Wave propagation on the Louisiana inner shelf is studied using concurrent measurements at two shallow water ocean observatory sites, in sedimentary environments dominated by mud at one site, and sand at the other. Contrary to the widely accepted hypothesis that mud-induced wave dissipation is important only for long waves, observations show significant damping of high-frequency, short waves, which interact weakly with the bottom. The mechanism of short wave dissipation is not understood. Numerical simulations show that other dissipative processes such as refraction, or depth-limited breaking, do not account for the magnitude of the observed effects. Independent observations of strong sediment re-working during storms suggest that these effects are related to sediment resuspension processes.