Grassroot Urges Legislature To Move on Ferry Project

Free market think tank says study should include effects of a Jones Act exemption

News Release from Grassroot Institute

HONOLULU, HAWAII--April 1, 2016--Today, the Grassroot Institute offered comments on SB 2618 and urged the legislature to expand the scope of a feasibility study on a interisland ferry system so as to give any new ferry the best chance at survival and profitability.

Citing the continuing popularity of the Superferry and the benefit to the state's economy and business, the think tank urged the legislature to provide strong leadership on the issue and consider several factors that could mean the difference between a successful project and a doomed one. Foremost among these is how an exemption from the Jones Act's build requirement could make ferry construction significantly more affordable.

"In the past few years, we have seem ample evidence that the people and the businesses of the state want to see a new ferry system put in place," stated Keli'i Akina, Ph.D. "That is a tribute to the enduring popularity of the Superferry, but it also demonstrates where we must learn from the past. By asking practical questions about routes, what kind of ferry is needed, and how to handle the regulatory hurdles involved, the State can ensure that any project has a real chance of long-term success."

Dr. Akina continued: "It is especially critical that the state consider how seeking an exemption from the Jones Act's build requirement might result in significant savings. It would demonstrate that they truly are interested in an economically viable ferry system and won't put special interests ahead of real leadership on this issue."

SB2618: Text, Status

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Grassroot Testimony: SB 2618 (Ferry Feasibility Study)

From: Grassroot Institute of Hawaii, President Keli’i Akina, Ph.D.

To: House Committee on Finance

Rep. Sylvia Luke, Chair

Rep. Scott Y. Nishimoto, Vice Chair

RE: SB 2618 — RELATING TO TRANSPORTATION

Comments Only

Dear Chair and Committee Members:

The Grassroot Institute of Hawaii would like to offer its comments on SB 2618, which would require the Department of Transportation to feasibility study of establishing an interisland ferry system.

It is a tribute to the enduring impact of the Superferry that so many years after its demise, there remains a strong interest in seeing it restored. That this continues to come before the Legislature on an annual basis speaks both to the local need for an interisland transport solution and the inability of the state to put forth a sound and viable plan for a replacement system. In this bill, there is the opportunity to create real leadership on this issue and rescue it from the mire of studies and debate that it has been bogged down in for years.

What is needed is a comprehensive consideration of all of the factors that could further hold up the creation of a ferry system. In addition to those identified in the bill, therefore, it might be useful to also consider:

• What type of ferry system is envisioned—a fast ferry or more traditional ferry service? Because serious questions have been raised about the economic viability of a fast ferry, the state must do an honest assessment as to which is the most beneficial and frame the remaining questions around that solution. Moreover, while the bill specifically mentions studying domestic ferry systems in Alaska and Washington, it would also be useful to expand the scope of that directive to encompass successful international ferry systems, such as Australia/Tasmania ferry. This would also allow for serious consideration as to whether a publicly-owned and subsidized ferry would be better for the state than a private one.
• What remaining regulatory hurdles remain for the construction of a viable ferry service? There are a number of regulatory considerations that could sink a ferry project from the outset or make its cost so burdensome that it will be difficult for it to survive. Foremost among such considerations is construction. For this reason, it would be wise for the feasibility study to consider how an exemption from the US-build requirement of the Jones Act may make a significant difference in the cost of construction and how that might affect the ongoing cost and operations of the ferry system.
• How will routes and harbors be determined? The bill asks that the study identify appropriate routes and harbors for a ferry system, but neglects to offer any guidance on how such a determination should be made. Given that not all routes may be economically viable, it may be best to require the study to consider the probable use and popularity of the various routes, identifying which are ideal and which may compromise the profitability of the ferry.

At the time that the Superferry was discontinued, it had support from approximately 88% of Hawaii’s citizens.[1]This was a service that not only helped create jobs, but also provided a substantial benefit to local businesses. Companies like Love’s Bakery were able to use the ferry to improve distribution and save costs, making it a boon to Hawaii’s citizens and economy.

We have seen multiple failed attempts to bring back the Superferry in some form. What we truly need now is decisive action and leadership that will move the project forward. A study that effectively addresses the barriers to a new ferry and outlines a practical way forward is an important first step.

[1] Michael A. Lilly, “Why Hawaii Lost the Superferry.” Building Industry. (July 2009).