Hawaiian distiller takes on illegal, century-old Jones Act and crushing maritime monopoly
PLF wields Port Preference Clause to end discriminatory shipping protectionism
“This outdated law has hurt our state’s economy for a century, and it’s time we finally put an end to it.”
—Bob Gunter
Hawaiian distiller takes on illegal, century-old Jones Act and crushing maritime monopoly
PLF wields Port Preference Clause to end discriminatory shipping protectionism
Bob Gunter didn’t just fall for Hawaii’s beaches during a brief military leave¾he fell for a future. “I got out of the service and within a few years I was here,” Bob recalls with a smile. “I moved here as a young, single guy, and got a job right away in the sugar industry.”
His love for Hawaii birthed Kōloa Rum Company in 2009, a tribute to Kauai’s rich sugar heritage. A thriving venture today, Kōloa Rum draws hundreds daily to sample premium rums infused with local ingredients including cacao from Kauai’s fifth-generation Lydgate Farms and cinnamon from the family-run O.K. Farms on the Big Island. The company has also secured partnerships with the Las Vegas Raiders and Maui’s prestigious Century Open PGA tournament.
“We’re creating jobs, supporting our community, and helping diversify Hawaii’s economy beyond just tourism,” Bob explains. “That’s what makes this all worthwhile.”
But behind this island success story lurks a century-old federal law that was deliberately¾and illegally¾engineered by Congress to protect powerful mainland shipping interests while stifling opportunity for businesses and families in non-mainland states.
The culprit is the Merchant Marine Act of 1920, better known as the Jones Act, which requires all shipping between U.S. ports to use vessels that are U.S.-built, U.S.-owned, U.S.-registered, and U.S.-crewed. Passed by Congress to purportedly strengthen domestic shipbuilding following World War I, the Jones Act has done the exact opposite: gutting American shipping, stifling competition, hiking costs, and kneecapping American businesses in Hawaii and Alaska.
This absurdity and injustice struck Bob like a tidal wave with Kōloa Rum’s first international order, which came from Australia.
“We had to ship it to Los Angeles first because there were no international vessels providing direct service from Hawaii to Australia,” he explains. “The freight rate for one 20-foot container to go from Hawaii to LA was $5,000. From LA to Sydney it was $1,900.”
Bob couldn’t believe his eyes. “When I first saw that differential, I did a double-take. I said, ‘Wait a minute. That can’t be right. It’s three times as far from LA to Sydney than it is from Hawaii to LA.”
Upon further investigation, Bob learned of the Jones Act and why the World Economic Forum dubbed it the world’s most restrictive domestic shipping law.
Under the Jones Act, the American shipping fleet dwindled from 193 vessels in 2000 to just 92 today—a tiny fraction of the world’s 60,000-plus commercial ships. With a gutted fleet and American shipping monopoly, Jones Act-compliant ships can charge up to 10 times more than other vessels, creating a stranglehold on places like Hawaii and Alaska that depend on ships to supply nearly every type of good.
“Ninety percent of what we consume in Hawaii is shipped in by ocean transport, and the 90% premium that we pay for shipping applies to everything we consume—food, clothing, shelter, building materials, you name it,” says Bob.
The inflated cost of doing business in Hawaii is like having both hands tied behind its back; Kōloa Rum pays double its mainland competitors to import bottles and packaging materials, and triple to export the island-crafted spirits to its outside markets in 38 states, as well as Canada, Japan, and Europe.
Beyond the economics, the Jones Act itself violates the Constitution’s Port Preference Clause. This overlooked but crucial provision was specifically designed to prevent Congress from playing favorites among states’ ports, ensuring fairness in interstate commerce.
Nevertheless, and despite fierce opposition from Hawaiian and Alaskan leaders, Congress intentionally crafted the Jones Act to sideline these states from fair shipping opportunities. Powerful special interests have since blocked every attempt at reform, including the recently failed “Open America’s Water Act,” to keep competitors out of America’s mainland ports.
“Hawaii and Alaska are forced to pay billions in extra costs because of a shipping monopoly that Congress had no right to create, and stands today because entrenched shipping interests have a stranglehold on Congress,” says PLF senior attorney Joshua Thompson. “The Jones Act is protectionism on steroids and its demise is long overdue.”
With free representation by Pacific Legal Foundation, Bob and Kōloa Rum are fighting back with a federal lawsuit to liberate economic opportunity from this 125-year-old, illegally rigged system. Bob says the chance to finally compete on equal footing will ultimately transform Hawaiians’ lives for the better and it can’t happen soon enough.
“I’m a firm believer in free markets, fair competition, and innovation,” Bob declares. “This outdated law has hurt our state’s economy for a century, and it’s time we finally put an end to it.”
“The impact of winning this case would be huge, not only for Kōloa Rum, but all of us who live, work, and visit Hawaii,” he adds.
Congress cannot make laws that defy the Constitution
The framers deliberately designed the Constitution’s Port Preference Clause to protect fairness in interstate shipping commerce from congressional favoritism among states’ ports. The outdated, discriminatory Jones Act openly flouts this provision, stifling competition, limiting economic opportunity, and increasing the cost of goods for all Americans.
To our Donors
The Constitution demands that all U.S. ports must be treated equally when shipping goods between states, no matter the goods, the state, or who builds the ship. Your investment in PLF ensures that entrepreneurs like Bob Gunter can restore equal opportunity for businesses outside the U.S. mainland to compete in the market. Thank you!
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