Members of the House of Representatives recently heard testimony from U.S. dredgers in support of a legislative solution to correct a misinterpretation of a 1992 amendment that was aimed at augmenting control over ownership in the domestic dredging trades.U.S. funds are used to support dredging operations.
The SIU and the International Union of Operating Engineers submitted a joint statement for the record of the April 30 hearing, jointly conducted by the Subcommittee on Coast Guard and Maritime Transportation and the Subcommittee on Water Resources and the Environment (both parts of the House Committee on Transportation and Infrastructure).
The unions’ statement read in part, “Our support for clear and emphatic U.S. cabotage policies is unwavering. An American-flag fleet owned, controlled and crewed by U.S. citizens is in the national interest, today more than ever. Unfortunately, it is becoming more and more apparent through aberrations in U.S. laws foreign interests are making inroads into the domestic transportation market. In the last decade, foreign shipping interests have entered the domestic cargo trade through lease-financing schemes and have entered the domestic dredging trade through a misguided interpretation of ownership requirements.
“The question before the Congress today is whether the U.S. coastwise laws are being interpreted correctly. Are U.S. dredging companies, which adhere to the basic tenets of U.S. cabotage policy, enjoying fair competition or has the playing field been skewed? Have we established in the United States an environment that allows one particular dredging company to operate under an entirely separate set of rules? Maritime labor firmly believes that an unfair competitive environment does exist today in the U.S. dredging industry, which can no longer be tolerated and must be corrected by the U.S. Congress.”
The unions noted that in 1992, Congress enacted legislation designed to tighten control over the domestic dredging fleet. The amendment clarified that the 75 percent citizen ownership requirement, mandated in U.S. cabotage policy, would apply to all vessels engaged in dredging in U.S. navigable waters, including any entity that charters a vessel for dredging in U.S. waters.
As recalled in the statement, in the spirit of fairness, Congress included a grandfather clause to allow the Stuyvesant, a U.S.-built, U.S.-flag hopper dredge to continue in domestic operation under charter to Royal Boskalis, a Dutch company, for as long as the Stuyvesant remained under the American flag, or until the end of its useful life. In addition, Congress permitted Royal Boskalis to operate other existing U.S.-flag hopper dredges and other non-hopper dredges that worked with the Stuyvesant or would be needed in the event of the disability of the Stuyvesant.
“For several years, this amendment worked as intended by the U.S. Congress,” stated the SIU and the Operating Engineers. “However, the U.S. Customs Service in 1998 issued a rather broad interpretation of the grandfather clause that has allowed Royal Boskalis to expand into a much larger non-hopper segment of the dredging market. As a result, Royal Boskalis today controls a fleet of 16 vessels, including at least six dredges, through a joint venture with Bean Dredging known as Bean Stuyvesant LLP. Today, Boskalis, the largest dredging company in the world conducting 35 percent of the world’s dredging operations in more than 50 countries, is primed to dominate the U.S. dredging market. Contrary to congressional intent in 1992 to limit foreign interest in the U.S. dredging trade, the Customs Service ruling has in effect circumvented the will of Congress when it bestowed on a foreign company benefits not offered to U.S. companies and thereby in all reality encouraged its rapid expansion in the domestic dredging market.”
The unions further stated, “The level playing field intended by the Congress has been turned upside down. The Bean Stuyvesant joint venture enjoys access to the financial resources of its foreign parent, Royal Boskalis, and as a result is in a position to destabilize U.S. market conditions, thereby hindering the ability of some American companies to obtain suitable financing. Further, Bean Stuyvesant enjoys trading advantages not available to other U.S. industry participants. The Bean Company is free to charter its dredging equipment to a non citizen—no American company can do so. Bean Stuyvesant has the commercial flexibility to reflag its equipment and then return to the American flag and American market without asking congressional permission—no American company can do so….
“Clearly, the Bean Stuyvesant operation goes well beyond the intent of Congress when it approved the 1992 amendment to tighten the control over ownership in the U.S. domestic dredging trade. Congressman Billy Tauzin, Chairman of the Coast Guard Subcommittee and floor manager of the 1992 legislation, was very clear about the intent of Congress when he stated that the purpose of the amendment was to ‘close loopholes in the Federal law’ and to ‘make all domestically operated dredges subject to the same documentation and ownership requirements as other vessels under the coastwise trade laws.’ Unfortunately, the Customs Service interpretation has opened a wide loophole that has benefited foreign interests at the expense of American operators adhering to the standards mandated by the U.S. Congress. The Seafarers International Union and the Operating Engineers urge the Congress to close the door to the Stuyvesant loophole.”
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