Judge Hints at Rejecting Bid to Limit Scope of Shipyard Cleanup Fraud

This 2006 aerial view shows the former San Francisco Naval Shipyard at Hunters Point, California. (Telstar Logistics via Wikipedia)

SAN FRANCISCO (CN) – In a case alleging widespread fraud in the $1 billion cleanup of a radiation-contaminated shipyard, a federal judge signaled Thursday he will likely reject a contractor’s bid to exclude claims related to two other major cleanup projects in the San Francisco Bay Area.

“Why should the plaintiffs be foreclosed from pursuing that,” U.S. District Judge James Donato asked in court Thursday.

Accused of falsifying soil tests in the cleanup of the Hunters Point Naval Shipyard, U.S. Navy contractor Tetra Tech EC is fighting to exclude claims of fraud at two other U.S. Navy cleanup sites: Treasure Island and Alameda. Tetra Tech EC is a wholly owned subsidiary of Tetra Tech Inc.

After seven whistleblowers sued Tetra Tech and its subcontractors for fraud in 2013 and 2016, the United States intervened last year to prosecute the civil case against the Pasadena, California-based contractor. However, the government chose not to pursue claims of fraud related to cleanup projects at Treasure Island and Alameda, both man-made islands in the San Francisco Bay where major redevelopment projects are planned.

Representing the whistleblowers, attorney David Anton told Donato his clients still plan to pursue those claims even if the United States declines.

“The concept has been the government sometimes doesn’t notice what’s going on,” Anton said, referring to right of private citizens to sue for government fraud under the False Claims Act. “They need people like my whistleblowers to bring this information forward.”

Anton said his clients are also prepared to pursue claims of environmental fraud that occurred at Hunters Point before 2007, when the government claims Tetra Tech supervisors first began engaging in a pattern of fraud.

According to Anton, Tetra Tech management in 2005 and 2006 ordered workers to “speed up” the dial of a sensor that detects radiation in soil bound for landfills. This allowed the company to dispose of contaminated dirt more cheaply by trucking it to conventional state landfills, instead of federally licensed landfills that accept radioactive debris. He said managers even built a cage around the dial to prevent workers from turning it down to comply with U.S. Navy standards.

Anton said the U.S. government’s complaint also excludes allegations that Tetra Tech manipulated a portal monitor, which detects radiation in trucks hauling dirt bound for landfills, to be less sensitive.

“Tetra Tech directed people to stop doing the portal monitor the proper way because so many trucks were failing and it was getting too expensive,” Anton said.

The whistleblowers’ lawyer said he plans to file an amended complaint with those allegations if the government declines.

Donato ordered the U.S. government to file an amended complaint by July 11 and for the whistleblowers to file theirs within 30 days after that.

In an emailed statement, Tetra Tech representative Sam Singer rejected Anton’s claims, saying the lawyer “simply regurgitated the allegations made in his deficient complaints” which the judge found must be amended.

Tetra Tech “is confident it will prevail following an impartial and transparent legal and scientific review of the facts,” Singer said.

The U.S. Navy says it paid Tetra Tech more than $250 million for its work on the Hunters Point project from 2006 to 2012.

Two former Tetra Tech employees who oversaw testing of contaminated soil at Hunters Point pleaded guilty to falsifying reports and were sentenced to eight months in prison last year.

Tetra Tech says the fraudulent conduct was limited to a few rogue employees, and the whistleblowers – who would receive a portion of any damages award – are motivated by greed.

The former Navy shipyard in the city’s Bayview neighborhood was home to top-secret nuclear tests from 1946 to 1969 and a place where ships returning from hydrogen bomb tests were decontaminated, both potential sources of radioactive waste.

Last year, the San Francisco Board of Supervisors approved moving forward with plans to build more than 10,000 homes on the 400-acre site, despite concerns about potential contamination.

The California Department of Public Health found no evidence of radioactive contamination after conducting above-ground, gamma-radiation scans in two Hunters Point parcels. The above-ground scans cannot detect substances that emit alpha or beta radiation, including plutonium-239, which persists tens of thousands of years, and strontium-90, which acts like calcium and gets embedded in bones and teeth. Only soil tests could detect those types of radiation, according to scientists who have publicly criticized the process.

The Navy also released a report stating it has confidence there is no public health risk on Treasure Island, where 8,000 housing units are planned, because Tetra Tech’s work there was done with “close review and oversight” by it and the California Department of Public Health.

Tetra Tech and Hunters Point developer FivePoint are also fighting a series of lawsuits brought by Bayview homeowners and residents over the allegedly widespread fraud. The homeowners and residents want Donato to remand their cases to state court, a demand that Tetra Tech opposes.

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