Floating Cities

As a major portal to the Pacific and gateway to Alaska, Seattle has
recently emerged as a leading West Coast port of call for the luxury
passenger cruise ship industry. Over the past decade, the number of
cruise ships calling in Seattle has burgeoned from six vessels carrying
6,615 passengers in 1999 to 218 vessels carrying 875,433 passengers in
2009. This year, the Port of Seattle estimates that 223 luxury cruise
ships carrying a projected 858,000 passengers will sail from Seattle.
The projected 2010 annual business revenue generated by these luxury
cruise sailings is $425 million, and the industry will contribute $18.9
million to annual state and local taxes and support 4,447 local jobs.

Terminal Facilities Expansion

Celebrity
Cruises and Norwegian Cruise Lines berth at Pier 66, an 11-acre
facility on the downtown waterfront, for their weekly cruises to Alaska.
The Pier 91 terminal opened in 2009 and is home to Carnival, Holland
America Line, Princess Cruises and Royal Caribbean, all operating Alaska
voyages. Pier 91 also features a U.S. Customs desk, concierge service
and onboard airline check-in facilities. This terminal expansion has
allowed Seattle to compete with Vancouver, B.C., formerly the sole hub
of cruise traffic in the region.

Reducing the Carbon Footprint

The
Port of Seattle, in conjunction with the Port of Tacoma, commenced the
Puget Sound Maritime Air Emissions Inventory in 2004 to reduce the
carbon footprint of ship traffic. In 2005, the Port of Seattle, the
Environmental Protection Agency, the Puget Sound Clean Air Agency
(PSCAA) and Seattle City Light joined with Princess Cruises to install
the first shore power connection for a cruise vessel in Seattle. The
availability of shore power allows vessels at berth to turn off their
engines. In 2006, Holland America also installed a shore power
connection. According to the Port, shore power connections slash a
cruise ships greenhouse emissions by 29 percent during each berthing
operation.

While it is mandatory for all cruise ships not using
shore power to burn fuel with a sulfur content no greater than 1.5
percent, the PSCAA and the Port of Seattle launched an At Berth Clean
Fuels (ABC Fuels) program in January 2009, which pays participating
vessels that agree to utilize low sulfur fuel of no greater than 0.5
percent with a $2,250 incentive per port call. To date, at least one
luxury cruise line is participating in the ABC Fuels program.

The
Port of Seattle has recently instituted a plan to further reduce carbon
emissions and greenhouse gases. Starting Jan. 1, 2011, the Port will
prevent trucks older than model year 1994 from entering the terminal
area.

Protection of the Washington Marine Environment

Cruise
ships, which are in essence small floating cities, also present
environmental challenges to the navigable waters of Washington. In 2004,
the Washington Department of Ecology (WDOE), the Port of Seattle and
the Northwest Cruise Ship Association, representing nine major cruise
lines, executed a voluntary Memorandum of Understanding, which requires
cruise ships to implement procedures concerning the disposal of
wastewater in Washington waters that exceed federal standards.

The
agreement also prohibits the discharge of treated waste-water from
cruise ships within a half-mile of commercial or tribal shellfish beds
to prevent contamination. It also prohibits outright any discharge of
untreated wastewater, and limits the discharges permitted in the Olympic
Coast National Marine Sanctuary. Furthermore, cruise ships are required
to install advanced wastewater treatment systems that are certified and
periodically inspected by WDOE.

This is a sponsored legal report from Lane Powell PC. Katie Matison, a shareholder
at Lane Powell and chair of the firms London Practice Group, focuses
her practice on all aspects of marine litigation and transactions as
well as insurance coverage matters for the London Insurance Market. She
can be reached at [email protected] or at 206.223.7029.