Bipartisan group seeks limited exemption from Jones Act

A bipartisan group of five Hawaii lawmakers has introduced a resolution that if passed would ask Congress to allow foreign-built ships to carry cargo to Hawaii from the mainland under a limited exemption to the Jones Act.

The measure, House Resolution 119, was introduced last week along with companion measure House Concurrent Resolution 150 by two Republicans and three Demo­crats.

Lead sponsor Rep. Gene Ward (R, Kalama Valley-Queen’s Gate-Hawaii Kai) said in a written announcement that the high cost of building new ships at domestic shipyards is the main cost driver in Hawaii shipping, and so residents would save money without it.

The proposed exemption wouldn’t change other key elements of the Jones Act that require cargo between two U.S. ports be delivered on ships with U.S. crews, owners and flags.

The resolution seeks an exemption only for building ships domestically, and asks that Alaska and Puerto Rico also be given the same exemption.

The proposed exemption is modeled on similar but more limited exemptions in place for Guam and cruise ships serving Hawaii.

Ward also said such an exemption would play an important role in an effort to import liquefied natural gas as an alternative to oil for generating electricity. He said U.S. shipyards haven’t built liquefied natural gas carriers since the 1970s.

The Hawaii Shippers Council, an organization representing companies that ship goods on carriers such as Matson Inc., Horizon Lines and Pasha Hawaii Transport Lines, said in a statement that allowing foreign-built ships to serve Hawaii from other U.S. ports would make the trade more competitive by lowering a major barrier to entry.

"The proposed reform will create significant economic benefits that will flow through the system to businesses and consumers in Hawaii and other noncontiguous jurisdictions," the council said in a statement.

The council estimates that U.S.-built ships cost five times as much as foreign-built ships.

Matson, which spent $500 million buying four new ships in the past decade and plans to spend another $400 million in the next three to five years on two more new ships, opposes the proposed exemption.

Hawaii’s largest ocean cargo carrier said the U.S.-built requirement is a vital component of the Jones Act that helps ensure the country has strong shipyards.

"We should not become dependent on foreign shipyards to support the U.S.-flag maritime industry," Matson said in a statement.

Matson also said the cost of ships represents a "small percentage" of overall operating costs and that other U.S.-flag cargo transportation companies are aligned in support of building ships domestically.

Legislatures in Alaska and Puerto Rico are being encouraged to join in the request initiated by the group of Hawaii lawmakers.

No hearing, however, has been scheduled yet on the resolution in Hawaii’s Legislature.

Besides Ward, other introducers of the measure are Rep. Lauren Kealohilani Cheape (R, Mililani-Scho­field-Kunia), Rep. John Mizuno (D, Kamehameha Heights-Kalihi Valley), Rep. Cindy Evans (D, Kaupulehu-Waimea-Halaula) and Rep. Clift Tsuji (D, Hilo-Waiakea-Keaukaha).

If the resolution is passed, legislation passed by Congress would need to be enacted to provide such an exemption.