I. INTRODUCTION AND,BACKGROUND.

Recognizing the complexity of the issues afflicting the economic health of Virginia's shipbuilding industry and the importance of the industry to Virginia's economy, the 2001 Session of the General Assembly, through the passage of Senate Joint Resolution No. 351 (SJR 351, see Appendix A), continued the Joint Subcommittee Studying Economic Incentives to Promote the Growth and Competitiveness of Virginia's Shipbuilding Industry. The subcommittee was first convened by the 1998 Session of the General Assembly and has been studying Virginia's shipbuilding industry since that time. As expected, SJR 351 directed the joint subcommittee to study several issues that had already been under consideration at the close of 2000, some of which were also the focus of prior joint subcommittees (See Senate Documents No. 32 (1999); No. 51, (2000); No. 37 (2001)). In particular, the study panel was charged to study:

• the Commonwealth's regulation of tributyltin (TBT);

• the establishment of a state commission to promote and provide marketing assistance to the shipbuilding industry;

• the Commonwealth's tax structure and its impact on the shipyard industry; and

• the use of grant programs to encourage capital investments by shipyards.

II. JOINT SUBCOMMITTEE ACTIVITIES.

Since its creation in 1998 through November 2001, the joint subcommittee has examined a number of complex issues that relate to economic activity at Virginia's shipyards. A few major issues, however, have dominated the work of the joint subcommittee over this period. The major issues considered have been:

• the level of tax benefits or other economic incentives that would be an effective tool in ensuring the continued health of the Commonwealth's maritime industries;

• the economic condition of Virginia's shipbuilding and ship repair firms, and reasons for the declining levels of employment in the industry;

• the Commonwealth's regulation of tributyltin (TBT);

• dual state and federal jurisdiction over workers' compensation insurance for shipyard workers;

• the establishment of a state commission to promote and provide marketing assistance to shipyard industries; and

• the establishment and implementation of an apprenticeship program to enhance the skills of shipyard workers.

The joint subcommittee met three times in 2001. Immediately following are the issues examined by the joint subcommittee.