Cruise Lines International Association Sues Juneau Alaska

One year ago, Cruise Lines International Association (CLIA) filed a lawsuit (1:16-cv-00008-HRH) on behalf of their member cruise lines against Juneau, Alaska. Its members include 12 cruise lines: Carnival Cruise Lines, Celebrity Cruises, Crystal Cruises, Disney Cruise Line, Holland America Line, Norwegian Cruise Line, Oceania Cruises, Ponant Yacht Cruises and Expeditions, Princess Cruises, Regent Seven Seas Cruises, Royal Caribbean International, and Silversea Cruises, against the  City and Borough of Juneau,  Alaska (“CBJ”).

In the past year, Juneau has spent more than $283,000 in legal fees defending the case and has now added  another $100,000 to defend the legal action.

It is interesting to note, that less than a month ago,  the Juneau assembly voted 7-1 to exempt on board sales and services on cruise ships in port. The city Finance Department estimated the exemption would cost about $100,000 annually.

Court documents Cruise Bruise has attained, says that “The City and Borough of Juneau,  Alaska  assessed out-of-state cruise visitors entry fees, which  are used by CBJ to pay for projects that bear no relationship to costs created or services provided by CBJ to cruise ships calling in Juneau.

The entry fees produce revenues that exceed the expenses that CBJ incurs to provide services or facilities to cruise vessels; they were imposed without consideration of specific services being provided to cruise vessels; they have been used to fund future projects that provide no direct benefits to the passengers who actually pay the fee or to the vessels that transport the passengers; their proceeds have been appropriated to projects that do not have the legally-required relationship to services or facilities provided to cruise ships; and they discriminate against cruise visitors over other modes of transportation.

Plaintiffs allege that the entry fees are excessive and illegal under federal constitutional and statutory protections. Plaintiffs seek declaratory and injunctive relief barring the continued imposition of the entry fee in whole or in part. Since 1990, CBJ has assessed and collected a series of fees against cruise vessels and their passengers. Which has increased over the years.

In February 1990, CBJ enacted a port dues ordinance, enacted as Ordinance No. 89-52, which charged $0.05 per ton per vessel to fund capital improvements to port facilities.

Juneau Alaska Cruise Ships

Nine years later, on October 5, 1999, CBJ voters passed the Marine Passenger Fee initiative, Proposition 1, which charged a $5.00 entry fee per cruise ship passenger (“Marine Passenger Fee”) in addition to port dues. CBJ then adopted Ordinance No. 2000-01 am to codify the terms of the entry fee and to provide for the administration and collection of the fee. See City and Borough Code, Ch. 69.20, et seq.

In Apri1 2002, CBJ enacted Resolution No. 2150, a temporary port development fee that imposed a $1.73 fee per passenger for capital projects said to be port-related. By 2007, CBJ had increased this fee to $3.00 per cruise ship passenger (“Port Development Fee”), and in 2011, CBJ repealed its sunset date, making the tax permanent. See Resolution Nos. 2163, 2294b, 2423b-am, and 2552.

Since 2012, the CBJ has collected, from a per passenger tax separately imposed on cruise ships by the State of Alaska, an additional $5 per cruise passenger visiting CBJ on vessels greater than 250 passengers (the “Commercial Passenger Vessel Excise Tax”). See AS Sec. 43.52.230.

The Cruise Lines have objected and continue to object to CBJ’s misuse of the entry fees noted in paragraphs 18, 19, and 20 (collectively, the “Entry Fees”) on numerous occasions without relief.

The Cruise Lines members operate large cruise ships that enter Alaska waters while engaged in interstate and international commerce. The Cruise Lines operate vessels on the navigable waters of the United States while carrying passengers subject to the Entry Fees.

The Cruise Lines must collect the Entry Fees and remit them to CBJ at their own expense. In addition, the ordinance imposes accounting and record keeping obligations on the Cruise Lines, and the Cruise Lines are subject to penalties for late payment of the Entry Fees.

The Cruise Lines have been charged and have paid the Entry Fees each time their vessels have called at CBJ’s port since CBJ imposed the Entry Fees.

Cruise ship at the dock

The Entry Fees discriminate against cruise travel over other modes of transportation; passengers arriving in Juneau by air or ferry (including the Alaska State Ferry) are not assessed special entry fees to fund government services or projects of general community benefit, like those described more fully in paragraphs 28 and 29.

The Entry Fees discriminate against large cruise ships. Ships accommodating 20 or fewer passengers and ships without berths or overnight accommodations for passengers are exempted from paying the $5 per passenger Marine Passenger Fees. Vessels under 200 tons, noncommercial vessels, and state-owned ferries are exempted from paying the additional CBJ $3 Port Development Fee. Vessels under 250 passengers are exempted from paying the additional $5 per passenger Commercial Passenger Excise Tax received by the State of Alaska and appropriated to specific projects by the CBJ.

Revenues generated by the Entry Fees bear no reasonable relationship to the actual costs incurred by CBJ to provide services to the cruise vessels and the passengers paying the fees.

CBJ has spent the proceeds from the Entry Fees, or significant portions thereof, on activities which are unrelated to and/or which have not provided any benefits to passengers and vessels. One example is $10 million collected and allocated to build a man-made recreational island, elevated walkways, and infrastructure to support a whale statute located nearly a mile away from the cruise ship docks.

CBJ has also applied revenues raised by the aforementioned Entry Fees to a variety of other projects and expenses that provide general benefits to the community, but do not recoup costs incurred by CBJ in providing services to vessels and passengers. By way of example, CBJ has appropriated Entry Fees during the period of Fiscal Year 2001 to Fiscal Year 2016 for the following:

(a) $22 million to fund CBJ general government operating expenses;
(b) $11 million to fund projects within the CBJ roaded service area, which includes a number of projects that benefit CBJ generally and or provide no direct benefits to the vessels and cruise passengers;
(c) $2 million for city bus services where individual passengers already pay bus service fees; $594,000 for operations, maintenance, capital improvements, and expansion of the Juneau International Airport; and
(e) $447,000 for upgrades to a private dock that CLIA vessels and passengers are not able to utilize.

The persons against whom the Entry Fees are assessed and collected include citizens and resident aliens of the United States and foreign citizens, the vast majority of whom reside outside Alaska. Some of these passengers will not visit Alaska again, and they therefore have no interest in and derive no benefit from projects that CBJ may build or complete in the future.

From Fiscal Year 2012 to Fiscal Year 2016, CBJ has levied against and collected from Cruise Lines over $35 million. During the same time, CBJ also collected over $20 million in State Passenger Fees from the State of Alaska intended to support local harbor infrastructure. Moreover, CBJ annually collects approximately 18 to 20 percent of all local sales taxes from visitors (the overwhelming amount of visitors are cruise passengers) to Juneau and appropriates these funds to support general government services and infrastructure.

Plaintiffs and their Cruise Line members have been damaged and continue to be damaged by the wrongful imposition and collection of the Entry Fees.”

I think it would be safe to say, the cruise lines are not making any friends among Juneau, Alaska’s 32,406 citizens,  as they drain the city coffers with this long drawn out legal action. But, the friendship ended back in 1999 when Alaska realized the cruise ships were deliberately polluting their ports and the ocean. On the flip side, the cruise lines may want to rethink calling at the cruise port.  There has been a profound change in crime in Juneau, recently, which may make the city much less desirable as a cruise ship port. Crime and the threat of violence has been a reason cruise lines pulled out of other cities, such as Acapulco, Mexico; Istanbul, Turkey;  Incheon, South Korea and Busan, South Korea.

Juneau, Alaska Government Improvements

The Juneau, Alaska government website states, “Juneau has two cruise ship docks located in the downtown waterfront. There are also two private cruise ship docks in the area. Together they serve nearly 1 Million passengers a season (May through September). The current city owned docks provide berthing for one ship up to 800 feet in length and one Panamax ship up to 1,000 feet in length.

Public amenities in this area include a pedestrian promenade, visitor center, bus staging, public parking, and a Port/Customs Building housing the Port of Juneau Field Office and the offices of the US Customs and Border Protection. All of these facilities have been built within the last five years which provide a safe, efficient, and pleasant experience for visitors and locals alike. Other amenities nearby include a grocery store, restaurants, gift shops, coffee shops with wifi, a public library with public computers, a post office, payphones, and public transportation.

Improvements in this area is entering the final phase which will construct two new floating berths capable of handling one Panamax ship up to 1,000 feet in length and one post-Panamax ship up to 1,100 feet in length. Construction of this project will be in two phases with Phase I (south berth) commencing in late September 2015 and completed in May 2016. Phase II (north berth) will begin construction in late September 2016 and be complete by May 2017.”

2016 Cruise Ship Friends of the Earth Report

Juneau Alaska Contentious Cruise Industry History 

October 1999, voters in Juneau, Alaska, approved by a 5-to-2 ratio an initiative to charge each cruise ship passenger $5 for visiting their city. The result came three months after a guilty plea by the Royal Caribbean International cruise line to charges of dumping pollutants into Alaskan waters.

Juneau Mayor Egan said that despite apologies to three southeastern Alaska cities by the president of Royal Caribbean, the residents remained outraged. The cruise line, which agreed in court to pay $18 million in fines, pleaded guilty to polluting coastal waters around the United States; this included dumping dry-cleaning chemicals and other toxic wastes into a channel within the Juneau city limits and dumping oily bilge water into a canal between Skagway and Haines.

The fine was so large because the crew lied to the US coast guard when asked about the slicks trailing its ships. It also comes after evidence was found that it had indulged in a fleet-wide conspiracy to dump oil into US coastal waters.

Resources: 

Video: Time to Explore Juneau! Alaska Cruise Travel Vlog