Port rule could sink revenue source

A new interpretation of a 120-year-old U.S. maritime law could result in The City losing up to $42 million in annual cruise ship revenue, San Francisco Port officials said.

The 1886 Passenger Vessel Services Act requires foreign-owned passenger ships — which includes all but two of the major ocean liners operating in the world — must make a short stop in a foreign port sometime between departure and arrival in a U.S. port.

As of Nov. 21, the U.S. Customs and Border Protection is considering extending that short foreign visit into a mandatory 48-hour stay. That change would essentially derail all cruises ships from embarking on popular routes from San Francisco to Alaska or Mexico, said Peter Dailey, maritime manager for the Port of San Francisco.

“It would be utterly devastating, not just for San Francisco, but the entire West Coast,” Dailey said.

On excursions to Alaska from San Francisco, liners spend 84 percent of their trip based out of domestic ports, a time that would be greatly affected by the new law, said Gerry Roybal of the Port of San Francisco. On trips to Mexico, where liners make four stops in foreign ports, a 48-hour layover would extend a seven-day cruise into a 10-day excursion, making it unaffordable for many customers, Roybal said.

According to estimates by the port, San Francisco would lose $11 million in tourism revenue, $23 million in direct wages and $8 million in related business earnings if foreign-flagged ships were discouraged from coming to The City due to the new interpretation of the law. The port also estimates that 5,000 job assignments for longshoremen would be gone.

The proposal is an interpretative ruling within the Customs and Border Protection, said Aaron Ellis of the American Association of Port Authorities. The Customs and Border Protection opened the issue for public comment, subsequently resulting in a “deluge of feedback” said Ellis, which could force the department to consider an Economic Impact Report.

Set to gain from the new interpretation of the law are the two U.S-flagged cruise ships that operate within the Hawaiian Islands. Several Hawaiian politicians support the new rule interpretation, Ellis said.

Randy Obata, spokesman for one of the rule’s staunchest backers, Rep. Neil Abercrombie, D-Hawaii, said the new law would “help to level the playing field” for U.S.-flagged ships that must pay extra costs for American union workers.

wreisman@examiner.com

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