What is known as the Passenger Vessel Act (PSA) of 1886 (46 U.S.C. 289) states that “no foreign vessel shall transport passengers between ports or places in the United States, under penalty of $200 for each passenger so transported or landed.”
Over time, a number of exceptions have been made to the Jones Act, for example Canadian vessels may transport passengers between Rochester and Alexandria Bay, New York and between southern Alaska and U.S. ports until an American carrier enters the markets. Similarly, foreign vessels may transport passengers between Puerto Rico and the U.S. mainland as long as a U.S. carrier does not provide such service.
Foreign-flagged cruise ships may carry passengers from a U.S. port as long as they return them to the same port (a "cruise to nowhere"). Foreign vessels may also call at intermediate U.S. ports as long as no passenger permanently leaves the vessel at those ports and the vessel makes at least one call at a foreign port.
While the PSA prevents foreign cruise ships from carrying passengers directly from Alaska and the West Coast to Hawaii and from competing for Hawaiian inter-island cruise traffic, a considerable number of foreign cruise ships do visit Hawaii in any given year. American passengers on foreign cruise ships to Hawaii must board in another country—typically, Vancouver, Canada or Ensenada, Mexico. These ships cannot pick up a passenger in one U.S. port and drop off the passenger in another U.S. port. However, after arriving from Canada or Mexico, they may tour the islands and drop off passengers in Hawaii. They may then pick up new passengers, tour the islands, and return to Canada or Mexico.
In October 1997, federal legislation was passed that permits a person to operate a foreign-built cruise ship in the U.S. coastwise trade provided that the person had entered a binding contract for the delivery of two U.S.-built cruise ships. The first ship must be delivered no later than January 1, 2005, and the second ship must be delivered no later than January 1, 2008. Moreover, in Hawaii, only the existing cruise ship operator may operate a foreign-built ship among the islands unless a new U.S.-built cruise ship is placed into regular service outside of Hawaii. This legislation makes it possible to temporarily employ a foreign-built vessel among the Hawaiian Islands despite the Passenger Services Act while new U.S.-built cruise ships are constructed.