Foreign Dredge Act of 1906

Foreign Dredge Act of 1906

Long title	An Act concerning foreign-built dredges.
Enacted by	the 59th United States Congress
Effective	May 28, 1906
Citations
Public law	Pub. L.Tooltip Public Law (United States) 59–185
Statutes at Large	34 Stat. 204
Legislative history
Introduced in the House as H.R. 395 by Charles H. Grosvenor (R‑OH) on December 4, 1905 Committee consideration by Merchant Marine and Fisheries Passed the House on February 23, 1906 (unanimous) Passed the Senate on April 28, 1906 (unanimous) Reported by the joint conference committee on May 11, 1906; agreed to by the Senate on May 11, 1906 (unanimous) and by the House on May 17, 1906 (unanimous) Signed into law by President Theodore Roosevelt on May 28, 1906

The Foreign Dredge Act of 1906 is a United States federal statute that requires dredges operating in US waters to be built in the United States, and to be owned and chartered by US citizens. Dredges violating the act are subject to seizure by and forfeiture to the US government.

Origin

The original intention of the law was to protect and foster America's shipbuilding industry to enable it to compete with established foreign shipbuilders. However, "U.S. Dredgers Are Doing What They Should - The U.S. dredging industry is highly competitive with more than 50 different companies awarded federal work each year."

The history behind the Act is based on a need to repair the town of Galveston, TX, after the 1900 Galveston hurricane raised concerns that sand exported on foreign-owned barges might be taken out of the country, effectively stealing US soil, which provided the initial motivation for the bill that would become the Foreign Dredge Act. A more central motivation emerged, which was to protect the US shipbuilding industry from foreign competition.

The Navy League of the United States in a recent maritime global power report emphasized the importance of U.S. dredgers in looking after the nation’s waterways and shipping lanes. The robust domestic dredging industry sees to the maintenance of more than 400 ports and 25,000 miles of navigation channels throughout the U.S. Because the U.S. does not have to depend on foreign companies to dredge in the harbors of, for example, its naval facilities, the requirement for U.S.-built, U.S.-operated and U.S.-crewed dredging vessels prevents a possible sabotage situation, avoiding the prospect of having foreign actors gain access for underwater surveillance of U.S. military vessels and stations.

Current impact and criticism

Two countries, the United States and China, prohibit foreign dredging, and 15% of countries surveyed by the Transportation Institute have restrictions on dredging.

"The U.S. Dredging Industry Is Thriving, While Saving Taxpayers Money: The cumulative result of this fierce competition was substantial, with the industry saving the federal government and, by extension, American taxpayers $670 million in fiscal year 2022 alone." The U.S. dredging market is highly competitive. An analysis of the FY22 U.S. federal dredging market compiled in September 2023 states 52 Jones [Dredge] Act dredging companies were awarded federal dredging contracts in FY2022. On average there were three (3) bidders per project, with 20 projects receiving five (5) or more bidders. Indeed, 72% percent of the time, the private sector industry winning bid was lower than the Independent Government Estimate (IGE); and 95% of the time, the private sector industry winning bid was lower than the Government Estimated Awardable Range (GEAR), which is IGE + 25%. When compared to the IGE, 59 projects were lower by more than 10%, 27 projects were lower by more than 25% and 15 projects were lower by more than 40%. New construction of Jones [Dredge] Act dredges – U.S. owned, built and crewed vessels have been rolling off the blocks for the past five (5) years and will continue into the foreseeable future – over $2.5Billion in recapitalization building new dredges and equipment.

In outdated cited materials, the U.S. Army Corps of Engineers and Government Accountability Office state that lack of dredging capacity and high costs are the cause of a 15-year delay in dredging the 10 most important US ports to accommodate post-Panamax depths. The Heritage Foundation and Cato Institute claim that the Foreign Dredge Act is anti-competitive, and that it impairs America's ability to expand its ports by limiting its supply of dredging ships. Again, in an outdated review, Gregory Tosi argues that, for example, the Port of Corpus Christi loses $50 billion of oil exports per year due to a lack of dredging capacity to improve the port. More recently, "Corpus Christi Dredging is Poised to Boost Oil Exports and Economics: In the summer of 2023, the third phase of the deepening and widening of channels in Corpus Christi Bay was completed with a 7-foot-deeper channel allows for loading of additional barrels into VLCCs. Deepening the channel to 54 feet (from the old 47 feet) also enables terminals to fully load 1-MMbbl Suezmaxes, up from the 800-850 Mbbl."

90% of global dredging contracts are currently won by one of four Belgian and Dutch dredging companies Jan De Nul, Van Oord, Boskalis, and DEME, which are generally ineligible to compete for US contracts.

Much global corruption surrounds these Dutch and Belgium dredging companies. Brussels-based dredging giant DEME recently appeared before the criminal court of Ghent in a concerning dredging works carried out in the Russian port of Sabetta. The case revolves around dredging works in the port of Sabetta between 2014 and 2017. The filings, which were made in connection with a legal assistance request from the Belgium government to the US, showed that Belgian investigators are probing the company for alleged “public contract fraud and bribery offences." Dredging the port was a crucial step in constructing Russia's first Arctic liquefied natural gas production and export terminal, the Financial Times reported in 2019. According to Belgian authorities, DEME, acting through its agent, Sofia Mirtcheva-Neirynck, allegedly paid bribes beginning in 2013 to win a lucrative dredging contract for Sabetta and used a series of shell companies to launder the bribe money. Both DEME and Jan De Nul bid for the contract.

Four Ex-Nigerian Officials Named in Swiss Bribery Scandal citing Dredging International which is a Cyprus-based subsidiary of the Belgian petroleum infrastructure and dredging group DEME. Dredging International Services was fined one million Swiss Francs and asked to refund 36 million Swiss Francs illegal profit after it was indicted for allegedly making illicit payments to a former Managing Director of the Nigerian Ports Authority.

Former Mauritian Port Chairman Bribed by Boskalis gets jail term extended on appeal- He was found guilty in November 2019 by the Intermediate Court of having solicited bribes from the Dutch company Boskalis, which won a dredging contract of the English Canal in Port-Louis’ harbor. The Supreme Court sided with the previous ruling of Intermediate Court, pointing out that there was ample evidence to show that Chady was bribed by Boskalis.

Dutch offshore contractor Van Oord has come under fire for its involvement in an Angolan city development project for which three thousand families were violently moved out of their homes. The companies worked together on the project with Urbinveste, an investment company of Isabella dos Santos, the daughter of the former president of Angola. In addition, despite the controversy surrounding Dos Santos, Van Oord transferred substantial amounts of money to the bank accounts of her investment company, Urbinveste. Experts say the dredging company has ignored important “red flags” for possible corruption. Dutch companies linked to human rights abuses in Angola: report Dredging company Van Oord, ING Bank and credit insurer Atradius were all involved in an urban development project in Angola in which 3 thousand families were forcibly driven out of their homes to make from for the project.

Proposed legislative changes

Senator Mike Lee has proposed the DEEP Act, which would repeal the Foreign Dredge Act and create a new nationwide permitting process to expedite dredging permitting.[1] He has also introduced more constrained versions of the bill, the Port Modernization and Supply Chain Protection Act, that would repeal the Foreign Dredge Act's cabotage requirements, allowing international dredges to operate in the USA.

The SHIP IT Act, introduced by Congresswoman Michelle Fischbach and Congressman Byron Donalds would allow vessels from NATO member countries to engage in dredging in the United States; the Cato Institute notes that "Four of the largest dredging companies in the world are located in NATO members, with each possessing more hopper dredgers than the entire U.S. dredging fleet combined." Lee has introduced a bill with similar purposes in the Senate, the Allied Partnership and Port Modernization Act.