Feds Settle Port of Alaska Lawsuit for $191.3M
Photo Credit: John McQuiston | Adobe Stock
Closing the books on of the longest-running lawsuits in Alaska history, the federal government is paying $180 million dollars to settle a legal fight over a botched expansion project at the Don Young Port of Alaska. The amount is about half of what a federal judge awarded the Municipality of Anchorage in 2022, but the settlement is far more than the reduction to $11.3 million the US Maritime Administration (MARAD) had won in a 2024 appeal.
Win-Win-Win
Acting US Attorney General Todd Blanche came to Anchorage this week to finalize the settlement, along with MARAD Administrator Stephen M. Carmel. The $180 million is on top of the $11.3 million judgment, which had not yet been paid, bringing the total recovery to $191.3 million. Anchorage Mayor Suzanne LaFrance calls it the largest settlement in the city’s history. She notes that the funds are going directly toward construction costs for the current Port of Alaska Modernization Program.
The settlement ends a lawsuit that began in 2014 over the previous attempt to upgrade the city-owned Port of Anchorage, as it was then known. In 2003, the city partnered with MARAD to overhaul the port, but the project was undermined by design and construction defects, particularly the unstable sheet piling. The municipality sued, accusing MARAD of breaching its contract to oversee the project.
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The US Court of Federal Claims ruled in Anchorage’s favor in 2021. Since then, the dispute has been over how much the federal agency owes. MARAD successfully appealed the 2022 award of $367.4 million in expectation and remediation damages, and the agency was found to have not been legally required to deliver a defect-free port.
Governor Mike Dunleavy joined LaFrance and federal officials in accepting the settlement. “This is a win-win-win. The Don Young Port of Alaska is a vital piece of infrastructure for our state and the nation. This settlement lets us turn the page and puts real resources toward rebuilding the Port,” Dunleavy says.
In accepting the settlement, LaFrance credited Senator Dan Sullivan for his intercession. Sullivan says, “This settlement has been a team effort over many years: mayors, assembly members, state legislators and officials, our congressional delegation, and the hard-working Alaskans who do great work on the port every day. I want to thank Attorney General Blanche for coming up to our state for this announcement and MARAD Administrator Carmel for his recent visit as well.”
The $191.3 million from MARAD goes toward the Port of Alaska Modernization Program, a roughly $2.7 billion effort to replace aging terminals with facilities built to withstand a major seismic event and accommodate modern shipping. Furthermore, Dunleavy signed a state budget for this year that provides $15 million for the project, and another $10 million in state funding could become available if the price of oil averages $80 per barrel or higher through the rest of this calendar year.
“Securing these funds for the Port of Alaska means we are able to reduce the costs of goods for all Alaskans,” says LaFrance.
The Don Young Port of Alaska handles goods that reach 90 percent of Alaskans. Every federal or state dollar secured for the port reduces the total amount that must be raised through future shipping surcharges by about $2.50, meaning these funds will lower costs on Alaskans by as much as $694 million over the lifetime of the facility.
Construction began last week on the first of two new cargo terminals. The replacement for Cargo Terminal One is estimated to cost $977 million and be completed in 2029. Construction of cargo terminal 2 is slated to start in 2029 and be completed in 2032.
