The price of monopoly is upon every occasion the highest which can be got. The natural price, or the price of free competition, on the contrary, is the lowest which can be taken, not upon every occasion indeed, but for any considerable time altogether. The one is upon every occasion the highest which can be squeezed out of the buyers, or which, it is supposed, they will consent to give: The other is the lowest which the sellers can commonly afford to take, and at the same time continue their business. ~ Adam Smith

1. STATE OF HAWAII
PUBLIC UTILITIES COMMISSION (PUC)
SELECTIVE ENFORCEMENT
PART I
Sause Bros, Young Brothers, Hawaiian Tug & Barge
Foss Maritime Company, Matson
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PART II
Pasha – Pasha Hawaii
ACT 213 SB98 SD2 HD1 CD1
Hawaii Revised Statutes (HRS) Chapter 217G-10
PART III
Legislative Reform ⎢Repeal
Hawaii Revised Statutes (HRS) Chapter 217G-10
Certifcates of Public Convenience and Necessity (CPCN)
____________________________________________________________
PASHA SAYS 2011 LAW MADE IT IMPOSSIBLE
FOR HAWAII REGULATORS TO ALLOW INTERISLAND SERVICE
By Bill Cresenzo. Pacifc Business News
Jan 9, 2014, accessed July 15, 2018
https://www.bizjournals.com/pacifc/blog/2014/01/pasha-says-2011-law-made-it-impossible.html
In August 2011, George Pasha IV, the president of the California shipping
company The Pasha Group, said a new law the Hawaii Legislature passed
that put limits on who could ship cargo among the Islands would put a
local division of the company, Pasha Hawaii Transport Lines, out of
business.

2. Pasha's prediction came true Jan. 1 when the company halted its
interisland shipping service.
Act 213 put stringent new rules in place for the Hawaii Public Utilities
Commission as it decided whether to distribute licenses to shipping
companies. Among the requirements, Act 213 forbids the commission
from issuing a license to a carrier unless it could prove that other carriers
— in this case, Young Brothers Ltd. — weren’t meeting the state's
interisland shipping demands.
On Jan. 2, the Public Utilities Commission issued a 37-page ruling that
dismissed Pasha’s application for a certifcate of public convenience and
necessity.
In the ruling, the commission said Pasha did not fle the necessary
documents to amend its original application to address the new
requirements.
“We have enjoyed doing it but unfortunately, it didn't work out for us to
continue,” said Emily Sinclair, a Pasha spokeswoman.
____________________________________________________________
Background
September 24, 2013 PUBLIC COMMENT – Clifton M. Hasegawa
https://dms.puc.hawaii.gov/dms/DocumentViewer?pid=A1001001A13I25B32409A46322
Re: In the Matter of the Application of PASHA HAWAII TRANSPORT LINES LLC;
Docket No. 2009-0059 Public Utilities Commission's Interim Decision and
Order, September 20, 2010
Dear Chairwoman Morita, Commissioner Champley and Commissioner Akiba:
By previous Invitation by the Commission I have presented Letters of Concern to
the Commission. I respectfully provide these comments on this Open Docket.

3. On September 20, 2012, the Commission "issued an Interim Decision and Order
that approved Pasha Hawaii Transport Lines LLC's ("Pasha") application for a
Certifcate of Public Convenience and Necessity ("CPCN").
The Interim Decision and Order authorizes Pasha to operate as a water
carrier of property between and among the ports of Honolulu, Kahului,
Hilo, Nawiliwili, Barbers Point, and Pearl Harbor on an interim basis
through December 31, 2013.
The Commission found that Pasha's proposed intrastate operations will
foster competition in the intrastate shipping industry and provide
consumers with a choice of intrastate water carriers. Furthermore, the
addition of a second water carrier of property will minimize any potential
harm or inconvenience to the public if existing services are disrupted.
The Commission also determined that there was no specifc, verifable
evidence in the record that Pasha's proposed service will detrimentally
harm the public or other intrastate water carriers. The Commission noted
that while there may be some concern that certain customers and
neighbor island communities may be potentially afected by Pasha's entry
into the market, such issues are difcult to evaluate based on the
theoretical projections submitted by the parties.
Allowing Pasha to operate on an interim basis will enable the Commission
and the Division of Consumer Advocacy ("Consumer Advocate") to obtain
actual intrastate revenue, cargo volume and cost support data, and
evaluate the impact of Pasha's proposed service on the State's inter-island
shipping industry or the public interest. Once the Commission and the
Consumer Advocate carefully analyze such information, the Commission
will then make a fnal decision regarding Pasha's request for a CPCN.
The Commission, however, may terminate Pasha's interim authority to
operate if, at any time, the Commission determines that Pasha's intrastate
service causes undue harm to existing intrastate shipping services or the
public interest.

4. Act 213, is of primary concern,
I. Under Act 213, the PUC will not be allowed to permit a carrier to serve only
high-margin or high-proft ports, or lines of service served by an existing
carrier. The law also requires the PUC to hold public hearings on these license
applications. The old law gave the commission the option of holding hearings,
and the PUC chose not to conduct any in the Pasha case. Additionally, the law
prohibits the PUC from granting a license if there is evidence that a new
shipper would "diminish" Young Brothers' rate of return. Finally, interim or
temporary licenses also are now prohibited, unless water-carrier service is
needed during a state-declared emergency.
II. Source: Staf, Pacifc Business News. Pasha-Young Bros, feud shows state at
its worst. Pacifc Business News [Honolulu, Hawaii] 12 Aug 2011.
III. B. Lum, Curtis. Pasha: New law makes competition nearly impossible.
Pacifc Business News [Honolulu, Hawaii] 05 Aug 2011.
The Interstate Commerce Commission Termination Act Of 1995 Public Law 104-88
—Dec. 29,1995 109 Stat. 804Part B—Chapter 135—Subchapter IV—§ 13504 deferred
to the State of Hawaii to regulate motor carriers operating solely within the State of
Hawaii. Implemented by Hawaii Revised Statutes - Chapter 271: MOTOR CARRIER
LAW.
The Hawaii Water Carrier Law, Hawaii Revised Statutes § 271G-1 was enacted by
the Hawaii Legislature in 1974. Legislative Note: [L1974, c 94, pt of §1]. Not
indicated in the Legislative Note is whether an exemption for water carriage was
obtained in advance from the Surface Transportation Board, the Federal Maritime
Commission, or through legislation passed by Congress. Hawaii Revised Statutes
§ 271G-2 provides,
The legislature of this State recognizes and declares that the transportation
of persons and of property, for commercial purposes, by water within the
State or between points within the State, constitutes a business afected
with the public interest.

5. It is intended by this chapter to provide for fair and impartial regulation of
such transportation, so administered as to recognize and preserve the
inherent advantages of such transportation, in the interest of preserving
for the public the full beneft and use of the waterways consistent with the
public safety and the needs of commerce: to promote safe, adequate,
economical, and efcient service among carriers, to encourage the
establishment and maintenance of reasonable rates and charges for
transportation and related accessorial service, without unjust
discrimination, undue preference or advantage, or unfair or destructive
competitive practices, all to the end of developing, coordinating, and
preserving a sound transportation system by water. This chapter shall be
administered and enforced with a view to carrying out the above
declaration of policy. [L1974, c 94, pt of §1]
As reference, the Commission's attention is respectfully directed to Federal Maritime
Commission - Docket No. 02-03 - Exclusive Tug Arrangements in Port Canaveral,
Florida - Order Of Investigation And Hearing http://www.fmc.gov/assets/i/Documents/D2-o3investigate.pdf
The Order provides in part,
Exclusive arrangements such as the monopoly granted to Seabulk by the
Canaveral Port Authority have been the subject of a number of
Commission decisions and are generally viewed as contrary to this
nation's pro-competitive policies .... As the Commission has recognized,
the 1984 Act, like its predecessor, the Shipping Act, 1916, does "not forbid
all preferential or prejudicial treatment; only that which is undue or
unreasonable." .., "[t]o analyze whether an exclusive arrangement is prima
facie unreasonable under the 1984 Act, the Commission must frst
determine the market relevant to the practice in question, and then must
determine the degree of actual harm or harm likely to be caused by the
practice within that market." ... [T]he Commission must frst determine the
market relevant to the practice in question, and then must determine the
degree of actual harm or harm likely to be caused by the practice within
that market.
PASHA HAWAII — INFUSING COMPETITON IN THE HAWAII TRADE LANE

6. In early 2005, Pasha Hawaii Transport Lines, a joint venture between The
Pasha Group, a California-based automobile handling and logistics
company, and Strong Vessel Operators LLC, a Connecticut-based operator
of a U.S.-fagged ship on a trade route between the U.S. east coast and the
Azores, began a Jones Act qualifed shipping service between Hawaii and
San Diego, utilizing one roll-on/roll-of vessel'. Pasha Hawaii has targeted
newly manufactured vehicles, including Chrysler and Honda vehicles for
shipment from the U.S. west coast to Hawaii, privately-owned vehicles for
shipment between the U.S. west coast and Hawaii and larger, rolling-stock
pieces, including tractors and military vehicles and equipment for
shipment between the U.S. west coast and Hawaii. Pasha Hawaii's service
has had some efect on us through the loss of some shipments of vehicles
between the U.S. west coast and Hawaii.
We have also experienced downward rate pressure, resulting in eroding
margins, with respect to these types of vehicle shipments.
— Horizon Lines, Inc. (HRZ). SEC Form lO-K. Period: DEC.24.06. Date
Filed: MAR.03.07 http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?
c=i88937&fd=4733787
Existing non-Jones Act qualifed shipping operators whose container ships
sail between ports in Asia and the U.S. west coast could add Hawaii or
Alaska as additional stops on their sailing routes for non-U.S. originated or
destined cargo. Shipping operators could also add Puerto Rico as a new
stop on sailings of their vessels between the continental U.S. and ports in
Europe, the Caribbean, and Latin America for non-U.S. originated or
destined cargo. In addition, current or new U.S. citizen shipping operators
may order the building of new vessels by U.S. shipyards and may
introduce these U.S.-built vessels into Jones Act qualifed service on one
or more of our trade routes. For example, one of our competitors in the
Hawaii market plans to introduce a combination container and roll-
on/roll-of vessel during the second half of 2013.

7. This vessel will serve the U.S. west coast to Hawaii trade lane on a
fortnightly basis and will provide regularly scheduled calls to Kahului and
Hilo for both roll-on/roll-of and container shipments. The container
capacity of the vessel is expected to be 1,500 TEUs and the automobile
capacity is expected to be 2,750 autos.
These potential competitors may have access to fnancial resources
substantially greater than our own. The entry of a new competitor on any
of our trade routes could result in a signifcant increase in available
shipping capacity that could have a material adverse efect on our
business, fnancial condition, results of operations and cash fows.
— Horizon Lines, Inc. (HRZ) - SEC Form 10-K. Period: DEC.25.11. Date
Filed: APR.10.12 http://services.corporate-ir.net/SEC.Enhanced/SecCapsule.aspx?
c=i88937&:fd=8i2ii20
Davis K. Yogi, Harbors Administrator, Hawaii State Department of Transportation,
Harbors Division, related to me that a grant of Certifcates of Public Convenience and
Necessity for Pasha Hawaii to operate the M/V Jean Anne and M/V Marjorie C by the
Commission is a step in the right direction to infusing competition in the intrastate
trade lane. Both vessels will operate between the ports on the Big Island, Maui, and
Oahu. Of concern is the utilizing of the M/V Marjorie C and her full capabilities as a
Roll On/Roll Of vessel and fexibility as a container vessel. The routing of the M/V
Marjorie C from the West Coast to the Big Island to Maui and to Oahu to unload cargo
is understandable. The Harbors Division acknowledges that other ports in the State of
Hawaii are not designed to provide docking for the M/V Marjorie C. The M/V Marjorie
C will be allowed to unload cargo but v^ill be prohibited and precluded from loading
cargo at the ports. This is another area of concern.
Respectfully,
Electronically Signed
Clifton M. Hasegawa
Copies to: Ms. Margaret Ryan {Pasha Group}; Mr.Jefery T. Ono {Hawaii Consumer
Advocate]; Mr. Christopher T. Kobayashi {Pasha Hawaii Transport Lines LLC]; Cliford
K. Higa, Esq. {Pasha Hawaii Transport Lines LLC]; Bruce A. Nakamura, Esq. {Pasha
Hawaii Transport Lines LLC]; Craig I. Nakanishi, Esq. [Young Brothers, Ltd.]

8. HAWAII PUBLIC UTILITIES COMMISSION
DOCKET NO. 2009-0059 ORDER NO. 31766
Afrming Pasha Hawaii Transport Lines, LLC's Interim Authority
To Operate Through December 31, 2 013,
And Dismissing, Without Prejudice, Pasha Hawaii Transport Lines, LLC's
Application For A Certifcate Of Public Convenience And Necessity
https://dms.puc.hawaii.gov/dms/DocumentViewer?pid=A1001001A14A03B01000G11767
As to the frst requirement, the commission found that Pasha had (1) the
operational and fnancial ability to provide the proposed service,
including the appropriate managerial and technical support to
successfully provide the proposed intrastate service; (2) sufcient
fnancial resources to sustain operations for the proposed service; and (3)
the necessary facilities and equipment to provide the proposed service.
As to the second and third requirements, the commission found that
Pasha's proposed service is or will be required by the present and future
public convenience and necessity, stating, among other things, that (1)
the proposed service ofers the public a choice of intrastate water carrier
service and encourages competition among carriers (potentially resulting
in higher quality customer service, improved service oferings, and
possibly more jobs); and (2) provides the State with an alternative option
in the event YB's service is disrupted or an emergency situation that
requires the availability of a second water carrier of property should
occur.
The commission further found that there was “no verifable evidence that
the addition of Pasha will be detrimental to the public or to other
intrastate water carriers of property.”

9. However, recognizing the various concerns raised by YB, the Consumer
Advocate [CA}, and members of the public regarding the potential
negative impacts on certain YB customers and neighbor island
communities, the commission stated that “[b]ecause such concerns are
difcult to determine based on projections and estimates submitted by
the parties, the commission concludes that the most reasonable solution
is to allow Pasha to provide its proposed service on an interim basis,
until December 31, 2013.”
The commission further stated that, upon receipt of certain reports and
any additional briefngs submitted by the Parties, “the commission will
then consider the additional evidence and issue a fnal decision and
order.”
YB fled an appeal of the Interim Order (joined by the CA) with the
Intermediate Court of Appeals for the State of Hawaii, and, on October
10, 2013, that Court issued a “Memorandum Opinion” in which it
rejected all of YB's and the CA's submissions of error.
____________________________________________________________
PROTECTIONISM BY HAWAII CONSUMER ADVOCATE (CA)
HAWAII PUBLIC UTILITIES COMMISSION (PUC)
PROTECTIONISM refers to government actions and policies that restrict
or restrain international trade, often with the intent of protecting local
businesses and jobs from foreign competition.
Investopedia
https://www.investopedia.com/terms/p/protectionism.asp?partner=asksa

10. SELECTIVE ENFORCEMENT occurs when law enforcers derail the
course of regulation or deviate from the established objective or principle
of regulation and instead execute the law and enforce regulations by
discretion.
Selective enforcement of regulation
Donghua Chen, Dequan Jiang, Shangkun Liang and Fangping Wang.
China Journal of Accounting Research. Vol. 4, Issues 1–2, June 2011, Pages 9-27.
Sun Yat-sen University (Guangzhou) Science Direct. Accessed July 14, 2018
https://doi.org/10.1016/j.cjar.2011.04.002
https://www.sciencedirect.com/science/article/pii/S1755309111000037
HRS §271G-10(e)(5)
The commission shall not make a fnding of public convenience
and necessity nor issue a certifcate if the evidence in the record
indicates that the issuance of the certifcate would diminish an
existing water carriers ability to realize its allowed rate of return
or if the certifcate would allow an applicant to serve only high-
margin or high-proft ports or lines of service that are currently
served by an existing carrier. [Emphasis Supplied; see discussion
below, Legislative Reform – Repeal – Barrier to Competition]
(5) If the commission's fnding of public convenience and
necessity difers from the recommendation of the consumer
advocate, specifc fndings to address each ground for objection
articulated by the consumer advocate. [Emphasis Supplied]
Notes Supplied: (1) The Commission is not bound by the recommendations
of the Consumer Advocate (CA); (2) The Commission found Pasha met all
statutory requirements of HRS 271G-10; (3) The Commission's decision not
approving and granting Pasha's application for a permanent certifcate of
public convenience and necessity is selective enforcement.

11. LEGISLATIVE REFORM ⎢REPEAL
HAWAII REVISED STATUTES (HRS) §217G-10(e)(5)
CERTIFICATES OF PUBLIC CONVENIENCE AND NECESSITY (CPCN)
REMOVING BARRIERS TO PROMOTE COMPETITION
PROMOTING COMPETITION
Competition in the market or direct competition occurs when operators
are free to enter a market to provide goods and services to end
consumers.Source: The Public Utility Research Center (PURC) at the
University of Florida http://regulationbodyofknowledge.org/faq/market-structure/promoting-
competition-what-are-the-diferent-ways-to-promote-competition-in-a-utility-sector-and-what-can-be-
the-regulators-role-in-doing-so/
ACT 213 SB98 SD2 HD1 CD1
Hawaii Revised Statutes (HRS) Chapter 217G-10
The legislature fnds that the State's water cargo transportation industry is
critical to the economic health of its island communities. In recognition
of the signifcance of a healthy, efcient, and accessible water
transportation system, the legislature passed the Hawaii Water Carrier
Act, codifed as chapter 271G, Hawaii Revised Statutes, to subject water
carriers to the regulatory oversight of the public utilities commission.
The regulatory framework created by chapter 271G, Hawaii Revised
Statutes, includes a requirement that a water carrier apply for and
receive a certifcate of public convenience and necessity from the public
utilities commission before engaging in operations within the State.
Issuance of a certifcate of public convenience and necessity requires
fndings that the [1] applicant is willing and able to properly perform
the proposed service and conform to the applicable laws and rules,
and that [ 2 ] the proposed service is currently required for the
convenience and [3] necessity of the public or that it will be in the
future. [Clarifcation and Emphasis Supplied]