Passenger Vessel Financial Responsibility, 47441-47457 [2021-18220]

Agencies

• Federal Maritime Commission

[Federal Register Volume 86, Number 162 (Wednesday, August 25, 2021)]
[Proposed Rules]
[Pages 47441-47457]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-18220]


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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: Notice of proposed rulemaking (NPRM).

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SUMMARY: The Federal Maritime Commission (Commission) is issuing this 
NPRM to seek comment on potential regulatory changes to its passenger 
vessel operator financial responsibility requirements. The Commission 
is proposing to define when nonperformance of transportation has 
occurred and to establish uniform procedures regarding how and when 
passengers may make claims for refunds under a passenger vessel 
operator's financial responsibility instrument when nonperformance 
occurs. This rulemaking resulted from recommendations in an Interim 
Report issued by the Fact Finding Officer in Commission Fact Finding 
Investigation No. 30: COVID-19 Impact on Cruise Industry.

DATES: Submit comments on or before October 25, 2021.

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. Introduction
II. Background
III. ANPRM Proposed Changes and Summary of Comments
    A. Defining Nonperformance of Transportation

[[Page 47442]]

    B. Process for Obtaining Refunds From PVO Financial Instruments 
After Nonperformance of Transportation
    1. General
    2. Deadline for Submitting Refund Requests Under the Financial 
Instrument
    3. Deadline for Refund Payment Under the Financial Instrument
    4. Form of Refund Payment Under the Financial Instrument
    5. Defining Unearned Passenger Revenue (UPR)
    6. Publishing Information on How To Obtain Refunds
    C. Passenger Cancellations
IV. Discussion & NPRM Proposal
    A. Definition of Nonperformance of Transportation
    B. Process for Obtaining Refunds From PVO Financial Instruments 
for Nonperformance of Transportation
    C. Definition of Unearned Passenger Revenue (UPR)
    D. Publishing Information on How To Obtain Refunds
V. Public Participation
VI. Rulemaking Analyses and Notices
VII. Proposed Regulatory Language

I. Introduction

    On October 29, 2020, the Federal Maritime Commission (Commission) 
issued an Advance Notice of Proposed Rulemaking \1\ (ANPRM) to obtain 
comments on potential regulatory changes recommended in the Fact 
Finding 30 Interim Report on passenger vessel operator (PVO) refund 
policies.\2\ The proposed changes are intended to provide a clear and 
consistent policy toward vessel passenger ticket refunds, from the 
PVOs' financial responsibility instruments filed with the Commission, 
in the case of nonperformance by the vessel operator. Specifically, the 
Commission recommended modifying regulations in 46 CFR part 540 to (1) 
adopt a definition of nonperformance of transportation, and (2) detail 
the process for obtaining refunds under the PVOs' financial 
responsibility instruments filed with the Commission. In response to 
the ANPRM, the Commission received four sets of comments from 
interested parties. These parties are Cruise Lines International 
Association (CLIA); Passenger Vessel Association (PVA); The Surety & 
Fidelity Association of America (SFAA); and Kacie Didier. Under this 
Notice of Proposed Rulemaking (NPRM), the Commission addresses the 
comments to the ANPRM and seeks further public comments on the proposed 
modifications to its regulations in part 540.
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    \1\ Docket No. 20-15, Passenger Vessel Financial Responsibility, 
85 FR 65020 (October 29, 2020).
    \2\ 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).
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II. Background

    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 2 is commonly known as the ``Casualty'' 
section. Section 3 of the statute (codified at 46 U.S.C. 44102) 
requires persons arranging, offering, advertising, or providing 
transportation on such vessels to establish evidence of financial 
responsibility to indemnify passengers for nonperformance of the 
transportation. Section 3 is commonly known as the ``Performance'' 
section. The Commission published implementing regulations at 46 CFR 
part 540 in 1967.\3\
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    \3\ 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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    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 evidence of 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).\4\ 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.\5\ 
The second type of Certificate (Casualty) is issued by the Commission 
when a PVO provides the Commission with acceptable evidence of coverage 
to satisfy any liability incurred for death or injury during a voyage, 
as provided in the regulations and statute.
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    \4\ 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).
    \5\ 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.\6\ 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.\7\
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    \6\ 46 CFR 540.9(j); Final Rule: Passenger Financial 
Responsibility Requirements for Nonperformance of Transportation, 78 
FR 13268 (Feb. 27, 2013).
    \7\ Notice: Financial Responsibility for Indemnification of 
Passengers for Nonperformance of Transportation--Cap Adjustment, 84 
FR 17410 (June 24, 2019). An increase of $1 million (from $32 
million to $33 million), based on the 2020 Consumer Price Index, is 
pending as of April 1, 2021.
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    In March of 2020, following the arrival of COVID-19 in the U.S., 
the Centers for Disease Control and Prevention (CDC) issued a ``No Sail 
Order and Suspension of Further Embarkation,'' (CDC No Sail Order) 
causing most PVOs to cease operations. As a consequence, questions 
arose concerning future cruises and passengers' ability to obtain 
refunds of monies paid for transportation disrupted by COVID-19. Fact 
Finding 30 was initiated on April 30, 2020, to investigate the impact 
of COVID-19 and identify commercial solutions to COVID-19 related 
issues that interfered with the operation of the cruise industry. The 
Fact Finding Officer issued an Interim Report on PVO Refund Policies 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.\8\ The Fact Finding Officer proposed recommending 
certain regulatory changes in order to provide a clear interpretation 
of nonperformance of transportation, and to modify the

[[Page 47443]]

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 Advance Notice of Proposed Rulemaking (ANPRM) 
Docket No. 20-15 Passenger Vessel Financial Responsibility was 
published in the Federal Register on October 14, 2020, seeking comments 
on potential regulatory changes to implement the recommendations in the 
Interim Report.
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    \8\ Fact Finding 30: Covid-19 Impact on Cruise Industry, Interim 
Report: Refund Policy (July 27, 2020).
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III. ANPRM Proposed Changes and Summary of Comments

    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 
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 rulemaking 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.\9\
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    \9\ 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.\10\
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    \10\ Id. at 12.
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A. Defining Nonperformance of Transportation

    As outlined in Section II 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,\11\ 
in accordance with the terms of the ticket contract between the PVO and 
passenger.\12\
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    \11\ 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).
    \12\ 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 ensure financial responsibility 
and the supplying of 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 discussed in the ANPRM, the Commission sought comment on 
adopting a definition of nonperformance of transportation. The 
Commission anticipated 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.\13\ 
To that end, the Commission included in the ANPRM the following draft 
definition:
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    \13\ 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 
or delayed voyage.
Summary of Comments
Passenger Vessel Association (PVA)
    PVA maintains that the regulatory changes proposed in the ANPRM are 
outside the Commission's jurisdiction and believes that while the 
statutory provision at 46 U.S.C. 44102 imposes duties upon a covered 
PVO to file with the Commission evidence of financial responsibility to 
indemnify passengers for nonperformance of transport, it does not grant 
legal authority to the Commission to address the matter of what 
constitutes nonperformance. Nevertheless, PVA urges that if the 
Commission elects to go forward with the proposed rule, it should 
eliminate any reference to delayed sailing in its definition of 
nonperformance of transportation, and failing that, the time threshold 
should be a delay of at least 48 hours. PVA is concerned that the 
proposed definition of nonperformance could provide incentive for a PVO 
to begin a cruise despite potentially unsafe

[[Page 47444]]

conditions, such as bad weather, in an effort to avoid a delay being 
deemed as nonperformance. PVA remarks that the proposal for a 24 hour 
delay to constitute nonperformance appears to be based on a U.S. 
Department of Transportation policy regarding delays in scheduled 
commercial airline transportation and is not an appropriate standard to 
apply to a scheduled cruise.
The Surety & Fidelity Association of America (SFAA)
    SFAA believes the proposed definition of nonperformance is ``overly 
stringent and will increase the number of claims against this 
obligation, thereby increasing the likelihood of exposure under the 
surety bond.'' SFAA further states that a standard of requiring refunds 
if boarding is delayed by 24 hours would add a significant burden to 
PVOs in terms of an increase in full refunds issued, as well as 
compliance costs to operationalize procedures to process refunds based 
on a 24-hour delay to the voyage. SFAA contends the 24-hour delay 
standard for nonperformance would increase ``nuisance'' claims against 
PVOs, which would impact how sureties underwrite the obligation. SFAA 
believes the proposed definition of nonperformance would cause sureties 
to require PVOs to have more cash on hand or larger lines of credit, 
and ultimately decrease the number of PVOs eligible to receive a surety 
bond. SFAA recommends changing the definition of nonperformance to a 
minimum of 72 hours.
    SFAA also expresses concern over uncertainty about what is covered 
under the bond in response to a claim based on the new definition of 
nonperformance. Specifically, SFAA argues that a passenger's unilateral 
cancellation should be excluded from coverage under the bond. SFAA also 
requests clarity as to what passenger expenses are covered as a result 
of PVO nonperformance.

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.\14\
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    \14\ Fact Finding 30 Interim Report at 11-12.
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    Neither part 540 nor the financial responsibility instrument forms 
provide 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 and the ANPRM 
requested comments on 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.\15\ 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.
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    \15\ Fact Finding 30 Interim Report at 11-12.
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Summary of Comments
Passenger Vessel Association (PVA)
    PVA comments that while there is a business relationship between a 
PVO and its financial responsibility instrument provider, no comparable 
relationship exists between the provider and the cruise ship passenger. 
PVA believes the Commission should not attempt to create or force such 
a relationship. Instead, should the Commission go forward with 
establishing a process for a passenger to claim a refund for 
nonperformance of transportation, it should specify that the passenger 
must submit the refund claim directly to the PVO. The PVO would then be 
responsible to submit the claim to the financial responsibility 
instrument provider, if the PVO agrees that nonperformance of 
transportation has occurred and that satisfaction of a claim is 
warranted.
The Surety & Fidelity Association of America (SFAA)
    SFAA ``strongly believes'' that the PVO should continue to serve as 
the primary party designated to receive and handle claims submitted by 
passengers. In a case of liquidation of the PVO, or if there is no 
response from the PVO, then claims could be submitted to the surety. 
SFAA maintains that sureties do not generally have the claims handling 
capability to process individual claims against the financial 
responsibility instrument. SFAA believes that implementing a system 
that allows a direct right of action against the surety bond without 
requiring a judgment will make claim handling more involved, expensive, 
and tedious. Further, SFAA asserts that if sureties are designated as 
the direct claims handling entity with an investigatory requirement 
under the new regulatory regime, many will likely exit the market. SFAA 
believes that the net effect of the proposed changes would increase the 
cost of a surety bond, or a lack of availability of surety bonds. SFAA 
recommends two alternative approaches to the proposed process:

    (1) Claims be submitted directly to the Federal Maritime 
Commission as the obligee and beneficiary of said surety bonds, and 
the FMC may then submit verified requests for payment to the 
sureties based on its review of the claim; or
    (2) Claimants be required to obtain adjudication of its claim 
before submitting their claims to the surety.

2. Deadline for Submitting Refund Requests Under the Financial 
Instrument
    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.\16\ The Commission 
included the following draft provision to reflect this recommendation:
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    \16\ Fact Finding 30 Interim Report at 12.

    A passenger must submit a request for refund no later than 180 
days \17\ after

[[Page 47445]]

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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    \17\ 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.
Summary of Comments
    No comments were received which specifically address the submission 
of refund requests.
3. Deadline for Refund Payment Under the Financial Instrument
    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.\18\ 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.\19\
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    \18\ Fact Finding Interim Report at 11.
    \19\ Id. at 12.
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    The Commission requested comment on prescribing a deadline for 
payment of refunds from financial responsibility instruments providers 
as a general matter. The ANPRM proposed two different timeframes for 
payment depending on whether nonperformance is due to a governmental 
order or declaration, and the ANPRM adopted the deadlines recommended 
in the Interim Report (180 days when there is a governmental order or 
declaration; 60 days in all other cases).
Summary of Comments
Passenger Vessel Association (PVA)
    It is PVA's position that the Commission's proposed bifurcated time 
frame for refunds, which varies depending on the reason for the 
cancellation, is potentially confusing and unfair. PVA poses the 
question of how the regulation would be applied in the case of a 
governmental order to cancel sailings that applies to some PVOs that 
are regulated by the Commission, but not all. PVA states that in such a 
case, smaller PVOs, that may not be subject to a No Sail Order but that 
voluntarily choose to cancel a cruise in the interest of passenger and 
crew health and safety, would have to provide requested refunds in a 
shorter time period than larger PVOs. PVA believes this is an unfair 
policy distinction and recommends that a period of payment of the 
refund be no more than 180 days after the customer's claim is 
submitted, no matter the reason for the nonperformance of 
transportation.
    Should the Commission choose to retain a specific refund process in 
the event of nonperformance due to a governmental order or declaration, 
PVA maintains that it should be ``very precise'' as to what triggers 
this process. PVA believes that, as a general rule, states, counties, 
and municipalities have no or very limited authority over vessel safety 
and navigation. PVA therefore recommends that only orders and 
declarations from federal agencies with ``clear maritime authority'' be 
specified as the triggering events for the refund process.
4. Form of Refund Payment Under the Financial Instrument
    Commission 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 that 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.\20\ The ANPRM requested comments on the 
recommendation.
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    \20\ Fact Finding 30 Interim Report at 11-12.
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Summary of Comments
    No comments were received which specifically address the form of 
refunds. However, it is the Commission's experience that financial 
instrument providers will not likely be able to provide refunds in the 
same manner as the passenger's original payment. The Commission 
understands refunds provided by financial instruments are typically in 
the form of checks that are mailed to the passenger.
5. Defining Unearned Passenger Revenue
    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.\21\
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    \21\ 46 CFR 540.2(i).
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    The Fact Finding 30 Interim Report recommended the Commission 
specify that refund payments must include all fees, including ancillary 
fees, paid to the PVO by the passenger. The Commission requested 
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 included the following draft 
definition in the ANPRM:

    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.
Summary of Comments
Cruise Lines International Association (CLIA)
    CLIA urges the Commission to clarify that ``unearned passenger 
revenue'' (UPR) should include cruise passage fare and related cruise 
lines goods and services amounts collected by the cruise line, such as 
port charges and taxes, pre-paid on-board purchases, gratuities, and 
shore excursions at the cruise line's own or affiliated destinations. 
CLIA argues that UPR should not include deposits for airfare, non-
affiliated shore excursions or other third party provider costs for 
which the cruise line is not still holding the passenger's deposit or 
is contractually obligated to pay such deposit to a third-party 
provider.
    CLIA maintains that if a cruise line contracts with an airline, 
shore hotel resort, attraction or other unaffiliated ``arm's length'' 
third party services provider, the cruise line would be acting as an 
agent for the passenger in booking such accommodations or activities 
for the passenger's benefit.

[[Page 47446]]

    If the cruise line has not yet paid or contractually committed any 
passenger deposits for such items to the third-party provider, the 
cruise line may refund them to the passenger. However, if these funds 
have been paid or contractually committed to such third-party 
providers, the cruise line will have paid, or will have to pay, those 
funds to the third-party provider on behalf of the passengers. CLIA 
states that passengers may be entitled to seek funds directly from such 
third parties. CLIA believes that statutory law and current Commission 
regulations support its interpretation that UPR is limited to the 
passenger vessel transportation only and does not extend to other goods 
and services for which passengers may make advance payments to the 
cruise line. CLIA also notes that most cruise passengers are offered 
cancellation insurance arrangements, or other means of protecting such 
third-party refunds, at time of booking.
6. 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.\22\ The ANPRM envisioned 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 requested 
comment on this potential change.
---------------------------------------------------------------------------

    \22\ Fact Finding 30 Interim Report at 12.
---------------------------------------------------------------------------

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 ANPRM requested comments on the recommendation regarding 
passenger refunds when the passenger cancels their booking, and the 
voyage is subsequently canceled as a result of governmental orders or 
declarations.
    The ANPRM also requested comments 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.
Summary of Comments
Cruise Lines International Association (CLIA)
    CLIA commented on the provision of the proposed rule which entitles 
passengers to a full refund when the passenger themselves canceled 
their booking within 60 days prior to a governmental order or 
declaration and the commensurate cancelled or delayed sailing (so-
called ``lookback'' refunds). It is CLIA's recommendation that the 
proposed rule should apply only in cases of:

    (i) A declaration by the Secretary of Health and Human Services 
of a nationwide Public Health Emergency that
    (ii) Results from events that were public knowledge prior to the 
passenger's cancellation.

    CLIA maintains the correct standard for the type of emergency that 
would trigger the rulemaking is a federal nationwide ``Public Health 
Emergency'' declaration which affects most or all of the country and 
the cruise industry, such as the COVID-19 pandemic. CLIA also 
distinguishes an emergency such as the current pandemic, which was 
slow-developing and uncertain, from a local or regional event such as 
storm, which may develop quickly. Cruise line cancellations in the case 
of a local event give rise to a refund for passengers who were booked 
on the scheduled sailing, but do not lead to anticipatory passenger 
cancellations as much as 60 days before the sailing date. CLIA also 
asserts that state and local authorities have jurisdiction over only 
localized or regional situations that tend to be more limited in 
geographic scope, such as a highway obstruction that temporarily 
disrupts traffic to a cruise port. CLIA believes that the inclusion of 
emergencies that do not at some point directly require cancellation 
would allow subjective interpretations as to whether the passengers 
were acting reasonably when they cancelled bookings due to the advent 
of the situation. Further, CLIA believes this would create incentives 
for passengers who had terminated bookings for personal reasons to try 
to capitalize on later cancellation rationales that had no bearing on 
their decision to cancel.
    CLIA also believes that declarations from international 
organizations should not qualify as governmental declarations for this 
provision. CLIA contends that cruise lines are not likely to cancel 
U.S. sailings based on a multinational organizations' warnings unless 
the U.S. government also decides to issue an order. Further, even if a 
foreign government took action to prevent embarking passengers at U.S. 
ports from calling in their jurisdiction, cruise lines could change 
their itineraries or omit foreign calls, and this would not likely 
result in either cancellation of the sailing or anticipatory passenger 
cancellations.
Passenger Vessel Association (PVA)
    PVA asks the Commission to refrain from imposing a refund policy to 
include a situation in which a passenger voluntarily cancels a booking 
following the declaration of a public health emergency, but the voyage 
nevertheless occurs as scheduled. PVA believes that the proposed rule 
would go beyond the problem of nonperformance of transportation, as in 
this case there is no ``nonperformance of transportation'' as 
envisioned by 46 U.S.C. 44102. PVA further poses the question of by 
whom is the public health emergency to be declared (whether a federal, 
state, or local official). PVA maintains that this type of situation is 
best handled in the context of the commercial relationship between the 
cruise operator and the customer. PVA states that while the vessel 
operator may wish to provide a refund or cruise credit as a matter of 
company policy, it should not be required to do so by the Commission.
    PVA also requests the Commission to make clear that the term 
``public health emergency'' includes only events such as the 
coronavirus pandemic, in which the gathering of persons on a vessel has 
the potential to worsen the emergency.

IV. Discussion & NPRM Proposal

A. Definition of Nonperformance

    The Commission believes that adding a definition for nonperformance 
to 46 CFR part 540 would provide clarity to passengers, PVOs, and the 
participating financial institutions as to when nonperformance has 
occurred. The Commission has also taken into

[[Page 47447]]

consideration the potential negative effects of the proposed definition 
of nonperformance raised by the commenters, particularly the period of 
time a vessel is delayed as it relates to the definition of 
nonperformance of transportation. SFAA proposed the definition of 
nonperformance to be a period of time greater than 24 hours, a minimum 
of 72 hours, to ensure PVOs are not inundated with claims. The 
Commission proposes to define nonperformance as when a passenger vessel 
operator cancels or delays a voyage by three or more calendar days, if 
the passenger elects not to embark on the delayed or a substitute 
voyage offered by the PVO. Adoption of the proposed definition will 
require corresponding changes to all financial instruments.
    Due to the proposed definition of nonperformance of transportation 
and to ensure that passengers are indemnified for nonperformance of 
transportation, the Commission is proposing a change to require PVOs to 
report nonperformance of transportation events to the Commission semi-
annually. This reporting is necessary in order for the Commission to be 
responsive to the public and to provide adequate monitoring and 
statistical information on occurrences of nonperformance. 
Nonperformance of transportation events occurring between January 1 and 
June 30 would be reported no later than July 30 of the same calendar 
year, and events occurring between July 1 and December 31 would be 
reported no later than January 31 of the following calendar year.

B. Process for Obtaining Refunds From PVO Financial Instruments for 
Nonperformance of Transportation

    The Commission reiterates its position on the importance of a clear 
and consistent policy toward refunds from financial instruments in the 
event of nonperformance of transportation, in an effort to eliminate 
uncertainty on the part of passengers. The Commission therefore 
proposes changes to 46 CFR part 540 by adding a Process for obtaining 
refunds from the financial instrument in the event of nonperformance by 
a PVO. This process would apply in a situation where the PVO claims 
procedure provides less than 180 days for submission of claims after 
nonperformance of transportation, and the passenger wishes to submit a 
claim after the PVO's deadline for submission has passed, the passenger 
may still seek reimbursement from the financial instrument after 
providing written notification to the PVO. This provides the passenger 
with up to 180 days to submit their claim, first to the PVO or, 
secondarily, to the financial instrument provider. If proper 
documentation is provided, the refund payment shall be issued within 90 
days of submission of the claim to the financial instrument provider.
    The Commission elected the period of 90 days for the refund payment 
considering PVA's comments which stated that smaller PVOs may be 
unfairly treated under the ANPRM language. They cited an example 
wherein smaller PVOs were not subject to Centers for Disease Control 
and Prevention's (CDC) No Sail Orders, but nonetheless they chose to 
voluntarily cancel planned cruises for safety reasons. In this example, 
smaller PVOs would be required to provide refunds in a shorter time 
period (60 days) relative to larger PVOs (180 days). To address this 
concern, the NPRM proposes a refund payment, under a PVO financial 
responsibility instrument, to be made within 90 days of submission of 
claims to the financial responsibility provider, regardless of the 
reason for nonperformance.
    Subsequent to receiving formal comments to the ANPRM, the 
Commission engaged in additional discussions regarding cost and 
availability of PVO financial instruments with representatives of 
financial instrument providers. It was indicated there likely would be 
an abandonment of the PVO program by many of the financial instrument 
providers due to the possible direct interaction with passengers and 
the lack of a formal judgement. The NPRM proposes passengers first seek 
refunds from the PVO in order to minimize the direct interaction 
between passengers and financial instrument providers, and that the 
financial instrument providers would be permitted to require a formal 
court judgement.
    The Commission is interested in receiving comments from industry 
stakeholders regarding the potential availability of financial 
instruments resulting from the proposed change to the definition of 
nonperformance, and on the proposed process of obtaining refunds from 
the financial instrument. As discussed in this NPRM, comments received 
in response to the ANPRM indicate a concern by some stakeholders that 
the proposed regulatory changes will constrain the current providers of 
financial instruments from continuing to provide such instruments to 
PVOs. Commenters have stated that surety companies would be largely 
unwilling to act as the direct claims handling entity in cases of 
alleged nonperformance. The Commission is also aware of a concern that 
banks may view the new regulations as too burdensome and choose not to 
offer PVOs the option of an escrow account to satisfy PVOs' financial 
responsibility requirement. In addition, the increased claims activity 
of commercial providers of travel insurance during the pandemic may 
influence their determination whether to offer financial instruments to 
PVOs. Subsequent to receiving formal comments to the ANPRM, the 
Commission had additional discussions regarding cost and availability 
of PVO financial instruments with SFAA and Allianz Partners, the 
largest U.S. travel insurance provider. SFAA reiterated many of the 
comments received in response to the ANPRM including the likely 
abandonment of the PVO program by many, if not all, of the surety 
participants due to the possible direct interaction of passengers with 
the surety companies and the lack of a court judgement. Further 
discussion revealed the lack of a court judgement seemed to be the 
largest obstacle to continued participation. The Commission also spoke 
with Allianz Partners in an attempt to determine the availability and 
cost of insurance to fill the void left by the potential abandonment of 
other financial instruments. It was surprising to learn that Allianz, 
and likely other travel insurance providers, would have little interest 
in providing financial coverage to PVOs in the event of nonperformance. 
The lack of interest appears to be due to the hesitancy of travel 
insurance providers to broaden their exposure in the cruise sector due 
to the impact of the pandemic. The Commission seeks further comment on 
these and any other anticipated effects on the availability of 
financial instruments, should the proposed regulations take effect. The 
NPRM proposes that: (1) The passenger makes a request for refund from 
the Principal in accordance with the ticket contract. If the ticket 
contract refund procedure provides less than 180 days to submit a 
claim, the financial instrument will be available after written 
notification to Principal; (2) If the passenger is unable to resolve 
the claim within 180 days after nonperformance, as defined in 46 CFR 
540.2, occurs, the passenger may submit a claim against the financial 
instrument as per instructions on the Commission website. The claim 
must include a copy of the boarding pass, proof and amount of payment, 
cancellation notice, and dated proof of properly filed claim against 
the Principal. All documentation must clearly display the vessel and 
voyage

[[Page 47448]]

with scheduled and actual date of sailing. At the discretion of the 
financial instrument provider a judgment may be required prior to 
resolving the claim; and (3) valid claims must be paid within 90 days 
of submission of claim to the financial instrument provider.
    Additionally, the Commission decided not to propose a refund 
process that would apply in a situation when the passenger unilaterally 
cancels their cruise, which is supported by the ANPRM comments 
questioning whether those cancellations are nonperformance.

C. Definition of Unearned Passenger Revenue (UPR)

    The Commission proposes defining Unearned Passenger Revenue as 
passenger revenue received for water transportation and all other 
accommodations, services and facilities that have not been performed by 
the PVO. Passenger revenue will include port fees, taxes and all 
ancillary fees submitted to the PVO by the passenger. CLIA recommended 
to modify the definition to exclude such items as airfare, non-
affiliated shore excursions, or other third-party provider costs for 
which the PVO is no longer holding the passenger's deposit or is 
contractually obligated to pay such deposit to a third-party provider. 
In order to provide better protection to the consumer, and because PVOs 
have the existing relationship with the providers of ancillary 
services, the Commission believes PVOs should be responsible for 
refunding all monies collected by the PVOs for all services, and 
facilities not yet performed.

D. Publishing Information on How To Obtain Refunds

    The Commission proposes:

    (1) PVOs provide on their websites clear and precise 
instructions on how passengers may obtain refunds in the event of 
nonperformance of transportation; and
    (2) PVOs shall submit an active web page address with their 
refund instructions for nonperformance of transportation to the 
Commission for publication on the Commission's website.
    (3) Form FMC-131 ``Application for Certificate of Financial 
Responsibility'' will include a required field for PVOs to provide 
the web page address of their refund instructions for nonperformance 
of transportation.

    The Commission seeks further comment on whether the Commission 
should provide an example web page with refund instructions in Part 540 
and if so, what it should include.

V. 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.

VI. Rulemaking Analyses and Notices

Regulatory Flexibility Act
Initial Regulatory Flexibility Analysis
    Under the Regulatory Flexibility Act (RFA), whenever an agency is 
required to publish general notice of proposed rulemaking, the agency 
must prepare and make available for public comments an initial 
regulatory flexibility analysis (IRFA) describing the impact of the 
proposed rule on small entities, which in this case are PVOs.\23\ 5 
U.S.C. 603. As discussed below in more detail, the Commission does not 
collect performance data from small PVOs, nor is such specific 
information published. Therefore, in this analysis, the Commission has 
used industry-wide published data as a proxy to estimate the impact of 
the proposed rule on both small and larger PVOs with a comparative 
assessment as recommended in the RFA guide of the Small Business 
Administration (SBA).\24\ The Commission encourages comments on its 
analysis from interested parties with supporting data and information.
---------------------------------------------------------------------------

    \23\ Under 5 U.S.C. 601, the term small entity is defined as a 
small business, a not-for-profit enterprise which is independently 
owned and operated and is not dominant in its field, or a 
governmental jurisdiction with a population of less than 50,000. A 
small business is defined as a small business concern under section 
3 of the Small Business Act. The Small Business Administration 
interprets the meaning of business concern as a business entity 
organized for profit, with a place of business located in the U.S., 
and which operates primarily within the U.S. or which makes a 
significant contribution to the U.S. economy through payment of 
taxes or use of American products, materials, or labor. 13 CFR 
121.105(a)(1).
    \24\ Office of Advocacy, U.S. Small Business Administration, A 
Guide for Government Agencies How to Comply with the Regulatory 
Flexibility Act (August 2017), p. 37.
---------------------------------------------------------------------------

    The requirements for preparing an IRFA of a proposed rule are set 
forth in 5 U.S.C. 603 and direct federal agencies to address the 
following topics:
Why the Commission Is Considering the Proposed Rule
    The proposed rule stems from the Commission's Fact Finding 
Investigation No. 30: COVID-19 Impact on Cruise Industry, which 
concluded 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.
Objectives and Legal Basis for the Proposed Rule
    As discussed in the background section, 46 U.S.C. 44102 requires 
certain persons arranging, offering, advertising, or providing 
transportation on vessels to

[[Page 47449]]

establish financial responsibility for indemnification of passengers 
for nonperformance of transportation. The proposed rule seeks to 
provide a clear and consistent policy toward vessel passenger ticket 
refunds from the PVOs' financial responsibility instruments filed with 
the Commission, in the case of nonperformance by the vessel operator. 
The proposed rule primarily does this by defining nonperformance. The 
proposed rule would add a definition of nonperformance for which 
passengers would be entitled to a refund of their prepaid fares where 
voyages are canceled or delayed for three or more days and the 
passenger does not opt to accept an alternative voyage. Additionally, 
the proposed rule changes the definition of UPR to remove the language 
``excludes such items as airfare, hotel accommodations, and tour 
excursions,'' to include such items in the definition of UPR, if the 
PVO offers and collects money from the passenger for such items.
Determine and Estimate the Number of Small Entities to Which the New 
Rule Will Apply
    As part of this analysis, 5 U.S.C. 603(b)(3) requires a description 
of and, where feasible, an estimate of the number of small entities to 
which the proposed rule will apply. The SBA has established regulations 
to determine whether businesses qualify as small entities. 13 CFR part 
121. The regulations use the North American Industry Classification 
System (NAICS) with codes and descriptions to classify businesses and 
measure their size by either annual receipts (gross annual revenue) or 
number of employees.\25\ The calculation of total annual receipts or 
number of employees for the purpose of determining the size of a 
business includes those of the business itself plus those of its 
domestic and foreign affiliates.\26\
---------------------------------------------------------------------------

    \25\ See 13 CFR subpart A--Size Eligibility Provisions and 
Standards (January 1, 2020).
    \26\ See 13 CFR 121.104 and 121.106.
---------------------------------------------------------------------------

    As discussed, the proposed rule would modify the regulations in 46 
CFR Subpart A of part 540 governing evidence of PVOs financial 
responsibility for nonperformance of transportation. The regulated 
businesses that the proposed rule applies to are PVOs. At present, 
there are a total of 43 PVOs with certificates of financial 
responsibility for nonperformance issued by the Commission. Pursuant to 
the SBA regulations in 13 CFR 121.201, PVOs fall under the 
classification of NAICS code 483112, Deep Sea Passenger Transportation, 
and under this classification, businesses with a total number of 1,500 
employees or less qualify as small. Accordingly, the Commission 
estimates that 14 out of the 43 certified PVOs (or 33 percent) qualify 
as small businesses under the size standard of the SBA. While there may 
be PVOs that report employees of less than 1,500, lines that are 
subsidiaries of much larger companies would not qualify as small 
entities for the intent of receiving regulatory relief under the RFA. 
See 13 CFR 121.106(b).
    In terms of the economic impact on small PVOs, the proposed rule 
would add a definition of nonperformance for which passengers would be 
entitled to a refund of their prepaid fares where voyages are canceled 
or delayed for three or more days and the passenger does not opt to 
accept an alternative voyage. This new definition would potentially 
increase the number of claims for refunds, which in turn may affect the 
cost and method used by a PVO to cover the passengers' prepaid fares. 
In effect, under the proposed definition, PVOs that perform well and on 
time as scheduled would be less impacted than PVOs that perform poorly. 
The Commission has no data or information on the performance of the 14 
small PVOs (per the specifics of the proposed definition) by which to 
gauge which ones would be more significantly impacted by the proposed 
rule, and no such information is published. The proposed rule would 
require that all certified PVOs semi-annually report instances of non-
performance by which the Commission could make this determination in 
the future. Therefore, the Commission assumes that all of the 14 small 
PVOs would be impacted by the proposed rule by varying degrees 
depending on their performance and other factors affecting their 
performance. The Commission seeks public comments on its assumption and 
the economic impact of the proposed rule on small PVOs supported by 
performance data on the cancelation or delay of voyages, as per the 
proposed definition of nonperformance.
Projected Reporting, Record Keeping, and Other Compliance Requirements 
of the New Rule
Cost to Government
    The Commission estimates the total annual cost of this proposed 
rule to the Federal government to be $145,356, offset by the collection 
of $64,482 in filing fees, for a net annual cost of $80,874.
Record Keeping and File Costs to PVOs
    The proposed rule would require that PVOs submit additional semi-
annual reports on their instances of nonperformance. The estimated 
annual cost of the additional reports would be $41,670.
Other Costs to PVOs
    The definition of nonperformance under the proposed rule would 
likely increase instances of non-performance by PVOs and thus 
obligations on financial instruments filed with the Commission. The 
obligations on financial instruments may occur when a cruise has been 
delayed by more than three days or canceled and the passenger desires a 
refund instead of a credit on a future cruise. In turn, the change in 
the definition of UPR to include other items in addition to cruise fare 
(plus fees and taxes) offered and collected by the PVO could increase 
the amount of the refund and the cost to the PVO or discourage PVOs 
from offering such items to passengers. Prior to the proposed rule, the 
passenger vessel program focused on when PVOs ceased operations and 
canceled remaining cruises. Existing policies regarding cancelations 
and refunds vary by PVO. In general, most PVOs provide refunds or 
credits for cancelled voyages or partial refunds for voyages that are 
forced to end early, but it is unclear whether PVOs may provide refunds 
for delayed voyages.
    In response to the ANPRM, the Surety and Fidelity Association of 
America noted that because of the likely increase of instances of 
nonperformance ``sureties likely will require PVOs to have stronger 
balance sheets, specifically more cash on hand or larger lines of 
credit, thereby narrowing the universe of PVOs eligible to receive a 
surety bond guaranteeing this obligation.'' Also, they claimed that the 
required amount or value of collateral could be increased.
    The increased costs to the PVOs would be from three factors. First, 
the increased cost of financial instruments to cover UPR because of 
possible increases in non-performance and issue more credits or refunds 
for certain delayed voyages now defined as nonperformance under this 
NPRM. Second, PVOs would have to refund additional purchases by 
passengers such as airfare and third-party excursions that were 
previously excluded from the definition of UPR before the proposed 
rule. Third, for PVOs using escrow accounts, the opportunity cost of 
having to hold additional cash on hand that is

[[Page 47450]]

unable to be deployed as capital elsewhere.
    To estimate the total cost to the industry, the Commission would 
need to know:
     The estimated rate of nonperformance by PVOs;
     The likelihood that passengers would request refunds 
instead of opting for future cruise credits;
     The impact of the prior two items on the cost of financial 
instruments;
     Whether or not companies offering financial instruments 
would leave the market, or if PVOs could meet the requirements to 
obtain financial instruments; and
     Estimated changes to UPR by removing the exclusion of 
``such items as airfare, hotel accommodations, and tour excursions'' 
from the definition of UPR, to the extent offered and collected by 
PVOs.
    The Commission believes it has an estimate for historical rates of 
nonperformance. The Commission is not certain on the likelihood that 
consumers would request refunds instead of receiving credits, nor the 
size of increase the proposed rule would have on premiums and the 
ability of PVOs to obtain financial instruments. The lack of data on 
these items makes it difficult to provide an accurate cost estimate. 
The Commission seeks public comments on the aforementioned items from 
interested parties supported by data and additional information.
    The Cruise Line International Association (CLIA) publishes data on 
significant operational incidents that can be used to estimate past 
nonperformance by PVOs. Significant operational incidents are defined 
as delays of more than 24 hours to published itinerary, fatalities 
occurring to either passengers or crew, and serious injury occurring to 
either passengers or crew.\27\
---------------------------------------------------------------------------

    \27\ See Report on Operational Incidents 2009 to 2019, Cruise 
Line International Association, https://cruising.org/en/news-and-research/research/2020/may/report-on-operational-incidents-2009-to-2019.
---------------------------------------------------------------------------

    It is difficult to separate out all the significant operational 
incidents to know for certain which ones would meet the definition of 
nonperformance under the proposed rule. However, the total number of 
significant operational incidents reported by CLIA sets an upper bound 
limit for how often instances of nonperformance, as defined by the 
proposed rule, have occurred in the past.
    Between 2009 and 2019, there were 195 significant operational 
incidents for an average of 17.7 annually. The data for significant 
operational incidents is reported globally so the number of instances 
occurring from U.S. embarkations would be lower. To estimate the number 
of incidents in the U.S., the ratio of global incidents to global 
number of passengers was applied to the number of passengers embarking 
from the U.S. on an annual basis. The estimated number of annual 
incidents for the U.S. is 8.4.
    As previously stated, this estimate serves as an upper bound of how 
many instances of nonperformance may occur under the proposed rule. 
U.S. per capita incident rates may vary from the global per capita 
incident rates. Additionally, CLIA reports that incidents appear to be 
trending downward.

----------------------------------------------------------------------------------------------------------------
                                                    Significant       Global           U.S.       Estimated U.S.
                      Year                           incidents      passengers     embarkations      incidents
----------------------------------------------------------------------------------------------------------------
2009............................................              21      17,800,000       8,900,000            10.5
2010............................................              27      19,100,000       9,690,000            13.7
2011............................................              15      20,500,000       9,840,000             7.2
2012............................................              18      20,900,000      10,090,000             8.7
2013............................................              21      21,300,000       9,960,000             9.8
2014............................................              16      22,340,000      11,060,000             7.9
2015............................................              21      26,060,000      10,920,000             8.8
2016............................................              16      25,155,000      11,660,000             7.4
2017............................................              13      26,716,000      12,200,000             5.9
2018............................................              14      28,515,000      12,680,000             6.2
2019............................................              13      29,673,000      13,790,000             6.0
----------------------------------------------------------------------------------------------------------------
Data on significant incidents compiled from CLIA's Report on Operational Incidents 2009 to 2019. Data on global
  passengers compiled from CLIA's annual reports. Data on U.S. embarkations compiled from CLIA's Economic
  Contribution of the International Cruise Industry in the United States publications.

    Using significant operational incidents as a proxy for 
nonperformance, the next step in this analysis is to compare it to how 
many instances of nonperformance occur under the existing program.
    Under its program, the Commission records when PVOs cease their 
operations. Since September 2000, 16 PVOs covered by the Commission's 
program have ceased operations and another company declared bankruptcy 
but successfully restarted operations later.\28\ There have been 17 
PVOs over the last 21 years that ceased operations for an average of 
0.81 incidents per year, where a company either declared bankruptcy or 
ceased operations.
---------------------------------------------------------------------------

    \28\ The PVOs that ceased operations are: Premier Cruise 
Operations Ltd. (Premier), New Commodore Cruise Lines Limited (New 
Commodore), Cape Canaveral Cruise Lines, Inc., MP Ferrymar, Inc., 
American Classic Voyages Company (American Classic), Royal Olympic, 
Regal Cruises, Ocean Club Cruise Line, Society Expeditions, Scotia 
Prince, Glacier Bay, Great American Rivers, RiverBarge Excursion 
Lines, Inc., Majestic America Line, and West Travel, Inc. d/b/a 
Cruise West, and French American Lines. Most of these incidents 
occurred in the 2000s with only one company ceasing operations in 
the last decade. At least one additional company, Haimark Line Ltd, 
declared bankruptcy and emerged successfully from it to continue 
operations.
---------------------------------------------------------------------------

    Significant operational incidents occur much more frequently than 
incidents where PVOs cease operations or declare bankruptcy. The 
estimated number of significant operational incidents is 8.4 annually 
compared to a rate of 0.81 under the Commission's current program. 
Adding the average incident rate of a company ceasing operations or 
declaring bankruptcy to the rate of significant operation incidents 
would equate to a rate of 9.21 incidents per year where a PVOs 
financial instrument may be impacted or a 10-fold increase from the 
current incident rate of nonperformance, when PVOs cease operating. 
However, this impact is mitigated by the fact that many PVOs on their 
own terms, including those determined to be small under the SBA 
guidelines, already provide refunds of prepaid fares to passengers in 
the case of voyage cancellations. The Commission seeks public comments 
from interested parties on the above methodology for incidents of 
nonperformance, other estimates of PVO nonperformance, and the impact 
the rate of nonperformance would have on surety bond premiums and other

[[Page 47451]]

PVO financial instruments, with supporting data and information.
    For these reasons, the Commission believes that the proposed rule 
could increase the cost of UPR coverage to PVOs by 25 percent. Based on 
the investigation in Fact Finding No. 30 and its own research, the 
Commission estimates the cost of UPR coverage to range from $75,000 for 
the smallest of PVOs to around $600,000 for the largest. The total cost 
of current UPR coverage is estimated to be around $9,830,000. Assuming 
a 25 percent increase, the cost would rise by $2,457,500 to a total of 
$12,287,500. However, there is uncertainty about how much the cost 
would rise given the variance in the rate of incidents of 
nonperformance for each PVO. Breaking down the costs increases by size 
of PVOs, the total increase for small PVOs would be $425,000 for a 
total cost of $2,125,000 and for large PVOs would be $2,032,500 for a 
total cost of $10,162,500.
    The removal of the language ``excludes such items as airfare, hotel 
accommodations, and tour excursions'' from the definition of unearned 
passenger revenue might also increase the amount of refunds to 
passengers (and the cost to the PVO) and the amount of UPR held by 
PVOs, to the extent that PVOs offered and collected money for such 
items. Currently, 22 companies' UPR exceeds the $32 million coverage 
cap set by the Commission and pegged to inflation and thus would be 
unaffected by rising UPR. For the remaining 21 companies, their UPR 
would likely rise causing their premiums or money held in escrow to 
increase. This change may disproportionately impact smaller PVOs since 
their UPR is below the current coverage cap. The Commission seeks 
comments on how the change in the definition would increase the amount 
of refunds to passengers and UPR for PVOs.
Alternatives for Small Entities
    The RFA requires agencies to consider significant alternatives for 
small businesses. The Commission has demonstrated flexibility during 
the rulemaking process by publishing an ANPRM and taking into 
consideration the comments from parties impacted by the proposed rule. 
The Commission responded to comments about the definition of 
nonperformance by changing the timing element in the proposed 
definition of nonperformance from 24 hours to three calendar days.
Other Possible Alternatives Are Discussed
Exempt Small Entities From the Proposed Rule
    Exempting small entities from the proposed rule would likely keep 
costs of obtaining certification the same as they are now for small 
entities. The commission could move forward with the definition of 
nonperformance and expanded UPR for entities above a specific revenue 
threshold. However, exempting small entities would mean the consumer 
protections from the proposed rule would not apply to passengers 
booking cruises on small PVOs. Therefore, simply exempting small 
entities would not meet the consumer protection objectives of the 
proposed rule.
Delayed Compliance of the Proposed for Small Entities
    In comments in response to the ANPRM, the Commission has received 
feedback that there is uncertainty regarding how financial institutions 
will respond to the proposed rule with respect to the financial 
instruments they offer. In the most extreme scenario, some surety 
companies may leave the market entirely and certain PVOs would be 
forced to switch to escrow accounts or other forms of financial 
instruments. Delaying the compliance deadline of the proposed rule for 
small PVOs would allow for the market for financial instruments to 
adjust to the new conditions resulting from the proposed rule and 
potentially new financial instruments to emerge. The transition costs 
of the proposal would be mainly borne by large PVOs. Companies offering 
financial instruments would have additional time to study the impacts 
of the proposed rule on small entities. The Commission requests 
comments on whether a delay for small PVOs would be beneficial and how 
long of a delay to allow the market for financial instruments to 
adjust.
Longer Period Before Nonperformance for Small Entities
    The proposed rule could be amended to allow for a longer period of 
delay before a cruise is defined as nonperforming. For small PVOs, the 
proposed rule could allow 4 or 5-day delay of scheduled departure. This 
would reduce the cost to small entities as they would have a lower 
likelihood of nonperformance. The drawback to this alternative is that 
it would create a two-tier structure of refund policies for consumers. 
One of the main objectives of the proposed rule is to provide clarity 
to consumers on refunds by creating a standard policy. A separate 
definition of noncompliance for small entities would lessen consumer 
protections and go against the objectives of the proposed rule by 
straying from a standard refund policy.
Relevant Federal Rules That May Duplicate, Overlap, or Conflict With 
the Proposed Rule
    The Commission is not aware of any other federal rules that 
duplicate, overlap, or conflict with the proposed rule.
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 NPRM discusses potential 
amendments to Commission's program for certifying the financial 
responsibility of PVOs. This rulemaking thus falls within the 
categorical exclusion for ``[c]ertification of financial responsibility 
of passenger vessels'' under 46 CFR 504.4(a)(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.
    The information collection requirements associated with the 
Application for Certificate of Financial Responsibility filing 
requirements in part 540 are currently authorized under OMB Control 
Number 3072-0012. In compliance with the PRA, the Commission has 
submitted the proposed revised information collection to the Office of 
Management and Budget and is requesting comment on the proposed 
revision.
    Title: 46 CFR part 540--Application for Certificate of Financial 
Responsibility.
    OMB Control Number: 3072-0012.
    Abstract: 46 U.S.C. 44102, 44103 and 46 CFR part 540 require 
passenger vessel operators to file unearned passenger revenue reports 
confidentially with the Commission.

[[Page 47452]]

    Current Action: The proposed rule would amend (1) the Application 
for Certificate of Financial Responsibility filing requirements adding 
the website and (2) unearned passenger revenue reports by PVOs adding 
nonperformance of transportation occurrences. Currently, part 540 
requires that passenger vessel operators file unearned passenger 
revenue only, on a semiannual basis.
    Type of Request: Revision of a previously approved collection.
    Needs and Uses: The Commission issues certificates (Performance and 
Casualty) to PVOs for the Indemnification of Passengers for 
Nonperformance of Transportation and Financial Responsibility to Meet 
Liability Incurred for Death or Injury to Passengers or Other Persons 
under Public Law 89-777 (codified as 46 U.S.C. 44102 and 44103).
    Frequency: Filings are submitted to the Commission on a semiannual 
basis.
    Type of Respondents: Passenger vessel operators or their duly 
appointed agents are required to file applications and unearned 
passenger revenue reports with the Commission.
    Number of Annual Respondents: The Commission does not anticipate 
that the proposed revisions would affect the number of respondents. As 
a general matter, however, the number of respondents has decreased 
since the last revision to the information collection. The Commission 
estimates an annual respondent universe of 48 passenger vessel 
operators.
    Estimated Time per Response: The Commission does not anticipate 
that the proposed revisions would affect the estimated time per 
response, which would continue to be 8 person-hours for reporting and 
recordkeeping requirements contained in the regulations and for 
completing Form-131.
    Total Annual Burden: The Commission does not anticipate that the 
proposed revisions would affect the number of applications or unearned 
passenger revenue reports filed, however there will be an increase in 
the burden associated with each filing and would in fact affect the 
total annual burden. Due to the increase in the amount of information 
being collected since the last revision, the Commission expects that 
the total annual burden will increase. The Commission estimates the 
total person-hour burden at 2,087 person-hours.
    Comments are invited on:
     Whether the collection of information is necessary for the 
proper performance of the functions of the Commission, including 
whether the information will have practical utility;
     Whether the Commission's estimate for the burden of the 
information collection is accurate;
     Ways to enhance the quality, utility, and clarity of the 
information to be collected; and
     Ways to minimize the burden of the collection of 
information on respondents, including the use of automated collection 
techniques or other forms of information technology.
    Please submit any comments, identified by the docket number in the 
heading of this document, by the methods described in the ADDRESSES 
section of this document.
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.

VII. Proposed Regulatory Language

List of Subjects in 46 CFR Part 540

    Insurance, Maritime carriers, Penalties, Reporting and 
recordkeeping requirements, Surety bonds.

    For the reasons stated in the preamble, the Federal Maritime 
Commission proposes to amend part 540 of Title 46 Code of Federal 
Regulations as follows:

PART 540--PASSENGER FINANCIAL RESPONSIBILITY

0
1. The authority citation for part 540 continues to read as follows:

    Authority:  5 U.S.C. 552, 553; 31 U.S.C. 9701; 46 U.S.C. 305, 
44101-44106.

0
2. Amend Sec.  540.2 by revising paragraph (i) and adding paragraph (m) 
to read as follows:


Sec.  540.2  Definitions.

* * * * *
    (i) Unearned Passenger Revenue means that passenger revenue 
received for water transportation and all other accommodations, 
services, and facilities that have not been performed by the PVO. 
Passenger revenue includes port fees, taxes, and all ancillary fees 
remitted to the PVO by the passenger.
* * * * *
    (m) Nonperformance of transportation means cancelling or delaying a 
voyage by three (3) or more calendar days, if the passenger elects not 
to embark on the delayed voyage or a substitute voyage offered by the 
passenger vessel operator.
0
3. Amend Sec.  540.9 by revising paragraphs (f), (h), and (i) to read 
as follows:


Sec.  540.9  Miscellaneous.

* * * * *
    (f) Process for obtaining refunds from the financial instrument in 
the event of nonperformance. (1) The passenger must make a written 
request for a refund from the PVO in accordance with the respective 
PVO's claims procedures. If the PVO claims procedure provides less than 
180 days for submission of claims after nonperformance of 
transportation, the passenger may seek reimbursement from the financial 
instrument provider after providing written notification to the PVO.
    (2) In the event the passenger is unable to resolve the claim 
within 180 days after nonperformance of transportation occurs or if the 
claim is denied by the PVO, the passenger may submit a claim against 
the financial instrument as per instructions on the Commission website. 
The claim must include a copy of the boarding pass, proof and amount of 
payment, the cancellation or delay notice, and dated proof of properly 
filed claim against the PVO or written notification as required in 
paragraph (1) above. All documentation must clearly display the vessel 
and voyage with the scheduled and actual date of sailing.
* * * * *
    (h) Every person who has been issued a Certificate (Performance) 
must submit to the Commission a semi-annual statement of any changes 
with respect to the information contained in the application or 
documents submitted in support thereof or a statement that no changes 
have occurred. Negative statements are required to indicate no change. 
These statements must cover the 6-month period of January through June 
and July through December and include a statement of the highest 
unearned passenger vessel revenue accrued for each month in the 6-month 
reporting period as well as any

[[Page 47453]]

instances of nonperformance of transportation. Such statements will be 
due within 30 days after the close of every such 6-month period. The 
reports required by this paragraph shall be submitted to the Bureau of 
Certification and Licensing at its office in Washington by certified 
mail, courier service, or electronic submission.
    (i) Information on How to Obtain Refunds. (1) PVOs shall provide on 
their websites clear instructions on how passengers may obtain refunds 
in the event of nonperformance of transportation; and
    (2) PVOs shall submit an active web page address with their refund 
instructions for nonperformance of transportation to the Commission for 
publication on the Commission's website.
    (3) Form FMC-131 ``Application for Certificate of Financial 
Responsibility'' will include a required field for PVOs to provide the 
web page address of their refund instructions for nonperformance of 
transportation.
* * * * *
0
4. In subpart A of Part 540, revise Form FMC-132A to read follows:

Form FMC-132A to Subpart A of Part 540

FORM FMC-132A

FEDERAL MARITIME COMMISSION

Passenger Vessel Surety Bond (Performance)

Surety Co. Bond No._____
FMC Certificate No._____
    Know all persons by these presents, that we __ (Name of applicant), 
of __ (City), __ (State and country), as Principal (hereinafter called 
Principal), and __ (Name of Surety), a company created and existing 
under the laws of __ (State and country) and authorized to do business 
in the United States as Surety (hereinafter called Surety) are held and 
firmly bound unto the United States of America in the penal sum of __, 
for which payment, well and truly to be made, we bind ourselves and our 
heirs, executors, administrators, successors, and assigns, jointly and 
severally, firmly by these presents. Whereas the Principal intends to 
become a holder of a Certificate (Performance) pursuant to the 
provisions of 46 CFR part 540, subpart A, and has elected to file with 
the Federal Maritime Commission (Commission) such a bond to insure 
financial responsibility and the supplying transportation and other 
services subject to 46 CFR part 540, subpart A.
    Whereas this bond is written to assure compliance by the Principal 
as an authorized holder of a Certificate (Performance) pursuant to 
subpart A of part 540 of title 46, Code of Federal Regulations, and 
shall inure to the benefit of any and all passengers to whom the 
Principal may be held legally liable for any of the damages herein 
described. Now, therefore, the condition of this obligation is such 
that if the Principal shall pay or cause to be paid to passengers any 
sum or sums for which the Principal may be held legally liable by 
reason of the Principal's failure faithfully to provide such 
transportation and other accommodations and services 46 CFR 540, 
subpart A made by the Principal and the passenger while this bond is in 
effect for the supplying of transportation and other services pursuant 
to and in accordance with the provisions of subpart A of part 540 of 
title 46, Code of Federal Regulations, then this obligation shall be 
void, otherwise, to remain in full force and effect. Whereas this bond 
is written to assure compliance by the Principal as an authorized 
holder of a Certificate (Performance) pursuant to 46 CFR part 540, 
subpart A, and shall inure to the benefit of any and all passengers to 
whom the Principal may be held legally liable for any of the damages 
herein described. Now, Therefore, the condition of this obligation is 
that the penalty amount of this bond shall be available to pay damages 
made pursuant to passenger claims, if:
    (1) The passenger makes a request for refund from the Principal in 
accordance with the ticket contract. If, the ticket contract refund 
procedure provides less than 180 days, this bond shall be available 
after written notification to Principal.
    (2) If the passenger is unable to resolve the claim within 180 days 
after nonperformance, as defined in 46 CFR 540.2, occurs, the passenger 
may submit a claim against the bond as per instructions on the 
Commission website. The claim must include a copy of the boarding pass, 
proof and amount of payment, cancellation notice, and dated proof of 
properly filed claim against the Principal. All documentation must 
clearly display the vessel and voyage with scheduled and actual date of 
sailing. And, Surety reserves the discretion to require a judgement 
prior to resolving the claim.
    (3) Valid claims must be paid within 90 days of submission to the 
Surety.
    The liability of the Surety with respect to any passenger shall not 
exceed the passage price paid by or on behalf of such passenger. The 
liability of the Surety shall not be discharged by any payment or 
succession of payments hereunder, unless and until such payment or 
payments shall amount in the aggregate to the penalty of the bond, but 
in no event shall the Surety's obligation hereunder exceed the amount 
of said penalty. The Surety agrees to furnish written notice to the 
Federal Maritime Commission forthwith of all suits filed, judgments 
rendered, and payments made by said Surety under this bond.
    This bond is effective the __ day of __, 20 _, 12:01 a.m., standard 
time at the address of the Principal as stated herein and shall 
continue in force until terminated as hereinafter provided. The 
Principal or the Surety may at any time terminate this bond by written 
notice sent by certified mail, courier service, or other electronic 
means such as email and fax to the other and to the Federal Maritime 
Commission at its office in Washington, DC, such termination to become 
effective thirty (30) days after actual receipt of said notice by the 
Commission, except that no such termination shall become effective 
while a voyage is in progress. The Surety shall not be liable hereunder 
for any refunds due under ticket contracts made by the Principal for 
the supplying of transportation and other services after the 
termination of this bond as herein provided, but such termination shall 
not affect the liability of the Surety hereunder for refunds arising 
from ticket contracts made by the Principal for the supplying of 
transportation and other services prior to the date such termination 
becomes effective.
    The underwriting Surety will promptly notify the Director, Bureau 
of Certification and Licensing, Federal Maritime Commission, 
Washington, DC 20573, of any claim(s) or disbursements against this 
bond.
    In witness whereof, the said Principal and Surety have executed 
this instrument on __ day of __, 20_.
Principal
Name-------------------------------------------------------------------
By---------------------------------------------------------------------
(Signature and title)
Witness----------------------------------------------------------------
Surety
[SEAL]
Name-------------------------------------------------------------------
By---------------------------------------------------------------------
(Signature and title)
Witness----------------------------------------------------------------

    Only corporations or associations of individual insurers may 
qualify to act as Surety, and they must establish to the satisfaction 
of the Federal Maritime Commission legal authority to assume

[[Page 47454]]

the obligations of Surety and financial ability to discharge them.
0
5. In subpart A of Part 540, revise Form FMC-133A to read follows:

Form FMC-133A to Subpart A of Part 540

FORM FMC-133A

FEDERAL MARITIME COMMISSION

Guaranty in Respect of Liability for Nonperformance

Guaranty No. _____
FMC Certificate No._____
    1. Whereas __ (Name of applicant) (Hereinafter referred to as the 
``Applicant'') is the Owner or Charterer of the passenger Vessel(s) 
specified in the annexed Schedule (``the Vessels''), which are or may 
become engaged in voyages to or from United States ports, and the 
Applicant desires to establish its financial responsibility in 
accordance with 46 CFR part 540, subpart A, provided that the Federal 
Maritime Commission (``FMC'') shall have accepted, as sufficient for 
that purpose, the Applicant's application, supported by this Guaranty, 
and provided that FMC shall issue to the Applicant a Certificate 
(Performance) (``Certificate''), the undersigned Guarantor hereby 
guarantees to discharge the Applicant's legal liability to indemnify 
the passengers of the Vessels for nonperformance of transportation 
within the meaning of 46 CFR part 540.2, in the event that:
    (1) The passenger makes a request for refund from the Principal in 
accordance with the ticket contract. If, the ticket contract refund 
procedure provides less than 180 days, this Guaranty shall be available 
after written notification to Principal.
    (2) If the passenger is unable to resolve the claim within 180 days 
after nonperformance, as defined in 46 CFR 540.2, occurs, the passenger 
may submit a claim against the Guaranty as per instructions on the 
Commission website. The claim must include a copy of the boarding pass, 
proof and amount of payment, cancellation notice, and dated proof of 
properly filed claim against the Principal. All documentation must 
clearly display the vessel and voyage with scheduled and actual date of 
sailing. And, Guarantor reserves the discretion to require a judgement 
prior to resolving the claim.
    (3) Valid claims must be paid within 90 days of submission to the 
Guarantor.
    2. The Guarantor's liability under this Guaranty in respect to any 
passenger shall not exceed the amount paid by such passenger; and the 
aggregate amount of the Guarantor's liability under this Guaranty shall 
not exceed $ __.
    3. The Guarantor's liability under this Guaranty shall attach only 
in respect of events giving rise to a cause of action against the 
Applicant, in respect of any of the Vessels, for nonperformance of 
transportation within the meaning of 46 CFR 540.2, occurring after the 
Certificate has been granted to the Applicant, and before the 
expiration date of this Guaranty, which shall be the earlier of the 
following dates:
    (a) The date whereon the Certificate is withdrawn, or for any 
reason becomes invalid or ineffective; or
    (b) The date 30 days after the date of receipt by FMC of notice in 
writing delivered by certified mail, courier service or other 
electronic means such as email and fax, that the Guarantor has elected 
to terminate this Guaranty except that: (i) If, on the date which would 
otherwise have been the expiration date under the foregoing provisions 
(a) or (b) of this Clause 3, any of the Vessels is on a voyage whereon 
passengers have been embarked at a United States port, then the 
expiration date of this Guaranty shall, in respect of such Vessel, be 
postponed to the date on which the last passenger on such voyage shall 
have finally disembarked; and (ii) Such termination shall not affect 
the liability of the Guarantor for refunds arising from ticket 
contracts made by the Applicant for the supplying of transportation and 
other services prior to the date such termination becomes effective.
    4. If, during the currency of this Guaranty, the Applicant requests 
that a vessel owned or operated by the Applicant, and not specified in 
the annexed Schedule, should become subject to this Guaranty, and if 
the Guarantor accedes to such request and so notifies FMC in writing or 
other electronic means such as email and fax, then, provided that 
within 30 days of receipt of such notice, FMC shall have granted a 
Certificate, such Vessel shall thereupon be deemed to be one of the 
Vessels included in the said Schedule and subject to this Guaranty.
    5. The Guarantor hereby designates __, with offices at __, as the 
Guarantor's legal agent for service of process for the purposes of the 
Rules of the Federal Maritime Commission, in accordance with 46 CFR 
part 540, subpart A

-----------------------------------------------------------------------
    (Place and Date of Execution)
-----------------------------------------------------------------------
    (Type Name of Guarantor)
-----------------------------------------------------------------------
    (Type Address of Guarantor)
    By
-----------------------------------------------------------------------
    (Signature and Title)
Schedule of Vessels Referred to in Clause 1
Vessels Added to This Schedule in Accordance With Clause 4
    [ssquf] 6. In Subpart A of Part 540, revise Appendix A to Subpart A 
of Part 540--Example of Escrow Agreement for Use Under 46 CFR 540.5(b) 
to read as follows:

Appendix A to Subpart A of Part 540--Example of Escrow Agreement for 
Use Under 46 CFR 540.5(b)

Escrow Agreement

    This Escrow Agreement, made as of this __day of (month & year), 
by and between (Customer), a corporation/company having a place of 
business at (``Customer'') __ and (Banking Institution name & 
address) a banking corporation, having a place of business at 
(``Escrow Agent'').
    Witnesseth:
    Whereas, Customer wishes to establish an escrow account in order 
to provide for the indemnification of passengers in the event of 
non-performance of water transportation to which such passengers 
would be entitled, and to establish Customer's financial 
responsibility therefore; and
    Whereas, Escrow Agent wishes to act as Escrow Agent of the 
escrow account established hereunder;
    Now, Therefore, in consideration of the premises and covenants 
contained herein and other good and valuable consideration, the 
receipt and sufficiency of which is hereby acknowledged, the parties 
hereto agree as follows:
    1. Customer has established on (month, & year) (the 
``Commencement Date'') an escrow account with the Escrow Agent which 
escrow account shall hereafter be governed by the terms of this 
Agreement (the ``Escrow Account''). Escrow Agent shall maintain the 
Escrow Account in its name, in its capacity as Escrow Agent.
    2. Customer will determine, as of the date prior to the 
Commencement Date, the amount of unearned passenger revenue, 
including any funds to be transferred from any predecessor Escrow 
Agent. Escrow Agent shall have no duty to calculate the amount of 
unearned passenger revenue. Unearned Passenger Revenues are 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).
    3. Customer will deposit on the Commencement Date into the 
Escrow Account cash in an amount equal to the amount of Unearned 
Passenger Revenue determined under Paragraph 2 above plus a cash 
amount (``the Fixed Amount'') equal to (10 percent of the Customer's 
highest Unearned Passenger Revenue for the prior two fiscal years. 
For periods on or after (year of agreement (2009)), the Fixed Amount 
shall be determined by the Commission on an

[[Page 47455]]

annual basis, in accordance with 46 CFR part 540.
    4. Customer acknowledges and agrees that until such time as a 
cruise has been completed and Customer has taken the actions 
described herein, Customer shall not be entitled, nor shall it have 
any interest in any funds deposited with Escrow Agent to the extent 
such funds represent Unearned Passenger Revenue.
    5. Customer may, at any time, deposit additional funds 
consisting exclusively of Unearned Passenger Revenue and the Fixed 
Amount, into the Escrow Account and Escrow Agent shall accept all 
such funds for deposit and shall manage all such funds pursuant to 
the terms of this Agreement.
    6. After the establishment of the Escrow Account, as provided in 
Paragraph 1, Customer shall on a weekly basis on each (identify day 
of week), or if Customer or Escrow Agent is not open for business on 
(identify day of week) then on the next business day that Customer 
and Escrow Agent are open for business recompute the amount of 
Unearned Passenger Revenue as of the close of business on the 
preceding business day (hereinafter referred to as the 
``Determination Date'') and deliver a Recomputation Certificate to 
Escrow Agent on such date. In each such weekly recomputation 
Customer shall calculate the amount by which Unearned Passenger 
Revenue has decreased due to (i) the cancellation of reservations 
and the corresponding refund of monies from Customer to the persons 
or entities canceling such reservations; (ii) the amount which 
Customer has earned as revenue as a result of any cancellation fee 
charged upon the cancellation of any reservations; (iii) the amount 
which Customer has earned due to the completion of cruises; and (iv) 
the amount by which Unearned Passenger Revenue has increased due to 
receipts from passengers for future water transportation and all 
other accommodations, services and facilities relating thereto and 
not yet performed.
    The amount of Unearned Passenger Revenue as recomputed shall be 
compared with the amount of Unearned Passenger Revenue for the 
immediately preceding period to determine whether there has been a 
net increase or decrease in Unearned Passenger Revenue. If the 
balance of the Escrow Account as of the Determination Date exceeds 
the sum of the amount of Unearned Passenger Revenue, as recomputed, 
plus the Fixed Amount then applicable, then Escrow Agent shall make 
any excess funds in the Escrow Account available to Customer. If the 
balance in the Escrow Account as of the Determination Date is less 
than the sum of the amount of Unearned Passenger Revenue, as 
recomputed, plus an amount equal to the Fixed Amount, Customer shall 
deposit an amount equal to such deficiency with the Escrow Agent. 
Such deposit shall be made in immediately available funds via wire 
transfer or by direct transfer from the Customer's U.S. Bank 
checking account before the close of business on the next business 
day following the day on which the Recomputation Certificate is 
received by Escrow Agent. The Escrow Agent shall promptly notify the 
Commission within two business days any time a deposit required by a 
Recomputation Certificate delivered to the Escrow Agent is not 
timely made.
    7. Customer shall furnish a Recomputation Certificate, in 
substantially the form attached hereto as Annex 1, to the Federal 
Maritime Commission (the ``Commission'') and to the Escrow Agent 
setting forth the weekly recomputation of Unearned Passenger Revenue 
required by the terms of Paragraph 6 above. Customer shall mail or 
fax to the Commission and deliver to the Escrow Agent the required 
Recomputation Certificate before the close of business on the 
business day on which Customer recomputes the amount of Unearned 
Passenger Revenue. Notwithstanding any other provision herein to the 
contrary, Escrow Agent shall not make any funds available to 
Customer out of the Escrow Account because of a decrease in the 
amount of Unearned Passenger Revenue or otherwise, until such time 
as Escrow Agent receives the above described Recomputation 
Certificate from Customer, which Recomputation Certificate shall 
include the Customer's verification certification in the form 
attached hereto as Annex 1. The copies of each Recomputation 
Certificate to be furnished to the Commission shall be mailed to the 
Commission at the address provided in Paragraph 25 herein. If copies 
are not mailed to the Commission, faxed or emailed copies shall be 
treated with the same legal effect as if an original signature was 
furnished. No repayment of the Fixed Amount may be made except upon 
approval of the Commission.
    Within fifteen (15) days after the end of each calendar month, 
Escrow Agent shall provide to Customer and to the Commission at the 
addresses provided in Paragraph 25 below, a comprehensive statement 
of the Escrow Account. Such statement shall provide a list of assets 
in the Escrow Account, the balance thereof as of the beginning and 
end of the month together with the original cost and current market 
value thereof, and shall detail all transactions that took place 
with respect to the assets and investments in the Escrow Account 
during the preceding month.
    8. At the end of each quarter of Customer's fiscal year, 
Customer shall cause the independent auditors then acting for it to 
conduct an examination in accordance with generally accepted 
auditing standards with respect to the weekly Recomputation 
Certificates furnished by Customer of the Unearned Passenger 
Revenues and the amounts to be deposited in the Escrow Account and 
to express their opinion within forty-five (45) days after the end 
of such quarter as to whether the calculations at the end of each 
fiscal quarter are in accordance with the provisions of Paragraph 6 
of this Agreement. The determination of Unearned Passenger Revenue 
of such independent auditors shall have control over any computation 
of Unearned Passenger Revenue by Customer in the event of any 
difference between such determinations. To the extent that the 
actual amount of the Escrow Account is less than the amount 
determined by such independent auditors to be required to be on 
deposit in the Escrow Account, Customer shall immediately deposit an 
amount of cash into the Escrow Account sufficient to cause the 
balance of the Escrow Account to equal the amount determined to be 
so required. Such deposit shall be completed no later than the 
business day after receipt by the Escrow Agent of the auditor's 
opinion containing the amount of such deficiency.
    The opinion of such independent auditors shall be furnished by 
such auditors directly to Customer, to the Commission and to the 
Escrow Agent at their addresses contained in this Agreement. In the 
event that a required deposit to the Escrow Agent is not made within 
one Business Day after receipt of an auditor's report or a 
Recomputation Certificate, Escrow Agent shall send notification to 
the Commission within the next two Business Days.
    9. Escrow Agent shall invest the funds in the Escrow Account in 
Qualified Investments as directed by Customer in its sole and 
absolute discretion. ``Qualified Investments'' means, to the extent 
permitted by applicable law:
    (a) Government obligations or obligations of any agency or 
instrumentality of the United States of America;
    (b) Commercial paper issued by a United States company rated in 
the two highest numerical ``A'' categories (without regard to 
further gradation or refinement of such rating category) by Standard 
& Poor's Corporation, or in the two highest numerical ``Prime'' 
categories (without regard to further gradation or refinement of 
such rating) by Moody's Investor Services, Inc.;
    (c) Certificates of deposit and money market accounts issued by 
any United States bank, savings institution or trust company, 
including the Escrow Agent, and time deposits of any bank, savings 
institution or trust company, including the Escrow Agent, which are 
fully insured by the Federal Deposit Insurance Corporation;
    (d) Corporate bonds or obligations which are rated by Standard & 
Poor's Corporation or Moody's Investors Service, Inc. in one of 
their three highest rating categories (without regard to any 
gradation or refinement of such rating category by a numerical or 
other modifier); and
    (e) Money market funds registered under the Federal Investment 
Company Act of 1940, as amended, and whose shares are registered 
under the Securities Act of 1933, as amended, and whose shares are 
rated ``AAA'', ``AA + '' or ``AA'' by Standard & Poor's Corporation.
    10. All interest and other profits earned on the amounts placed 
in the Escrow Account shall be credited to Escrow Account.
    11. This Agreement has been entered into by the parties hereto, 
and the Escrow Account has been established hereunder by Customer, 
to establish the financial responsibility of Customer as the owner, 
operator or charterer of the passenger vessel(s) (see Exhibit A), in 
accordance with 46 CFR part 540, subpart A. The Escrow Account shall 
be held by Escrow Agent in accordance with the terms hereof, to be 
utilized to discharge Customer's legal liability to indemnify the 
passengers of the named vessel(s) for non-performance of 
transportation within the meaning of 46 CFR

[[Page 47456]]

540.2(m). The Escrow Agent shall make indemnification payments 
pursuant to written instructions from Customer, on which the Escrow 
Agent may rely, or in the event that:
    (1) The passenger makes a request for refund from the Principal 
in accordance with the ticket contract. If, the ticket contract 
refund procedure provides less than 180 days, this Escrow Account 
shall be available after written notification to Principal.
    (2) If the passenger is unable to resolve the claim within 180 
days after nonperformance, as defined in 46 CFR 540.2, occurs, the 
passenger may submit a claim against the Escrow Account as per 
instructions on the Commission website. The claim must include a 
copy of the boarding pass, proof and amount of payment, cancellation 
notice, and dated proof of properly filed claim against the 
Principal. All documentation must clearly display the vessel and 
voyage with scheduled and actual date of sailing. And, The Escrow 
Agent shall make indemnification payments pursuant to written 
instructions from Customer, on which the Escrow Agent may rely, or 
in the event that such legal liability has not been discharged by 
Customer within twenty-one (21) days after any such passenger has 
obtained a final judgment (after appeal, if any) against Customer 
from a United States Federal or State Court of competent 
jurisdiction the Escrow Agent is authorized to pay funds out of the 
Escrow Account, after such twenty-one day period, in accordance with 
and pursuant to the terms of an appropriate order of a court of 
competent jurisdiction on receipt of a certified copy of such order.
    (3) Valid claims must be paid within 90 days of submission to 
the Escrow Agent.
    As further security for Customer's obligation to provide water 
transportation to passengers holding tickets for transportation on 
the passenger vessel(s) (see Exhibit A) Customer will pledge to each 
passenger who has made full or partial payment for future passage on 
the named vessel(s) an interest in the Escrow Account equal to such 
payment. Escrow Agent is hereby notified of and acknowledges such 
pledges. Customers' instructions to Escrow Agent to release funds 
from the Escrow Account as described in this Agreement shall 
constitute a certification by Customer of the release of pledge with 
respect to such funds due to completed, canceled or terminated 
cruises. Furthermore, Escrow Agent agrees to hold funds in the 
Escrow Account until directed by Customer or a court order to 
release such funds as described in this Agreement. Escrow Agent 
shall accept instructions only from Customer, acting on its own 
behalf or as agent for its passengers, and shall not have any 
obligations at any time to act pursuant to instructions of 
Customer's passengers or any other third parties except as expressly 
described herein. Escrow Agent hereby waives any right of offset to 
which it is or may become entitled with regard to the funds on 
deposit in the Escrow Account which constitute Unearned Passenger 
Revenue.
    12. Customer agrees to provide to the Escrow Agent all 
information necessary to facilitate the administration of this 
Agreement and the Escrow Agent may rely upon any information so 
provided.
    13. Customer hereby warrants and represents that it is a 
corporation in good standing in its State of organization and that 
is qualified to do business in the State of. Customer further 
warrants and represents that (i) it possesses full power and 
authority to enter into this Agreement and fulfill its obligations 
hereunder and (ii) that the execution, delivery and performance of 
this Agreement have been authorized and approved by all required 
corporate actions.
    14. Escrow Agent hereby warrants and represents that it is a 
national banking association in good standing. Escrow Agent further 
warrants and represents that (i) it has full power and authority to 
enter into this Agreement and fulfill its obligations hereunder and 
(ii) that the execution, delivery and performance of this Agreement 
have been authorized and approved by all required corporate actions.
    15. This Agreement shall have a term of one (1) year and shall 
be automatically renewed for successive one (1) year terms unless 
notice of intent not to renew is delivered to the other party to 
this Agreement and to the Commission at least 90 days prior to the 
expiration of the current term of this Agreement. Notice shall be 
given by certified mail to the parties at the addresses provided in 
Paragraph 25 below. Notice shall be given by certified mail to the 
Commission at the address specified in this Agreement.
    16. (a) Customer hereby agrees to indemnify and hold harmless 
Escrow Agent against any and all claims, losses, damages, 
liabilities, cost and expenses, including litigation, arising 
hereunder, which might be imposed or incurred on Escrow Agent for 
any acts or omissions of the Escrow Agent or Customer, not caused by 
the negligence or willful misconduct of the Escrow Agent. The 
indemnification set forth herein shall survive the resignation or 
removal of the Escrow Agent and the termination of this agreement.
    (b) In the event of any disagreement between parties which 
result in adverse claims with respect to funds on deposit with 
Escrow Agent or the threat thereof, Escrow Agent may refuse to 
comply with any demands on it with respect thereto as long as such 
disagreement shall continue and in so refusing, Escrow Agent need 
not make any payment and Escrow Agent shall not be or become liable 
in any way to Customer or any third party (whether for direct, 
incidental, consequential damages or otherwise) for its failure or 
refusal to comply with such demands and it shall be entitled to 
continue so to refrain from acting and so refuse to act until such 
conflicting or adverse demands shall finally terminate by mutual 
written agreement acceptable to Escrow Agent or by a final, non-
appealable order of a court of competent jurisdiction.
    17. Escrow Agent shall be entitled to such compensation for its 
services hereunder as may be agreed upon from time to time by Escrow 
Agent and Customer and which shall initially be set forth in a 
separate letter agreement between Escrow Agent and Customer. This 
Agreement shall not become effective until such letter agreement has 
been executed by both parties hereto and confirmed in writing to the 
Commission.
    18. Customer may terminate this Agreement and engage a successor 
escrow agent, after giving at least 90 days written termination 
notice to Escrow Agent prior to terminating Escrow Agent if such 
successor agent is a commercial bank whose passbook accounts are 
insured by the Federal Deposit Insurance Corporation and such 
successor agrees to the terms of this agreement, or if there is a 
new agreement then such termination shall not be effective until the 
new agreement is approved in writing by the Commission. Upon giving 
the written notice to Customer and the Commission, Escrow Agent may 
terminate any and all duties and obligations imposed on Escrow Agent 
by this Agreement effective as of the date specified in such notice, 
which date shall be at least 90 days after the date such notice is 
given. All escrowed funds as of the termination date specified in 
the notice shall be turned over to the successor escrow agent, or if 
no successor escrow agent has been named within 90 days after the 
giving of such notice, then all such escrowed funds for sailing 
scheduled to commence after the specified termination date shall be 
returned to the person who paid such passage fares upon written 
approval of the Commission. In the event of any such termination 
where the Escrow Agent shall be returning payments to the 
passengers, then Escrow Agent shall request from Customer a list of 
passenger names, addresses, deposit/fare amounts and other 
information needed to make refunds. On receipt of such list, Escrow 
Agent shall return all passage fares held in the Escrow Account as 
of the date of termination specified in the notice to the 
passengers, excepting only amounts Customer is entitled to receive 
pursuant to the terms of this Agreement for cruises completed 
through the termination date specified in the notice, and all 
interest which shall be paid to Customer.
    In the event of termination of this Agreement and if alternative 
evidence of financial responsibility has been accepted by the 
Commission and written evidence satisfactory to Escrow Agent of the 
Commission's acceptance is presented to Escrow Agent, then Escrow 
Agent shall release to Customer all passage fares held in the Escrow 
Account as of the date of termination specified in the notice. In 
the event of any such termination where written evidence 
satisfactory to Escrow Agent of the Commission's acceptance has not 
been presented to Escrow Agent, then Escrow Agent shall request from 
Customer a list of passenger names, addresses, deposit/fare amounts 
and other information needed to make refunds. On receipt of such 
list, Escrow Agent shall return all passage fares held in the Escrow 
Account as of the date of termination specified in the notice to the 
passengers, excepting only amounts Customer is entitled to receive 
pursuant to the terms of this Agreement for cruises completed 
through the termination date specified in the notice, and all 
interest which shall be paid to Customer. Upon termination, Customer 
shall pay all costs and fees previously earned or incurred by Escrow 
Agent through the termination date.
    19. Neither Customer nor Escrow Agent shall have the right to 
sell, pledge,

[[Page 47457]]

hypothecate, assign, transfer or encumber funds or assets in the 
Escrow Account except in accordance with the terms of this 
Agreement.
    20. This Agreement is for the benefit of the parties hereto and, 
accordingly, each and every provision hereof shall be enforceable by 
any or each or both of them. Additionally, this Agreement shall be 
enforceable by the Commission. However, this Agreement shall not be 
enforceable by any other party, person or entity whatsoever.
    21. (a) No amendments, modifications or other change in the 
terms of this Agreement shall be effective for any purpose 
whatsoever unless agreed upon in writing by Escrow Agent and 
Customer and approved in writing by the Commission.
    (b) No party hereto may assign its rights or obligations 
hereunder without the prior written consent of the other, and unless 
approved in writing by the Commission. The merger of Customer with 
another entity or the transfer of a controlling interest in the 
stock of Customer shall constitute an assignment hereunder for which 
prior written approval of the Commission is required, which approval 
shall not be unreasonably withheld.
    22. The foregoing provisions shall be binding upon undersigned, 
their assigns, successors and personal representative.
    23. The Commission shall have the right to inspect the books and 
records of the Escrow Agent and those of Customer as related to the 
Escrow Account. In addition, the Commission shall have the right to 
seek copies of annual audited financial statements and other 
financial related information.
    24. All investments, securities and assets maintained under the 
Escrow Agreement will be physically located in the United States.
    25. Notices relating to this Agreement shall be sent to Customer 
at (address) and to Escrow Agent at (address) or to such other 
address as any party hereto may hereafter designate in writing. Any 
communication sent to the Commission or its successor organization 
shall be sent to the following address: Bureau of Certification and 
Licensing, Federal Maritime Commission, 800 North Capitol NW, 
Washington, DC 20573-0001.
    26. This agreement may be executed in any number of 
counterparts, each of which shall be deemed to be an original and 
all of which when taken together shall constitute one and the same 
instrument.
    27. This Agreement is made and delivered in, and shall be 
construed in accordance with the laws of the State __ of without 
regard to the choice of law rules.
    In witness whereof, the undersigned have each caused this 
Agreement to be executed on their behalf as of the date first above 
written.

By:--------------------------------------------------------------------
Title:-----------------------------------------------------------------
By:--------------------------------------------------------------------
Title:-----------------------------------------------------------------

EXHIBIT A

ESCROW AGREEMENT, dated __ by and between (Customer) and (Escrow 
Agent).

Passenger Vessels Owned or Chartered

ANNEX 1

RECOMPUTATION CERTIFICATE

    To: Federal Maritime Commission
    And To: (``Bank'')
    The undersigned, the Controller of __ hereby furnishes this 
Recomputation Certificate pursuant to the terms of the Escrow 
Agreement dated __, between the Customer and (``Bank''). Terms 
herein shall have the same definitions as those in such Escrow 
Agreement and Federal Maritime Commission regulations.

I. Unearned Passenger Revenue as of (``Date'') was: $__
    a. Additions to unearned Passenger Revenue since such date were:
    1. Passenger Receipts: $__
    2. Other (Specify) $__
    3. Total Additions: $__
    b. Reductions in Unearned Passenger Revenue since such date 
were:
    1. Completed Cruises: $__
    2. Refunds and Cancellations: $__
    3. Other (Specify) $__
    4. Total Reductions: $__
II. Unearned Passenger Revenue as of the date of this Recomputation 
Certificate is: $__
    a. Excess Escrow Amount $__
III. Plus the Required Fixed Amount: $__
IV. Total Required in Escrow: $__
V. Current Balance in Escrow Account: $__
VI. Amount to be Deposited in Escrow Account: $__
VII. Amount of Escrow Account available to Operator: $__
VIII. I declare under penalty of perjury that the above information 
is true and correct.

Dated:-----------------------------------------------------------------

(Signature)------------------------------------------------------------
Name:------------------------------------------------------------------
Title:-----------------------------------------------------------------

(Signature)------------------------------------------------------------
Name:------------------------------------------------------------------
Title:-----------------------------------------------------------------

By the Commission.
Rachel Dickon,
Secretary.
[FR Doc. 2021-18220 Filed 8-24-21; 8:45 am]
BILLING CODE 6730-02-P