U.S.-FLAG INTERESTS WANT JONES ACT ?LOOPHOLES? CLOSED IN DREDGING

U.S.-FLAG INTERESTS WANT JONES ACT ôLOOPHOLESö CLOSED IN DREDGING    U.S.-flag vessel interests in dredging and coastwise transport want Congress to tighten regulations governing these industries’ operations.
   The debate arose during a House Coast Guard and Maritime Transportation Subcommittee oversight hearing Tuesday focusing on U.S.-flag dredge ownership requirements.
   “It is impossible for us to believe that when Congress acted in 1992 to ensure American control of dredging vessels, it intended or condoned that a limited exception based on a single vessel, the ‘Stuyvesant,’ should become an avenue for increasing penetration of the U.S. industry by foreign-controlled vessels,” Richard Weeks, president of dredge firm Weeks Marine, and head of the Dredging Contractors of America, told lawmakers.
   “This is a loophole, plain and simple,” Weeks said. “And it should be closed.”
   The U.S. domestic waterborne trades, including dredging the nation’s waterways and harbors, are regulated under section 27 of the 1920 Merchant Marine Act, also known as the Jones Act.
   The controversial dredge firm, Stuyvesant Dredging Co., a subsidiary of Dutch giant Royal Boskalis Westminster, did not pose much of a threat to other U.S. dredging firms competing for jobs in the 1980s and early 1990s.
   Then in February 1998, Stuyvesant Dredging received a ruling from U.S. Customs to allow it to charter two cutter dredges to perform work on the Colorado River. Later that year, the company expanded its competitiveness by entering into a joint venture with New Orleans-based C.F. Bean Dredging Corp. These were unsettling moves for the U.S. dredging industry.
   “If this exploitation is allowed to continue, Royal Boskalis’ stated strategy of expansion and consolidation could well lead to its domination of the U.S. dredging market — exactly what Congress intended to prevent in 1992,” Weeks said.
   The Dredging Contractors of America’s position received support from maritime labor, including the Maritime Trades Department of the AFL-CIO, Seafarers International Union, and the International Organization of Masters, Mates and Pilots, in addition to the Maritime Cabotage Task Force, American Waterways Operators and Associated General Contractors of America.
   “Absent such control, the United States simply cannot be assured that the economic and operating decisions affecting these industries will be made by persons sharing U.S. national and economic security interests,” said the Maritime Cabotage Task Force in a written statement to the subcommittee.
   Jim Bean, chief executive officer of Bean-Stuyvesant, who also testified before the subcommittee, said he and his Dutch partners operate within the confines of the law and the company is simply giving the U.S. dredge leaders a run for their money.
   'Frankly, I think existing legislation and relevant U.S. Customs rulings are quite clear on ownership standards for U.S.-flag dredges,' Bean said. 'Sometimes legislative advocacy gets a bit overzealous and erroneous charges are sometimes made. I regret that this seems to be the case here.'
   It’s estimated that the Army Corps of Engineers, which awards the bulk of the nation’s dredging contracts, spends about $800 million a year on harbor deepening projects. The public port authorities and private terminals spend about another $200 million a year on dredging.
   Congressional leaders have generally been split in their view on whether or not Bean-Stuyvesant has violated the Jones Act.
   “I have thoroughly examined the merits on both sides of the Stuyvesant issue and feel strongly that the agreement reached in the 1992 act resolved the matter,” said Rep. Don Young, R-Alaska, chairman of the House Transportation and Infrastructure Committee last July.
   Industry groups, such as the American Association of Port Authorities and National Industrial Transportation League, have tended to welcome Bean-Stuyvesant’s presence in the domestic market to help keep dredging prices down.
   There is some concern by port officials that clamping down on Bean-Stuyvesant may negatively impact existing dredge contracts they have with the company.
   “Nobody is suggesting that contracts already awarded to Bean Stuyvesant be jeopardized by legislation to close the loophole,” Weeks said. “But we should not yet again ‘grandfather’ the fruits of international circumvention of the purpose and spirit of our dredging and coastwise laws.”