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Federal rules threaten U.S. cruise ports

Cruise Ship Rules
The Explorer of the Seas cruise ship backs into the Maine State Pier in Portland, Maine. Because of a proposed change in federal rules, the city that's banking on cruise ships and their passengers to pump millions of dollars into its economy is now wondering how many, if any, cruise ships will be calling this summer.Joel Page / AP
/ Source: The Associated Press

Portland's gleaming, $21 million terminal for cruise ships and ferries will open this spring. Another $7 million berth built to accommodate the world's largest cruise ships will follow next year.

There's one problem.

Because of a proposed change in federal rules, the city that's banking on cruise ships and their passengers to pump millions of dollars into its economy is now wondering how many, if any, cruise ships will be calling this summer.

The U.S. Customs and Border Protection proposal would require foreign-flagged cruise ships that depart from a U.S. port to spend 48 hours in a foreign port. It would also require them to spend more than 24 hours in a foreign port for every two days in a U.S. port.

More time in foreign ports would mean less in U.S. ports, and fewer tourists to spill out of the ships and spend money in places like Portland.

"It could be potentially devastating. There's no question about that," said Jeff Monroe, the city's transportation director.

The proposed change is aimed at helping U.S.-flagged cruise ships based in Hawaii to compete against foreign cruise ships sailing from California by reducing the foreign ships' time in the islands. It would close a loophole that allowed foreign-flagged ships to sail from U.S. ports to Hawaii by stopping briefly in Mexico on the way.

Critics say the sweeping change will imperil hundreds of millions of dollars in revenues and port improvements on the mainland U.S.

"They've sunk all of this money into cruise facilities and now the government is changing the rules," said Aaron Ellis, communications director for the American Association of Port Authorities, one of many groups trying to change the rules.

The Cruise Lines International Association, which represents 24 operators including Carnival Cruise Lines, Celebrity Cruises, Holland America Line and Royal Caribbean International, warns that about 10 million U.S. vacationers stand to have their cruises altered or canceled unless the federal proposal is changed.

In Portland, Monroe predicts that up to 80 percent of cruise ships would have to alter their itineraries. To meet the rules, they might drop Bar Harbor and Portland from their summer and fall cruises on the East Coast.

Together, the two Maine ports accounted for 120 cruise ship stops last year. More than 150,000 tourists disembarked from the ships, spending money in shops, dining in restaurants and taking shore excursions.

Other U.S. ports would be affected. Key West, Fla., for example, could get skipped altogether by cruise ships traveling from Florida's mainland to the Caribbean. And ships departing from Seattle could be forced to spend more time in British Columbia and less time in Alaska.

Alaska is one of the world's top cruise destinations, with tourists exploring the vast glaciers, towering mountain peaks and pristine waters.

"It would be tough to sell an Alaskan cruise if they could only come for one day," said Andrew Green, the Juneau port manager for Cruise Line Agencies of Alaska. Juneau alone would lose an estimated $68 million in direct spending from cruise ships in one summer.

Customs and Border Protection acknowledges that it didn't foresee all of the potential ramifications of the change, which was intended to protect two Norwegian Cruise Line ships that fly the U.S. flag in Hawaii. Rival foreign-flagged competitors based in Los Angeles and San Diego stop briefly in Ensenada, Mexico, before traveling to Hawaii.

The agency's solution to help NCL America was a new interpretation of the 122-year-old Passenger Vessel Services Act, a federal law that forbids foreign-flagged vessels from transporting passengers directly between U.S. ports. To meet the federal requirement, those ships must make a foreign port call as part of their cruise itinerary.

As it stands, foreign-flagged cruise ships traveling from Los Angeles and San Diego to Hawaii make a brief stop in Ensenada — a "touch and go" — before continuing to Hawaii.

The agency's new interpretation defines a foreign port call as a 48-hour layover, putting a crimp in the itinerary of foreign-flagged ships.

The change was proposed in November and the agency declined to extend the comment period. Because of the timing, there was meager public outcry, Monroe said. "This happened very quietly and right in the middle of the Christmas shopping season," he said.

Glen Vereb, chief of cargo security, carriers and immigration for Customs and Border Protection, said the agency is reviewing more than 1,000 comments, many opposed to the change.

"The door's wide open right now. I'm not quite sure where we're going to end with this, but people have certainly made their opinions loud and clear," he said. "We're taking all of those opinions into account here in making our final rule."

John Shively, Holland America Line's vice president for government and community relations in Alaska, is not sure his company has a fallback plan.

"I do think people are hopeful that enough commotion was raised that the federal government will look at it again," said Shively.

For its part, Norwegian Cruise Lines hasn't backed down from its position that something needs to be done to protect its U.S.-flagged operation in Hawaii.

NCL America's U.S.-flagged ships are at a competitive disadvantage because they're subject to U.S. taxes and labor laws. Other major cruise ship companies fly the flags of countries like the Bahamas, Panama and Bermuda.

But NCL America supports a clarification of the proposed change to make clear that it applies only to the Hawaii market, said Alan Yamamoto, vice president of Hawaii operations for NCL America, in Honolulu.

Maine Sen. Susan Collins, ranking Republican on the Senate Homeland Security Committee, said she's confident the agency will revise the rule. If not, she'll ask for hearings.

"It would kill the fledgling cruise ship business in Maine if this were to go into effect, and I'm determined to ensure that it doesn't," she said.