Going Coastal

The big earthmoving machines sit atop floating barges, steadily slurping through the water with giant shovels and excavators like oversized kids’ toys carving through waterlogged sand at the beach.

The work — involving the removal of millions of tons of muck, silt and sediment — is part of an ongoing, multibillion-dollar effort to create a network of deeper channels that will allow bigger ships to safely navigate the Port of New York and New Jersey.

But the project, critical to the region’s economy, has turned into a fight involving political muscle, mounting lawsuits and other battles among companies looking for a piece of a $2.5 billion project — a fight expected to get even more complex after a decision behind the scenes last week to bid a crucial part of the contract.

At issue is a deal with the Port Authority of New York and New Jersey to clean and treat the so-called “dredge spoils” being dug up from the bottom of the harbor. Anything dredged from the bottom of New York Harbor cannot simply be disposed of like a bucket of sand at the Jersey Shore. The rock and sediment being dug from the channels is often contaminated with heavy metals and old industrial wastes that settled to the bottom over time, and must be treated and dried before being trucked for disposal or used as landfill cover.

Four years ago, after work had already begun, Texas-based UTEX Environmental Services charged that the Port Authority and the U.S. Army Corps of Engineers were violating its patents on the treatment of dredge spoils.

The company, an environmental remediation firm, sued the Army Corps for patent infringement. But instead of hauling the Port Authority into court, UTEX negotiated an unusual settlement. It agreed not to sue the agency in return for a 15-year contract with extension options for another 15 years. The proposal gave UTEX the right to process all dredged material from New York Harbor — without the payment of any damages by the authority — at a set fee it said was lower than what the authority is currently paying.

The Port Authority’s staff negotiated the proposal and the agency’s commissioners approved it last May. A staff report concluded the deal would save $3 million a year in dredging costs, and up to $40 million if the Army Corps also used UTEX facilities. The commissioners authorized executive director Christopher Ward to draw up a contract.

The settlement seemed all but sealed, when at least three dredging companies under contract with the Port Authority appealed directly to Gov. Jon Corzine to block the deal.

It has remained in limbo ever since.

Donjon Marine Co. of Hillside called the agreement with UTEX an illegal monopoly. Company president Arnold Witte said he was unaware of any ability by UTEX to actually do the work.
“I thought it was bizarre … that there would be a sole source agreement with a company that had not demonstrated any practical experience. I just didn’t understand it,” Witte said.

UTEX officials say they have the experience and the patents for a process other dredgers are using, and said Donjon used political connections in an effort to kill the deal. Donjon’s attorney is Angelo Genova, a former Port Authority commissioner and one of the governor’s personal lawyers.

Corzine spokeswoman Deborah Howlett acknowledged the governor had intervened in the case. She said there were concerns over UTEX being given a long-term contract without competitive bidding, and the matter was brought to the attention of Anthony Coscia, the Port Authority chairman and one-time chairman of the New Jersey Economic Development Authority.

“There was no political agenda. He just wants to make sure it’s done the right way,” Howlett said.

After months of inaction, the Port Authority last week decided to start from scratch and put it up for bid.

Port Authority officials said the commissioners had initially approved the proposed settlement to stave off litigation, but then came up against questions raised not only by Corzine but also by the Army Corps and the Department of Justice because of the UTEX lawsuit.

“Treatment and dredging is a complicated issue to start with and this has been particularly complicated because there was a lot of internal debate,” said Stephen Sigmund, chief of public and government affairs for the agency. “Staff thought it could save money on doing the agreement with UTEX, but the board did not want us to do a single-source agreement. Ultimately the agreement the staff wanted to reach did not satisfy the needs for fiscal responsibility and transparency that the board wanted.”

UTEX officials question the sudden turnaround on a matter they believed had essentially been resolved by the agency’s commissioners.

“The port has ignored and refused to implement an agreement which their professional staff projects will save the authority $43 million annually,” said UTEX president Rich Studer, asking why the agency has waited eight months to suddenly raise the competitive bidding issue. Studer said the Port Authority’s staff cited a sole-source contract awarded to Donjon in October 2008 in defending the contract with UTEX.

Sigmund said a competitive bid will provide the best price for the port, no matter who wins.
BY TED SHERMAN
Star-Ledger