The Rockefeller bills and you

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Eben PeckViewing the cruise industry's "bill of rights" for passengers as an inadequate response to a recent spate of accidents, last month U.S. Sen. Jay Rockefeller (D-W.Va.), chairman of the Senate Committee on Commerce, Science and Transportation, introduced legislation that would give the federal government broad new regulatory powers over the cruise industry and impact the way travel agents sell cruises.

Given that travel agents book nearly 70% of cruise travel in a given year, ASTA and our industry have a significant stake in the debate over these bills, which have the potential to radically reshape the relationship between the cruise industry, travel agents and consumers.

Rockefeller's Cruise Passenger Protection Act of 2013 (S. 1340) would set strict new safety standards for cruise ships and includes the following provisions:

• Gives the Department of Transportation (DOT) one year to develop standards for how cruise lines summarize for prospective passengers the key terms in the passage contract. Ship operators would then have six months to post the standards on their websites and to include them in any promotional literature or advertising.

• Empowers the DOT to impose fines as high as $25,000 per day for violations of this passenger notification provision, rising to a $50,000 daily cap for "continuing violations." Individuals found "willfully" skirting the regulations would face fines as high as $250,000 as well as up to a year in prison.

• Requires the DOT to develop a consumer complaints hotline and website and empower it to investigate complaints and "refer any complaint ... to the Attorney General or relevant federal agency for action."

• Creates a DOT Advisory Committee for Passenger Vessel Consumer Protection to make recommendations to improve existing consumer protections, similar to the current Advisory Committee on Aviation Consumer Protection.

• Establishes a DOT director of victim support services, a cruise victim advocate who would provide assistance to victims onboard a cruise ship, make sure each victim is aware of his or her rights in international waters and has access to appropriate law enforcement officers.

Sen. Jay Rockefeller at the cruise oversight hearing.S. 1340 includes no mention of travel agents or any recognition of the role of intermediaries in the distribution of cruise travel, a notable omission given that the vast majority of cruise trips are booked by travel professionals.

Still, agents could be affected indirectly if the bill became law. Under S. 1340, cruise lines would be required to include plain-English summaries of passage contracts in "any promotional literature or advertising, through any medium of communication in the United States" and in "any electronic confirmation of the purchase of passage."

Failure to do so by "any person" could result in DOT fines of up to $50,000 per day or up to $250,000 in the case of willful violations. In the absence of clarifying bill language, we have to assume that responsibility for providing this notification would rest with the travel agent when trips are sold through the agency channel.

Given the DOT's aggressiveness in fining travel agencies for violations of aviation consumer protection provisions like code-share notification and full-price advertising, this proposed expansion of DOT powers into the realm of cruise sales should be cause for concern.

Moreover, this concern appears to be shared by some members of Rockefeller's committee, including Sen. Mark Begich (D-Alaska), who as co-chairman of the Senate Travel and Tourism Caucus understands and is strongly supportive of our industry.

Also, membership on the DOT Advisory Committee for Passenger Vessel Consumer Protection envisioned by S. 1340 is limited to cruise lines, "international industry-related associations," state and local governments, public-interest groups and other relevant federal agencies but not travel agents.

Reserving a slot for the travel agency industry on this committee would be a clear improvement to the bill.

A week after S. 1340 was introduced, Sen. Rockefeller introduced two additional bills that would scale back tax preferences for the cruise industry and otherwise increase cruise lines' tax burdens.

According to Rockefeller, S. 1449 would "close a tax loophole, currently exploited by the cruise industry, that has given cruise lines the ability to avoid paying U.S. income tax," while S. 1450 would require cruise lines to pay a 5% excise tax on the income they generate from using U.S. ports to start and finish voyages.

According to a Travel Weekly estimate, these two measures could cost the cruise lines almost $1 billion per year, based on 2012 annual reports ("Rockefeller introduces 2 bills to impose taxes on cruise lines," Aug. 12). 

While these bills would have no direct impact on travel agents, a significant increase in the cruise lines' tax burden could have a negative impact on consumer demand if the price of cruising were to increase.

Chairman Rockefeller is certainly well-positioned to push S. 1340 through his committee, but beyond that, its prospects are murky. Republicans are likely to resist such a broad expansion in the DOT's regulatory power, especially in the Republican-controlled House of Representatives.

All told, while the bill is likely to move at least part of the way through the legislative process and stay very much in the news, chances for enactment are slim.

Congress is currently in the midst of its August recess, so there will be no movement on S. 1340 until mid-September at the earliest. Between now and then, ASTA will be soliciting member feedback and working with industry and Congressional allies on the path forward. As we do so, Travel Weekly readers should rest assured that as the travel agency industry's trade association, we will work to protect your interests throughout this debate.

Please note that this issue will be discussed at the upcoming ASTA Global Convention (Sept. 16 to 19 in Miami) as part of the cruise line CEO panel featuring Richard Fain of Royal Caribbean Cruises Ltd., Kevin Sheehan of Norwegian Cruise Line and Tor Hagen of Viking Cruises.

If you haven't done so already, please register to attend at http://astaglobalconvention.org.  

Eben Peck is ASTA's vice president for government affairs. Contact him at [email protected].

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