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The Merchant Marine Act and The Jones Act

The Merchant Marine Act of 1920

On June 5, 1920 The Merchant Marine Act (MMA) was passed by the 66th United States Congress and signed into law by President Woodrow Wilson. While this law covers a wide array of topics, it primarily addresses what is most commonly referred to as cabotage. For purposes of The MMA, cabotage is essentially the transportation of people or goods within U.S. waters and between two U.S. ports. While in modern times this term applies to transport via road, air, rail, and waterways, it originated from the French word caboter, which means to travel by the coast, and applied initially only to transport via waterways.

Section 27 of The Merchant Marine Act of 1920

Senator Wesley Jones (R-WA)
Senator Wesley Jones (R-WA)

Senator Wesley Jones (R-WA) was the original Congressman to propose Section 27 of The MMA, more commonly known as The Jones Act. In addition to various areas regulating a seaman's rights while operating in a commercial trade environment, The Jones Act also addresses transportation of goods via water between U.S. ports and requires them to take place on U.S.-flagged vessels built in the United States, owned by U.S. citizens, and operated by U.S. citizens or permanent U.S. residents. While the law was originally intended to support and protect the U.S. cargo ship building, transportation and maintenance industries, the law applies today to ALL foreign-built vessels, including those used for recreational purposes.

The Ultimate Purpose of The Merchant Marine Act of 1920

In modern times pundits and politicians alike have interpreted and argued the true purpose of the law, however the preamble doesn't leave much to argue. As you read through the preamble below keep in mind current events taking place at the time. Most notably the Treaty of Versailles had just been signed in 1919, signaling the end to World War I. In addition 65,000 laborers participated in The Seattle General Strike of 1919, which had its infancy in labor wages and working conditions associated with World War I manufacturing. It's no coincidence that Section 27 was also proposed by a Senator from Washington, where the strike took place. In addition the country was at a peak in terms of protecting its national interests, labor market, and that of the American people in general.

46 U.S.C. §861 "It is necessary for the national defense and for the proper growth of its foreign and domestic commerce that the United States shall have a merchant marine of the best equipped and most suitable types of vessels sufficient to carry the greater portion of its commerce and serve as a naval or military auxiliary in time of war or national emergency, ultimately to be owned and operated privately by citizens of the United States; and it is declared to be the policy of the United States to do whatever may be necessary to develop and encourage the maintenance of such a merchant marine..."

The Impact of The Jones Act on Modern-day Charter Vessels

While the recreational charter industry wasn't likely contemplated when The Jones Act was drafted, enforcement of this law within the charter industry seems to be at an all-time high. In the sailing yacht industry the impact is as significant as ever though, as American-built sailing cruisers are unfortunately not generally considered to be of exceptional quality. When Americans consider purchasing a newly built sailing yacht for use in the United States as a charter vessel they are forced to choose between the high quality of many foreign-built brands such as Dufour, Fountaine Pajot, and Beneteau but being heavily regulated, or purchase a much lower quality American-built vessel that is significantly less regulated. Foreign manufacturers are getting smart though, as many such as Jeanneau and Beneteau have begun to manufacture some of their models within the United States.

The most major impact to the recreational charter industry though has been the unintended consequence of promoting unsafe skippering of vessels on U.S. waterways. A foreign-built vessel holding a Recreational endorsement, but not a Coastwise endorsement, on its Certificate of Documentation is NOT permitted to offer commercial/crewed charter services. However, that same boat can carry up to 12 non-paying passengers (think non-paying family, friends, etc.) in most cases if offered as a demise charter, or more commonly known as a "bareboat charter". In most states this can be done without any sort of boating license or formal training. A U.S.-built vessel, or one carrying a Coastwise endorsement, can carry up to 6 paying passengers assuming it doesn't have approval to operate with more (note: most vessels are not approved for more than 6 on a commercial basis), however the individual operating the vessel must be a licensed mariner enrolled in a drug and alcohol program and with very specific training amongst other requirements. So here we have the dilemma; a law on the books, currently being enforced, that supports unlicensed, untrained, and unqualified individuals operating very expensive and dangerous assets in U.S. waters that can take twice the number of people than a boat with a licensed, trained, and qualified skipper. Add to it that the foreign-built vessel with 12 passengers actually has LESS restrictive safety gear requirements than the U.S.-built vessel with a licensed/trained mariner carrying no more than 6 people.

That all being said after a foreign-built vessel reaches her 3rd birthday she is eligible for a Small Vessel Waiver by The U.S. Department of Transportation through The Maritime Administration (MARAD). This waiver essentially approves a foreign-built vessel to operate commercially so long as a Coastwise Endorsement is obtained. For sake of clarity, a MARAD Small Vessel Waiver is not the same as a Coastwise Endorsement, and issuance of the waiver does not guarantee a Coastwise Endorsement will be issued.

For more information on obtaining a MARAD Small Vessel Waiver and Coastwise Endorsement for your foreign-built vessel please contact us at

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