Rep. Ward urges Jones Act reform

News Release from Office of Rep Gene Ward March 20, 2013

HONOLULU – Rep. Gene Ward (R, Hawai‘i Kai-Kalama Valley) introduced a resolution (HCR150/HR119) calling on Congress to enact Jones Act reform legislation extending Guam’s U.S. build exemption for large oceangoing ships to Hawai‘i, Alaska and Puerto Rico.

"The resolution asks Congress for a limited exemption from the U.S. build requirement of the Jones Act for large oceangoing ships in the noncontiguous domestic trades of Hawai‘i, Alaska and Puerto Rico," Ward said.

The exemption is modeled on the Guam Exemption and the Hawai‘i Cruise Trade exemption.  The historical Guam Exemption allows foreign-built vessels in the domestic Guam trade.

The Hawai‘i Cruise Trade Exemption was put in place in 2003 by the efforts of late U.S. Senator Daniel K Inouye.  With this exemption, Congress revitalized Hawai‘i’s cruise ship industry and boosted our tourist economy.

"This exemption from the U.S. built requirement will become very important in Governor Abercrombie’s plans to switch from petroleum based fuels to Liquefied Natural Gas (LNG) for the purpose of electrical power generation," Ward continued.

No U.S. shipyard has built LNG carriers since the 1970's.  With the shutdown of Tesoro’s Hawai‘i refinery in April 2013 — Hawai‘iGas loses its supplier of naphtha feed stock for the production of synthetic natural gas (SNG). Hawai‘iGas SNG customers will soon depend on recently-approved shipments of LNG carried in 40-foot refrigerated tank containers.  LNG carriers are required if LNG is to fuel the much larger demands of electricity generation.

Changing air pollution rules are forcing Hawai‘i electric generators to switch to Natural gas.  Likewise, ship owners are beginning to power their vessels with LNG to meet new air pollution requirements requiring reduced emissions within 250 miles of shore.

This proposed exemption would not change the other requirements of the Jones Act for U.S.-flag, crew and ownership, would not apply to the tug and barge industry, nor cause a loss of any maritime jobs in Hawai‘i or the other noncontiguous jurisdictions.

The high cost of new Jones Act ships is the main cost driver in the noncontiguous trades and by allowing foreign built oceangoing ships operating under U.S.-flag into these trades we can substantially lower the shipowners’ capital costs and meaningfully increase competition that will assist all of the residents.  This exemption would also not affect Matson has some of its ship repairs done in Asia rather than U.S. ports.  This will not alter current ship repair operations.

"We are looking forward to the Legislatures of Alaska, Guam and Puerto Rico to join with us by passing complimentary resolutions supporting this important Jones Act exemption for all of us," Ward concluded.

The House concurrent resolution can be found at the following link: http://www.capitol.hawaii.gov/session2013/Bills/HCR150_.HTM

-30-