BILL ANALYSIS �
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|Hearing Date:April 22, 2013 |Bill No:SB |
| |662 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: SB 662Author:Galgiani
As Introduced: February 22, 2013 Fiscal:Yes
SUBJECT: Structural pest control operators: financial responsibility.
SUMMARY: Increases the minimum limit for liability insurance to
$500,000 for a structural pest control company; increases the amount
of the surety bond required to maintain a license or company
registration to $12,500; increases the upper limit of a surety bond
required for issuance, reissuance, or restoration of a license or
company registration, after a suspension or revocation, to $25,000.
Existing law:
1)Licenses and regulates more than 24,000 structural pest control
operators, field representatives, applicators and registered
structural pest control companies by the Structural Pest Control
Board (SPCB or Board) within the Department of Pesticide Regulation
(DPR), and provides for a registrar as the Board's executive
officer.
(Business and Professions Code (BPC) � 8500 et seq.)
2)As of July 1, 2013, transfers the SPCB from DPR into the Department
of Consumer Affairs. (Governor's Reorganization Plan No. 2, 2012)
3)Licenses structural pest control operators, field representatives,
and applicators in three specified areas of pest control: Branch 1
- Fumigation, Branch 2 - General pest, and
Branch 3 - Termite. (BPC � 8560)
4)Provides that a "registered company" is a sole proprietorship,
partnership, corporation or other organization that is registered
with SPCB to engage in the practice of pest control, and provides
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that a "qualifying manager" is a licensed operator designated by the
registered company to supervise the daily business of the company
and the company's employees. (BCP �� 8506.1, 8506.2)
5)Requires a registered company to file with the SPCB written evidence
of an insurance policy approved by the board or a bond, as specified
as a condition of the company's registration by the Board. (BCP �
8690)
a) Requires an insurance policy to provide minimum liability limits
of $25,000 for any one loss due to bodily injury, sickness, or
disease, including death, sustained by a person, and
$25,000 minimum for any one loss due to injury or destruction of
property, including loss of use. (BCP � 8692)
b) Provides that in lieu of insurance that a company may file a
$25,000 surety bond with the SPCB. (BCP � 8693)
1)Provides that violation of the financial responsibility provisions
for structural pest control operators is a misdemeanor (crime).
(BCP � 8695)
2)Requires a registered company to maintain a $4,000 surety bond
payable for the benefit of any person damaged by fraud or dishonesty
of the registered company in the performance of a contract, or any
person who is damaged as a result of a violation by the registered
company. (BCP �� 8697, 8697.2)
3)Provides that If a structural pest control operator license or
company registration is suspended or revoked, the registrar shall
require the applicant, licensee, or registered company, as a
condition of the issuance, reissuance, or restoration of the license
or company registration, to file a surety bond in a sum determined
by the registrar based upon the seriousness of the violation, but
not less than $1,000 nor more than $8,000. (BPC � 8697.3)
This bill:
1)Deletes the option for a company to obtain a bond in order to be
issued registration by the SPCB.
2)Increases the minimum limit for liability insurance to $500,000.
3)Increases the amount of the surety bond required to maintain a
license or company registration, from $4,000 to $12,500.
4)Increases the upper limit of the amount of the surety bond required
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for issuance, reissuance, or restoration of a license or company
registration, after a suspension or revocation, from $8,000 to
$25,000.
5)Specifies that another method of deposit, including a certificate of
deposit, shall not satisfy the insurance or bonding requirements of
the law.
6)Makes technical conforming changes.
FISCAL EFFECT: Unknown. This bill has been keyed "fiscal" by
Legislative Counsel.
COMMENTS:
1.Purpose. This bill is sponsored by the Author, and would increase
the minimum insurance and bond requirements that a pest control
company must maintain in order to operate in California. The
minimum limits for the insurance policy would be increased from
$25,000 to $500,000 and the minimum amount of the surety bond,
needed to maintain license or company registration, would be
increased from $4,000 to $12,500.
2.Need for the bill. The Author states that there have been numerous
consumer complaint cases throughout the state where the only option
for a consumer, once a pest control company went out of business or
was revoked, was to attempt to file a claim against the bond.
However, $4,000 does not cover a lot of damage when dealing with
home repairs.
Compared to other states, California has some of the most expensive
real estate, yet the lowest minimum requirements to protect
consumers, according to the Author.
The Author further argues that the current minimum insurance amounts
have not been increased since the requirement for insurance was
first enacted by legislation in 1960. The minimum bond requirement
has not been increased since 1991, when it was raised from $2,000 to
$4,000.
3.Background. Structural pest control is the control of household
pests (including but not limited to rodents, vermin and insects) and
wood-destroying pests and organisms or such other pests which may
invade households or structures, including railroad cars, ships,
docks, trucks, airplanes, or the contents thereof. The practice of
structural pest control includes the engaging in, offering to engage
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in, advertising for, soliciting, or the performance of any of the
following: identification of infestations or infections; the making
of an inspection for the purpose of identifying or attempting to
identify infestations or infections of household or other structures
by such pests or organisms; the making of inspection reports;
recommendations, estimates, and bids, whether oral or written, with
respect to such infestation or infections; and the making of
contracts, or the submitting of bids for, or the performance of any
work including the making of structural repairs or replacements, or
the use of pesticides, insecticides, rodenticides, fumigants, or
allied chemicals or substances, or mechanical devices for the
purpose of eliminating, exterminating, controlling or preventing
infestations or infections of such pests, or organisms.
The SPCB was created in 1935 to provide for the registration and
licensing of persons engaged in the practice, and for the protection
of the public in the practice of structural pest control. In 2009,
as a part of the consolidations of regulatory boards, the SPCB was
moved from under the oversight of DCA into the DPA by AB x4 20
(Strickland). In 2012, the Governor's Reorganization Proposal No. 2
moved the SPCB back into the DCA.
Currently, the SPCB is composed of seven members of which, four are
public members, and three are members of the pest control industry.
The Governor appoints two public members and the three licensed
members, and the Senate Rules Committee and the Speaker of the
Assembly each appoint one public member.
4.Prior Legislation. Governor's Reorganization Plan No. 2 (2012)
transferred the SPCB from the jurisdiction of DPR to the
jurisdiction of DCA.
AB X4 20 (Strickland, Chapter 18, Statutes of 2009) transferred the
SPCB from the jurisdiction of DCA to the jurisdiction of DPR.
SUPPORT AND OPPOSITION:
Support: None received as of April 16, 2013
Opposition: None received as of April 16, 2013
Consultant:G. V. Ayers
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