Cruise lines, port cities oppose rule change

PORTLAND, Maine -- 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 ship lines 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.

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.

Customs and Border Protection acknowledges 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.

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."

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.