Short Sea Shipping - The New Marine Highways

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COMMENT: Short Sea Shipping in the United States - The New Marine Highways
Winter, 2008
Reporter
33 Tul. Mar. L. J. 203 *
Length: 14070 words
Author: Sean D. Kennedy*
* © 2008 Sean D. Kennedy. J.D. 2008, Tulane University School of Law; B.A. 2003, University of Chicago.
Text
[*203]
I. Introduction
On December 19, 2007, President George W. Bush signed into law the Energy Independence and Security Act of 2007, 1 a
"comprehensive energy strategy" 2 for the United States that addresses the economic, environmental, and social issues inherent
in fuel production and energy [*204] consumption. 3 Included in this broad energy policy Act is Title XI, subtitle C, which
authorizes the United States Department of Transportation (DOT) to implement its Short Sea Shipping (SSS) initiative. Broadly
defined, SSS is any waterborne transportation of commercial cargo between domestic ports over the U.S. inland or coastal
waterways system. Commercial traffic can travel on approximately 12,000 miles of the waterway system. 4 The goal of SSS is
to mitigate highway congestion and bottlenecks caused by the increasing reliance on tractor-trailer trucks for shipment of cargo
containers on the nation's roadways, to decrease the environmental and social external costs that result from land-based transport,
to encourage waterborne solutions that reduce highway traffic, and to increase the fuel efficiency of cargo transportation within
the United States. 5
This Comment examines the interplay between the SSS concept and contemporary maritime law and jurisprudence. Because the
goal of SSS is to offer shippers an economic incentive to utilize marine transportation routes within the United States as a
supplement to land-based cargo carriage, container traffic will shift from traditional truck and rail routes to waterways serviced
by tug and barge, cargo ferry, or more innovative, self-propelled SSS vessels. Proponents of SSS tout the potential for private
1 Energy Independence and Security Act of 2007, Pub. L. No. 110-140, 121 Stat 1492.
2 Statement by President George W. Bush upon Signing H.R. 6, 2007 U.S.C.C.A.N. § 25 (Dec. 19, 2007).
3 Fact Sheet: Energy Independence and Security Act of 2007 (Dec. 19, 2007), http:// www.whitehouse.gov/news/releases/2007/12/20071219-
1.html.
4 U.S. Gov't Accountability Office, Freight Transportation, GAO-05-768, at 3 n.5 (July 2005), available at
http://www.gao.gov/new.items/d05768.pdf [hereinafter GAO Report].
5 MARAD, U.S. Dep't of Transp., The Wave of America's Future, http://www.marad. dot.gov/Programs/sss_II.html (last visited Sept. 21,
2008).
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economic benefits such as increased freight capacity and improved transportation efficiency, 6 as well as public benefits such as
decreased highway congestion, lower greenhouse gas emissions, and improved highway safety. 7 However, the increased use of
marine transportation routes for cargo shipped between points within the United States may be at loggerheads with existing
maritime laws that were fashioned at a time when SSS and higher volumes of waterborne freight traffic were not anticipated.
This Comment will explore how the SSS vision may compel a rethinking of the existing laws of towage and coastwise
transportation in order to adapt to changing circumstances and new disputes that will arise as SSS and the anticipated increase in
marine freight traffic are realized.
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II. Background
Prior to the development of extensive rail and highway transportation networks in the United States, commercial shipping via
inland and coastal waterways was the mode of choice among shippers, but has since fallen into desuetude due to its longer transit
time compared to land transport alternatives. 8 "American culture is quickly forgetting that the rivers were here long before the
roadways." 9 Despite the drop off, shippers of bulk commodities like coal, petroleum, grain, and lumber have continued to utilize
water transport, but shippers of time-sensitive goods have relied on faster modes such as trucks and railways. 10 However,
increasing freight volumes have stressed the capacity of the U.S. land transportation system, and it is estimated "that growing
international trade and domestic production will increase overall freight traffic by 70 percent by 2020." 11 Trucks carry seventy-
eight percent of the nation's goods, but roadways have become congested, causing delays in truck traffic. 12 Additionally, driver
shortages make it difficult for trucking companies to increase their capacity to meet the growing demand for cargo transportation
services. 13 The nation's railways are experiencing similar capacity problems as a result of increasing freight volumes. 14 A
2002 study of rail traffic in five East Coast states noted that there was a lack of capacity on critical rail lines in at least twenty-
five different locations. 15 As congestion increases, logistics providers may find it "cheaper and faster to travel partly by sea
instead of totally by land and bypass many high density or congested areas." 16 The situation has forced both public-and private-
sector officials to reconsider marine transportation as an option for supporting the growing demand on freight transport capacity.
17
These transportation [*206] officials have looked to existing SSS operations as models for the implementation of an SSS
program in the United States, considering both the obstacles that such a development must face and the efficiency benefits that
would result from the successful incorporation of SSS into the freight transportation networks in the United States.
A. Short Sea Shipping Experience in the European Union
6 Ctr. for Mar. Studies, U.S. Merch. Marine Acad., US Short Sea Shipping: Prospects and Opportunities 13 (2004).
7 Stephen Flott, Turning the Sea into a Bridge 2 (Apr. 19-20, 2004), http://www.
seabridge.net/docs/Journal%20of%20Commerce%20Confe.pdf.
8 See Arthur Donovan, Intermodal Transportation in Historical Perspective, 27 Transp. L.J. 317, 335 (2000).
9 Philip N. Davey, The Tug and Tow Relationship in the United States, 70 Tul. L. Rev. 475, 476 (1995).
10 GAO Report, supra note 4, at 6-7.
11 Id. at 1.
12 Id.
13 Id.
14 Id. at 2.
15 The Mid-Atlantic Rail Operations Study was a joint product of five states (Delaware, Maryland, New Jersey, Pennsylvania, and Virginia);
the I-95 Corridor Coalition, which represents 13 states in the Northeast; and three railroads (Amtrak, CSX, and Norfolk Southern)." GAO
Report, supra note 4, at 2 n.2.
16 Ken Wykle, Highway Congestion? Think Water!, Def. Transp. J., Sept. 26, 2005, at 47, 50.
17 GAO Report, supra note 4, at 3-4.
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The European Union (EU) has had an SSS program in place since the 1997 founding of the SSS Promotion Center, which is
supported jointly by government and industry. 18 "The waterborne transportation of freight has a strong presence in Europe,
where European Union policies have encouraged its use." 19 In the latter half of the 1990s, "growing pressure on road capacity
and the associated negative impact on the economy and environment led European nations to promote Short Seas Shipping
operations as an alternative to road transport." 20 The purpose of SSS in the EU is described as one of achieving "the sustainable
distribution of goods while minimizing the impact on society in terms of safety, environmental damage, and other transport
users." 21 The European Commission (EC) has actively promoted SSS, providing 100 million euros for SSS projects through
2006, and proposing to raise the budget to 740 million euros for 2007-2013. 22 This governmental role in SSS is viewed as that
of a facilitator, with policy measures "aimed at creating [a] level playing field for SSS, looking at whole logistical processes,
creating understanding and commitment among all stakeholders, and keeping SSS on the political agenda." 23 Europe considers
SSS to be complementary to road transportation systems that were unable to absorb the tremendous growth in cargo movement
and "a welcome part of an integrated transportation system." 24
Roadway congestion, land infrastructure costs, energy consumption, and environmental impact were significant reasons for the
increased use of SSS services in Europe. 25 Road traffic was increasing [*207] between borders and on major transit routes in
the EU. "The monetary value of congestion delays [is] estimated to come to almost .9 billion for inter-regional users just on the
trans-European Transport Network (TEN-T) road network by 2020." 26 Diverting freight from the roadways to SSS operations
not only lessened the problem of cargo bottlenecks, but also had a salutary effect on job growth. "Short Sea Shipping is seen as
an opportunity to maintain if not enhance the EU Flag maritime transport sector as well as employment of EU state member
maritime employment." 27 Furthermore, the EU was able to keep its infrastructure spending down, because with SSS,
"infrastructure costs are low and are fully borne by users - unlike railway and highway infrastructure costs which are supported
by taxpayers." 28 By adopting SSS in its transportation policy, the EU advanced its long-term goal of reducing energy
consumption and greenhouse gas emissions.
Short Sea Shipping energy consumption is virtually insignificant, as demonstrated by data from British Department of Transport
showing that maritime transport consumes 0.12-0.25 mega-joules per ton/km, compared to 0.70-1.20 for highway transport and
around 0.60 for rail traffic. Short sea shipping is seen as environmentally friendly as its CO<pow 2> emissions stand at 30g per
ton/km against 41g for rail and 207g for highways. 29
Cargo transportation networks in Europe, however, are not directly analogous to those of the United States. Europe's rail system
is less efficient for moving freight than the U.S. rail system, its main industrial centers are situated close to navigable waterways,
18MARAD, U.S. Dep't of Transp., MARAD 3rd Annual Short Sea Shipping Conference 5 (Oct. 13-15, 2004) (on file with Tulane Maritime
Law Journal) [hereinafter 3rd MARAD Conference].
19 GAO Report, supra note 4, at 8.
20 3rd MARAD Conference, supra note 18, at 5.
21 Id.
22 Id.
23 Id. at 6.
24 Id.
25 Nat'l Ports & Waterways Inst., Univ. of New Orleans, Public Benefits of the Short-Sea Intermodal System 1 (2004).
26 Mark Yonge, European Union Short Sea Shipping 2 (Apr. 12, 2004), available at http://advancedmaritimetechnology.aticorp.org/short-sea-
shipping/create3s-european-commission- initiative/EUSSS_04-2004.pdf.
27 Id. at 3.
28 Id. at 5.
29 Id.
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30
and road transporta-tion of freight has never been as dominant in Europe as it is in the United States. 31 In contrast with the
situation in the United States, promotion of SSS operations has become a key focus of intermodal expansion for the EU:
"Currently, 41% of freight traffic (in ton miles) is delivered by Short Sea. In the United States, the coastwise share of Short Sea
traffic has declined." 32 There are significant cultural, regulatory, and geographical differences between the United States and
Europe that make it difficult for an exact comparison of the impact that SSS would [*208] have on transport markets. 33
However, there is general agreement among policy makers and logistics providers that the SSS success in the EU could be
replicated in the United States. 34
B. The Development of a Short Sea Shipping Initiative in the United States
1. The MARAD Conferences on Short Sea Shipping
The Maritime Administration (MARAD), the agency within the DOT in charge of the U.S. marine transportation system, held
its first conference on SSS in 2002 to address the problem of increased congestion of container transport on U.S. highways and
investigate how SSS might be integrated into existing multimodal transportation networks. 35 Faced with a projected increase in
truck traffic along major U.S. highways, the conference participants discussed alternative solutions to expanding the costly land-
based transportation system. 36 "New interstate roadways typically cost $ 32 million per paved mile, not to mention the cost of
new highway interchanges, which are often funded at a level of over $ 100 million each." 37 The participants discussed the
development of an SSS system to reduce the increasing land congestion, looking to both the advancements made in Europe as
well as domestic SSS operators to determine how an SSS program could meet the needs of an expanding market. 38 The
recommendations included government tax incentives for users of SSS, the reduction of crew requirements for self-propelled
vessels, and the generation of more public exposure to the benefits of SSS. 39
MARAD sponsored a second SSS conference in November 2003. 40 The participants' recommendations addressed start-up
capital concerns, tax disincentives to SSS intermodal coastal trade, research and development funding to encourage technological
advances, and the need [*209] to raise awareness of the public benefits of an SSS program. 41 The chairman of the new Short
Sea Shipping Cooperative Program (SCOOP) pointed out that SSS "can add new highway alternatives that will improve the
quality of life by reducing road congestion, protect our National Security transportation needs, provide new jobs for American
Mariners and the shipyard industry and keep the economy growing." 42 Representatives of the shipping industry generally were
receptive to the idea of an SSS program so long as it added flexibility and reliability while addressing their ultimate requirements

32 Nat'l Ports & Waterways Inst., supra note 25, at 67.
34 Id.
35MARAD, U.S. Dep't of Transp., Conference Report on the Marine Transportation System Initiative Short Sea Shipping Conference 1 (2002)
(on file with Tulane Maritime Law Journal).
36 Id.
37 Id.
38 Id. at 1-2.
39 Id. at 3.
40 MARAD, U.S. Dep't of Transp., Conference Report: Marine Transportation System (MTS) 2nd Annual Short Sea Shipping Conference 4
(2003) (on file with Tulane Maritime Law Journal).
41 Id. at 4.
42 Id. at 6.
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- speed and price. 43 Overall, the participants agreed that "Short Sea Shipping must be viewed as a "highway alternative'" rather
than a replacement or competitor to rail and truck shipping. 44
The third MARAD conference on SSS was held in October 2004, and over 250 representatives from both the public and private
transportation sectors attended with the goal of formulating "a comprehensive plan to expand our nation's water transportation
system and meet our growing surface congestion needs." 45 Then-Secretary of Transportation Norman Mineta emphasized the
DOT's commitment to integrating SSS into the national transportation system. 46 Congressman Jerry Nadler of New York
addressed the conference, advocating the elimination of the Harbor Maintenance Tax as it applies to SSS, noting "that funding
sources should not suppress activities the government is trying to promote." 47 While the tax issue and other concerns remain
unresolved, it was clear that the DOT made the development and implementation of SSS a national priority for enhancing freight
mobility. 48
2. Enactment of the Short Sea Transportation Program
The efforts of MARAD and other proponents of SSS resulted in the enactment on December 20, 2007, of the Short Sea
Transportation Program, which instructs the Secretary of Transportation to "establish a short sea transportation program and
designate short sea transportation projects to be conducted under the program to mitigate landside [*210] congestion." 49 The
program's goal is to encourage the use of short sea transportation through the development and expansion of documented vessels,
shipper utilization, port and landside infrastructure, and marine transportation strategies by state and local governments. 50 The
Secretary of Transportation is also directed to designate certain marine routes as short sea transportation routes that may serve as
extensions of the surface transportation system as well as to designate certain projects as short sea transportation projects. 51 For
projects that are designated as short sea transportation projects, the DOT can promote the services that such projects will provide,
and the Secretary may "coordinate, with ports, State departments of transportation, localities, other public agencies, and the
private sector and on the development of landside facilities and infrastructure to support short sea transportation services." 52
The DOT is also authorized to develop measures of evaluating the performance of such designated short sea transportation
projects. 53 Finally, the Act also encourages state and federal cooperation in promoting the use of short sea transportation of
passengers and cargo to address regional and interstate transportation problems. 54
C. Benefits of Successful Incorporation of Short Sea Shipping in the United States
The supporters of SSS in the United States are optimistic about the numerous benefits that a thriving domestic water-based
transportation system would bring. "If coastal sea shipping services succeed and are, in fact, used by the widest possible
customerbase, they can provide economic growth through new employment and tax revenue; create important environmental,
43 Id. at 7.
44 Id.
46 Id. at 2.
47 Id. at 13.
49 46 U.S.C. § 55601(a) (2000).

50 Id. § 55601(b).
51 Id. § 55601(c)-(d).
52 Id. § 55601(e)(2).
53 Id. § 55601(e).
54 Id. § 55601(f).
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congestion mitigation, and highway safety benefits; and support the U.S. shipbuilding industry and the defense mobilization
base." 55 The positive results of a successful SSS system can be categorized broadly as either public or private benefits.
1. Public Benefits
In November 2004, the National Ports and Waterways Institute at the University of New Orleans released a study of the public
benefits of [*211] SSS, analyzing the "negative externalities in different intermodal options." 56 When the public benefits of
an SSS system relative to an existing land-based system are not reflected as benefits in the pricing structure of services, there is
a need for "public policy intervention either in the form of subsidies or user taxes to accurately reflect social costs of transportation
options." 57 A negative externality is any cost associated with the production, marketing, or consumption of a product that is not
reflected in the price of the product and not borne by either its producers or consumers. 58 The inability to account for the
negative externalities inherent in land-based transportation methods justifies the governmental involvement necessary for market
correction. "The social costs of freight transportation are borne by several parties, including the carriers, shippers, government
agencies, other common users of the infrastructure facilities, and the public at large." 59 To gauge accurately the advantages of
SSS vis-a-vis land transportation, it is necessary to take into account the negative externalities such as congestion, environmental
damage, and highway accidents that are not directly reflected in the pricing of land-based transportation services. Although there
are many ways to interna-lize the majority of the costs associated with land-based operations, "the two major lines of thinking
are either to levy a tax per unit of externality approximate to the social damage or in the case of transportation options with low
external costs to provide fiscal incentives such as tax deduction, rebates, and other monetary incentives to promote such options."
60
The EU experience has shown that the external benefits of SSS can be maximized by two principal methods: "First, increasing
amounts of highway user charges to reflect external losses and second, directing financial support to water transportation
projects." 61 Recent studies conducted by the maritime industry and research institutions in the United States have found that
SSS operations
should provide a significant impact on the formation of an effective intermodal system … [that] would relieve congestion and
decrease the number of heavy trucks on coastal highways[,] … [improve] safety, air, noise, and other environmental consequences
of land based transportation [*212] modes, [and create] a modern U.S. fleet reserve and cadres of seafarers for military and
other emergencies. 62
Short sea vessels not only emit fewer pollutants per ton/mile than trucks, but "the combustion also occurs further from population
centers." 63 "Marine transportation can also be an extremely energy efficient method of transporting large quantities of freight."
64
The United States Merchant Marine Academy has argued that due solely to the "significant environmental benefits" of an SSS
program, "some level of tax relief or other government incentive" for it would be justified. 65
55 Flott, supra note 7, at 2.

57 Id. at 24.
58 Id.
59 Id.
60 Id. at 33.
61 Id. at 67.
62 Id. at 68.
63 C. James Kruse et al., Short Sea Shipping Initiatives and the Impacts on the Texas Transportation System: Technical Report, available at
http://cdm266301.cdmhost. com/cdm4/item_viewer.php?CISOROOT=/p266401coll4&CISOPTR=1685&CISOBOX=1&REC=8.
64 Id.
65 Ctr. for Mar. Studies, supra note 6, at 23.
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2. Private Benefits
Maritime transportation and logistics providers are increasingly vocal proponents of the advantages that under-utilized SSS
routes can have regarding increased cargo capacity and trade efficiency. "There is a widespread opinion that Short Sea Shipping
markets clearly exist and that these services are very necessary and will expand." 66 In contrast to railways and highways, for
SSS "there are no fixed infrastructure costs to develop transportation routes, and ships can carry more cargo per dollar than any
other method of transport." 67 The volume of domestic trade alone is expected to increase from a 1998 level of 13.5 billion tons
to 22.5 billion tons by 2020; international trade is expected to grow to more than 2 billion tons annually over the next twenty
years. 68 Concerned about rising fuel costs, driver shortages, and traffic congestion, 69 transport companies are eager to take
advantage of the cost savings of domestic marine routes, where "one barge could take up to 58 trucks off the highway and a 15-
barge tow could eliminate the need for 870 trucks." 70 Ideally, SSS could be offered with a higher profit margin than [*213] land-
based transport networks. 71 In turn, a successful SSS network "will alleviate overland congestion, and thus would lower costs
(increasing profits) in the competing overland sector." 72
One of the primary advantages of SSS over trucks and trains is lower fuel consumption. 73 In a comparison of energy
consumption, "one gallon of fuel can move one ton the following distances: 514 miles by inland barge, 202 miles by rail, and 59
miles by truck." 74 However, the economic advantages of marine shipping increase with the distance traveled, so "SSS routes
under a certain distance threshold will not be economically viable and should be avoided." 75 As the cost of fuel rises, the fuel
efficiency of waterborne cargo transportation will be a key advantage for shippers utilizing new SSS routes to move goods in the
U.S. market.
Another advantage of SSS operations is the ability to absorb significant freight tonnage and allow shippers to take advantage of
economies of scale. A regular cargo container can hold approximately twenty-seven tons of cargo, but due to weight limitations
on trucks using the highways, shippers can only load containers with twenty tons, or about eighty percent of its maximum
capacity. 76 Instead, a shipper can load that same container to full capacity and transport it by an SSS service, thus reducing the
need for one extra truck for every four containers shipped by barge. 77 SSS services can complement trucking operations, which
are subject to increasing regulations on their long-haul routes. 78 Trucking companies can optimize their drivers' schedules to
"fill a single workday with multiple short trips, bringing containers to and from barges, increasing the efficiency of the entire
66Mark Yonge & Lawrence Henesey, A Decision Tool for Identifying the Prospects and Opportunities for Short Sea Shipping 5 (Jan. 25,
2006), http://www.maritimeadvisors.com/pdf/ 555TRB2006whitepaper.pdf.
67 Matt Hilburn, New Believers, Sea Power, May 2007, at 38 (quoting Maritime Administrator Sean Connaughton).
68 Id.
69 Id. at 39.
70 Id. at 38.
72 Id.
73 Id.
74 Id.
75 Id. at 15.
76Innovative Strategies To Raise Efficiencies Along Transportation Corridors and at Multimodal Hubs 60 (Lyndon B. Johnson Sch. of Pub.
Affairs Policy Research Report, Paper No. 147, 2005) [hereinafter Innovative Strategies].
77 Id.
78 Id. at 62.
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network." 79 Such a schedule would be more attractive to drivers, who currently are in short supply, while also reducing the
highway congestion and public safety issues caused by long-haul trucking operations. 80
[*214] Supporters of SSS are enthusiastic about the increased use of roll-on, roll-off (RoRo) technology in intermodal cargo
transportation. 81 Vessels that can be loaded without the use of cargo cranes are particularly well suited for SSS operations,
offering the shortest cargo turnaround time at the loading and destination terminals, as well as requiring a minimum investment
in port infrastructure. 82 RoRo vessels could even be loaded with tractor-trailers, enabling customers to take advantage of the
fuel efficiency of SSS routes while retaining the flexibility and speed advantages of door-to-door truck delivery to which they
are accustomed. 83 Shippers using RoRo vessels would not have to pay dockworkers to lift cargo on or off at the loading and
discharge ports, avoiding an additional service cost that otherwise makes waterborne transport less cost competitive with other
modes. 84 These operating cost and efficiency advantages make SSS operations using RoRo vessels particularly attractive.
III. Obstacles to Short Sea Shipping in the United States
A. The Harbor Maintenance Tax
One of the main impediments to the implementation of a strong SSS program in the United States is the economic disincentive
imposed by the Harbor Maintenance Tax (HMT). 85 "When asked how Federal policy might be adjusted to foster coastwise
shipping stakeholders say the first priority is to exempt certain domestic cargo from the Harbor Maintenance Tax." 86 All
commercial cargo that is loaded or unloaded from a commercial vessel is subject to a fee of 0.125% of its value if the loading or
unloading occurs at any channel or harbor in the "customs territory of the United States which is not an inland waterway and is
open [*215] to public navigation and at which Federal funds have been used since 1977 for construction, maintenance or
operation." 87 The HMT was enacted by Congress in 1986 "to recover a portion of the cost of maintaining, not improving, the
nation's deep-draft navigation channels." 88 The tax is a cost-sharing mechanism for deepening and widening harbors and
channels funded in part by the federal government, which pays a portion from the general treasury, and the remainder is paid by
local port sponsors. 89 The HMT is problematic when a container is transshipped to another SSS vessel bound for a different
79 Id.
80 Id.
81 RoRo stands for "Roll On Roll Off cargo. RoRo is a cargo handling method whereby vessels are loaded via one or more ramps that are
lowered on the quay or lowered onto the vessel. Essentially RoRo is comprised of cargo items that can be driven on/off a vessel. These include
Heavy Goods Vehicles (HGVs), cars, buses and other vehicular traffic." Dublin Port Co., Glossary of Terms,
http://www.dublinport.ie/information-centre/glossary-of-terms/ (last visited Nov. 11, 2008); see also IMO and RoRo Safety, IMO Focus (IMO,
London, U.K.), Jan. 1997, available at www.imo.org/includes/blastData.asp/doc_id=429/RORO.pdf.
83 Id.
85 19 C.F.R. § 24.24 (2006) ("Commercial cargo loaded on or unloaded from a commercial vessel is subject to a port use fee of 0.125 percent
(.00125) of its value if the loading or unloading occurs at a port within the definition of this section.").
86 Am. Ass'n of Port Auth., The Harbor Maintenance Tax & Congestion Relief in Brief (Sept. 1, 2005), http://www.aapa-
ports.org/files/PDFs/HMT%5FCoastwise%5FPaper%5FShort%5F01Sept05.pdf.
87 19 C.F.R. § 24.24 (2005).
88 Am. Ass'n of Port Auth., The History of the Harbor Maintenance Tax (2006), http:// www.aapa-
ports.org/Issues/content.cfm?ItemNumber=1006.
89 Id.
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domestic port where the goods are taxed a second time. 90 Removing this tax for SSS operations will increase the competitiveness
of SSS with other transportation modes.
Originally, the HMT applied to imports and exports transported via the nation's ports, but in March 1998, a unanimous Supreme
Court in U.S. Shoe Corp. v. United States found that the HMT, as applied to goods intended for export, violated the Export Clause
of the United States Constitution. 91 The Export Clause states: "No Tax or Duty shall be laid on Articles exported from any
State." 92 However, domestic transship-ments of international cargo from one state to another are subject to the HMT at both the
loading and discharge ports. 93 This double taxation of goods in transit between U.S. ports is criticized by proponents of SSS as
a strong deterrent to the use of waterborne cargo transportation options. "Specifically burdensome and illogical is "double' HMT
as applied to domestic transshipment of international imports." 94 A carrier pays the tax when a ship unloads an international
container at a U.S. port. When that container is transshipped by barge to another port, it is subject to the HMT again. But if that
same container is transported by truck or rail to another destination, there is no additional tax on cargo. 95 SSS proponents argue
that since shippers can avoid the tax by utilizing other modes, such as trucking or railroads, few would choose to use SSS services.
96
[*216] The National Port and Waterways Institute study of the public benefits of SSS points to the HMT as a "major
impediment" to the implementation of SSS and urges that the "tax should not be applied to domestic traffic," especially since
"Short Sea vessels do not require deep channels." 97 In its October 2005 study of the HMT, the National Port and Waterways
Institute contends that, if the HMT were withdrawn, "short-sea services may generate $ 27.5 million in financial savings and $
61 million in combined financial and external savings" - savings that are four times greater than lost HMT. 98 The argument is
that introduction of SSS services would create new activity, so elimination of the HMT with respect to such new services would
not reduce the existing collections. 99 In a statement before the House Subcommittee on Coast Guard and Maritime
Transportation, Congressman Elijah Cummings supported an HMT exemption for SSS voyages, stating, "It is critical that our
nation takes every possible step to make water a mode competitive with roads and rails by supporting the development of short
sea shipping. To that end, I strongly believe we should exempt these voyages from the Harbor Maintenance Tax… ." 100 So far,
Congress has yet to allow an exemption from the HMT for SSS operators.
B. Coastwise Trading Laws
1. Vessel Build and Documentation Requirements
90 Innovative Strategies, supra note 76, at 61.
91 523 U.S. 360, 1998 AMC 1403 (1998).
92 U.S. Const. art. I, § 9, cl. 5.

93 Nat'l Ports and Waterways Inst., Univ. of New Orleans, Short-Sea Vessel Service and Harbor Maintenance Tax I-2 (Oct. 2004).
94 Id.
95 R.G. Edmonson, Short-Sea Backers Seek HMT Exemption, J. Com., Nov. 15, 2004, at 40.
97 Nat'l Ports & Waterways Inst., supra note 25, at 69; see also Nat'l Ports & Waterways Inst., supra note 93, at I-3 ("Besides, short-sea vessels
are shallow draft, normally about 15 feet, and would not require additional dredging in most cases.").
98 Nat'l Ports & Waterways Inst., supra note 93, at I-2.
99 Id. at I-3.
100Press Release, Transp. & Infrastructure Subcomm., Coast Guard Budget and Authorization for Fiscal Year 2009 (Feb. 26, 2008) (statement
of Hon. Elijah Cummings) available at http://transportation.house.gov/News/PRArticle.aspx?NewsID=460.
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The cabotage provisions in the Jones Act require that any vessel operating in the coastwise trade between two U.S. ports be U.S.-
built, 101 owned by a documentation citizen, 102 and operated by a crew of U.S. citizens. 103 For purposes of owning a U.S.-
flag vessel, an SSS company must be organized in such a way that it qualifies as a documentation citizen. 104 If it is organized
as a U.S. corporation, an SSS company must be at least seventy-five percent owned by U.S. citizens, 105 its
chief [*217] executive officer and chairman of the board of directors must be U.S. citizens, and no more of its directors than a
minority of the number necessary to constitute a quorum may be noncitizens. 106 The corporate citizenship requirements apply
to all levels of a company's organization, so the seventy-five percent ownership requirement applies to a parent corporation that
has a subsidiary company operating an SSS service. 107 An SSS operator that meets these citizenship requirements may own
qualified U.S.-flag vessels that were built in a U.S. shipyard 108 and apply for a coastwise endorsement to be issued to the vessel
by the United States Coast Guard (Coast Guard). 109 Any vessel engaged in transporta-tion, including towage operations, 110 of
passengers or merchandise between U.S. ports must be issued a coastwise endorsement. 111 Thus, SSS operators that wish to
expand their fleet in order to accommodate increased demand for domestic marine transportation will be restricted to purchasing
vessels constructed in U.S. shipyards.
In order to support an extensive national SSS network, there must be "a tremendous fleet build-up and the shipyard costs of
construction will be a competitive issue." 112 The Coast Guard considers a vessel to be U.S.-built if all major components of her
hull and superstructure are fabricated in the United States, and the vessel is assembled entirely in the United States. 113
Nonetheless, "the Coast Guard has consistently held that items not integral to the hull or superstructure, such as propulsion
machinery, consoles, wiring harness and other outfitting have no bearing on a U.S. build determination and may, therefore, be
foreign built without compromising the coastwise eligibility of a vessel." 114 Proponents of SSS have urged MARAD to ease
build requirements in the U.S. with respect to SSS vessels in order for operators to overcome the substantial capital [*218] costs
101
46 U.S.C.A. § 12112(a)(2)(A) (2007).
102Id. § 12103(b); see also Constantine G. Papavizas, U.S.-Flag Vessel Financing and Citizenship Requirements Update, 32 Tul. Mar. L.J. 35,
36 (2007).
103 46 U.S.C.A. § 8103(a) (2007).
104 See Papavizas, supra note 102, at 38; see also 46 C.F.R.§§67.30-.39 (2008).
105 46 U.S.C.A. § 50501(a).

106 Id. § 12103(b)(4).
107 See Conoco, Inc. v. Skinner, 970 F.2d 1206, 1222, 1992 AMC 2816, 2838 (3d Cir. 1992) (holding that the seventy-five percent U.S. citizen
ownership requirement extends from parent companies to their subsidiaries - that is, the parent corporation and its subsidiary must both be able
to own the vessel as a documentation citizen in its own right).
108 There are narrow exceptions permitting the issuance of a coastwise endorsement to a foreign vessel that was captured in war by a U.S.
citizen and lawfully condemned as a prize, was forfeited for a breach of U.S. law, or was a qualified wrecked vessel rebuilt in the United States.
46 U.S.C.A. § 12112(a)(2)(B).
109 Id.
110 Id. § 55111.
111 46 C.F.R. § 67.19 (2005).

113 46 U.S.C.A. § 12101(a); see also 46 C.F.R. 67.97.

114 Phila. Metal Trades Council v. Allen, No. 07-145, 2007 WL 1057027, at 1 (E.D. Pa. Apr. 3, 2007).
Page 11 of 17
inherent in buying U.S. vessels at above-market rates. 115 They argue that the U.S.-build requirements deter investment in SSS
operations due to inflated start-up costs of purchasing vessels built in U.S. shipyards that are costlier than vessels that can be
acquired from the global market. 116 U.S. shipyards charge anywhere from three to four times the price of a comparable ship
built in Europe or Asia, while failing to offer the technology that would make an SSS operation more efficient. 117 These higher
costs for vessels in the coastwise trade make it difficult for operators to create SSS services or sustain profitability. 118 The
United States International Trade Commission conducted a study in 1999 to determine what effect removing the U.S.-build
requirement, while maintaining all other cabotage laws, would have on U.S. economic welfare. 119 Taking into consideration
the resulting adverse effect on U.S. shipyards, the study estimated that the removal of the U.S.-build requirement would result in
an increase in the volume and demand for cabotage services due to the lower price and would ultimately benefit domestic
consumers with "a welfare increase ranging from $ 138 million to $ 380 million." 120 A relaxation of the U.S.-build requirement
for coastwise vessels would spur private investment in SSS vessels, further the DOT's goal of enhancing freight mobility, and
generate public benefits for domestic consumers.
The justification for the protectionism of the U.S.-build requirement is grounded in national security concerns - to assure a reliable
domestic shipping network and the existence of a maritime capability that is completely subject to federal control in times of war
or national emergency. 121 However, noneconomic objectives like national security and defense are achieved most efficiently
by using targeted, direct government interventions in the form of subsidies, rather than through indirect interventions like the
Jones Act import restraints. 122 The [*219] unintended consequence of this protection for domestic shipyards is the disincentive
to private investment in efficient and profitable alternative modes of domestic freight transport due to the prohibitive cost of
acquiring suitable vessels.
2. Coast Guard Crew Requirements
The Coast Guard requires crew members of U.S.-flag vessels to be U.S. citizens. 123 The purpose is to provide employment
opportunities as well as develop a cadre of trained and experienced seafarers. 124
The upside of successful privately owned commercial short sea shipping ventures is substantial. Not only can such ventures add
significant freight capacity to the highway system without adding on-going demands on the federal treasury, they can also provide
trained merchant seamen for use in times of national emergency and ships with militarily useful applications. 125
115Peter T. Leach, Coming into Focus, J. Com., Apr. 19, 2004, at 29 ("[The president of SSS operation said he would say to MARAD], "Just
make one tough decision on the build-America provision and do it… . Otherwise, I can promise you we'll find a way around the build-America
provision of the Jones Act.'").
117 Innovative Strategies, supra note 76, at 60.
119 U.S. Int'l Trade Comm'n, The Economic Effects of Significant U.S. Import Restraints: Second Update 1999, at 99-103 (1999).
120 Id. at 103.
121 46 U.S.C.A. § 50101(a) (2007) ("It is necessary for the national defense and the development of the domestic and foreign commerce of the
United States that the United States have a merchant marine.").
122 U.S. Int'l Trade Comm'n, The Economic Effects of Significant U.S. Import Restraints: Fourth Update 2004, at 98 (2004).
123 There is an exception that allows not more than twenty-five percent of a vessel's unlicensed seamen to be either aliens with permanent
resident status or foreign nationals enrolled in the United States Merchant Marine Academy. 46 U.S.C. § 8103(b)(1)(B) (2000).
124 MARAD, Dep't of Transp., By the Capes - A Primer on U.S. Coastwise Laws (on file with Tulane Maritime Law Journal).
125 Flott, supra note 7, at 6.
Page 12 of 17
However, some SSS proponents argue that Coast Guard crewing requirements that mandate unnecessarily large crews for SSS
operations increase the costs of the service. 126 Wages of crew members are a significant expense for vessel operators: "U.S.
crew costs generally account for most of the differences in operating costs between U.S.-and foreign-flagged vessels." 127 The
Coast Guard requires larger crews for self-propelled cargo vessels than for tug and barge operations. 128 Federal law dictates the
minimum number of licensed mates required for a vessel based on her tonnage, length of voyage, and, in some cases, the vessel
type. 129 The required manning levels for self-propelled vessels engaged in domestic coastwise commerce are higher than those
of tug-barge combinations moving an equivalent amount of freight. 130 One current SSS operation using a self-propelled vessel
is able to complete its service route in half the time of a tug and barge operation. 131 The increased cost of additional crew
members decreases the competitiveness of using [*220] innovative high-speed SSS vessels compared to slower tug and barge
combinations. 132 Using faster vessels would make SSS more cost competitive with land transportation modes because SSS
operators would be able to offer more frequent service that accommodates shippers' existing supply chains. 133 SSS operators
are eager to use innovative self-propelled vessels in the coastwise trade. 134 The Coast Guard regulations should be adapted to
accommodate faster SSS vessels that have no discernable need for larger crews than tug and barge operations. The overarching
obligation to provide a seaworthy vessel will put the burden on SSS vessel owners to properly crew their vessels or face increased
liability exposure for the resulting unseaworthy condition.
C. Towage Laws
1. Allocating Risk Between Tug and Tow
The increased marine traffic on inland and coastal waterways resulting from the growth of SSS in the United States will prompt
towage 135 companies to seek ways to anticipate and manage the risks inherent in the towing business. Initial SSS operations
requiring only a minimal capital investment in vessels would be ones that load containers or tractor-trailers on barges and use
ocean-going tugs for the motive force: "[Such a service] might be attractive to potential operators who seek to minimize their
exposure to longer-term debt. This option offers the lowest cost, speed, and environmental impact." 136
One impediment to the swift utilization of towage services in a domestic SSS network is that a tug owner cannot allocate the risk
of damage resulting from negligent towing by means of a clause inserted in the contract with the tow owner that exculpates the
tug from its liability. The Supreme Court held in Bisso v. Inland Waterways Corp. that a contract provision exempting the tug
from liability for its negligence is invalid as contrary to public policy. 137 The Court stated that there are two main reasons for
the rule against contract provisions exempting a tug from liability: "(1) to discourage negligence by making wrongdoers pay
damages, and (2) to protect those in need of goods or services from being [*221] overreached by others who have power to
126 GAO Report, supra note 4, at 13 n.20.

127 U.S. Int'l Trade Comm'n, The Economic Effects of Significant U.S. Import Restraints: Fifth Update 2007, at 98 (2007).
129 See 46 U.S.C. § 8301 (2000).

130 Global Insight, Four Corridor Case Studies of Short-Sea Shipping Services 28 (2006).
131 See GAO Report, supra note 4, at 16.
132 Id. at 24.
133 Id.
134 See id. at 16, 24 (describing SSS operators' efforts to incorporate self-propelled vessels in their business and concern over the impediments
to further growth).
135 Towage
service is the employment of one vessel to expedite the voyage of another." Sacramento Navigation Co. v. Salz, 273 U.S. 326, 328,
1927 AMC 397, 398 (1927).
137 349 U.S. 85, 90, 1955 AMC 899, 904 (1955).
Page 13 of 17
drive hard bargains." 138 While it seems fair that a tug should not be permitted to contract out of liability arising from her
negligent operation, towage companies urge that such a requirement is needlessly burdensome because it forces both the tug and
the tow to purchase liability insurance. "The tug would prefer to sell towing services without carrying liability insurance for
damage it does to towed vessels, because towed vessels are already covered by casualty insurance." 139 The price of insurance
premiums is an additional operating cost imposed on tug owners that utilize this method of marine transport that is most readily
accessible to SSS operators.
Arguably, the reasons the Court points to in Bisso are not applicable in the context of modern towage practice. The Court adopted
in Bisso the view that the owner of the tow is simply a consumer of towage services that should be protected against such
contractual provisions inserted by the tug owner. 140 However, companies that own vessels to be towed on SSS routes are
commercial bargainers that would deliberately release their protection against liability-exempting contract provisions in exchange
for a lower towage fee, which a tug would be able to provide without the added insurance costs. Unless there is a distinct inequality
in the bargaining powers of the tug and tow interests, "the most economically efficient way to insure against property loss or
damage is to leave the cost of insurance on the user." 141 The vessel being towed must carry her own hull insurance, so requiring
a tug owner to purchase an insurance policy protecting it against liability for damage to its tow is duplicative, adding a diseconomy
to the market for towage services. 142 Furthermore, tug owners in a competitive marketplace for their services will not be more
likely to act negligently if the risk of damage to the tow is borne solely by the owner of the tow or its insurer. A blanket
requirement that the negligent party pay for the damages it causes disregards the efficiencies that can be realized when a tow
accepts the increased risk burden in exchange for a lower price for the service provided, while the tug company has a commercial
and reputational interest in offering safe towage to its customers.
Tug and barge owners developed other arrangements to exculpate the tug without running afoul of the Bisso rule, but such
arrangements [*222] still force both parties to purchase insurance against an identical risk - damage to the tow. In Twenty Grand
Offshore, Inc. v. West India Carriers, Inc., the Supreme Court denied certiorari on a decision by the United States Court of
Appeals for the Fifth Circuit that held valid a clause that required both the tug and tow to carry insurance policies in which each
party includes a clause naming the other as an additional assured and waiving subrogation rights. 143 Such "name and waive"
clauses effectively deter a tow from suing a tug for damage caused by her negligence without violating Bisso, because the tow is
named as an additional assured on the tug's hull policy and protection and indemnity (P&I) policy, while the waiver of subrogation
prevents the tow's hull insurer from suing the tug after paying the tow's claim. Each party is free to bargain with its own insurer
to insert a waiver of subrogation clause into its respective insurance policies, and neither party has an incentive to act recklessly
since neither wants a claim on its insurance record. In a special concurrence by Judge Godbold, he states, "If free to do so, I could
with comfort hold that, at least absent monopolistic compulsion, towboat and towed vessel can bargain as they wish over both
allocating the cost of insurance and concomitantly releasing from liability for negligence." 144 Considering the relative strength
of the bargaining positions of the commercial actors involved, this area of risk management practices between the interests of tug
and tow is ripe for reconsideration in light of the goals of the new SSS initiative and the increase in towage business that will
flow from it.
138 Id. at 91, 1955 AMC at 905.

139 Nicholas j. Healy et al., Admiralty 467 (4th ed. 2006).
140 349 U.S. at 95, 1955 AMC at 908.

141 See Healy et al., supra note 139, at 450.
142 See id. at 449 ("Insurance is a perceptible cost of maritime services and products, and it is good economics to minimize the cost of
insurance.").
143 492 F.2d 679, 685, 1974 AMC 2254, 2262 (5th Cir.), cert. denied, 419 U.S. 836 (1974).
144 Id.; see also 492 F.2d at 685 n.2 ("Even where the tower has monopoly power, it is by no means clear that Bisso serves much purpose. To
the extent that the tower has such power he has the ability to pass on to the barge in the form of an increase in price his cost of insurance. Thus,
preventing the tower from contractually assigning to the barge the responsibility for obtaining insurance may accomplish no change in payor
but only a transformation in the form in which the barge pays for the insurance-price for towage rather than payments to the insurance
company.").
Page 14 of 17
2. The Warranty of Workmanlike Performance
Since initial SSS operations will use tug and barge combinations to transport cargo, it is important to address the difficulties that
the current towage laws will present. The relationship of tug and tow arises by contract, but the Supreme Court stated explicitly
in Stevens v. The White City that a suit by the owner of a tow against her tug for damage sustained during the towage service
sounds in tort, not contract. 145 Under [*223] a towage contract, "the tug is not a bailee of the vessel in tow or its cargo." 146
However, some courts have stretched this reasoning to append an implied warranty of workmanlike performance to towage
contracts. 147 This misplaced use of a warranty theory in towage claims alters the nature of the relationship between a tug and
her tow and unnecessarily confuses the responsibilities that they owe to one another under a towage contract. This uncorrected
flaw in the law of towage will be magnified as the use of towage services in SSS increases and could be an impediment to the
incorporation of SSS in the U.S. cargo transportation system.
In Ryan Stevedoring v. Pan-Atlantic Steamship Corp., the Supreme Court found that a stevedore's agreement to perform all of a
shipowner's stevedoring operations necessarily included the implied obligation to stow cargo properly and safely. 148 This case
arose when one of the stevedore's longshoremen was injured when a vessel's cargo broke free, violently striking his leg. 149 The
stevedore's insurer paid the injured longshoreman the benefits prescribed under the Longshore and Harbor Workers'
Compensation Act (LHWCA). 150 The longshoreman then sued the shipowner, arguing that the unsafe stowage of the cargo
"established either the unseaworthiness of the ship, or the shipowner's negligence in failing to furnish him with a safe place to
work, or both." 151
Prior to Ryan, shipowners were strictly liable under the warranty of seaworthiness for an injury to a longshoreman, even if the
injury was caused by the negligence of the stevedore hired to load the cargo. 152 Rather than deny the injured longshoreman the
breach of warranty of seaworthiness claim against the shipowner, the decision in Ryan introduced the warranty of workmanlike
performance (WWLP) to the maritime law, permitting the innocent shipowner to seek indemnity from the negligent stevedore
based on an implied warranty in the contract, even though the stevedore had tort immunity under the LHWCA. 153 Congress
amended the LHWCA in 1972 to require an injured longshoreman to establish a vessel's negligence, determined
in [*224] accordance with tort principles rather than admiralty principles applicable to unseaworthiness. 154
Although Ryan was not a towage case, the decision has led some courts to engraft a WWLP onto towage contracts, 155 while
other courts have continued to follow the Stevens rule that towage is not bailment, and require a damaged tow to prove the tug
145 285 U.S. 195, 201, 1932 AMC 468, 471 (1932).
146 Id. at 200, AMC at 470.
147 See Fairmont Shipping Corp. v. Chevron Int'l Oil Co., 511 F.2d 1252, 1259-60, 1975 AMC 261, 270-71 (2d Cir. 1975).
148 350 U.S. 124, 133, 1956 AMC 9, 16 (1956).
149 Id. at 126, 1956 AMC at 11.
150 Id. at 127, 1956 AMC at 11.
151 Id., 1956 AMC at 12.
152Charles E. Lugenbuhl & David B. Sharpe, The Law of Towage at the Millennium: What Changes Are Needed?, 73 Tul. L. Rev. 1811, 1819
(1999).
153 Id.
154 33 U.S.C. § 905(b) (2000) (amended 1972) ("The liability of the vessel under this subsection shall not be based upon the warranty of
seaworthiness or a breach thereof at the time the injury occurred.").
155 See Fairmont Shipping Corp. v. Chevron Int'l Oil Co., 511 F.2d 1252, 1259-60, 1975 AMC 261 (2d Cir.), cert. denied, 423 U.S. 838 (1975)
(finding an obligation on a tug to perform in a workmanlike manner a contract for providing navigational assistance to a vessel whose owner
relied on tug's expertise); James McWilliams Blue Line, Inc. v. Esso Standard Oil, 245 F.2d 84, 87, 1957 AMC 1213, 1217 (2d Cir. 1957)
Page 15 of 17
was negligent. 156 The Supreme Court has not addressed the issue of implied WWLP in towage contracts, so the status of the
proper liability standard in cases of damage to a tow remains unclear. This presents a possible impediment to the integration of
SSS in the United States by adding unneeded uncertainty as to whether a vessel operating in an SSS network warrants her
performance to the barges in tow, or is subject to a negligence standard of liability. Though an injured party's normal legal theory
is negligence, a claim asserting a breach of the WWLP gives a plaintiff several advantages. The plaintiff is not required to prove
that the defendant's negligence proximately caused its damages, and indemnity for a breach of warranty includes damages as well
as attorney fees and expenses. 157 The theoretical differences in liability standards under towage contracts can have a real effect
on the profits of an SSS operation - application of the warranty theory of liability makes a tug the insurer of her tow, liable for
any damage regardless of the skill and care exercised in performing the service. 158
The idea of an implied WWLP in towage contracts is irreconcilable with the Supreme Court's ruling in Stevens that under a
towage contract, the tug is not a bailee of the vessel in tow or her cargo, so a claim against the tug arises ex delicto, requiring the
tow to prove that the tug's [*225] negligence was the cause of the damage. 159 "The notion of an implied warranty of
workmanlike service in a towage contract is an unnecessary source of friction between the bodies of tort and contract when the
interests of tug and tow collide." 160 An SSS operator using a tug to tow barges in the coastwise trade is prohibited by the Bisso
decision from contractually allocating commercial risk onto the barge owner in exchange for lower freight rates, so the price of
the towage service will reflect the increased operating cost of paying additional insurance premiums. 161 Continued application
of the Ryan WWLP in the towage context will discourage the growth of SSS in the United States, and the imposition of strict
liability on the tug for damage to the tow "provides no incentive for the owner of a tow to ensure that its vessel is seaworthy."
162
Considering the unintended results of the WWLP - added costs, increased liability exposure, and the disincentive for towage
service consumers to provide seaworthy tows - proponents of SSS should be eager to see the demise of the misplaced application
of the WWLP in the law of towage.
IV. Conclusion
The most important factor for the success of the new SSS initiative in the United States is the seamless and inexpensive
integration of marine transport networks into the existing intermodal transportation system. Proponents of SSS must overcome
the "tyranny of current practices" 163 within the transportation industry in order to ensure the commercial viability of marine
alternatives to land-based cargo transportation networks. The DOT has been working to raise awareness among industry
participants of the options that SSS service can provide to accommodate increasing cargo transportation demand. 164 For the
SSS initiative to succeed, shippers and logistics providers must be convinced to abandon their sole reliance on rail and truck
transport and give serious consideration to the efficiencies and increased capacity that integrating SSS into their supply chains
will bring. In turn, SSS operators must ensure that their services can meet the speed, reliability, and cost- [*226] efficiency
needs of their users if SSS is to be adopted as a legitimate alternative and complement to land-based transportation modes.
(applying the principle of warranty in Ryan to a towing contract); Singer v. Dorr, 272 F. Supp. 931, 934, 1968 AMC 146, 150 (E.D. La. 1967)
(holding that an implied WWLP, that is, an implied obligation to tow properly and safely, is owed by a tug to a barge because of the very nature
of the towing agreement); S.C. Loveland, Inc. v. East West Towing, Inc., 415 F. Supp. 596, 604, 1978 AMC 2293, 2295-96 (S.D. Fla. 1976),
aff'd, 608 F.2d 160 (5th Cir. 1979) (finding a tug owes a barge an implied WWLP under a towage contract).
156 See Transcon. Gas Pipe Line Corp. v. Mr. Charlie, 424 F.2d 684, 693, 1970 AMC 1147, 1158 (5th Cir.), cert. denied, 400 U.S. 832 (1970)
(refusing to extend the ruling in Ryan beyond its particular facts).
157 Healy et al., supra note 139, at 476.
158 Davey, supra note 9, at 499-50.
159 285 U.S. 195, 201, 1932 AMC 468, 471 (1932).
160 Davey, supra note 9, at 497.
161 Cargill, Inc. v. C & P Towing Co., No. 89-378-N, 1990 WL 270199, at 9, 1991 AMC 101, 115 (E.D. Va. Aug. 16, 1990).
162 Id.
Page 16 of 17
The public and private benefits that a fully integrated SSS network will achieve are numerous. "A successful short sea shipping
program offers an opportunity to add value to a national or international transportation network and, thus, increase the affected
economy's efficiency and ultimately the societal standard of living." 165 As the nation's highways and railways near their capacity
and trade volumes continue to increase, SSS is a necessary addition to the intermodal transportation system. 166 SSS can relieve
congestion and decrease the number of heavy trucks on coastal highways. 167 Alleviating highway congestion will provide a
positive benefit to trucking companies as well as noncommercial users. 168 With the rising cost of fuel, SSS offers an alternative
that is more fuel efficient than truck or rail transportation. 169 The lower fuel consumption of an SSS network will have a
corresponding decrease in environmental pollution and will improve air quality in congested urban areas. 170
SSS operations will face several challenges as more cargo is diverted from land transportation modes to coastwise vessels. There
is nearly universal agreement among shipping officials that exempting domestic cargo transported in SSS networks from the
Harbor Maintenance Tax would encourage the expansion of SSS. 171 The tax places an additional burden on cargo moved by
SSS that can be avoided by using trucking or railroads. If integrating SSS into the nation's transportation system is considered
one of the government's priorities in its efforts to enhance freight capacity, it is counterproductive to add a disincentive to utilizing
SSS services by saddling them with an increased tax burden. 172
More complicated difficulties arising in the context of coastwise trading and towage laws will also need to be addressed as SSS
increases. The U.S.-build requirements increase the cost of acquiring the new vessels needed to transport cargo on SSS routes.
The Coast Guard [*227] manning requirements may need to be adapted as technological innovations enhance SSS vessel
designs. The greater manning requirements for self-propelled SSS vessels compared to traditional tug and barge operations will
add costs to using more efficient vessels and impede the incorporation of vessel innovations in SSS.
Finally, the contradictions inherent in the present towage laws will need to be reconciled. With SSS moving more cargo from the
land onto the marine highways, traditional tug and barge operations will be relied on during the developmental stages of the
nation's SSS system. Tug and barge operators, however, are forbidden from efficiently allocating their respective risks and
liabilities by contract. The present situation requires each party to purchase duplicative insurance policies, which increases the
operating costs and price of the service. The Bisso rule should be reconsidered in light of the changing commercial environment
and the relatively equal bargaining power of tug and barge interests in negotiating SSS towage agreements. Giving tug and barge
owners the freedom of contract to allocate risk of damage in exchange for a lower price for the service will not achieve the
anticipated commercial efficiency if courts continue to read an implied WWLP into towage contracts. This aberration within
towage law must be corrected if tug companies are expected to be able to operate in the new SSS system. The error of interpreting
a WWLP in a towage contract is more than a mere academic concern: it profoundly changes the standard of liability imposed on
the tug from one of negligence to one of strict liability. The WWLP has been misplaced in towage law, and SSS operations
involving towage services will benefit from its demise.
The goal of creating viable marine highways for transporting cargo within the domestic market through SSS is still in its beginning
stage. However, the outlook for its continued growth is good. The inland and coastal waterways are an underutilized resource in
the nation's freight transportation system. SSS networks are ideally suited to handle the demands for increased cargo capacity as
domestic and international trade volumes continue to grow.

166 Id. at 13.
169 Id. at 13.
170 Id. at 25.
171 See Letter from Kurt J. Nagle, President, Am. Ass'n of Port Auth., to Representatives Weldon and Shays (Dec. 22, 2005),
http://staging.aapa.rd.net/files/PDFs/SSSletter_weldonandshays.pdf; see also Nat'l Ports & Waterways Inst., supra note 93, at I-2; GAO Report,
supra note 4, at 12.
172 See GAO Report, supra note 4, at 45.
Page 17 of 17
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Short Sea Shipping - The New Marine Highways

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Short Sea Shipping - The New Marine Highways

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Length: 14070 words

Author: Sean D. Kennedy*

A. Short Sea Shipping Experience in the European Union

B. The Development of a Short Sea Shipping Initiative in the United States

1. The MARAD Conferences on Short Sea Shipping

30 GAO Report, supra note 4, at 8.

2. Enactment of the Short Sea Transportation Program

C. Benefits of Successful Incorporation of Short Sea Shipping in the United States

49 46 U.S.C. § 55601(a) (2000).

55 Flott, supra note 7, at 2.

III. Obstacles to Short Sea Shipping in the United States

A. The Harbor Maintenance Tax

87 19 C.F.R. § 24.24 (2005).

B. Coastwise Trading Laws

1. Vessel Build and Documentation Requirements

90 Innovative Strategies, supra note 76, at 61.

91 523 U.S. 360, 1998 AMC 1403 (1998).

92 U.S. Const. art. I, § 9, cl. 5.

103 46 U.S.C.A. § 8103(a) (2007).

105 46 U.S.C.A. § 50501(a).

111 46 C.F.R. § 67.19 (2005).

113 46 U.S.C.A. § 12101(a); see also 46 C.F.R. 67.97.

2. Coast Guard Crew Requirements

1. Allocating Risk Between Tug and Tow

126 GAO Report, supra note 4, at 13 n.20.

129 See 46 U.S.C. § 8301 (2000).

138 Id. at 91, 1955 AMC at 905.

140 349 U.S. at 95, 1955 AMC at 908.

2. The Warranty of Workmanlike Performance

146 Id. at 200, AMC at 470.

151 Id., 1956 AMC at 12.

165 Ctr. for Mar. Studies, supra note 6, at 42.

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