Alaska victory bodes well for Hawaii

by Keli’i Akina, PhD, President/CEO Grassroot Institute

A case of maritime-related common sense has broken out in Washington, DC. 

Let’s hope it’s contagious.

Earlier this year, the Grassroot Institute of Hawaii partnered with the Alaska Policy Forum in support of a resolution before the Alaska Legislature that asked Congress to grant the Last Frontier an exemption to the federal Passenger Vessel Services Act. The intent was to help save Alaska’s tourism industry, which relies heavily on visitor arrivals brought to the state aboard large foreign-flagged cruise ships.

Alaska’s federal delegation subsequently sponsored legislation that sailed through Congress without objections, and this past Monday, the exemption was approved by President Joe Biden.

The exemption was needed because, like the 101-year-old Jones Act, the 135-year-old PVSA requires any ship under its jurisdiction to be U.S. flagged and built and mostly owned and crewed by Americans. The PVSA, as its name suggests, applies to ships carrying passengers; the Jones Act, to ships carrying merchandise.

More specifically, the PVSA also requires that foreign-flagged cruise ships transporting passengers from one U.S. port to another stop at a foreign port as part of their itinerary. In the case of Hawaii, that typically means Fanning Island, about 1,000 miles to the south. Naturally, that requirement has hindered Hawaii’s tourism potential, but under normal circumstances, not so much Alaska’s.

Before the COVID-19 lockdowns that started in March 2020, Alaska had been able to build a strong tourism industry based on large foreign-flagged cruise vessels, as the ships could easily stop at various ports in Canada on their way to Alaska from U.S. ports such as Seattle.

After the COVID-19 lockdowns were imposed, Alaska’s tourism industry was destroyed. Businesses in port towns closed. Unemployment soared. Tax revenues plummeted. Kind of like in Hawaii after air travel to the islands was virtually shut down. 

Over the past month, the cruise industry in America has finally started to reopen, following the lifting of restrictions imposed by the U.S. Centers for Disease Control and Prevention. Unfortunately for Alaska, Canada announced in February it would be keeping its ports closed to large cruise vessels for an additional year, through February 2022. That meant the state would have to suffer another year without visitor arrivals brought in by large foreign-flagged cruise vessels.

The legislative resolution supported by the Grassroot Institute urged Congress to exempt the state from the PVSA’s foreign-port requirement as a means to solve the problem posed by Canada. Not surprisingly, it was approved by the Alaska Legislature and signed by the governor, then bore fruit in Congress when both Republicans and Democrats worked together to pass the Alaska Tourism Restoration Act, which temporarily allows ships to travel directly between Washington State and Alaska without stopping in Canada. 

To his ever-lasting credit, President Biden signed the bill, providing Alaska a measure of relief from the economic devastation wrought by the combination of the lockdown and the protectionist PVSA.

This again raises a point I’ve mentioned before about the Jones Act, which also applies to the PVSA: If you need a waiver from a law to avert an economic crisis, perhaps that law is inherently flawed — or not needed in the first place.

Notwithstanding Alaska’s current crisis, both the PVSA and Jones Act were passed to protect American shipping interests, years before Alaska and Hawaii were even states. Both acts, not coincidentally, have been economically costly to Americans and have failed to protect the industry or jobs they were meant to preserve. 

In the case of the PVSA, no ocean-going cruise ship has been built in the U.S. in six decades. The only PVSA-compliant cruise ship that remains, the Pride of America, homeported in Hawaii, is technically a foreign-built ship and operates in Hawaii waters only because of a PVSA exemption that U.S. Sen. Daniel Inouye steered through Congress in 2003.

I’m happy to say that our research and support of the Alaska resolution helped make a strong case for that state’s PVSA exemption, and demonstrated that this is an issue that reaches beyond one state. As you can imagine, I am proud that our efforts to help Alaska paid off. 

The Alaska Legislature, Congress and the president all deserve praise for removing this barrier to the recovery of the state’s cruise industry, and the people of Alaska should be very happy that their needs were recognized and addressed.

This experience demonstrates the need to update both the PVSA and Jones Act for the 21st century. It makes no sense to hold states like Hawaii and Alaska hostage to maritime laws that belong to another era.

There’s one more lesson that we in Hawaii can take from this victory: One of the reasons the PVSA exemption moved quickly through Congress was that it had the full support of Alaska’s legislature, governor and congressional delegation. 

Just imagine what we could accomplish if we could get that same level of cooperation among Hawaii’s leaders to update the federal maritime laws that burden and hold back Hawaii. 

E hana kākou! (Let's work together!)

Keli'i Akina, Ph.D.