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It’s only been three weeks since Brian Schatz abruptly took off in Air Force One with President Barack Obama en route from Honolulu to Washington D.C., where he was promptly sworn in as Hawaii’s new U.S. senator.

Gov. Neil Abercrombie tapped Schatz the day after Christmas to replace the late Daniel K. Inouye, who achieved legendary status in Hawaii during his five decades of service.

Since then, Schatz has and been to three congressional committees: the powerful Commerce Committee, the Energy and Natural Resources Committee and the Indian Affairs Committee.

He’s back in Hawaii this week. Civil Beat caught up with him for an interview to discuss energy policy, the Jones Act and the potential loss of federal dollars in Hawaii.

The Jones Act

Don’t expect Schatz to support doing away with the Jones Act. The post-World War I law requires all shipping between U.S. ports be conducted with domestic vessels and crews.

Inouye was a staunch defender of the federal law and it’s had the support of other members of Hawaii’s delegation. With Inouye’s passing, there has been speculation about whether there might be more success in repealing it, or gaining certain exemptions for Hawaii.

The issue has gained increased traction with Hawaii, Alaska, Puerto Rico and Guam, where shipping costs are high. Hawaii in particular is seeking imports of liquefied natural gas to help lower electricity bills, something that would be easier with a Jones Act exemption.

But Schatz said his support for the Jones Act is unwavering.

“I’ve always been for the Jones Act and I will not change. I believe it is important for America to control its own shipping and maintain labor and environmental standards within the industry,” said Schatz. “There is no appetite for a significant change to the Jones Act. There are occasionally exemptions that are pursued, but those are on a one-off basis. As a matter of national policy, the Jones Act is critical in terms of labor and environmental standards and in terms of our own national and economic security.”

In November, several Hawaii businesses filed a lawsuit to overturn the Jones Act, arguing that it was monopolistic and a violation of the U.S. Constitution’s Commerce Clause. And a in Bloomberg News called for repealing the law, noting that some estimates show that in Hawaii it has raised prices on goods by one-third.

But Schatz said that it was “nonsense” to think the Jones Act raises prices that much, and said that the main culprit for high shipping costs is not domestic vessels, but fuel costs.

“I think we are the most isolated, populated place on the planet and it shouldn’t surprise anyone that it costs a significant amount of money to get goods here,” he said.

The Price of Paradise

When it comes to shipping, Schatz said that the best way to keep rates under control is through regulation by the Hawaii Public Utilities Commission.

But in other industries, he said, Hawaii could use more competition, an issue that falls under the purview of the Senate Commerce Committee.

“One of the reasons that the cost of living is so high in Hawaii is that we have a number of monopolies and duopolies,” said Schatz. “Competition is good. Competition drives prices down and quality up. And so it will certainly be in the commerce committee’s jurisdiction to try to facilitate competition.”

He said that the telecommunications market could be broadened, for example.

However, Schatz said Hawaii’s small size limits competition to some degree, noting the recent announcement that Tesoro, one of the state’s two oil refineries, was shutting down.

“As a small market it’s not always that feasible to have three, four or five players because the barrier to entry is so great. Oil refineries are one example,” he said. “It’s one thing to say it’s great to have competition, but the market is too small to retain two refineries. There are some instances where we are unlikely to have some competition, then we have to look at the regulatory arena.”

Federal Dollars Imperiled

Inouye brought billions of dollars to Hawaii during his reign as senator and chair of the powerful Senate Appropriations Committee. How much the state stands to lose with him gone is purely speculative. But state budget officials have warned that it could be significant — especially given that one-fifth of the state’s budget comes from federal dollars.

There’s also a threat of massive cuts to federal expenditures if Congress can’t reach a budget deal by the first of March. Known as “sequestration,” funding for federal programs could be cut by $85 billion.

Schatz said that however it plays out, Hawaii should brace itself for a reduction in federal spending.

“The domestic federal expenditures are going to go downward and the only question is how much,” he said. “We are going to try very hard to avoid the sequestration because it would be disastrous for people. But no doubt, there will be reduced federal expenditures for people and it will have an impact.”

But in terms of a steep drop-off in federal dollars, Schatz pointed out that Hawaii has been dealing with a loss of earmark funding for the past few years.

In January 2011, Obama any bill with earmarks after a $1.3 trillion omnibus appropriations bill, that contained $8 billion worth of earmarks, was rejected by Congress.

Reluctantly, Inouye called for a two-year moratorium on earmarks that cost Hawaii $321 million in the 2011 fiscal year alone, according to federal budget records. Federal money has still filtered in to Hawaii, but not at the same levels.

Energy

While lieutenant governor, Schatz led energy policy for the Abercrombie administration, so his appointment to the Senate Energy and Natural Resources Committee earlier this month seemed like a natural fit.

Schtaz said that the committee’s legislative agenda has not yet been set, but that he had met with committee chair, Oregon Sen. Ron Wyden.

“I think Wyden and I will be kindred spirits in the urgent need to move forward on clean energy,” he said.

One of the issues that the committee will likely be grappling with is the increasingly heated debate over liquefied natural gas. Schatz said that he will likely be balancing pressure for greater environmental controls on drilling at the federal level with local demand in Hawaii for importing the fuel source.

“Hawaii certainly has a need and market for LNG, and I have been supportive of being aggressive in exploring the possibility of switching fuel oil to LNG — mostly because of the price in Hawaii,” said Schatz. “Parallel to that, there are broader federal issues that have to do with national economic policy and national environmental policy. It could very well be that we make policies on the federal level that do more to ensure that LNG is extracted in a way that minimizes harm to the environment. But that from a local standpoint, we still pursue this fuel option because ratepayers in Hawaii need some relief.”

Air Force One!

And the question that Schatz says he gets most frequently: What was it like to ride on Air Force One?

Schatz conceded it was exciting.

“The best part was the tour,” he said, noting the conference tables, secure data center and mobile hospital equipped with several doctors.

“It’s probably the last time I’ll ever do that — either you have to live in a swing state or your travel plans have to coincide exactly with the president’s,” said Schatz.

Obama cut his Hawaii vacation with his family short this December to rush back to Washington D.C. to try to avoid the fiscal cliff. Fortuitously, Abercrombie announced Schatz’s Senate appointment that same day. Schatz’s vote was needed in the fiscal cliff negotiations.