Assessing the Jones Act: Perspectives from the Noncontiguous States and Territories

from CATO Institute, Sept 16, 2025

Noncontiguous states and territories are disproportionally harmed by the Jones Act’s restrictions on shipping competition. Rooted in 18th-century protectionism, the law significantly increases the cost of water transportation for these shipping-dependent parts of the country when trading with each other and the US mainland. Beyond these economic costs, the Jones Act has also proven to be ineffective in meeting the country’s national security needs amidst a collapse in shipbuilding, a declining fleet, and a shortage of mariners. There is a growing and bipartisan recognition among policymakers that an overhaul of US maritime policy is sorely needed to meet the country’s economic and national security needs.

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MOYLAN HIGHLIGHTS JONES ACT'S IMPACT ON NON-CONTIGUOUS COMMUNITIES AT CATO INSTITUTE EVENT; CALLS FOR URGENT REFORM

Press Release from Office of Rep James Moylan, Sept 19, 2025

(Washington, D.C.)—Congressman James Moylan (R-Guam) joined Representative Ed Case (D-HI) at the Cato Institute to highlight the urgent need for reforms to the Jones Act, which continues to impose disproportionate costs on non-contiguous U.S. states and territories like Guam and Hawaii.

During his remarks, Congressman Moylan underscored the unique challenges faced by Guam and other similar regions due to the Jones Act's requirements that goods shipped between U.S. ports be carried on U.S.-built, U.S.-crewed, and U.S.-owned vessels.

"The Jones Act inflicts significant economic disadvantages on non-contiguous regions of the United States," Congressman Moylan stated at the Cato Institute event. "For Guam, these outdated restrictions translate to inflated prices on essential goods, hindering economic growth and negatively impacting the daily lives of our families. A $12 gallon of milk is just one glaring example of how these outdated restrictions drive up the price of basic necessities for our people.”

To address these inequities, Congressman Moylan and Congressman Case are working together to advance bipartisan legislation, including:

• Noncontiguous Shipping Relief Act: creates limited exceptions to the Jones Act for territories like Guam, allowing more competitive shipping while maintaining labor and environmental standards.

• Noncontiguous Shipping Reasonable Rate Act: caps domestic shipping charges for non-contiguous routes at no more than 10% above comparable international rates.

• Noncontiguous Disaster Shipping Act: exempts the Jones Act during disaster situations to ensure emergency aid and supplies reach non-contiguous communities swiftly.

• Merchant Marine Allies Partnership Act: allows certain allied-nation vessels or shipyard modifications to qualify under U.S. law, reducing costs while supporting U.S. strategic partnerships.

• Noncontiguous Energy Relief & Access Bill: exempts energy shipments to Guam, Hawaii, Alaska, and Puerto Rico from Jones Act restrictions to lower fuel and energy costs.

"These reforms, while intended to support the U.S. maritime industry, have inadvertently created barriers to affordable goods and services for those of us geographically separated from the mainland," Moylan explained. "We need policies that foster economic opportunity, not stifle it."

Congressman Case echoed Moylan's concerns, emphasizing the need for bipartisan collaboration to address the issue. Both representatives reiterated their commitment to working together to advance reforms that will benefit non-contiguous communities.

Moylan concluded by emphasizing the importance of recognizing Guam's strategic significance in the Indo-Pacific region. “Reforming the Jones Act is not only about economic fairness; it’s also about ensuring that Guam remains a strong, resilient, and affordable home for our people while strengthening our nation’s position in the region.” Congressman Moylan remains dedicated to advocating for policies that promote economic prosperity and opportunity for the people of Guam and all non-contiguous states and territories.

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TRANSCRIPT: 9-16-25, U.S. Reps. Ed Case and James Moylan with host Colin Grabow

Colin Grabow: Good morning, everyone. We don’t have a lot of time, so I’d like to go ahead and get started. Welcome to today’s discussion: Assessing the Jones Act: Perspectives From the Noncontiguous States and Territories. 

My name is Colin Grabow. I’m associate director here at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies. The Jones Act, of course, is Section 27 of the Merchant Marine Act of 1920, which restricts domestic water transportation to vessels that are U.S. flagged and registered, that are at least 75% U.S. owned, that are crewed by Americans, with a couple exceptions, and that are constructed in U.S. shipyards.

These restrictions inflict significant harms that we here at the Cato Institute have been documenting and educating Americans about since the launch of our project on Jones Act Reform Back in 2018. That said, you can find plenty of criticisms of the Jones Act published by Cato from well before then. 

Quite simply, my colleagues and I believe that this law imposes very serious costs while utterly failing to generate robust shipping and shipbuilding industries. While the entire country bears these costs, they’re most acutely felt in the noncontiguous states and territories of Alaska, Puerto Rico, Guam and Hawaii. And this burden isn’t new.

Speaking at a hearing in 1960, [U.S.] Sen. Hiram Fong of Hawaii noted that vessels serving the state from the U.S. mainland cost almost twice as much to build as those constructed abroad, and “these costs will have to be absorbed by the people of Hawaii through even higher freight rates.” 

He went on to add that, “Orderly development of Hawaii’s economy in the years to come will depend upon the regularity of ocean transportation and the reasonableness of shipping rates.”

And he wasn’t alone. Speaking at that same hearing, Hawaii [U.S.] Sen. Oren Long stated that, “We are caught up in a cost spiral that is exacting an ever-increasing toll on our economy and our people. We have no choice but to pay the bill. 

“It is unthinkable that we should be without the service of water carriers, but the bill is getting higher and higher and is approaching the point where severe damage may be done to our economy and our standard of living.”

Hawaii Attorney General Shiro Kashiwa, meanwhile, noted that the problem of high and continually increasing maritime rates for its essential shipping to and from the mainland is one of the most serious economic problems Hawaii faces today. 

Sixty-five years later, things have only gotten worse. While Sen. Fong noted that U.S.-built ships cost almost twice as much as those built abroad, today, Matson, which serves Hawaii and Guam, has three ships on order from the Philly Shipyard that, according to The Wall Street Journal, could be built for one-sixth of their $334 million costs if built in Asia.

Little wonder perhaps that earlier this year, Ryan Petersen, the CEO of logistics firm Flexport, stated it costs roughly 20 times as much to send a container from the West Coast to Hawaii as to send that same container from the West Coast to China. 

And let’s not forget about Guam. Now, nominally Guam is not fully subject to the Jones Act, being exempt from its U.S.-build requirement, but this doesn’t benefit the island as much as you might think.

Matson, which serves Guam, offers liner service that first stops in Hawaii from the West Coast and then continues on to Guam. Because of that, the ships are U.S. built, U.S. flagged, and bring all those Jones Act costs along with it when they continue on to Guam. 

Matson’s only competitor in the Guam trade lane, APL, uses foreign-built ships with U.S. crews, but because that foreign construction cannot stop in Hawaii along the way, and instead go from the West Coast to Japan, and then transship down to Guam. 

This brings with it added time and added costs that reduces some of the benefit from their ability to use foreign-built vessels.

As with Hawaii, it has long been recognized that U.S. shipping restrictions are a substantial burden on Guam. The 1950 Guam Organic Act, which made Guam an unincorporated U.S. territory, included the establishment of a commission to determine which federal law should apply to Guam. 

Among those it recommended excluding were U.S. coastwise laws, the Jones Act. In 1963, the Guam legislature passed a resolution asking Congress to exempt it from U.S. coastwise laws.

In 1979, a United Nations mission to Guam released a report identifying the Jones Act as among those federal regulations that “have had a decisive impact on Guam.” 

In 1995, the U.S. Navy sent a letter to the chairman of the Senate Transportation Committee stating that, “because of the high cost of transportation to Guam, the Navy is considering shifting many personnel and operations to Japan.”

A year later, meanwhile, a report funded by Guam’s government found the Jones Act to inflict an estimated cost of $40 to $50 million per year, an amount the report said was, “estimated to cost each family on Guam at least $1,139 a day.” An amount that, just for inflation, is roughly $2,100 today. 

So what have we gotten for all these costs? Not much. 

There are fewer than 100 ocean-going cargo ships that comply with the Jones Act, which is down from 257 as recently as 1980. 

Many of the ships that serve the noncontiguous states and territories are old because of the high cost of buying new ones. Some of the ships that serve Hawaii are over 40 years of age. And this is in an industry when ships are typically considered old at 20.

And as for shipbuilding, last year the United States ranked 19th in global commercial shipbuilding with just 0.04% of global output. 

And this is all a long-winded way of setting the table for today’s discussion featuring Rep. Ed Case and Rep. James Moylan. 

Representing Hawaii’s 1st Congressional District since 2019, Congressman Case’s interest in the Jones Act goes back to his time as a member of the state Legislature in the 1990s. 

[A] Democrat, he also advocated for a reform of the law during a previous stint in Congress when he represented Hawaii’s 2nd Congressional District, which, from my understanding is basically everything outside of Honolulu.

Rep. Moylan, meanwhile, is in his second term as a member of the House of Representatives. In his relatively short time in office has frequently highlighted the cost of the Jones Act in US shipping restrictions to Guam. 

So, aloha Congressman Case. Hafa adai, Congressman Moylan. Thanks for joining us here today.

Now, I have a lot of questions for you, and I’d like to set aside some time towards the end of today’s event to field questions from the audience, both here and online. 

But I wanted to give you each a few minutes, before we get started, to provide any opening remarks, thoughts, or comments that you might have. I’ll start with you, Congressman Case.

Congressman Ed Case: Well, first of all, thank you so much for having me, and I want to say right up front, it’s incredible to have such a great partner in Congressman Moylan representing Guam, and our other colleagues representing the noncontiguous parts of our country. 

Rep. Moylan and I work across the aisle. It doesn’t feel like there is any aisle between us on a whole range of issues, from our military, to economic sustainability, to the Pacific, the Indo-Pacific in general, where we are both acutely a part of. And finally, on this particular effort, which affects us very, very much in our island economy, so thank you for your partnership.

And the Cato Institute, thank you so much for carrying the laboring oar on this. 

I also want to credit the Grassroot Institute back in Hawaii, which is your partner, and which has done really, really great work on the Jones Act on actually quantifying the effects, because you know, people yell and scream about it all the time, but if you get down and do a real economic study, peer-reviewed, scientific rigorous study on it, then the impacts on our noncontiguous areas are much more acute.

I think what I want to do right up front is describe for folks out there, the dilemma of the noncontiguous parts of our country. Because the effect of the Jones Act is far more severe on those parts of our country. 

Imagine that you are a small island state, or territory, in the case of Hawaii, 2,500 miles from the United States continent, the continental United States. You have 1.4 million people, you do not do any manufacturing to speak of. It is very difficult to reach critical mass in industries, to provide for basics, such as food.

You don’t really have the innate capability for various reasons to provide for materials that we take for granted. You don’t build cars. You don’t do anything. And you are reliant on the outside world for most of your everyday living, right across the board. 

So that has to come from somewhere. It has to come from the United States mainland, for the most part. And you only have one alternative to get that there, which is shipping, ocean-going shipping. And that is a mind shift from the continental United States. 

Let’s imagine that you want to take a cargo from Minneapolis to New Orleans, on the Mississippi River, that’s a Jones Act transit. If you want to take it on the barge down the Mississippi, you can do that. But if that market is out of whack supply-demand, then you have alternatives. You have trucking. You have rail. In some limited cases, you have air freight. 

You have none of that, so you’re completely exposed to ocean-going shipping, and that’s the biggest thing to say here, right up front. That’s why the effect of the Jones Act is so devastating to a place like Hawaii. 

Because if you, therefore, artificially restrict the supply of domestic shipping in a high-demand, captive market, that’s the classic definition of a monopoly. The only difference here is the monopoly is created by federal law. It’s not created by the market. It’s created by federal law. 

And when you have a lot of supply out there in the world that would be happy to transit that market between Hawaii and the continent, which is going to be lucrative in any case because it is the only market available, then you effectively hold the people of Hawaii hostage. And that’s what this is really about. 

Now, in my own approach to the Jones Act, I believe the Jones Act should be reformed across the entire country. That’s my own personal belief. 

It impacts our entire country on U.S. ship-build requirements. Merchant marine, it has not proven out to be the panacea that everybody thought, or that the Jones Act opponents, sorry, the supporters argue all the time for a domestic ship-building and ship maintenance industry. It’s not working, and it hurts prices across the country. But you know what? At least they have alternatives.

But, hey, let our noncontiguous parts of our country go because that’s where the impact is the most severe. So I’m here, willing and able to work with anybody who wants to reform the Jones Act on a national basis, but my focus is on the disproportionate impact on our noncontiguous parts of our country.

Grabow: Representative Moylan.

Representative James Moylan: Thank you. Of course, I agree with my Congressman Ed Case here, my good friend, and we’ve been working this for quite some time as well to have some sort of really necessary reform on the Jones Act. Was just talking earlier, and thank you also, Cato, for this opportunity to discuss this important topic for us. 

Let’s talk about air transportation, too, just for a second. I’m going to go home this weekend, and by the time I leave my door in Washington, D.C., to the time I get to my home back in Guam, it’s 20 hours. That’s a flight. So just that distance is tremendous, and it costs close to $3,000 as well. So airfare is expensive, but shipping, shipping is so important to us.

We, like Hawaii, we don’t grow enough of our foods. Most of our produce is brought in. All our supplies, building supplies, are all brought in as well. We rely on the shipping to come into Guam to help us survive for a population of 170,000 people. Which will increase by another 23,000 with the military buildup happening on Guam. 

Though we’re so far from CONUS [continental U.S.], we’re so close to Asia. We’re supposed to be the gateway to Asia, the hub of the Pacific. But we’re not because of the Jones Act.

It’s so unfortunate. We have the situation in Indo-Pacific with our aggressors right now, and we’re trying to keep the sea lines open for trade and economics. We have our allies, Japan, South Korea, Philippines. We have all these ships over there as well. 

So their merchandise, which the United States relies upon, goes from Asia, bypasses Guam, bypasses Hawaii, goes to L.A., gets unloaded, gets reloaded to a Matson ship that comes to Hawaii, then comes to Guam. That means the price of milk for you folks here may be $3 or $5. But the price of milk in Guam for a gallon of milk is $12. Just basic stuff.

But yet 40 miles away from us, we have the Commonwealth, the Northern Marianas. When they decided to do their plebiscite on what they wanted to become, they also worked in the removal of the Jones Act, so they’re exempt. 

But still, we got the same ships coming on in, so they don’t really see the benefit. It’s just too bad on where this has gone and how long this has taken.

On Guam, we built a new power plant that’s going to be opening pretty soon because of the military buildup. It can run off of fossil fuel, or it can also run off of LNG gas. But there’s no Jones Act-approved ship that can bring that gas, natural gas, to Guam or any of the other, Hawaii or anywhere else there. 

So, here we are, America should be the American capital for energy, and shipbuilding, and all that, but yet we can’t provide this natural fuel for the territories. It’s unheard of. 

And we should. We have the lines ready to have that operational for the power plant with the LNG gas there, but until they build the ship, there’s no Jones Act-approved ship that would carry that fuel.

So, we got high cost of living, electricity, as well, power generation, and then we have this military buildup going on. We have a 360-degree missile defense going on, on Guam too, for our aggressors, because they got missiles pointed to Guam that say Guam-killer. 

So, as this buildup happens, construction material keeps on coming on in, personnel keep on coming in, contractors keep on coming in, they got to bring all these materials on over.

We even had to get an exemption from the Build America, Buy America because the steel was just too expensive, shipping that from CONUS to Guam. So, we buy it from our allies. 

But yet we can’t use our allies with their shipping lines. When we have military exercises, we combine efforts from air to sea power, working together with Japan, and Philippines and Taiwan and South Korea there, all working together. 

But when it comes to economic growth, we’re punishing ourselves with a 1920 law. It’s very unfortunate, and it needs to be changed. We just have to remove these blinders, I think, from folks that don’t really understand.

We have several congressional delegations that come out to Guam, and they always say, “are we there yet?” [chuckles] It is a long way to go. And then they realize the distance and trying to understand the shipping cost because of this Jones Act is just unfair. 

We should all be treated equally, right, for this opportunity to really grow the United States, the most Western soil being Guam. 

When that happens, you got good trade and better pricing, and better livelihood for the people of Guam, cheaper for the U.S. taxpayer as well for the military buildup too.

You’re going to have all these folks coming on in and realizing the cost of goods, and they’re going to suffer. And the price is going to go up as well. 

Our homes, our median price for a home is half a million dollars on Guam. Now, of course, it’s more in Hawaii, [chuckles] but for us …

Case: That’s a deal.

Moylan: Yes. [chuckles] But for us, that’s a lot for a small population. Economics got to grow. Our tourism market is really hurting since the pandemic, and that’s probably not going to come back because of how Asia is still recovering from that, too. 

So what are we going to do in the meantime? We got to build this trade. We have to help our U.S. citizens, our residents of the islands, the territories, Puerto Rico, too, as well. 

And we haven’t given up. Congressman Case and I have attempted twice, at least with me, twice, and there’s another bill that we introduced regarding, at least for disasters, eliminate this Jones Act for disaster periods. 

We get storms, we get typhoons. If we can get our supplies in from [the] Asia side, that would be very helpful. And also, for energy, let us bring in the natural gas as well by removing that Jones Act. 

But nothing seems to be moving. And so I appreciate this organization just getting the word out more, and we’re doing our part to spread the word within the house and Senate too, to really bring this to light. 

The Jones Act has a good purpose for CONUS, but not for the territories, as Congressman Case has said. So possibly this term, hopefully. [chuckles]

Grabow: Well, thanks for that. I want to ask each of you where your interest in the Jones Act comes from. Was there an “aha” moment? Was this the result of constituents reaching out to you or businesses? How did this get on your radar as an issue that you should pursue and care about?

Case: My interest goes back to my time in the state Legislature, Hawaii State Legislature, which was in the 1990s, and I had no familiarity with the Jones Act at the time. 

I did have a lot of familiarity with the concerns of my constituents with the high cost of living. And so I just systematically tried to start to check off the ingredients of the high cost of living, whether it was housing, or food, or energy, or any of the things that we take for granted in life. And in one way or the other, they all led back to shipping. 

And so then I started just asking the question, “OK, well, what is it about shipping? Can we improve anything about the shipping?” And that’s when I encountered the Jones Act. 

And I’m not a supporter of, you know, monopolies to start with. And so the idea that a few companies had managed to capture the market by way of federal law was an “aha” moment to me. 

And so, I remember that I just started innocently asking questions, and I introduced a resolution into the Hawaii State Legislature. This was somewhere around 1995 or something like that. And it was a very simple resolution, study the effects of the Jones Act on the high cost of living in Hawaii and report back on possible solutions.

A resolution to study. And oh, my goodness. You would think that the entire universe had opened up there. People were all over me just in a second. 

Of course, the Jones Act shippers who had enjoyed a very cozy relationship with the Hawaii state government. After the Senator Long, Senator Fong period, when the questions were last asked, there really had not been anything in a long time, people carrying the flame a little bit. 

But, you know, not just the shippers, but the cluster of interest around the Jones Act. For example, some of the unions who are very strong supporters of the Jones Act. Unreasonably, by the way, and I hope we get into this, is who’s actually being hurt by the Jones Act. It includes all of the union members of Hawaii.

 And so, you know, obviously it was a federal issue, and so I couldn’t really do anything about it at the state Legislature other than to highlight it, which I did. 

And then once I got up to Congress, I started to work on the actual legislative fix to the Jones Act. And in my first time in Congress, which was ’02 to ’07, I introduced legislation to actually reform the Jones Act across the entire country in various ways.

That met with a whole bunch of resistance, which translates, by the way, politically, because every single election, I can absolutely rely on these folks coming out and finding candidates to run against me and funding them very, very well, and so that’s a consequence of raising it. 

In other words, it’s been a longstanding concern of mine, and it’s frankly just getting worse because many of the things that were predicted in the 1990s about the Jones Act, and that were discounted by the supporters of the Jones Act. 

For example, that somehow if we kept the Jones Act, we would see a resurgence in US shipbuilding, a resurgence in US merchant marine capability, and that somehow costs would equalize, you know, Senator Fong talking to a 2:1 differential. Well, it’s 8:1 now, right? 

So the intervening decades have only proved the point more and have disproved the arguments against Jones Act reform. So that’s my journey.

Grabow: Well, you raised a couple of interesting points I’d like to return to later, but I’d also like to ask Representative Moylan about his thoughts here.

Moylan: Well, I was a senator as well, but prior to that, I was in business too, and I saw the prices of goods. It’s really hard to start up a business, and what you have to put into it, everything. 

Whatever you’re going to import, the cost is high. So you had the median price of what we can afford on Guam, but then your margins are really tough, tough to meet.

I think Guam and Hawaii, when this Jones Act started, we weren’t even considered for that purpose, right? And then somehow it just graduated on over to Hawaii and Guam, where it doesn’t work. 

Now we finally get to raise our voice, at least in Guam. We didn’t have a voting, well, we didn’t have a member of Congress until [the] 1970s. So we’ve been struggling with this for such a long time.

And of course, you know, I hear it from my constituents there that, “what can you do about the cost of living on Guam?” 

You know, when the typhoons come on through on Guam, it really knocks things out pretty good. We’re finally building to the quality where the roofs don’t go and the walls stay up, but many folks don’t have that ability to do that so we’re suffering. Then you got to bring in all this material. So we’re suffering.

Again, the prices of goods go up too, depending on our port. And when the strikes happen in California, boy, the dockworkers go on strike, that really messes things up. 

So overall, it’s been painful, it’s quite too long, and we need to do something. And I appreciate working with Congressman Case on this.

Grabow: Well, you mentioned the need to do something, and in fact, the two of you have been trying to do something. You’ve introduced a few different pieces of legislation. 

There’s the Noncontiguous Shipping Relief Act, the Noncontiguous Energy Relief and Access Act, and the Merchant Marine Allies Partnership Act, among others. I was wondering if you could discuss each one of these and kind of what the purpose of each one, why you have these different pieces of legislation, and what you’re trying to do with them.

Moylan: Go ahead.

Case: So, we’ve come about this from a number of different directions. I think we have five related Jones Act bills now. So the first one is pretty basic, Exempt the noncontiguous parts of our country from the Jones Act. “Hey, mainland United States, you want to keep it? Be our guest.” 

There’s lots of problems with that, and maybe you can argue some different benefits, but when you’re talking about the noncontiguous areas, that’s a different story.

The second bill basically says you can keep the Jones Act, but you cannot charge rates for the Jones Act that are higher than 10% above an international rate structure. So you essentially are subject to, are regulatorily subject to a competitive rate. And I guess you have to choose whether that’s good enough for you to stay in business or not. 

Now, I don’t like that approach, necessarily, but if somebody wants to go in the direction of rate regulation in order to maintain American capacity, fine. That would help us.

The third one basically says that the Jones Act is suspended anytime you have a monopoly situation. 

The fourth one is what Congressman Moylan was mentioning earlier, which is, it’s particularly important to have access to the Jones Act in disaster situations where you must get something to a particular jurisdiction ASAP. 

And the classic example of this is the hurricane in Puerto Rico, which devastated Puerto Rico. The Jones Act prevented aid from getting to Puerto Rico. That should not be the case, and it should not be subject to a discretionary waiver.

And then our fifth bill is our most recent one. And this is about really calling out the hypocrisy of the Jones Act and meeting the national security arguments of the Jones Act head-on. 

What people don’t know about the Jones Act, and its implementation, is that it actually allows some foreign construction of parts of a Jones Act ship, which then have to be brought in here and assembled here.

It also allows, essentially, for, incentivizes really, for repairs to be conducted outside of the United States. And so take Matson as an example, which is my primary Jones Act shipper. Matson’s vessels that are assembled in the United States, many of the parts are fabricated overseas, that’s contrary to the Jones Act. 

Matson repairs its ships in the People’s Republic of China, and it gets a subsidy for doing that, an incentive for doing that. Now, if the whole idea of the Jones Act is to maintain American shipbuilding, ship repair capacity, then why are we not only allowing them to repair overseas, but to do it in an adversary? 

This is really, and I want to note this because our military, and I serve on the House Appropriations Committee Subcommittee on Defense, which has all of our military funding, our military is struggling with the Jones Act itself.

It has insufficient sealift capability. It utilized non-Jones Act sealift during the Iraq and Afghanistan wars. As was mentioned by Congressman Moylan, it has had to do that in some of its exercises overseas, and increasingly, it simply cannot afford the cost and time involved in the construction and maintenance of all of our naval vessels, as an example, primarily in the United States. 

And so it is actively considering and actually utilizing the shipyards of our friends and allies, Japan and Korea in particular, who have world-class shipbuilding, ship repair capacity.

And so, that all comes together in this basic point. Why should we allow for a hypocritical application of the Jones Act to advantage an adversary when we have friends and allies sitting there perfectly willing and able to do the job, and to develop an interdependence with them, which will help us both economically and strategically? 

And so that’s our fifth piece of legislation. I think I got that right.

Moylan: Yes, yes, yes. There’s so many different options that we created to get some sort of reform, and add on with the military, their shifts being repaired in North Korea, I’m sorry, South Korea, not North Korea, South Korea. When we could have the capacity to do this on Guam, too. Our ship repair facility should be operational. This is U.S. soil. 

So, the military will have their ships repaired with our allies, but yet, we can’t trust our allies to bring their goods to us. It doesn’t make sense. 

We’ll go to war, we’ll fight together, but we won’t build our economy. We won’t help our people reduce the cost of living so we can live in the territories.

Like Guam and Hawaii, we were an afterthought. Well, we weren’t even considered when this Jones Act came about. And now that we’re pointing out how harmful it is for the islands, it’s hard to get the word through because we’ll be hit with the different unions and all, but really, it’s we’re protecting CONUS, that’s fine, but the territories, let’s exempt them.

Grabow: Now, to get these bills passed, you’ll obviously need the support of folks from the U.S. mainland, can’t do it just with the noncontiguous states and territories. So what are the … and you have had some success there … you have Representative Torres, I believe, has supported some of these bills from New York. 

But what’s your pitch to both other members of Congress as to why they should be interested in this, why they should care about this, as well as just maybe just people that are viewing this or members of our audience? Why should people in the mainland care about this issue?

Case: Your costs are higher from the Jones Act, too. Let’s start with the cost of living. Your costs are significantly higher because of the application of the Jones Act to coastwise trade in the continental United States. So, this is a cost additive. 

So, if we’re all sitting here talking about the cost of living being the No. 1 concern on the minds justifiably of the American electorate, let’s talk about the cost of living, let’s talk about the drivers. And the Jones Act is a driver of higher costs.

If you had the advantage and the access to the international shipping, which could transit our coastwise trade, say take some goods from New York City to, you know, Charleston or whatever it might be, down the Mississippi River, as I already talked about, that would create competition and lower your costs. 

Let’s not forget, we’re down to just a few, literally, Jones Act vessels transiting our entire country right now. Down from 2,000 or 3,000 just decades ago. Now we’re down to what, 200 or something like that, 99 or actually less than that, capable of doing ocean-going transits like Hawaii and the U.S. continent.

And so [the costs of] your goods are higher, that’s No. 1. Certainly to the, you know, growers and manufacturers of the Midwest, who actually were some of the center of Jones Act reform 20 years ago, who were held captive, really, to a Jones Act monopoly on certain parts of their essential supply routes, their costs are higher, and they pass that through their consumer. 

It makes it less competitive for them in the entire marketplace.

Let’s talk national defense here. Because this is always trotted out as the reason for resisting Jones Act reform. That somehow, we need the Jones Act in order to maintain military shipbuilding and a military sealift capacity. 

And the fact of the matter is that that has failed miserably. That is not the case at all.

We have seen shipbuilding decline precipitously in this country, despite the Jones Act. 

We have seen ship repair capacity decline precipitously in this country. 

We have seen our merchant marine decline. 

We have seen our total sealift decline because of the Jones Act. 

That’s a matter not only of an economic consequence to our country, but a military exposure at the same time. 

So obviously, the direction we’re going in is not working.

Now, you could argue that what we should do is pure economic industrial policy. Let’s just subsidize, just totally outright subsidize, the U.S. shipbuilding, ship repair industry to the tune, probably, of billions and billions and billions of dollars, which is what it would take to get it anywhere close to where it was 50 years ago. 

I don’t think that’s actually good policy. I think that’s a commitment of hard taxpayer dollars to what is a flawed, inefficient model to start with.

And so let’s take the best of what we’ve got and try to stabilize that through good overall economic policy, but definitely change the parts that are hurting, really all Americans. 

And the issue that we have with this is that it’s far easier to, I guess, disguise the consequences of the Jones Act in a broader continental population, which is not so captive to a Jones Act monopoly, where the alternatives of other transportation are available, as it is a direct consequence to the noncontiguous.

So I agree with you, it’s a harder sell, but, you know, hey, one sell is just, “Why are you being unfair to us? If it’s such a big deal, well, let us go. You guys can take the Jones Act. You don’t think it’s a big deal, fine, take it.” 

But look at what’s happening to our part of the world. By the way, for us, the most important part of the world, really, nowadays. We better have a stable economy. We better be able to take care of places like Hawaii, center to our defense effort in the entire U.S., completely subject to the same costs of the Jones Act to bring their stuff in. 

So there’s lots of arguments, and you mix and match depending on who you’re talking to.

Grabow: And I wanted to talk about the politics of the Jones Act a bit. Now, you said something interesting earlier where you mentioned you just asked some questions when you were a member of the Hawaii State Legislature, and  this brought a lot of blowback. And I suspect that people might be surprised by that. 

There have been at least two opinion polls I’m aware of in the last five years of residents of Hawaii asking them what they think about the Jones Act. And among those aware of the Jones Act, which is like 40% or so, 90% favor repeal or reform of the law. 

And yet it seems to me like this is a heavy lift as a legislator from Hawaii. In fact, you were the only member of the Hawaii delegation that supports reform. 

Now, I’m not going to ask you to speak to the motivations of your fellow delegation members, but maybe you could shed some light on why this is difficult politically. 

And again, I suspect that from the outside looking in, people think this is a slam dunk, but it’s not. How do we explain this?

Moylan: Yeah.

Case: You want to take it for Guam, and then I’ll do Hawaii.

Moylan: Well, I want to just hop on, and pretty much it’s, my concern is really on the military side. 

As a member of the House Armed Services, as well, we’re in a bad position right now with the amount of ships that we have that can support the merchant marines and all that, can support what we need for the services. 

With our current situation with our aggressors, the CCP, they’re not waiting around. They got enough ships. They’re building like mad. And unless we can really fix our economy, with opening it up, giving us the exemptions, then we’re in a bad situation.

This is American soil. You know, this is like World War II all over again, unfortunately, because of our sea lanes trying to keep those open. 

But the way you really keep that open is with fair trade, fair economy, fair shipping rights, equality across the board. 

To let that, or see that, to understand it, that’s difficult to put across to members of Congress to understand. 

Congress changes just about every two years, different members. You got to get re-elected. You finally get something, you understand it, you’re not around. 

Then you start with brand new, fresh people, folks that maybe never saw the Pacific Ocean, have no idea what’s going on. Not to say they’re all like that, but some of them, I wonder, but that’s another story. 

But that’s why it’s so important that we have these congressional delegations to help them understand what is important. And the more we can talk about this, in these kinds of settings, it does spread the word.

Case: Yeah, so it has been a hard sell to fully explain and, you know, articulate to constituents what the Jones Act is, why it is important, how it affects you, and to quantify that to them. 

But as you already pointed out, once people actually understand it, it’s pretty obvious that it needs reform. 

And it’s pretty obvious that it’s simply a monopoly created by federal law that is defended under federal law, very vociferously by the Jones Act lobby. 

And so, these efforts, I’ve never despaired of this because I believe that as we introduce these bills, as we talk about them, which, by the way, our opponents absolutely hate us doing, right? They would rather this just continue to lurk in, you know, the dark shadows of secrecy, and nobody really focus on it. 

And good people are focusing on it. And so I have believed that over time, it would educate enough people. It is now a regular subject of discussion, for example, in my constituent meetings. 

Among my constituents, it’s kind of a litmus test in some ways for bad government. And when I started on this 20, 30 years ago, nobody knew what it was. I didn’t know what it was.

And when I brought it up and the impacts, they’d go, “Well, why don’t you explain that to me again.” 

And I said, “Well, OK, here, here, and here.” And I gravitated to a shorter version, which was, so it’s a government monopoly that’s raising your prices, and it’s created by the government, defended by the government. It’s 100-some-odd years old, it’s outdated. It was from another time. It don’t work anymore, and this is why it’s affecting you.” 

And then people like the Grassroot Institute came in and said, “OK, well, let’s quantify that.” That means for every single family in Hawaii, an extra $1,700 a year. $1,700. It’s a lot of money to be passed along and a lot of indirect effects as well. 

And so, it is a challenge, but not an insurmountable challenge to educate people what is actually going on to develop that critical mass where change is actually possible. 

On the other side of it, the Jones Act shippers and the constituencies around them, this is the only thing that matters to them. And this is No. 1, and they can muster the money to influence it and defeat it, the time, and the resources. 

And they do, as I already said, this is a very strong opposition. And so some politicians just don’t want to face that. Why bother? Nobody cares about it, blah, blah, blah. 

And so that’s the political dynamic that we face. But I think, you know, it is going in the right direction, and you never can tell when things break loose. 

I also think that simply by talking about it, simply by highlighting it, operates as its own somewhat check and balance against monopolistic abuse. 

Now, I think there’s monopolistic abuse going on, but maybe, just maybe, it’s not as bad as it would be if we weren’t highlighting it. 

So there’s advantages even now, and the hope of real reform over time.

Grabow: Representative Moylan, anything to add to that?

Moylan: Very good. [chuckles] You know, Hawaii, Guam, we’ve got U.S. citizens, right? And we’re not treated equally because of this Jones Act. 

We have heavy military buildup because of our strategic locations. We probably got every … there’s somebody from every state and territory, that are residents of our islands. 

We’re protecting [the] United States. We’re protecting the freedom that we have against our biggest aggressor now, the CCP, who continuously try to push the rope further and further, their line here.

So Guam’s in the second island chain for the defense of the nation. The taxpayer’s money is being spent, I think we just got around $3 billion in NDAA funding to come on in. 

But we’re charging too much. If we could just have this exempt for us, it would support the nation, it would support our communities, and it would especially support our economy.

Case: You know, sometimes it’s instructive to just talk about some real-world examples that are just, you sit there and you puzzle over them. So, I’ll give you like three that are kind of on my mind. 

The first is, you know, we’ve turned into a net exporter of petroleum in the world versus a net importer in a very short period of time. We don’t get the benefit of that in the noncontiguous parts of our country. 

And the reason we don’t get the benefit of that is because it is given that that petroleum has to come to us on Jones Act ships, which, by the way, are not available, to start with, for ocean-going petroleum transfer.

So, there’s not even any ships out there to do it. Even if there were, it would be prohibitively expensive to take that from our own continental United States, our own country, which is what I think we’re trying to do here, benefit from this, you know, this benefit of the last decades. 

It’s cheaper for us to import our oil from overseas on non-Jones Act ships … because. It doesn’t make any sense. That’s pretty stupid. 

Another example, this always just gets me. So, we recently had a very severe crisis in Hawaii with the Red Hill fuel tanks that used to store our bulk fuel for our country, in the Indo-Pacific. 

They leaked. It was a tragic leak. It was very significantly damaging across a number of areas. We decided to close it down. 

A lot of bulk fuel had to be moved somewhere else. And most of that bulk fuel moved out into the Pacific to, you know, for the most part, non-Jones Act locations. Thus, it didn’t have to transit Jones Act ships. 

So we went out into the world, the military that is, and bid that for the ocean-going tanker fleet of the world and got really solid prices. 

But there was one load of fuel that had to transit about 10 miles as the crow flies, from Pearl Harbor to Barbers Point, which is where we had some bulk fuel storage facilities. 

Couldn’t pipeline it. That’s a Jones Act transit, right? Ten miles from Pearl Harbor to Barbers Point. That had to be by Jones Act ship. 

There were no tankers available. We had to wait for a tanker. It was prohibitively expensive. 

Asked for a waiver, waiver was denied. That’s just a waste of money. That’s a stupid example of the Jones Act in practice. 

And then my last example, because we’re talking about imports, but we both have export industries, some export industries. 

In my case, I have cattle. The cattle’s market, aside from Hawaii, which doesn’t consume all of our cattle, the cattle’s market is the United States continent. It wants to get to the stockyards in Stockton, California, and get into the continental distribution. And that’s a Jones Act transit. 

So, somehow, the cattle has to get from the neighbor islands in Hawaii. So, not Honolulu. Has to get from there up to the U.S. mainland. 

However, there’s no Jones Act ship specializing in cattle transfer. 

And so, therefore, what has to happen is two things. Either the cattle has to, and by the way, Matson doesn’t care about the return transit. That’s just kind of a freebie giveaway. So, they’re not particularly focused on this. So, they make no accommodations for our exports that have to go out to the continent on a Jones Act ship, of which they are the only possessor. 

And so, the cattle have to come from the other islands, down to Honolulu, and they’ll sit around in the port waiting for the next, you know, Jones Act ships. They’re kind of accommodated going back up. They lose weight along the way, which is not good for cattle. It loses value.

Or the other thing they have to do, non-Jones Act ship to Canada, but they have to keep the cattle in Canada for a certain period of time because that’s a Jones Act loophole that’s been cut off. That reduces value. 

Or, and this is what they’re doing, they’re air-freighting their cattle, which is prohibitively expensive. 

And so, in an earlier time, I actually introduced a bill. I’m not sure why I didn’t reintroduce it this time around, but I didn’t, to actually say, “OK, fine. Let the exports go then. Do you have a problem with our exports? You don’t care about them anyway.”

There were cattle carriers from places like Europe that specialize in cattle that were willing to come down and transit cattle on specific carriers, but they weren’t eligible.

Those are three examples of how, aside from a direct overall increase in costs across the board, timber, food, cement, fertilizer, all of the goods by which we handle standard manufacture. 

Aside from that, there are very specific examples of the application of the Jones Act in ways that I don’t think even its supporters anticipated in a noncontiguous area.

Because Mr. Jones, Senator Jones, from Washington State, I think it was, he wasn’t living in a United States that had noncontiguous areas. He just wasn’t. And so this was never thought of, but the application is severe.

Grabow: Well, we’re getting towards the event’s conclusion. I have lots more questions, but I want to give the audience a chance to chime in here and pose some questions of their own. 

For those online, you can join the conversation and submit questions through the event webpage, Facebook, YouTube and X. I’ll start with someone here in the auditorium.

Please speak directly into the microphone. 

Now, normally I don’t, you know, everyone asks a form of question, form of a question, I’ll entertain statements, something for the members to react to. I just don’t want any speeches. 

But if you do want to make a statement or something, that’s fine as well. So, over here, gentleman in the second row.

Participant 1: Sure. Thank you very much. This is all very, very fascinating, and I appreciate your time today. Kōloa Rum from Hawaii recently filed a lawsuit through the Pacific Legal Foundation, claiming that the Jones Act is unconstitutional. Do you put any stock in that? Do you have any hopes that that might actually free you from the Jones Act restrictions?

Case: I don’t know enough about the actual legal argument. I haven’t read the briefs. I mean, I’m a lawyer, so I’m thinking about this legally. 

I’m not sure exactly what the argument would be. I take stock in it because a lawsuit is pending, saying the Jones Act is unconstitutional, and I think it should be adjudicated in the courts. 

I think it should be pursued in all avenues. So I’m happy that that lawsuit is pending. 

My suspicion, at least, is that the fix is still going to be largely legislative. So, can’t put all our eggs in that basket.

Grabow: Anyone else? We have someone right here.

Participant 2: Hi. Thank y’all for being here today. I was wanting to ask about waivers as a short- to medium-term remedy, especially for the noncontiguous parts of the United States. And especially considering what both of you have said about the importance of these states and territories for our defense.

Moylan: I have a measure there for that purpose for the waiver. The military was able to get it, as I mentioned earlier, for steel, because it was just way above budget to try to get the steel from the CONUS there, versus getting it from our allies. 

So they were able to, but it seems like the military can, but the civilians can’t. Our measure is basically for disasters, just a temporary waiver. Ten days at a time, can renew that, up to 45 days for typhoons, for earthquakes. 

Whatever our disaster is, just to bring it in and get our supplies coming along quicker, and cheaper too.

But it’s important for survival of our residents there, for building, for housing, for getting things going once again after the storm. So, that hasn’t passed yet either. 

But it’s, as Congressman Case here mentioned, we have several bills, so many different options. They all sound so logical, but it’s getting our fellow members to understand why that’s important. Getting it through committee, getting it up for a hearing, a markup as well.

Case: Yeah. I mean waivers are also a possibility. In my experience, the Jones Act interests have pervaded the regulatory process. And they are completely opposed to any waiver. Get it. 

Their mindset is, any change in the Jones Act for any purpose, no matter how compelling, will set off a chain reaction that will lead to Jones Act reform. 

And so they will say no to the most outrageous application of the Jones Act. And they will urge the administration, which is empowered to give that waiver, to deny it. 

And I go back to my Red Hill bulk fuel situation. We asked for a waiver in that situation so you didn’t have to bring one Jones Act ocean tanker, you know, one or two in the entire fleet, down here at a cost that was multiples higher to do a 10-mile transit. That’s pretty compelling. 

And the answer was no. Why? Why? Because they didn’t want to give a waiver. That’s the only reason. 

And so waivers are available. Yes, they have been given in very compelling circumstances, where, I guess, you just couldn’t possibly argue it any other way. Maybe it was just a bone to throw away to say that we give waivers once in a while. 

But to govern by waiver is a bad idea, right? I mean, if you need a lot of waivers, then all of a sudden, they overcome the purpose of the law to start with, then you might as well just throw it out and start over again.

Grabow: I’ll just note there, as a practical matter, the ability of the executive branch to grant waivers has been severely constrained in recent years. I believe in the 2020 National Defense Authorization Act, there were new restrictions put on waivers. I think their duration would be a maximum of 10 days, with extensions to 30 days. 

And then after, last hurricane that hit Puerto Rico a few years ago, Fiona it was, that necessitated a Jones Act waiver for diesel fuel to be delivered to Puerto Rico. 

There was a ship going from Texas to, I believe, the Netherlands, steaming past Puerto Rico, it diverted, offloaded its cargo. And then the waivers were yet restricted again to make sure that any vessel granted a waiver had to be empty at the time that the waiver was granted to avoid that exact scenario from playing itself out again.

Case: Let’s be careful to establish any precedent whatsoever for waivers. Make that situation so impossible to duplicate that you can never claim precedent that you did it once.

Grabow: I do have one other question for you. So, to try to steelman the case for the Jones Act, give the supporters of the law a fair shake here. 

You know, of course, they say this is essential for our shipping and shipbuilding capacity. You already addressed that, but other arguments here, especially in the context of Hawaii, and I think Guam, is that, OK, you know, the Jones Act ensures that, A, you get reliable service. That’s important, and you don’t have a lot of warehouse space, I believe, in Hawaii.

And B, another argument is, absent this law, we would see these critical trade lanes captured by the Chinese Communist Party. The Chinese would control these shipping lanes. What are your thoughts about those arguments?

Case: Well, first of all, our reform efforts specifically anticipate that by allowing the trade lanes only to be “captured” by friends and allies. So yes, I mean, we do have to place things in a national security perspective. And no, we don’t want a world in which, you know, PRC-built and flagged shipping is dominating all of our sea lanes. 

The reality of our world today is that we can’t do everything alone, for national security purposes. We have to rely on friends and allies, and we routinely do. Our entire military supply chains are not manufactured in this country. They’re built and manufactured by friends and allies. A little bit too much by the PRC still, but that’s another story. 

But we need to be able to work together on our mutual issues. And so if we can involve friends and allies, like Japan and Korea, we should. And we need to believe that under the right constructs, we can take care of national security and provide an opening. 

Now, if we were in a situation where there was a Jones Act out there, that led as a matter of national policy, to a surplus of merchant marine shipping in this country, and a competitive shipbuilding environment, and a competitive ship operation environment where we had the best of all worlds. Which was, we took care of some of the arguments of the Jones Act shippers in a way that took care of places like Hawaii and Guam, the noncontiguous areas, well then, OK. We might have a discussion then. 

So it’s a cost-benefit here. Like, what is the actual consequence of modifying the Jones Act to take care of the very specific concerns of our noncontiguous territories, as against some of these arguments, merchant marine capacity, national security? 

And I don’t think that we are going to sacrifice our national security by freeing our noncontiguous areas from the devastating consequences of the Jones Act.

And there are plenty parts of our country that are reliant not just on purely domestic-controlled transportation modes to transit critical stuff back and forth. 

So I think for Hawaii, we can certainly find a replacement that takes care of our high costs in a way that is not going to sacrifice reliability of shipping, our container space, infrastructure investment. That’s a false god that, you know, has been disproved repeatedly elsewhere.

Moylan: It’s national defense. Look, we can have the different scenarios of what we’re imagining, the next war or preventing the next war, by working closely with our allies, from air to sea, from troops on the ground. 

We can work with our allies as well to keep this area free, the economic zone free, as long as we have open trade and open shipping, then we kind of all get along. 

And then we’re making our nation strong. We’re building our friendships strong. And we’re keeping our constituents, our folks in the territories, at least giving them a better life and better opportunity by reducing our cost.

Grabow: Great. Well, we’re just about at time here, so I think we have like 20 seconds left. So I think we’ll go ahead and call it a day. I’d like to have everyone please join me in giving a round of applause for Congressman Moylan and Congressman Case and extend our thanks for coming here today.

[applause]

Case: Thank you so much.

Moylan: Thank you.

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GRIH: Case, Moylan discuss how Jones Act harms Hawaii, Guam and entire U.S. | Grassroot Institute of Hawaii

FW: Panel: Jones Act a dire economic ‘burden’ for Hawaii - FreightWaves

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