US Customs and Border Protection (CBP) recently fully mitigated approximately $2.8 million in fines levied against two cruise ships for alleged violations of the Passenger Vessel Services Act.

In February 2004 two Carnival cruise ships departed from New Orleans for their regularly scheduled cruises in the Caribbean. While the ships were at sea, a collision occurred near the mouth of the Mississippi River, causing the US Coast Guard to close the river to all traffic. The river remained closed when the ships were scheduled to return. Carnival was forced to divert its ships to Gulfport, Mississippi and Mobile, Alabama to disembark the passengers, while passengers waiting to board in New Orleans were bussed to Gulfport and Mobile to embark on the next cruises. When the river was reopened, the ships returned to New Orleans.

The CBP levied $2.8 million in fines against Carnival's two ships for alleged violations of the Passenger Vessel Services Act. Under the act, a foreign-flagged vessel may not transport passengers between two US ports; vessels must leave from and return to the same port. Failure to do so results in a fine of $300 per passenger. Carnival's vessels were initially fined for diverting its vessels to Mobile and Gulfport and again fined for returning passengers to New Orleans who had embarked in Mobile and Gulfport.

Under the Passenger Vessel Services Act and Customs Mitigation Guidelines, a penalty imposed for violation of the act must be mitigated in full where the violation was not wilfully committed or the violation occurred as a result of a force of nature, the vessel being in distress or for safety or humanitarian concerns. In this case Carnival was forced to divert the cruises and disembark the vessels at alternative ports of call due to the river closure imposed by the US Coast Guard.

Carnival petitioned to mitigate the penalties and the CBP mitigated all fines associated with the first deviations to Mobile and Gulfport, but refused to mitigate the fines for the return voyages to New Orleans. Carnival filed supplemental petitions seeking reconsideration and negotiated with CBP officials on the most appropriate application of the Passenger Vessel Services Act under the circumstances. The fines were subsequently reduced to zero, as Carnival succeeded in persuading the authorities that it had no intention of transporting passengers between two US ports and did so only because of the unforeseen collision at the mouth of the river.

The CBP has since amended its guidelines to allow for mitigation of Passenger Vessel Services Act violations that occur as a result of port closures mandated by the US Coast Guard. For further information please contact Antonio J Rodriguez or Philip Brickman at Fowler Rodriguez Valdes-Fauli by telephone (+1 504 523 2600) or by fax (+1 504 523 2705) or by email (ajr@frvf-law.com or pbrickman@frvf-law.com).

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