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The Jones Act

 

A considerable number of our clients have raised the question as to how the "Jones Act" effects them in terms of their clients embarking and disembarking during the duration of a cruise at an intermediary port of call.

 

Take a recent situation which applied to one of our clients - They had a group taking a cruise which was going to start in Miami and go to the Mexican Riviera finally returning to Miami.  The President of the company was embarking in Miami solely for the initial festivities and the corporate banquet/prize giving, his intention was to then disembark in Key West and fly to Europe for a series of meetings.

 

It came as a surprise to our client to learn that this was not going to be possible because of the "Jones Act", he was not going to be allowed to disembark at another US Port until the ship had gone "foreign" after which he could then disembark when the ship returned a US Port  (which in effect is what happens to almost every cruise passage) or, as he chose to do, disembark at the first Mexican port the ship hit.

 

The Jones-Shafroth Act (the Jones Act as it is known) was signed into law on March 2, 1917, by President Woodrow Wilson.  Even today, close to 90 years later,  many provisions of the Act are very pertinent especially those dealing with Seamen's health, accident and disability benefits.  So what is the "Jones Act" and how does it influence us as resellers of cruises?

 

The Jones Act is the everyday name for Section 27 of the Merchant Marine Act of 1920 (46 U.S.C. 883; 19 CFR 4.80 and 4.80b). Its intent is very simple, to promote a healthy U.S-Flag fleet and protect that fleet from unfair foreign competition, the Jones Act requires that cargo moving between U.S. ports be carried in a vessel that was built in the United States and is owned (at least 75 percent) by American citizens or corporations. Since the Jones Act vessels are registered in the United States, our general labor and immigration laws require that crewmembers be American citizens or legal aliens. (In fact most maritime nations have an equivalent to the Jones Act - (50 countries).

 

To reduce the terminology to something the layman can understand - this is termed "cabotage" and applies not only to shipping but to airlines and other forms of international transportation.    The statute covering cabotage as it applies to passengers is known as the Passenger Services Act (PSA) and became law in 1886.

 

Does the Jones Act apply to passengers?  The Act, no; the principle, yes. What is known as the Passenger Vessel Act (PSA) of 1886 (46 U.S.C. 289) states that “no foreign vessel shall transport passengers between ports or places in the United States, under penalty of $200 for each passenger so transported or landed.”

 

Another question we are frequently asked is, can the Jones act be waived or suspended?  the answer is Yes, but only during a national emergency.  However, over time, a number of exceptions have been made, for example Canadian vessels may transport passengers between Rochester and Alexandria Bay, New York and between southern Alaska and U.S. ports until an American carrier enters the markets. Similarly, foreign vessels may transport passengers between Puerto Rico and the U.S. mainland as long as a U.S. carrier does not provide such service. Foreign-flagged cruise ships may carry passengers from a U.S. port as long as they return them to the same port (a "cruise to nowhere"). Foreign vessels may also call at intermediate U.S. ports as long as no passenger permanently leaves the vessel at those ports and the vessel makes at least one call at a foreign port.

 

While the PSA prevents foreign cruise ships from carrying passengers directly from Alaska and the West Coast to Hawaii and from competing for Hawaiian inter-island cruise traffic, a considerable number of  foreign cruise ships do visit Hawaii in any given year. American passengers on foreign cruise ships to Hawaii must board in another country—typically, Vancouver, Canada or Ensenada, Mexico.  These ships cannot pick up a passenger in one U.S. port and drop off the passenger in another U.S. port.  However, after arriving from Canada or Mexico, they may tour the islands and drop off passengers in Hawaii.  They may then pick up new passengers, tour the islands, and return to Canada or Mexico.  As a consequence, these "foreign" cruise ships made approximately over 300 calls in Hawaii ports during 2002.

 

In October 1997, federal legislation was passed that permits a person to operate a foreign-built cruise ship in the U.S. coastwise trade provided that the person had entered a binding contract for the delivery of two U.S.-built cruise ships. The first ship must be delivered no later than January 1, 2005, and the second ship must be delivered no later than January 1, 2008. Moreover, in Hawaii, only the existing cruise ship operator may operate a foreign-built ship among the islands unless a new U.S.-built cruise ship is placed into regular service outside of Hawaii. This legislation makes it possible to temporarily employ a foreign-built vessel among the Hawaiian Islands despite the Passenger Services Act while new U.S.-built cruise ships are constructed.

 

In the mid- and late 1990s, there was a debate about the continued need for the nation's cabotage laws, key among which is the Jones Act.  A group calling itself the Jones Act Reform Coalition (JARC), which was claiming service shortfalls in every part of the nation made an unsuccessful effort to repeal the law.  As it later turned out, the JARC criticisms of the US Flag fleet galvanized the industry into a coalition that won statements of support for the Jones Act from a majority of the House, the Clinton (and now Bush) Administrations, the Department of Defense,  to the extent that the JARC was disbanded in 2000.

 

The situation in other parts of the world are somewhat more confusing.  In Europe the European Economic Union has indicated that it intends to make the carriage of passengers and goods between members countries as open as its frontiers (another story).  To date this is not the case and each country appears to have its own interpretation of how the cabotage laws are applied.  For example, we recently had a charter doing a site inspection on a ship that was traveling between contiguous ports of one of the Atlantic Coast EEC countries - this was no problem.  A couple of weeks later a different group wanted to do the same thing on a cruise ship traveling between Mediterranean ports of another EEC country  - and this was not possible. 

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