Cruise exemption bolstered
By Derrick DePledge
Advertiser Washington Bureau
WASHINGTON — House and Senate negotiators have agreed to endorse an exemption to federal law so Norwegian Cruise Line could use three foreign-built ships operating under the U.S. flag on interisland cruises in Hawai'i, Rep. Neil Abercrombie said late yesterday.
The agreement likely means the exemption will survive as part of a federal spending bill for government operations this year. Lawmakers hope to complete their review of the bill and move it through the House and Senate by the end of the week. President Bush would then have to decide whether to sign or veto the legislation.
"It's a major boost for the Hawai'i economy and high-end tourism in particular,'' said Abercrombie, D-Hawai'i. "This provision is especially welcome at a time when the state is still trying to recover from the devastating effects of 9/11."
Sen. Daniel Inouye, D-Hawai'i, added the exemption to the Senate version of the bill but it was not included in the House version, so negotiators had to settle the issue in conference committee. Although the exact language was not available yesterday, an aide to Abercrombie said that key lawmakers from Florida and Alaska agreed to support the exemption as long as the three Norwegian ships did not operate in the Caribbean and the Gulf of Mexico or in Alaska markets.
Abercrombie and Inouye predicted that interisland cruises would bring several thousand jobs and millions in tax and tourism revenue to Hawai'i.
"The final legislative product protects (Florida and Alaska) interests and creates an opportunity for an expanded, first-class cruise operation in Hawai'i that will employ our own people at U.S. wages and observe every applicable U.S. law,'' Abercrombie said.
The Passenger Vessel Services Act requires foreign-flagged ships to make a foreign stop when operating between U.S. ports, a provision to help U.S. shipbuilders. Norwegian, for example, stops at Fanning Island in the Republic of Kiribati on cruises it offers in the Islands.
Inouye sought the exemption to salvage "Project America,'' a failed plan that provided federal loan guarantees so American Classic Voyages, which had operated interisland cruises for years, could order two newly built cruise ships from the Ingalls shipyard in Mississippi. But American Classic went bankrupt in 2001 and the project imploded, costing U.S. taxpayers more than $185 million and ending interisland cruises in Hawai'i.
Norwegian — based in Miami but part of Malaysia's Star Cruises — purchased a partially completed hull and parts for the second ship at Ingalls and has moved the material to a shipyard in Germany for construction. Inouye's and Abercrombie's exemption would allow Norwegian to use these two ships under U.S. flags in Hawai'i and reflag a third foreign-built ship in the Islands.
Inouye has said the vessels would have U.S. crews and be regulated by U.S. laws dealing with taxes, labor and environmental protection. A Norwegian spokeswoman has said that the cruise line would hire mostly from Hawai'i.
Sen. John McCain, R-Ariz., who has sparred with Inouye and Sen. Trent Lott, R-Miss., over Project America, criticized the exemption when it passed the Senate in late January. He said it would "grant new life to an already failed shipbuilding project that has cost the American taxpayer over $185 million, and give it to a foreign-owned corporation."
The International Council of Cruise Lines, an industry group that represents the leading cruise lines, including Norwegian, had backed a move to broaden the exemption so any cruise line could operate up to six foreign-built ships under U.S. flags in the Islands.
