A Hawaiian distillery has filed a federal lawsuit challenging the Jones Act, arguing the 1920 law violates a clause in the Constitution that prohibits Congress from favoring ports of one state over another.
The Kōloa Rum Company, founded in 2009 on the island of Kauai, argues that the Jones Act violates the Port Protection Clause – a line in Article 1 of the Constitution – and “inflates costs, stifles competition, and severely disadvantages American businesses in Hawaii and Alaska.”
“Hawaii and Alaska are forced to pay billions in extra costs because of a shipping law that Congress had no constitutional authority to create,” said Joshua Thompson, a senior attorney at Pacific Legal Foundation, a public interest group that goes to bat on property rights and conservative legal causes. “The Port Preference Clause was designed to prevent this exact type of economic discrimination.”
Kōloa Rum’s case echoes longstanding complaints from Hawaiians about how the Jones Act requirement for cargo between U.S. ports be carried on U.S-flagged and crewed vessels drives up the cost of living for island businesses and residents.
“The Jones Act doesn’t just hurt our business — it hurts all Hawaii residents,” said Bob Gunter, CEO of Kōloa Rum Company, in a statement announcing the federal lawsuit.
“We pay more for everything we import, from bottles to packaging, just like all families across the state. And then we are hit a second time, paying exorbitant costs for exporting our rum to our fellow Americans. This lawsuit is about ending an unfair, outdated law that discriminates against the citizens of Hawaii and Alaska.”
The Port Protection Clause – described by Pacific Legal Foundation lawyers as “a largely overlooked provision of the Constitution” – was rooted in the Founders’ debates over federal and state powers. Ensuring equal protection for each state’s seaborne trade commerce was a critical consideration then, according to constitutional scholars.
The clause states:
“No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another; nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.”
The Pacific Legal Foundation’s argues the port clause renders the Jones Act restrictions on Hawaii trade unconstitutional. It echoes other attempts over the years by critics – notably the late Sen. John McCain, R-Arizona, and various free-market and libertarian advocates – to change the law.
“By mandating that shipping between American ports must be only on American-flagged ships, the Jones Act puts the non-contiguous states at a severe and unconstitutional disadvantage,” the Pacific Legal Foundation insists. “It restricts competition, limits economic opportunity, and drives up costs. American laws should work to the benefit of American businesses, but the Jones Act puts American business at a severe disadvantage on the world stage. The Constitution demands that Kōloa Rum Company have an equal opportunity to compete in the market.”
The case is Kōloa Rum Company v. Noem, filed in the U.S. District Court for the District of Columbia.
