Contractor License #707580 A
(415) 121-2131 FAX (415) 121-1394

November 19, 1996

Department Of The Army
San Francisco District
Corps of Engineers
Bay Model Building
Sausalito, CA 94965

Attention:  Mr. Leonard Soohoo, P.E.                    Serial Letter No. 0190
            Administrative Contracting Officer

Subject:  Turning Basin, Todd and Schnitzer Wings

Reference:  Contract No. DACW07-95-C-0003

Dear Mr. SooHoo:
Attached, please find copies of letters from our insurance company and bonding company with their instructions as to handling the issue of potential hazardous materials in the above referenced areas.

You will note that both parties tell us to cease and desist the dredging operation until proper analysis of materials takes place and a proper plan of operation is put in place.

If there any questions, please contact us.



Robert D. Johnston


Chartwell Surety
Insurance Agency Lic. 0768459
3301 Watt Avenue, CA 95821
916 485 8000 fax 916 485 1007

November 18, 1996

Mr. Robert Johnston
The Dutra Group
1000 Point San Pedro Road
San Rafael, CA 94901

Re: Oakland Hazardous Material

Dear Bob:

Upon learning of the potential for hazardous materials in the turning basin at Oakland, I contacted SAFECO to verify their positoin. As I had indicated to Bill Dutra, the surety takes the position that all regulations pertaining to hazardous materials containment must, repeat must be followed.

Federal guidelines are specific as to ceasing of work until the materials can be identified and proper hadnling procedures are established. Primary is that all jurisdictional agencies, including the EPA must be notified, and a properlly agreed upon plan of action taken.

Bob, the surety would not want you to continue work, if it will increase the liability to you and themselves as a result of increased public or environmental exposure to hazardous materials. Once an acceptable resolution of the rmoveal and disposal of the material is established, the surety would again support the continuation of work.


Robert D. Laux

Johnson & Higgens of California
One California Street
San Francisco, CA 94111
415 981 6700

November 19, 1996

Mr. David Werner
Risk Manager
The Dutra Group
1000 Point San Pedro Road
San Rafael, CA 94901

Subject: Port of Oakland Project Probable Contaminated Spoils

Dear Dave:

Thank you for your fax and subsequent discussion about the recent appearance of certain "hazardous waste" materials in the Galbreath disposal Area for the Port of Oakland 42' Dreding Project spoils.

From an insurance perspective, there are four critical areas of concern:

  1. The terms of dutra's General Liability policy, which covers Third Party

    bodily Injury and Property Damage, specifically excludes liability in
    respect of disposal or dumping of any waste materials or substances.
    There is no coverage under this policy for the intentional dumping
    contaminated spoils.

  2. The terms of your Protection & Indemnity coverage, which covers your tug

    boat crews, contains an 'absolute" pollution exclusion. There is no
    coverage undr this policy for any claim for Bodily Injury or Property
    Damage due to the discharge, policy for any claim for bodily Injury or
    Property Damage dut to the discharge, whether intentional or not, of
    contaminated spoils.

  3. the Employer's Liability section of Dutra's Workder's Compensation

    coverage specifically excludes any "bodily injury intentinoally caused or
    aggravated by you". Since Dutra is now aware of the probability that
    these dredge spoils are contaminated, any resulting Employer's Liability
    claim(s) may not be covered.

  4. The intent of Dutra's "CERCLA" Pollution coverage is to protect Dutra in

    the event of "sudden and unintentional" discharge of pollutants. There
    is no coverage for the intentional dumping of contaminated spoils.

In light of the serious pollution/contamination exposures you have identified, we urge you to immediately cease any further operations until necessary tests and analyses can be performed to fully understand and deal with the chemical components of these spoils.

Respectfully submitted,

Michael Payne
Assistant Vice President

Copy to:

  1. Paul Seeth
  2. Timothy Smith
  3. Veit Metzroth