One of the more protectionist laws that applies to U.S. coastal trade is the Merchant Marine Act of 1920, commonly know as the Jones Act, after its sponsor Senator Wesley Jones of Washington state. Among other provisions that pertain to personal-injury claims, the Jones Act imposes restrictions upon vessels plying the cabotage or coastwise trade. Specifically, only U.S. flag vessels are permitted to carry persons or merchandise between points in the United States; foreign flag vessels are prohibited from doing so. The Act serves to promote the U.S. merchant marine industry by requiring the employment of “Jones Act vessels” staffed with U.S. merchant mariners.

Jones Act vessels must be built in the United States and owned by U.S. citizens, which sounds fairly straightforward, until you consider that for a public corporation this requires: 75% ownership by U.S. shareholders at every tier of the corporate structure;  regular monitoring of the company’s publicly-owned stock to ensure compliance; and never selling the vessels “foreign.” Once a Jones Act vessel is sold to an entity not qualified to own a U.S.-flag vessel, or is flagged foreign, the vessel loses its Jones Act privileges forever, absent an act of Congress.

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