WHEREAS, interstate ocean shipping is a vital economic link connecting the United States mainland, Alaska, Hawaii, American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the United States Virgin Islands; and

WHEREAS, section 27 of the Merchant Marine Act of 1920, 46 United States Code section 55102, commonly known as the Jones Act, is a federal cabotage law that requires goods shipped domestically overseas be transported on vessels constructed in the United States, registered to the United States, owned by United States citizens, and crewed by United States citizens or permanent residents; and

WHEREAS, the Jones Act restricts shipping to and from Alaska, Guam, Hawaii, and Puerto Rico, but not American Samoa, the Northern Mariana Islands, and the Virgin Islands due to exemptions arising from international treaties; and

WHEREAS, Guam has been granted an exemption from the Jones Act requirement that all commercial vessels be constructed in the United States pursuant to 46 United States Code section 12111, known as the "Guam exemption"; and

WHEREAS, the Guam exemption is of limited benefit because the natural westbound trade lane from the west coast of the United States to Guam passes through Hawaii, making it difficult for ocean common carriers to mount financially viable voyages without carrying cargo to both Hawaii and Guam; and

WHEREAS, the high construction costs and low production rate of the United States shipbuilding industry has resulted in an aging and inefficient fleet serving Hawaii, Alaska, and Puerto Rico, and this disproportionately and adversely affects noncontiguous jurisdictions; and

WHEREAS, United States ship construction is typically four to five times the cost of comparable ships built in Japan or South Korea and is also of limited scale, averaging less than three deep draft merchant ships annually; and

WHEREAS, the United States construction requirement of the Jones Act creates an artificial scarcity of available ships, erects substantial barriers to entry for domestic trade, and severely restricts the contestability of the domestic ocean transportation markets; and

WHEREAS, the average age of container ships employed in the noncontiguous common carrier trades is thirty years, compared to the international average of twelve years, and this results in higher operating costs and increased accident rates; and

WHEREAS the United States construction requirement of the Jones Act for large oceangoing ships in noncontiguous domestic trades is not essential for the national defense of the United States because the remaining seven domestic shipbuilding yards capable of constructing large oceangoing ships mainly build naval ships and produce so few merchant ships each year that this activity does not represent sufficient shipbuilding capacity to address the mobilization needs of a major wartime contingency; and

WHEREAS, granting an exemption to the requirement that a ship be constructed in the United States will allow aging ships to be quickly and economically replaced by newer, less expensive, safer, and more fuel efficient ships; and

WHEREAS, an exemption to the United States construction requirement would not change the other existing Jones Act requirements as they currently apply to the coastwise noncontiguous domestic trade; and

WHEREAS, enactment of federal legislation exempting noncontiguous domestic trade from the United States construction requirement for large self-propelled ships would revitalize shipping by allowing for the use of efficient foreign-built ships, removing barriers to entry, encouraging competition, and making more United States merchant ships available to support military sealift operations; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-eighth Legislature of the State of Hawaii, Regular Session of 2015, that the Congress of the United States is urged to enact legislation exempting the domestic shipment of goods to and from Hawaii, Alaska, and Puerto Rico, from the United States construction requirement of the Jones Act for large self-propelled oceangoing ships; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the President of the United States; the Majority Leader of the United States Senate; the Speaker of the United States House of Representatives; the Chairperson of the United States Senate Committee on Commerce, Science, and Transportation; the Chairperson of the United States House of Representatives Committee on Transportation and Infrastructure; the Secretary of the United States Department of Transportation; members of Hawaii's congressional delegation; members of Alaska's congressional delegation; the Resident Commissioner of Puerto Rico; and the Delegate to the United States House of Representatives from Guam.

	OFFERED BY:	_____________________________

Report Title:

Jones Act; Exemption; Alaska; Puerto Rico; United States Construction.

HOUSE OF REPRESENTATIVES	H.R. NO.	21
TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII