Opinion ID: 4558795
Heading Depth: 2
Heading Rank: 3

Heading: Kiewit’s Constructive Change Claim

Text: “A constructive change occurs where a contractor performs work beyond the contract requirements without a formal order, either by an informal order or due to the fault of the Government.” Int’l Data Prods. Corp. v. United States, 492 F.3d 1317, 1325 (Fed. Cir. 2007); see Zafer Taahhut Insaat ve Ticaret A.S. v. United States, 833 F.3d 1356, 1361 (Fed. Cir. 2016) (explaining that “[e]ven absent a formal order under the Changes clause, the contracting officer may still constructively change the contract” (citation and internal quotation marks omitted)). 8 In general, where a federal agency “requires a constructive change in a contract, [it] must fairly compensate the contractor for the costs of the change.” Aydin, 61 F.3d at 1577; see Int’l Data Prods., 492 F.3d at 1325 (“Equitable adjustments are corrective measures that make a contractor whole when the Government modifies a contract.”). Kiewit asserts that it performed work beyond the re- quirements set out in its contract with the FHA because it 8 The contract for the Deweyville project incorporated certain standard Federal Acquisition Regulation (“FAR”) provisions, such as the FAR changes clause, 48 C.F.R. § 52.243-4. See J.A. 119. Case: 19-2125 Document: 30 Page: 11 Filed: 08/26/2020 KIEWIT INFRASTRUCTURE WEST CO. v. UNITED STATES 11 was required to purchase mitigation credits not only for wetlands in the Deweyville project’s roadway corridor, but also for the wetlands it encountered at the governmentdesignated waste disposal sites. According to Kiewit, because the solicitation affirmatively represented that a contractor would not need to conduct any further environmental impacts analysis of the government-designated waste sites unless it decided to expand those sites, see J.A. 330, it reasonably concluded that it would not need to perform any wetlands analysis at those sites. We agree. Resolution of the dispute between Kiewit and the FHA hinges on the proper interpretation of the term “environmental impacts” in RSS 105.06. See Federal Claims Decision, 2019 WL 2156459, at . That solicitation provision states: Waste and excess material may be disposed at the sites listed in the [Waste Site Report]. The sites have received NEPA clearance. No further analy- sis of the environmental impacts of using these sites is needed unless an expansion of a site is proposed. If expansion is proposed, the requirements of Subsection 105.02(b) will apply. Obtain ap- proval from the U.S. Forest Service before using these sites. J.A. 330 (emphasis added). By its plain terms, RSS 105.06 dictates that, unless a contractor decided to expand the government-designated waste sites, “[n]o further analysis of the environmental impacts of using” such sites would be necessary. J.A. 330. The government does not meaningfully dispute that the analysis required to obtain a permit under section 404 of the Clean Water Act, 33 U.S.C. § 1344, is an “environmental impacts” analysis. It nonetheless contends that “wetland delineation and payment of wetland mitigation credits” are excluded from the “environmental impacts” covered by RSS 105.06, Br. of Appellee 43, because that Case: 19-2125 Document: 30 Page: 12 Filed: 08/26/2020 12 KIEWIT INFRASTRUCTURE WEST CO. v. UNITED STATES provision “does not refer to section 404 of the Clean Water Act, or to wetlands, but only to NEPA,” id. at 45; see also id. at 44–45 (arguing that because the sentence in RSS 105.06 containing the “environmental impacts” language “is directly preceded by the statement that the ‘[government-designated waste] sites have received NEPA clearance,’ the only reasonable reading of [RSS 105.06] is that no further analysis of environmental impacts was necessary for NEPA clearance purposes” (quoting J.A. 330)). This argument is unavailing for two reasons. First, contract language matters. See, e.g., Precision Pine & Timber, Inc. v. United States, 596 F.3d 817, 826 (Fed. Cir. 2010) (“Our analysis begins with the language of the contracts.”); C. Sanchez & Son, Inc. v. United States, 6 F.3d 1539, 1543 (Fed. Cir. 1993) (“A contract is read in accordance with its express terms and the plain meaning thereof.”). RSS 105.06 does not state that no further environmental analysis would be necessary for NEPA clearance purposes if a contractor elected to dispose of waste and excess material at government-designated waste sites. See J.A. 330. Instead, it broadly provides that “[n]o further analysis of the environmental impacts of using [such] sites” would be required. J.A. 330 (emphasis added). If the government intended to exclude wetland impacts from the “environmental impacts” covered by RSS 105.06, it should have included contract language to that effect. See, e.g., States Roofing, 587 F.3d at 1369 (adopting a contractor’s interpretation of a disputed contract provision where the contracting agency “‘inadvertently’ omitted a [provision] that could have avoided misunderstanding”). Because the government failed to do so, we decline “to rewrite the contract . . . and insert words the parties never agreed to.” George Hyman Const. Co. v. United States, 832 F.2d 574, 581 (Fed. Cir. 1987); see also Am. Capital Corp. v. FDIC, 472 F.3d 859, 865 (Fed. Cir. 2006) (explaining that this court “cannot rewrite a contract or insert words to which a party has never agreed”); Freightliner Corp. v. Case: 19-2125 Document: 30 Page: 13 Filed: 08/26/2020 KIEWIT INFRASTRUCTURE WEST CO. v. UNITED STATES 13 Caldera, 225 F.3d 1361, 1367 (Fed. Cir. 2000) (rejecting a proffered interpretation of a contract term “because it add[ed] an unnecessary interpretative gloss to the contract language”). Second, there is no merit to the government’s argument that because the second sentence of RSS 105.06 states that the government-designated waste sites had “received NEPA clearance,” Kiewit should have understood that the term “environmental impacts” in the next sentence excluded impacts to wetlands. There is no dispute that NEPA and the Clean Water Act are separate statutes; there is likewise no dispute that NEPA imposes duties on federal agencies rather than private parties. See, e.g., Wilderness Soc’y v. U.S. Forest Serv., 630 F.3d 1173, 1177 (9th Cir. 2011) (explaining that “NEPA is a procedural statute that binds only the federal government”). Because NEPA requires federal agencies to “take a hard look at environmental consequences” of a proposed project or action, Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350 (1989) (citation and internal quotation marks omitted), however, an agency’s NEPA assessment will frequently include an analysis of the impact that a proposed project will have on any wetlands in the project’s vicinity. See Protection of Wetlands, Exec. Order 11,990, 42 Fed. Reg. 26,961 (May 24, 1977), reprinted as amended in 42 U.S.C. § 4321 note; see also Greater Yellowstone Coal. v. Flowers, 359 F.3d 1257, 1271–72 (10th Cir. 2004); Miss. River Basin All. v. Westphal, 230 F.3d 170, 173–77 (5th Cir. 2000); City of Carmel-by-the-Sea v. U.S. Dep’t of Transp., 123 F.3d 1142, 1151–53 (9th Cir. 1997). Indeed, the FHA specifically considered the impact that the Deweyville project would have on wetlands as part of its NEPA analysis. 9 See J.A. 350. 9 As will be discussed more fully below, the Categorical Exclusion, which the FHA prepared as part of its effort to comply with NEPA, identified approximately forty-three Case: 19-2125 Document: 30 Page: 14 Filed: 08/26/2020 14 KIEWIT INFRASTRUCTURE WEST CO. v. UNITED STATES We cannot accept, therefore, the government’s argument that because RSS 105.06 states that the government-designated waste sites had “received NEPA clearance,” it somehow excludes the analysis of wetlands from the provision’s affirmative representation that “[n]o further analysis of the environmental impacts of using [those] sites” would be necessary. J.A. 330. To the contrary, the fact that the FHA, as part of the NEPA process, had already undertaken an evaluation of “the effects of [Deweyville] project activities on wetlands,” J.A. 350, bolstered, rather than undercut, Kiewit’s reasonable conclusion that it would not need to conduct any further wetlands analysis at the designated waste disposal areas. D. The Waste Site Report and the Categorical Exclusion Even assuming that the meaning of the term “environmental impacts” in RSS 105.06 were ambiguous, moreover, the Categorical Exclusion would alleviate any interpretive uncertainty. 10 See Per Aarsleff A/S v. United States, 829 F.3d 1303, 1311 (Fed. Cir. 2016) (concluding that a term in a solicitation was ambiguous but that this ambiguity was resolved by reference to communications from the contracting agency); see also Agility Pub. Warehousing Co. KSCP v. Mattis, 852 F.3d 1370, 1381 (Fed. Cir. 2017) (concluding that both the plain language of the solicitation and the extrinsic evidence supported one interpretation of a disputed contract provision); Gardiner, Kamya & Assocs., P.C. v. Jackson, 467 F.3d 1348, 1354 (Fed. Cir. 2006) (explaining that “[w]hen a contract is ambiguous, before resorting to acres of wetlands in the Deweyville project’s roadway corridor but did not identify any wetlands at the waste disposal sites. See J.A. 350. 10 We need not decide whether either the Categorical Exclusion or the Waste Site Report was incorporated into the solicitation because resolution of this issue is unnecessary to our analysis. Case: 19-2125 Document: 30 Page: 15 Filed: 08/26/2020 KIEWIT INFRASTRUCTURE WEST CO. v. UNITED STATES 15 the doctrine of contra proferentem, we may appropriately look to extrinsic evidence to aid in our interpretation of the contract” (citation and internal quotation marks omitted)). The Categorical Exclusion, like RSS 105.06, represents that “[n]o further analysis of the environmental impacts of using” the government-designated waste sites would be necessary “unless an expansion of a site [was] proposed.” J.A. 348. Notably, however, in the Categorical Exclusion, unlike in RSS 105.06, the “[n]o further analysis” language is not preceded by any reference to NEPA. See J.A. 330, 348. Thus, as the Court of Federal Claims correctly concluded, “[r]eading the Categorical Exclusion[], a reasonably prudent contractor would conclude that no further analysis was necessary regarding any environmental issues, that is, including ones arising under the [Clean Water Act].” Federal Claims Decision, 2019 WL 2156459, at . The Categorical Exclusion states, moreover, that the FHA estimated that approximately forty-three acres of wetlands would be “permanently impacted” by the Deweyville project. J.A. 350. Importantly, however, notwithstanding the fact that the Categorical Exclusion represents that the waste sites were “included in [the FHA’s] analysis of environmental resource impacts,” J.A. 348, the agency’s estimate of the wetlands that would be impacted by the project was based only on wetlands in the roadway corridor and not on the presence of any wetlands at the waste disposal areas. See J.A. 126; see also J.A. 489. The fact that the FHA included the waste sites in its environmental resource impacts analysis—and yet did not identify any wetlands at those sites—confirmed Kiewit’s reasonable conclusion, based on RSS 105.06, that it would not need to perform wetland delineation at the government-designated waste areas. The Waste Site Report, which was provided to all bidders and which discussed the details of twelve governmentidentified waste sites, J.A. 369–83, likewise supported Case: 19-2125 Document: 30 Page: 16 Filed: 08/26/2020 16 KIEWIT INFRASTRUCTURE WEST CO. v. UNITED STATES Kiewit’s pre-bid determination that wetland delineation at the waste sites would be unnecessary. That report notes that many of the designated waste sites were situated in existing rock quarries. 11 J.A. 372, 376–79, 382–83. It further states that “[t]he criteria for establishing waste disposal sites included identifying locations that would minimize negative impacts to wetlands.” J.A. 372. 12 The fact that the waste sites were selected to minimize any impact to wetlands reinforced Kiewit’s conclusion that wetland delineation at those sites would not be required. In sum, we conclude that Kiewit reasonably inter- preted RSS 105.06 to mean what it says—that no further environmental impacts analysis would be required if a contractor chose to dispose of waste and excess material at government-designated waste sites. See J.A. 330. The FHA therefore effected a constructive contract change 11 On appeal, the government argues that Kiewit should have recognized that there were wetlands at the government-designated waste sites because the Waste Site Report stated that there was a “palustr[ine] stream” on one of the sites. J.A. 379. Because this argument was not adequately presented to the Court of Federal Claims, however, we decline to address it on appeal. See, e.g., SimpleAir, Inc. v. Google LLC, 884 F.3d 1160, 1170–71 (Fed. Cir. 2018); DuMarce v. Scarlett, 446 F.3d 1294, 1304 (Fed. Cir. 2006). We note, moreover, that the presence of a palustrine stream on one of twelve government-designated waste sites would not necessarily alert a bidder to the presence of approximately nineteen acres of wetlands, see J.A. 386, in the waste disposal areas. 12 As Traffalis, the Deweyville project manager, acknowledged, moreover, the contract documents furnished to bidders did not contain “any affirmative statement” that there were wetlands at the government- designated waste sites. J.A. 540. Case: 19-2125 Document: 30 Page: 17 Filed: 08/26/2020 KIEWIT INFRASTRUCTURE WEST CO. v. UNITED STATES 17 when it required Kiewit to perform wetland delineation at the government-designated waste sites. E. Damages Calculations Before the Court of Federal Claims, the government argued that even if Kiewit prevailed on its constructive change claim, its right to damages was limited because its total wetland mitigation costs were less than $1 million. See Federal Claims Decision, 2019 WL 2156459, at . It also argued that the amount of damages should be reduced because Kiewit had expanded the boundaries of the government-designated waste sites. See id. Nothing in this opinion should be interpreted to preclude the Court of Federal Claims from addressing these issues on remand.