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By Ira Breskin –
The popular notion that the Congress is dysfunctional has been dispelled, somewhat, given recent legislative “wins” for the U.S. maritime industry.
The evidence: two pieces of legislation, both signed into law late last year.
The first extends a popular financial incentive for developers of U.S. offshore wind projects. Many backers tout this nascent industry as the next significant new employer of U.S. merchant mariners, crewing brand new ships.
The second law increases annual spending for harbor maintenance within U.S. deepwater ports.
More specifically, Congress in December voted to extend the 30 percent investment tax credit for offshore wind projects that begin construction before 2026.
The subsidy was set to expire in late 2020. The tax break was included in the Offshore Wind Incentives for Development Act.
The offshore wind farm development provision invariably will spur the building of additional U.S.-flagged vessels to serve those installations. Several such vessels, to be crewed by American seafarers, now are under construction.
“The extension of the investment tax credit for offshore wind, plus the Biden Administration’s commitment to double offshore wind by 2030, makes offshore wind in the U.S. a very promising business now for the maritime industry and cadets,” maritime attorney Joan Bondareff said on Wednesday.
Bondareff focuses on offshore wind project regulation for Blank Rome in Washington.
Offshore wind vessels will either house or transport maintenance and repair crews to and from wind farms located in the U.S. Exclusive Economic Zone, within 200 nautical miles offshore.
And given the likelihood of increased construction of larger-scale projects spurred by the renewed tax break, additional U.S.-flagged vessels will be required to help install offshore windfarms’ giant turbines.
Keppel AmFELS shipyard in Brownsville, TX, recently began construction of the first U.S.-flagged wind turbine installation vessel.
The second legislative “victory” is a boon to operators of domestic marine terminals and shippers that use them.
According to terms of the Consolidated Appropriations Act, signed into law on Dec. 27, 2020, the U.S. Army Corps of Engineers this fiscal year can spent a total of about $1.7 billion to dredge many U.S. harbors.
The $1.7 billion outlay represents the amount deposited annually in the Harbor Maintenance Trust Fund, established in 1986.
The government collects HMTF funds tied to a fee imposed on imports transiting a harbor that has been dredged using HMTF money. The fee is 0.125 percent of the declared value of imported cargo.
Moreover, the legislation also allows the USACE to tap into HMTF’s accumulated $9.3 billion surplus during each of the next nine fiscal years. The first annual drawdown is $600 million, and it increases each year by $100 million throughout the decade, according to the American Association of Port Authorities.
A provision in the Water Resources Development Act of 2020, a rider to the Consolidated Appropriations Act, spurred the move to release languishing HMFT money.
Congress recently has been reluctant to spend the accrued HMTF balance; any HMTF balance is a bookkeeping device that helps “offset” the federal deficit.
Ira Breskin is a senior lecturer at State University of New York Maritime College in the Bronx, NY and author of The Business of Shipping (9th edition, 2018), a primer that explains shipping economics, operations and regulations.
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