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                               May 14, 1987




    ElonorableMark W. Stiles           Opinion No. n-696
    chairman
    County Affairs Conduittee          Re:    Definition of "principal place
    Texas House of Repres&tatives      of business" for purposes of article
    P. 0. Box 2910                     60113,  V.T.C.S.. the out-of-state
    Austin, Texas   78769              bidding act

    Dear Representative Stiles:

         Tou ask about the proper construction of article 6Olg, V.T.C.S.
    Thereinafter the act], which governs bids submitted by nonresidents
    to political subdivisions in Texas for constructlou, supplies, and
    services. Specifically, you ask about' the proper construction of
    the phrase "principal place of business' that is set forth in the
    statutory definitions of "nonresident bidder" and "Texas resident
    bidder" found in section l(a) of the act.

         Section l(b) of the act provides the following:

              T'he state or a govermnsntal agency of the state
              may not award a contract for general construction,
              improvements, services, or public works projects
              or purchases of supplies, materials, or equipment
              to a nonresident bidder unless the nonresident's
              bid is lower than the lowest bid submitted by a
              responsible Texas resident bidder by the same
              amount that a Texas resident bidder would be
              required to underbid a nonresident bidder to
              obtain a comparable contract in the state in which
              the nonresident's principal place of business is
              located. (Emphasis added).

    Section l(a)(2). of article 6Olg. provides that "'[nlonresident
    bidder' means a bidder whose principal place of business is not in
    this state, but excludes a contractor whos.&ultimate parent company or
    majority owner has its principal place of business in this state."
    (Emphasis added.) Section    l(a)(3) provides that "'Texas resident
    bfdder' means a bidder whose principal place of business is in this
    state, and includes a contractor whose ultimate parent company or
    majority owner has its principal place of business in this state.'
    (Emphasis added.)    The act itself does not define the phrase




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Honorable Mark W. Stiles - Page 2   (m-696)




"principal place of business." You express concern that political
s&divisions   in this state are construing     "principal place of
business" in such a way as to permit companies having, for example,
only one permanent office in the state with as few as one employee
engaged in activities other than submitting bids to governmenral
agencies to compete on an equal footing with Texas resident bidders.
You assert that this does not comport with the legislature's intent
when it enacted the statute.

     In construing a statute, we must look to the intent of the
legislatiare and construe the statute so as to give effect to chat
intent. Knight v. International Harvester Credit Corp., 627 S.W.2d
382 (Tex. 1982). In determining legislative intent. we must consider
the end to be attained. the mischief to be remedied, and the purposes
to be accomplished. Flowers v. Den se -Ta eler h Co., 472 S.W.2d 112
(Tex. 1971); Calvert v. Kadane, 427 S.W.2d 605 (Tex. 1968). When the
words of a statute are subject to two reasonable Interpretations and
are therefore ambiguous. one may consider the legislative history of
the statute to determine which meaninn of the words the legislature
intended. San Antonio General Drive&, Helpers Local No, 657 v.
Thornton, 299 S.W.2d 911 (Tex. 1957); Miller v. Calverc, 418 S.W.2d
869 (Tex. Civ. App. - Austin      1967, no writ).   Specifically, in
attempt&g to- dis&rn legislative intent from an examination of the
legislative history of a statute, one looks to the purpose the
original enactment served, the discussion of statutory meaning in
committee reports, the effect of amendments. whetha? accepted or
rejected, and the remarks in debatc preceding passage. Johnson v.
Department of Treasury, I.B.S., 700 F.2d 971 (5th Cir. 1983); Rogers
v. Frito-Lay, Inc., 611 F.2d 1074 (5th Cit. 1980). cert. denied, 449
U.S. 889 (1980),

     On the basis of our examination of both the Bouse Committee on
Business and Commerce and Iiouse of Representatives discussions of the
bill, we conclude that the act is intended to impose on any out-of-
state company seeking co bid on construction. supplies, or services
contracts with a political subdivision in Texas the same burdens that
are imposed, if any. upon Texas resident bidders by the state in which
the nonresident's principal place of business is located. In the
public hearing before the House Committee on Buslnass and Commerce,
the House author of the bill made the following remarks explaining the
purpose of the proposed bill:

          In neighboring states. like Louisiana, Arkansas,
          and New Mexico, there is a rule that says any
          public work awarded In that state, if an out-of-
          state contractor like a contractor from Texas bids
          a project in that state, than the Texas bidder, in
          order to receive the contract, has to be five
          percent lower than the lowest bidder in that




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Honorable Mark W. Stiles - Page 3   (JM-696)




         state. This is Arkansas, for instance . . . . If
         a state like Arkansas, New Mexico, Louisiana, New
         York, wherever, requires that an out-of-state
         contractor be lower by a certain amount in order
         to receive that bid, we will require those state
         contractors to do the same thing in Texas. . . .'

Teshony    of Rep. Mark Stiles on Tex. B.B. No. 602 before House
Cosmlttee on Business and Commerce, 69th Leg., public hearing (Feb.
18, 1985) (transcript available from House Staff Services). In the
House discussion prior to the bill's passage to engrossment, the liouse
author of the bill explained that it was designed to create a
"reciprocity requirement in the award of state contracts so chat
bidders from other.states would face the same under-bid requirements
in Texas contracts that Texas bidders would experience from bidding on
comparable contracts in those states."

     In Attorney General Opinion JM-616 (1987). we declared:

         [T]he term 'principal place of business' as used
         in article 601g does not necessarily refer to the
         place of incorporation or organization of a
         fompany . or to the residence of Its majority
         owner.    It means the place where the person'
         whether natural or artificial, maintains offices
         and transacts business. I.e., where the person's
         business affairs are conducted.      See National
         Truckers Service, Inc. v. Aero SystG     Inc., 480
         S.W.2d 455 (Tax. Civ. App. - Fort Worth 1972. writ
         ref'd n.r.e.). The 'principal place of business'
         can sometimes be different from the place of the
         person's general offices, see Dryden v. Ranger
         Refining 6 Pipe Line Co., 280 F. 257 (5th Cir.
         1922). but when a business ouerates in a number of
         states and no one state is clearly the state in
         which its activities are principally conducted,
         the    state  from   which   centralized   general
         supervision is exercised may be considered the
         location of the 'principal place of business,'
         particularly if a substantial part of its
         operations are also conducted there. See Jackson
         v. Tennessee Valley Authority. 462 F.upp.       45
         (D.C. Term. 1978). Cf. In re' Commonwealth 011
         Refining Co., Inc., 596 F.2d 1239 (5th Clr. 1979).

It Is clear that the bill is intended to treat as a "Texas resident
bidder" a bidder that has more In Texas than merely an office In the
state with an employee who submits bids to various political sub-
divisions. "Principal" has been defined to mean "chief, leading,




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liouorableMark W. Stiles - Page 4    (JM-696)




ttost important or considerable, primary, original' highest in rank'
authority, character, importance, or degree."       Stilwell Co. v.
Commissioner of Taxation, 100 N.W.2d 504, 507 (Minn. 1959); Kelp  v.
Burgess.  115 P.s 583, 584 (Kan. 1911).

     The issue of whether an office or establishment is a "principal
place of business" requires, of course, a determination of fact,
Kibler v. Transcontinental & Western Air, 63 F. Supp. 724. 726 (E.D.
N.Y. 1945)' the resolution of which would be inappropriate in the
opinion process. We do conclude, however, chat, for purposes of
article 6Olg, V.T.C.S., a bidder's "principal place of business"
refers to the place-where the bidder maintains offices and a sub-
stantial part of its operations are also conducted there.



               For purposes of article 601g, V.T.C.S., which
          governs bids submitted by nonresidents to political
          subdivisions in Texas for construction, supplies,
          and services, a bidder's "principal place of
          business" refers to the state in which the bidder
          maintains an office and a substantial part of its
          operations are also conducted there.




                                         Attorney General of Texas

JACK HIGHTOWER
First Assistant Attorney General

MARY KELLER
Executive Assistant Attorney   General

JDDGE ZOLLIE STZAKLKT
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Jim Moellinger
Assistant Attorney General




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