A new lawsuit alleges that the Jones Act violates the Constitution’s port preference clause by putting Hawaiian and Alaskan ports at a disadvantage.
Article I, Section 9, of the Constitution includes these words: “No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another.” That prohibition is supposed to apply to laws passed by Congress. In 1920, Congress passed the Jones Act, a protectionist law that says all ships transporting goods between U.S. ports must be U.S.-built, U.S.-flagged, U.S.-owned, and U.S.-crewed.
A new lawsuit alleges that the Jones Act violates the port preference clause of the Constitution by putting Hawaiian and Alaskan ports at a disadvantage relative to other states. Since those two states rely on water transportation to connect them to the rest of the Union, they effectively subsidize a moribund American shipping industry while facing unnecessarily higher transportation costs than other states.
The plaintiff is the Kōloa Rum Company, founded in 2009. As the company has grown, the Jones Act has impeded it. If Kōloa were located in a different state, it wouldn’t have to deal with the law’s restrictions in the same way it does by being located in Hawaii. Because the law discriminates against Hawaii’s ports, Kōloa and countless other Hawaiian businesses are harmed, in violation of the Constitution, the lawsuit argues.
“We pay more for everything we import, from bottles to packaging, just like all families across the state. And then we are hit a second time, paying exorbitant costs for exporting our rum to our fellow Americans,” said Kōloa CEO Bob Gunter.
This discriminatory effect was not an accident but rather an express purpose of the Jones Act when it was passed. “The legislative history of the Jones Act is replete with testimony from shipping companies that sought to protect their interests at the expense of Hawaiians and Alaskans,” the lawsuit says. Hawaii’s governor at the time warned against it, and Wesley Jones, the legislator from Washington State for whom the law is named, sought to benefit his state’s shipbuilding industry at the expense of Hawaii and Alaska, which were territories, not states, at the time.
Because of the Jones Act, international vessels infrequently serve Hawaii, despite ships’ crisscrossing the Pacific every day. They would not be allowed to pick up any freight in Hawaii because they are not U.S.-flagged, so stopping there would not be worthwhile. This means that, for Kōloa to ship its rum to Australia, it must first ship it to Los Angeles on a Jones Act vessel. It costs Kōloa three times as much to ship from Hawaii to Los Angeles as it does to ship from Los Angeles to Australia.
“The cost of shipping a container from the U.S. West Coast to Hawaii is two to three times higher than the cost of shipping the same container from the West Coast to Asia despite the latter being a much longer route,” the lawsuit says. “The Port Preference Clause was designed to prevent this exact type of economic discrimination,” said attorney Joshua Thompson of the Pacific Legal Foundation, which is representing Kōloa in the lawsuit.
The Jones Act never made sense as regulatory policy and has failed to accomplish its stated aims of promoting U.S. shipbuilding or enhancing national security. What it has succeeded in doing — harming the noncontiguous states disproportionately — is not permitted by the Constitution. Congress should have repealed it long ago, but barring that, the courts should feel no qualms about striking it down.