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Board of Trade, Inc. v. Alaska Wage & Hour Administration (11/27/98), 968 P 2d 86


     Notice:  This opinion is subject to correction before publication in
the Pacific Reporter.  Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.



             THE SUPREME COURT OF THE STATE OF ALASKA
                                 

BOARD OF TRADE, INC.,         )
                              )    Supreme Court No. S-7952
             Appellant,       )
                              )    Superior Court No.
     v.                       )    3AN-95-9883 CI
                              )
STATE OF ALASKA, DEPARTMENT   )    O P I N I O N
OF LABOR, WAGE AND HOUR       )
ADMINISTRATION,               )    [No. 5048 - November 27, 1998]
                              )
             Appellee.        )
______________________________)



          Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
                     Milton M. Souter, Judge.


          Appearances: Kevin T. Fitzgerald, Bogle &
Gates, P.L.L.C., Anchorage, for Appellant.  Toby N. Steinberger,
Assistant Attorney General, Anchorage, and Bruce M. Botelho,
Attorney General, Juneau, for Appellee.


          Before:  Matthews, Chief Justice, Eastaugh,
Fabe, and Bryner, Justices.  [Compton, Justice, not participating.]


          FABE, Justice.


I.   INTRODUCTION
          In this appeal we must decide whether an employer must
pay prevailing wages under the Little Davis-Bacon Act [Fn. 1] to
workers employed at a quarry thirteen miles from the site of an
airport construction project.  The employer challenges the validity
of the Department of Labor's regulation that broadly defines the
term "on-site"to encompass activities occurring away from the
construction site but dedicated exclusively to the construction
contract.  Although we uphold the validity of the regulation
itself, we conclude that the Department erred in interpreting the
regulation and remand for further proceedings.  
II.  FACTS AND PROCEEDINGS
     A.   Facts
          In June 1991 the Alaska Department of Transportation and
Public Facilities (DOTPF) issued an invitation for bids for a
runway rehabilitation project at the Nome airport.  The bid
specifications suggested that rock suitable for crushed aggregates
for asphalt concrete would be available at Cape Nome Quarry,
located thirteen miles from the Nome airport.  The specifications
further remarked that the State was "unaware of any other material
sources in closer proximity meeting project requirements."
          In July 1991 DOTPF notified Knik Construction, Inc.
(Knik) that it was the lowest bidder on the prime contract for the
runway renovation project.  At the same time, Board of Trade, Inc.
(BOT), a Nome gravel supplier, entered into a contract with the
owners of the Cape Nome Quarry for the removal of material from the
quarry to supply the job.  In August 1991 DOTPF formally awarded
Knik the runway renovation contract.  Knik and BOT then entered
into a formal contract for the supply of aggregate materials from
the quarry to the Nome airport project.
     B.   The Prevailing Wage Issue and the Prior Proceedings
          In August 1992 the Department of Labor (Department)
informed BOT that under the regulations interpreting the Little
Davis-Bacon Act (LDBA), [Fn. 2] the Cape Nome Quarry was considered
"on-site"and employees at the quarry were entitled to compensation
at the prevailing wage rate.  The Department also instructed DOTPF
to withhold $100,000 from Knik for BOT's failure to pay prevailing
wages to its quarry employees. [Fn. 3]
          In February 1994 the Department filed a prevailing wage
complaint against BOT.  The Department concluded that because BOT's
activities at the quarry were dedicated virtually exclusively to
the performance of the Nome airport contract, they were considered
"on-site"under 8 Alaska Administrative Code (AAC) 30.910(a) and
the work of BOT's employees was thus compensable at the prevailing
wage rate.  After an informal hearing, the Department calculated
the additional wages owed by BOT to be $118,110.59.
          BOT requested a formal hearing and challenged the
validity of the regulation defining on-site activity.  The hearing
officer, Robert Landau, granted the Department's motion for summary
judgment, ruling that he did not have authority to address the
validity of the Department's regulation.  He concluded that BOT was
liable for the prevailing wage rate because the quarry work was
exclusively dedicated to the airport project and was "on-site"
under the Department's regulations.  The Director of the Division
of Labor Standards and Safety adopted the hearing officer's
findings and ordered BOT to pay $118,110.59.
          BOT appealed to the superior court.  In December 1996
Superior Court Judge Milton M. Souter affirmed the Department's
decision in its entirety.  BOT appeals.  
III. DISCUSSION
     A.   Standard of Review
          We will not defer to the decision of a superior court
acting as an intermediate court of appeal. [Fn. 4]  Instead, we 
"independently review the merits of an administrative
determination."[Fn. 5]  Whether the grant of summary judgment was
appropriate is a question of law that we review de novo. [Fn. 6] 
We "must determine whether there was a genuine issue of material
fact and whether the moving party was entitled to judgment on the
law applicable to the established facts."[Fn. 7]   The moving
party "has the entire burden of proving that his opponent's case
has no merit."[Fn. 8]        We also exercise our independent
judgment in determining the validity of an administrative
regulation and in interpreting the underlying statute. [Fn. 9]  
But we will not substitute our judgment for that of the agency with
regards to the efficacy or wisdom of the regulation. [Fn. 10]   We
limit our review of an administrative regulation to: "(1) whether
the regulation is reasonable and not arbitrary"; and "(2) whether
the regulation is consistent with the statute and reasonably
necessary to its purposes."[Fn. 11]  We have explained, however,
that "reasonable necessity is not a requirement separate from
consistency"and the scope of review should center around
consistency with the authorizing statute. [Fn. 12]   We review an
administrative regulation with a presumption of validity. [Fn. 13] 
 The party challenging the regulation has the burden of
demonstrating invalidity. [Fn. 14]  An agency's interpretation of
its own regulations is reviewed under the reasonable basis standard
and "is normally given effect unless plainly erroneous or
inconsistent with the regulation."[Fn. 15]
     B.   The Department's Regulation Is Consistent with and
Reasonably Necessary to Carry Out the Purpose of the LDBA.

          1.   The Little Davis-Bacon Act
          The LDBA was first enacted in 1931 and was modeled after
the federal Davis-Bacon Act of the same year. [Fn. 16]  We have
previously recognized that "'[t]he fundamental purpose of
[Alaska's] Little Davis-Bacon [Act] is to assure that employees
engaged in public construction receive at least the prevailing
wage,' the same purpose as under the federal legislation."[Fn. 17] 
Noting the remedial nature of the LDBA, we have also held that
"[the LDBA] is therefore liberally construed to effectuate its
beneficent purpose."[Fn. 18]  
          The LDBA provides that where a public construction
contract involves the employment of mechanics, laborers, or field
surveyors, they are to be paid the prevailing wage. [Fn. 19] 
Alaska Statute 36.95.010(3) defines "public construction"as:
          [T]he on-site field surveying, erection,
rehabilitation, alteration, extension or repair, including painting
or redecorating of buildings, highways, or other improvements to
real property under contract for the state . . . . 

(Emphasis added.)
          The Department promulgated 8 AAC 30.910, which broadly
defines the term "on-site"to cover not only the "physical place
where the construction . . . will remain when work on it has been
completed,"but also "other adjacent or nearby property . . . which
can be reasonably said to be included in the site because of
proximity."[Fn. 20]  The regulation contains an example of how the
term is to be interpreted for a large airport project such as this
one:  "on-site"may include "[f]abrication plants, mobile
factories, batch plants, borrow pits, job headquarters, tool yards,
etc., . . . provided they are dedicated exclusively or nearly so to 
performance of the contract."[Fn. 21]
          2.   The coverage of the LDBA is broader than the
federal Davis-Bacon Act and does not require the worker to be
employed "directly upon the site of the work."
               
          BOT argues that 8 AAC 30.910(a)'s definition of the term
"on-site"impermissibly extends the coverage of the LDBA to
employees who do not work within the physical footprint of the
public construction project.  BOT urges us to interpret the LDBA in
the same way that federal courts have interpreted the federal
Davis-Bacon Act, limiting coverage to those workers employed
"directly upon the site of the work."[Fn. 22]   Recent cases
interpreting the federal act require contractors to pay prevailing
wage rates only to workers employed directly upon the site of the
work. [Fn. 23]
          BOT further argues that because "on-site"is not defined
in the statute, the term should be given its common or ordinary
meaning: "located at the place connected with a particular
activity."[Fn. 24]  Based on this definition, BOT argues that the
LDBA was designed to compensate only those employees who work on
the job site where construction occurs.
          The State maintains that 8 AAC 30.910 is consistent with
the LDBA because the legislature intended that employees who are
integral to a public construction project receive the prevailing
wage, even if they are not working on the actual site where
construction is to take place.  It relies on differences in the
language of the LDBA and the federal act to argue that the LDBA was
designed to provide broader and more flexible coverage than the
federal act.
          In construing the meaning of a legislative enactment, we
have rejected the mechanical application of the "plain meaning"
rule in favor of a sliding scale approach under which "[t]he
plainer the statutory language is, the more convincing the evidence
of contrary legislative purpose or intent must be."[Fn. 25]   The
State responds to BOT's plain meaning interpretation and reliance
on federal precedent by focusing on a textual difference between
the LDBA and its federal counterpart.  The federal act requires
payment of the prevailing wage rate to workers "employed directly
upon the site of the work."[Fn. 26]  The LDBA, on the other hand,
requires that prevailing wages be paid to workers "who perfor[m]
work on public construction in the state."[Fn. 27]  "Public
Construction,"in turn, is defined as "on-site"work by AS
36.95.010(3).  The State contends that the Legislature's omission
of the term "directly upon the site"reflects its intent to broaden
the coverage of the LDBA.  We agree.
          Although the LDBA and the federal Davis-Bacon Act are
nearly identical in structure, one notable difference between the
acts is the LDBA's deletion of the phrase "directly upon the site
of the work."  Instead, the LDBA merely requires the work to be
"on-site"rather than directly on-site.  As a result of this
omission, we conclude that federal precedent lends little
assistance in interpreting the language of the LDBA at issue in
this case.  Even where an Alaska statute is modeled after a federal
statute, if the differences in the language indicate a difference
in legislative intent, "no federal court decision would be [on]
point on the issue raised."[Fn. 28] 
          Furthermore, where language has been omitted from a model
statute, there "is a strong indication that the Legislature did not
intend to import such a provision into the state statute."[Fn. 29] 
"It can be assumed that changes made in a statute which was drawn
from a similar statute in another jurisdiction must have been for
the very purpose of avoiding the construction developed elsewhere."
[Fn. 30]  We must therefore ascribe meaning to the difference
between the LDBA and the statute on which it was modeled.  We
conclude that the elimination of the language "directly on the site
of the work"from the LDBA was intended to provide broader and more
flexible coverage than the federal act. [Fn. 31]
          We must next determine whether 8 AAC 30.910(a) is
reasonable and consistent with the LDBA.  According to AS
36.05.010, a contractor or subcontractor who "performs work on
public construction in the state"must pay the prevailing wage
rate.  "Public construction"is then defined statutorily as the
"on-site"work under a contract for the state and use of the term
"on-site"implies a geographical limitation. [Fn. 32]  The
Department's regulation defining the term "on-site"also contains
a geographical limitation based on proximity:
          '[O]n-site' means at the physical place where
the construction called for in a contract will remain when work on
it has been completed and at other adjacent or nearby property used
by the contractor or subcontractor in the construction which can
reasonably be said to be included in the site because of
proximity.[ [Fn. 33]] 

This definition of "on-site"is consistent with the "on-site"
language of AS 36.95.010(3).  Although application of the
regulation will require a fact-specific inquiry in each case, we
conclude that the regulation is reasonable and not arbitrary.  BOT
has therefore failed to meet its burden of proving that 8 AAC
30.910(a) is invalid.  
     C.   The Department's Interpretation of 8 AAC 30.910(a) Is
          Inconsistent with the Language of the Regulation.
     
          The hearing officer interpreted 8 AAC 30.910(a)
differently in this case, concluding that "[a]s long as
construction activity is dedicated exclusively or nearly so to
performance of a public works project, there is no geographical
restriction with regard to distance from the actual site of the
project."  BOT argues that the hearing officer erred by adopting
the Department's interpretation of 8 AAC 30.910 and contends that
8 AAC 30.910(a) does not cover a quarry pit located thirteen miles
from the runway improvement project.  As discussed above, we agree
with BOT that the regulation establishes a geographical restriction
for determining whether public construction is "on-site."
          The State, on the other hand, advocates a functional
interpretation of the regulation, arguing that the determination of
whether a public project is "on-site"depends more on the
relationship between the contract and the construction project than
the geographic proximity of the activity to the construction site. 
The State relies on an example provided in the text of 8 AAC
30.910(a):
          In the case of larger contracts such as for
airports, dams or road projects, the scope of "on-site"is
necessarily more extensive and includes the whole area in which the
contract construction activity will take place.  Fabrication
plants, mobile factories, batch plants, borrow pits, job
headquarters, tool yards, etc., are "on-site,"provided they are
dedicated exclusively or nearly so to performance of the contract. 

          Although this example illustrates that the scope of "on-
site"for larger projects is "necessarily more extensive"than for
smaller projects because a larger project may require the
contractor or subcontractor to draw its materials from sources away
from the project site, the text of the regulation provides that
"adjacent"or "nearby"properties and work areas outside the
project footprint can only reasonably be said to be included in the
site based on their "proximity"to the construction. [Fn. 34]
          Interpreting 8 AAC 30.910(a) to require a finding of
geographical proximity for smaller projects, but no geographical
restriction for larger ones, as the State urges, would create a
distinction that is not found in the regulation or LDBA itself. 
Although we have concluded that the Legislature's removal of the
adverb "directly"in reference to the on-site requirement provided
for broader and more flexible prevailing wage coverage, we do not
interpret the LDBA or 8 AAC 30.910(a) as disposing of a geographic
component altogether. 
          We conclude that for a large public construction project,
such as the airport project in this case, a property will be
considered "on-site"only if it is in close geographic proximity to
the project footprint.  Determination of whether a public
construction project is "on-site"will necessarily be fact specific
and decided on a case-by-case basis.  In making this determination,
the agency should consider the normal meaning of the statutory term
"on-site"and the regulatory terms "adjacent"and "nearby."  In
addition, the agency may consider whether the activity could have
been carried out at an alternative site closer to the construction
and should recognize that deciding if the site of an activity is
"nearby"and "proximate"to the construction depends on the
setting, the physical lay of the land, and whether the area is
developed or undeveloped.
          The Department's interpretation of 8 AAC 30.910 is
erroneous and inconsistent with the language of the regulation.
Because the hearing officer relied on this interpretation, we do
not review his factual determinations.  Rather, we remand to the
Department to determine whether the Cape Nome Quarry is "adjacent"
or "nearby"and "can reasonably be said to be included in the site
because of proximity"and dedication to the performance of the
contract.
          In evaluating whether the Cape Nome Quarry is "on-site"
under 8 AAC 30.910, the hearing officer should consider the actual
time period in which BOT fulfilled its obligation under its
contract with Knik:  August 1991 to September 1992.  We reject
BOT's contention on appeal that the appropriate time period is 1991
to 1993, the dates of Knik's contract with the State.  BOT's
approach is not in accordance with 8 AAC 30.910(a), which requires
one to determine exclusivity of the subcontractor's work site "in
the course of his performance on a particular contract."  As the
State points out, "[t]he time period for determining whether a
worksite is exclusively devoted to a project is the course of time
when the subcontractor performed the subcontract."
          We decline to consider BOT's argument that it should be
considered a material supplier instead of a subcontractor.  BOT
proposed this argument for the first time in its opening brief. 
Because BOT never raised this issue at the administrative level,
before the superior court, or in its points on appeal, we consider
it waived. [Fn. 35]
IV.  CONCLUSION
          We conclude that 8 AAC 30.910(a) is consistent with and
necessary to the purposes of the LDBA, and therefore valid.  The
Department's interpretation of 8 AAC 30.910(a), however, is
inconsistent with the language of that regulation.  We therefore
VACATE the Department's decision and REMAND to the Department for
proceedings consistent with this opinion.


                            FOOTNOTES


Footnote 1:

     AS 36.05.010-.110.


Footnote 2:

     8 Alaska Administrative Code (AAC) 30.910 (1996) provides in
part:

          (a)  In AS 36.95.010(3), "on-site"means at
the physical place where the construction called for in a contract
will remain when work on it has been completed and at other
adjacent or nearby property used by the contractor or subcontractor
in the construction which can reasonably be said to be included in
the site because of proximity.  For example, if a small office
building is being erected, "on-site"will normally include no more
than the building itself and its grounds and other land or
structures "down the block"or "across the street"which the
contractor or subcontractor uses in the course of his performance
on a particular contract.  In the case of larger contracts such as
for airports, dams or road projects, the scope of "on-site"is
necessarily more extensive and includes the whole area in which the
contract construction activity will take place.  Fabrication
plants, mobile factories, batch plants, borrow pits, job
headquarters, tool yards, etc., are "on-site,"provided they are
dedicated exclusively or nearly so to performance of the contract.


Footnote 3:

     In its opening brief, BOT asserts that DOTPF had assured BOT
that the quarry work would be "off-site"for the purposes of the
LDBA.  But BOT's reliance on DOTPF's statement is not at issue in
this case because BOT withdrew the defense at the administrative
level.


Footnote 4:

     See Handley v. State, Dep't of Revenue, 838 P.2d 1231, 1233
(Alaska 1992). 


Footnote 5:

     Id.


Footnote 6:

     See Farmer v. State, 788 P.2d 43, 46 n.8 (Alaska 1990).


Footnote 7:

     Zeman v. Lufthansa German Airlines, 699 P.2d 1274, 1280
(Alaska 1985) (quoting Brock v. Alaska Int'l Indus., 645 P.2d 188,
190 n.6 (Alaska 1982)).


Footnote 8:

     Williams v. Municipality of Anchorage, 633 P.2d 248, 250
(Alaska 1981) (citation and quotation omitted).


Footnote 9:

     See Anchorage Sch. Dist. v. Hale, 857 P.2d 1186, 1188 n.3
(Alaska 1993).


Footnote 10:

     See Kelso v. Rybachek, 912 P.2d 536, 540 (Alaska 1996).


Footnote 11:

     Kachemak Bay Watch, Inc. v. Noah, 935 P.2d 816, 827 (Alaska
1997) (citation omitted).


Footnote 12:

     State, Bd. of Marine Pilots v. Renwick, 936 P.2d 526, 531-32
(Alaska 1997) (citing State, Dep't of Revenue v. Cosio, 858 P.2d
621, 624 (Alaska 1993)).


Footnote 13:

     See Kelso, 912 P.2d at 540.


Footnote 14:

     See id.


Footnote 15:

     State, Dep't of Highways v. Green, 586 P.2d 595, 602 n.21
(Alaska 1978) (citations omitted); see also Lake & Peninsula
Borough v. Local Boundary Comm'n, 885 P.2d 1059, 1062 n.11 (Alaska
1994). 


Footnote 16:

     40 U.S.C. sec. 276a (1986); see also Fowler v. City of
Anchorage,
583 P.2d 817, 821 n.8 (Alaska 1978).


Footnote 17:

     Western Alaska Bldg. & Constr. Trades Council v. Inn-Vestment
Assocs., 909 P.2d 330, 333 n.8 (Alaska 1996) (quoting City and
Borough of Sitka v. Construction & Gen. Laborers Local 942, 644
P.2d 227, 232 & n.11 (Alaska 1982)). 


Footnote 18:

     See id. at 333 (citation omitted).


Footnote 19:

     See AS 36.05.070(a).


Footnote 20:

     8 AAC 30.910(a).


Footnote 21:

     Id. (emphasis added).


Footnote 22:

     The Davis-Bacon Act, 40 U.S.C. sec. 276a(a), provides in part:

          The advertised specifications for every
contract . . . to which the United States . . . is a party, for
construction, alteration, and/or repair . . . and which requires or
involves the employment of mechanics and/or laborers shall contain
a provision stating the minimum wages . . . shall be based upon the
wages that will be . . . prevailing . . .; and every contract based
upon these specifications shall contain a stipulation that the
contractor or his subcontractor shall pay all mechanics and
laborers employed directly upon the site of the work, [the
prevailing wage].

(Emphasis added.)


Footnote 23:

     See L.P. Cavett Co. v. United States Dep't of Labor, 101 F.3d
1111, 1114-15 (6th Cir. 1996); Ball, Ball & Brosamer, Inc. v.
Reich, 24 F.3d 1447, 1452-53 (D.C. Cir. 1994); Building & Constr.
Trades Dep't v. United States Dep't of Labor Wage Appeals Bd., 932
F.2d 985, 990 (D.C. Cir. 1991).


Footnote 24:

     Webster's Ninth New Collegiate Dictionary 825 (1990).


Footnote 25:

     Muller v. BP Exploration (Alaska), Inc., 923 P.2d 783, 787-88
(Alaska 1996).


Footnote 26:

     40 U.S.C. sec. 276a(a) (emphasis added).


Footnote 27:

     AS 36.05.010.


Footnote 28:

     Cesar v. Alaska Workmen's Compensation Bd., 383 P.2d 805, 807
(Alaska 1963), overruled on other grounds by Providence Wash. Ins.
Co. v. Grant, 693 P.2d 872, 877-78 (Alaska 1985)); see also Everett
Concrete Prods., Inc. v. Department of Labor & Indus., 748 P.2d
1112, 1115 (Wash. 1988).


Footnote 29:

     J.R. Norton v. General Teamsters Local 890, 256 Cal. Rptr.
246, 253 (Cal. App. 1989) (citation omitted).


Footnote 30:

     State v. Greenwald, 454 A.2d 827, 830 (Me. 1982).


Footnote 31:

     See Everett Concrete, 748 P.2d at 1115-16 (interpreting
Washington prevailing wage act more broadly given omission of the
phrase "directly upon the site of the work").


Footnote 32:

     AS 36.95.010(3).


Footnote 33:

     8 AAC 30.910(a) (emphasis added).


Footnote 34:

     Id.


Footnote 35:

     See Gunderson v. University of Alaska, Fairbanks, 902 P.2d
323, 327 n.5 (Alaska 1995).