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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Board of Trade, Inc. v. State, Dept. of Labor (01/23/2004) sp-5771

Board of Trade, Inc. v. State, Dept. of Labor (01/23/2004) sp-5771

     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,


AIRPORT E/W RUNWAY       )    Supreme Court No. S-10533
REHABILITATION,               )
                              )    Superior Court No.
             Appellant,            )    3AN-01-07343 CI
     v.                       )    O P I N I O N
STATE OF ALASKA,              )    [No. 5771 - January 23, 2004]
             Appellee.             )

          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Rene J. Gonzales, Judge.

          Appearances:  Kevin T. Fitzgerald,  Ingaldson
          Maassen,   P.C.,  Anchorage,  for  Appellant.
          Toby   N.   Steinberger,  Assistant  Attorney
          General,  Anchorage,  and  Gregg  D.  Renkes,
          Attorney General, Juneau, for Appellee.

          Before:    Fabe,  Chief  Justice,   Matthews,
          Eastaugh, Bryner, and Carpeneti, Justices.

          FABE, Chief Justice.


          On  remand from our decision in Board of Trade, Inc. v.

State,  Department of Labor & Workforce Development, Wage &  Hour

Administration1 (BOT I), the hearing officer determined  that  an

employer  must pay prevailing wages under the Little  Davis-Bacon

Act  to workers employed at a quarry located thirteen miles  from

the site of an airport construction project.  The hearing officer

concluded that the Cape Nome Quarry activity should be considered

on-site  because  it  could  not have  been  carried  out  at  an

alternative  site  closer  to the airport  construction  project.

Necessary  to the hearing officers determination was his  finding

that   five  closer  quarry  sites  could  not  produce  adequate

material.    The   employer  challenges  the   hearing   officers

conclusion.   Because the hearing officer incorrectly interpreted

our   guidance   on  remand  and  because  the   factual   record

demonstrates that the quarry activity could have been carried out

at sites closer to the construction project, we reverse and order

that judgment be entered in favor of the employer.


     A.   Factual History

          The  Alaska  Department  of Transportation  and  Public

Facilities (DOTPF) invited bids from contractors to resurface the

East/West  runway  of  Nomes airport.   The  invitation  informed

bidders  that the project required four layers of material:   two

inches  of asphalt concrete at the top; nine to twelve inches  of

base  course  under  the asphalt concrete; thirty-two  inches  of

subbase  materials;  and  two types of  borrow  material  at  the


          While the invitation did not dictate the source of  the

contractors material, it did state that DOTPF was unaware of  any

other  material  sources  in  closer  proximity  meeting  project

requirements  than those at the Cape Nome Quarry, thirteen  miles

from  the airport.  DOTPF further represented that the Cape  Nome

Quarry was off-site for purposes of the Little Davis-Bacon Act.

          In  July  1991 DOTPF notified Knik Construction Company

that  it  was  the  lowest bidder on the prime contract  for  the

runway  renovation project.2  At the same time, Board  of  Trade,

          Inc. (BOT), a Nome gravel supplier, entered into a contract with

Sound  Quarry, Inc., the owner of the Cape Nome Quarry,  for  the

removal of material from the quarry to supply the job.3  Prior to

1991, Sound Quarry had entered into royalty agreements with other

contractors  for the extraction of material from  the  Cape  Nome

Quarry.   From 1993 to 1996, after the completion of  the  runway

project,  BOT  entered  into additional royalty  agreements  with

Sound  Quarry for the extraction of material from the  Cape  Nome


          In  August 1991 DOTPF formally awarded Knik the  runway

renovation  contract.4  Knik and BOT then entered into  a  formal

agreement  for the supply of aggregate materials.5  BOT  supplied

Knik  with  aggregate materials for the top  two  layers  of  the

runway:   the asphalt concrete and base course layers.  For  1991

and  1992,  the overwhelming majority of rock that BOT  extracted

from the Cape Nome Quarry went to supply the runway project.

          For each of the top two layers, DOTPF required that the

rock  have a sufficiently high degradation mark and low  abrasion

result.  The degradation mark indicates the hardness of the  rock

and  its  durability  when  struck.  A higher   degradation  test

result indicates harder rock.  DOTPF required that the first  two

layers  have  a  degradation value of fifty.  The  abrasion  test

measures how durable the rock is when exposed to water.  A  lower

test  result  indicates  more durable rock.   DOTPF  required  an

abrasion test result of forty for the asphalt concrete layer  and

of forty-five for the base course layer.

     B.   Procedural History

          The Little Davis-Bacon Act requires that where a public

construction  contract  involves  the  employment  of  mechanics,

laborers,  or field surveyors, they are to be paid the prevailing

wage.6  Public construction is defined as work performed on-site.7

In  August 1992 the Department of Labor (Department) informed BOT

that  under regulations interpreting the Little Davis-Bacon  Act,

the  Cape  Nome  Quarry  was considered on-site  for  the  public

          construction project and that employees at the quarry were

entitled  to  compensation  at the prevailing  wage  rate.8   The

Department filed a prevailing wage complaint against BOT  because

the Department concluded that virtually all of BOTs activities at

the  quarry were dedicated to the performance of the Nome airport

contract,   making  the  activities  on-site   under   8   Alaska

Administrative Code (AAC) 30.910(a).9  That provision defines on-

site  as  including  areas that are adjacent  or  nearby.10   BOT

appealed,   claiming  that  the  regulation  was   invalid   and,

alternatively,  that  the  Departments  interpretation   of   the

regulation was wrong.11

          We  upheld  the regulations validity, noting  that  the

Little  Davis-Bacon  Act expanded the scope  of  its  model,  the

federal  Davis-Bacon Act, to include workers who are not directly

upon  the  site of the work.12  But we ruled that the regulations

expanded definition of on-site was still geographically based and

rejected  the  Departments  argument 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


          Consequently, we remanded.  We recognized that  whether

a public construction project is on-site will necessarily be fact

specific and decided on a case-by-case basis14 and that the agency

should  consider the normal meaning of the statutory term on-site

and  the regulatory terms adjacent and nearby. 15  We added  that

the  agency  may  consider whether the activity could  have  been

carried  out  at an alternative site closer to the construction16

and  clarified that whether 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


          On  remand, the hearing officer held that the Cape Nome

Quarry  was  on-site because no closer quarry could  consistently

          produce material that met the projects specifications.  The

Department  adopted  the hearing officers findings  of  fact  and

conclusions of law, and the superior court affirmed its decision.

BOT again appeals and raises two primary arguments:  (1) that the

hearing officer misread this courts first ruling by requiring any

sites  closer  than the Cape Nome Quarry to consistently  produce

material  that matches the project specifications; and  (2)  that

substantial  evidence  does  not  support  the  agencys   factual

determination   that  there  are  no  closer   sites   that   can

consistently produce the material.


          We  do  not  defer  to a superior court  acting  as  an

intermediate court of appeal.18  In reviewing an agencys  ruling,

we apply the reasonable basis test for questions of law involving

agency expertise but apply the substitution of judgment test  for

questions of law where no expertise is involved.19  BOT challenges

the  hearing  officers reading of our first  decision.   Properly

interpreting  our  ruling  does  not  involve  agency  expertise;

consequently, we apply the substitution of judgment test to  BOTs

legal argument.

          We  apply a substantial evidence test when reviewing an

agencys  factual determinations.20  Substantial evidence is  such

relevant  evidence as a reasonable mind might accept as  adequate

to  support  a conclusion.21  Under this standard, the  reviewing

court  does not reweigh the evidence or choose between  competing

inferences; it only determines whether such evidence exists.22


          [T]he  fundamental purpose of [Alaskas]  Little  Davis-

Bacon  [Act]  is  to  assure  that employees  engaged  in  public

construction  receive  at  least the prevailing  wage.23   Alaska

Statute 36.95.010(3) defines public construction as:  the 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.  The Departments regulation defines the term on-

site  to  mean: 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.24

          In  BOT I, we ruled that the definition of on-site must

be geographically based.25  We remanded and instructed the hearing

officer  to redetermine whether the Cape Nome Quarry was on-site.

The hearing officer was to consider when making his determination

the  normal  meaning of adjacent and nearby, the availability  of

alternative  closer sites, the physical lay-out of  the  project,

and whether the area was developed or undeveloped.26

          The  hearing officer apparently narrowed the  scope  of

consideration  and  only  examined  whether  there  were   closer

alternative  sites  that could produce the  required  material.27

Moreover,  in  determining  whether a closer  site  existed,  the

hearing officer formulated a new three-prong test.

          To  establish  that BOT could  have  used  an
          alternative site closer to the airport . .  .
          it  must be shown . . . that (1) the site was
          available  to  BOT during the  relevant  time
          frame  of August 1991 to September 1992;  (2)
          materials  from  the site could  consistently
          meet  contract specifications, in  particular
          for  degradation and . . . abrasion; and  (3)
          BOT  was  aware  that  the  site  could  meet
          contract   specifications  for  the   project
          during  the times of its performance  on  the
          The  first  prong  of  this test corresponds  with  our

explanation that [i]n evaluating whether the Cape Nome Quarry  is

on-site  .  . . , the hearing officer should consider the  actual

time  period  in  which  BOT fulfilled its obligation  under  its

contract  with Knik.28  A site first developed or made  available

after  the  contracts performance could not  have  served  as  an

alternative  site  during the course of the  project.   Here  the

hearing  officer  apparently  dismissed  alternative  sites  that

          existed at the time of the runway project that lacked test

results  showing that they produced material meeting the  project


          The  third  prong  of  the hearing officers  test  asks

whether   BOT   was  aware  that  a  closer  site   met   project

specifications.   But  the availability of  contemporaneous  test

results  and  BOTs subjective knowledge are not relevant  to  the

question  at  hand:   whether the quarry is  on-site    that  is,

whether  it  is  in  close geographic proximity  to  the  project

footprint.29  Thus, the hearing officers inquiry should have been

focused  on whether there were closer sites capable of  producing

specified  material developed and available at the  time  of  the

contractual  performance, not on whether BOT  knew  of  any  such

sites or had examined test data on the material produced at those


          Finally, the second prong of the hearing officers  test

does not correspond with any language in BOT I.  The second prong

asks   whether  alternative  sites  could  consistently   produce

specified  material.  A sites consistency is not the  dispositive

issue when determining whether it can produce enough material  to

service  a  contract.  A large site that inconsistently  produces

the  required  amount  of  specified material  may  be  a  viable

alternative  site.   Additionally,  a  site  that  inconsistently

produces the specified material because it has different types of

rock in different areas, with strong rock being excavated in  one

area, might be able to adequately service the contract.  In other

words,  the  question is whether alternative  sites  can  produce

enough  of  the  required material to meet contract requirements,

not  whether  they can consistently produce it.31  BOT  presented

evidence of five alternative sites that it claimed were closer to

the  airport  project than the Cape Nome Quarry.  Application  of

the  correct  legal  standard  to the  hearing  officers  factual

findings regarding these five sites reveals that at least two  of

these  sites  were closer alternative sites at the  time  of  the

          contracts performance.

     A.   The Alaska Gold Dumpsite

          The Alaska Gold Dumpsite is located within two miles of

the  project.   Test results from this site produced  degradation

results  of  forty-five,  fifty,  and  fifty-five.   The  hearing

officer  dismissed the tests that produced acceptable degradation

results  because  they were conducted in 1998, after  the  runway

project  was  completed.   Therefore, according  to  the  hearing

officer,  the test results did not prove that BOT, prior  to  the

performance  of  the contract, was subjectively aware  that  this

sites  material  met  project specifications  and  the  remaining

evidence  suggested  that  BOT was unaware  that  this  site  had

adequate  material while it fulfilled the contract.  However,  as

noted above, BOTs subjective knowledge regarding the availability

of adequate material is not dispositive.

          Second,  the  hearing officer found that  the  material

contained schist, making it unreliable.  According to the hearing

officer,  [s]chist is composed of thin layers that tend  to  come

apart very easily, and contains mica and clay minerals that  tend

to  make  it  a relatively weak rock.  But the contract  did  not

preclude  rock that met the degradation values and  consisted  of

schist.   Consequently, the hearing officer erred  in  dismissing

this site.

     B.   The Windfall Pit

          The Windfall Pit is located between two and three miles

from the project. Again, the hearing officer excluded the use  of

this  site  because  the  degradation  tests  producing  adequate

results  were  ascertained after the project  was  completed  and

because  BOT  was  unaware  that the Windfall  Pit  had  produced

crushed aggregate exceeding a degradation value of fifty.  Again,

the  lack  of subjective knowledge on the part of BOT  is  not  a

disqualifying factor.

          In  sum,  the  record  does  not  support  the  hearing

officers  determination that the Cape Nome  Quarry  is  in  close

geographic  proximity to the project footprint.   The  Cape  Nome

Quarry is located more than thirteen miles from Nome and is  more

remote  than  other  pits  capable  of  producing  the  specified

material.  The Cape Nome Quarry thus cannot be viewed as adjacent

to  the  airport  project when there are alternative  sites  that

separate  the  quarry  from  the project  footprint.   For  these

reasons, we reverse the decision of the hearing officer that  the

Cape Nome Quarry was on-site.


          Because  the  hearing officer improperly  narrowed  the

inquiry  regarding whether the Cape Nome Quarry was  on-site  for

purposes  of  the  Little  Davis-Bacon Act  and  because  factual

findings  indicate that the Cape Nome Quarry was not on-site,  we

REVERSE the hearing officers ruling and order judgment be entered

in favor of BOT.

     1    968 P.2d 86 (Alaska 1998).

     2    Id. at 88.

     3    Id.

     4    Id.

     5    Id.
     6    Id. at 90 (citing AS 36.05.070(a)).
     7    AS 36.95.010(3).

     8    Bd. of Trade, 968 P.2d at 88.
     9    Id. at 88-89.
     10    8 AAC 30.910(a) (2003).

     11    Bd. of Trade, 968 P.2d at 89-91.

     12    Id. at 90.
     13    Id. at 92.

     14    Id.
     15    Id.

     16    Id.
     17    Id. at 92-93.

     18    Handley v. State, Dept of Revenue, 838 P.2d 1231, 1233
          (Alaska 1992).
     19    Id.
     20    Id.
     21    Storrs v. State Medical Bd., 664 P.2d 547, 554 (Alaska
     22    Id.
     23     Bd.  of Trade, 968 P.2d at 90 (quoting Western Alaska
Bldg. & Constr. Trades Council v. Inn-Vestment Assocs., 909  P.2d
330, 333 n.8 (Alaska 1996) (citation omitted)).

     24    8 AAC 30.910 (2003).

     25    Bd. of Trade, 968 P.2d at 92.

     26    Id. at 92-93.

     27    The hearing officer did consider the normal meaning of
nearby  and adjacent.  In considering these definitions, however,
he  simply  subsumed their definitions into the consideration  of
whether  there was a closer, alternative site:  Adjacent  may  or
may  not imply contact but always implies the absence of anything
of the same kind in between.

     28    Bd. of Trade, 968 P.2d at 93.
     29    Id. at 92.

     30    The hearing officer incorrectly reasoned that if there
were a suitable site closer than Cape Nome Quarry, BOT would have
investigated   the  possibility  of  using  that   site   because
excavating  and transporting the rock from Cape Nome  Quarry  was
cumbersome  and expensive.  However, this ignores the  fact  that
BOT  was  assured  that  Cape Nome Quarry was  off-site,  thereby
lowering labor costs.  BOTs focus on use of the Cape Nome  Quarry
therefore  cannot be viewed as dispositive of the  absence  of  a
closer site.

     31      And even if consistency were an important component,
the  hearing  officer does not reconcile the fact that  the  Cape
Nome  Quarry  had  an  inconsistent  history  of  producing   the
specified material.