VOLUME 51, ISSUE 12, JUNE 17, 2019
RULE PROPOSALS

Reporter
51 N.J.R. 910(a)
NJ - New Jersey Register  >  2019  >  JUNE  >  JUNE 17, 2019  >  RULE PROPOSALS  >  LAW AND PUBLIC SAFETY -- DIVISION OF CONSUMER AFFAIRS

Interested Persons Statement

INTERESTED PERSONS
Interested persons may submit comments, information or arguments concerning any of the rule proposals in this issue until the date indicated in the proposal. Submissions and any inquiries about submissions should be addressed to the agency officer specified for a particular proposal.

The required minimum period for comment concerning a proposal is 30 days. A proposing agency may extend the 30-day comment period to accommodate public hearings or to elicit greater public response to a proposed new rule or amendment. Most notices of proposal include a 60-day comment period, in order to qualify the notice for an exception to the rulemaking calendar requirements of    N.J.S.A. 52:14B-3. An extended comment deadline will be noted in the heading of a proposal or appear in a subsequent notice in the Register.
At the close of the period for comments, the proposing agency may thereafter adopt a proposal, without change, or with changes not in violation of the rulemaking procedures at    N.J.A.C. 1:30-6.3. The adoption becomes effective upon publication in the Register of a notice of adoption, unless otherwise indicated in the adoption notice. Promulgation in the New Jersey Register establishes a new or amended rule as an official part of the New Jersey Administrative Code.

Agency


LAW AND PUBLIC SAFETY > DIVISION OF CONSUMER AFFAIRS > STATE BOARD OF EXAMINERS OF HEATING, VENTILATING, AIR CONDITIONING, AND REFRIGERATION CONTRACTORS

Administrative Code Citation

Proposed Amendments: N.J.A.C. 13:32A-1.1 and 1.2
Text

Bona Fide Representative

Authorized By: State Board of Examiners of Heating, Ventilating, Air Conditioning, and Refrigeration Contractors, Kerrie Shahan, Acting Executive Director.
Authority: N.J.S.A. 45:16A-4 and P.L. 2018, c. 125.
Calendar Reference: See Summary below for explanation of exception to calendar requirement.

Proposal Number: PRN 2019-087.

Submit written comments by August 16, 2019, to:

   Kerrie Shahan, Acting Executive Director
   State Board of Examiners of Heating, Ventilating, Air Conditioning, and Refrigeration Contractors
   PO Box 45008
   124 Halsey Street
   Newark, New Jersey 07101
   or electronically at: http://www.njconsumeraffairs.gov/Proposals/Pages/default.aspx.

The agency proposal follows:

Summary

N.J.S.A. 45:16A-2 requires an entity undertaking, or offering to undertake, heating, ventilating, air conditioning, and refrigeration (HVACR) services to have a bona fide representative who is licensed as a master HVACR contractor by the Board of Examiners of Heating, Ventilating, Air Conditioning, and Refrigeration Contractors (Board). P.L. 2018, c. 125 revised the definition of "bona fide representative" to impose new ownership requirements for bona fide representatives. Under the new definition, a bona fide representative must have: at least one percent ownership of the issued and outstanding shares of stock in a corporation; at least one percent ownership of the capital of a partnership; or at least one percent ownership of any other firm or legal entity engaged in HVACR contracting. The new definition provides a different ownership requirement if the entity engaged in HVACR contracting generates more than 65 percent of its gross revenue from sources other than HVACR contracting or if the entity is a publicly traded corporation. For such entities, a bona fide representative must be: the owner of a sole proprietorship; a partner in a partnership; a manager of a limited liability company; or an executive officer of a corporation.

P.L. 2018, c. 125 also provides a definition of "one percent ownership." The definition requires that a bona fide representative be entitled to one percent of any net profits from a business, own one percent equity in the entity, and be entitled to one percent of the net proceeds from the sale of the entity. When an entity is a corporation, the bona fide representative must own stock equaling one percent equity interest and, if there is more than one class of stock, the stock owned by the bona fide representative must be the highest level stock with full voting rights. The Board proposes to amend N.J.A.C. 13:32A-1.2 to incorporate the definitions for "bona fide representative" and "one percent ownership" from P.L. 2018, c. 125.

N.J.S.A. 45:16A-10 provides exemptions to the requirements of the State Heating, Ventilating, Air Conditioning, and Refrigeration Contracting License Law. P.L. 2018, c. 125 amended this statutory provision to include an exemption for a related competitive business segment of a public utility holding company that offers to provide, or provides, competitive services pursuant to the "Electric Discount and Energy Competition Act," P.L. 1999, c. 23. The Board proposes to amend N.J.A.C. 13:32A-1.1 to include the exemption from P.L. 2018, c. 125.

The Board has provided a 60-day comment period for this notice of proposal. Therefore, this notice is excepted from the rulemaking calendar requirement pursuant to N.J.A.C. 1:30-3.3(a)5.

Social Impact

The proposed amendments will not have a social impact.

Economic Impact

If there are licensed HVACR contractors who are acting as bona fide representatives who do not have the ownership interests required by P.L. 2018, c. 125, these licensees will need to either obtain such an ownership interest or cease to function as bona fide representatives. This would have an economic impact on such licensees and the entities for which they act as bona fide representatives. The Board does not anticipate that the rulemaking will have any other economic impact.

Federal Standards Statement

A Federal standards analysis is not required because there are no Federal laws or standards applicable to the proposed amendments.

Jobs Impact

The Board does not believe that the proposed amendments will increase or decrease the number of jobs in New Jersey.

Agriculture Industry Impact

The proposed amendments will not have any impact on the agriculture industry of this State.

Regulatory Flexibility Analysis

Since licensed master HVACR contractors are individually licensed by the Board, they may be considered "small businesses" under the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq.

[page=911] The economic impact on small businesses will be the same as that imposed on all businesses as detailed in the Economic Impact statement. The Board does not believe that licensed master HVACR contractors will need to employ any professional services to comply with the requirements of the rulemaking. The proposed amendments impose no reporting or recordkeeping requirements, but impose compliance requirements as detailed in the Summary above.

The proposed amendments will help to ensure that bona fide representatives have ownership interests in entities offering HVACR services and the ability to affect the practices of such entities. This will help to ensure that HVACR services are provided in a safe and effective manner pursuant to Board requirements. As the proposed amendments will protect the safety of those who receive HVACR services, no differing compliance requirements are provided based upon the size of a business.

Housing Affordability Impact Analysis

The proposed amendments will have an insignificant impact on the affordability of housing in New Jersey and there is an extreme unlikelihood that the proposed amendments would evoke a change in the average costs associated with housing because the proposed amendments concern ownership requirements for bona fide representatives.

Smart Growth Development Impact Analysis

The proposed amendments will have an insignificant impact on smart growth and there is an extreme unlikelihood that the proposed amendments would evoke a change in housing production in Planning Areas 1 or 2, or within designated centers under the State Development and Redevelopment Plan in New Jersey because the proposed amendments concern ownership requirements for bona fide representatives.

Racial and Ethnic Community Criminal Justice and Public Safety Impact

The Board has evaluated this rulemaking and determined that it will not have an impact on pretrial detention, sentencing, probation, or parole policies concerning adults and juveniles in the State. Accordingly, no further analysis is required.

Regulations

Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

SUBCHAPTER 1.   PURPOSE AND SCOPE; DEFINITIONS

13:32A-1.1 Purpose and scope

(a)-(b) (No change.)

(c) This chapter shall not apply to [any]:

1. Any public utility company regulated by t

he Board of Public Utilities or any related competitive business segment of that public utility that offers competitive services pursuant to the ["]Electric Discount and Energy Competition Act,["] P.L. 1999, c. 21 (N.J.S.A. 48:3-49 et seq.)[. This chapter does not apply to];

2. A related competitive business segment of a public utility holding company that offers to provide or provides competitive services pursuant to the Electric Discount and Energy Competition Act, P.L. 1999, c. 23 (N.J.S.A. 48:3-49 et seq.); or

3. HVACR work performed on buildings, structures, or premises owned or operated by a public utility holding company or its subsidiaries.
(d)-(f) (No change.)

13:32A-1.2 Definitions

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

. . .
"Bona fide representative" means a licensed master HVACR contractor who:

1. Has not less than one percent ownership of the issued and outstanding shares of stock in a corporation, not less than one percent ownership of the capital of a partnership, or not less than one percent ownership of any other firm or legal entity engaged in HVACR contracting in this State; or

2. Is, if the entity engaged in HVACR contracting generates more than 65 percent of its gross revenue from sources other than HVACR contracting or if the entity is a publicly traded corporation, including its wholly owned subsidiaries, whose principal business in this State is HVACR contracting:

[1.] i. In the case of a sole proprietorship, [is] the owner of the business;
[2.] ii. In the case of a partnership, [is] a partner in the business;
[3.] iii. In the case of a limited liability company, [is] a manager; or
[4.] iv. In the case of a corporation, [is] an executive officer.
. . .

"One percent ownership" means that a bona fide representative is entitled to one percent of any net profits from a business, owns one percent equity in a master HVACR contractor, and is entitled to one percent of the net proceeds from the sale of a business in the event of sale of the business. If the master HVACR contractor is a corporation, the bona fide representative owns stock equaling one percent equity interest, and, if there is more than one class of stock, the stock owned by the bona fide representative is the highest level stock with full voting rights.
. . .