DUTRA DREDGING

A MEMBER OF THE DUTRA GROUP

Contractor License #707580 A

1000 POINT 5AN PEDRO ROAD

SAN RAFAEL, CALIFORNIA 94901

(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.




Sincerely,


DUTRA GREDGING COMPANY






Robert D. Johnston

President


RDJ/lgc












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.






Sincerely,






Robert D. Laux

President
















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