Dredge Report

Ritchie Studer has been making fewer trips to New York lately, and, from his perspective, that’s a big problem.

As the chief executive of the Texas-based company UTEX, which wants to process the dredged land from New York Harbor and use the material to build up land along the Jersey shoreline, ultimately selling it off to developers, Mr. Studer said he, for months, was constantly traveling to the area to craft a contract with the Port Authority.

Those talks ceased in July, after the highly valuable 30-year contract was approved by the Port Authority’s board and finalized; now the company has been waiting on the New York–New Jersey agency to execute it, an unusually long wait for a contract that was approved and readied six months ago.

The company is getting antsy.

The wait, it contends, is costing the public money, as the Port Authority has valued UTEX’s contract as one that would save the agency $45 million a year, according to UTEX. Last month, the company took the Port Authority to court, trying to get a New York judge to order the agency to execute the contract (UTEX lost). In November, the firm filed a suit in federal court, accusing the Port Authority of patent infringement.

“We went through a tremendous amount of detail—two years of work,” Mr. Studer said. “You can deal with ‘no,’ and you can deal with ‘yes,’ but it’s very difficult to deal with a ‘yes’ that never happens.”

A Port Authority spokeswoman, Candace McAdams, said simply that the process to execute the contract was not complete: “The board authorized us to reach an agreement, and the process with that hasn’t been completed yet,” she said.

A quick glance shows a complex history surrounding the issue.

The Port Authority and the Army Corps of Engineers have been dredging the New York area’s waterways for years, clearing channels for larger ships. UTEX does not do harbor dredging itself, but rather it cleans and processes the material from the harbor’s floor that’s been dredged by other companies. Should it get awarded the contract in question, Mr. Studer said the firm would buy potentially hundreds of acres of land, using the dredged landfill to build up the height of low-lying waterside industrial sites, readying them for commercial development.

However, the way the company was awarded the still-unexecuted contract seems quite unusual.

UTEX owns the patent for a processing method that it created, though it contends the Port Authority and the Army have been using that technique through contractors, violating patent law. It has sued the Army Corps of Engineers over the patent issue, but it chose a different route with the Port Authority. In a conceptual agreement, UTEX agreed not to sue for patent infringement; instead, it would be awarded a valuable no-bid, long-term contract guaranteeing the right to process the dredged material for any dredging done in New York Harbor administered by the agency.

The agreement was mostly finalized in May of last year, brought to the Port Authority’s board and approved unanimously, with one abstention. The board authorized Chris Ward, the agency’s executive director, to execute a contract that would grant UTEX “the exclusive right to treat, process and beneficially use future dredged material.”

By the end of July, UTEX said in its court filings, a final contract was ready for execution that it says was “prepared and agreed to by all parties.”

In November, seeking to force the issue, it filed the patent infringement lawsuit in federal court—a suit it said it would drop if the Port Authority executes the contract—and also filed the proceeding in New York state court, in an attempt to force Mr. Ward to sign the contract.

Needless to say, the long-term guarantee that all processing would be done by UTEX has upset at least one competitor.

On July 22—just six days before UTEX said a final agreement was ready to be executed—J. Arnold Witte, the president of the New Jersey firm Donjon Marine Co., wrote a letter to New Jersey Governor Jon Corzine asking him to hold off on executing the contract. Donjon has been awarded a number of large dredging and dredge-material-processing contracts for the harbor in recent years; both the New York and New Jersey governors control the Port Authority.

“I write to voice my objections to an exclusive, long term, no bid agreement with a foreign entity that will have an immediate effect on a group of long-standing New Jersey domiciled companies,” he wrote. “We do not believe that the UTEX ‘settlement agreement,’ which is neither public nor competitively bid, will serve New York, New Jersey, the Port Authority of New York and New Jersey, or the taxpayers.”

Mr. Studer, of UTEX, contends that despite the no-bid nature of the contract, the savings of going with his company, by the Port Authority’s own estimates, are substantial.

The matter seems bound for resolution at some point: UTEX is proceeding with its federal patent lawsuit, which could cost the Port Authority significant sums if the firm is successful.

ebrown@observer.com

Dredge Report