Legal experts: Cruise ship deal is giveaway, disenfranchises voters

'One wonders if it was delivered whole to the town by APPLL's law firm'

BAR HARBOR, Aug. 17, 2024 - Three year-round island residents with deep legal experience in municipal contracts condemned the Town Council’s cruise ship management proposal which was finally released in full Wednesday night. One called it a “sham.”

The three, who are not acquainted with each other, shared a common refrain as expressed by Peter Scott of Bar Harbor,

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“It's striking how the town commenced this contract negotiation by offering the opposing parties everything they could possibly want.”

Scott is a contracts consultant for Marsh McLennan, the global strategy and risk-management advisory agency.

“It's clear these were written with the close cooperation of the affected industries. As a whole the documents struck me as so one-sided that I have to wonder who is representing the interests of Bar Harbor’s voters?” he wrote in comments shared with the QSJ.

Ignacio Pessoa, former city attorney of Alexandria, VA, with a population of 155,000, said in an interview:

“This council is, to my view, complicit with the cruise industry completely. I think that's why they're so anxious to rush this through.”

Pessoa, who retired Dec. 31, 2009 after 22 years of service, including 14 years as city attorney, is a resident of Mount Desert. Eben Salvatore, manager of the cruise ship business for Ocean Properties, is his neighbor.

“The rushed ordinance is a cunning mechanism to remove important procedural elements of accountability to the citizens,” he wrote in a comment to the QSJ.

A third legal expert, an year-round island resident who is a retired appellate judge from another state, wrote in an email, “This proposed contract hamstrings the town and treats the cruise lines so well that one wonders if it was delivered whole to the town by APPLL's law firm.”

Pessoa wrote, “A majority of voters should recognize that a so-called ‘contract’ negotiated between a complicit municipality and the cruise lines would be a sham designed to abdicate the Town's regulatory authority and negate the citizens' long-established right to control the exercise of that authority.”

Scott stated, “I do a lot of work with local governments in New York and help them negotiate financial service contracts … never seen anything like the draft contracts the council released.”

Pessoa added, “I rather suspect that the rushed ordinance to lift the existing disembarkation cap will meet the same fate at the hands of the voters as did Mount Desert's recent and rushed attempt to regulate vacation rentals.

“Regulatory decisions are constrained by settled principles of administrative law, in particular the ‘substantial evidence in the record’ and ‘arbitrary, capricious or abuse of discretion’ standards; contract decisions are not,” Pessoa stated. “In addition, of course, regulatory decisions under the zoning or land use ordinance are reviewable at the municipal level by the Board of Appeals; contract decisions are not.”

The retired appellate judge wrote, “Choosing a five-year contract over enforceable legislation gives the game away. It gets a failing grade in Local Government 101. Governments that really want to regulate potentially harmful behavior don't enter  into agreements with potential offenders; they make enforceable laws and see to it that the regulated parties obey them.”

Scott, whose wife Claire Fox is a newly appointed member of the appeals board, wrote the most detailed critique of the council ordinance and contract. His and Pessoa’s comments to the QSJ were unsolicited. The former judge was asked to comment on their written opinions.

“Aside from the change in the daily passenger cap from 1,000 to 3,200, many provisions stood out as unfair to Bar Harbor and its residents,” Scott wrote.

Here was his point-by-point critique:

• “The five-year contract term is stunning when coupled with the difficulty of terminating these contracts. There are many scenarios under which a cruise line’s contract should be terminated by the town for cause for events that may or not occur in Bar Harbor’s waters (negligence or reckless disregard for passenger safety, environmental malfeasance, change in ownership or reflagging in a country with lax regulations, etc.) but there is no right for the town to terminate the contracts other than by a long process involving a formal election by voters. Furthermore, Section 4 of the Cruise Line contract automatically extends each cruise line’s five-year contract for an additional year, every year beginning on the contract’s second anniversary (August 2026).

  “Are there any other contracts entered into by Bar Harbor that require a vote of the citizenry to terminate or modify?”

• “The grandfathering of reservations made prior to November 8, 2022 for dates through 2026 is another gift to the cruise lines. Despite the November 2022 vote, these ships still discharge passengers exceeding the 1,000 limit without apparent consequence. These larger ships with prior reservations would be exempt from the 3,200 disembarkation limit.  (Section 50-6 B(1)). Will the voters receive a list of these ships, their lower berth capacity and their arrival dates?”

• “Cruise Ship Free Days - For cruise ships that have previously booked dates that are “cruise ship free” days, they are asked to use “best efforts” to reschedule. Section 50-6(B)(1). This has no teeth and makes the promise of cruise ship free days dependent upon the Town Council’s enforcement of an unenforceable standard.

  The Harbor Master plays a role in future reservations (Section 5 of the Cruise Line contract), and if a cruise line wishes to dock on a cruise ship free day the Harbormaster is to use ‘reasonable efforts’ to reschedule ‘if possible.’ This language potentially guts the possibility of cruise ship free days. 

  The complete exemption for small cruise ships from the daily or monthly caps is also a gift to the industry. While smaller ships pose smaller problems, there is no reason to exclude their passengers from daily or monthly limits.”

• “Contract notices would go to Stephen Wagner (town attorney) at his Bangor office address. While I agree that the town’s hired attorney should be copied on contract notices involving Bar Harbor contracts, the town, not outside counsel, should be the primary recipient of notices under contracts to which it is a party.  I hope that this was just an oversight and not an effort to avoid Freedom of Access transparency by placing all such communications under the guise of attorney work product or pertaining to legal advice. I’m sure the Town Council or Town Manager would like to personally receive notices regarding the town’s contracts.

• “Penalties and Fines under Section 50-16 are minuscule given the revenues of the publicly traded cruise lines. Increasing the fines by a magnitude of 10 to 100 would be required to serve as a deterrent for the cruise lines. Ships can apparently anchor without a reservation, and the penalty for disembarking is a meager $1,500 – less than a dollar per passenger for larger ships. 

  What if Chapter 50 simply forbid a cruise ship that anchored without a reservation from disembarking passengers?  Or if the contract with the disembarkation facility prohibited the facility - on pain of contract termination - from disembarking passengers from a cruise ship for which they've been notified by the Harbor Master had no reservation.  That would put some teeth into the enforcement of the reservation system.

• “The cruise ship contract’s boilerplate provisions regarding its effective date, and its conflict and termination provisions are similarly one-sided.  While cruise lines agree to “stand down” in their thus-far unsuccessful litigation against Bar Harbor, the price for this perhaps unnecessary concession is much too high, and shows utter disregard for the intent of the voters, who strongly voiced a preference for  a significant reduction in cruise ship passengers.  

“While I understand that a permitting and contract system may have advantages over a land-use ordinance approach, these documents demonstrate that negotiating changes with the cruise lines and disembarkation facility owners will not produce the reduction in cruise ship passengers the voters demand. The approach can work but only if the town’s negotiators approach this as advocates for the voters rather than friends of the cruise industry.”

Pessoa also said Bar Harbor is squandering its advantage in a “home rule state” like Maine.

“Virginia is a ‘Dillon Rule’ state. Cities and Towns have only the authority that the legislature has expressly given them. Maine is exactly the opposite,” he said. “The Home Rule municipalities have all the authority unless it's specifically taken away.”

U.S. District Court Judge Lance Walker, in his Feb. 29 decision upholding Bar Harbor’s home rule against the lawsuit by APPLL (Association to Preserve and Protect Local Livelihoods), wrote:

“The Maine Constitution affords municipalities home rule authority. The inhabitants of any municipality shall have the power to alter and amend their charters on all matters, not prohibited by Constitution or general law, which are local and municipal in character.”

He also voiced skepticism over a similar agreement with cruise lines devised by former town manager Kevin Sutherland in July 2022 as only an instrument from the president of the Cruise Lines International Association and accepted by the council as part of a “negotiation,” which Walker put in quotes. Councilors Gary Friedmann and Joe Minutolo voted against Sutherland’s proposal, which was superseded by the citizens ordinance on Nov. 8, 2022.

“Although public pressure was growing, the Bar Harbor Town Council, ultimately, was not then constituted to provide the pressure relief that many citizens hoped for,” Walker wrote.

The council has scheduled only one public hearing, Aug. 27, for full airing of the most complicated issue in Bar Harbor history. There will be six items to be discussed, including the proposed repeal of the citizens ordinance Nov. 8, 2022 which capped passenger visitation at 1,000 a day.

“If I had drafted that ordinance, it would have had a phase-in period, so that there was some notice before it came into effect,” Pessoa said in a follow-up interview. “So I can't fault them for not enforcing it this year. But they're trying to rush it through before the citizens ever see the lifestyle benefits of a reduced thing, so it never occurs.

“Because I'm sure they're afraid that if it occurs, it'll never go away. The citizens will never agree to the higher numbers that council wants.”

Lead citizen petitioner Charles Sidman has filed suit in Maine Superior Court to challenge the council’s unilateral decision in March not to enforce Judge Walker’s decision one week after he ruled in favor of the 1,000-passenger cap. The council instead chose to allow ships booked by Sutherland up to the Nov. 8, 2022 vote instead of the deadline of Match 17, 2022 imposed in the citizens ordinance.

The council is expected to vote the same night of the hearing Aug. 27 to send the repeal and its replacement, Chapter 50 which uses contracts with cruise ships instead of the town’s land-use ordinance, to be placed on the November ballot.

The documents on the town website make up 45 pages. There are many blank pages so one must scroll through them to get to the next section.

Town Manager James Smith and members of the council refused to respond to opinions expressed by Scott and Pessoa.