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. A dredging project 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.

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 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 bidders per project, with 20 projects receiving five or more bidders. Seventy-two 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%, see https://www.marinelink.com/news/dredge-construction-booming-competitive-509814#:~:text=To%20help%20meet%20the%20steady,CEO%2C%20Dredging%20Contractors%20of%20America. 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, see https://www.ajot.com/news/competitive-u.s-jones-act-dredging-market-new-construction-of-dredges-largest-capitalization-ever. 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. 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. 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 that can be loaded now, see, https://rbnenergy.com/deeper-and-deeper-corpus-christi-channel-dredging-is-poised-to-boost-oil-export-economics.

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 is attributed to these Dutch and Belgium dredging companies. Brussels-based dredging giant DEME recently appeared before the criminal court of Ghent in a bribery and fraud case 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. 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.The Russian Transport ministry awarded the project to Russian construction group USK Most, which in 2013 announced a tender to subcontract the dredging work. Both DEME and Jan De Nul bid for the contract, see, https://www.belganewsagency.eu/dredging-group-deme-to-stand-trial-in-russian-bribery-case. 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, see, https://www.occrp.org/en/daily/6541-four-ex-nigerian-officials-named-in-swiss-bribery-scandal.

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.