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Shipbuilders Council of America
20 F Street NW, Suite 500
Washington, DC 20001
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SCA Weekly Report | May 10 - 14, 2021
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Registration Now Open: 2021 SCA Spring Meeting
June 17, 2021
1:00 – 4:30 PM Eastern Time
This event will be held virtually
Registration for the 2021 SCA Spring Meeting is now open. Due to gathering capacity restrictions in Washington, D.C., the meeting will be held virtually on Thursday, June 17, 2021.
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Wittman: Navy Needs Money in its Budget for Modernization, But Not From Cutting Cruisers
The Navy is facing pressure to find savings within its own budget to pay for investments in future technologies like unmanned vehicles and hypersonic and directed energy weapons – but those savings shouldn’t come from the early decommissioning of cruisers and amphibious ships, a key lawmaker said today.
Rep. Rob Wittman (R-Va.), the top Republican on the House Armed Services seapower and projection forces subcommittee, said that Congress needs to do its part in finding enough money for a sufficient defense top line – at the very least, last year’s budget plus inflation, or about $757 billion, which is more than the $715 billion the Biden administration has proposed. But the Navy needs to do its part in ensuring it’s spending wisely without taking drastic measures like retiring ships and creating a short-term readiness problem to solve a long-term modernization problem.
Wittman acknowledged that balancing the current demand signal for operations and the readiness of the current force with investing in modernization for the future force would be an ongoing struggle, but he said the Navy has to find a way to self-fund some of its modernization by making cuts or reforms that don’t involve early ship retirements. Read more HERE.
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Gilday: Columbia, Shipyards, Sealift Recapitalization Top Navy FY22 Budget Priorities
The Navy's premier fiscal year 2022 budget priorities are keeping the Columbia-class submarine program on track, pursuing its shipyard revitalization efforts and recapitalizing the service's sealift fleet, Chief of Naval Operations Adm. Michael Gilday said Thursday. The Navy considers the Columbia-class ballistic missile submarine its top acquisition priority and awarded General Dynamics Electric Boat a $9.47 billion contract modification in November 2020 to begin full construction on the first Columbia-class submarine. The new subs are meant to replace the Ohio class.
The Navy is working on a 20-year, $21 billion Shipyard Infrastructure Optimization Plan to revitalize the nation's four public shipyards in an attempt to reduce maintenance delays. Lawmakers have called on the Navy to accelerate the plan and have proposed a $25 billion shipyard improvement bill.
"This, quite frankly, is a once-in-a-century investment," Gilday said.
The Navy is planning to procure 16 used sealift vessels in the next five years while building two new sealift vessels, the service's 2020 shipbuilding plan states.
Pentagon Continues to Seek Billions in Pandemic Related Costs
Acting Pentagon acquisition chief Stacy Cummings said Thursday the Defense Department still needs at least $11 billion in supplemental funding from Congress to support defense contractors with pandemic-related costs and avoid cutting modernization programs and military readiness accounts. Cummings, who spoke during an event hosted by McAleese & Associates, reiterated what she told the Senate Armed Services Committee in February: DOD needs a large supplemental appropriation. While Congress has authorized language that would allow contractors reimbursement for keeping workers in a ready state, it has not appropriated new money for the government to pay for it.
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Biden Budget Expected May 27
President Joe Biden will unveil his full budget request on May 27, a spokesperson for the Office of Management and Budget said Thursday. That fleshed-out proposal for fiscal 2022, which begins Oct. 1, will include proposals for mandatory spending and tax reform, in addition to discretionary spending details the administration has yet to release. It will also likely tie in the president’s vision for infrastructure and jobs.
Last month, the Biden administration detailed major highlights of the president’s discretionary spending request, which comprises about a third of the total federal budget.
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Biden Courts Congressional Leaders on Infrastructure, but Divisions Remain
To hear the participants tell it, President Biden’s first-ever meeting with Republican and Democratic leaders from both houses of Congress was 90 minutes of productive conversation- it was cordial, there were no explosions of anger.
But the agreeable tenor could barely mask the legislative reality: The two parties remain deeply divided over the president’s proposal for $2.3 trillion in spending to upgrade the nation’s crumbling infrastructure.
The meeting produced only minuscule progress on Biden’s ambitious efforts to invest more broadly in the United States than at any time in generations, underscoring the political challenge for the president as he seeks to exploit the narrowest of majorities in Congress to revive and reshape the country’s economy.
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BOEM Green-Lights First Offshore Wind Farm in Federal Waters
The Biden administration's Interior Department has given its final approval for the construction of the first full-scale offshore wind farm in federal waters. The long-anticipated approval for the Vineyard Wind project brings years of debates and delays to an end, and it provides new regulatory certainty for the nascent U.S. offshore wind industry. In a statement, BOEM director Amanda Lefton pledged to continue to advance new projects with an "efficient and predictable process for industry and stakeholders."
The 800-megawatt, 62-turbine Vineyard Wind 1 development will be located about 12 nautical miles off Martha's Vineyard. It will create an estimated 3,600 jobs and provide enough power for 400,000 homes and businesses, according to the Department of the Interior. The turbines will be installed in an east-west layout with a minimum spacing of one nautical mile, in line with USCG recommendations and a wind industry proposal on standardization.
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DHS Approves Jones Act Waiver in Response to Colonial Pipeline Hack
Earlier this week, the U.S. Department of Homeland Security approved a Jones Act waiver request to an individual company to ease fuel supply constraints between Gulf Coast and East Coast ports, Secretary Alejandro Mayorkas said in a statement.
The move is designed to address fuel shortages spurred by the cyberattack on the Colonial Pipeline, which shut down a major artery for gasoline, diesel and jet fuel across the U.S. East Coast. Even with fuel shipments resuming from around 5 p.m. eastern time Wednesday, its unclear how long it will take for the network to return to normal.
While the government has temporarily lifted U.S. shipping requirements to combat fuel shortages after major storms, including Hurricanes Sandy and Harvey, the issue is politically fraught. The Jones Act is championed by some of the nation’s biggest shipbuilders and vessel operators, as well as their allies on Capitol Hill. It also has the backing of a key Biden constituency in organized labor, including the Seafarers International Union.
Biden Administration Approves Second Jones Act Waiver
On Thursday, the Biden administration issued a second Jones Act waiver in hopes of getting more fuel to the East Coast in the wake of the Colonial Pipeline shutdown. The waiver, announced late Thursday night, gives an unnamed company a limited exemption from the Jones Act, which requires that goods transported between American ports be carried on domestically built and crewed ships. The Homeland Security Department did not provide any details about the recipient of the new waiver or how long it would be valid.
Senator Lee Introduces Jones Act Repeal Bill
This week, Senator Mike Lee (R-UT) introduced a bill (S. 1646) aimed at repealing the Jones Act. The bill is titled “A bill to repeal the Jones Act restrictions on coastwise trade, and for other purposes.” The bill text has not been released yet.
Offshore Wind Analysts Temper Jones Act Assessment
Energy analysts at IHS Markit amended their recent May 5th report on wind energy installation vessel needs, dropping a suggestion that the United States might need to relax its Jones Act maritime law to gain momentum in developing offshore wind. Considering the Biden administration’s ambitious goals for expanding offshore wind, the original IHS Markit report predicted that “in order to hit its target, the country must either relax its maritime rules to permit foreign-built vessels to operate, or ensure new heavy-weight vessels are built and put into service promptly.”
That drew some attention from the U.S. offshore services industry, which has been challenging viewpoints that the U.S. Merchant Marine Act of 1920 and its related requirements for using U.S. vessels and crews will hobble U.S. wind power development.
“I discussed with them and they admitted that they were not experts on the U.S. market or legal requirements,” said Aaron Smith, president of the Offshore Marine Service Association. “After a discussion about the market and the requirements, they agreed that the Jones Act was not an impediment,” said Smith. “I think that is the takeaway.”
The IHS Markit report now notes that “in order to hit its target, the country must ensure new vessels are built and put into service promptly.”
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Bill to Allow Cruise Ships to Sail to Alaska without stopping in Canada Passes U.S. Senate
The United States Senate unanimously passed a bill that will allow foreign flagged cruise ships to sail to Alaska without having to stop in Canada. The Alaska Tourism Recovery Act (H.R. 1318) passed the Senate in a vote on Thursday, and will now to go to the U.S House of Representatives for a vote. The Alaska Tourism Recovery Act is meant to alleviate the Passenger Vessel Services Act (PVSA) restrictions for cruise ships transporting passengers between the State of Washington and the State of Alaska. The bill was introduced by Lisa Murkowski (R-AK) and Dan Sullivan (R-AK) as a way for cruise ships to be able to sail to Alaska in 2021.
Egypt Approves Plan to Expand Southern Suez Canal
Earlier this week, authorities in Egypt officially unveiled plans to expand and deepen the Suez Canal waterway after a mega-ship blockage caused substantial losses and raised the prospect that shipping lines might seek alternative routes. Suez Canal Authority chairman, Osama Rabie, unveiled the expansion plan stating that it was crucial in order to improve the navigation of ships. The Suez Canal Authority has claimed losses totaling $916 million due to the Ever Given's grounding and the resulting blockade, which closed the quickest maritime link between Asia and Europe for nearly a week.
Over 700 Barges Stranded by Mississippi River Closure in Memphis Due to Bridge Crack
The U.S. Coast Guard said 44 vessels with a total of 709 barges are now in the queue as a 1-miles stretch of the Mississippi River remains closed after a large crack was discovered in the I-40 Hernando DeSoto Bridge in Memphis, Tennessee on Wednesday. The crack was discovered in a crucial structural support beam near the center span of the bridge on Wednesday during a routine inspection of the bridge by the Arkansas Department of Transportation, which immediately shut the bridge down to road traffic.
Online Purchasing Drives Port of Long Beach to Record April
The Port of Long Beach reported its busiest April on record as the cargo boom continues. Dockworkers and terminal operators moved 746,188 TEUs in April for a 43.6% increase from the same month last year. It was the first time the port handled more than 700,000 TEUs in the month of April and surpassed the previous record set in April 2019 by 118,066 TEUs. The nation’s second busiest port said the ongoing cargo boom is largely driven by online purchases.
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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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