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CCASE:
ALMEDA-SIMS SLUDGE DISPOSAL
DDATE:
19790105
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of
ALMEDA-SIMS SLUDGE DISPOSAL WAB Case No. 78-13
Plant, Harris County, TX Dated: Dated: January 5, 1979
APPEARANCES: Gerald Yamada, Esquire,
Joseph M. Zorc, Esquire
for Environmental Protection Agency
Lawrence D. Levien, Esquire
for City of Houston
Charles Stuber, Esquire for the Texas Highway-Heavy
Chapter and the Texas Municipal and Utilities
Chapter of the Associated General Contractors of
America, Inc., the Associated Builders and
Contractors of Greater Houston, and the Houston
Contractors Association
Terry Yellig, Esquire for the Houston-Gulf Coast
Building and Construction Trades Council and the
Building and Construction Trades Department, AFL-CIO
Gail V. Coleman, Esquire for the Wage and Hour
Division, U. S. Department of Labor
Decision by: Alfred L. Ganna, Chairman, William T. Evans, Member,
Thomas M. Phelan, Member [1]
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[2] DECISION BY THE WAGE APPEALS BOARD
This case is before the Wage Appeals Board on the petition
of the Environmental Protection Agency (EPA) seeking orders from
the Board pursuant to 29 CFR, Part 7, Subpart C, that the Wage
and Hour Division discontinue interfering with the EPA Region VI
wage determination issued for the Almeda-Sims Sludge Disposal
Plant Project, that the Wage and Hour Division discontinue applying
a definition of "building construction" (All Agency Memo #130)
on EPA projects, and eliminate from consideration in determining
wage rates any past or current projects for which Wage and Hour
has relied in any manner upon its definition of building
construction.
EPA has been joined and supported in this appeal by the
Texas Highway-Heavy Chapter and the Texas Municipal and Utilities
Chapter of the Associated General Contractors of America, Inc.,
the Associated Builders and Contractors of Greater Houston, the
Houston Contractors Association and the Associated General
Contractors of America, Inc. The Intervenors have adopted the
position of EPA in their appeals and further urge the Board that
regardless of the disposition of the issue of which of the two
Federal agencies, the Department of Labor (DOL) or EPA, has
authority to determine the character of a construction project
for purposes of applying prevailing wages, no changes can be
made in prevailing wages incorporated in the contract already
awarded. [2]
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[3] Also, the City of Houston has joined EPA in this appeal and
while supporting the EPA petition and reply memorandum, the City
proposed additional arguments that also would require that the
EPA petition be granted.
The Assistant Administrator was joined in her position that
the Secretary of Labor has the final authority to determine the
character of a project, by the Houston-Gulf Coast Building and
Construction Trades Council and the Building and Construction
Trades Department, AFL-CIO.
In its petition, EPA is arguing that a directive by the
Assistant Administrator to apply building construction wage rates
to construction of a structure housing dryers and filters at
the Almeda-Sims Sludge Disposal Plant in Houston, Texas, was
without legal effect. In September 1977, EPA requested a wage
determination for the sludge disposal plant and indicated that
the type of work was building and heavy construction. The Wage
and Hour Division issued wage Decision No. 77-TX-279 containing
a schedule of wage rates for heavy construction and indicated
that EPA should use the area determination for Harris County for
the building wage rates. The area determination in question
contained the routine description of building construction which
Wage and Hour was utilizing at the time. As a result of the
definition the City of Houston solicited bids with only the
building wage rates. [3]
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[4] In January 1978, relying on a Wage Appeals Board decision
in WAB Case No. 77-23, the Wage and Hour Division deleted the
description of building construction from the area determination.
Local contractors then requested that heavy rates be applied to
the structure. The Wage and Hour Division obtained more
information concerning the structure and confirmed that building
wage rates were applicable to it. On January 19, 1978, the City of
Houston, following telephone advice from EPA, issued an addendum
to the Invitation for Bids stating that heavy wage rates should
be substituted for the building wage rates. On the same day or
the next day when the Wage and Hour Division became aware of the
City's intention, a representative called the EPA Regional Office
and informed them that the building rates should apply to the
project. On the 23rd of January EPA advised the City by letter
that the heavy rates should be used, and on January 25 the EPA
Regional Office received a telegram stating Wage and Hour's
position and inviting EPA to request reconsideration. Also on
the 25th, EPA sent a letter to Wage and Hour informing them that
their telegram had been received the same day as bid opening
and that it was impossible to communicate an addendum to bidders
in time for them to change their bids. The City of Houston
accepted the bids and on January 31, 1978, the contract was
awarded containing only the heavy wage rate schedule. [4]
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[5] On February 6, 1978, the Houston-Gulf Coast Building and
Construction Trades Council filed an action related to this case in
the U.S. District Court alleging that the contract for construction
of the sludge disposal plant was awarded with an improper wage
determination contrary to the direction of the Wage and Hour
Division. The defendants in the action in addition to the
Department of Labor and EPA include the contractor and the City
of Houston. After considering the views of the two federal
agencies, the Department of Justice suggested that EPA might
wish to seek review by the Wage Appeals Board with the possibility
that the Board's decision could dispose of the pending litigation.
It was based on this instruction that EPA filed its Petition
for Review with this Board on June 2, 1978.
EPA's argument in support of its right to choose the heavy
wage rates from the Department of Labor's wage determination
which contained heavy and building wage schedules is based upon
the fact that the Department in All Agency Memorandum #68 (July 19,
1966) instructed the contracting agency's contracting officers
to include only the appropriate wage schedule from a wage
determination which contained more than one schedule of rates.
AAM #68 was in effect at the time this contract was being awarded
although it was superseded on March 17, 1978, by AAM #130. EPA
further argues that it was not required to seek a ruling from
the Wage and Hour Division regarding the application of the wage [5]
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[6] rate schedules under Sec. 5.12 of 29 CFR because only
questions arising from a disagreement among interested parties
should be referred to DOL for a ruling and there was no such
disagreement at the time in question. EPA characterizes DOL's
telephone message and telegrams as merely advisory, or as a
modification of the wage determination which was received less than
10 days before bid opening and need not be utilized by EPA in
accordance with the DOL regulation and, therefore, DOL's
instructions were of no legal effect.
Finally, EPA argues that the so-called statements of policy
contained in AAM #130 and subsequently expanded in AAM #131 were
in effect binding rules which should have been issued pursuant
to proper rule-making procedures required by 5 U.S.C. [sec] 553 of
the Administrative Procedure Act (APA) and the Department's own
regulation at 29 CFR [sec] [1].7.
The contractors' associations in their brief generally
supported EPA's petition and further argue that bidding and
administering projects containing multiple wage schedules is
arbitrary, and that the contracting agency is in a superior
position to DOL in making a proper characterization of the
project. Finally, the contractors' associations question what
action by this Board is appropriate considering that the contract
for Almeda-Sims was awarded over 8 months earlier.
The City of Houston, in addition to supporting EPA's petition,
argues that DOL's building wage schedule issued for the project [6]
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[7] was capricious and arbitrary because DOL did not base its
building wage rates on a wage survey, and that DOL did not analyze
the proposed project from available information which would have
shown that the project should be classified as heavy construction.
Also, the City argues that this Board is without jurisdiction to
modify a competitively bid contract which already has been awarded
and is partially performed.
The Department of Labor argued to the Board that under the
Davis-Bacon Act, the Secretary of Labor has the responsibility
of issuing wage determinations and determining the wages which
must be contained in the particular contract specifications.
All-Agency Memorandum #68 was issued to permit contracting
agencies to make the initial determination as to the character
of a project for the purpose of applying the appropriate wage
schedules from the general wage determination, but when a question
arises as to the correct rates, the contracting agency is required
to seek a ruling from DOL and, furthermore, to observe DOL's
directive regarding the rule's application. The Department of
Labor disputes EPA's claim of residual authority under the
Federal Water Pollution Control Act to determine the appropriate
schedule of wage rates applicable to its contracts, noting that
since the Secretary of Labor has the final authority which cannot
and has not been delegated to other agencies, the directives of
the Wage and Hour Division must be observed by the contracting
agency. DOL further disputes EPA's claim that it did not have [7]
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[8] the necessary time to effectuate the Wage and Hour directive
concerning the correct schedule which EPA considered to be a
modification. DOL claims it did not modify the wage determination,
so that the 10-day rule has no bearing. The Department considers
the issue here to be whether the contract awarded by the City of
Houston with the advice of EPA contains a valid wage determination.
Finally, DOL claims that AAM #130 and #131 are interpretative
rules, general statements of policy, or rules of agency
organization, procedure or practice which are exempt from
rule-making requirements of the APA.
The brief of the Building and Construction Trades Department,
AFL-CIO, and the Houston-Gulf Coast Building and Construction
Trades Council supports the arguments on behalf of the Wage and
Hour Division and specifically argues that AAM #130 and #131
were properly promulgated in a manner consistent with the APA.
The Board considered this appeal on the basis of the
petition and reply memorandum filed by EPA and the supporting
briefs filed by interested parties, the Statement on behalf of
the Assistant Administrator and supporting brief, the record
of the case filed by the Solicitor of Labor and a hearing on the
appeal held on November 16, 1978, at which all interested parties
were present and participated. It seems to the Board that the
facts in this case are not substantially disputed by the various
parties. [8]
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[9] Prior to the hearing, the Building and Construction Trades
Department, AFL-CIO, and the Houston-Gulf Coast Building and
Construction Trades Council submitted a motion to the Board to
dismiss that portion of the petition requesting that AAM #130
be withdrawn. DOL joined in this motion. The basis for the
motion was that AAM #130 was issued subsequent to all relevant
action concerning the wage decision applicable to Almeda-Sims.
The Board takes note that the contract for the construction of
Almeda-Sims Sludge Disposal Plant Project was awarded on
January 31, 1978, and AAM #130 was issued on March 17, 1978.
However, the Board considers the issuance of AAM #130 a final
decision of the Administrator reviewable under 29 CFR, Part 7,
Subpart C. EPA, an agency affected by AAM #130, is a proper
party to request review by this Board. Therefore, the motions
to dismiss are denied.
From the Board's view AAM #130 furnishes guidelines to be
used by contracting agencies in the use of wage determinations
issued by the Wage and Hour Division, as did AAM #68 which was
issued by the Department of Labor 12 years earlier. The concern
of the petitioners appears to be the more detailed manner in
which the guidelines are presented in AAM #130. In addition to
the aforementioned guidelines, the memorandum instructs contracting
agencies to refer to the Wage and Hour Division for resolution [of]
any questions regarding the application of the [9]
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[10] wage schedules. It is noted that AAM #130 is further
explained by AAM #131 issued by the Wage and Hour Division
on July 14, 1978. It appears to the Board that publication of
the guidelines is an endeavor on the part of the Wage and Hour
Division to assist the contracting agencies and to assure that
proper wages are paid to the workers as intended by the Davis-Bacon
Act. By AAM #130's own terms, and as modified by AAM #131, the
memorandum invites agencies to resolve difficult problems with DOL.
The Board does not agree that the guidelines contained in AAM #130,
and as explained in AAM #131, constitute a binding rule that requires
publication in accordance with the APA. At most, they are guidance to
the agencies as to the manner in which the agencies should proceed in
using wage determinations. The Board, therefore, sees no basis for
instructing the Wage and Hour Division to withdraw AAM #130 and
#131.
Nevertheless, the Board feels that because of the far reaching
applicability of AAM #130 and #131 their existence should be
published extensively to effectuate their purposes and to avoid
disagreements and disputes arising after contract award, such
as has happened on the Almeda-Sims contract. It seems to the
Board that the Wage and Hour Division has a means of effectively
accomplishing this. A statement should be added to each edition
of the Federal Register containing the general wage determinations
providing notification to parties using the wage determinations
of the existence of AAM #130 and #131 and notifying them that [10]
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[11] they provide guidelines for the use of both project and
general wage determinations and where the memoranda may be
obtained. This statement should be published in each edition of
the Federal Register containing wage rates as long as AAM #130 and
#131 are in effect.
The Board does not agree with EPA's position that its
Regional Office had residual authority to determine which schedule
applied to the Almeda-Sims project. EPA in its presentation
mentioned as its support for this position the Federal Water
Pollution Control Act, Reorganization Plan No. 14 and AAM #68.
The Board does not find any basis for EPA's position in these
statutes and the All Agency Memorandum. The Federal Water
Pollution Control Act incorporates the provisions of the
Davis-Bacon Act as they relate to the predetermination of
prevailing wage rates. This function is performed by the Secretary
of Labor by virtue of the Davis-Bacon Act. The Federal Water
Pollution Control Act does not invest in EPA any of the power
granted to the Secretary of Labor by the Davis-Bacon Act.
Reorganization Plan No. 14 pertains to enforcement actions, not to
wage predeterminations as is the case here. AAM #68, dated July
19, 1966, merely provided guidelines for application of
predetermined wage rates as is clearly stated in the heading of the
memorandum. Since the instructions were merely guidelines, DOL
retained the responsibility of assuring that they were properly
applied. To do [11]
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[12] otherwise would be contrary to the intent
of Congress in passing the Davis-Bacon Act, wherein it is stated,
in part, that:
. . . the advertised specifications . . . shall
contain a provision stating the minimum wages to
be paid various classes of laborers and mechanics
which shall be based upon the wages that [*] will be
determined by the Secretary of Labor [*] to be
prevailing for the corresponding classes of laborers
and mechanics employed on projects of a character
similar to the contract work in the city, town,
village, or other civil subdivision of the State
in which the work is to be performed, or in the
District of Columbia if the work is to be performed
there; . . . [*](Emphasis added).[*]
In this case EPA followed the procedure permitted by AAM #68
in applying the heavy rates to Almeda-Sims. After DOL advised
the EPA Regional Office that the project was a building
construction project and that wages labeled building construction
in the applicable wage decision were proper for the project,
EPA acted improperly in ignoring the directions of the Department
of Labor.
Petitioner's position that the Department's action was a
modification under Regulations, 29 CFR [sec] 1.7(b)(1) [and] (2)
and subject to the 10 day rule is untenable. The Department was
not modifying its decision as envisioned by [sec] 1.7(b)(1) [and]
(2) but rather was correcting an error in judgment by EPA, in that
the agency was applying what the Department considered the wrong
schedule of wage rates to the project in question. Evidently EPA
disagreed, but rather than make a determined effort to resolve the
question with the intent of effectuating the provisions of the
Davis-Bacon Act, [12]
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[13] EPA permitted the award of the contract. DOL's telegram
was received by EPA on January 25, 1978, the same date as, but
prior to, bid opening. There was sufficient time to make a
concerted effort to resolve the problem before contract
award. The Board does not find that EPA made such an
effort. However, since the construction contract for Almeda-
Sims was awarded some time ago, the Board will not direct that
the wage rates be changed.
The Board is impressed with wage data submitted by the City
of Houston questioning the accuracy of DOL's wage decision. This
question, however, was not presented to the Board in the original
petition and the Board is not ruling on it. The Wage and Hour
Division should review this material carefully and obtain any
additional data necessary to assure the accuracy of any future
decisions for this type of work in Harris County, Texas.
Considering all the foregoing, the Board does not agree to
EPA's request that a blanket order be issued prohibiting the use
of wage data from projects subjected to the so-called "Building
Construction" definition. No project other than Almeda-Sims was
presented to the Board at this hearing.
In view of these considerations, the petition of the
Environmental Protection Agency is hereby dismissed.
BY ORDER OF THE BOARD
Craig Bulger,
Executive Secretary
Wage Appeals Board [13]
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