In the Matter of:
BECHTEL CONSTRUCTORS ARB CASE NO. 95-045A
CORPORATION,
Prime Contractor
RODGERS CONSTRUCTION COMPANY, (Formerly WAB Case No. 95-06)
Prime Contractor,
BALL, BALL AND BROSAMER, INC.,
Prime Contractor,
THE TANNER COMPANIES, DATE: July 15, 1996
Subcontractor
With respect to laborers and mechanics
employed by the Subcontractor on Contracts
4-CC-30-02120 (Brady Pumping Plant), Central
Arizona Project ("CAP"), 5-CC-30-02770 (Red
Rock Pumping Plant, CAP) 4-CC-30-01480 (Picacho
Pumping Plant, CAP), 5-CC-30-03560 (Tucson
Aqueduct, Reach 3, CAP).
BEFORE: THE ADMINISTRATIVE REVIEW BOARD /FN1/
DECISION AND ORDER OF REMAND
This matter is before the Administrative Review Board on
the petition of the Administrator, Wage and Hour Division
(Administrator) seeking review of the May 5, 1995 Decision and
Order (D. and O.) issued by an Administrative Law Judge (ALJ).
The ALJ denied the Administrator's motion to withdraw from a
stipulation relating to the distance between certain batch plants
and the permanent construction work. The ALJ then relied on the
stipulation to find that the work was performed at a location too
remote from the permanent construction to be deemed on the "site
of the work" and therefore dismissed the claim against the
Respondents.[1]
[2] For the reasons set forth below, the ALJ's D. and O. is
reversed and the matter is remanded for a decision consistent
with this order.
I. BACKGROUND
This case is a dispute over whether the wage standards of
the Davis-Bacon Act, as amended (DBA), 40 U.S.C. 276a et seq.,
apply to work performed at certain batch plants constructed and
operated in connection with construction work on the Central
Arizona Project (CAP). The CAP is a massive Bureau of
Reclamation construction project consisting of 330 miles of
aqueduct and pumping plants running from Lake Havasu in
northwestern Arizona to Tucson in south central Arizona.
Respondents Rodgers Construction (Rodgers), Bechtel Constructors
Corporation (Bechtel), and Ball, Ball & Brosamer, Inc. (Ball)
were prime contractors on the CAP. Rodgers was the winning
bidder on the contract to construct the Picacho Pumping Plant.
Bechtel was awarded the contracts to build the Brady Pumping
Plant and the Red Rock Pumping Plant. Ball was responsible for
building the aqueduct connecting the pumping plants. The four
contracts were awarded on various dates between May 1984 and
September 1985 and construction on each commenced soon after
award. Each contract was expressly subject to the specifications
and requirements of the DBA, supra, the contract overtime
requirements of the Contract Work Hours and Safety Standards Act,
as amended (CWHSSA), 40 U.S.C. 327 et seq., the Department of
Labor regulations (29 C.F.R. Part 5), and the prevailing wage
rate classifications and hourly rates specified by the Department
of Labor (DOL) through wage determinations.
Each of the prime contractors contracted with Respondent
Tanner Companies (Tanner) to provide the concrete necessary for
the performance of its contract. In order to perform
satisfactorily on these contracts Tanner found it necessary to
construct a temporary batch plant proximate to each of the
pumping stations under construction. The Bureau of Reclamation's
specifications for the concrete was essentially the same for each
of the contracts. Roughly ninety-nine percent of the concrete
produced was used in connection with this project, and
specifically with these four CAP contracts. Each of the batch
plants dedicated the largest share of its output to the
construction of the pumping station to which it was proximate.
Each of the plants also provided a significant amount of its
production to Ball for the construction of the aqueduct between
the pumping stations. The Picacho batch plant also provided
concrete to the Red Rock Pumping Station.
According to the testimony given before the ALJ, the Brady
batch plant was somewhere between five hundred feet to one half
mile from the actual permanent location of the Brady Pumping
station. Concrete from the Brady batch plant was also delivered
to various sites along the aqueduct ranging in distance from one
thousand feet to fifteen miles from the plant.
At the Picacho site the batch plant was located from three
hundred feet to one-half mile from the permanent location of the
pumping station. The Picacho batch plant was located between
twelve to fifteen miles from the Red Rock station to which it
also supplied concrete. Deliveries to sites along the aqueduct
from the Picacho batch plant ranged from one half to fifteen
miles.
The Red Rock batch plant was located between one quarter
and three quarters of a mile from the permanent location of the
Red Rock pumping station. Concrete was delivered to Ball for
aqueduct construction from the Red Rock batch plant up to a
distance of fifteen miles from the batch plant.
Photographic evidence of the Red Rock and Picacho
construction sites show that both batch plants were located on
land cleared by the contractors for the purpose of facilitating
construction of the pumping stations. These batch plants are
located amid other work and [2][3] equipment storage areas
dedicated to the construction project. These batch plants are,
at a minimum, adjacent to the actual pumping stations and the
associated aqueduct. No photographic evidence was introduced
with respect to the Brady pumping station.
Sometime during 1985, following a complaint by a Tanner
employee, the Administrator initiated an investigation into
whether Tanner was operating in compliance with the DBA.
Specifically, the investigation was aimed at determining whether
the workers employed by Tanner at the temporary batch plants were
employed on the "site of the work" and consequently covered by
the DBA. As a result of that investigation, the Acting
Administrator of the Wage and Hour Division issued a charging
letter to Tanner and each of the prime contractors, asserting
various violations of the DBA and CWHSSA in the operation of the
temporary batch plants. In response to the charging letter,
Tanner requested a hearing on this matter. By Order of Reference
dated September 28, 1990, the Acting Administrator forwarded that
request to the Chief Administrative Law Judge to schedule a
hearing.
Accordingly, a three day hearing commencing on October 18,
1993 was held. Prior to hearing the parties entered into a
number of stipulations including the following:
These three batch plants were located from one-half to
fifteen miles from the physical places where the
construction called for in these contracts remained
when the work was completed.
Parties' Joint Exhibit 1.
At the close of the hearing, the ALJ requested and
received briefs from the Administrator and Tanner. While the
matter was still pending before the ALJ, the District of Columbia
Circuit Court of Appeals issued its decision in Ball, Ball &
Brosamer, Inc. V. Reich, 24 F.3d 1447 (D.C. Cir. 1994). Because
of the relevance of that case to the pending proceeding, the ALJ
directed the parties to file briefs addressing the Ball, Ball &
Brosamer case. Id.
In response to a request by the Administrator, by order of
February 13, 1995, the ALJ permitted the Administrator to file a
motion to withdraw from the above quoted portion of the written
stipulations entered in this case. By Decision and Order of May
5, 1995, the ALJ ruled adversely to the Administrator's motion
and rendered a decision in this matter. The Administrator then
filed a petition for review with the Wage Appeals Board, the
responsibilities of which have since been transferred to this
Board.
II. PROCEDURAL ISSUE
Tanner argues that the Administrator has unlawfully relied
upon Wage Appeals Board (WAB) decisions that have not been
indexed and appropriately made available pursuant to the Freedom
of Information Act (FOIA). 5 U.S.C. 552(a)(2). The
Administrator responds by noting that "since at least 1984, the
Department of Labor has notified the public, through the "Guide
to Freedom of Information Indexes," published in the Federal
Register, of the availability of an index and digest for Wage
Appeals Board decisions." Reply of the Administrator, October 5,
1995, at 2. The full text of WAB decisions is also available
through a "computer bulletin" board previously provided by the
WAB and now supported by this Board. Further, while the prior
decisions of the WAB have been cited by the Administrator in
presenting this case and by us in deciding the case, those
decisions only serve to highlight the department's regulation, 29
C.F.R. 5.2(l)(1), that is the basis for the reversal of the
ALJ's decision in this matter. Tanner's argument that this case
should be dismissed for violation of the FOIA is without
merit.[3]
[4] III. DISCUSSION
Two issues present themselves at this time for review by
the Board. The first issue is whether the ALJ erred in denying
the Administrator's request to withdraw from the stipulation
regarding the distances between the three temporary batch plants
and the construction called for in these contracts. The second
issue is whether the ALJ properly applied the holding of Ball,
Ball, & Brosamer to the facts of this case.
For the reasons more fully discussed below, the Board
concludes that the ALJ erred in failing to permit the
Administrator to withdraw from the stipulation in question. The
Board then finds that the ALJ compounded this error by relying on
the stipulation in concluding that the temporary batch plants
were so removed from the actual construction work as not to be
included in the "site of the work." In reaching this decision
the ALJ went beyond the D.C. Circuit's decision in Ball, Ball and
Brosamer and rendered a decision inconsistent with the statute
and the relevant regulations. The Board finds that,
notwithstanding the stipulation, the record clearly supports a
finding that the temporary batch plants were located at the "site
of the work." Nevertheless, to avoid any potential unfairness to
the Respondents that may have been caused by reliance on the
stipulation, this issue will be remanded to the ALJ for
consideration of any additional evidence that may be offered on
this point.
A. Stipulation
As a general rule, the trier of fact is given broad
discretion to permit a party to withdraw from a stipulation.
Morrison v. Genuine Parts Company, 828 F.2d 708, 709 (11th Cir.
1987). The trier of fact is to exercise this discretion where
the enforcement of a stipulation would result in manifest
injustice or where substantial evidence adduced at trial casts
serious doubt on the accuracy of the stipulation. Smith v.
Blackburn, 549 F.2d 545, 549 (5th Cir. 1986). Finally, in
deciding procedural issues such as whether to permit a party to
withdraw from a stipulation, the trier of fact should be reversed
only upon a finding of an abuse of discretion. See, Lui
Landscaping, WAB Case No. 94-05, May 20, 1994, slip op. at 3;
Killeen Electric Company, WAB Case No. 87-49, March 21, 1991,
slip op. at 4. However, the trier of fact has an independent
duty to examine the record to ascertain the accuracy of a
stipulation. Smith v. Blackburn, supra, at 549. This obligation
is particularly pronounced in matters, such as the instant one,
in which the rights of individuals not parties to the proceedings
are being adjudicated. The danger of manifest injustice is
heightened where the individuals whose rights are being decided
have not assented to the stipulation of a critical fact.
In the present case, the Board finds it particularly difficult to
compel the Administrator to adhere to a critical stipulation
known to be false. The stipulation states that the batch plants
were located between one-half and fifteen miles from the site of
the actual construction. The portion of the stipulation
regarding the outer limits (fifteen miles) of the distance
between the batch plants and the site of construction is in
accordance with the evidence introduced at the hearing. The
portion of the stipulation that is clearly false, based upon the
testimony at the hearing and the photographic evidence, is the
statement that the nearest point between any batch plants and any
site of construction was one-half mile.
The Respondents, in their own pleadings, have shown the
minimum of one-half mile estimate to be false. In its statement
opposing the petition for review, Tanner recites evidence that is
clearly at odds with the stipulation. At page 9 of that
statement, Tanner states that "estimates as to the distance from
the Brady plant to the Brady Pumping Plant construction site
ranged from five hundred feet to one-half mile." At page 10,
Tanner states that "estimates as [4][5] to the distance between
the Picacho plant and Picacho Pumping Plant construction ranged
from three hundred feet to one-half mile." With respect to the
Red Rock Plant at page 11, Tanner states that "this batch plant
was from one-quarter to three-quarters of a mile from Bechtel's
Red Rock Pumping Plant construction site." Each of these
statements suggests a shorter distance to a place of permanent
construction than that to which the parties stipulated. These
statements, combined with the photographic evidence and testimony
introduced at the hearing, show the minimum one-half mile
stipulation to be false.
Stipulations are critical to the efficient use of
adjudicatory resources. The Board wants to take every
appropriate step to encourage stipulations between litigants.
The Board recognizes that precedent lightly setting aside a
stipulation could severely undercut the important judicial values
generated by the proper use of stipulations. On the other hand,
never allowing a party to withdraw a previously agreed upon
stipulation could also have a deleterious effect on the use of
stipulations. As the Federal District Court noted in Sam
Galloway Ford v. Universal Underwriters Ins., 793 F.Supp. 1079
(M.D. Fla. 1992):
One way for courts to encourage parties to stipulate is
for courts to readily set aside stipulations when
parties discover that the stipulations are erroneous.
This willingness on the part of courts to set aside
stipulations encourages parties to stipulate since the
parties feel more confident that courts will set aside
the stipulations if there is a reasonable basis to do
so.
793 F.Supp. at 1082.
Our decision to allow Petitioner to withdraw from the
stipulation is made easier in light of the Circuits Court's
decision in Ball. The Ball decision, which was rendered after
the hearing in this matter, increased the relevance of distance
in determining whether work was performed "on site" for the
purposes of the DBA. Prior to the D.C. Circuit Court's decision
in Ball any batch plant within fifteen miles of the work site was
close enough to meet the geographic proximity test of the
regulations. In fact, the Board had previously held with regard
to this very same project that "2 to 15" miles was close enough
to meet the geographic proximity test of the regulation. See
Ball, Ball and Brosamer, WAB Case No. 90-18, November 29, 1990,
slip op. at 13.
The stipulation entered into in this case contained what
amounted to boilerplate language regarding the distances between
the batch plants and the site of construction. The actual
distance between the batch plant and the site of construction,
prior to Ball, was not a concern to the extent that it was 15
miles or less. The actual distance became paramount, after the
stipulation was entered into, when the Ball decision limited the
geographic proximity test to where the batch plant is directly on
the site of the work, or where the batch plant was "in actual or
virtual adjacency to the construction site." Ball, Ball &
Brosamer, id. at 1452.
Where there has been a change in the law it is generally
recognized that a court may relieve a party from a stipulation.
In Brast v. Winding Gulf Colliery Co., 94 F.2d 179 (4th Cir.
1938), the court addressed this issue by noting that "where a
stipulation is entered into under a mistake of law induced by the
then existing state of the case law, a taxpayer is entitled to be
relieved of the effect of that stipulation if no prejudice
results." Id. at 182. Similarly in this matter the Administrator
entered into a stipulation unable to appreciate the effect that a
subsequent change in the case law would give to the stipulation.
The Board sees no prejudice that would result if the
Administrator is relieved of this stipulation and the matter is
resolved on the basis of more precise and complete findings of
fact. We find that the ALJ abused his discretion in refusing the
Administrator's request to be relieved from the burden of the
stipulation as it related to the distance between the batch
plants and the sites of work.[5]
[6] B. Site of the work
The D.C. Circuit's recent decision in Ball unfortunately
has created a good deal of confusion with respect to the coverage
of the DBA. Some have read the decision to mean that the
statutory phrase "directly upon the site of the work" limits the
wage standards of the DBA to the physical space defined by
contours of the permanent structures that will remain at the
close of work. At close reading it is clear that Ball does not
suggest, let alone demand, such a narrow reading of the
protections of the statute. See, Cavett Co. v. United States
Dep't of Labor, 892 F.Supp. 973 (S.D. Ohio 1995). The Circuit
Court held in Ball only that the Secretary was enforcing Section
5.2(l)(2) of the regulations in a manner that did not respect the
geographic limiting principle of the statute. The court found
that the Secretary had gone beyond the plain meaning of the
statute to include within the reach of the statute work performed
at locations too remote from the place of permanent construction.
The Circuit Court specifically declined to rule on the validity
of the definition of the "site of the work" set out at 29 C.F.R.
5.2(l)(1).
The Board holds that the language of 5.2(l)(1)
sufficiently resolves this matter. It is instructive to note
what the Circuit Court said regarding 5.2(l)(1):
The Secretary maintains that the regulations at
5.2(l)(2) satisfy the geographic limiting principle of
the Davis-Bacon act and Midway. This might be the case
if the Secretary were applying the regulatory phrase
"so located in proximity to the actual construction
location that it would be reasonable to include them"
only to cover batch plants and gravel pits located in
actual or virtual adjacency to the construction site.
See 29 C.F.R. 5.2(l)(1). But such an application is
not before us and we express no opinion on its
validity.
Ball, supra at 1452.
The facts of this case clearly suggest that the work
performed at the temporary batch plants satisfy the test set out
in Section 5.2(l)(1). Aerial photographs of the Red Rock and
Picacho sites place the temporary batch plants on land integrated
into the work area adjacent to the pumping plants. Workers at
the batch plants were employed on the sites of work equally as
much as the workers who cleared the land and the workers who
inventoried, assembled, transported or operated tools, equipment
or materials on nearby or adjacent property. Unless the Board
were also to exclude these workers, and in doing so largely
nullify the wage protections of the DBA, there is no principled
basis for excluding the batch plant workers.
Tanner might concede that the batch plants were located
proximate to the pumping stations, but argue that concrete from
the batch plant was also transported and used on aqueduct
construction miles from the plant. This argument is unpersuasive
in that it is the nature of such construction, e.g. highway,
airport and aqueduct construction, that the work may be long,
narrow and stretch over many miles. Where to locate a storage
area or a batch plant along such a project is a matter of the
contractor's convenience and is not a basis for excluding the
work from the DBA. The map of the project introduced at hearing
by Tanner, RX 22, abundantly illustrates that the project
consisted of miles of narrow aqueduct connected by pumping
stations. The only feasible way to meet the needs of the
aqueduct construction was to have the concrete prepared at a
convenient site and transported to the precise area of need.
This equally holds true for the storage and distribution of other
materials and equipment. Faced with such a project, the Board
finds that work performed in actual or virtual adjacency to one
portion of the long continuous project is to be considered
adjacent to the entire project. See, L.P. Cavett Co. v. United
States Dep't of Labor, supra at 979-980.[6]
[7] Alternatively, Tanner argues that insofar as it supplied
concrete to more than one contractor on the project, its
temporary batch plants were not dedicated exclusively to one
contract and therefore did not satisfy the functional test which
the regulations and our predecessor, the Wage Appeal Board,
applied in determining whether work was performed on site. United
Construction Company, Inc., WAB Case No. 82-10, January 14, 1983.
First, the applicable section of the regulations, Section
5.2(l)(1) does not explicitly contain a functional test.
Secondly, to the extent that a functional test is read into
Section 5.2(l)(1), the Board refuses to draw an artificial
distinction between one portion of the project that is let under
one contract and another portion of the same project that is let
under a separate contract./FN2/ Any other interpretation would
free contracting agencies to circumvent the statute by purposely
dividing work on one project into separate contracts. To the
extent that 29 C.F.R. 5.2(l)(1) incorporates a functional test,
we deem it satisfied under the facts of this case.
For the foregoing reasons, the Administrator's petition
for review is granted and it is hereby
Ordered, that the ALJ's order denying the Administrator's
motion to withdraw from the stipulation is reversed and this
matter is remanded for the ALJ to take additional evidence the
parties may wish to enter relevant to the distances between the
batch plants and the sites of the work, and to thereafter render
a new decision and order consistent with the DBA, the pertinent
regulations, and this Decision and Order.
SO ORDERED.
DAVID A. O'BRIEN
Chair
KARL J. SANDSTROM
Member
JOYCE D. MILLER
Alternate Member[7]
/FN1/ On April 17, 1996, the Secretary redelegated jurisdiction
to issue final agency decisions under, inter alia, the
Davis-Bacon and Related Acts and their implementing regulations
to the newly created Administrative Review Board (the Board).
Secretary's Order 2-96 (Apr. 17, 1996), 61 Fed. Reg. 19978, May
3, 1996 (copy attached).
Secretary's Order 2-96 contains a comprehensive list of
the statutes, executive order, and regulations under which the
Board now issues final agency decisions. A copy of the final
procedural revisions to the regulations, 61 Fed. Reg. 19982,
implementing this reorganization is also attached. The
Secretary's earlier decision and the entire record in this case
have been reviewed by the Board.
/FN2/ The functional test set out in Section 5.2(l)(2) requires
examination of whether facilities are "dedicated exclusively, or
nearly so, to performance of the [*]contract or project[*]...."
[*]Emphasis added.[*]