PVSA-reform bills in Congress could provide boost to Hawaii

The Grassroot Institute of Hawaii issued the following as a news release on June 12, 2021.

The federal Passenger Vessel Services Act has long been recognized as an impediment to Hawaii’s tourism potential and port-related jobs

HONOLULU, June 12, 2021 >> In another blow to the U.S. Passenger Vessel Services Act, U.S. Sen. Mike Lee, R-Utah, has just introduced three bills in Congress to amend or completely repeal the 135-year-old protectionist maritime law.

His introduction of the bills comes on the heels of President signing into law a temporary PVSA waiver intended to help Alaska’s tourism industry.

Keli’i Akina, Grassroot Institute of Hawaii president and CEO, applauded the three measures, saying any one of them would provide benefits all across the United States, including Hawaii.

“They are welcome news, especially for Hawaii and Alaska,” he said. “Just like the Jones Act, the PVSA has reduced competition and increased prices, harming both consumers and the maritime industry. It also has severely limited Hawaii’s tourism potential. With cruises restarting in the U.S., now is an excellent time to repeal or reform the PVSA.”

Lee’s three PVSA-related bills are the proposed Open America’s Ports Act, the Safeguarding American Tourism Act and the Protecting Jobs in American Ports Act.

>> The Open America’s Ports Act would repeal the PVSA.

>> The Safeguarding American Tourism Act would repeal the PVSA as it applies to large cruise ships with 800+ passenger berths. Currently, some U.S. cruise lines, such as UnCruise and American Cruise Line, operate smaller PVSA-qualified ships in America’s coastal and river markets. The Safeguarding American Tourism Act would retain PVSA protections for these small ships while repealing PVSA “protection” for the non-existent large U.S. cruise ship market.

>> The Protecting Jobs in American Ports Act would remove the PVSA’s U.S.-build requirement, allowing U.S. companies to buy foreign-made cruise ships, both large and small. This measure is a response to the fact that not a single large cruise vessel has been built in the U.S. since 1958.

In a news release issued Thursday, Lee explained that the PVSA “requires that all ships transporting passengers between two or more U.S. ports be American built, owned, flagged, and crewed.”

But due to these “rigid and expensive requirements,” he said, “many ship operators choose to domicile and conduct business elsewhere. As a result, these ships cannot operate continuously in the U.S., and must call at a foreign port in between stops at U.S. ports to remain in compliance with this 135-year-old law.”

For example, he said, “instead of spending more time in American ports and cities, cruises sailing from Washington to Alaska must make stops in Vancouver, Canada, while cruises from California to Hawaii must stop in Ensenada, Mexico.

“Even intra-island Hawaiian cruises [by foreign-flagged and foreign-built vessels] are forbidden,” he said. Such cruises “must travel 1,000 miles south to Fanning Island (Republic of Kiribati) to avoid running afoul of the PVSA.”

Meanwhile, the PVSA also “reduces demand for American port workers in dockside maintenance and repair, and hurts job opportunities for those in the domestic travel and hospitality industries.”

As for who benefits from this “arcane law,” Lee listed Canada, Mexico and other countries that receive “increased maritime traffic at the expense of American workers in our coastal cities, towns and ports.”

The PVSA is “bad economics and bad law,” he said, “and it’s far past time that Congress reconsider it.”

Indeed, as the Grassroot Institute of Hawaii has extensively reported, the PVSA has failed so spectacularly that only one large cruise liner in the world, Norwegian Cruise Line’s Pride of America, currently complies with its stringent requirements. Further, the ship is limited to operating only in Hawaii, as a condition of its exemption from the PVSA’s U.S.-build requirement.

Tourism media outlets have been quick to cover Lee’s proposals.

In Royal Caribbean Blog, Matt Hochberg noted that, “The cruise industry received a temporary reprieve for cruises to Alaska this year, but one senator wants it to become permanent.”

Before the waiver, Hotchberg said, “cruises to Alaska from the United States [were] legally impossible under the PVSA” because “for two years, Canada has banned cruise ships from being able to enter their waters due to the global health crisis.”

Reporter Robert McGillivray wrote in Cruise Hive that the PVSA “reduces demand for American port workers in dockside maintenance and repair, reduces job opportunities for those in the domestic travel and hospitality industries, and does not help the U.S. shipbuilding industry, as it is non-existent in terms of large passenger vessels.”

This is not the first time Sen. Lee has taken a stab at reforming U.S. coastwise laws.

Earlier this year, Lee partnered with U.S. Rep. Tom McClintock, R-Calif., in proposing the Open America’s Waters Act, which would reform the 1920 Jones Act.. The Jones Act is identical to the PVSA except that it applies to vessels carrying merchandise, not passengers.

In July 2020, Lee and U.S. Rep. Ed Case, D-Hawaii, participated in a Grassroot Institute of Hawaii webinar at which the institute released its groundbreaking study, “Quantifying the cost of the Jones Act to Hawaii,” showing the protectionist maritime law costs Hawaii about $1.2 billion a year, or about $1,800 per average Hawaii family.

Case, who also has sponsored bills to reform the Jones Act, agreed with Lee’s statement that the Jones Act is “standard, textbook protectionism that favors a certain industry at the expense of everybody else, and that’s wrong.”

Lee’s statement about the Jones Act echoed what University of Hawaii emeritus professor of economics James Mak said about the PVSA more than 10 years ago: “The current, and antiquated law imposes costs on a lot of people but confers few, if any, national benefits. It should be repealed.”

Akina agreed: “Even without a complete repeal, PVSA reform could open U.S. waters to greater competition, and allow the cruise tourism industry to flourish, including in Hawaii, where for decades the PVSA has limited its tourism potential.”

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