Green Groups Call on Treasury Department to Bar Cruise Companies From Stimulus Package

As the U.S. House of Representatives passed a sweeping $2 trillion coronavirus stimulus package on Friday, March 27, which President Donald Trump is expected to sign into law later today, green groups Stand.earth and Friends of the Earth US pointed out that the text of the bill excludes all three major cruise companies from any loans and loan guarantees because the companies claim their foreign workforce as employees, not contractors, in annual Securities and Exchange Commission filings. The groups called on the U.S. Department of the Treasury to enforce the exclusion of cruise companies from the stimulus package.

See page 517 of the final text of the bill for the section on "Loans and loan guarantees": https://drive.google.com/open?id=1clHOO4LLtO4tmV6shRI0lVjdoFyBDO7n

"The final text of the stimulus bill unfortunately makes no reference to where businesses are incorporated, only that they must be 'created or organized' in the U.S. or under U.S. laws to qualify for loans or loan guarantees. With the headquarters for cruise majors Carnival Corporation, Royal Caribbean, and Norwegian all in Miami, Florida, these corporations could certainly try to argue they are 'organized' within the U.S.," said Kendra Ulrich, Shipping Campaigns Director at Stand.earth.

The legislation specifies that 10 days after it becomes law, the Treasury will publish guidelines on application requirements and how to get loans. Based on the language in the aid package stipulating that aid is limited to companies created or organized in the U.S. with a majority of workers based in the U.S., many media outlets, including the Wall Street Journal, concluded that cruise companies do not qualify because of their massive foreign workforce.

Text in the stimulus bill says eligible businesses must have 'a majority of its employees based in the U.S.' However, the green groups point out that it isn't clear whether cruise companies could attempt to meet this standard, despite the fact that most ship-based employees are from foreign countries and work on fixed-term contracts.

"Given their law-breaking track record, it is plausible that these foreign cruise corporations could attempt to characterize their ship-based employees as contractors in order to qualify for a loan or loan guarantee. In that case, since the three cruise majors are all headquartered in the U.S., it is likely they could argue the vast majority of their 'employees' are in the U.S. and the rest are foreign contractors. We are calling on the Treasury Department to issue a ruling enforcing the exclusion of cruise companies from the stimulus package," said Ulrich.

In its 2019 annual report to the SEC, Carnival Corporation claimed an average of 92,000 employees onboard its 104 ships, including crew members and officers. Carnival's shoreside operations have an average of 12,000 full-time and 2,000 part-time/seasonal employees, including seasonal employees in Alaska. In the same filing, Carnival says it sources its shipboard officers primarily from Italy, the UK, the Netherlands, Germany and Norway, with the remaining crew positions sourced from around the world, with the largest contingent from the Philippines, Indonesia and India.

"The nonessential luxury cruise industry has for decades violated national and international environmental laws and avoided compliance with U.S. labor laws by hiring the majority of its ship-based crew members on limited-term contracts from developing countries.The industry has also avoided paying its fair share of U.S. taxes by incorporating overseas and flagging its vessels in foreign countries. U.S. federal government support to prop up foreign interests during the midst of a national crisis is a gross violation of the public trust. Our government must put the interests of the people before polluting foreign corporations during this crisis," said Marcie Keever, oceans and vessels program director at Friends of the Earth.

President Trump has long-standing ties to the cruise industry and has stated his interest in providing it with funding. Trump is close friends with former Carnival CEO Micky Arison, who was reportedly one of the sponsors of President Trump's reality TV show "The Apprentice."

"Despite outstanding questions about whether cruise companies may try to qualify for loan guarantees, the fact that there is no specific carve out for the cruise sector in this stimulus package, as there is for airlines, is a huge win for environmental groups who have been sounding the alarm over polluting, foreign cruise companies receiving U.S. government support during a national crisis," said Keever.

This stimulus package is likely to be the first of several attempts to revitalize the weakened economy, and green groups expect an ongoing fight to ensure foreign cruise corporations do not receive U.S. government support during this crisis.

Last week, Stand.earth and Friends of the Earth US sent a letter to Congressional leaders opposing any bailout to the rule-breaking cruise industry during the coronavirus crisis, asking leaders to instead focus on providing relief to impacted workers and affected communities.