Long-running lawsuit over fast ferries’ engines is settled

The fast ferry Chenega pulling into Whittier. Photo by Ed Schoenfeld.

The lawsuit over allegedly defective engines for the state’s fast ferries has come to an end.

A settlement was announced in Juneau Superior Court Friday afternoon after nearly three years of litigation and just before the start of trial.

Senior Assistant Attorney General Dana Burke said the Alaska Marine Highway System will get eight new diesel engines provided by the German manufacturer MTU Friedrichshafen. There’ll be an option for the state to purchase two spare engines nearly at-cost.

Burke said the settlement also calls for a maintenance agreement and new five-year extended warranty on the newer model 4000 series V engines for the fast ferries Fairweather and Chenega.

We’ve built into this settlement agreement an improved mutually beneficial working relationship that’s going to allow these engines to continue to operate in ferry service from here on out. And it’s not just a rhetorical flourish with respect to an agreement to do that. We have binding commitments that make us do that.”

Value of the new engines was not immediately available, but Burke said that MTU could deliver and install them – four for each of the ferries – starting in the fall. Current plans calls for a staggered installation with the engines installed in one vessel during next fall’s off-season and the other vessel to have its engines replaced in the subsequent year. Burke said they’ve all committed to keeping the current 595 series engines operating in both vessels until they have been replaced by the 4000s.

Burke promised that the settlement agreement will be made public as soon as all the parties sign off on it. That may happen early next week.

Doug Serdahely, the Alaska attorney for MTU, said it has taken the parties and counsel working full-time nearly three weeks to develop the settlement agreement.

A lot of thought and effort has gone into it. Both sides think it is a very fair and very reasonable agreement for both sides.”

During Friday’s court hearing, both Burke and Serdahley asked that the trial scheduled for April 8th be vacated or taken off the calendar.

The lawsuit was initiated nearly three years ago and included arguments over potential evidence and a brief diversion into federal bankruptcy court. State of Alaska attorneys recently traveled to Germany to take depositions in the case.

The state’s case against MTU and its affiliate Tognum America will be dismissed while the state hopes to preserve its interests against Robert E. Derecktor, Inc., the Connecticut builder of the ferries and the other defendant in the case. That company is currently mired in bankruptcy court and is not currently part of the state’s lawsuit.

More recently, the fast vehicle ferry (FVF) Fairweather has served Southeast Alaska while the Chenega has served Prince William Sound.

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