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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,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
BOARD OF TRADE, INC./NOME )
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]
DEPARTMENT OF LABOR, WAGE )
AND HOUR ADMINISTRATION, )
)
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.
I. INTRODUCTION
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.
II. FACTS AND PROCEEDINGS
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
bottom.
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
Quarry.
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
site.13
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
undeveloped.17
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.
III. STANDARD OF REVIEW
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
IV. DISCUSSION
[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
project.
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
requirements.
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
sites.30
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.
V. CONCLUSION
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
1983).
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.
