Navy Contractor Sued for Fraud in Environmental Cleanup Case

One of the biggest redevelopment projects in the history of San Francisco is on hold pending a lawsuit against a U.S. Navy Contractor for fraud in the $1 billion cleanup of a formerly radiation-filled shipyard.

An aerial view of Hunter's Point Naval Shipyard, San Francisco, California, with three docked aircraft carriers on 25 August 1971. This is the former site of the top secret U.S. Navy base where radioactive vessels from test missions were decontaminated. It is also the proposed site of a major new luxury multi-use property development in San Francisco. Photo: Robert Huffstutter, CC

The lawsuit stems from complaints from no less than seven whistleblowers, who claim contractor Tetra Tech faked critical soil tests which were supposed to prove the former 400-acre shipyard site was properly decontaminated.

If those complaints had not been heeded, the land would have been plowed over and turned into a new luxury mixed-use development project, including almost 11,000 new housing units, 32 percent of which were to be affordable housing badly needed in the area. It would also have included a 120-room hotel, 300 acres of waterfront parks, and 58 acres of commercial space. The space includes both the former Hunters Point Shipyard and Candlestick Park, the stadium where the San Francisco 49ers once played.

The full development was designed by FivePoint, a private developer.

The U.S. Navy had contracted with Tetra Tech and paid them over $250 million for work on the Hunters Point project from 2006 to 2012.

On October 26, Assistant Attorney General Joseph Hunt announced it was suing the company, saying in a written statement that, “It was of critical importance to the United States Navy, and the public, that Tetra Tech perform accurately and fully the radiological testing and remediation of the Hunters Point site for which it was hired.” He went on to say that, “The Department of Justice will vigorously pursue action against those who obtain federal funds based on promises they knowingly fail to keep.”

For its part, Pasadena, California-based Tetra Tech argued against the coming charges, saying that the whistleblowers who told the Navy about the fraud were just acting out of greed. The company also claims the alleged fraudulent actions the Navy is concerned about were carried out by just a few employees.

The 400-acre property where the radioactive materials were dumped is in San Francisco’s Bayview neighborhood. Between the years of 1946 and 1969, it was a top-secret nuclear test site, used as a place where ships coming home after hydrogen bomb testing were decontaminated. Both the ships and the residue cleaned off them were possible sources of highly radioactive waste.

Among the whistleblower complaints were that a Tetra Tech manager involved in the remediation and cleanup operation on the site had ordered employees to carry out multiple fraudulent actions. The workers were ordered to destroy lab results for post-cleanup soil traces which “had some of the highest radioactive readings that had ever been obtained at Hunters Point”. The workers were also ordered to take samples in other areas and avoid potential “radioactive hot spots”.

The case already triggered criminal charges against two former Tetra Tech employees who were responsible for testing the contaminated soil. They ended up pleading guilty to falsifying reports and were sentenced to eight months in prison in two separate cases, which concluded in December and May.

The Environmental Protection Agency also found, during a December 2017 audit of the tests, that from 90 to 97 percent of all the soil samples taken in two areas of the site were either compromised or deliberately faked.

309 homes were already completed in what was known as Phase I of the Hunters Point project before it was put on hold. The region where they were built is being retested for excessive radiation.

The rest of the site is a major problem to test properly, because the area is “mostly developed and covered with concrete, asphalt or landscaping soil”. Despite that, the California Department of Public Health is in the process of re-testing two parcels of the site using above-ground gamma ray scans to detect radiation. If they find evidence of radiation, the state will pursue further tests.

San Francisco Supervisor Malia Cohen, the representative for the Bayview neighborhood where the development was taking place, has taken a strong stand that no construction will take place unit the site is fully certified as clear of radiation above acceptable limits.

Tetra Tech is facing five federal lawsuits for its part of these environmental frauds. The Hunters Point project developer FivePoint is named as a co-defendant in four of those cases.