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The Honolulu Advertiser

Posted on: Friday, July 25, 2003

Shipping exemptions proposed for Hawai'i

By Derrick DePledge
Advertiser Washington Bureau


WASHINGTON — Rep. Ed Case proposed legislation yesterday that would exempt Hawai'i from the Jones Act, the federal maritime law requiring cargo ships operating between domestic ports to be U.S.-flagged and carry U.S. crews.

The congressman said the Jones Act, passed in 1920, has limited competition and led to higher costs in the Islands. Two companies, Matson Navigation and Horizon Lines, dominate cargo shipping between the Mainland and Hawai'i.

"It's simply getting harder and harder for anyone to defend the consequences of the Jones Act on key industries in Hawai'i," said Case, D-Hawai'i.

The maritime industry has fought other efforts to amend or repeal the Jones Act, and Case acknowledged that he does not know how his proposals will fare this year.

"Obviously, we would oppose this legislation," said Philip Grill, vice president of government relations for Matson.

Grill is also chairman of the Maritime Cabotage Task Force, a coalition of shipping, rail, trucking, aviation and labor interests.

"I think there is a false expectation about the supposed benefits of repealing the Jones Act," he said.

"When you put an American flag on a vessel, the only thing that means is that vessel is operating in full compliance with the laws of this country."

Case proposed three bills that would add different exemptions to the law, allowing him more flexibility to negotiate with House leaders.

One bill would exempt noncontiguous U.S. locations, including Hawai'i, Alaska and Guam. The second bill would exempt only Hawai'i. The third bill would exempt only Hawaiian agriculture and livestock.

Big Island ranchers have turned to foreign-flagged ships to take their cattle to the U.S. Mainland, typically through Canada, because some of those vessels are better suited than Matson's or Horizon's for carrying the livestock.

All of the proposed bills would require shipping companies that take advantage of the exemption to comply with the same labor and environmental laws that foreign-flagged ships must adhere to in U.S. waters, Case said.

Earlier this year, Sen. Dan Inouye and Rep. Neil Abercrombie, both of them also Hawai'i Democrats, added an exemption to the federal Passenger Vessel Services Act so that Norwegian Cruise Line could operate up to three foreign-built ships under U.S. flags on interisland cruises in Hawai'i.

"I believe it's going to happen sooner or later," Case said of exemptions for Hawai'i in maritime law, "because the Jones Act doesn't make sense anymore in today's world."