Untitled Texas Attorney General Opinion ( 2001 )


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  •     OFFICE OF THE ATTORNEY GENERAL . STATE OF TEXAS
    JOHN        CORNYN
    June 19,200l
    Ms. Victoria J.L. Hsu, P.E.                              Opinion No. JC-0390
    Executive Director
    Texas Board of Professional          Engineers           Re:     Whether the licensing        and registration
    1917 III-35 South                                        requirements of the Texas Engineering Practice Act
    Austin, Texas 78741                                      apply to the activities of a federal contractor on a
    federal enclave and related questions (RQ-0344-JC)
    Dear Ms. Hsu:
    On behalf of the Texas Board of Professional Engineers (the “Board”), you ask several
    questions about the application of the Texas Engineering Practice Act’s licensing and registration
    provisions to a particular private corporation that employs engineers who practice engineering in
    Texas. ’ We conclude that, to the extent those engineers practice engineering under contracts
    procured by the federal government pursuant to federal procurement laws and regulations under
    which the federal government assesses engineers’ qualifications, federal law preempts the Act’s
    licensing and registration requirements. The corporation and its divisions are not required to register
    with the Board and their employees and independent contractors are not required to be licensed by
    the Board based on engineering performed pursuant to such contracts.
    You ask about the Act’s application with respect to Lockheed Martin Corporation (“LMC”)
    and Lockheed Martin Aeronautics Company (“LM Aero”), an unincorporated division of LMC.
    Although you have not provided us with any factual information about those entities’ engineering
    activities in Texas, we have received extensive briefing from LMC. We accept LMC’s factual
    assertions as true.
    We understand that LMC is a Delaware corporation that does business throughout the United
    States and in several locations overseas.* “[I]ts activities in Texas are almost entirely federal
    government related and are mainly in the defense industry.” LMC Brief, note 2, at 1. LMC
    locations in Texas design, develop, and manufacture military products or provide services under
    contracts with the United States Government for the military or the National Aeronautics and Space
    Administration (“NASA”). 
    Id. at 2.
    These contracts are procured under federal statutes, see, e.g.,
    ‘Letter from Ms. Victoria J.L. Hsu, P.E., Executive   Director, Texas Board of Professional Engineers, to
    Honorable     John Comyn, Texas Attorney General (Jan. 30,200l)   (on file with Opinion Committee) [hereinafter Request
    Letter].
    2Brief from Stephen L. Tatum, Brown, Herman, Dean, Wiseman, Liser & Hart, L.L.P., to Honorable
    John Comyn, Texas Attorney General, at 1 (March 20,200l) (on file with Opinion Committee) [hereinafter LMC BriefJ.
    Ms. Victoria J.L. Hsu, P.E. - Page 2              (JC-0390)
    1OU.S.C. 60 2302 - 2331(1994 & Supp. V 1999) (military procurement), 41 U.S.C. ch. 7 (1994 &
    Supp. IV 1998) (general federal procurement policy), and extensive regulations governing federal
    acquisitions, known as the Federal Acquisition Regulations (“FAR”), see 48 C.F.R. chs. 1 (general
    federal acquisition regulation), 2 (United States Department of Defense FAR), 18 (NASA FAR)
    (2000). See LMC Brief, note 2, at 8-11. LMC asserts that “[w]ith some minor exceptions, none of
    the LMC facilities in Texas design, develop, manufacture, or sell any product for or provide any
    service to anyone but the United States Government for the United States Military or NASA, foreign
    governments by and through the United States Government, or other foreign governments subject
    to the United States Government regulation and approval.” 
    Id. at 2-3.
    LM Aero operates Air Force Plant 4 on a federal enclave in Tan-ant County and manufactures
    military aircraft under contracts with the United States Government and other foreign governments.
    
    Id. at l-2,3.
    The jurisdiction of the State of Texas in this federal enclave is limited by a 1942 deed
    of cession, pursuant to which the state ceded to the United States exclusive jurisdiction over the land.
    See Bd. OfEqualization v. Gen. Dynamics Corp., 
    344 S.W.2d 489
    (Tex. Civ. App.-Fort Worth 1961,
    writ ref d n.r.e.) (determining validity of this federal enclave); see also Vincent v. Gen. Dynamics
    Corp., 
    427 F. Supp. 786
    , 796 (N.D. Texas 1977) (holding that Texas civil statutes not in effect at
    time cession was perfected do not apply on federal enclave); 
    id. at 798-99
    (noting that part of Air
    Force Plant 4 was located in federal enclave and part was not).
    Before we turn to your questions, we briefly review the key provisions of the Texas
    Engineering Practice Act, TEX.REV.CIV.STAT.ANN. art. 3271a (Vernon 1968 & Supp. 2001) (the
    “Act”). The Act generally prohibits a person who is not licensed by the Board from practicing
    engineering in this state. See 
    id. 0 1.2(a)(l)
    (Vernon Supp. 2001); see also 
    id. 0 20
    (licensing
    exceptions).  Under the Act, “practice of engineering” or “practice of professional engineering”
    means
    any service or creative work, either public or private, [requiring]
    engineering education, training and experience in the application of
    special knowledge or judgment of the mathematical, physical, or
    engineering sciences to such services or creative work.
    The activities included in the practice of engineering include
    services, designs, analyses, or other work performed for a public or
    private entity in connection with utilities, structures, buildings,
    machines, equipment, processes, systems, works, projects, and
    industrial or consumer products or equipment of a mechanical,
    electrical, electronic, chemical, hydraulic, pneumatic, geotechnical,
    or thermal nature and include other professional services necessary
    for the planning, progress, and completion of any engineering service.
    
    Id. 0 2(4).
    Ms. Victoria J.L. Hsu, P.E. - Page 3               (JC-0390)
    The Act gives the Board authority over both individual engineers and engineering firms. The
    Act establishes minimum standards for licensing engineers and authorizes the Board to administer
    an examination. See 
    id. $5 12,14.
    “The Board shall issue a license upon payment of the license fee
    as provided for in this Act, to any applicant, who, in the opinion of the Board, has satisfactorily met
    all the requirements     of this Act.    The license shall authorize the practice of professional
    engineering.”    
    Id. $ 15(a).
    Section 20 of the Act excepts certain persons from this licensing
    requirement, including, for example, “officers and employees of the Government of the United
    States while engaged within this state in the practice of the profession of engineering for said
    Government.” 
    Id. 8 20(a)(2).
    Section 17 of the Act extends the Board’s regulatory authority to
    engineering firms, which must register with the Board:
    A sole proprietorship, firm, co-partnership, corporation, or
    joint stock association may engage or offer to engage in the practice
    of professional engineering in this State, provided:
    (1) the entity is registered with the Board; and
    (2) such practice is carried on by only professional   engineers
    licensed in this State.
    
    Id. 8 17(a).
    In addition to its authority to license engineers and register firms, see 
    id. $0 15,
    17, the
    Board has the authority to discipline engineers, see 
    id. 9 22,
    and to bring an action against “any
    individual person, sole proprietorship, firm, partnership, or other entity to enjoin any violation of any
    provision of this Act or any rule or regulation of the Board,” 
    id. 8 8(a).
    Your questions are as follows:
    1. Is LMC required to register with the Board pursuant to section
    17 of the Act?
    2. Do the registration requirements of section 17 extend to
    Lockheed Martin Aeronautics Company (LM Aero), an unincorporat-
    ed division of LMC, doing business in Texas since 1943 on a federal
    enclave?
    3. Would the registration requirements of section 17 extend to
    LM Aero if it was an incorporated subsidiary of LMC doing business
    on a federal enclave or an incorporated subsidiary doing strictly
    defense contracting business for the federal government off the
    enclave[?]
    Request Letter, supra note 1, at l-2. In a fourth, unnumbered question, you also ask whether the
    Act’s licensing requirements apply to non-licensed engineers who work as independent contractors
    for LMC at its facility on the federal enclave on a part-time basis. See 
    id. at 2.
    You ask, in essence,
    about the application of the Act’s registration requirement to LMC and LM Aero and about the
    Ms. Victoria J.L. Hsu, P.E. - Page 4              (JC-0390)
    application of the Act’s licensing     requirements   to independent   contractors   employed   by the
    companies on the federal enclave.
    The Act gives the Board extensive authority over the practice of engineering in this state.
    As we explain below, however, we conclude that the Act’s licensing and registration requirements
    do not apply to LMC and LM Aero and their employees and independent contractors to the extent
    they practice engineering under contracts procured by the federal government pursuant to federal
    procurement     laws and regulations under which the federal government assesses engineers’
    .   qualifications. Our conclusion is based on United States Supreme Court decisions holding that such
    federal procurement laws and regulations preempt states from regulating the qualifications of federal
    contractors.
    As noted above, LMC informs us that the federal government procures goods and services
    from LMC and LM Aero in Texas pursuant to federal statutes, see 10 U.S.C. $0 2302 - 233 1 (1994
    & Supp. V 1999) (military procurement), 41 U.S.C. ch. 7 (1994 & Supp. IV 1998) (general federal
    procurement policy), and the Federal Acquisition Regulations, 48 C.F.R. ch. l(2000) (FAR). These
    provisions give the acquiring officer the discretion to determine whether a bidder is responsible. For
    example, the general federal acquisition regulation charges the contracting officer with determining
    whether a prospective contractor is responsible. See 
    id. 9 9.103(b).
    To be determined responsible,
    a prospective contractor, must, among other things, have a record of integrity and the necessary
    technical skills. See 
    id. tj 9.104-1(d),
    ( e) ; see also 10 U.S.C. $5 2302(3)(E) (1999) (defining
    “responsible source” according to 41 U.S.C. 9 403), 2305 (United States Department of Defense
    awards to “responsible source”); 41 U.S.C. $403(7)(D), (E) (1998) (defining “responsible source”
    as prospective contractor who has various qualifications, including “a satisfactory record of integrity
    and business ethics” and “the necessary organization, experience, accounting and operational
    controls, and technical skills, or the ability to obtain such organization, experience, controls, and
    skills”). LMC provides no specific information regarding the statutory basis for its work producing
    military products for foreign governments in Texas. See LMC Brief, supra note 2, at 3 (“Similar
    restrictions and requirements apply to contracts with foreign governments and contracts with the
    United States Government on behalf of foreign governments.“).         We assume for purposes of this
    opinion that the United States Government assesses the responsibility of engineers performing such
    contracts under these provisions or similar statutes and regulations.
    United States Supreme Court precedent holds that federal statutes and regulations pursuant
    to which the federal government assesses the qualifications and responsibility of federal contractors
    preempt state laws governing their qualifications and responsibility.        In Leslie Miller, Inc. v.
    Arkansas, 
    352 U.S. 187
    (1956), the Court held that Arkansas licensing rules could not be applied
    to a contractor who had been hired by the federal government to build facilities for an air force base
    in that state. Similar to the FAR, the federal procurement provisions in effect at that time provided
    that the contract should be awarded “‘to that responsible bidder whose bid, conforming to the
    invitation for bids, will be the most advantageous to the Government, price and other factors
    considered. “’ 
    Id. at 188
    (citation omitted). Reasoning that “[slubjecting a federal contractor to the
    Arkansas contractor license requirements would give the State’s licensing board a virtual power of
    review over the federal determination of ‘responsibility’ and would thus frustrate the expressed
    federal policy of selecting the lowest responsible bidder,” 
    id. at 190
    (citations omitted), the Court
    Ms. Victoria J.L. Hsu, P.E. - Page 5               (JC-0390)
    held that the federal and state regulatory schemes conflicted, see 
    id. Similarly, in
    Sperry v. Florida,
    
    373 U.S. 379
    (1963), the Court held that the State of Florida could not apply its “unauthorized
    practice of law” regulations to a nonlawyer in Florida registered to practice before the federal Patent
    Office because “[a] State may not enforce licensing requirements which, though valid in the absence
    of federal regulation, give ‘the State’s licensing board a virtual power of review over the federal
    determination’ that a person or agency is qualified and entitled to perform certain functions.” 
    Id. at 385
    (citing Leslie Miller, Inc. v. 
    Arkansas, 352 U.S. at 190
    ).
    Significantly, the United States Court of Appeals for the Fourth Circuit recently concluded
    that this Supreme Court precedent precluded the application of the Commonwealth of Virginia’s
    licensing and registration requirements to private investigators working solely for the Federal Bureau
    of Investigation (“FBI”) providing background investigations for security clearances. See United
    States v. Virginia, 
    139 F.3d 984
    (4th Cir. 1998). The FBI had hired the private investigators
    pursuant to the Federal Acquisition Regulations. 
    Id. at 986.
    The court of appeals concluded that
    [gliven the near identity of the federal and state regulatory schemes
    at issue in Leslie Miller and this case, Leslie Miller compels the
    conclusion that-by     adding to the qualifications necessary for an
    investigator to do background checks for the FBI-the           Virginia
    regulatory scheme frustrates the objectives of the federal procurement
    laws by allowing the state to “second-guess” the FBI’s responsibility
    determination and by giving the state licensing board “a virtual power
    of review over the federal determination of ‘responsibility.“’
    
    Id. at 989.
    The court of appeals upheld the district court’s order permanently enjoining Virginia
    from enforcing the state regulations against investigators based solely on their participation in the
    FBI program. See 
    id. at 987,990.
    Like the state regulatory schemes at issue in these cases, the Texas Engineering Practice
    Act’s licensing requirements authorize the Board to assess the qualifications of engineers, including
    not only their technical expertise, see TEX.REV.CIV.STAT.     ANN. art. 3271 a $0 12(a) (Vernon Supp.
    2001) (education and training), 14 (examination), but also their character and reputation, see 
    id. 9 12(b).
    The Board may discipline its licensees by suspending or revoking their licenses for various
    causes including “[a]ny gross negligence, incompetency,            or misconduct in the practice of
    professional engineering.” 
    Id. 9 22(a).
    With certain exceptions, a person who is not licensed by the
    Board is prohibited from practicing engineering in this state. See 
    id. $3 1.2,
    15, 20 (licensing
    exceptions). Although the Act’s registration requirement, section 17, does not vest the Board with
    the same degree of authority to assess the qualifications of engineering firms, it does provide that
    a “sole proprietorship, firm, co-partnership, corporation, or joint stock association” may not engage
    or offer to engage in the practice of professional engineering in this state unless “such practice is
    carried on by only professional engineers licensed in this State,” see 
    id. 8 17(a),
    effectively making
    a firm’s authority to practice engineering contingent on the licensing of its employees, and all of the
    Board discretion that licensing entails. In addition, the Board is empowered to bring an action not
    only against individual engineers but also against “any . . . sole proprietorship, firm, partnership, or
    other entity to enjoin any violation of any provision of this Act or any rule or regulation of the
    Ms. Victoria J.L. Hsu, P.E. - Page 6                        (JC-0390)
    Board,” 
    id. § 8(a).
    Thus the Act gives the Board the authority to bring an action against an
    engineering firm for violating section 17 and to enjoin it from practicing engineering in this state.
    We conclude that this regulatory scheme, like the Virginia regulatory scheme regulating private
    investigators, frustrates the objectives of the federal procurement laws by allowing the state to
    “second-guess” the federal government’s determination that an engineer or engineering firm is
    responsible and by giving the state licensing Board “a virtual power of review over the federal
    determination of ‘responsibility.“’ United States v. 
    Virginia, 139 F.3d at 989
    .
    Accordingly, we conclude that the Act’s licensing and registration requirements do not apply
    to LMC and LM Aero and their employees and independent contractors to the extent they perform
    engineering services in this state that have been procured by the United States Government pursuant
    to federal procurement laws and regulations under which the federal government assesses engineers’
    qualifications. Accord 1977-78 Va. Op. Att’y Gen. 3 13 (“whether a state licensing requirement for
    engineering work is prohibited where an individual is performing engineering services exclusively
    for the federal government depends upon an examination of the relevant federal statute or federal
    policy permitting such activity”; where grounds for licensing contractors under state law are similar
    to federal procurement provisions, state law and the federal policy conflict) (citing LeslieMiller, Inc.
    v. Arkansas, 
    352 U.S. 187
    (1956)). This office, which is not a fact-finding body,3 is unable to
    determine whether LMC, LM Aero, their employees, or independent contractors perform other
    engineering services that bring them within the ambit of the Act’s licensing and registration
    requirements.
    Before turning to your specific questions, we note that your request letter focuses on the
    activities of LMC and LM Aero on the federal enclave in Tar-rant County given the State of Texas’
    limited civil jurisdiction in that area. See Bd. of Equalization, 
    344 S.W.2d 489
    ; Vincent, 427 F.
    Supp. at 796. It appears, however, that all engineering that takes place on the federal enclave in
    Tarrant County has been procured by the federal government pursuant to federal procurement laws
    and regulations such as the FAR. Because that federal law preempts the Texas Engineering Practice
    Act’s licensing and registration requirements both on and off the federal enclave, it is not necessary
    for us to address the extent to which Texas’ 1942 deed of cession limits the Act’s application on the
    federal enclave. Again, we assume for purposes of this opinion that the United States Government
    assesses the responsibility of engineers working under foreign-military contracts under federal law
    or regulations. 
    See supra, at 4
    . If LM Aero’s work for foreign governments on the federal enclave
    is not procured pursuant to such federal law, the effect of the deed of cession might be relevant.
    In answer to your specific questions, whether LMC is required to register with the Board
    pursuant to section 17 of the Act depends upon whether LMC performs any engineering services in
    this state that are not procured by the United States Government pursuant to federal procurement
    laws and regulations under which the federal government assesses engineers’ qualifications. LMC’s
    brief suggests that it may perform some engineering services in this state that are not subject to
    3See, e.g., Tex. Att’y Gen. Op. Nos. JC-0020 (1999) at 2 (stating that investigation and resolution of fact
    questions cannot be done in opinion process); M-l 87 (1968) at 3 (“[Tlhis office is without authority to make . . . factual
    determinations.“);   O-29 11 (1940) at 2 (“[Tlhis . . . presents a fact question which we are unable to answer.“).
    Ms. Victoria J.L. Hsu, P.E. - Page 7               (JC-0390)
    federal procurement laws and regulations. See LMC Brief, supra note 2, at 2-3 (“With some minor
    exceptions, none of the LMC facilities in Texas design, develop, manufacture, or sell any product
    or provide any service to anyone but the United States Government for the United States Military
    or NASA, foreign governments by and through the United States Government, or other foreign
    governments     subject to the United States Government regulation and approval.“) (emphasis
    added); Letter from Beale Dean, Brown, Herman, Dean, Wiseman, Liser, & Hart, L.L.P., to
    Dr. C. Walter May, Jr., Director of Licensing, Texas Board of Professional Engineers, at 2 (Nov. 29,
    2000) (“Although certain LMC operations . . . do some commercial work [in Texas], it is such a
    small portion of the work performed in Texas as to be statistically insignificant at this time.“). This
    office has no information about the nature of those activities and therefore cannot determine whether
    LMC might be required to register with the Board on the basis of those activities. See 
    note 3 supra
    .
    We do conclude as a matter of law, however, that the Board may not require LMC to register based
    on engineering it performs under contracts procured by the United States Government pursuant to
    federal procurement laws and regulations under which the federal government assesses engineers’
    qualifications, such as the FAR.
    Your second and third questions ask about the Board’s jurisdiction over LM Aero. Again
    you ask if the section 17’s registration requirement extends to LM Aero, “an unincorporated division
    of LMC, doing business in Texas since 1943 on a federal enclave” and if that requirement would
    extend to LM Aero “if it was an incorporated subsidiary of LMC doing business on a federal enclave
    or an incorporated subsidiary doing strictly defense contracting business for the federal government
    off the enclave.” See Request Letter, supra note 1, at 2. You appear concerned not only about the
    Board’s jurisdiction in the federal enclave in Tar-rant County but also about LM Aero’s status as an
    unincorporated division of LMC, perhaps because section 17 of the Act makes no reference to such
    entities. See TEX.REV. CIV.STAT.ANN. art. 3271a, 4 17(a) (Vernon Supp. 2001) (requiring
    registration of a “sole proprietorship, firm, co-partnership, corporation, or joint stock association”).
    As with LMC, the Board may not require LM Aero to register based on engineering the
    company performs under contracts procured by the United States Government pursuant to federal
    procurement     laws and regulations under which the federal government assesses engineers’
    qualifications, such as the FAR. Given that your question about registration is answered by
    preemption principles, it is not necessary for us to consider the extent to which the deed of cession
    limits the Act’s application on the federal enclave. Nor do we need not reach the question whether
    the Act’s registration requirement extends to LMC Aero as unincorporated division of a corporation.
    Finally, we are somewhat confused about your fourth question regarding independent
    contractors. Again, you ask if “non-licensed contract engineers, who are not full time employees
    of LMC, [are] subject to the [] Act when providing engineering services to LMC on a federal
    enclave?” See Request Letter, supra note 1, at 2. You state that the Board takes the position that
    “section 20(a)(2) [of the Act] does not provide an exemption for non-licensed contract engineers and
    that such individuals are subject to the [] Act even when working on a federal enclave.” 
    Id. - As
    we have noted, section 20(a)(2) of the Act provides an exemption from the Act’s licensing
    requirements for “officers and employees of the Government of the United States while engaged
    within this state in the practice of the profession of engineering for said Government.” TEX.REV.
    Ms. Victoria J.L. Hsu, P.E. - Page 8              (JC-0390)
    CIV.STAT.ANN. art.
    3271a, 0 20(a)(2) (V emon Supp. 2001). This exemption by its plain terms
    applies only to officers and employees of the United States; it does not apply to either employees
    or independent contractors of a private entity. However, the rationale of Leslie Miller and its
    progeny applies to an independent contractor employed by a prime contractor as a subcontractor on
    a contract procured under federal procurement laws and regulations such as the FAR. As with
    contractors, the FAR vests the federal government with the right to assess the responsibility of
    subcontractors. See 48 C.F.R. 4 9.104-4 (2000). Moreover, at least two courts have extended Leslie
    Miller preemption to state attempts to license federal subcontractors.        See Airport Constr. &
    Materials, Inc., v. Bivens, 
    649 S.W.2d 830
    (Ark. 1983) (Leslie Miller rule applied to subcontractors
    on federal project because federal policy of selecting the lowest responsible bidder would have been
    frustrated by subjecting even the subcontractor to state regulations); Elec. Constr. Co. v. Flickzhger,
    
    485 P.2d 547
    , cert. denied, 
    404 U.S. 952
    (1971) (under Leslie Miller, Arizona could not require
    federal subcontractor to obtain a state contractor’s license).
    Accordingly, we conclude that an independent contractor employed by LMC or LM Aero,
    either on or off the federal enclave, as a subcontractor on a contract procured by the federal
    government pursuant to federal procurement laws and regulations under which the federal
    government assesses engineers’ qualifications is not subject to the Act’s licensing requirements. Of
    course, a person who works as a part-time independent contractor for LMC or LM Aero and who
    also practices engineering for other clients might be subject to the Act’s licensing requirements
    based on those other engineering activities.
    Ms. Victoria J.L. Hsu, P.E. - Page 9             (JC-0390)
    SUMMARY
    To the extent engineers practice engineering under contracts
    procured by the federal government pursuant to federal procurement
    laws and regulations under which the federal government assesses
    engineers’ qualifications, federal law preempts the Texas Engineering
    Practice Act’s licensing and registration requirements. A corporation
    and its divisions are not required to register with the Texas Board of
    Professional    Engineers   and their employees       and independent
    contractors are not required to be licensed by the Board based on
    engineering performed pursuant to such contracts.
    Attorney General of Texas
    ANDY TAYLOR
    First Assistant Attorney General
    SUSAN D. GUSKY
    Chair, Opinion Committee
    Mary R. Crouter
    Assistant Attorney General - Opinion Committee