The Great Lakes, their connecting rivers, and the St. Lawrence Seaway–collectively, the Great Lakes-St. Lawrence Seaway System–are a vital natural and economic resource to millions of people in both the United States and Canada. The region, encompassing eight states and two Canadian provinces, is an economic powerhouse, with a combined Gross Domestic Product (GDP) of more than $6 trillion U.S. dollars.[1]The transportation of cargo via marine vessels in the Great Lakes-Seaway System comprises a significant portion of this economic activity, generating a total of $36 billion U.S. dollars in 2022.[2] The law governing transportation on the Great Lakes is multi-faceted, covering federal, state, and international law. This article seeks to address some of the laws, regulations, and treaties that relate to transportation on the Great Lakes.
The Boundary Waters Treaty of 1909 (“BWT”) is a binational agreement between the United States and Canada.[3] While the BWT does not actively regulate transportation on the Great Lakes, it was established, in part, to address unilateral actions by either nation that could have adverse economic impacts on the other nation.[4]The treaty does, however, establish a commercial agreement between the nations, stating, “the navigation of all navigable waters shall . . . continue free and open for the purposes of commerce to the . . . ships, vessels, and boats of both countries . . . subject . . . to any laws and regulations of either country . . . .”[5]As a binding framework, the BWT evidences that the Great Lakes, and the transportation that takes place on them, can be regulated by both nations.
Cabotage laws regulate the transportation of persons and merchandise along the inland and coastal waters of a nation.[6]They are protectionist measures designed to keep marine transportation under national control, originally established to build a strong merchant marine capable of supporting military operations. To promote the development of the merchant marine for both military and economic purposes, the United States has limited coastwise trade to American ships.[7]
Perhaps the most prominent federal cabotage law regulating the transportation of merchandise between U.S. ports is the Merchant Marine Act of 1920, otherwise known as the “Jones Act.”[8] The Jones Act restricts the transportation of coastal commerce to ships owned by U.S. citizens and U.S. corporations, thereby excluding foreign vessels from engaging in such commerce.[9]The Act further provides that the transportation of merchandise between U.S. “coastwise” points is reserved for vessels both built and documented by the United States.[10] Here, “coastwise” refers to the coastal waters of the United States, extending three nautical miles wide, seaward of the territorial sea baseline.[11] Given this restriction, the Jones Act governs the transportation of merchandise between points within territorial waters,[12] including Great Lakes’ ports such as Duluth, Chicago, Detroit, and Cleveland. It follows that foreign-flagged vessels, as well as U.S.-flagged vessels lacking proper documentation, are prohibited from transporting merchandise amongst U.S. coastwise points.[13]
Despite the prohibition on foreign-flagged vessels, the Jones Act does provide an exception for the transportation of merchandise on Canadian vessels, allowing them to transport between coastwise points where no U.S.-flagged vessel is available.[14] This exception is consistent with the BWT, in that it supports the original and principal concern of the treaty: navigation and access to the boundary waters.[15]The application of this exception is further subjected to the U.S. Secretary of Transportation’s determination of whether U.S. vessels are available for such transportation.[16]
Critics of the Jones Act believe the act is outdated and economically defective.[17] As for its impact on the Great Lakes, opponents of the Act argue that the region would experience greater economic output were foreign vessels permitted to transport merchandise.[18]For example, a 2019 study produced by Capital Policy Analytics found that, without the Jones Act, “more than $45 million in shipping costs would have been saved moving 87 million tons of domestic cargo between 2006 and 2017 to Wisconsin ports[.]”[19] Moreover, from the opponents’ perspective, an increase in water shipment following cessation of the Jones Act could potentially alleviate pressure on major highways, pipelines, and railroads in the Great Lakes region, concurrently achieving environmental benefits.[20]
Supporters of the Jones Act argue that and it positively impacts the Great Lakes by providing beneficial protections for shipbuilders.[21] In order to comply with the Jones Act, and therefore obtain the ability to engage in coastwise transportation of merchandise, the shipping vessel must be built in the United States.[22]This protectionist measure supports U.S. shipbuilders, like Fincantieri Bay Shipbuilding in Sturgeon Bay, Wisconsin, who construct vessels for operator companies like Crowley, a U.S. maritime energy company with $3.4 billion in annual revenues.[23] However, the cost to build vessels in the United States is substantially more than the cost to build in foreign countries, as evidenced by a Congressional Budget Office report showing that cargo ships built in Japan or Korea can cost as little as one-third of those built in U.S. shipyards.[24]
Domestic and international efforts to either repeal or reform the Jones Act have proved unavailing thus far.[25]Transportation on the Great Lakes continues to operate under its rule, in conjunction with the Great Lakes St. Lawrence Seaway Development Corporation. As debates over reform continue, the balance between economic efficiency, national security, and domestic industry protection remains central to the future of transportation on the Great Lakes.
[6] Wakil Oyeleru Oyedemi, Cabotage Regulations and the Challenges of Outer Continental Shelf Development in the United States, 34 Hous. J. Int’l L. 607, 608 (2012).
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