Judge awards Municipality of Anchorage full $367M sought from feds in lawsuit over botched port construction

Anchorage is another big step closer to getting reimbursed for much of the failed construction work at the city’s port. A federal judge on Thursday awarded the city every dime of the $367.4 million Anchorage attorneys had been asking for in its years-long lawsuit against the federal government.

U.S. Court of Federal Claims Judge Edward J. Damich issued his judgment against the U.S. Maritime Administration four days shy of eight years after the Municipality of Anchorage filed suit against the federal agency for its role in managing the troubled expansion project for the then-Port of Anchorage, which started nearly two decades ago.

The Anchorage Assembly officially renamed the facility the Port of Alaska in 2017 to highlight its importance to the state as a whole, an indirect way of drumming up support to fund a second rebuild attempt. Roughly half of all Alaska-bound cargo enters the state through Anchorage’s port.

“We didn’t assume we were going to get anything but we kind of had our fingers crossed,” Assistant Municipal Attorney Robert Owens said.

[US will build a new customs station on the Alaska Highway at Canadian border]

Owens emphasized that getting a full award of all the damages they were seeking from MARAD should quell any lingering notions that city or port officials were to blame for the significant past construction problems at the port.

Anchorage Mayor Dave Bronson said the judgment will help make the city whole for the prior work, but advocating for funding of the city’s current, scaled-back port modernization project would continue to be one of his top priorities.

“Though this is a positive outcome, we must remember that the appeal process could take up to a year, and the final amount to be paid is unresolved. In the meantime, we still need to construct a seismically resilient port that achieves food security for our state,” Bronson said in a statement from his office.

The money would allow port officials to remediate the work done at the north end of the port during the prior expansion project, according to Port of Alaska Director Steve Ribuffo, but will not come close to covering the overall modernization work.

Large sections of the docks at the port are approaching 60 years old, and work to patch badly corroded piles that support the aging structures is nearly constant each summer.

City and port officials have estimated the full cost to finish the port overhaul with two new cargo docks, a second fuel terminal and shoreside infrastructure updates, in addition to the north end stabilization, at nearly $2 billion, depending on the final design criteria for the docks.

[Girdwood’s fluoridation system has been offline for months and won’t be fixed until 2024, water utility says]

Damich previously ruled Dec. 9 that MARAD was liable for faulty sheet pile installation and dock construction done at the port in the late 2000s due to a lack of oversight and management of the project.

MARAD took on those responsibilities via a memorandum of understanding signed in 2003 with Anchorage leaders.

A 2013 Inspector General audit of MARAD also concluded agency officials did not adequately plan or monitor the work being done at the port and occasionally didn’t comply with federal contracting requirements.

Anchorage was the first in a series of port projects the MARAD led in the mid-2000s. The agency began managing infrastructure construction so federal money could be appropriated to the specific projects quicker.

However, Damich did not award damages at that time in part because of discrepancies in documents presented throughout the case regarding the exact amount Anchorage officials were seeking and for what.

Justice Department attorneys argued on behalf of MARAD in a subsequent brief that the simple fact that city attorneys were unable to set a firm amount and stick to it makes their broader claims for damages unreliable. MARAD’s attorneys also claimed the city should deduct from its claims the $91.2 million it has received in state funds for work at the port since the expansion project, among other arguments.

City attorneys wrote in their response to the December ruling that a discrepancy of roughly $8 million between two claims for costs the city incurred because of the failed work — ultimately valued at $180.8 million — was partially due to the resale of leftover construction materials from the failed project and settlements from a separate lawsuit over the project. They also acknowledged some of the differences were typographical mistakes. The city also sought $186.6 million to stabilize and repair the north end of the port where much of the prior work occurred.

In his opinion Thursday, Damich wrote that while there were “minor incorrect calculations” in the city’s case documents, government attorneys never challenged any of the underlying claims for damages with expert witnesses or in an earlier brief.

He added that Anchorage would not not have to stabilize the north area for safety purposes if not for MARAD’s breach of contract, and thus ordered the government to pay for the future work as well.

“The evidence is clear that the structure left by the government on Anchorage’s property by MARAD is dangerous, prevents Anchorage from using its property and creates navigational hazards,” Damich wrote. “The evidence is also clear that Anchorage has no choice but to remove the defective structure, and the cost to remove the dangerous structure is clearly recoverable.”

How quickly that recovery happens is to be determined. The government’s attorneys have 60 days to appeal to the Federal Circuit Court of Appeals, and it’s unclear at this point whether they will. The appeals process could take as much as two years if they do, according to Owens.

“We don’t know what the final (award) number might be. On appeal it might be changed,” he added.

The city also sued several contractors on the project in a separate lawsuit filed in 2013, including PND Engineers, which designed the sheet pile system used to build the new dock. PND representatives consistently said faulty installation caused the structure to be damaged, a claim backed by construction firms that previously worked with the design.

A city-commissioned study done in 2013 by then-CH2M Hill, a competitor to PND, concluded the design was incompatible with the glacial silt soils that underlie the area. The municipality eventually settled that case for $19.3 million across seven contractors. The municipality settled with PND Engineers for $750,000.

Elwood Brehmer can be reached at elwood.brehmer@alaskajournal.com.