Lawmakers take up bailout bills as Young Brothers container mishap investigation continues

  • A stack of shipping containers that evidently fell over on the Young Brothers barge Ho‘omaka Hou on June 22. (Courtesy of KAI KAHELE/Special to West Hawaii Today)

  • A Young Brothers barge is offloaded Tuesday at Kawaihae Harbor. (Laura Ruminski/West Hawaii Today)

  • A Young Brothers barge is offloaded Tuesday at Kawaihae Harbor. (Laura Ruminski/West Hawaii Today)

As the investigation into the loss of cargo containers from a Young Brothers barge transiting to Hilo Harbor continued Tuesday, so did efforts to keep the 120-year-old shipper afloat.

All cargo that remained aboard the barge was successfully removed over the weekend, according to a statement issued Tuesday by the U.S. Coast Guard. The barge Ho Omaka Hou returned safety to Honolulu on Monday and is undergoing a damage assessment.

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Of the 21 containers that went overboard early June 22, 12 remained missing Tuesday, the Coast Guard said. One container was initially located north of Hilo and sank while another washed ashore at Onomea beach, where it was refloated and towed to Hilo Harbor. The other containers located to date were recovered from Hilo Harbor.

Both the Coast Guard and National Transportation Safety Board are investigating the incident, which is classified as a “marine casualty.” The agencies will each produce their a report on the incident.

Young Brothers, which the Coast Guard said has “worked cooperatively” to address the situation, is conducting its own independent investigation.

“We continue to work closely with state and federal authorities to determine the cause of the first loss of containers overboard in more than 20 years, and we look forward to sharing more information at the conclusion of the investigation,” said Director of Terminal Operations Chris Martin. “Young Brothers remains committed to connecting our island communities with reliable service and moving what matters most to Hawaii as safely as possible.”

The container mishap occurred about a month after the interisland shipper notified the state on May 26 it needed $25 million in federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funds and other relief to stay afloat through the end of the year.

Without a bailout, the company said it would have to maintain a now-extended reduced sailing schedule and make additional cuts. Since then, no additional cuts have been made, and the company deferred suspending LCL and mixed cargo and changed Hilo barge service back to Monday after receiving community feedback.

The Public Utilities Commission (PUC) subsequently opened an emergency investigative proceeding into the matter and has yet to issue a report on the request after grilling Young Brothers and executive leadership, including president Jay Ana, on June 10.

Meanwhile, the House Committee on Finance on Tuesday deferred decision on a gut-and-replace bill that as currently written would allow for loans to water carriers to “address the impacts of the coronavirus 2019 disease pandemic and offset certain costs incurred.”

“They continue to struggle trying to figure out an approach — whether DOT is the right approach, PUC proceeding is the right approach — so at this point in time, this measure will be deferred,” Finance Chairwoman Sylvia Luke said Tuesday afternoon.

Senate Bill 1427 would permit the PUC to exempt a water carrier from the Hawaii Water Carrier Act in the “public interest;” authorize the state Department of Transportation (DOT) to enter into a loan contract utilizing Harbors Special Funds; and temporarily authorize the DOT ratemaking authority for water carriers.

Among the provisions are that loans not exceed more than $3 million per month and the aggregate total of all loans not exceed $20 million in a 12-month period. The proposal also calls for the loan recipient to repay all loans plus a “reasonable rate of interest.”

Further, any loan contract entered into would require Young Brothers to resume the number of port calls it serviced on Jan. 1, prior to the modified sailing schedule implemented. Further, transport of less-than-container load (LCL) cargo to or from Lanai and Molokai must continue and negotiations be made in good faith with agriculture or livestock entities or business to set standards for the interisland shipment of livestock.

Jay Ana, president of Young Brothers, on Tuesday said the company “appreciates the thoughtful solutions proposed by the state House of Representatives.”

“We look forward to continuing the productive dialogue about weathering these challenging times and charting a sustainable course for the future,” he continued.

Another bill in the Legislature, House Bill 2475, would provide subsidies to cargo carriers to offset costs incurred by providing services to ports the neighbor island counties.

It would also authorize the PUC to appoint a receiver for a failing regulated water carrier to ensure uninterrupted interisland shipping services; extend the duration that the PUC can permit a regulated water carrier to operate in emergency situations; allow the PUC to waive regulatory provisions in “order to restore or protect essential water carrier services;” and to permit the PUC to authorize new water carriers to enter service in Hawaii.

The Transportation Committee amended the bill to allow the DOT to provide subsidies to cargo carriers before passing the measure on June 24. It is now awaiting a hearing before the Senate Ways and Means Committee.

In other Young Brothers-related news, a resolution urging Young Brothers and the PUC to find long-term solutions to ensure uninterrupted cargo service is expected to be heard during an upcoming meeting of the Hawaii County Council.

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Introduced by Kohala Councilman Tim Richards and Hilo Councilwoman Sue Lee Loy, Resolution 679 emphasizes the critical and unique role that Young Brothers plays by ensuring food, cargo, fuel, vehicles, and agriculture products are able to get to and from their destinations safely.

It also notes the alternate funding sources – from the federal government, for example – that the company can tap to remain in operation, cites the PUC’s statutory oversight role in keeping charges “just and reasonable,” and calls on state and federal leaders and regulators to ensure the “unthinkable threat of a shutdown in cargo operations does not happen,” according to a press release.

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