MARITIME SHIPPING HAWAII - ZONE OF REASONABLENESS - ACT 213
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MARITIME SHIPPING HAWAII - ZONE OF REASONABLENESS - ACT 213

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The Zone of Reasonableness in theory and prescribed by the Interstate Commission Termination Act of 1995 was to streamline the regulatory process for the Surface Transportation Board. ...

The Zone of Reasonableness in theory and prescribed by the Interstate Commission Termination Act of 1995 was to streamline the regulatory process for the Surface Transportation Board.

In practice, the Zone of Reasonableness has proven to be a haven for shipping companies seeking tariff increases. Any tariff increase within the range is presumed reasonable. The Surface Transportation Board does not otherwise require supporting data or make any inquiry.

The Zone of Reasonableness was implemented in Hawaii on a trial basis. The Hawaii Public Utilities Commission terminated the program finding the Zone of Reasonableness to be inconsistent with the public interest. The Hawaii Public Utilities Commission, unlike the Surface Transportation Board, scrutinized each application for tariff increase and determined whether the supporting data was sufficient to warrant approval of the tariff increase.

Act 213 has withstood judicial challenge. Act 213 provides the Hawaii Public Utilities Commission an additional tool to govern intrastate water borne transportation of goods within the Port of Hawaii system to ensure that all islands are treated equally. Any exception is to be granted in rare instances at the discretion of the Hawaii Public Utilities Commission.

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  • This guarantees Foss (division of Saltchuk) a perpetual monopoly as they have an ability to manipulate costs (via pricing of services from the Saltchuk parent organization) to ensure 'rate of return' never goes above 12%. It may be unconstitutional as restraint of trade.
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MARITIME SHIPPING HAWAII - ZONE OF REASONABLENESS - ACT 213 MARITIME SHIPPING HAWAII - ZONE OF REASONABLENESS - ACT 213 Presentation Transcript

  • MARITIME SHIPPING HAWAII SURFACE TRANSPORTATION BOARD (STB) HAWAII PUBLIC UTILITIES COMMISSION (Hawaii State PUC) ZONE OF REASONABLENESS ACT 213 MATSON NAVIGATION HORIZON LINES – HAWAII YOUNG BROS. and HAWAIIAN TUG & BARGE Companies Of SALTCHUK & FOSS MARITIME
  • CLEAR AND PRESENT DANGER ZONE OF REASONABLESS ACT 213
  • SURFACE TRANSPORTATION BOARD [ STB ] ZONE OF REASONABLENESS ACT 213 HAWAII STATE PUBLIC UTILITES COMMISSION [ Hawaii State PUC ]
  • STB ZONE OF REASONABLESS (1) IN GENERAL. — For purposes of this section, a rate or division of a motor carrier for service in noncontiguous domestic trade or water carrier for port-to-port service in that trade is reasonable if the aggregate of increases and decreases in any such rate or division is not more than 7.5 percent above, or more than 10 percent below, the rate or division in effect 1 year before the effective date of The proposed rate or division. (2) ADJUSTMENTS TO THE ZONE. — The percentage specified in paragraph (1) shall be increased or decreased, as the case may be, by the percentage change in the Producers Price Index, as published by the Department of Labor, that has occurred during the most recent 1-year period before the date the rate or division in question first took effect.
  • YOUNG BROS. APPLICATION TO HPUC - ZONE OF REASONABLENESS In concept, the practice will be similar to the federal procedure authorizing interstate water carriers regulated by the Surface Transportation Board to file for a rate change provided it is within a zone of reasonableness without having to secure Board approval each time a rate change is sought. See 49 USC 13701. Competition has drastically increased over the past several years primarily from the interstate carriers, including two potentially new interstate carriers entering the Hawaii market in the next few years. These carriers are not regulated by the Commission but are loosely regulated by the Surface Transportation Board, under the U.S. Department of Transportation. This Application will enable YB to compete more effectively by leveling the playing field for all carriers transporting to the Neighbor Islands. Hawaii State PUC Docket No. 2001-0255 [Emphasis Supplied]
  • Hawaii State PUC Decision YOUNG BROS. APPLICATION - ZONE OF REASONABLENESS THE COMMISSION ORDERS: The Zone of Reasonableness Program for Young Brothers is terminated, effective from the date of this Order, as inconsistent with the public interest. HPUC Docket No. 2001-0255 [Emphasis Supplied]
  • STB WATER CARRIER REGULATION • STB has authority over carriers operating between Hawaii and the US 48 states. • STB has no authority over carriers operating solely within the noncontiguous states or territories themselves.
  • Hawaii State PUC WATER CARRIER REGULATION The Commission regulates four water carriers: Young Brothers, Limited (“Young Brothers”), a provider of inter-island cargo service between all Major islands; Sea Link of Hawaii, Inc. (“Sea Link”), a passenger and cargo carrier providing water transportation services between the islands of Maui and Molokai; Hone Heke Corporation (“Hone Heke”), a passenger and cargo carrier providing water transportation services between the islands of Maui and Lanai; and Pasha Hawaii Transport Lines LLC (“Pasha”), a provider of cargo Service between the ports of Honolulu, Kahului, and Hilo with Authorization to make calls to Nawiliwili, Barbers Point, and Pearl Harbor upon a customer’s request.
  • YOUNG BROS. – MATSON - HORIZON Horizon and Matson cargo moving on Young Bros. is not subject to Hawaii State PUC regulation. Horizon does not have its own interisland vessels and uses Young Bros. to transship virtually all its neighbor island cargo. Matson operates an interisland (intrastate) fleet of three barges, which includes two container barges and one Ro/RO barge. Matson moves most of their neighbor island cargo on their own equipment. The Hawaii Shippers Council, 2013
  • MATSON CARGO MOVED INTER-ISLAND, INTRASTATE ON MATSON EQUIPMENT IS SUBJECT TO REGULATION BY HAWAII STATE PUC
  • Matson has no Tariff for Inter Island, Intrastate Water Carrier Service Filed and Approved by The Hawaii State PUC INFORMATION CURRENT AS OF: January 21, 2014
  • ACT 213 The commission shall not make a finding of public convenience and necessity nor issue a certificate if the evidence in the record indicates that the issuance of the certificate would diminish an existing water carrier's ability to realize its allowed rate of return or if the certificate would allow an applicant to serve only high-margin or high-profit ports or lines of service that are currently served by an existing carrier. Governor Neil Abercrombie, July 11, 2011, Act 213, effective as of July 1, 2011
  • ACT 213 APPLIES TO ALL APPLICATIONS FOR INTER-ISLAND WATER CARRIER SERVICES FILED AFTER JULY 1, 2011