Notice of Inquiry Regarding Passenger Vessel Financial Responsibility, 4558-4560 [2010-1799]

Agencies

• Federal Maritime Commission

[Federal Register Volume 75, Number 18 (Thursday, January 28, 2010)]
[Notices]
[Pages 4558-4560]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-1799]


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FEDERAL MARITIME COMMISSION


Notice of Inquiry Regarding Passenger Vessel Financial 
Responsibility

December 3, 2009.
AGENCY: Federal Maritime Commission.

ACTION: Notice of Inquiry.

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SUMMARY: The Federal Maritime Commission is issuing this Inquiry to 
solicit information and comments concerning the benefits and burdens of 
the current Commission requirements by which passenger vessel operators 
establish proof of financial responsibility in the event of 
nonperformance of a contracted cruise from a U.S. port. Comments 
received from the public and interested segments of the passenger 
cruise industry will assist in determining whether or not the 
Commission should amend its regulations at 46 CFR part 540, subpart A.

DATES: Comments are due on or before February 10, 2010.

[[Page 4559]]


ADDRESSES: Address all comments concerning this Inquiry to:
    Karen V. Gregory, Secretary, Federal Maritime Commission, 800 North 
Capitol Street, NW., Washington, DC 20573-0001, E-mail: 
secretary@fmc.gov.

FOR FURTHER INFORMATION CONTACT: Sandra L. Kusumoto, Director, Bureau 
of Certification & Licensing, Telephone: (202) 523-5787, E-mail: 
skusumoto@fmc.gov.

SUPPLEMENTARY INFORMATION:
    The Commission administers Chapter 441 of Title 46 of the U.S. 
Code, entitled Evidence of Financial Responsibility for Passenger 
Transportation. 46 U.S.C. 44101-44106. As relevant, this Chapter 
requires operators of vessels having berth or stateroom accommodations 
for 50 or more passengers and embarking passengers at U.S. ports to 
evidence proof of financial responsibility to reimburse passengers for 
the water portion of their fare in the event of nonperformance (46 
U.S.C. 44102), and provide coverage in the event of death or injury to 
passengers or other persons on voyages to or from United States ports 
(46 U.S.C. 44103).
    In order to indemnify passengers for nonperformance of contracted 
cruises, passenger vessel operators (PVOs) must establish proof of 
financial responsibility (Nonperformance Coverage) in an amount 
determined by the Commission. Current Commission regulations require 
that Nonperformance Coverage be set at no less than 110 percent of the 
highest unearned passenger revenue \1\ of the applicant within two 
fiscal years prior to filing an application with the Commission. 46 CFR 
540.5-.6. The amount of Nonperformance Coverage required is presently 
capped at $15 million dollars. 46 CFR 540.9(j).
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    \1\ Unearned passenger revenue is defined as ``that passenger 
revenue received for water transportation and all other 
accommodations, services, and facilities relating thereto not yet 
performed,'' 46 CFR 540.2(i).
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    The $15 million ceiling for Nonperformance Coverage has been in 
existence since 1991, when it was raised from $10 million. The 
Commission is issuing this Notice of Inquiry (NOI) to gather 
information that will assist in assessing comprehensively the benefits 
or burdens that the Nonperformance Coverage requirement has on all 
sectors of the passenger vessel industry. Information derived through 
this Inquiry may determine whether changes to our program may be called 
for at this time. PVOs, ports, industry associations, credit and 
financial companies, sureties, guarantors, insurers, travel agents, 
cruise passengers and other interested parties are encouraged to 
participate by providing responses to the questions herein and 
information pertaining to the impact of Nonperformance Coverage.
    To promote maximum participation, the NOI questions will be made 
available on the Commission's Web site, https://www.fmc.gov. The NOI 
questions also may be obtained by contacting the Commission's 
Secretary, Karen V. Gregory, by telephone at (202) 523-5725, or by e-
mail at secretary@fmc.gov. In addition, non-confidential comments may 
be submitted as an attachment to an e-mail submission. These 
attachments must be submitted in Microsoft Word (2007 or prior 
version), Rich Text format (.rtf), or plain text (.txt).
    Some commenters may wish to include some commercially sensitive 
information as necessary or relevant, whether by way of explaining 
their experience or detailing in practical terms the impact of 
Nonperformance Coverage. Any such information should be identified as 
commercially sensitive by the filer and the document or relevant 
portions thereof must be marked as confidential. Confidential treatment 
must be specifically requested for those marked portions, and one 
additional copy of the comments with the confidential portions redacted 
must be provided along with the original and one copy of the complete 
comments. Confidential comments should not be submitted by e-mail. The 
Commission will provide confidential treatment to the extent allowable 
by law for submissions, or parts of submissions, for which the parties 
request confidentiality.
    While the Commission intends that this review of Nonperformance 
Coverage be as thorough as possible, there is no requirement that 
participants answer all NOI questions. Commenters are free to answer 
only those questions for which they have direct experience or specific 
views.
    The Commission accordingly invites written comments from interested 
parties responding to the following inquiries:

Notice of Inquiry Questions

A. PVOs' Cost of Complying With Nonperformance Regulations

    1. Do you expect your company's unearned passenger revenue to 
increase, decrease or remain the same over the next twelve to twenty-
four months? If you expect it to change, by what percent?
    2. Set forth a detailed description of your actual costs for 2008, 
and actual or projected costs for 2009, directly related to satisfying 
the FMC's PVO regulations for Nonperformance Coverage.
    3. With respect to passenger bookings and payments:
    (i) What is your company's policy with regard to passenger 
reimbursement in the event of nonperformance of a cruise?
    (ii) What is your company's booking policy regarding the timing and 
amount of booking deposit and for payment of any fare balance?

B. Adequacy of Nonperformance Coverage

    The Commission is interested in assessing whether Nonperformance 
Coverage remains adequate for the purpose of protecting cruise 
passengers. The following questions are addressed to all interested 
parties:
    4. What is your position with regard to the adequacy of the current 
ceiling of $15 million? Please provide a detailed explanation with your 
response.
    5. Should the Commission consider adjusting the $15 million cap 
periodically based on an inflation factor (i.e., Consumer Price Index)?
    6. Should the Commission consider alternatives to the current $15 
million cap? Please provide a detailed explanation with your response.
    7. If the $15 million cap is modified, what would be the likely 
benefits or burdens upon PVOs, related companies and the shipping 
public?
    8. What other methodologies could the Commission use to establish 
adequate coverage amounts as required by current regulations?
    9. Should the Commission consider legislative alternatives to the 
current Nonperformance Coverage requirement? If so, set forth a 
detailed response.

C. Practices of Sureties, Credit Card Companies and Others

    The Commission is interested in assessing whether and to what 
extent the practices of sureties, credit card issuers or other 
companies may affect the availability of Nonperformance Coverage. The 
following questions are addressed primarily to financial entities, but 
may be answered by PVOs or other interested parties:
    10. Have credit card companies added specific requirements for 
servicing PVOs?
    11. What are the factors credit card issuers use to assess a cruise 
line's creditworthiness or financial fitness? How does a credit card 
issuer determine whether to implement additional security (i.e., 
holdbacks, letters of credit, collateral)?
    12. What are the factors that sureties or guarantors use to assess 
a cruise

[[Page 4560]]

line's creditworthiness or financial fitness? Please describe the 
factors that affect premiums for passenger vessel operators. What 
indicators will cause an increase or decrease in premiums for bonds or 
guarantees?

Further Proceedings and Scheduling

    Following receipt of written comments, the Commission anticipates 
holding one or more hearings to receive public testimony from 
interested parties. The Commission will announce the dates and 
locations of such hearings by subsequent Order.

    By the Commission.
Karen V. Gregory,
Secretary.
[FR Doc. 2010-1799 Filed 1-27-10; 8:45 am]
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