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Shipbuilders Council of America
20 F Street NW, Suite 500
Washington, DC 20001
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SCA Weekly Report | March 8 - 12, 2021
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2021 National Ship Repair Industry Conference (NSRIC) Registration Now Open
Registration for the 2021 National Ship Repair Industry Conference (NSRIC) is now open. NSRIC 2021 will take place virtually on 23 March 2021 from 1300-1600 EST.
Due to the pandemic, the in person portion of NSRIC will be deferred to 2022. However, we will continue with the NSRIC tradition of having senior Navy, Coast Guard and MSC leadership speak to the companies that make up the Ship Repair Industrial Base.
Confirmed Speakers Include:
- A message from CNO Gilday
- VADM Galinis
- VADM Kitchener
- RADM Wettlauffer
- RDML Moore, USCG
- RDML Ver Hage
This event is free to attend for SCA and SRA members.
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Feedback Requested: NOAA CLASS B Vessel Detail Design and Construction
NOAA is in the process of recapitalizing its fleet of research and survey ships. The agency is providing U.S. shipbuilders an opportunity to review and provide feedback on NOAA’s draft requirements for vessels with the capability of performing charting and surveying activities, and to support secondary missions, including living marine resource surveys and oceanographic monitoring, research, and modeling activities.
NOAA’s draft requirements have been posted HERE.
Submission information is listed in the announcement itself.
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COVID-19 STIMULUS SUMMARY
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Today President Biden will sign a $1.9T stimulus measure passed by the Congress earlier this week. After receiving the initial bill the House passed on February 27, the Senate made their revisions and passed the measure on March 6 by a vote of 50 to 49. Because the legislation was considered under the budget reconciliation process, a simple majority was all that is necessary for passage. The bill itself is massive and the below summary is not comprehensive of all provisions contained in the legislation. If there are questions from you or your company regarding provisions not covered below, please do not hesitate to contact SCA staff for additional information. Below are highlights of relevant portions of the final bill:
Tax Provisions and Stimulus Payments
- Individual Stimulus Payments - The latest round of payments will be $1,400 for singles earning $75,000 or less, and payments will phase out completely at the $80,000 income level. Couples earning a combined income up to $150,000 will get $2,800 with payments declining up to $160,000. Children in those same households (fulltime students younger than 24) will be eligible for $1,400 payments. This is in addition to the $600 checks that were part of the December stimulus package.
- Earned Income Tax Credit – Expands the earned income tax credit for taxpayers without children by increasing the credit percentage and phase out thresholds. It also allows taxpayers 19 and older without children to qualify, phasing out the standard 25 to 64 threshold.
- Child Tax Credit - Most Americans would receive $3,000 a year for each child from ages 6 to 17 and $3,600 for each child under the age of 6 years old. It greatly expands the program from its current $2,000 a year for children up to 16 years old.
- Employee Retention Credit – Extends the employee retention credit established in the CARES Act until December 31. It also expands eligibility to new startups that were established after February 15, 2020, and companies whose revenue dropped 90% compared to the same time last year. The credit is capped at $50,000 per calendar year for startups.
- Paid Leave Credits - The bill provides paid leave of as much as $1,400 a week and tax credits for employers with fewer than 500 employees as reimbursement of the cost of sick time.
Other Tax Changes
- Business Losses: The measure would extend rules relating to limitations on “excess business losses” for noncorporate taxpayers for one additional year, through 2026. Under the Republicans’ 2017 tax overhaul (Public Law 115-97), taxpayers were allowed deductions for business-related losses up to a certain amount, which was later modified by the CARES Act.
- Corporate Interest Expenses: The measure would eliminate the ability of companies to allocate interest expenses on a worldwide basis beginning in 2021. The election allows corporations to claim additional foreign tax credits against their U.S. tax liability, according to a Congressional Budget Office estimate.
- Executive Compensation: Beginning in 2027, the limitation on deducting compensation for publicly traded companies’ five most highly paid executives would be expanded to include the next five additional highly compensated employees.
- Small Business Grants Exclusion: Advance funds provided through the Small Business Administration’s Economic Injury Disaster Loan program and restaurant grants created by the bill would be excluded from gross income for tax purposes.
- Third Party Transactions: The measure also would lower the threshold below which third party settlement organizations don’t need to report certain transactions to $600, from $20,000.
Contractor Relief Extension
The bill includes a provision to extend a program that allows the Defense Department and other agencies to reimburse contractors who continue to pay employees who can't work because of federal facilities shut down by the pandemic. The program, which was created by Section 3610 of the CARES Act stimulus last spring, expires on March 31. The final stimulus bill extends the provision to the Sept. 30 end of the fiscal year.
Small Business
The bill increases the Paycheck Protection Program’s lending authority to $813.7 billion and expands the eligibility rules to cover more tax exempt groups including:
- 501(c)(5) labor groups
- 501(c)(7) social clubs
- 501(c)(8) fraternal benefit societies
- Religious groups that are generally banned from SBA rules are permitted
It now allows 501(c)(3) groups with as many as 500 employees per location to participate. The bill also extends the PPP loan forgiveness for payments made for premiums for COBRA health insurance. Economic Injury Disaster Loans would receive $15 billion.
Longshoreman Act
Additionally, a provision that was originally included in the House legislation that would have expanded the Longshore Act to require employers to provide workman’s compensation under the Act for COVID-19, regardless of whether the virus is contracted at work, was removed.
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Sen. Wicker, Sen. Casey, and Rep. Garamendi Reintroduce Bipartisan Energizing American Shipbuilding Act
This week, Congressman John Garamendi (D-CA) and U.S. Senators Roger F. Wicker (R-MS) and Robert P. Casey, Jr. (D-PA) reintroduced the “Energizing American Shipbuilding Act.” This bipartisan and bicameral legislation would recapitalize America’s strategic domestic shipbuilding and maritime industries by requiring that increasing percentages of liquefied natural gas (LNG) and crude oil exports be transported on U.S.-built, flagged, and crewed vessels. The bill can be found HERE.
Democrats Eye Big Infrastructure Measure
Following the passage of the $1.9T COVID stimulus bill, Democrats in Congress will now pivot to what is expected to be a massive infrastructure package. Speaking Thursday, House Speaker Nancy Pelosi (D-CA) said she’d like to see a bill that could broadly create jobs and improve quality of life, touching on transit infrastructure, water systems, telemedicine, distance learning, and e-commerce, among other things.
Democrats also haven’t said exactly how much the package will cost. Pelosi said lawmakers will have to “pay for some of it.” That could mean either including tax increases in the infrastructure package, or pairing it with cuts to spending in other areas. Infrastructure investments justify a significant cost, though, Pelosi said. House Transportation and Infrastructure Chair Peter DeFazio (D-OR) has previously outlined a $1.5 trillion package.
INDOPACOM Chief: China On Track to Unseat U.S. As Dominant Military in the Pacific As Soon As 2026
China is on track to overtake the United States as the most powerful military in the Pacific within the decade -- potentially as soon as 2026 -- with the wherewithal sooner than previously expected to establish permanent, regional primacy, the top U.S. military official in the Asia-Pacific region warned this week.
Adm. Phil Davidson, head of U.S. Indo-Pacific Command, said a potential shift in the balance of military power between Beijing and Washington could come much sooner than U.S. officials have previously said.
"The most important thing I'd like you all to take away from the discussion is a fundamental understanding that the period between now and 2026 -- this decade is the time horizon in which China is positioned to achieve overmatch in its capability," Davidson said during an online address to the American Enterprise Institute. "And when Beijing could -- could -- likely choose to forcibly change the status quo in the region. And I would say the change in that status quo could be permanent."
Davidson offered this assessment as a backdrop to a new $27 billion, six-year plan INDOPACOM is proposing to counter China by accelerating fielding of new, precision-fire networks west of the International Date Line along the First Island Chain (from the Kuril Islands in the north down toward Borneo and the northern portion of the Philippines), integrated air missile defense in the Second Island Chain (from the Bonin Islands and Volcano Islands of Japan down to the Mariana Islands), and a distributed force posture that provides the ability to preserve stability.
That is the assessment of a previously non-public appendix to Indo-Pacific Command's recent report to Congress that Sen. Roger Wicker (R-MS) introduced into the public record during a March 9 hearing of the Senate Armed Services Committee. Three PowerPoint slides summarize key elements of China's inventory in 1999, currently and projected in 2025 as compared to forward-stationed U.S. forces west of the International Date Line can be viewed HERE.
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First Pentagon Budget Expected to Hold Flat Between $704-$708B; Shipbuilding Budget Under Scrutiny
President Joe Biden’s first Pentagon budget submission is expected to hold flat roughly between $704-$708 billion, according to one former defense official and two people familiar with the discussions. Pentagon officials who are crafting the department’s budget request for fiscal 2022 are working under the assumption that defense spending will stay level amid shifting Biden priorities and rising deficits from Covid-19 relief, said the people, who requested anonymity to share sensitive discussions.
Due to the delay in authorizing the presidential transition, the military services have not yet received guidance from the Office of the Secretary of Defense on their individual allotments within that top line, according to two of the people. The budget is expected to be submitted to Congress the first week of May. The Pentagon is again considering a reduction in aircraft carrier force structure as part of the upcoming Fiscal Year 2022 budget submission to Congress, according to two sources familiar with the discussions. The search for cost savings could include revisiting a 2019 Trump administration proposal to take aircraft carrier USS Harry S. Truman (CVN-75) out of the inventory rather than conduct a mid-life refit and refueling, a legislative source told USNI News. A separate source familiar with the carrier review said that, additionally, the entire scope of the shipbuilding budget was under scrutiny.
The fiscal 2022 budget will be the first in a decade in which defense and non-defense spending aren’t constrained by budget caps, meaning that Congress has an opening to shift funds from defense to non-defense spending or the reverse. Congressional math is likely to prevent Democrats from taking a scalpel to the Pentagon’s budget. Senate committees are evenly split among Democrats and Republicans, so every proposal would have to attract Republican votes.
U.S. Challenged 19 'Excessive Maritime Claims' in FY-20, Annual Report Says
The United States challenged "excessive maritime claims" from 19 countries in fiscal year 2020, the most prominent -- and common -- of which is China, the Defense Department's annual freedom of navigation report states. The report, released Wednesday, states that the U.S. is committed to challenging excessive maritime claims around the world through tangible, operational challenges. China itself had seven excessive maritime claims that the U.S. challenged, according to the report. These claims took place in the South China Sea and East China Sea and include straight baseline claims and restrictions on foreign aircraft flying through an Air Defense Identification Zone without the intent to enter national airspace, among other claims. The report is available HERE.
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Commandant Thanks US Coast Guard and US Merchant Marine for Their Service in 2020
Yesterday, Commandant Karl Schultz, in the annual State of the Coast Guard Address, outlined the US Coast Guard’s perseverance through a difficult year and highlighted recent developments to advance USCG mission-ready capabilities. He also thanked all US Merchant Mariners for their service during the pandemic.
“Make no doubt about it, we are a maritime nation and our waterways provide this nation with a tremendous global advantage.” Admiral Schultz said. “I have to give a shout out to our US Merchant Mariners who are the backbone of the marine transportation system. Last year the USCG made sure our mariners were categorized as essential workers. Annually they are responsible for $5.4 Trillion in economic activity that America depends on. Throughout this pandemic US Merchant Mariners kept products moving to ensure stores were stocked with medicine and critical supplies. Our nation’s 12,000 miles of commercially navigable inland waterways transport 570 million tons of cargo each year. It would take an extra 21 million large trucks on America’s congested highways to transport the same amount of cargo as tugs and barges do each and every year.”
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BOEM Completes Vineyard Wind Environmental Review
Moving quickly on the Biden administration’s renewable energy agenda, the Bureau of Ocean Energy Management completed its environmental review of the 800-megawatt Vineyard Wind plan, clearing the path for the first truly commercial-scale U.S. offshore wind project. Located about 15 nautical miles off Martha’s Vineyard, Mass., Vineyard Wind is viewed as a bellwether for the nascent U.S. offshore wind industry. Analysts have predicted BOEM approval would trigger new investment commitments to building out a U.S.-flag wind energy workboat fleet and East Coast port improvements to accommodate up to 15 other projects now in various planning stages.
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Coast Guard Looks to 2030 for Replacement of its Aging Buoy Tenders
The Coast Guard has begun the early steps of replacing its aging fleet of buoy tenders. The current fleet of 35 river buoy tenders, inland construction tenders and inland buoy tenders will be replaced by 30 waterways commerce cutters (WCC). The new fleet of 30 vessels would include 16 river buoy tenders, 11 inland construction tenders and three inland buoy tenders. The average age of the existing fleet is 56, with the oldest two being 76 and 75 years old, and the youngest two being 30 years old. The first construction contract is expected to be awarded during fiscal year 2022, which begins Oct. 1, 2021, and the first vessel will be in service by 2025, according to a recently released report by the Congressional Research Service. To keep to this schedule, six vessels would have to be procured each year.
Busiest February on Record for Port of Long Beach as Import Boom Continues
The Port of Long Beach has reported its busiest February on record amid an unseasonable surge in imports during the ongoing pandemic-fueled cargo boom. The port reported Wednesday that dockworkers and terminal operators moved 771,735 twenty-foot equivalent units last month, a 43.3% uptick from the same month last year and marking the largest year-over-year increase for a single month in the Port’s 110-year history.
Crowley, Greenbrier Launch and Christen ATB Fuel Barge for Alaska
Recently, Crowley Maritime launched and christened the Qamun, a shallow draft double hull ATB built by Greenbrier Marine. The ATB was specifically designed to meet Ice Class and Polar Code requirements to safely and effectively operate in Western Alaska year-round. The vessel can operate in winter ice conditions and temperatures as low as -20 degrees.
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If you have any questions, please do not hesitate to contact Paula Zorensky on the SCA staff.
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