Passenger Vessel Financial Responsibility, 65020-65025 [2020-21957]
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Federal Register / Vol. 85, No. 199 / Wednesday, October 14, 2020 / Proposed Rules
the opportunity to comment on EPA’s
proposal.
development of any subsequent
proposed rulemaking.
VII. Statutory and Executive Order
Reviews
Under Executive Order 12866 (58 FR
51735, October 4, 1993) and Executive
Order 13563 (76 FR 3821, January 21,
2011), this action was submitted to the
Office of Management and Budget
(OMB) for review. Any changes made in
response to OMB recommendations
have been documented in the docket for
this action. Because this action does not
impose or propose any requirements,
and instead seeks comments and
suggestions for the Agency to consider
in possibly developing a subsequent
proposed rule, other statutory and
Executive Order reviews that apply to
rulemaking do not apply to this action.
Should EPA subsequently determine to
pursue a rulemaking, EPA will address
the statutes and Executive Order as
applicable to the rulemaking.
Nevertheless, the Agency welcomes
comments and/or information that
would help the Agency to assess any of
the following: The potential impact of a
rule on small entities pursuant to the
Regulatory Flexibility Act (RFA) (5
U.S.C. 601 et seq.); potential impacts on
federal, state, or local governments
pursuant to the Unfunded Mandates
Reform Act ((UMRA) (2 U.S.C. 1531–
1538); federalism implications pursuant
to Executive Order 13132, entitled
Federalism (64 FR 43255, November 2,
1999); availability of voluntary
consensus standards pursuant to section
12(d) of the National Technology
Transfer and Advancement Act of 1995
(NTTAA), Public Law 104–113; tribal
implications pursuant to Executive
Order 13175, entitled Consultation and
Coordination with Indian Tribal
Governments (65 FR 67249, November
6, 2000); environmental health or safety
effects on children pursuant to
Executive Order 13045, entitled
Protection of Children from
Environmental Health Risks and Safety
Risks (62 FR 19885, April 23, 1997);
energy effects pursuant to Executive
Order 13211, entitled Actions
Concerning Regulations that
Significantly Affect Energy Supply,
Distribution, or Use (66 FR 28355, May
22, 2001); Paperwork burdens pursuant
to the Paperwork Reduction Act (PRA)
(44 U.S.C. 3501); or human health or
environmental effects on minority or
low-income populations pursuant to
Executive Order 12898, entitled Federal
Actions to Address Environmental
Justice in Minority Populations and
Low-Income Populations (59 FR 7629,
February 16, 1994). The Agency will
consider such comments during the
List of Subjects in 40 CFR Part 257
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Environmental protection, Coal
combustion products, Coal combustion
residuals, Coal combustion waste,
Disposal, Hazardous waste, Landfill,
Surface impoundment.
Andrew Wheeler,
Administrator.
[FR Doc. 2020–22058 Filed 10–13–20; 8:45 am]
BILLING CODE 6560–50–P
FEDERAL MARITIME COMMISSION
46 CFR Part 540
[Docket No. 20–15]
RIN 3072–AC82
Passenger Vessel Financial
Responsibility
Federal Maritime Commission.
Advance Notice of Proposed
Rulemaking (ANPRM).
AGENCY:
ACTION:
The Federal Maritime
Commission (Commission) is issuing
this ANPRM to seek comment on
potential regulatory changes to its
passenger vessel operator financial
responsibility requirements. These
changes were recommended in an
Interim Report issued by the Fact
Finding Officer in Commission Fact
Finding 30: COVID–19 Impact on Cruise
Industry.
DATES: Submit comments on or before
November 13, 2020.
ADDRESSES: You may submit comments,
identified by Docket No. 20–15, by the
following methods:
• Email: secretary@fmc.gov. For
comments, include in the subject line:
‘‘Docket No. 20–15, Comments on PVO
Financial Responsibility Rulemaking.’’
Comments should be attached to the
email as a Microsoft Word or textsearchable PDF document.
Instructions: For detailed instructions
on submitting comments, including
requesting confidential treatment of
comments, and additional information
on the rulemaking process, see the
Public Participation heading of the
SUPPLEMENTARY INFORMATION section of
this document. Note that all comments
received will be posted without change
to the Commission’s website, unless the
commenter has requested confidential
treatment.
Docket: For access to the docket to
read background documents or
comments received, go to the
Commission’s Electronic Reading Room
SUMMARY:
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at: https://www2.fmc.gov/readingroom/
proceeding/20-15/.
FOR FURTHER INFORMATION CONTACT:
Rachel E. Dickon, Secretary; Phone:
(202) 523–5725; Email: secretary@
fmc.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
II. Background
A. PVO Program
B. Fact Finding 30
III. Proposed Changes and Request for
Comments
A. Defining Nonperformance of
Transportation
B. Process for Obtaining Refunds From
PVO Instruments After Nonperformance
of Transportation
1. General
2. Deadline for Submitting Refund
Requests
3. Deadline for Refund Payment
4. Form and Amount of Refund Payment
5. Publishing Information on How To
Obtain Refunds
C. Passenger Cancellations
IV. Public Participation
V. Rulemaking Analyses and Notices
I. Executive Summary
Before a passenger vessel operator
(PVO) may arrange, offer, advertise, or
provide transportation on a vessel, the
PVO must file with the Commission
evidence of responsibility to indemnify
passengers in the event of
nonperformance of transportation.1
Satisfactory evidence includes a copy of
a bond, insurance, guaranty, or escrow
agreement meeting the Commission’s
requirements in 46 CFR part 540. The
Commission reviews the PVO’s
submission and if it meets the
Commission’s requirements, it will
issue the PVO a Certificate of Financial
Responsibility for Indemnification of
Passengers for Nonperformance of
Transportation (Certificate
(Performance)).2
Following the arrival of Coronavirus
disease 2019 (COVID–19) in the United
States, the Centers for Disease Control
and Prevention (CDC) issued a ‘‘No Sail
Order and Suspension of Further
Embarkation,’’ (CDC No Sail Order)
causing PVOs to cease all operations
and raising questions regarding
passengers’ ability to obtain refunds of
monies paid for transportation
disrupted by COVID–19. In response,
the Commission initiated Fact Finding
30: COVID–19 Impact on Cruise
Industry, on April 30, 2020.
The Fact Finding Officer issued an
Interim Report on PVO Refund Policies
1 46
2 46
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U.S.C. 44102; 46 CFR part 540, subpart A.
CFR 540.7.
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on July 27, 2020, concluding that clearer
guidance is needed in determining
whether a passenger is entitled to obtain
a refund if a PVO cancels a voyage,
makes a significant schedule change, or
significantly delays a voyage.3 The FactFinding Officer proposed, among other
things, that the Commission provide a
clear interpretation of nonperformance
of transportation and modify the
appropriate provisions of the
Commission’s PVO regulations to make
clear how passengers may obtain
refunds under the PVOs’ financial
responsibility instruments filed with the
Commission. The Commission voted on
August 10, 2020, to initiate a
rulemaking to implement the
recommended changes.
The Commission is requesting
comment on these recommended
changes and their effects on PVOs and
passengers. In addition to general
comments, the Commission is
requesting focused comment on the
issues identified below in section III for
each of the recommended changes.
II. Background
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A. PVO Program
On November 6, 1966, Congress
enacted Public Law 89–777. Section 2 of
the statute (codified at 46 U.S.C. 44103)
requires owners and charterers of
vessels having berth or stateroom
accommodations for 50 or more
passengers, and embarking passengers at
United States ports, to establish
financial responsibility to meet any
liability incurred for death or injury to
passengers or other persons on voyages
to or from United States ports. Section
3 of the statute (codified at 46 U.S.C.
44102) requires persons arranging,
offering, advertising, or providing
passage on such vessels to establish
financial responsibility for
indemnification of passengers for
nonperformance of transportation. The
Commission published implementing
regulations at 46 CFR part 540 in 1967.4
Under this program, the Commission
issues two types of certificates to PVOs
of vessels that: (1) Have berths for 50 or
more passengers; and (2) embark
passengers from U.S. ports. The first
type of Certificate (Performance) is
issued by the Commission when a PVO
provides the Commission with
acceptable coverage to satisfy liability
incurred for nonperformance of
3 See Fact Finding Investigation No. 30: COVID–
19 Impact on Cruise Industry, Interim Report:
Refund Policy, at 11–13 (July 27, 2020) (Fact
Finding 30 Interim Report or Interim Report).
4 32 FR 3986 (Mar. 11, 1967) (establishing
regulations governing nonperformance coverage);
32 FR 7282 (May 16, 1967) (establishing regulations
governing casualty coverage).
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transportation up to the amount of
unearned passenger revenue (UPR) held
by the PVO or the monetary cap set in
the Commission’s regulation. Such
coverage may be in the form of
insurance, a guaranty, a surety bond, or
escrow agreement (collectively referred
to as financial responsibility
instruments).5 The coverage is used to
reimburse passengers when the PVO
fails to perform cruises as contracted
and has taken no further actions to
refund passengers.6 The second type of
Certificate (Casualty) is issued by the
Commission when a PVO provides the
Commission with acceptable coverage to
satisfy any liability incurred for death or
injury during a voyage, as provided in
the regulations and statute.
There have been few changes to the
regulations in part 540 since its
inception. Changes have included
several increases to the monetary cap for
required performance coverage under
section 44102, the elimination of the
self-insurance option for PVOs, some
limitations on the types of entities
acceptable as guarantors, and the
elimination of certain sliding-scale
provisions as to the amount of coverage
required. Most recently, the
Commission increased the cap on
required performance coverage in two
annual steps, from $15 million to $22
million in 2014, and then from $22
million to $30 million in 2015.7 Since
2015, the cap has been adjusted for
inflation every two years based upon the
U.S. Bureau of Labor Statistics’
Consumer Price Index. The current cap
is $32 million.8
B. Fact Finding 30
In response to COVID–19, the Centers
for Disease Control and Prevention
(CDC) issued a ‘‘No Sail Order and
Suspension of Further Embarkation’’
(CDC No Sail Order) on March 14, 2020,
causing PVOs to cease all operations.
Due to the unpredictable nature of the
disease, the CDC has extended the term
of the order through September 30,
5 The Commission’s regulations also permit
smaller PVOs to request to substitute alternative
forms of financial protection as evidence of
financial responsibility. See 46 CFR 540.9(l).
6 In practice, passengers generally receive refunds
for canceled cruises from the PVOs directly or, if
the passenger paid by credit card, from the credit
card issuer. Refund payments under the PVO
financial responsibility instruments are rare and
usually only occur if the PVO ceases operations or
declares bankruptcy.
7 46 CFR 540.9(j); Final Rule: Passenger Financial
Responsibility Requirements for Nonperformance of
Transportation, 78 FR 13268 (Feb. 27, 2013).
8 Notice: Financial Responsibility for
Indemnification of Passengers for Nonperformance
of Transportation–Cap Adjustment, 84 FR 17410
(June 24, 2019).
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2020.9 Consequently, questions arose
concerning future cruises and
passengers’ ability to obtain refunds of
monies paid for transportation
disrupted by COVID–19.
The Commission initiated Fact
Finding 30 on April 30, 2020, to
investigate COVID–19’s impact and
identify commercial solutions to
COVID–19-related issues that interfere
with the operation of the cruise
industry. The Commission’s Fact
Finding Officer has been meeting with
PVOs, marine terminal operators, and
other stakeholders to understand
COVID–19’s effects on the cruise
industry.
On July 27, the Fact Finding Officer
issued an Interim Report recommending
certain regulatory changes to the
Commission’s regulations with respect
to PVOs. The Fact Finding Officer
concluded that clearer guidance is
needed in determining whether a
passenger is entitled to obtain refunds if
a PVO cancels a voyage, makes a
significant schedule change, or
significantly delays a voyage.
The Fact Finding Officer stated that a
clear and consistent policy toward ticket
refunds would eliminate any
uncertainty on the part of passengers
and would provide clear terms upon
which the industry may plan for future
operations. The Fact Finding Officer
proposed, among other things, that the
Commission provide a clear
interpretation of nonperformance of
transportation and modify the
appropriate provisions of the
Commission’s PVO regulations in part
540 to make clear how passengers may
obtain refunds under the PVOs’
financial instruments filed with the
Commission. These recommendations
were as follows:
Therefore, it is proposed that the
Commission: (1) Interpret ‘‘nonperformance
of transportation’’ to include cancelling a
sailing or delaying passenger boarding by
twenty-four (24) hours or more; and (2)
modify the appropriate provisions of the
Commission’s PVO regulations to make clear
how passengers may obtain refunds under
the PVOs’ financial instruments:
1. When a sailing is cancelled or consumer
boarding is delayed by twenty-four (24) hours
or more for any reason other than due to a
government order or declaration in paragraph
2 below, full refunds must be paid within
sixty (60) days following a passenger refund
request.
2. When a sailing is cancelled or consumer
boarding is delayed by twenty-four (24) hours
or more due to a governmental order or
declaration, full refunds must be paid within
one hundred eighty (180) days following a
passenger refund request. This includes all
9 CDC Newsroom, https://www.cdc.gov/media/
releases/2020/s0716-cruise-ship-no-sail-order.html.
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consumers who, at their own discretion,
cancelled their booking within sixty (60)
days prior to said governmental action and
commensurate cancelled or delayed sailing.
3. If, following a declaration of a public
health emergency, any consumer cancels a
cruise booking of a sailing that may be
affected by such emergency after the PVO’s
refund deadline, but the sailing is not
cancelled, the PVO will provide a credit for
a future cruise equal to the consumer’s
amount of deposit. In all other cases in which
a consumer cancels and embarkation and
sailing occur within the prescribed timeline,
the cruise line’s rules for cancellation will
apply.
4. A PVO may set a reasonable deadline for
a consumer entitled to a refund to request the
refund which shall not be less than 6 months
after the scheduled voyage.
5. Refunds should include all fees paid to
carrier by consumer to include all ancillary
fees remitted to the carrier by the consumer.
6. Refunds to be given in same fashion as
monies were originally remitted to the
carrier. The PVO will be deemed to have
made a refund payment if the deposited
revenue as to a passenger requesting a refund
is remitted by the PVO in the same manner
as the passenger’s original payment, by: (1)
Mailing a check payable in immediately
available funds to the passenger at an address
furnished by the passenger, (2) issuing an
electronic funds transfer, including wire
transfer, automated clearinghouse (ACH) or
other electronic means, in immediately
available funds, or (3) posting of a credit to
the credit card processor for the benefit of the
credit card account used by passenger to
make payments to the applicant. The refund
will be deemed timely notwithstanding that
passenger may not immediately have access
to the transferred funds in its account or any
credit card account due to rules and
processes of any third-party services
provider.
7. Nothing in this rule shall be interpreted
to preclude the consumer and the PVO from
entering into an alternative form of
compensation in full satisfaction of a
required refund, such as a future cruise
credit.10
The Fact Finding Officer also
recommended the Commission mandate
that: (1) PVOs provide on their websites
clear instructions on how passengers
may obtain refunds; and (2) PVOs
submit current web addresses showing
their refund instructions to the
Commission for publication on the
Commission’s website.11
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III. Proposed Changes and Request for
Comments
A. Defining Nonperformance of
Transportation
As discussed above, 46 U.S.C. 44102
requires that PVOs file with the
Commission evidence of financial
responsibility to indemnify passenger
10 Fact
11 Id.
Finding 30 Interim Report at 11–12.
at 12.
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for nonperformance of transportation.
The Commission’s regulations in 46
CFR part 540 do not expressly define
what constitutes nonperformance of
transportation, but the substantive
provisions and required financial
responsibility instrument terms indicate
that it means the PVO’s failure to
provide transportation or other
accommodations and services subject to
part 540, subpart A,12 in accordance
with the terms of the ticket contract
between the PVO and passenger.13
As noted in the Fact Finding 30
Interim Report, what constitutes
nonperformance of transportation under
the current regulations depends on the
specific terms of each PVO’s ticket
contract and may vary from PVO to PVO
or from contract to contract.14
Accordingly, the Interim Report
recommended interpreting
nonperformance of transportation under
46 U.S.C. 44102 to include: (1)
Canceling a voyage; and (2) delaying
passenger boarding by 24 hours or more.
Similar to the U.S. Department of
Transportation’s policy (cited in the
Interim Report) addressing when airline
passengers are entitled to refunds from
air carriers, a delay would only
constitute nonperformance if the
passenger chooses not to embark on the
delayed voyage.
The Commission is seeking comment
on adopting this definition of
nonperformance of transportation. The
Commission anticipates that
implementing this change would
involve amending the regulations in
part 540, subpart A, to include the
definition and revising the language of
the forms for financial responsibility
instruments (surety bonds, guaranties,
and escrow agreements) to reflect
coverage in situations under the
definition.15 To that end, the
12 The scope of the transportation,
accommodations, and services covered is described
in the definition of ‘‘unearned passenger revenue’’
in § 540.2 and includes water transportation and all
other accommodations, services, and facilities
relating thereto, but excludes air transportation,
hotel accommodations, or tour excursions. 46 CFR
540.2(i).
13 See 46 CFR 540.1(a) (stating that PVOs must
file evidence of financial responsibility or a bond
or other security for obligations under the terms of
ticket contracts to indemnify passengers for
nonperformance of transportation to which they
would be entitled; Form FMC–132A to Subpart A
of Part 540 (stating that: (1) The purpose of the bond
is to insure financial responsibility and the
supplying transportation and other services subject
to subpart A of part 540, in accordance with the
ticket contract between the PVO and the passenger;
and (2) the scope of the surety’s liability is for
refunds due under ticket contracts made by the
PVO for the supplying of transportation and other
services).
14 Fact Finding 30 Interim Report at 11.
15 These forms include Form FMC–132A,
Passenger Vessel Surety Bond (Performance); Form
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Commission has developed the
following draft definition:
Nonperformance of transportation means:
(1) Canceling a voyage; or (2) delaying the
boarding of passengers by more than twentyfour (24) hours if the passenger elects not to
embark on the substitute or delayed voyage.
The Commission predicts that this
interpretation may change the situations
in which passengers could make claims
for refunds against the PVO’s financial
responsibility instrument. In addition to
a request for comments on the draft
definition provided above, the
Commission requests comments on:
• Necessary changes to the
Commission’s regulations, including the
financial responsibility instrument
forms, to implement the revised
definition of nonperformance of
transportation;
• Whether this change will increase
or decrease claims for refunds against
PVO financial responsibility
instruments (i.e., bond, insurance,
guaranty, or escrow agreement), and if
so, the magnitude of the increase or
decrease (including number of claims
and total dollar amounts paid to
passengers);
• Whether this change will increase
or decrease the cost to PVOs of
obtaining compliant financial
responsibility instruments (e.g., higher
or lower premiums or collateral
requirements), and if so, the magnitude
of the increase or decrease (i.e., dollar
amount);
• Other effects of this change the
Commission should consider.
B. Process for Obtaining Refunds From
PVO Instruments for Nonperformance of
Transportation
1. General
Although the Commission regulations
require certain coverage and terms to be
included in financial responsibility
instruments, the regulations do not
include uniform procedures regarding
how and when passengers may make
claims for refunds against the various
financial responsibility instruments.
The Fact Finding 30 Interim Report
recommended that the Commission
revise its regulations to make clear how
passengers may obtain refunds under
these instruments and include specific
provisions related to such claims and
the timing of refund payments.16
Neither part 540 nor the financial
responsibility instrument forms provide
FMC–133A, Guaranty in Respect of Liability for
Nonperformance, Section 3 of the Act; Appendix A,
Example of Escrow Agreement for Use Under 46
CFR 540.5(b)). There is no required or optional form
for insurance, which must meet the requirement in
§ 540.5(a).
16 Fact Finding 30 Interim Report at 11–12.
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specific instructions on how or when
passengers may obtain refunds under a
PVO’s financial responsibility
instrument. For example, the Guaranty
Form (Form FMC–133A) provides that
Guarantor will make refund payments to
passengers when: (1) The PVO and
passenger enter into settlement
agreement, approved by the Guarantor;
or (2) the passenger obtains a final
judgment against the PVO and the PVO
does not make payment within 21 days.
Similarly, the suggested language for
Escrow Agreements in Appendix A
states that an Escrow Agent will make
refund payments to passengers when
either: (1) The PVO provides written
instructions to the Escrow Agent to
make such payment; or (2) the passenger
obtains a final judgment against the
PVO, the PVO does not make payment
within 21 days, and the Escrow Agent
receives a certified copy of the court
order.
The Fact Finding 30 Interim Report
recommended the following general
procedure: (1) The passenger makes a
request for a refund from a PVO
financial responsibility instrument
when nonperformance has occurred;
and (2) the refund payment is made
within a certain period, depending on
certain conditions.17 Under this
procedure, the passenger would not
need a final court judgment in order to
obtain a refund. The Commission
anticipates that implementing these
changes would involve amending the
regulations in part 540, subpart A and
the language of the financial
responsibility instruments forms to
reflect the new procedure. The
Commission requests comment on the
following issues related to this
procedure that would need to be
resolved in any proposed revisions to
the Commission’s regulations:
• To whom passengers should submit
requests for refunds under the revised
procedures.
• Should passengers submit refund
claims to the financial responsibility
instrument providers directly (e.g.,
surety company, insurer, guarantor, or
escrow agent)? Alternatively, should
passengers submit refund claims to the
PVO, and the PVO in turn authorizes
payment from the financial
responsibility instrument (similar to the
current procedure for escrow
agreements)?
• Information passengers will need to
provide to obtain a refund.
• Should the Commission specify the
information necessary for passengers to
submit to obtain refunds from a PVO
financial responsibility instrument, or
17 Fact
Finding 30 Interim Report at 11–12.
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should those decisions be left to the
individual PVOs and their financial
responsibility providers?
• If the Commission should specify
the necessary information from
passengers, what information should be
required beyond evidence of payment to
the PVO, ticket contract, and evidence
of cancellation or delayed boarding?
• Necessary changes to the
Commission’s regulations, including the
financial responsibility instrument
forms, to implement the revised process
for obtaining refunds.
The Commission is also requesting
comments on the effects of the
recommended changes described in this
section (section III.B) (individually and
as a whole), including:
• Whether these changes will
increase or decrease claims for refunds
against PVO financial responsibility
instruments, and if so, the magnitude of
the increase or decrease (including
number of claims and total dollar
amounts paid to passengers).
• Whether these changes will
increase or decrease the cost to PVOs of
obtaining compliant financial
responsibility instruments (e.g., higher
or lower premiums or collateral
requirements), and if so, the source and
magnitude of the increase or decrease
(i.e., dollar amount).
• Other effects of these changes the
Commission should consider.
2. Deadline for Submitting Refund
Requests
Commission regulations do not
currently prescribe how long passengers
have after a scheduled voyage to seek a
refund from a PVO financial
responsibility instrument. The Fact
Finding 30 Interim Report
recommended that the Commission
specify that a PVO may set a reasonable
deadline for passenger refund requests
but the deadline may not be less than
six months after the scheduled voyage.18
The Commission has developed the
following draft provision to reflect this
recommendation:
A passenger must submit a request for
refund no later than 180 days 19 after
nonperformance occurs, unless the ticket
contract or other passenger vessel operator
policy allows a longer period of time for such
requests.
The Commission could include this
provision in part 540 and require that
the financial responsibility instrument
specify the time period for passengers to
file refund requests. The Commission
18 Fact
Finding 30 Interim Report at 12.
clarity and ease of calculation, the
Commission contemplates using a deadline of 180
days rather than six months.
requests comment on prescribing a
minimum timeframe for refund
requests, the amount of time
recommended in the Fact Finding 30
Interim Report (six months) and the
draft language provided above. As
discussed above in section III.B.1, the
Commission also requests comment on
the effects of this change.
3. Deadline for Refund Payment
Commission regulations do not
currently specify a time period within
which passengers must receive a refund
under a PVO financial responsibility
instrument. The Fact Finding 30 Interim
Report recommended that the
Commission specify two different
timeframes for payment depending on
whether nonperformance was due to ‘‘a
governmental order or declaration’’: (1)
When nonperformance is due to a
governmental order or declaration, full
refund payments must be made within
180 days after the passenger requests a
refund; and (2) in all other cases, full
refund payments must be made within
60 days after the passenger requests a
refund.20 The Interim Report also
recommended that a refund payment be
deemed timely notwithstanding that the
passenger may not immediately have
access to the funds due to the rules and
processes of any third party services
provider.21
The Commission requests comment
on prescribing a deadline for payment of
refunds from financial responsibility
instruments as a general matter,
establishing two different timeframes for
payment depending on whether
nonperformance is due to a
governmental order or declaration, and
the deadlines recommended in the
Interim Report (180 days when there is
a governmental order or declaration; 60
days in all other cases). The
Commission also requests comment on
the following:
• The types of governmental orders or
declarations that would trigger the
longer 180-day period for providing
refunds.
• Should these include only U.S.
federal, state, and local orders or
declarations, or should foreign
government orders and declarations also
trigger the longer refund payment
period?
• What types of governmental orders
and declarations should qualify, i.e.,
should this be limited to governmental
orders and declarations that expressly
prohibit embarking passengers and
suspend passenger operations like the
CDC No Sail Order? If not, what other
19 For
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20 Fact
21 Id.
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Finding Interim Report at 11.
at 12.
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types of governmental orders and
declarations should trigger the longer
refund payment period?
• The effects of this change as
discussed above in section III.B.1.
4. Form and Amount of Refund Payment
Commission regulations provide that
the PVO financial responsibility
instruments must provide coverage for
‘‘unearned passenger revenue,’’ which is
defined as passenger revenue received
for water transportation and all other
accommodations, services, and facilities
relating thereto not yet performed; this
includes port fees and taxes paid, but
excludes such items as airfare, hotel
accommodations, and tour excursions.22
The regulations do not specify in what
form refund payments must be made
under PVO financial responsibility
instruments.
The Fact Finding 30 Interim Report
recommended the Commission specify:
(1) That refund payments must include
all fees, including ancillary fees, paid to
the PVO by the passenger; and (2)
refund payments must be made in the
same manner as the passenger’s original
payment, e.g., check, electronic funds
transfer, or credit card chargeback.23
Regarding the first recommendation,
the Commission is requesting comment
on whether to expand the definition of
unearned passenger revenue and the
scope of the ancillary fees to be
included in any revised definition. The
Fact Finding 30 Interim Report
discusses the following types of
ancillary charges paid by passengers to
PVOs prior to sailing: Gratuities, shore
excursions, pre-cruise onboard
purchases, port fees, and taxes. Of these,
the current definition of unearned
passenger revenue expressly includes
port fees and taxes and excludes
excursions. The Interim Report does not
discuss refunds for airfare or hotel
accommodation.
To facilitate comment, the
Commission has developed the
following draft definition:
jbell on DSKJLSW7X2PROD with PRO_RULES
Unearned passenger revenue means that
passenger revenue received for water
transportation and all other related
accommodations, services, and facilities
relating thereto not yet performed; this
includes port fees, taxes, and all ancillary
fees remitted to the passenger vessel operator
by the passenger.
The Commission requests comment
on expanding the definition of unearned
passenger revenue, including:
• What types of ancillary fees should
be included as unearned passenger
22 46
CFR 540.2(i).
Finding 30 Interim Report at 11–12.
23 Fact
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17:18 Oct 13, 2020
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revenue subject to refund, and what
types of fees should be excluded.
• For example, should the
Commission include the types of fees
mentioned in the Fact Finding 30
Interim Report (e.g., shore excursions,
dining packages, other onboard
packages, and gratuities)?
• Are there any types of fees that
should be included?
• Should the definition continue to
exclude airfare and hotel
accommodations?
• The effects of this change as
discussed above in section III.B.1.
The Commission is also requesting
comment on the recommendation to
specify that refund payments must be
made in the same manner as the
passenger’s original payment.
Specifically, the Commission requests
comment on the following:
• Whether it is feasible for payment
from a PVO financial responsibility
instrument to be made in the same
manner as the passenger’s original
payment.
• Necessary changes to the
Commission’s regulations, including the
financial responsibility instrument
forms, to implement this
recommendation.
• The effects of this change as
discussed above in section III.B.1.
5. Publishing Information on How To
Obtain Refunds
The Fact Finding 30 Interim Report
recommended the Commission mandate
that: (1) PVOs provide on their websites
clear instructions on how passengers
may obtain refunds; and (2) PVOs
submit current website addresses for
their refund instructions to the
Commission for publication on the
Commission’s website.24 The
Commission envisions that this
recommendation could be implemented
by: (1) Revising the Form FMC–131,
Application for Certificate of Financial
Responsibility, to require PVOs to
provide the uniform resource locator
(URL) for their refund instructions; and
(2) amending § 540.4 to require PVOs to
amend their application if the URL
changes. The Commission requests
comment on this potential change,
including:
• Whether the Commission should
prescribe any specific content or format
requirements for published PVO refund
instructions.
• The nature of any additional
regulatory burden associated with
publishing refund policies on a PVO’s
website or providing the URL for those
24 Id.
PO 00000
at 12.
Frm 00044
Fmt 4702
Sfmt 4702
instructions to the Commission, as well
as the estimated cost to PVOs.
C. Passenger Cancellations
In addition to recommendations
related to passenger refunds in the event
of nonperformance of transportation, the
Fact Finding 30 Interim Report also
proposed that the Commission amend
its regulations to ensure PVO financial
responsibility in the event passengers
cancel their booking with a PVO prior
to or following certain governmental
orders or declarations. Specifically, the
Fact Finding 30 Interim Report
recommended that: (1) A passenger be
entitled to a refund if they cancel their
booking no more than 60 days prior to
a governmental order or declaration that
results in the PVO canceling the voyage
or delaying boarding of passengers by
more than 24 hours; and (2) a passenger
be entitled to a future cruise credit if
they cancel their booking following the
declaration of a public health
emergency and the voyage occurs as
scheduled.
The Commission requests comment
on the recommendation regarding
passenger refunds when the passenger
cancels their booking and the voyage is
subsequently canceled as a result of a
governmental orders or declarations,
including comment on the following:
• The types of governmental orders or
declarations that would make a
passenger eligible for a refund when
they cancel their booking.
• Should these include only U.S.
federal, state, and local orders or
declarations, or should foreign
government orders and declarations also
trigger the longer refund payment
period?
• What types of governmental orders
and declarations qualify, i.e., should
this be limited to governmental orders
and declarations that expressly prohibit
embarking passengers and suspend
passenger operations like the CDC No
Sail Order? If not, what other types of
governmental orders and declarations
should qualify?
• Information passengers will need to
provide to obtain a refund.
• Should the Commission specify the
information necessary for passengers to
submit to obtain refunds from a PVO
financial responsibility instrument, or
should those decisions be left to the
individual PVOs and their financial
responsibility providers?
• If the Commission should specify
the necessary information from
passengers, what information should be
required? Such required information
could include evidence of payment to
the PVO, ticket contract, evidence
showing cancellation of the booking,
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Federal Register / Vol. 85, No. 199 / Wednesday, October 14, 2020 / Proposed Rules
evidence of a governmental order or
declaration, and evidence of
cancellation or delayed boarding of the
voyage.
The Commission also requests
comment on the recommendation
regarding the provision of future cruise
credit when the passenger cancels their
booking following declaration of a
public health emergency but the voyage
occurs as scheduled, including
comment on the following:
• Whether it is feasible for a
passenger to obtain future cruise credit
under a PVO financial responsibility
instrument.
• The type of public health
emergency declaration that would make
a passenger eligible for a future cruise
credit when they cancel their booking.
• Whether requests for future cruise
credit should be subject to the same
requirements as those recommended for
refunds with respect to the deadline for
requesting credit, the deadline for
providing credit, and the amount of the
credit.
The Commission also requests
comment on the following related to
both recommendations:
• Necessary changes to the
Commission’s regulations, including the
financial responsibility instrument
forms, to implement these changes.
• Whether these changes will
increase or decrease claims for refunds
against PVO financial responsibility
instruments, and if so, the magnitude of
the increase or decrease (including
number of claims and total dollar
amounts paid to passengers).
• Whether these changes will
increase or decrease the cost to PVOs of
obtaining compliant financial
responsibility instruments (e.g., higher
or lower premiums or collateral
requirements), and if so, the magnitude
of the increase or decrease (i.e., dollar
amount).
• Other effects of these changes the
Commission should consider.
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IV. Public Participation
How do I prepare and submit
comments?
Your comments must be written and
in English. To ensure that your
comments are correctly filed in the
docket, please include the docket
number of this document in your
comments.
You may submit your comments via
email to the email address listed above
under ADDRESSES. Please include the
docket number associated with this
notice and the subject matter in the
VerDate Sep<11>2014
17:18 Oct 13, 2020
Jkt 253001
subject line of the email. Comments
should be attached to the email as a
Microsoft Word or text-searchable PDF
document.
How do I submit confidential business
information?
The Commission will provide
confidential treatment for identified
confidential information to the extent
allowed by law. If your comments
contain confidential information, you
must submit the following by email to
the address listed above under
ADDRESSES:
• A transmittal letter requesting
confidential treatment that identifies the
specific information in the comments
for which protection is sought and
demonstrates that the information is a
trade secret or other confidential
research, development, or commercial
information.
• A confidential copy of your
comments, consisting of the complete
filing with a cover page marked
‘‘Confidential-Restricted,’’ and the
confidential material clearly marked on
each page.
• A public version of your comments
with the confidential information
excluded. The public version must state
‘‘Public Version—confidential materials
excluded’’ on the cover page and on
each affected page, and must clearly
indicate any information withheld.
Will the Commission consider late
comments?
The Commission will consider all
comments received before the close of
business on the comment closing date
indicated above under DATES. To the
extent possible, we will also consider
comments received after that date.
How can I read comments submitted by
other people?
You may read the comments received
by the Commission at the Commission’s
Electronic Reading Room at the address
listed above under ADDRESSES.
V. Rulemaking Analyses and Notices
Regulatory Flexibility Act
Under the Regulatory Flexibility Act
(codified as amended at 5 U.S.C. 601–
612), no analysis is required for an
ANPRM. However, PVOs are
encouraged to comment on any aspects
of the potential rulemaking that may
apply to them and the potential impact.
National Environmental Policy Act
The Commission’s regulations
categorically exclude certain
PO 00000
Frm 00045
Fmt 4702
Sfmt 9990
65025
rulemakings from any requirement to
prepare an environmental assessment or
an environmental impact statement
because they do not increase or decrease
air, water or noise pollution or the use
of fossil fuels, recyclables, or energy. 46
CFR 504.4. The ANPRM discusses
potential amendments to Commission’s
program for certifying the financial
responsibility of PVOs. This rulemaking
thus falls within the categorical
exclusion for certification of financial
responsibility of passenger vessels
under Part 540. § 504.4(2). Therefore, no
environmental assessment or
environmental impact statement is
required.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3521) (PRA) requires an
agency to seek and receive approval
from the Office of Management and
Budget (OMB) before collecting
information from the public. 44 U.S.C.
3507. The agency must submit
collections of information in proposed
rules to OMB in conjunction with the
publication of the notice of proposed
rulemaking. 5 CFR 1320.11. Any
information collection requirements and
associated burdens will be discussed in
detail if a proposed rule is issued.
Executive Order 12988 (Civil Justice
Reform)
The Commission will ensure that any
proposed or final rule issued in this
proceeding meets the applicable
standards in E.O. 12988 titled, ‘‘Civil
Justice Reform,’’ to minimize litigation,
eliminate ambiguity, and reduce
burden.
Regulation Identifier Number
The Commission assigns a regulation
identifier number (RIN) to each
regulatory action listed in the Unified
Agenda of Federal Regulatory and
Deregulatory Actions (Unified Agenda).
The Regulatory Information Service
Center publishes the Unified Agenda in
April and October of each year. You
may use the RIN contained in the
heading at the beginning of this
document to find this action in the
Unified Agenda, available at https://
www.reginfo.gov/public/do/
eAgendaMain.
By the Commission.
Rachel Dickon,
Secretary.
[FR Doc. 2020–21957 Filed 10–13–20; 8:45 am]
BILLING CODE 6730–02–P
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Agencies
[Federal Register Volume 85, Number 199 (Wednesday, October 14, 2020)]
[Proposed Rules]
[Pages 65020-65025]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-21957]
=======================================================================
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FEDERAL MARITIME COMMISSION
46 CFR Part 540
[Docket No. 20-15]
RIN 3072-AC82
Passenger Vessel Financial Responsibility
AGENCY: Federal Maritime Commission.
ACTION: Advance Notice of Proposed Rulemaking (ANPRM).
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SUMMARY: The Federal Maritime Commission (Commission) is issuing this
ANPRM to seek comment on potential regulatory changes to its passenger
vessel operator financial responsibility requirements. These changes
were recommended in an Interim Report issued by the Fact Finding
Officer in Commission Fact Finding 30: COVID-19 Impact on Cruise
Industry.
DATES: Submit comments on or before November 13, 2020.
ADDRESSES: You may submit comments, identified by Docket No. 20-15, by
the following methods:
Email: [email protected]. For comments, include in the
subject line: ``Docket No. 20-15, Comments on PVO Financial
Responsibility Rulemaking.'' Comments should be attached to the email
as a Microsoft Word or text-searchable PDF document.
Instructions: For detailed instructions on submitting comments,
including requesting confidential treatment of comments, and additional
information on the rulemaking process, see the Public Participation
heading of the SUPPLEMENTARY INFORMATION section of this document. Note
that all comments received will be posted without change to the
Commission's website, unless the commenter has requested confidential
treatment.
Docket: For access to the docket to read background documents or
comments received, go to the Commission's Electronic Reading Room at:
https://www2.fmc.gov/readingroom/proceeding/20-15/.
FOR FURTHER INFORMATION CONTACT: Rachel E. Dickon, Secretary; Phone:
(202) 523-5725; Email: [email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
II. Background
A. PVO Program
B. Fact Finding 30
III. Proposed Changes and Request for Comments
A. Defining Nonperformance of Transportation
B. Process for Obtaining Refunds From PVO Instruments After
Nonperformance of Transportation
1. General
2. Deadline for Submitting Refund Requests
3. Deadline for Refund Payment
4. Form and Amount of Refund Payment
5. Publishing Information on How To Obtain Refunds
C. Passenger Cancellations
IV. Public Participation
V. Rulemaking Analyses and Notices
I. Executive Summary
Before a passenger vessel operator (PVO) may arrange, offer,
advertise, or provide transportation on a vessel, the PVO must file
with the Commission evidence of responsibility to indemnify passengers
in the event of nonperformance of transportation.\1\ Satisfactory
evidence includes a copy of a bond, insurance, guaranty, or escrow
agreement meeting the Commission's requirements in 46 CFR part 540. The
Commission reviews the PVO's submission and if it meets the
Commission's requirements, it will issue the PVO a Certificate of
Financial Responsibility for Indemnification of Passengers for
Nonperformance of Transportation (Certificate (Performance)).\2\
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\1\ 46 U.S.C. 44102; 46 CFR part 540, subpart A.
\2\ 46 CFR 540.7.
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Following the arrival of Coronavirus disease 2019 (COVID-19) in the
United States, the Centers for Disease Control and Prevention (CDC)
issued a ``No Sail Order and Suspension of Further Embarkation,'' (CDC
No Sail Order) causing PVOs to cease all operations and raising
questions regarding passengers' ability to obtain refunds of monies
paid for transportation disrupted by COVID-19. In response, the
Commission initiated Fact Finding 30: COVID-19 Impact on Cruise
Industry, on April 30, 2020.
The Fact Finding Officer issued an Interim Report on PVO Refund
Policies
[[Page 65021]]
on July 27, 2020, concluding that clearer guidance is needed in
determining whether a passenger is entitled to obtain a refund if a PVO
cancels a voyage, makes a significant schedule change, or significantly
delays a voyage.\3\ The Fact-Finding Officer proposed, among other
things, that the Commission provide a clear interpretation of
nonperformance of transportation and modify the appropriate provisions
of the Commission's PVO regulations to make clear how passengers may
obtain refunds under the PVOs' financial responsibility instruments
filed with the Commission. The Commission voted on August 10, 2020, to
initiate a rulemaking to implement the recommended changes.
---------------------------------------------------------------------------
\3\ See Fact Finding Investigation No. 30: COVID-19 Impact on
Cruise Industry, Interim Report: Refund Policy, at 11-13 (July 27,
2020) (Fact Finding 30 Interim Report or Interim Report).
---------------------------------------------------------------------------
The Commission is requesting comment on these recommended changes
and their effects on PVOs and passengers. In addition to general
comments, the Commission is requesting focused comment on the issues
identified below in section III for each of the recommended changes.
II. Background
A. PVO Program
On November 6, 1966, Congress enacted Public Law 89-777. Section 2
of the statute (codified at 46 U.S.C. 44103) requires owners and
charterers of vessels having berth or stateroom accommodations for 50
or more passengers, and embarking passengers at United States ports, to
establish financial responsibility to meet any liability incurred for
death or injury to passengers or other persons on voyages to or from
United States ports. Section 3 of the statute (codified at 46 U.S.C.
44102) requires persons arranging, offering, advertising, or providing
passage on such vessels to establish financial responsibility for
indemnification of passengers for nonperformance of transportation. The
Commission published implementing regulations at 46 CFR part 540 in
1967.\4\
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\4\ 32 FR 3986 (Mar. 11, 1967) (establishing regulations
governing nonperformance coverage); 32 FR 7282 (May 16, 1967)
(establishing regulations governing casualty coverage).
---------------------------------------------------------------------------
Under this program, the Commission issues two types of certificates
to PVOs of vessels that: (1) Have berths for 50 or more passengers; and
(2) embark passengers from U.S. ports. The first type of Certificate
(Performance) is issued by the Commission when a PVO provides the
Commission with acceptable coverage to satisfy liability incurred for
nonperformance of transportation up to the amount of unearned passenger
revenue (UPR) held by the PVO or the monetary cap set in the
Commission's regulation. Such coverage may be in the form of insurance,
a guaranty, a surety bond, or escrow agreement (collectively referred
to as financial responsibility instruments).\5\ The coverage is used to
reimburse passengers when the PVO fails to perform cruises as
contracted and has taken no further actions to refund passengers.\6\
The second type of Certificate (Casualty) is issued by the Commission
when a PVO provides the Commission with acceptable coverage to satisfy
any liability incurred for death or injury during a voyage, as provided
in the regulations and statute.
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\5\ The Commission's regulations also permit smaller PVOs to
request to substitute alternative forms of financial protection as
evidence of financial responsibility. See 46 CFR 540.9(l).
\6\ In practice, passengers generally receive refunds for
canceled cruises from the PVOs directly or, if the passenger paid by
credit card, from the credit card issuer. Refund payments under the
PVO financial responsibility instruments are rare and usually only
occur if the PVO ceases operations or declares bankruptcy.
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There have been few changes to the regulations in part 540 since
its inception. Changes have included several increases to the monetary
cap for required performance coverage under section 44102, the
elimination of the self-insurance option for PVOs, some limitations on
the types of entities acceptable as guarantors, and the elimination of
certain sliding-scale provisions as to the amount of coverage required.
Most recently, the Commission increased the cap on required performance
coverage in two annual steps, from $15 million to $22 million in 2014,
and then from $22 million to $30 million in 2015.\7\ Since 2015, the
cap has been adjusted for inflation every two years based upon the U.S.
Bureau of Labor Statistics' Consumer Price Index. The current cap is
$32 million.\8\
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\7\ 46 CFR 540.9(j); Final Rule: Passenger Financial
Responsibility Requirements for Nonperformance of Transportation, 78
FR 13268 (Feb. 27, 2013).
\8\ Notice: Financial Responsibility for Indemnification of
Passengers for Nonperformance of Transportation-Cap Adjustment, 84
FR 17410 (June 24, 2019).
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B. Fact Finding 30
In response to COVID-19, the Centers for Disease Control and
Prevention (CDC) issued a ``No Sail Order and Suspension of Further
Embarkation'' (CDC No Sail Order) on March 14, 2020, causing PVOs to
cease all operations. Due to the unpredictable nature of the disease,
the CDC has extended the term of the order through September 30,
2020.\9\ Consequently, questions arose concerning future cruises and
passengers' ability to obtain refunds of monies paid for transportation
disrupted by COVID-19.
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\9\ CDC Newsroom, https://www.cdc.gov/media/releases/2020/s0716-cruise-ship-no-sail-order.html.
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The Commission initiated Fact Finding 30 on April 30, 2020, to
investigate COVID-19's impact and identify commercial solutions to
COVID-19-related issues that interfere with the operation of the cruise
industry. The Commission's Fact Finding Officer has been meeting with
PVOs, marine terminal operators, and other stakeholders to understand
COVID-19's effects on the cruise industry.
On July 27, the Fact Finding Officer issued an Interim Report
recommending certain regulatory changes to the Commission's regulations
with respect to PVOs. The Fact Finding Officer concluded that clearer
guidance is needed in determining whether a passenger is entitled to
obtain refunds if a PVO cancels a voyage, makes a significant schedule
change, or significantly delays a voyage.
The Fact Finding Officer stated that a clear and consistent policy
toward ticket refunds would eliminate any uncertainty on the part of
passengers and would provide clear terms upon which the industry may
plan for future operations. The Fact Finding Officer proposed, among
other things, that the Commission provide a clear interpretation of
nonperformance of transportation and modify the appropriate provisions
of the Commission's PVO regulations in part 540 to make clear how
passengers may obtain refunds under the PVOs' financial instruments
filed with the Commission. These recommendations were as follows:
Therefore, it is proposed that the Commission: (1) Interpret
``nonperformance of transportation'' to include cancelling a sailing
or delaying passenger boarding by twenty-four (24) hours or more;
and (2) modify the appropriate provisions of the Commission's PVO
regulations to make clear how passengers may obtain refunds under
the PVOs' financial instruments:
1. When a sailing is cancelled or consumer boarding is delayed
by twenty-four (24) hours or more for any reason other than due to a
government order or declaration in paragraph 2 below, full refunds
must be paid within sixty (60) days following a passenger refund
request.
2. When a sailing is cancelled or consumer boarding is delayed
by twenty-four (24) hours or more due to a governmental order or
declaration, full refunds must be paid within one hundred eighty
(180) days following a passenger refund request. This includes all
[[Page 65022]]
consumers who, at their own discretion, cancelled their booking
within sixty (60) days prior to said governmental action and
commensurate cancelled or delayed sailing.
3. If, following a declaration of a public health emergency, any
consumer cancels a cruise booking of a sailing that may be affected
by such emergency after the PVO's refund deadline, but the sailing
is not cancelled, the PVO will provide a credit for a future cruise
equal to the consumer's amount of deposit. In all other cases in
which a consumer cancels and embarkation and sailing occur within
the prescribed timeline, the cruise line's rules for cancellation
will apply.
4. A PVO may set a reasonable deadline for a consumer entitled
to a refund to request the refund which shall not be less than 6
months after the scheduled voyage.
5. Refunds should include all fees paid to carrier by consumer
to include all ancillary fees remitted to the carrier by the
consumer.
6. Refunds to be given in same fashion as monies were originally
remitted to the carrier. The PVO will be deemed to have made a
refund payment if the deposited revenue as to a passenger requesting
a refund is remitted by the PVO in the same manner as the
passenger's original payment, by: (1) Mailing a check payable in
immediately available funds to the passenger at an address furnished
by the passenger, (2) issuing an electronic funds transfer,
including wire transfer, automated clearinghouse (ACH) or other
electronic means, in immediately available funds, or (3) posting of
a credit to the credit card processor for the benefit of the credit
card account used by passenger to make payments to the applicant.
The refund will be deemed timely notwithstanding that passenger may
not immediately have access to the transferred funds in its account
or any credit card account due to rules and processes of any third-
party services provider.
7. Nothing in this rule shall be interpreted to preclude the
consumer and the PVO from entering into an alternative form of
compensation in full satisfaction of a required refund, such as a
future cruise credit.\10\
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\10\ Fact Finding 30 Interim Report at 11-12.
The Fact Finding Officer also recommended the Commission mandate
that: (1) PVOs provide on their websites clear instructions on how
passengers may obtain refunds; and (2) PVOs submit current web
addresses showing their refund instructions to the Commission for
publication on the Commission's website.\11\
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\11\ Id. at 12.
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III. Proposed Changes and Request for Comments
A. Defining Nonperformance of Transportation
As discussed above, 46 U.S.C. 44102 requires that PVOs file with
the Commission evidence of financial responsibility to indemnify
passenger for nonperformance of transportation. The Commission's
regulations in 46 CFR part 540 do not expressly define what constitutes
nonperformance of transportation, but the substantive provisions and
required financial responsibility instrument terms indicate that it
means the PVO's failure to provide transportation or other
accommodations and services subject to part 540, subpart A,\12\ in
accordance with the terms of the ticket contract between the PVO and
passenger.\13\
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\12\ The scope of the transportation, accommodations, and
services covered is described in the definition of ``unearned
passenger revenue'' in Sec. 540.2 and includes water transportation
and all other accommodations, services, and facilities relating
thereto, but excludes air transportation, hotel accommodations, or
tour excursions. 46 CFR 540.2(i).
\13\ See 46 CFR 540.1(a) (stating that PVOs must file evidence
of financial responsibility or a bond or other security for
obligations under the terms of ticket contracts to indemnify
passengers for nonperformance of transportation to which they would
be entitled; Form FMC-132A to Subpart A of Part 540 (stating that:
(1) The purpose of the bond is to insure financial responsibility
and the supplying transportation and other services subject to
subpart A of part 540, in accordance with the ticket contract
between the PVO and the passenger; and (2) the scope of the surety's
liability is for refunds due under ticket contracts made by the PVO
for the supplying of transportation and other services).
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As noted in the Fact Finding 30 Interim Report, what constitutes
nonperformance of transportation under the current regulations depends
on the specific terms of each PVO's ticket contract and may vary from
PVO to PVO or from contract to contract.\14\ Accordingly, the Interim
Report recommended interpreting nonperformance of transportation under
46 U.S.C. 44102 to include: (1) Canceling a voyage; and (2) delaying
passenger boarding by 24 hours or more. Similar to the U.S. Department
of Transportation's policy (cited in the Interim Report) addressing
when airline passengers are entitled to refunds from air carriers, a
delay would only constitute nonperformance if the passenger chooses not
to embark on the delayed voyage.
---------------------------------------------------------------------------
\14\ Fact Finding 30 Interim Report at 11.
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The Commission is seeking comment on adopting this definition of
nonperformance of transportation. The Commission anticipates that
implementing this change would involve amending the regulations in part
540, subpart A, to include the definition and revising the language of
the forms for financial responsibility instruments (surety bonds,
guaranties, and escrow agreements) to reflect coverage in situations
under the definition.\15\ To that end, the Commission has developed the
following draft definition:
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\15\ These forms include Form FMC-132A, Passenger Vessel Surety
Bond (Performance); Form FMC-133A, Guaranty in Respect of Liability
for Nonperformance, Section 3 of the Act; Appendix A, Example of
Escrow Agreement for Use Under 46 CFR 540.5(b)). There is no
required or optional form for insurance, which must meet the
requirement in Sec. 540.5(a).
Nonperformance of transportation means: (1) Canceling a voyage;
or (2) delaying the boarding of passengers by more than twenty-four
(24) hours if the passenger elects not to embark on the substitute
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or delayed voyage.
The Commission predicts that this interpretation may change the
situations in which passengers could make claims for refunds against
the PVO's financial responsibility instrument. In addition to a request
for comments on the draft definition provided above, the Commission
requests comments on:
Necessary changes to the Commission's regulations,
including the financial responsibility instrument forms, to implement
the revised definition of nonperformance of transportation;
Whether this change will increase or decrease claims for
refunds against PVO financial responsibility instruments (i.e., bond,
insurance, guaranty, or escrow agreement), and if so, the magnitude of
the increase or decrease (including number of claims and total dollar
amounts paid to passengers);
Whether this change will increase or decrease the cost to
PVOs of obtaining compliant financial responsibility instruments (e.g.,
higher or lower premiums or collateral requirements), and if so, the
magnitude of the increase or decrease (i.e., dollar amount);
Other effects of this change the Commission should
consider.
B. Process for Obtaining Refunds From PVO Instruments for
Nonperformance of Transportation
1. General
Although the Commission regulations require certain coverage and
terms to be included in financial responsibility instruments, the
regulations do not include uniform procedures regarding how and when
passengers may make claims for refunds against the various financial
responsibility instruments. The Fact Finding 30 Interim Report
recommended that the Commission revise its regulations to make clear
how passengers may obtain refunds under these instruments and include
specific provisions related to such claims and the timing of refund
payments.\16\
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\16\ Fact Finding 30 Interim Report at 11-12.
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Neither part 540 nor the financial responsibility instrument forms
provide
[[Page 65023]]
specific instructions on how or when passengers may obtain refunds
under a PVO's financial responsibility instrument. For example, the
Guaranty Form (Form FMC-133A) provides that Guarantor will make refund
payments to passengers when: (1) The PVO and passenger enter into
settlement agreement, approved by the Guarantor; or (2) the passenger
obtains a final judgment against the PVO and the PVO does not make
payment within 21 days. Similarly, the suggested language for Escrow
Agreements in Appendix A states that an Escrow Agent will make refund
payments to passengers when either: (1) The PVO provides written
instructions to the Escrow Agent to make such payment; or (2) the
passenger obtains a final judgment against the PVO, the PVO does not
make payment within 21 days, and the Escrow Agent receives a certified
copy of the court order.
The Fact Finding 30 Interim Report recommended the following
general procedure: (1) The passenger makes a request for a refund from
a PVO financial responsibility instrument when nonperformance has
occurred; and (2) the refund payment is made within a certain period,
depending on certain conditions.\17\ Under this procedure, the
passenger would not need a final court judgment in order to obtain a
refund. The Commission anticipates that implementing these changes
would involve amending the regulations in part 540, subpart A and the
language of the financial responsibility instruments forms to reflect
the new procedure. The Commission requests comment on the following
issues related to this procedure that would need to be resolved in any
proposed revisions to the Commission's regulations:
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\17\ Fact Finding 30 Interim Report at 11-12.
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To whom passengers should submit requests for refunds
under the revised procedures.
Should passengers submit refund claims to the financial
responsibility instrument providers directly (e.g., surety company,
insurer, guarantor, or escrow agent)? Alternatively, should passengers
submit refund claims to the PVO, and the PVO in turn authorizes payment
from the financial responsibility instrument (similar to the current
procedure for escrow agreements)?
Information passengers will need to provide to obtain a
refund.
Should the Commission specify the information necessary
for passengers to submit to obtain refunds from a PVO financial
responsibility instrument, or should those decisions be left to the
individual PVOs and their financial responsibility providers?
If the Commission should specify the necessary information
from passengers, what information should be required beyond evidence of
payment to the PVO, ticket contract, and evidence of cancellation or
delayed boarding?
Necessary changes to the Commission's regulations,
including the financial responsibility instrument forms, to implement
the revised process for obtaining refunds.
The Commission is also requesting comments on the effects of the
recommended changes described in this section (section III.B)
(individually and as a whole), including:
Whether these changes will increase or decrease claims for
refunds against PVO financial responsibility instruments, and if so,
the magnitude of the increase or decrease (including number of claims
and total dollar amounts paid to passengers).
Whether these changes will increase or decrease the cost
to PVOs of obtaining compliant financial responsibility instruments
(e.g., higher or lower premiums or collateral requirements), and if so,
the source and magnitude of the increase or decrease (i.e., dollar
amount).
Other effects of these changes the Commission should
consider.
2. Deadline for Submitting Refund Requests
Commission regulations do not currently prescribe how long
passengers have after a scheduled voyage to seek a refund from a PVO
financial responsibility instrument. The Fact Finding 30 Interim Report
recommended that the Commission specify that a PVO may set a reasonable
deadline for passenger refund requests but the deadline may not be less
than six months after the scheduled voyage.\18\ The Commission has
developed the following draft provision to reflect this recommendation:
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\18\ Fact Finding 30 Interim Report at 12.
A passenger must submit a request for refund no later than 180
days \19\ after nonperformance occurs, unless the ticket contract or
other passenger vessel operator policy allows a longer period of
time for such requests.
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\19\ For clarity and ease of calculation, the Commission
contemplates using a deadline of 180 days rather than six months.
The Commission could include this provision in part 540 and require
that the financial responsibility instrument specify the time period
for passengers to file refund requests. The Commission requests comment
on prescribing a minimum timeframe for refund requests, the amount of
time recommended in the Fact Finding 30 Interim Report (six months) and
the draft language provided above. As discussed above in section
III.B.1, the Commission also requests comment on the effects of this
change.
3. Deadline for Refund Payment
Commission regulations do not currently specify a time period
within which passengers must receive a refund under a PVO financial
responsibility instrument. The Fact Finding 30 Interim Report
recommended that the Commission specify two different timeframes for
payment depending on whether nonperformance was due to ``a governmental
order or declaration'': (1) When nonperformance is due to a
governmental order or declaration, full refund payments must be made
within 180 days after the passenger requests a refund; and (2) in all
other cases, full refund payments must be made within 60 days after the
passenger requests a refund.\20\ The Interim Report also recommended
that a refund payment be deemed timely notwithstanding that the
passenger may not immediately have access to the funds due to the rules
and processes of any third party services provider.\21\
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\20\ Fact Finding Interim Report at 11.
\21\ Id. at 12.
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The Commission requests comment on prescribing a deadline for
payment of refunds from financial responsibility instruments as a
general matter, establishing two different timeframes for payment
depending on whether nonperformance is due to a governmental order or
declaration, and the deadlines recommended in the Interim Report (180
days when there is a governmental order or declaration; 60 days in all
other cases). The Commission also requests comment on the following:
The types of governmental orders or declarations that
would trigger the longer 180-day period for providing refunds.
Should these include only U.S. federal, state, and local
orders or declarations, or should foreign government orders and
declarations also trigger the longer refund payment period?
What types of governmental orders and declarations should
qualify, i.e., should this be limited to governmental orders and
declarations that expressly prohibit embarking passengers and suspend
passenger operations like the CDC No Sail Order? If not, what other
[[Page 65024]]
types of governmental orders and declarations should trigger the longer
refund payment period?
The effects of this change as discussed above in section
III.B.1.
4. Form and Amount of Refund Payment
Commission regulations provide that the PVO financial
responsibility instruments must provide coverage for ``unearned
passenger revenue,'' which is defined as passenger revenue received for
water transportation and all other accommodations, services, and
facilities relating thereto not yet performed; this includes port fees
and taxes paid, but excludes such items as airfare, hotel
accommodations, and tour excursions.\22\ The regulations do not specify
in what form refund payments must be made under PVO financial
responsibility instruments.
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\22\ 46 CFR 540.2(i).
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The Fact Finding 30 Interim Report recommended the Commission
specify: (1) That refund payments must include all fees, including
ancillary fees, paid to the PVO by the passenger; and (2) refund
payments must be made in the same manner as the passenger's original
payment, e.g., check, electronic funds transfer, or credit card
chargeback.\23\
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\23\ Fact Finding 30 Interim Report at 11-12.
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Regarding the first recommendation, the Commission is requesting
comment on whether to expand the definition of unearned passenger
revenue and the scope of the ancillary fees to be included in any
revised definition. The Fact Finding 30 Interim Report discusses the
following types of ancillary charges paid by passengers to PVOs prior
to sailing: Gratuities, shore excursions, pre-cruise onboard purchases,
port fees, and taxes. Of these, the current definition of unearned
passenger revenue expressly includes port fees and taxes and excludes
excursions. The Interim Report does not discuss refunds for airfare or
hotel accommodation.
To facilitate comment, the Commission has developed the following
draft definition:
Unearned passenger revenue means that passenger revenue received
for water transportation and all other related accommodations,
services, and facilities relating thereto not yet performed; this
includes port fees, taxes, and all ancillary fees remitted to the
passenger vessel operator by the passenger.
The Commission requests comment on expanding the definition of
unearned passenger revenue, including:
What types of ancillary fees should be included as
unearned passenger revenue subject to refund, and what types of fees
should be excluded.
For example, should the Commission include the types of
fees mentioned in the Fact Finding 30 Interim Report (e.g., shore
excursions, dining packages, other onboard packages, and gratuities)?
Are there any types of fees that should be included?
Should the definition continue to exclude airfare and
hotel accommodations?
The effects of this change as discussed above in section
III.B.1.
The Commission is also requesting comment on the recommendation to
specify that refund payments must be made in the same manner as the
passenger's original payment. Specifically, the Commission requests
comment on the following:
Whether it is feasible for payment from a PVO financial
responsibility instrument to be made in the same manner as the
passenger's original payment.
Necessary changes to the Commission's regulations,
including the financial responsibility instrument forms, to implement
this recommendation.
The effects of this change as discussed above in section
III.B.1.
5. Publishing Information on How To Obtain Refunds
The Fact Finding 30 Interim Report recommended the Commission
mandate that: (1) PVOs provide on their websites clear instructions on
how passengers may obtain refunds; and (2) PVOs submit current website
addresses for their refund instructions to the Commission for
publication on the Commission's website.\24\ The Commission envisions
that this recommendation could be implemented by: (1) Revising the Form
FMC-131, Application for Certificate of Financial Responsibility, to
require PVOs to provide the uniform resource locator (URL) for their
refund instructions; and (2) amending Sec. 540.4 to require PVOs to
amend their application if the URL changes. The Commission requests
comment on this potential change, including:
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\24\ Id. at 12.
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Whether the Commission should prescribe any specific
content or format requirements for published PVO refund instructions.
The nature of any additional regulatory burden associated
with publishing refund policies on a PVO's website or providing the URL
for those instructions to the Commission, as well as the estimated cost
to PVOs.
C. Passenger Cancellations
In addition to recommendations related to passenger refunds in the
event of nonperformance of transportation, the Fact Finding 30 Interim
Report also proposed that the Commission amend its regulations to
ensure PVO financial responsibility in the event passengers cancel
their booking with a PVO prior to or following certain governmental
orders or declarations. Specifically, the Fact Finding 30 Interim
Report recommended that: (1) A passenger be entitled to a refund if
they cancel their booking no more than 60 days prior to a governmental
order or declaration that results in the PVO canceling the voyage or
delaying boarding of passengers by more than 24 hours; and (2) a
passenger be entitled to a future cruise credit if they cancel their
booking following the declaration of a public health emergency and the
voyage occurs as scheduled.
The Commission requests comment on the recommendation regarding
passenger refunds when the passenger cancels their booking and the
voyage is subsequently canceled as a result of a governmental orders or
declarations, including comment on the following:
The types of governmental orders or declarations that
would make a passenger eligible for a refund when they cancel their
booking.
Should these include only U.S. federal, state, and local
orders or declarations, or should foreign government orders and
declarations also trigger the longer refund payment period?
What types of governmental orders and declarations
qualify, i.e., should this be limited to governmental orders and
declarations that expressly prohibit embarking passengers and suspend
passenger operations like the CDC No Sail Order? If not, what other
types of governmental orders and declarations should qualify?
Information passengers will need to provide to obtain a
refund.
Should the Commission specify the information necessary
for passengers to submit to obtain refunds from a PVO financial
responsibility instrument, or should those decisions be left to the
individual PVOs and their financial responsibility providers?
If the Commission should specify the necessary information
from passengers, what information should be required? Such required
information could include evidence of payment to the PVO, ticket
contract, evidence showing cancellation of the booking,
[[Page 65025]]
evidence of a governmental order or declaration, and evidence of
cancellation or delayed boarding of the voyage.
The Commission also requests comment on the recommendation
regarding the provision of future cruise credit when the passenger
cancels their booking following declaration of a public health
emergency but the voyage occurs as scheduled, including comment on the
following:
Whether it is feasible for a passenger to obtain future
cruise credit under a PVO financial responsibility instrument.
The type of public health emergency declaration that would
make a passenger eligible for a future cruise credit when they cancel
their booking.
Whether requests for future cruise credit should be
subject to the same requirements as those recommended for refunds with
respect to the deadline for requesting credit, the deadline for
providing credit, and the amount of the credit.
The Commission also requests comment on the following related to
both recommendations:
Necessary changes to the Commission's regulations,
including the financial responsibility instrument forms, to implement
these changes.
Whether these changes will increase or decrease claims for
refunds against PVO financial responsibility instruments, and if so,
the magnitude of the increase or decrease (including number of claims
and total dollar amounts paid to passengers).
Whether these changes will increase or decrease the cost
to PVOs of obtaining compliant financial responsibility instruments
(e.g., higher or lower premiums or collateral requirements), and if so,
the magnitude of the increase or decrease (i.e., dollar amount).
Other effects of these changes the Commission should
consider.
IV. Public Participation
How do I prepare and submit comments?
Your comments must be written and in English. To ensure that your
comments are correctly filed in the docket, please include the docket
number of this document in your comments.
You may submit your comments via email to the email address listed
above under ADDRESSES. Please include the docket number associated with
this notice and the subject matter in the subject line of the email.
Comments should be attached to the email as a Microsoft Word or text-
searchable PDF document.
How do I submit confidential business information?
The Commission will provide confidential treatment for identified
confidential information to the extent allowed by law. If your comments
contain confidential information, you must submit the following by
email to the address listed above under ADDRESSES:
A transmittal letter requesting confidential treatment
that identifies the specific information in the comments for which
protection is sought and demonstrates that the information is a trade
secret or other confidential research, development, or commercial
information.
A confidential copy of your comments, consisting of the
complete filing with a cover page marked ``Confidential-Restricted,''
and the confidential material clearly marked on each page.
A public version of your comments with the confidential
information excluded. The public version must state ``Public Version--
confidential materials excluded'' on the cover page and on each
affected page, and must clearly indicate any information withheld.
Will the Commission consider late comments?
The Commission will consider all comments received before the close
of business on the comment closing date indicated above under DATES. To
the extent possible, we will also consider comments received after that
date.
How can I read comments submitted by other people?
You may read the comments received by the Commission at the
Commission's Electronic Reading Room at the address listed above under
ADDRESSES.
V. Rulemaking Analyses and Notices
Regulatory Flexibility Act
Under the Regulatory Flexibility Act (codified as amended at 5
U.S.C. 601-612), no analysis is required for an ANPRM. However, PVOs
are encouraged to comment on any aspects of the potential rulemaking
that may apply to them and the potential impact.
National Environmental Policy Act
The Commission's regulations categorically exclude certain
rulemakings from any requirement to prepare an environmental assessment
or an environmental impact statement because they do not increase or
decrease air, water or noise pollution or the use of fossil fuels,
recyclables, or energy. 46 CFR 504.4. The ANPRM discusses potential
amendments to Commission's program for certifying the financial
responsibility of PVOs. This rulemaking thus falls within the
categorical exclusion for certification of financial responsibility of
passenger vessels under Part 540. Sec. 504.4(2). Therefore, no
environmental assessment or environmental impact statement is required.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA)
requires an agency to seek and receive approval from the Office of
Management and Budget (OMB) before collecting information from the
public. 44 U.S.C. 3507. The agency must submit collections of
information in proposed rules to OMB in conjunction with the
publication of the notice of proposed rulemaking. 5 CFR 1320.11. Any
information collection requirements and associated burdens will be
discussed in detail if a proposed rule is issued.
Executive Order 12988 (Civil Justice Reform)
The Commission will ensure that any proposed or final rule issued
in this proceeding meets the applicable standards in E.O. 12988 titled,
``Civil Justice Reform,'' to minimize litigation, eliminate ambiguity,
and reduce burden.
Regulation Identifier Number
The Commission assigns a regulation identifier number (RIN) to each
regulatory action listed in the Unified Agenda of Federal Regulatory
and Deregulatory Actions (Unified Agenda). The Regulatory Information
Service Center publishes the Unified Agenda in April and October of
each year. You may use the RIN contained in the heading at the
beginning of this document to find this action in the Unified Agenda,
available at https://www.reginfo.gov/public/do/eAgendaMain.
By the Commission.
Rachel Dickon,
Secretary.
[FR Doc. 2020-21957 Filed 10-13-20; 8:45 am]
BILLING CODE 6730-02-P