History and Overview of U.S. Cabotage Laws
The United States domestic maritime sector recently celebrated the 100th anniversary of the passage by Congress of the Jones Act. It is considered the most significant of various US cabotage laws. Few mariners though appreciate the long history of cabotage laws in this country.
Cabotage laws here are older than our nation. The British Navigation Acts and its predecessors were designed to develop, promote, and regulate British ships, shipping, trade, and commerce between other countries and with its colonies, including the restriction of foreign participation in its colonial trade. Later the goal of generating revenues from the colonies was added as a purpose of the Navigation Acts. This was done by prohibiting the colonies from exporting certain products to foreign nations and requiring the purchase of other products from Britain or British colonies. For example, molasses and later sugar could only be legally imported into the North American colonies from the British West Indies, even though these products could be purchased at a much lower price in the French West Indies. Such actions created dissention in the North American colonies, as well as increased smuggling, and were factors that led to the American Revolution.
Despite independence, the Navigation Acts found a permanent home in the new United States. The second law adopted by the First Congress imposed duties on numerous goods, wares, and merchandise imported into the new nation. The duty was lower if the imports were carried on vessels built in the United States and belonging to citizens thereof. The third law adopted imposed tonnage duties on ships in US waters, but again the duties were lower for vessels built in the United States and belonging to citizens thereof. The same Congress later adopted laws for registering vessels of the United States and for regulating the coastwise trade and for the government and regulation of seamen serving on vessels of the United States. Registered vessels were required to be wholly owned by citizens of the United States and the master was required to be a US citizen. The registry for vessels sold foreign was required to be surrendered. Another law imposed a significantly higher duty on foreign vessels trading between Customs districts than that imposed on vessels of the United States.
The Second Congress required ships of the United States to be commanded by US citizens. Foreign vessels captured in war and lawfully condemned as prize or adjudged to be forfeited for breach of laws of the United States and acquired wholly be US citizens were entitled to be registered as vessels of the United States. Another act provided for the enrollment of vessels of the United States and their entitlement to engage in the coasting trade or fisheries. Like registered vessels, enrolled vessels were required to be wholly owned by citizens of the United States and the master was required to be a US citizen. An enrolled vessel could not proceed on a foreign voyage until it had surrendered its enrollment and replaced it with a certificate of registry. Registered vessels could engage in the coasting trade, but if they carried goods, wares, or merchandise of foreign growth or manufacture, they were charged a higher duty.
In 1804, subsequent to the ratification of the Louisiana Purchase, foreign vessels coming up the Mississippi River were required to unlade in New Orleans. This effectively stopped all foreign vessels from operation on the Western Rivers upstream. In 1812, as an exception to prior law, steamboats owned wholly or in part by aliens resident in the United States were allowed to be enrolled and licensed, so long as they operated only in US bays and rivers and a bond of $1,000 was paid by the owner or owners. When the War of 1812 broke out, the duty on imported goods and merchandise was raised to 100%, with an addition 10% duty on goods and merchandise imported on foreign vessels. Also, the duty on foreign vessels calling in US ports was raised.
In 1813 a law was adopted, to enter into effect when war with the United Kingdom ended, making it unlawful to employ on any vessel of the United States persons other than citizens of the United States or persons of color or natives resident in the United States, except that masters in foreign ports were authorized to hire foreign seamen if there was a deficiency of US seamen in that port. This law, amended many times, remains in effect to date.
Commencing in 1817, the officers and at least three-fourths of the crews of vessels engaged in the fisheries were required to be citizens of the United States. The law also imposed a duty of fifty cents per ton for vessels of the United States, except for licensed vessels, engaged in transporting goods, wares, or merchandise from one state to a non-adjacent state. In 1819, the coasting trade law was amended to establish two ‘great districts’ – one on the east coast (and waters pertaining thereto) and the other on the south coast (and waters pertaining thereto). Vessels licensed for the coasting trade were allowed to so trade within their particular ‘great district’. Vessels could be separately licensed to trade between the ‘great districts’.
In 1825, enrollments and licenses for steamboats owned by incorporated companies was allowed for the first time. The enrollment or license was to be issued in the name of the president or secretary of the incorporated company. The president or secretary was required to swear or affirm that no part of the steamboat had been or was then owned by any foreigners.
In 1830, tonnage duties were abolished as regards vessels of the United States and vessels of foreign nations that likewise exempted US vessels. This remains the current US practice.
In 1848, yachts used exclusively for pleasure purposes were authorized to be enrolled as American vessels and could operate between ports of the United States without making entry.
In 1886, foreign vessels transporting passengers from one US port to another became subject to a fine of $2 per passenger so landed. In 1898, this act was amended to increase the fine to $200 per passenger. The 1898 statute also explicitly prohibited foreign vessels from transporting merchandise laden in one US port to another US port either directly or via a foreign port under penalty of forfeiture.
The Shipping Act of 1916 provided that no corporation, partnership, or association could be deemed a citizen of the United States unless the controlling interest therein is owned by citizens of the United States and, with respect to corporations, the president and managing directors are citizens of the United States and the corporation is organized under the laws of the United States or a state thereof. In 1918, this law was amended to provide that the controlling interest of a corporation shall not be deemed to be owned by citizens of the United States: (a) if the title to a majority of the stock thereof is not vested in 'such citizens free from any trust or fiduciary obligation in favor of any person not a citizen of the United States ; or (b) if the majority of the voting power in such corporation is not vested in citizens of the United States; or (c) if through any contract or understanding it is so arranged that the majority of the voting power may be exercised, directly or indirectly, in behalf of any person who is not a citizen of the United States ; or (d) if by any other means whatsoever control of the corporation is conferred upon or permitted to be exercised by any person who is not a citizen of the United States.
The Merchant Marine Act, 1920 (popularly known as the Jones Act) was adopted consolidating and updating many of the statutes mentioned above. The Jones Act has been revised numerous times, expanding the cabotage laws to apply to such activities as dredging, salvage, and towing. In 2006, the Act to complete the codification of Title 46, United States Code repealed the uncodified portions of Title 46, including the Jones Act and the other cabotage laws and consolidated them into the United States Code. Judges, maritime lawyers, and members of the maritime community continue to refer to the cabotage laws as the ‘Jones Act’.
In summary, cabotage laws have been part of the fabric of the United States from the beginning. Ironically, the British Navigation Acts, the progenitors of our cabotage laws, were repealed in 1849 under the influence of a free trade philosophy.