The Politics of Dredging

Why are the number of personal injury lawsuits from Texas employees being filed against dredging companies in the Gulf escalating out of control?
By Kevin Knoch

At first it was hard to make the connection. Even those industry professionals most affected had to start talking among themselves before individual companies realized they weren’t struggling with the dilemma alone. Ports along the lower South Texas coast started to worry about how they would keep their waterways clear for navigation. Others began to see how the situation could have a negative impact on the economy of the region.

Port directors began to hear rumblings from shippers about seeking other destinations for their cargo. Shipments were detoured to other ports; ships were light loaded to clear the shallow Brownsville Ship Channel. The waterway had a depth of 34 feet in some places when ideally the distance to the channel floor should have reached 46 feet.

What was their common concern? Simply the age-old problem of shoaling; the natural process caused by wind and waves that increases the shallowness of a body of water. Bottom line: The waterways weren’t getting cleared on a regular basis.

The answer to blocked and shallow waterways is dredging, and along the Texas coast the only customer for dredging companies is the United States Corps of Engineers. All of Texas’ harbors are manmade and in need of periodic maintenance. Finally, the federal agency started taking notice when fewer bidders were submitting bids on dredging projects, and those who did gave price offerings well above Corps cost estimates.

In December 2006, a lone bid for clearing the Brazos Santiago Pass headwaters leading into the 17-mile Brownsville Ship Channel came in at $6,587,110 — about $2.5 million above the predicted price of the Corps of Engineers. The project was shelved because of the high offer, and the waterway would remain dangerously low. Additionally, a project aimed at aiding the main asset of South Padre Island (SPI) ­— its beach — was also cancelled.

Since 1992, SPI’s Economic Development Corporation had contracted with the Corps and the Texas General Land Office to dredge sand from the nearby channel and move it to the island’s beaches to re-nourish them and fight erosion hot spots. The program had been effective, often adding footage of beach to areas where the sand was applied.

In the two years since the last beach re-nourishment project (winter 2004-2005), a trouble spot had developed on the north end of the town beach. In the summer of 2005, Hurricanes Emily, Katrina and Rita wreaked havoc on island beaches. One section of beach had seen a loss of 50 feet of beach in the last 18 plus months. The best the town could do was to take a Band-Aid approach: truck sand to the trouble spot eating away beach near condominiums and attacking a motel’s retaining wall.

It was the second dredging project cancelled by the US Corps of Engineers along the lower South Texas coast during the year. Port Mansfield, a recreational fishing port in Willacy County, is in need of major work where its channel cuts through Padre Island to the Gulf of Mexico and forms the northern end of SPI. The solo bidder on the project came in at nearly $3 million above the Corps estimate of $2,074,937. The best the local navigation district could do was take out a lease purchase on a small dredge to help clear their inner channel where the depth had risen to two to three feet in some places, threatening to impede even small recreational craft.

The dots were connected in August 2006 when the US Army Corps of Engineers received findings compiled by the Dredging Contractors of America (DCA). At that time Eric Stockdale, chief counsel of the US Army Corps of Engineers, learned that for 39 months (starting in 2003) there was an alarming increase in the number of lawsuits filed against dredgers. A high percentage of those lawsuits was filed by seamen claiming residence in South Texas counties.

At issue is a venue exception created during tort reform negotiations in the Texas legislature in 1995. It allowed seamen and railroad workers covered by the federal Jones Act to file suit in either federal or state courts and/or in the county of their residence. In contrast, most state suits are directed to the county where an incident happened or to the county the where the defendant’s principal place of business is located.

Eight dredging companies were surveyed. DCA found that “collectively the companies had 170 lawsuits of which 108 — or 64 percent — were from Texas and 98 were from South Texas.” The briefing went on to point out of the Texas torts 59 were filed by the Buzbee Law Firm of Galveston and 33 by John Stevenson and Associates of Houston. The DCA added that in 67 cases, three South Texas doctors appeared for the plaintiffs.

Joe Hrametz, chief of the Navigation Branch for the US Army Corps of Engineers’ Galveston District feels the litigation situation could soon affect dredging projects all along the Texas coast. “It is going to impact not only South Texas, but [also] the federal work we do in Texas,” he says. “Since they have venue rights back to their county, they are under their county jury and judge that are more sympathetic to the case.”

A Wall Street Journal article published February 27, 2007, hit on what Hrametz was referring to. The story featured attorney Anthony Buzbee of the Galveston law firm speaking at a convention in Lake Las Vegas, Nevada, in May 2006. Buzbee’s remarks were recorded. The lawyer used the Rio Grande Valley’s Starr County as an example of why he likes to file seamen injury cases there. “That venue probably adds about 75 percent to the value of a case. You’ve got an injured Hispanic client, you’ve got a completely Hispanic jury and you’ve got a Hispanic judge....That’s how it is.”

The litigation situation was also discussed by Richard M. Lowry, COO of the Great Lakes Dock and Dredge Company, at the 2006 Galveston District Annual Dredging Conference. Addressing the conference, Lowry bluntly stated that in all his 29 years with the company, “nothing has discussed and discouraged me more than the subject that I’m going to touch on today.”

Lowry then declared that the number of personal injury lawsuits from Texas employees being filed against dredging companies in the Gulf and the East Coast “is escalating out of control.” He took direct aim at the venue exception for Jones Act seamen under Texas law; suits filed in the Rio Grande River counties of Cameron, Hidalgo, Starr and Zapata; and the two Texas law firms filing the great majority of the suits. “The number of incidences leading to chronic back pain is without precedence,” he added.

Focusing on the lawsuit statistics for Great Lakes, Lowry used calendar year 2005 as an example. “The number of lawsuits and claims filed by South Texas employees were 30 times greater than the number filed by employees residing in the rest of the United States; not double, not triple, [but] 30 times!”

Lowry summed up his remarks about the litigation situation by stating, “We do not mean that there are no genuine personal injury claims against the industry. However: the outrageous number of supposedly serious personal injury lawsuits.... from such a small segment of the workforce.... from such a small area.... from a small number of law firms working.... with such a small number of physicians.... during such a short period, defies logic.”

The chief operating officer predicted increased bids for work being done in Texas to cover the liability costs of working in state waters. Emphasizing the dredging companies in Texas work almost exclusively for the US Army Corps of Engineers, Lowry stated that “if the situation is allowed to continue, the increased costs in the future will be borne directly by the U.S. government and their cost-sharing partners.”

This year members of the dredging industry formed a lobbying organization, Maritime Jobs for Texas. It has the support of several of the state’s port directors who favor legislation that would limit the venue opportunities in Jones Act cases filed in the state. House Bill 1602 filed by State Rep. Corbin Van Arsdale, R-Houston, seeks to have Jones Act cases mirror the general Texas venue law. The plaintiff would be required to file first in the county where the incident occurred or in the county where the defendant resides. If a plaintiff is unable to sue under those requirements, a plaintiff would still be able to file in the county of their residence.

On March 21, 2007, testimony was heard for over seven hours on the proposed legislation. The bill is now pending in the House Civil Procedures Committee. Companion legislation has been filed in the State Senate.

Where does the situation leave one of the state’s major tourism generators, South Padre Island? Re-nourishment projects protect the island’s main drawing card, the beach. Real estate developer Richard Franke serves as president of the community’s EDC.

“[People] come to South Padre because of the beaches,” he says. “If we don’t maintain the beaches, then obviously we could have a serious problem. Who knows whether the erosion that is occurring today will continue...but we assume that it will. We would like to see a re-nourishment of some sort take place next year, certainly within the next two years.”

Franke stresses the tourist business on the island is not close to being affected in a severe way by beach erosion, and adds that “we can’t ever allow that to happen.” Currently SPI is looking into a project — an offshore sand source — that would ensure healthy beaches in the future.
SPI City Planner Cate Ball states the project will be done in four steps, moving the actual re-nourishment to 2009. “Although this project will cost us millions of dollars, it should last us a lot longer than our current ‘small scale’ dredges,” she says. “Instead of having to re-nourish our beach every one to two years, a project on this scale wouldn’t need to be re-nourished for six to eight years, or maybe even 10 years.” The offshore source could pump one million cubic yards on the beaches, four times the amount of present nourishment projects. Franke estimates the costs of the ambitious project might run $4 million up to $20 million.

The method of sand delivery under the offshore source project is the same as the channel dredging; pipeline dredge. It doesn’t matter whether SPI receives its next sand supply from the channel or offshore, it still could be facing the same problems finding a dredger in 2009. Will the contractor add considerably to the costs of the offshore work because of the scope and continued threat of lawsuits?

Several questions remain, with or without a change in the state venue law. Will dredging companies continue to bid on work in Texas waters? It may not be worth their while. Shipping in and out of the Rio Grande Valley — whether the cargo is refined sugar cane headed to Louisiana or steel on its way to mills in Monterrey, Mexico — could continue to be affected.

Then there’s the $600-million-a-year hotel business in Cameron County, of which $400 million is generated by South Padre Island’s hotels. It could be seriously compromised if beach erosion problems cannot be addressed.

Major navigation routes and problems are sure to receive attention from the US Army Corps of Engineers. But what about small ports like Port Mansfield, nearly closed due to the lack of dredging? In the 2007 congressional budget only $5 million was earmarked for dredging for the Port of Brownsville. Nearby Port Harlingen, Port Mansfield and Port Isabel saw zero dollars set aside for them, and hope they will be scheduled for work in the near future, provided a dredger is willing to do the work.