[Extensions of Remarks]
[Pages E90-E91]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             INTRODUCTION OF JONES ACT MODERNIZATION BILLS

                                 ______
                                 

                              HON. ED CASE

                               of hawaii

                    in the house of representatives

                       Tuesday, February 4, 2025

  Mr. CASE. Mr. Speaker, today I again introduce three bills to end 
over a century of federally-imposed monopolistic closed market domestic 
cargo shipping to and from my isolated home state of Hawaii and the 
other island and separated jurisdictions of our country not part of the 
contiguous 48 United States. In doing so, we seek to break the 
stranglehold on the peoples and economies of our exposed communities 
and our resulting sky-high costs of living which are caused by just a 
few domestic shipping companies controlling the lifeline of commerce 
upon which we absolutely depend.
  These bills all amend the Merchant Marine Act of 1920, also known as 
the Jones Act. That federal law mandates that all cargo shipping 
between U.S. ports occur exclusively on U.S. not foreign, flagged 
vessels. Additionally,

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the law requires that these vessels are built in the U.S. and owned and 
crewed by U.S. citizens.
  The Jones Act was enacted in a protectionist era under the guise of 
preserving a strong national merchant marine. But today it is just an 
anachronism. Most of the world's shipping is by way of an international 
merchant marine functioning in an open, competitive market. And those 
few U.S. flag cargo lines that remain have maneuvered the Jones Act to 
develop virtual monopolies over domestic cargo shipping to, from and 
within our most isolated and exposed locales--our island and offshore 
states and territories--that have no alternative modes of 
transportation such as trucking or rail.
  My Hawaii is a classic example. Located almost 2,500 miles off the 
West Coast, we import well over 90 percent of our life necessities by 
ocean cargo. There are plenty of international cargo lines who could 
and would compete for a share of that market. Yet only two U.S. flag 
domestic cargo lines--Matson Navigation and Pasha Hawaii--operate a 
virtual duopoly over our lifeline.
  While they are nominally subject to federal regulation, the fact of 
the matter is that cargo prices have gone in only one direction--up, 
fast and repeatedly, despite a surplus of International shipping--and 
it is indisputable that there is no downward market pressure which 
would otherwise result from meaningful competition. These accelerating 
cargo prices are not absorbed by the shipping lines, but passed through 
all the way down the chain, to the transporters, wholesalers, 
retailers, small businesses, mom-n-pops and ultimately consumers, of 
all of the elements of life, from food to medical supplies, clothes, 
housing and virtually all other goods. The result is a crippling drag 
on an already-challenged economy and the very quality of life in 
Hawaii.
  The Jones Act has far-reaching consequences for the people of Hawaii, 
one of the most glaring and pervasive being its contribution to the 
high cost of living across all segments of our society. For the average 
Hawaii family, the act adds nearly $5 a day to their expenses, which 
amounts to $1,794 a year. While this may seem like a small amount on 
its own, when compounded over time, it creates a substantial financial 
strain on households already grappling with high living costs. That 
extra $1,794 could be spent on essentials like healthcare, education or 
better housing--things that would directly improve the quality of life 
for Hawaii's residents. However, instead of these scarce resources 
being available for more pressing needs, it is channeled into inflated 
transportation costs and the profits of the Jones Act shippers and 
their owners. These price increases cascade through every aspect of 
daily life: families are paying an additional $389 for housing, $200 
for motor vehicles and their maintenance and $147 for food, on top of 
what they would otherwise be paying, due just to the difference between 
market and monopoly shipping costs.
  One of the most significant areas affected by the Jones Act is 
housing, already challenged. The construction industry in Hawaii relies 
heavily on noncontainerized cargo like sand, cement, gypsum, steel and 
bricks, materials that are essential for building homes and 
infrastructure. However, due to the restrictions imposed by the Jones 
Act, the number of available vessels to transport these types of goods 
is severely limited. This scarcity drives up the cost of building 
materials, making it more expensive to develop affordable housing or 
address deferred maintenance on existing housing. In addition, because 
a large portion of these materials must be imported from foreign 
countries, they are subject to tariffs that further increase the price. 
This results in higher construction costs, which ultimately contribute 
to the already skyrocketing housing prices in Hawaii. The burden on the 
real estate market not only affects homebuilders but also exacerbates 
the affordable housing crisis, as fewer homes are being built, and the 
ones that are tend to be priced out of reach for most families.
  As a consequence of the Jones Act's impact on construction, the 
limited availability of affordable housing in Hawaii leads to a number 
of secondary challenges. With fewer new homes being built, the housing 
stock becomes increasingly vulnerable to damage from natural disasters 
like hurricanes or flooding. These older homes are at greater risk 
during such events, further exacerbating the state's housing crisis. As 
the risk of damage rises, insurers are forced to adjust premiums to 
reflect the increased likelihood of costly claims. This, in turn, 
drives up the cost of housing insurance, further burdening homeowners 
and renters alike, while also making it more difficult for individuals 
and families to secure affordable, safe housing.
  Another prime area for Hawaii is food, most of which we import on 
Jones Act ships. The monopolistic cargo premium is priced into our food 
products, contributing to the highest cost of food of any state. And 
even for locally-produced agriculture, the Jones Act extracts its price 
for necessary imports including farm machinery, fertilizer and 
processing materials, resulting in an addition to one of the highest 
costs of food production anywhere in the country.
  Nor is the Jones Act's impact limited to imports into Hawaii, for it 
also restricts cargo exported from Hawaii to other U.S. ports 
(especially the West Coast) to the very few Jones Act shippers and 
their monopolistic prices. Take our cattle industry, which is dependent 
on access to the market on the continent. No non-Jones Act 
international ship can serve that route, so, for example, no 
international ship could ship cargo from Asia into Hawaii, pick up 
cattle for another run to the West Coast, and then pick up U.S. exports 
to ship them back to Asia. That means our cattle industry is forced to 
take whatever is offered by the Jones Act ships returning to the 
continent, when they want, how they want, and at the prices they 
choose. It also means that we get very little direct international 
imports; they must first go to the continent and then ship on Jones Act 
ships to Hawaii, jacking up prices completely unnecessarily.
  The Jones Act also has other consequences, in addition to 
monopolistic shipping costs absorbed by Hawaii families, that are 
nothing short of ridiculous. Take the case of defueling the military's 
bulk fuel storage facility at Red Hill after the disastrous leaks. The 
great bulk of that fuel was transported elsewhere, which required 
specialized fuel tankers. There are many in the international trade but 
few Jones Act tankers in domestic use and in high demand. Much of the 
fuel was transported to non-U.S. locations and so could access non-
Jones Act international shipping and much lower rates. But some fuel 
was between U.S. ports and so required short-supply Jones Act tankers 
and much higher rates. Even a one-tanker load transported from Pearl 
Harbor to another location in Honolulu just ten miles away required 
bringing in Jones Act tankers from the continents at much higher tates, 
rather than allow an international tanker here for international export 
to do a short hop. I specifically asked for a waiver of the Jones Act 
to avoid this result, a total waste of taxpayer dollars, but got no 
support from the Jones Act shippers, who, although it made no real 
difference to them, were petrified by the precedent.
  The three bills I introduce today say: enough is enough. If you, the 
48 contiguous United States, want to continue the Jones Act as to 
shipping between your ports, that's your business. But don't penalize 
islands and other noncontiguous locations by throwing us to the 
monopoly wolves you've created.
  The first bill, the Noncontiguous Shipping Relief Act, exempts all 
noncontiguous U.S. locations from the Jones Act. These include Hawaii, 
Alaska, the Northern Marianas, Guam, American Samoa, Puerto Rico and 
the Virgin Islands.
  The second, the Noncontiguous Shipping Reasonable Rate Act, 
benchmarks the definition of a ``reasonable rate'' that Jones Act 
shipping can charge to within ten percent of analogous international 
shipping rates.
  And the third, the Noncontiguous Shipping Competition Act, prevents 
monopolies or duopolies in noncontiguous Jones Act shipping by allowing 
the noncontiguous Jurisdictions to be serviced by non-Jones Act 
vessels, in order to create and increase and increase competition in 
these critical shipping lanes. Again, this is a very small portion of 
the total national Jones Act shipping where it is particularly 
destructive in application and would not affect the bulk of Jones Act 
shipping throughout the 48 contiguous United States.
  Essentially, these bills are designed to provide viable solutions for 
alleviating the burdens faced by our U.S. noncontiguous areas. While 
there are multiple pathways to address this issue, one thing is clear, 
we must change the status quo that has caused such widespread harm to 
my state and other jurisdictions dependent on the Jones Act. I urge my 
colleagues to lend their support to this important effort to reduce the 
sky-high costs of living to the people of Hawaii and the other non-
contiguous areas.