OFFICIAL OPINION No. 11

OFFICIAL OPINION No. 11 Federal Office of Ernergency Preparedness ( OEP) Regiilations-Cornpleted construction-Requirernent of acceptance 1. Under Pennsylvania law construction of a facility, as intended by OEP regulations, is complete when it has been put together and made ready for use. 2. A facility can be considered to have been completed even though not for- mally accepted by the contractin State agency. Dr. Richard Gerstell Director of Civil Defense Harrisburg, Pennsylvania Dear Dr. Gersten: Harrisburg, Pa. January 25, 1973 You have requested an opinion as to whether construction of the Rausch Creek Water Treatment Plant can be considered to have been completed at the time of the June flood. This opinion is requested in order to determine how the assistance eligibility provisions of the Federal Disaster Relief Act, 42 U.S.C.A. §4482, and regulations provided in Circular 4000.5c of the Federal Office of Emergency Preparedness (OEP) are to be applied to the Rausch Creek Plant. The Act and OEP regulations provide that reimbursement shall be made in full for any publicly- owned utilities damaged in the flood. (See 42 U.S.C.A. §4482, and OEP Circular 4000.5c, pp 32 and 33). The Acts, however, pro- vide that where a public facility is "under construction" at the time of a natural disaster, Federal reimbursement shall be made 24 OPINIONS OF THE ATTORNEY GENERAL in an amount not to exceed fifty ( 50 % ) per cent of the resulting damage. ·w hile the opinion you request appears to turn on an interpre- tation of Federal statutes and regulations, you have further ~d­ vised that the Office of Emergency Preparedness, through its Federal Coordinating Officer, Francis X. Carney, has determin- ed that an interpretation of the applicable State la~ by the Attorney General would effectively settle the quest10~ as to what amount of compensation is due under the regulat10ns. A letter from OEP to that effect has been appended to this opinion. Records of the Depar tment of Environmental Resources indi- cate that with the exception of four minor, punch list items, all elements of the plant had been completed prior to May 22, 1972, and that the plant itself was successfully operated from June 14 to June 16, 1972. In addition, it appears that all items on the punch list had been completed by June 18, 1972, prior to the June flood. The question you have presented, therefore, is whether the Rausch Creek Plant, which had been completed in every major respect, but had not been formally accepted by the Department of Environmental Resources, was "under construc- tion" at the time of the flood, as intended by the OEP regula- tions. It is our opinion and you are advised that construction of the Rausch Creek Plant can be considered to have been com- pleted by the date of the flood. The P ennsylvania Superior Court has ruled that construction is complete "when it [is] lawfully usable for the purpose intend- ed." See Versailles Township v. Ulm et ux, 152 Pa. Super. 384, 389 ( 1943). The Rausch Creek Plant was usable and, in fact, had been operated satisfactorily prior to the flood. In referring to the meaning of construction, an earlier Superior Court de- cision stated that it meant "putting together, ready for use." Eichleay v. W ilson, 8 Pa. Super. 14, 16 ( 1898). On the date of the flood, the Rausch Creek Plant appears to have been "ready for use" and, consequently, met the Court's definition as to completed construction. In view of these two Pennsylvania court decisions, therefore, it is apparent that the plant had been com- pleted at the time of the June flood. The Federal courts have reached similar conclusions. In Clauss v. American Insurance Co., 214 F. Supp. 442 (E.D. Pa. 1963), J udge J oseph Lord III ruled, in effect, that construction could be completed without fonnal acceptance. In that case, plaintiff entered into a contract with the City of Philadelphia to construct a sewer. After work on the sewer had been completed, but before formal acceptance had been made by the City of Philadelphia, an accident occurred near the site where the work had been done. Suit was commenced on an insurance policy covering lia- bility arising from plaintiff's activities with regard to the con- struction of the sewer. The policy included an exclusionary clause which provided that "products hazards" occurring after OPINIONS OF THE ATTORNEY GENERAL 25 construction had been completed were not covered under the policy. Suit was brought on the policy, and the Court ruled that the work had been completed within the meaning of the insur- ance policy. Judge Lord ruled that the operation was completed because nothing further was needed in the way of construction. In dealing with the question of acceptance, the Court ruled that this was not a necessary requisite of the insurance policy, since the policy only called for completion and did not refer to ac- ceptance. The OEP regulations, in a similar manner, simply call for completion. No reference is made to formal acceptance. A similar conclusion was reached in Continental Illinois National Bank v. United States, 115 F. Supp. 892 (Ct. Cl. 1953), where the Court of Claims ruled that formal acceptance was not a re- quirement in determining whether construction had been com- pleted. For these reasons, it is our opinion that the Rausch Creek Plant was not "under construction," within the meaning of the OEP regulations, but rather had been completed in all signifi- cant respects. Hence, the Rausch Cre.ek Plant is eligible to re- ceive reimbursement in full for damages caused by the flood of June, 1972. Very truly yours, THEODORE A. ADLER Deputy Attorney General ISRAEL PACKEL Attorney General