Judge greenlights Navy contractor’s $57 million settlement resolving environmental fraud claims

SAN FRANCISCO (CN) — A federal judge Wednesday approved a $57 million settlement resolving the government’s claims against a U.S. Navy contractor accused of widespread fraud in the $1 billion cleanup of a radiation-contaminated shipyard and site of a major redevelopment project.

In a four-page order, U.S. District Judge James Donato, a Barack Obama appointee, said the settlement between contractor Tetra Tech EC, a wholly owned subsidiary of Tetra Tech Inc., and the government is “fair, adequate, and reasonable under all the circumstances,” noting no party or person had objected.

Under the False Claims Act, individuals can sue a corporation accused of defrauding the government in the name of the entity or agency that was purportedly defrauded. If successful, the relator can receive a portion of the money received.

Four whistleblowers — relators Elbert Bowers, Arthur Jahr, III, Archie Jackson and Susan Andrews — initially filed the qui tam case in March 2013 on behalf of the government, accusing Tetra Tech EC of falsifying soil tests that were supposed to verify the decontamination of Hunters Point Naval Shipyard in San Francisco, a 400-acre site where more than 10,000 homes were slated to be built. In 2016, relators Anthony Smith, Donald Wadsworth and Robert McLean filed similar qui tam actions.

The government intervened in the case in 2018, taking over the primary prosecutorial duties. In its complaint, the government accused Tetra Tech EC of reporting false results from soil samples and building surveys, as well as breach of contract. Later, the government added claims of common law fraud and recovery of response costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

“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 at the Hunters Point site for which it was hired,” Assistant Attorney General Joseph Hunt said in a 2018 statement.  “The Department of Justice will vigorously pursue action against those who obtain federal funds based on promises they knowingly fail to keep.”

The parties announced they had reached a settlement-in-principle in December 2024. Under the terms, Tetra Tech EC agreed to pay $57 million, plus interest, to the government to resolve four causes of action in the False Claims Act case — with $51.87 million allocated to the “Soil Fraud Allegations,” and $5.13 million allocated to the “Building Scan Fraud Allegations.”

The government separately reached a $40 million settlement agreement with Tetra Tech EC in July 2025 to resolve the CERCLA claim.

The relators initially objected to the settlements, challenging the government’s position they should not receive a percentage of the $40 million CERCLA claim settlement.

“The USA has interests in retaining as much of the settlement money as possible, and minimizing its exposure in other litigation, while relators have an interest in getting their fair share of the settlement proceeds,” the relators said in their objection order.

However, Donato rejected their argument.

The government and the relators also went back and forth on what percentage of the $57 million settlement relators should receive, and they ultimately agreed to a 21% share, which the settlement then divvies up between the various relators.

Donato said the relators can file an additional request for expenses, attorney fees and costs to be paid by Tetra Tech EC pursuant to the False Claims Act.

Representatives for the parties did not immediately respond to requests for comment.

The Hunters Point shipyard in San Francisco’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.

In their original complaints, the whistleblowers claimed a Tetra Tech manager ordered workers to destroy lab results for post-cleanup soil samples that “had some of the highest radioactive readings that had ever been obtained at Hunters Point.” The workers were ordered to take samples from other areas and avoid “radioactive hot spots,” the relators said.

The lawsuits also claim Tetra Tech and its subcontractors hired unqualified workers and improperly disposed of hazardous materials.

Two former Tetra Tech employees, who oversaw testing of the contaminated soil, pleaded guilty to falsifying reports in 2017 and were each sentenced to eight months in prison.

A December 2017 audit by the Environmental Protection Agency found that 90 to 97% of soil samples in two areas of the site were potentially compromised or intentionally falsified.

Tetra Tech was paid more than $250 million in contracts for its work on the Hunters Point project from 2006 to 2012, according to the U.S. Navy.

Tetra Tech previously claimed the fraudulent conduct was limited to a few rogue employees and argued the whistleblowers were motivated by greed.

In February, Donato approved a $1.5 million settlement between Tetra Tech and residents near the former Hunters Point Naval Yard.

The residents’ lawsuit arose from accusations Tetra Tech ordered workers to destroy post-cleanup soil samples with high radioactive readings and replace them with samples from other areas of the site.

The plaintiffs also named real estate developers Five Point Holdings LLC and the Lennar Corporation as defendants. They separately settled with the residents for approximately $10 million.