Merchant Marine Act of 1920
The Merchant Marine Act of 1920 (P.L. 66-261), also known as the Jones Act, is a United States federal statute that provides for the promotion and maintenance of the American merchant marine. Among other purposes, the law regulates maritime commerce in U.S. waters and between U.S. ports. Section 27 of the Jones Act, deals with cabotage (i.e., coastal shipping) and requires that all goods transported by water between U.S. ports be carried on U.S.-flag ships, constructed in the United States, owned by U.S. citizens, and crewed by U.S. citizens and U.S. permanent residents. The Act was introduced by Senator Wesley Jones.
Laws similar to the Jones Act date to the early days of the nation. In the First Congress, on September 1, 1789, Congress enacted Chapter XI, “An Act for Registering and Clearing Vessels, Regulating the Coasting Trade, and for other purposes,” which limited domestic trades to American ships meeting certain requirements.
The Merchant Marine Act of 1920 has been revised a number of times, the most recent revision in 2006 included recodification in the U.S. Code. In early 2015 Senator John McCain filed for an amendment that would essentially annul the Act.
The Jones Act is not to be confused with the Death on the High Seas Act, another United States maritime law that does not apply to coastal and in-land navigable waters.
Objectives and purpose
The intention of congress to ensure a vibrant United States maritime industry is stated in the Preamble to the Merchant Marine Act of 1920.
Cabotage is the transport of goods or passengers between two points in the same country, alongside coastal waters, by a vessel or an aircraft registered in another country. Originally a shipping term, cabotage now also covers aviation, railways, and road transport. Cabotage is "trade or navigation in coastal waters, or the exclusive right of a country to operate the air traffic within its territory". In the context of "cabotage rights," cabotage refers to the right of a company from one country to trade in another country. In aviation terms, for example, it is the right to operate within the domestic borders of another country. Most countries enact cabotage laws for reasons of economic protectionism or "national security."
The cabotage provisions relating to the "Jones Act" restrict the carriage of goods or passengers between United States ports to U.S.-built and flagged vessels. It has been codified as portions of 46 U.S.C. Generally, the Jones Act prohibits any foreign built or foreign flagged vessel from engaging in coastwise trade within the United States. A number of other statutes affect coastwise trade and should be consulted along with the Jones Act. These include the Passenger Vessel Services Act, 46 USC section 289 which restricts coastwise transportation of passengers and 46 USC section 12108 restricts the use of foreign vessel to commercially catch or transport fish in U.S. waters. These provisions also require at least three-fourths of the crewmembers to be U.S. citizens. Moreover, the steel of foreign repair work on the hull and superstructure of a U.S.-flagged vessel is limited to ten percent by weight.
It allows injured sailors to make claims and collect from their employers for the negligence of the ship owner, the captain, or fellow members of the crew. It operates simply by extending similar legislation already in place that allowed for recoveries by railroad workers and providing that this legislation also applies to sailors. Its operative provision is found at 46 U.S.C. § 30104), which provides:
"Any sailor who shall suffer personal injury in the course of his employment may, at his election, maintain an action for damages at law, with the right to trial by jury, and in such action all statutes of the United States modifying or extending the common-law right or remedy in cases of personal injury to railway employees shall apply..."
This allows seamen to bring actions against ship owners based on claims of unseaworthiness or negligence. These are rights not afforded by common international maritime law.
The United States Supreme Court, in the case of Chandris, Inc., v. Latsis, 515 U.S. 347, 115 S.Ct. 2172 (1995), has set a benchmark for determining the status of any employee as a "Jones Act" seaman. Any worker who spends less than 30 percent of his time in the service of a vessel on navigable waters is presumed not to be a seaman under the Jones Act.
An action under the Act may be brought either in a U.S. federal court or in a state court. The right to bring an action in state court is preserved by the "savings to suitors" clause, 28 U.S.C. § 1333. The seaman/plaintiff is entitled to a jury trial, a right which is not afforded in maritime law absent a statute authorizing it.
The Jones Act has a specific effect upon noncontiguous parts of the US, such as Puerto Rico, Hawaii, Alaska, and Guam as it prevents foreign-flagged ships from carrying cargo between the mainland and these locations. Foreign ships inbound with goods cannot stop any of these four locations, offload goods, load mainland-bound goods, and continue to U.S. mainland ports. Instead, they must proceed directly to U.S. mainland ports, where distributors break bulk and then send goods to US places off the mainland by U.S.-flagged ships. There are, of course, ways to circumvent the Jones Act by making a stop in a foreign country between two US ports, ie. Hawaii/Alaska-Vancouver-Seattle.
In March 2013, the Government Accountability Office (GAO) released a study of the effect of the Jones Act on Puerto Rico that noted “[f]reight rates are set based on a host of supply and demand factors in the market, some of which are affected directly or indirectly by Jones Act requirements.” The report further concludes, however, that “because so many other factors besides the Jones Act affect rates, it is difficult to isolate the exact extent to which freight rates between the United States and Puerto Rico are affected by the Jones Act.” The report also addresses what would happen “under a full exemption from the Act, the rules and requirements that would apply to all carriers would need to be determined.” The report continues that “[w]hile proponents of this change expect increased competition and greater availability of vessels to suit shippers’ needs, it is also possible that the reliability and other beneficial aspects of the current service could be affected.” The report concludes that “GAO’s report confirmed that previous estimates of the so-called ‘cost’ of the Jones Act are not verifiable and cannot be proven.”
In contrast, studies by the World Economic Forum and Federal Reserve Bank in New York have concluded that the Jones Act hinders economic development in Puerto Rico.
Ships built to satisfy the Jones Act may cost more than ships built in Korean or Japanese yards, and the most expensive Jones Act ship is the tanker Liberty Bay. Jones Act ships tend to cost more because they are built to last longer than foreign-flagged ships.
Because the Jones Act requires all transport between US ports be carried on US-built ships, the Jones Act supports the domestic US shipbuilding industry. Critics of the Jones act describe it as protectionist, harming the overall economy for the sake of benefiting narrow interests.  With protectionism as its competitive advantage, the need for innovation and cost efficiency is greatly reduced. They also argue that even if the ultimate goal is to support the US shipbuilding industry, the Jones Act is an ineffective way to achieve this goal, as it drives up shipping costs, increases energy costs, stifles competition, and hampers innovation in the U.S. shipping industry. As a result, U.S. built and flagged vessels lose part of their competitiveness in international markets, with its cheaper and more modern vessels.
Requests for waivers of certain provisions of the act are reviewed by the United States Maritime Administration on a case-by-case basis. Waivers have been granted in cases of national emergencies or in cases of strategic interest.
In the wake of Hurricane Katrina, Homeland Security Secretary Michael Chertoff temporarily waived the coastwise laws for foreign vessels carrying oil and natural gas from September 1 to 19, 2005.
In order to conduct an emergency shipment of gasoline from Dutch Harbor, Alaska to Nome in January 2012, Secretary of Homeland Security Janet Napolitano granted a waiver to the Russian ice class marine tanker Renda. Renda was originally scheduled to onload gasoline in Northern Japan for shipment but was unable due to a gale.
The Department of Homeland Security issued a temporary blanket waiver of the Jones Act for the shipment of petroleum products from Gulf Coast Petroleum Administration for Defense District (PADD 3) to the New England and Central Atlantic Petroleum Administration for Defense Districts (PADDs 1 a and 1 b, respectively) for 12 days from November 2 to 13 2012, following widespread fuel shortages caused by Hurricane Sandy.
- Flag of convenience
- Passenger Vessel Services Act of 1886 similar law concerning passenger transportation between US ports.
- Seaman status in United States admiralty law
- Pub. L. No. 66-261, 41 Stat. 988 (1920).
- 46. U.S.C. § 50101 et seq. (2006).
- First Cong., sess. 1, ch. 11, §1 (1789).
- "McCain: Repeal Jones Act" The Triton, 26 Jan 2015. Accessed: 29 January 2015
- “Cabotage,” definition, the Free Dictionary, available at http://www.thefreedictionary.com/Cabotage+trade.
- http://www.law.cornell.edu/uscode/html/uscode46/usc_sup_01_46_06_V_08_D_10_551.html ch.551 Coastwise Trade.
- jones act
- About the Jones Act.
- Stacy Yuen (August 22, 2012). "Keeping up with the Jones Act". Hawaii Business. Retrieved September 12, 2015.
- Murtaugh, Dan (May 29, 2014). "Birthplace of USS New Jersey Saved by Shale Production". Bloomberg.
- "Jones Act is set to stay". Reuters. May 2, 2013. Retrieved 25 May 2014.
- "DHS: Update: United States Government Response to the Aftermath of Hurricane Katrina". Dhs.gov. September 15, 2005. Retrieved July 6, 2010.
- Homeland Security grants waiver of Jones Act for Nome fuel delivery from Alaska Business Monthly
- See Waiver of Compliance with Navigation Law, Dept. of Homeland Security (Nov. 2, 2012)
- Sethi, Arjun, The Merchant Marine Act of 1920: The Impact on American Labor (2005).
- Congressional Research Service Report RS21566 The Jones Act: An Overview.