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Cabotage, explanation & application specifically for Hawaii

 

A new thrust to enforce US cabotage law

With NCL America’s struggling to make a go of their Hawaiian itinerary ships U.S. officials are to crack down on foreign-flag Hawaii cruises seen to be in flagrant violation of cabotage law.

Under the new proposals, sailings to Hawaii that make only cursory stops in non-U.S ports like Ensenada, Mexico, will be viewed as violating the Passenger Vessel Services Act. Under PVSA, the foreign stop must be ‘a legitimate object of the cruise.’ PVSA violations levy a fine of $300 per passenger.

Apart from the threat to their Hawaii itineraries, cruise operators appear concerned the crackdown could potentially impact a much wider range of  sailings originating in the U.S., particularly those to Alaska where brief stops are made in a Canadian port.

Foreign-flag ships already have tremendous flexibility in cruising from U.S. ports but when they  went to one-hour, middle of the night, Ensenada port calls in order to circumvent the PVSA and compete against the U.S.-flag ships in Hawaii they overstepped the mark and the Administration has called them on it and is taking steps to keep it from happening in the future.

Alarmed by the "Pride of Hawaii’s" withdrawal from inter-island service with a loss of 1,100 crewmember jobs which NCL America blames mainly on foreign-flag competition from the U.S. West Coast,  the U.S. Maritime Administration asked Customs and Border Protection (CBP) to ensure the enforcement of the PVSA.

CBP in August notified the Cruise Lines International Association and two Hawaii operators of its Ensenada concerns. It is understood that some ships may have changed their practices after the notice. CLIA on Wednesday said it is not commenting on the issue, and individual lines have not commented on the issue.

CBP is proposing that a stop at a foreign port is not ‘a legitimate object of the cruise’ unless the stop lasts at least 48 hours, or, the amount of time spent at the foreign port is more than 50% of the total time spent at the U.S. ports of call and the passengers are permitted to go ashore in the foreign port.

Under CBP’s proposed interpretive rule, ‘any cruise itinerary that does not include a foreign port call that satisfies each of these three criteria constitutes coastwise transportation of passengers,’ in violation of the PVSA.

While the intent of the U.S. action limits the debate to Hawaii – where there is a U.S.-flag operation to defend – public comments filed by CLIA and the American Association of Port Authorities indicate concerns the new interpretation could be extended to other cruise regions.

In remarks to CBP, CLIA and AAPA both seek time beyond the 30-day comment period, which ends Dec. 21. CLIA said the August letter from CBP did not lay out the ‘rigorous criteria’ for allowable Hawaii cruises established subsequently and stated the language of the proposed interpretation ‘could be read to affect virtually all cruise itineraries from U.S. ports.’

AAPA commented that Customs is laying out ‘radical changes to the U.S. cruise industry that would have serious effects on the U.S. port industry.’

CBP’s decision to require a 48-hour stay in a foreign port leaves room for debate since cruises seldom spend more than a day in each port anywhere in the world. Also, historically, ‘technical’ calls have been allowed in some circumstances on other itineraries – but in those cases there may not be U.S. interests to defend.

NCL America in a statement voiced its support for the proposal and the efforts of CBP and MARAD to ‘help realize the goals’ of the 2003 Hawaii Cruise Ship Initiative – the enabling legislation that allowed NCL to reflag foreign-built ships for Hawaii service. Under that bill, NCL America is limited to Hawaii and cannot operate coastwise to Alaska, for example.

NCL America noted it has invested more than $1.3bn ‘in the effort to revitalize America’s cruise industry’ and is subject to U.S. taxation and employment laws while providing more than 4,000 seagoing jobs.

Hawaii Sen. Daniel Inouye’s office did not immediately respond to requests for comment. A Seafarers International Union spokesman also said he had no immediate comment.

Interpretation of the PVSA over decades has been a ‘political football,’ according to an industry source with knowledge of the issue. If foreign-flag operators are now openly circumventing the law, that needs to be addressed, he opined. ‘Very few opportunities exist for U.S.-flag operators to provide service,’ he said. ‘The Hawaiian Islands business deserves to be looked at. I’m surprised it hasn’t been done before.’

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