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State Resolves Fast Vehicle Ferry Litigation for Alaskans

March 1, 2013, Juneau, Alaska - The State of Alaska and the Alaska Marine Highway System (AMHS) today announced the settlement of litigation involving the fast vehicle ferry vessels Fairweather and Chenega. The litigation has been pending for three years and was set for trial on April 8. The parties have reached a settlement that will benefit Alaskans, Alaskan communities, businesses that rely on the state’s marine highway system, and travelers to and from the state.

"Our goal in this litigation has always been to ensure Alaska's residents have reliable ferry service," said Attorney General Michael Geraghty. "This settlement accomplishes that goal."

The State sued the German engine manufacturer MTU, along with its U.S. affiliate Tognum America, and Robert E. Derecktor, Inc., the contractor responsible for the design and construction of the ferries, in 2010 based on recurrent problems with the vessels’ diesel engines. In February 2012, Derecktor declared bankruptcy, which delayed the lawsuit and eventually left the MTU entities as the lone defendants. Throughout the litigation process, the State and MTU continued discussions in an attempt to resolve the dispute. As a result, the State and MTU arrived at an agreement, whereby MTU will replace the vessels’ engines at no expense to the State.

“AMHS looks forward to installation of the new engines, which will greatly improve the reliability of the fast ferries Chenega and Fairweather,” said AMHS General Manager Captain John Falvey.

The settlement involves several components including:

  • Removal of the vessels’ existing engines and installation of eight, newer model engines, four each for the Fairweather and Chenega;
  • A commitment by MTU to keep the existing engines in the fast ferries operable until the new engines can be installed; installation on the first ferry will begin in the fall of 2013; and
  • An improved, mutually-beneficial working relationship between MTU and AMHS regarding engine maintenance and servicing.

For more information, contact Senior Assistant Attorney General Dana Burke at 269-5100.

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