Cruise ship proposal rejected

PORTLAND – A federal agency has failed to justify a proposal targeting foreign cruise ships visiting Hawaii that critics say would have altered cruise ship itineraries and imperiled tourism dollars and jobs, both in Hawaii and on the mainland, the White House ruled.

U.S. Customs and Border Protection filed the proposal late last year aimed at protecting U.S.-flagged cruise ships operating from Hawaii by reducing foreign ships’ time in the islands, but critics said it would have led to fewer cruise ship visits at mainland ports as well.

After public comments, a modified proposal was crafted, but it was rejected this week by the White House Office of Management and Budget.

The OMB, President Bush’s administrative arm, said Customs and Border Protection failed to demonstrate a compelling need for the changes. The agency also failed to show the cost and benefits of its proposal or show that it analyzed regulatory alternatives, OMB said.

It appeared that the matter was put to rest for the remainder of the Bush administration after OMB notified the Department of Homeland Security in a letter. All regulatory matters were to be submitted to OMB by June 1 “except in extraordinary circumstances.” There was no immediate comment from DHS on Friday.

The decision was greeted with relief by the American Association of Port Authorities and Cruise Lines International Association, which contended the sweeping change would have forced cruise ships to spend more time in foreign ports at the expense of U.S. ports that depend on tourism dollars from the ships and their passengers.

“There really wasn’t an economic justification for it, and we’re very happy to see the letter,” said Susan Monteferde of the American Association of Port Authorities.

Portland, which opened a $21 million cruise ship terminal this year, said the number of its cruise ship visits could have been cut by up to 80 percent under the original proposal. Amy Powers, director of CruiseMaineUSA, a coalition representing 12 Maine ports, said Maine officials and congressional delegation sent letters objecting to the proposal.

“In the end I think it was realized that the ruling as submitted made very little sense,” Powers said.

The proposal called for altering the definition of a coastwise cruise under the Passenger Vessel Services Act of 1886. It specifically targeted foreign-flagged cruise ships that sailed from the U.S. mainland to Hawaii after making a “touch-and-go” stop in Mexico to meet the existing regulations.

The proposal would have required foreign-flagged ships that begin and end their trips in a U.S. port to spend at least one day in foreign ports for every two days in U.S. ports, with the net effect of forcing foreign cruise ships departing California to spend less time in Hawaii.

After an outcry, it was modified to apply only to U.S. ports with a regularly scheduled service from a “large U.S.-flag” cruise ship. Hawaii is the only state that meets the description.

The company the rule was designed to protect, Miami-based Norwegian Cruise Lines America, used to have three U.S.-flagged cruise ships operating from Hawaii, but now has only one ship. NCL America said it sent the other two ships away because it couldn’t compete with rival foreign-flagged ships.

Hawaii Gov. Linda Lingle and California Gov. Arnold Schwarzenegger also opposed changing the rules.

For its part, Norwegian Cruise Line 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. Alan Yamamoto, vice president of Hawaii operations for NCL America, didn’t immediately respond to a request for comment Friday.