Is the Jones Act Unconstitutional?
The law is wasteful and protectionist. Now, a new lawsuit argues that it is unconstitutional too.
A 100-year-old law that artificially inflates the price of shipping freight by water in the United States is widely understood to be an economically inefficient bit of protectionism.
Could it also be unconstitutional?
That's what a lawsuit filed Tuesday asks a federal district court to decide. In the complaint, the owners of a Hawaii-based rum company say the Jones Act has unfairly disadvantaged them relative to businesses that operate in other parts of the country—something that could violate an arcane clause in the U.S. Constitution that forbids federal policymakers from favoring one port over another.
"The Jones Act doesn't just hurt our business—it hurts all Hawaii residents," Bob Gunter, the CEO of the Koloa Rum Company, said in a statement provided by the Pacific Legal Foundation (PLF), which is representing him in the lawsuit. Gunter founded Koloa Rum in 2009, and he alleges in the lawsuit that the Jones Act has "crippled" his business with an "unjustified and unconstitutional burden."
Passed in 1920, the Jones Act severely limits competition in the American shipping market by requiring that ships operating between U.S. ports be American-built, American-crewed, and American-flagged. The number of ships that meet the Jones Act's standards has been declining for decades, and now fewer than 100 are in operation. Anyone who wants to ship goods—including rum—from Hawaii, Puerto Rico, or other outlying U.S. territories to the mainland is required to use one of those few dozen vessels.
Unsurprisingly, the lack of competition drives up shipping costs. The lawsuit points out that it costs roughly three times as much to ship rum from Hawaii to Los Angeles as it does to ship the same goods from Los Angeles to Australia—an international route where greater competition keeps prices lower, even though the trip is significantly longer.
"We pay more for everything we import, from bottles to packaging, just like all families across the state," Gunter said in the statement. "And then we are hit a second time, paying exorbitant costs for exporting our rum to our fellow Americans."
The lawsuit, filed Tuesday in the U.S. District Court for the District of Columbia, alleges that the Jones Act violates a clause within Article 1, Section 9 of the U.S. Constitution, which sets out various powers that Congress does not have. Among other more famous things like forbidding Congress from suspending fundamental rights like habeas corpus, that part of the Constitution also forbids any federal law that gives preference to one port over another.
That's exactly what the Jones Act does, PLF argues in the lawsuit. From its origins, the Jones Act has served a "discretionary" purpose, the lawsuit claims, adding that the law was "purposefully designed to force Hawai'i to subsidize mainland commerce before Hawai'i was a state."
"Hawaii and Alaska are forced to pay billions in extra costs because of a shipping law that Congress had no constitutional authority to create," Joshua Thompson, a senior attorney at PLF, said in a statement. "The Port Preference Clause was designed to prevent this exact type of economic discrimination."
Sam Heavenrich, a federal law clerk, previewed this novel legal attack on the Jones Act in an op-ed for The Wall Street Journal in 2023. He noted that the Port Preference Clause has rarely been invoked during American legal history—the most significant precedent comes from an 1855 case in which a steamship company challenged the construction of a suspension bridge over the Ohio River—but argued that the Jones Act could be vulnerable because of the Supreme Court's current majority.
"A case arguing that the Jones Act violates the Port Preference Clause would hew to Founding-era understandings of the Constitution—an important consideration for an increasingly originalist Supreme Court," Heavenrich concluded.
It shouldn't take a Supreme Court case to get rid of the Jones Act, of course. The law creates myriad problems for Americans, even those living on the mainland. It makes traffic worse, slows the development of alternative energy, makes it impossible for some Americans to buy natural gas from other Americans, and raises prices. It has also failed to protect the American shipbuilding industry—the original, and nakedly protectionist, goal of the Jones Act—which now lags far behind the world's top producers.
The Jones Act should have gone to the scrapyard long ago. Hopefully, this new attempt to send it there will succeed.
