$236 Million Cruise Ship Deal Criticized

Carnival does not want to see that tax status jeopardized just because three major ships are clearly operating in the United States. After it won the FEMA bid, Carnival appealed to Treasury Secretary John W. Snow for a waiver of U.S. taxes. "We do not want to jeopardize our tax exemption, nor do we want to interrupt our relief efforts for failure to secure this assurance from the Treasury Department," wrote Howard Frank, Carnival's chief operating officer.

Cruise line council President Crye said the company will reduce its billings under the contract by the amount of income taxes forgiven. The waiver would spare Carnival and its employees the paperwork of filing tax returns.

But critics say Carnival deserves to be treated no differently than a hotel housing relief workers under a FEMA contract. "Carnival should be contributing to the relief effort just like all other taxpayers are," McIntyre said. "Why should they be singled out for special treatment, just because they've been so good at tax avoidance in the past?"

Treasury spokesman Taylor Griffin said the matter is under review.

But Congress's main focus remains on cost and how the Carnival contract came to pass. After a one-day competition, Sealift Command had bids from 13 ships, but only four met FEMA's requirements, which included full meal service, between-meal snacks, linen and maid service, medical support, even prescription refills. Four ships -- the Ecstasy, Sensation and Holiday, all owned by Carnival, as well as the ferry the Scotia Prince -- landed the contracts.

The ships are not holding nearly the number of people FEMA had expected. Many evacuees said they saw the ships as a dead end, far away from any job or potential new life. The Ecstasy and Sensation have become the homes of New Orleans first responders who have stayed at their posts, said FEMA spokesman James McIntyre. At the peak, the ships did house around 2,000 such workers and their families.

The Ecstasy and Sensation had to set sail for safer seas as Hurricane Rita rolled in. They re-docked Monday. By Tuesday morning, 625 were aboard the Ecstasy, a fraction of the 2,544 passengers once registered. An additional 820 were aboard the Sensation, down from 2,579.

And those ships have fared better than the Holiday, docked in Mobile, Ala., with 342 on board. FEMA had hoped for 1,800. McIntyre said the ship has been waiting for repairs to the Mississippi port of Pascagoula, where more evacuees are expected to board. FEMA expects the Holiday to steam for Pascagoula this week, McIntyre said.