This article by Michael Hansen first appeared Dec. 20 on the Facebook page of the Hawaii Shippers’ Council, of which Hansen is president.
U.S. Representative Ed Case (D-HI) introduced three Jones Act reform bills that would apply to the noncontiguous jurisdictions and trades of the United States, which collectively would result in a comprehensive change in the regulatory regime.
The Jones Act is the common name for the body of domestic maritime laws known in American jurisprudence as the coastwise laws of the United States and internationally and generically as maritime cabotage.
The noncontiguous jurisdictions of the United States embraced by the Jones Act (i.e., coastwise laws of the U.S.) are the States of Alaska and Hawaii and the Territory of Puerto Rico. Among other things, the Jones Act requires that commercial vessels to engage in domestic trade must be domestically registered and built and owned and crewed largely by U.S. Citizens.
There are four noncontiguous jurisdictions not embraced by the Jones Act.
The Territory of Guam is subject to maritime cabotage requiring vessels registered in the United Sates (i.e., U.S. flag vessels) but not domestically built and owned.
The three United States territories are fully exempt from any maritime cabotage are American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI) and the U.S. Virgin Islands (USVI).
Rep. Case’s innovative approach includes three separate bills.
First, the “Noncontiguous Shipping Relief Act” would exempt the noncontiguous jurisdictions of the United States from the Jones Act / the coastwise laws of the United States. This would primarily apply to Alaska, Hawaii and Puerto Rico.
Second, the “Noncontiguous Shipping Reasonable Rate Act” would amend the provisions of Interstate Commerce Commission Termination Act of 1995 applicable to ocean freight regulation in the noncontiguous common carrier trades by the Surface Transportation Board (STB). The current ocean rate regulatory standard, known as the “zone of reasonableness,” is so vague that it has resulted in virtually no enforcement. The new Act would tie noncontiguous ocean freight rates to international levels. This would apply to all ocean common carriers operating in the noncontiguous trades.
The Noncontiguous Shipping Competition Act, which rescinds the Jones Act wherever monopolies or duopolies in noncontiguous Jones Act shipping develop.
The first bill would reduce the ocean shipping companies’ capital and operating costs and the second place a hard cap on ocean freight rates. The third bill would be a failsafe alternative.