Anchorage port suit will stay in federal court


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A lawsuit originally filed in state court by the Municipality of Anchorage against participants in the stalled Port of Anchorage expansion project will stay in federal court.

The defendants, project management firm Integrated Concepts and Research Corp., or ICRC, PND Engineers Inc., and CH2M Hill Alaska successfully petitioned to have the suit moved to federal court in early April. In May, the municipality filed a motion to remand it to state court on the grounds that there was no federal jurisdiction in the case. The lawsuit was first filed in state court in March.

Federal District Court Judge Sharon Gleason wrote a 25-page decision, filed Nov. 21, denying the municipality’s motion stating that ICRC, which led the attempt to move the suit to federal court, presented a “colorable defense” that it acted as a contractor under the supervision of the U.S. Maritime Administration, or MARAD.

“The government contractor defense is intended to protect a government contractor from liability for acts done by him while complying with government specifications during the execution of performance of a contract with the United States,” wrote Gleason, citing previous civil cases over construction projects.

The municipality entered into a memorandum of understanding with MARAD in 2003 to oversee construction of the aging, city-owned port. MARAD subsequently contracted with ICRC, then a Koniag Inc. Alaska Native corporation subsidiary, under a Small Business Administration 8(a) contract to manage the project.

PND designed the Open Cell Sheet Pile dock structure that was chosen for the port, and that decision is at the center of the case. The municipality claims two separate reviews of the sheet pile design by CH2M Hill and San Francisco-based engineering firm Simpson Gumpertz and Heger prove the sheet pile is inadequate for the port site, which has high tides and seismic activity.

While the port expansion was first scheduled to be finished this year, major construction was halted in 2010 when extensive damage was discovered in installed sheet piles. PND claims the damage resulted from faulty installation, not design.

Anchorage Mayor Dan Sullivan, who took office in 2009 has estimated that the finished port that was supposed to cost roughly $220 million in 2003 could end up costing more than $1 billion. More than $300 million has been spent to date.

CH2M Hill is named in the suit because of its purchase of VECO Alaska, a former project consultant.

In July during arguments over where the case belonged, ICRC attorney Kurt Hamrock said daily emails and records of multiple weekly meetings between ICRC, MARAD and the municipality prove the federal agency’s direct involvement during construction.

At the same time the municipality asserted that ICRC approved the sheet pile design, not MARAD.

To that, Gleason’s brief cited an ICRC employee that said, “MARAD either mandated or meaningfully reviewed, revised, verified and ultimately approved the detailed specifications used for every aspect of the project.”

Municipal attorney Robert Owens said in an interview that the ruling was a “procedural” matter and that ICRC had a low standard to meet to keep the case where it was.

“The court didn’t rule on whether ICRC was an agent of MARAD, (ICRC) just put enough facts on the table to make it a question to examine later,” Owens said.

If ICRC is able to further tie itself to the MARAD it could be problematic for the municipality’s case, as the federal agency cannot enter the case as a defendant in U.S. District Court.

Hamrock said that the latest court action was “more than just procedural” because the federal contract law issues will remain in the case.

The next significant date going forward is Jan. 9, when Gleason has agreed to hear arguments on motions for dismissal filed by the defendants. In her filing setting the hearing date she wrote that each party would be provided approximately 20 minutes to state their case.

Only ICRC and the municipality testified during the July remand hearing.

PND counsel Lisa Marchese said she is pleased with Gleason’s decision because it allows the full vetting of what MARAD’s role was and what it should have been. Marchese added that she’s glad the case is starting to move ahead.

“We’ve kind of had to listen a lot to public statements that the (municipality) has made, but we really are looking forward to the opportunity to defend those allegations,” she said.

While the case is pending the municipality has put out a request for proposal, or RFP, for future construction management at the port. The solicitation, which closed in October, stated that it would initially be for five years and up to $30 million, with two additional $12 million, two-year options.

Lindsey Whitt, a spokeswoman for the mayor’s office said she could not comment as to when a decision on the management contract could be expected.

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

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