Will Kōloa Rum Co. lawsuit be the nail in Jones Act coffin?

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

For years, my colleagues and I at the Grassroot Institute of Hawaii have been working to achieve political reform of the Jones Act, producing research and sponsoring forums that highlight the drawbacks of this protectionist maritime law.

Recently, there has been momentum in Congress to revisit the law, which for more than a hundred years has been limiting shipping competition between U.S. ports and had an outsized negative impact on the residents of Hawaii and other U.S. states and territories who rely heavily on waterborne transportation for their imports.

And now comes a lawsuit that could be the catalyst we need to finally address the many economic problems caused by the law.

Kōloa Rum Co. of Kauai, represented in federal court by the Pacific Legal Foundation, has filed a lawsuit challenging the Jones Act on the grounds that it violates the U.S. Constitution’s “port preference” clause, which prohibits legislation favoring the ports of one state over another.

Led by CEO Bob Gunter, Kōloa Rum has firsthand experience with the negative effects of the Jones Act. The company pays the Jones Act premium when importing essential materials such as bottles and packaging that cannot be sourced locally — and then again when it exports its product.

It’s no wonder that Hawaii businesses struggle to expand beyond our state. The Jones Act not only makes everything more expensive, it also makes Hawaii less economically competitive.

The Pacific Legal Foundation, based in Sacramento, California, and representing Kōloa Rum for free, contends in the lawsuit that when the Jones Act was passed, Hawaii wasn’t yet a state, so the fact that the act intentionally disadvantaged the ports of Hawaii and Alaska wasn’t an issue. Now, however, that unfair treatment might have serious legal implications.

The lawsuit has received attention nationwide from a variety of media outlets, including maritime industry publications, which typically tend to support the Jones Act uncritically.

Meanwhile, in Congress, U.S. Rep. Ed Case of Hawaii continues to stand up for the average Hawaii resident in opposition to the Jones Act — and quite eloquently as well.

I keep hoping that Hawaii’s three other congressional delegates will join Case in supporting much-needed maritime reform for Hawaii. But even if they don’t, the Kōloa Rum lawsuit is a welcome addition to the cause of rescuing Hawaii from the clutches of the Jones Act; it already has brought critical attention to the issue.

Gunter and Kōloa Rum deserve our thanks for taking on this bold initiative. If the lawsuit succeeds — and I certainly hope that it does — then we could focus more on Hawaii’s myriad other problems that have increased our cost of living, limited local opportunities and frustrated economic prosperity.

To the plaintiffs in this case, I say: May the courts be with you.

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