Federal Register / Vol. 87, No. 52 / Thursday, March 17, 2022 / Rules and Regulations 15125 

PART 525—MARINE TERMINAL 

OPERATOR SCHEDULES 

■ 1. The authority citation for part 525 

continues to read as follows: 

Authority: 46 U.S.C. 40102, 40501, 41101– 

41106. 

■ 2. Amend § 525.1 by: 

■ a. Revising paragraphs (a) and (c)(1), 

(2), (7), (8), (13), (18), and (19); 

■ b. Redesignating paragraphs (c)(21) 

through (23) as paragraphs (c)(22) 

through (24); and 

■ c. Adding a new paragraph (c)(21). 

The revisions and addition read as 

follows: 

§ 525.1 Purpose and scope. 

(a) Purpose. This part implements the 

Shipping Act of 1984, as amended (46 

U.S.C. 40101–41309). The requirements 

of this part are necessary to enable the 

Commission to meet its responsibilities 

with regard to identifying and 

preventing unreasonable preference or 

prejudice and unjust discrimination 

pursuant to section 10 of the Act (46 

U.S.C. 41101–41106). 

* * * * * 

(c) * * * 

(1) Act means the Shipping Act of 

1984, as amended. 

(2) Bulk cargo means cargo that is 

loaded and carried in bulk without mark 

or count, in a loose unpackaged form, 

having homogenous characteristics. 

Bulk containerized cargo tendered by 

the shipper is subject to mark and count 

and is, therefore, subject to the 

requirements of this part. 

* * * * * 

(7) Expiration date means the last day 

after which the entire schedule or a 

single element of the schedule, is no 

longer in effect. 

(8) Forest products means forest 

products including, but not limited to, 

lumber in bundles, rough timber, ties, 

poles, piling, laminated beams, bundled 

siding, bundled plywood, bundled core 

stock or veneers, bundled particle or 

fiber boards, bundled hardwood, wood 

pulp in rolls, wood pulp in unitized 

bales, paper and paper board in rolls or 

in pallet or skid-sized sheets, liquid or 

granular by-products derived from 

pulping and papermaking, and 

engineered wood products. 

* * * * * 

(13) Marine terminal operator means 

a person engaged in the United States in 

the business of providing wharfage, 

dock, warehouse or other terminal 

facilities in connection with a common 

carrier, or in connection with a common 

carrier and a water carrier subject to 

Subchapter II of Chapter 135 of Title 49, 

United States Code. A marine terminal 

operator includes, but is not limited to, 

terminals owned or operated by states 

and their political subdivisions; 

railroads who perform port terminal 

services not covered by their line haul 

rates; common carriers who perform 

port terminal services; and 

warehousemen who operate port 

terminal facilities. For the purposes of 

this part, marine terminal operator 

includes conferences of marine terminal 

operators. This term does not include 

shippers or consignees who exclusively 

provide their own marine terminal 

facilities in connection with tendering 

or receiving proprietary cargo from a 

common carrier or water carrier. 

* * * * * 

(18) Terminal facilities means one or 

more structures comprising a terminal 

unit, which include, but are not limited 

to docks, berths, piers, aprons, wharves, 

warehouses, covered and/or open 

storage spaces, cold storage plants, 

cranes, grain elevators and/or bulk cargo 

loading and/or unloading structures, 

landings, and receiving stations, used 

for the transmission, care and 

convenience of cargo and/or passengers 

in the interchange of same between land 

and ocean common carriers or between 

two ocean common carriers. 

* * * * * 

(21) United States means the States of 

the United States, the District of 

Columbia, Guam, Puerto Rico, the 

Virgin Islands, American Samoa, the 

Northern Mariana Islands, and any other 

territory or possession of the United 

States. 

* * * * * 

■ 3. Amend § 525.3 by revising 

paragraphs (b) through (e) to read as 

follows: 

§ 525.3 Availability of marine terminal 

operator schedules. 

* * * * * 

(b) Access to electronically published 

schedules. Marine terminal operators 

shall provide access to their terminal 

schedules via the internet. 

(c) Internet connection. (1) The 

internet connection requires that 

systems provide a uniform resource 

locator (URL) internet address (e.g., 

http://www.tariffsrus.com or http://

1.2.3.4). 

(2) Marine terminal operators shall 

ensure that their internet service 

providers provide static internet 

addresses. 

(d) Notification. Each marine terminal 

operator shall notify the Commission’s 

Bureau of Trade Analysis (BTA), prior 

to the commencement of marine 

terminal operations, of its organization 

name, home office address, contact 

information for its representative, the 

location of its terminal schedule(s), and 

the publisher, if any, used to maintain 

its terminal schedule, by electronically 

submitting Form FMC–1 via the 

Commission’s website at www.fmc.gov. 

Any changes to the above information 

shall be immediately transmitted to 

BTA within 30 calendar days. BTA has 

the authority to accept submitted Form 

FMC–1 filings and revisions. Form 

FMC–1 filings are pending until 

accepted. The Commission will publish, 

on its website, the location of any 

terminal schedule made available to the 

public. 

(e) Form and manner. A marine 

terminal operator may make available to 

the public a schedule of rates, 

regulations, and practices, including 

limitations of liability for cargo loss or 

damage, pertaining to receiving, 

delivering, handling, or storing property 

at its marine terminal. Any such 

schedule made available to the public is 

enforceable by an appropriate court as 

an implied contract without proof of 

actual knowledge of its provisions. Each 

terminal schedule made available by a 

marine terminal operator shall contain 

an individual identification number, 

effective date, expiration date, if any, 

and the terminal schedule in full text 

and/or data format showing the relevant 

rates, charges, and regulations relating 

to or connected with the receiving, 

handling, storing, and/or delivering of 

property at its terminal facilities. 

* * * * * 

By the Commission. 

William Cody, 

Secretary. 

[FR Doc. 2022–05512 Filed 3–16–22; 8:45 am] 

BILLING CODE 6730–02–P 

FEDERAL MARITIME COMMISSION 

46 CFR Part 540 

[Docket No. 20–15] 

RIN 3072–AC82 

Passenger Vessel Financial 

Responsibility 

AGENCY: Federal Maritime Commission 

ACTION: Final rule. 

SUMMARY: The Federal Maritime 

Commission (Commission) is issuing 

this final rule to adopt regulatory 

changes to its passenger vessel operator 

financial responsibility requirements. 

The Commission is defining when 

nonperformance of transportation has 

occurred and establishing uniform 


khammond on DSKJM1Z7X2PROD with RULES
15126 Federal Register / Vol. 87, No. 52 / Thursday, March 17, 2022 / Rules and Regulations 

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. In the August 25, 2021, Notice 

of proposed rulemaking, the 

Commission proposed to modify 

regulations to revise the definition of 

Unearned Passenger Revenue, adopt a 

definition of nonperformance of 

transportation, and detail the process for 

obtaining refunds under the PVOs’ 

financial responsibility instruments 

filed with the Commission. Based on the 

comments received on the proposed 

rule, this final rule also clarifies that 

passengers must wait until the PVO 

refund period has ended as outlined in 

the PVO’s claims procedure before 

making a claim against the financial 

instrument, or the claim has been 

denied by the PVO. Also, this final rule 

confirms that claims may be resolved 

between the passenger and the PVO as 

an alternative form of compensation. 

Finally, it creates a small business 

accommodation by delaying 

implementation of the new unearned 

passenger revenue definition by two 

years for small entities. 

DATES: 

Effective date: This rule is effective 

April 18, 2022. 

Compliance date: For businesses that 

meet the criteria in the revised 46 CFR 

540.2(i), the compliance date is March 

17, 2024. 

ADDRESSES: Docket: To view 

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: 

William Cody, Secretary, Phone: 202– 

523–5725, Email: secretary@fmc.gov. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Introduction 

II. Regulatory History: ANPRM and NPRM 

Summary 

III. Discussion of Changes and Public 

Comments 

A. Substantive Changes to the Proposed 

Rule 

1. Process for Obtaining Refunds from 

PVO Financial Instruments for 

Nonperformance of Transportation 

2. Definition of Nonperformance 

3. Definition of Unearned Passenger 

Revenue 

4. Publishing Information on How To 

Obtain Refunds 

5. Mutually-Agreed Settlements 

6. Small Business Accommodation 

B. Other Comments 

1. Passenger Declaration With Refund 

Application 

2. Legal Authority 

3. Sureties’ Discretion To Require Final 

Court Judgement 

4. Passengers’ Own Cancellation 

IV. Regulatory Analyses 

I. Introduction 

The Federal Maritime Commission 

has broad authority pursuant to 46 

U.S.C. Ch. 44101 et seq. to establish 

rules pertaining to PVOs’ financial 

responsibility instruments filed with the 

Commission. 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. Fact Finding 30: Covid–19 

Impact on Cruise Industry, Interim 

Report: Refund Policy (July 27, 2020). 

This rulemaking was based on 

recommendations in an Interim Report 

issued by the Fact Finding Officer. The 

Commission has carefully considered all 

the comments it has received in an 

Advance Notice of Proposed 

Rulemaking (ANPRM), 85 FR 65020 

(October 29, 2020) and a Notice of 

Proposed Rulemaking (NPRM), 86 FR 

47441 (August 25, 2021), prior to 

issuing this Final Rule (FR). The NPRM 

contains a detailed background of this 

rule. See 86 FR at 47442. 

II. Regulatory History: ANPRM and 

NPRM Summary 

On October 29, 2020, the Commission 

issued an Advance Notice of Proposed 

Rulemaking (ANPRM) to obtain 

comments on potential regulatory 

changes recommended in the Fact 

Finding 30 Interim Report on PVO 

refund policies. The proposed changes 

were intended to provide a clear and 

consistent policy toward passenger 

vessel ticket refunds 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. Subsequent 

to the ANPRM, the Commission 

received 4 sets of comments; these were 

from Cruise Lines International 

Association (CLIA); Passenger Vessel 

Association (PVA); The Surety & 

Fidelity Association of America (SFAA); 

and Kacie Didier. The Commission took 

these comments into consideration in 

developing recommendations which 

were included in the Notice of Proposed 

Rulemaking (NPRM). 

The Commission considered the 

comments it received in response to the 

ANPRM and adjusted the proposed 

regulations published on August 25, 

2021. In response to the NPRM, the 

Commission received 82 comments 

from interested parties. Of the 

comments received, six recommended 

changes to the proposed regulatory text 

and are discussed below. The 76 

remaining comments detailed 

individual disputes between passengers 

and passenger vessel owners or 

operators but do not directly request 

changes to the proposed regulatory text. 

The Commission appreciates the 

examples provided and encourages 

passengers that have commented to 

utilize the tools the Commission 

provides in this final rule. The six 

comments recommending changes to 

the proposed rule text were filed by 

Alaskan Dream Cruises (ADC), CLIA, 

PVA, Roanoke, SFAA, and Fredric 

Lazarus. These comments are addressed 

in the discussion below. 

III. Discussion of Changes and Public 

Comments 

The Commission’s current regulations 

provide that ‘‘[n]o person in the United 

States may arrange, offer, advertise or 

provide passage on a vessel unless a 

Certificate (Performance) has been 

issued to or covers such person.’’ 46 

CFR 540.3. Such persons must apply for 

a Certificate pursuant to Section 540.4, 

and, per Section 540.5, provide 

financial responsibility ‘‘in an amount 

determined by the Commission to be no 

less than 110 percent of the unearned 

passenger revenue of the [PVO] 

applicant’’ for the two immediately 

preceding fiscal years that reflect the 

greatest amount of unearned passenger 

revenue. The amount of required 

financial responsibility, however, is 

currently capped at $32 million. 46 CFR 

540.9(j). This Final Rule will revise the 

current regulations to include the 

following: (1) Implementation of the 

process for obtaining refunds from PVO 

financial responsibility instruments for 

nonperformance of transportation, (2) 

addition of the definition of 

nonperformance and reporting 

requirement for instances of 

nonperformance of transportation, (3) 

revision of the definition of unearned 

passenger revenue, (4) publishing 

information on how to obtain refunds, 

(5) acknowledgement of mutuallyagreed settlements, and (6) 

accommodation for PVOs that fall into 

the small business category. 

The sample surety bond, guaranty, 

and escrow agreement that are set forth 


khammond on DSKJM1Z7X2PROD with RULES
Federal Register / Vol. 87, No. 52 / Thursday, March 17, 2022 / Rules and Regulations 15127 

1The scope of the transportation, 

accommodations, and services covered is described 

in the definition of ‘‘unearned passenger revenue’’ 

in § 540.2 and includes water transportation and all 

other accommodations, services, and facilities 

relating thereto, but excludes air transportation, 

hotel accommodations, or tour excursions. 46 CFR 

540.2(i). 

2These 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; and 

Appendix A, Example of Escrow Agreement for Use 

Under 46 CFR 540.5(b)). There is no required or 

optional form for insurance, which must meet the 

requirement in § 540.5(a). 

in the Commission’s regulations are also 

amended. They are included in the 

Appendix to this final rule. 

A. Substantive Changes to the Proposed 

Rule 

1. Process for Obtaining Refunds From 

PVO Financial Instruments for 

Nonperformance of Transportation 

The Commission’s regulations do not 

currently prescribe how long passengers 

have after nonperformance to seek a 

refund from a PVO’s 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. 

Fact Finding 30 Interim Report at 12. 

The Commission proposed: (1) The 

passenger makes a request for a 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 

responsibility instrument will be 

available after written notification to the 

Principal and (2) If the passenger is 

unable to resolve the claim within 180 

days after nonperformance, as defined 

in 46 CFR 540.2, the passenger may 

submit a claim against the financial 

responsibility instrument per the 

instructions on the Commission 

website. The claim may include a copy 

of the boarding pass, proof and amount 

of payment, cancellation notice, and 

dated proof of the properly filed claim 

against the Principal. All documentation 

submitted must clearly display the 

vessel and voyage with the 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 the claim to the 

financial instrument provider. 

In its submitted comments, CLIA 

requested that the Commission change 

the proposed text of 46 CFR 540.9(f)(1) 

and (2) to read: (1) The passenger must 

make a written request for a refund from 

the PVO in accordance with the 

respective PVO’s claims procedures; (2) 

In the event the passenger is unable to 

resolve the claim within 180 days, or 

such shorter refund notice period for 

which the PVOs claims procedure 

provides, 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 Commission 

has considered the proposed changes 

submitted by CLIA and has adopted the 

proposed changes with some 

modification. These changes will clarify 

that passengers must wait until (1) the 

PVO refund period has ended as 

outlined in the PVOs claims procedure 

before making a claim against the 

financial instrument, or (2) the claim 

has been denied by the PVO. With this 

minor change, the Commission adopts 

CLIA’s recommendation. 

CLIA also proposed to revise 

numbered paragraphs (1) and (2) of the 

Commission’s proposed forms FMC– 

132(A), FMC–133(A) and ‘‘Appendix A 

of Escrow Agreement,’’ changing the 

language to similarly match what they 

proposed for 46 CFR 540.9(f)(1) and (2). 

The Commission concurs and makes the 

corresponding changes to the forms. 

2. Definition of Nonperformance 

Congress requires that PVOs file with 

the Commission evidence of financial 

responsibility to indemnify passengers 

for nonperformance of transportation. 

46 U.S.C. 44102. The Commission’s 

regulations in 46 CFR 540 do not 

expressly define what constitutes 

nonperformance of transportation, but 

the substantive provisions and required 

financial responsibility instrument 

terms indicate that it means a PVO’s 

failure to provide transportation or other 

accommodations and services subject to 

part 540, subpart A,1 in accordance with 

the terms of the ticket contract between 

the PVO and passenger. See 46 CFR 

540.1(a). 

As discussed in the ANPRM and 

NPRM, the Commission sought 

comment on adopting a definition of 

nonperformance of transportation. In 

the ANPRM, the Commission include 

the following draft definition: 

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. 

After considering the comments 

received in the ANPRM to this 

definition, which are discussed in the 

NPRM, the Commission revised the 

proposed definition of nonperformance 

of transportation as follows: 

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. 

The Commission also proposed 

revising the language of the forms for 

financial responsibility instruments 

(surety bonds, guaranties, and escrow 

agreements) to reflect coverage in 

situations that meet the added 

definition.2

PVA concurs with the Commission’s 

change to the definition in the proposed 

rule from delaying the boarding of 

passengers by more than 24 hours to 

delaying the voyage by three or more 

calendar days because it does not 

believe that a 24-hour delay in sailing 

should constitute nonperformance of 

transportation. It states that the 

proposed rule embraces a more 

reasonable standard: a delay in sailing 

by three (3) or more calendar days, if the 

passenger elects not to embark on the 

delayed voyage or a substitute voyage. 

The PVA also agrees with the change 

in the proposed rule excluding from the 

definition of ‘‘nonperformance of 

transportation’’ a scenario in which a 

passenger voluntarily cancels a booking 

at any time in advance of the scheduled 

sailing. It states that if the PVO’s vessel 

in fact sails, there is no 

‘‘nonperformance of transportation.’’ 

PVA believes that the proposed 

definition of ‘‘nonperformance’’ 

satisfactorily addresses this potential 

problem. 

The Alaska Catamaran, LLC dba 

Alaskan Dream Cruises (ADC) also 

concurs with revised definition of 

nonperformance of transportation in the 

proposed rule because it does not 

believe that a 24-hour delay in sailing 

should constitute nonperformance of 

transportation. The ADC concurs with 

the updated definition in the proposed 

rule of ‘‘a delay in sailing by three (3) 

or more calendar days, if the passenger 

elects not to embark on the delayed 

voyage or a substitute voyage.’’ ADC 

encourages the Commission to resist 

suggestion to compress this standard. 

The Commission took into 

consideration the comments of the 

various interested parties, and adopts a 

new definition of nonperformance of 

transportation in 46 CFR 540.2. 

The adoption of the definition of 

nonperformance of transportation led 

the Commission to require PVOs to 

report nonperformance of transportation 

events to the Commission semiVerDate Sep<11>2014 16:41 Mar 16, 2022 Jkt 256001 PO 00000 Frm 00097 Fmt 4700 Sfmt 4700 E:\FR\FM\17MRR1.SGM 17MRR1

khammond on DSKJM1Z7X2PROD with RULES
15128 Federal Register / Vol. 87, No. 52 / Thursday, March 17, 2022 / Rules and Regulations 

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 20 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. 

Also, this final rule requires all 

certified PVOs to report to the 

Commission, as part of their semiannual statement, instances of 

nonperformance of transportation. The 

Commission will use the information to 

analyze any PVO’s nonperformance and 

monitor the rule’s impact on PVOs and 

consumers. 

3. Definition of Unearned Passenger 

Revenue 

Commission regulations currently 

state that the PVO financial 

responsibility instruments must provide 

coverage for ‘‘unearned passenger 

revenue,’’ (UPR) which is defined in 46 

CFR 540.2(i) as passenger revenue 

received for water transportation and all 

other accommodations, services, and 

facilities relating thereto not yet 

performed and includes port fees and 

taxes paid, but excludes such items as 

airfare, hotel accommodations, and tour 

excursions. In the NPRM, the 

Commission proposed redefining 

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 includes port 

fees, taxes, and all ancillary fees 

remitted to the PVO by the passenger. 

The Commission received comments 

from CLIA, PVA, The Roanoke 

Insurance Group Inc. (Roanoke) and 

ADC stating their concerns with revising 

the definition of unearned passenger 

revenue. 

CLIA proposes that the Commission’s 

proposed definitions of unearned 

passenger revenue, at 46 CFR 540.2(i), 

be revised by adding the words, ‘‘. . . 

excluding any non-refundable amounts 

advanced by the PVO on behalf of the 

passenger to unaffiliated providers of 

goods and services, such as payments 

for non-refundable airline tickets 

provided to the passenger.’’ CLIA 

believes the definition should exclude 

from ancillary fees any non-refundable 

payments by the PVO, which CLIA says 

is acting in good faith as the agent for 

passengers. With respect to nonrefundable airfares, CLIA maintains 

under most airlines’ policies the 

passenger may be able to apply a nonrefundable airfare for a different travel 

date for the passenger’s benefit for up to 

a year after the original scheduled flight 

date. CLIA further claims that while the 

PVO cannot legally recoup the airfare 

payment for the passenger, the 

passenger may use the ticket. 

The PVA continues to urge the 

Commission not to amend the definition 

of UPR. PVA believes that broadening 

the definition will cause the UPR of a 

PVO to go up and thereby increase how 

much financial responsibility must be 

demonstrated but that it will have no 

consequence for a PVO that can 

currently take advantage of the 

regulatory ‘‘cap’’ for financial 

responsibility (now at $32 million). PVA 

asserts that for smaller PVOs for which 

the ‘‘cap’’ does not come into play, it 

will increase their costs for obtaining 

instruments attesting to their financial 

responsibility. More specifically, PVA 

states, this change will increase the 

costs of the five PVOs that operate 

‘‘small ship’’ U.S.-flagged overnight 

cruise vessels. 

The PVA further states that travel 

providers that offer land-based package 

trips with advance collection of fees for 

airfare, hotel accommodations, and 

third-party tours will not be subject to 

this requirement and the land-based 

travel companies often compete directly 

with ‘‘small ship’’ U.S-flagged PVOs in 

Alaska and elsewhere. PVA claims that 

in the rare instances of 

‘‘nonperformance of transportation,’’ the 

passengers are not without remedies— 

the PVO is likely to provide voluntary 

refunds (or if the customer agrees, 

credits for future travel) or the customer 

can obtain reimbursement from a credit 

card company. 

Roanoke believes that the expanded 

definition of UPR may likely cause 

surety companies to be more reluctant 

to provide larger bonds to PVOs or make 

them available on pricing and/or 

collateral terms more expensive than 

they would be for a smaller bond 

amount. The revision will cause the 

calculation of UPR to be a higher 

amount than it would be under the 

current rule. This higher amount means 

that bond, if not already at the cap, 

would be for a larger amount. The 

financial structure of the PVO, however, 

would remain unchanged or could be 

more leveraged. 

Roanoke further states that the 

financial structure and business nature 

of the cruise industry requires large 

dollar fixed assets, large dollar 

capitalization (often debt many times 

greater than equity), and meaningful 

current liabilities (unearned passenger 

revenue) since cruises are often booked 

over a year in advance. This high 

leverage business model makes bonding 

expensive or difficult to obtain unless 

adequate collateral security is posted 

with the surety. In Roanoke’s 

experience, increasing to larger bond 

amounts would typically mean the 

surety would require a higher amount of 

collateral and charge a higher premium 

than is required by smaller bond 

amounts under the current rule. 

ADC is a member of PVA, and a 

portion of their submitted comments 

echoed exactly the comments submitted 

by PVA and discussed above. ADC 

believes that broadening the definition 

will cause the UPR to go up and thereby 

increase how much financial 

responsibility must be demonstrated. 

ADC believes this will have no 

consequence for a PVO that can take 

advantage of the regulatory ‘‘cap’’ for 

financial responsibility (now at $32 

million). The ADC asserts that for 

smaller PVOs, the cap does not come 

into play, and it will increase their costs 

for obtaining instruments attesting to 

financial responsibility, at a time when 

they are receiving great pressure from 

their bonding company to reduce their 

bond exposure through all steps 

necessary. 

The ADC further claims that travel 

providers that offer land-based package 

trips with advance collection of fees for 

airfare, hotel accommodations, and 

third-party tours will not be subject to 

this requirement; these land-based 

travel companies often compete directly 

with ‘‘small ship’’ U.S.-flagged PVOs. 

According to ADC, in the rare instances 

of ‘‘nonperformance of transportation,’’ 

the passengers are not without remedies 

as demonstrated by ADC work during 

2020 when they either refunded 

passengers or the passengers 

volunteered to move their travel to a 

future year. 

In addition, ADC stated that it is 

under contract with their credit card 

processor to hold funds received to use 

in the event the company is unable to 

refund passengers. During the COVID– 

19 pandemic, their credit card company 

increased ADC’s cash on deposit from 

$300,000 to $2 million. ADC believes 

that the UPR definition in the proposed 

rule would significantly damage the 

company’s ability to meet its financial 

obligations. 

The Commission adopts the definition 

of 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 


khammond on DSKJM1Z7X2PROD with RULES
Federal Register / Vol. 87, No. 52 / Thursday, March 17, 2022 / Rules and Regulations 15129 

port fees, taxes and all ancillary fees 

submitted to the PVO by the passenger. 

The Commission, therefore, continues to 

believe that to provide better protection 

to passengers, and because PVOs have 

the existing relationship with the 

providers of ancillary services, the PVOs 

should be responsible for refunding all 

monies collected by the PVOs for all 

services not yet performed. 

4. Publishing Information on How To 

Obtain Refunds 

The Commission received one 

comment in reference to publishing 

information on how to obtain refunds. 

The PVA commented that it agrees with 

the Commission’s suggestion of 

developing a template to place on its 

website with instructions for how a 

passenger might file a claim asserting 

‘‘nonperformance of transportation.’’ 

In this final rule, the Commission is 

revising part 540.9 to include a new 

paragraph (f) describing the process a 

passenger can use to obtain a refund in 

the event of nonperformance. Also, a 

new paragraph (i) will require PVOs to 

provide clear instructions on their 

websites for how passengers may obtain 

refunds in the event of nonperformance. 

The Commission believes that asking 

PVOs to provide this type of 

information on their websites will 

provide passengers with clear and 

concise instructions to follow when 

requesting refunds for nonperformance 

of transportation. 

The Commission will also include the 

PVOs’ active web page address to the 

Commission’s own website. 

Additionally, Form FMC–131 

‘‘Application for Certificate of Financial 

Responsibility’’ will be updated to 

provide a required field for PVOs to 

provide the web page address of their 

refund instructions for nonperformance 

of transportation. 

5. Mutually-Agreed Settlements 

Mutually-agreed settlements were not 

specifically discussed in the NPRM. 

However, CLIA requested as part of 

their comments that the Commission 

add a new paragraph reading, ‘‘Nothing 

in this rule shall be interpreted to 

preclude the passenger and the PVO 

from entering into an alternative form of 

compensation in full satisfaction of a 

required refund, such as a future cruise 

credit.’’ The Commission agrees with 

CLIA that the added paragraph makes it 

clear that claims may be resolved 

between the passenger and the PVO as 

an alternative form of compensation. 

The Commission’s proposed definition 

of nonperformance does not preclude 

alternative forms of compensation, such 

as a future cruise credit. Thus, the 

Commission adopts CLIA’s suggestion. 

6. Small Business Accommodations 

The Regulatory Flexibility Act 

analysis below suggests that the rule 

may have a substantial economic impact 

on small PVOs. The Commission has 

elected to delay the implementation of 

this rule with respect to small entities. 

This accommodation for small 

businesses will be discussed in depth in 

Section V, Regulatory Analyses. 

B. Other Comments 

1. Passenger Declaration With Refund 

Application 

CLIA recommends that passengers 

applying for refunds sign and submit 

with the application a declaration that 

they have not received compensation 

from an alternative party. CLIA believes 

that the following statement should be 

included, ‘‘Under penalty of perjury, 

that the passenger, to the best of his/her/ 

their knowledge, is due the refund 

sought and has not recovered and will 

not recover any portion of the refund 

sought from the cruise line or any other 

source, such as cancellation insurance 

or a credit card refund, and the 

passenger has not accepted an 

alternative form of compensation from 

the PVO, such as a future cruise credit, 

in full satisfaction of the refund.’’ The 

Commission understands CLIA’s 

concerns for possible duplicative refund 

claims by passengers. The Commission, 

however, does not regulate financial 

instrument providers. Financial 

instrument providers may follow their 

own claim procedure, and it is up to 

them whether to require the suggested 

declaration from passengers submitting 

claims. 

2. Legal Authority 

PVA restated that it does not believe 

the Commission has legal authority to 

issue a rule on nonperformance of 

transportation and refund policy. PVA 

claims that 46 U.S.C. 44102 does not 

grant legal authority to the Commission 

to address the matter of what constitutes 

nonperformance. PVA further asserts 

the Commission lacks the legal 

authority to issue a rule mandating 

when and how passenger refunds are 

payable in the event of nonperformance 

of transportation. 

The statute requires PVOs to file with 

the Commission evidence of financial 

responsibility to indemnify passengers 

for nonperformance of transportation. 

46 U.S.C. 44102. The statute states that 

satisfactory evidence includes the 

information the Commission considers 

necessary and must be filed in the forms 

required by the Commission’s 

regulation. 46 U.S.C. 44102 (a)–(b). 

Further, the Commission has broad 

authority to ‘‘prescribe regulations to 

carry out its duties and powers.’’ 46 

U.S.C. 46105(a). 

To satisfy the statutory mandate of 

protecting passengers from 

nonperformance of transportation, the 

Commission believes that it must clarify 

what constitutes nonperformance and 

what is UPR. Without clear definitions 

of those terms, the cruise industry and 

passengers may continue to experience 

confusion as to when and how to 

indemnify passengers for 

nonperformance under the submitted 

financial responsibility instruments. 

This final rule does not regulate PVOs’ 

own practice or policy of indemnifying 

passengers for nonperformance. Rather, 

the Commission clarifies when and how 

nonperformance may be covered under 

the financial responsibility instruments 

that must be submitted to the 

Commission by PVOs. The Commission 

has the statutory authority to implement 

these changes. 

3. Sureties’ Discretion To Require a 

Final Court Judgment 

SFAA recommends that the 

Commission add to the rule the surety’s 

authority to require a ‘‘final court 

judgment’’ prior to paying a claim. 

SFAA recommends that the provision 

providing that authority be included in 

the new proposed bond form. It 

recommends that Commission add that 

authority to the Commission’s 

regulations to make clear that only 

judgments finally adjudicated by a court 

are acceptable. 

The Commission does not adopt 

SFAA’s recommendation. The 

Commission believes that it is better to 

allow the sureties establish their own 

claim procedures satisfying their 

obligation under the surety bonds 

submitted to the Commission. 

4. Passengers’ Own Cancellation 

The Commission received a comment 

from Mr. Fredric Lazarus who stated 

that refunds should take place when (a) 

the passenger cancels a booking after the 

declaration by the Secretary of Health 

and Human Services of a nationwide 

Public Health Emergency and (b) the 

scheduled sailing is ultimately delayed 

or cancelled by the passenger vessel 

operator (PVO). 

Presently, PVOs are required to file 

with the Commission evidence of 

financial responsibility to indemnify 

passengers for nonperformance of 

transportation. 46 U.S.C. 44102. The 

adopted definition of nonperformance 

also provides that it means cancellation 


khammond on DSKJM1Z7X2PROD with RULES
15130 Federal Register / Vol. 87, No. 52 / Thursday, March 17, 2022 / Rules and Regulations 

or significant delay of voyages by PVOs. 

Passengers’ own cancellation does not 

constitute a nonperformance by PVOs 

that should be covered by the PVOs 

financial responsibility instruments for 

nonperformance. 

IV. Rulemaking Analyses 

Regulatory Flexibility Act 

Final Regulatory Flexibility Analysis 

Under the Regulatory Flexibility Act 

(RFA), whenever an agency promulgates 

a final rule after being required to 

publish a proposed rulemaking under 

the Administrative Procedure Act (5 

U.S.C. 553), the agency must prepare 

and make available a Final Regulatory 

Flexibility Analysis (FRFA) describing 

the impact of the rule on small entities, 

unless the head of the agency certifies 

that the rulemaking will not have a 

significant economic impact on a 

substantial number of small entities. 5 

U.S.C. 604–605. Below is the FRFA for 

this final rule. 

Need for and Objectives of the 

Passenger Vessel Financial 

Responsibility Regulation 

This rulemaking stems from the 

Commission’s Fact Finding 

Investigation No. 30: COVID–19 Impact 

on Cruise Industry on PVO refund 

policies. Fact Finding 30’s Interim 

Report concluded that clearer guidance 

is needed to determine 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. As part of 

the report, the Fact-Finding Officer 

recommended making regulatory 

changes with respect to the definition of 

nonperformance and to make clear how 

passengers may obtain refunds under 

the PVOs’ financial responsibility 

instruments filed with the Commission. 

This final rule establishes when 

passengers are entitled to a refund for 

nonperformance of transportation. First, 

the rule establishes a timeline for when 

a refund request can occur and requires 

PVOs to provide clear and precise 

instructions on how passengers may 

request refunds in the event of 

nonperformance. Second, it clarifies 

that nothing in the rulemaking 

precludes the passenger and PVO from 

entering into a mutually agreed 

settlement such as a future cruise credit. 

Third, it creates a small business 

accommodation by delaying 

implementation of the new UPR 

definition by two years for small 

entities. Fourth, it adds a definition of 

nonperformance which entitles 

passengers to a refund of their prepaid 

fares when voyages are canceled or 

delayed for three or more calendar days 

and the passenger does not opt to accept 

an alternative voyage. Finally, it 

changes the definition of UPR to include 

ancillary fees such as airfare, hotel 

accommodations, and tour excursions if 

the PVO offers and collects monies from 

the passenger for such services. 

Significant Comments in Response to 

the IRFA 

The Commission discussed comments 

received in response to the NPRM in 

Section IV above. Two commenters 

touched on issues related to the Initial 

Regulatory Flexibility Analysis (IRFA), 

and the commenters either are or 

represent small PVOs. The PVA believes 

that small PVOs may be 

disproportionately impacted by the 

regulation based on the regulation’s 

broadening definition of UPR. PVA 

argues that by including ancillary fees 

for services collected by the PVO in the 

definition of UPR, UPR will increase. 

PVA states that large PVOs will not have 

to demonstrate any additional financial 

responsibility because of the cap on 

coverage demonstrating financial 

responsibility for UPR. The cap is 

currently set at $32 million and many 

large PVOs likely exceed the cap while 

small PVOs likely do not. PVA contends 

that UPR should not include ancillary 

fees collected by PVOs and expresses 

concerns companies offering financial 

instruments may leave the market 

because of the regulation. The SFAA 

also expressed concerns that some of the 

proposed changes in the regulation may 

reduce the number of surety companies 

offering financial responsibility 

instruments to PVOs. ADC expressed 

similar concerns regarding UPR. ADC 

believes the increased costs of 

instruments to demonstrate financial 

responsibility for UPR could be as high 

as $1–$1.5 million for the small familyowned business. Both PVA and ADC 

asked for the rule to not be adopted. 

As part of the IRFA, the Commission 

considered alternatives for small entities 

including exemption from the rule, 

delayed compliance with the rule, and 

an alternative definition of 

nonperformance. The Commission 

ultimately decided the best way to 

balance the need for consumer 

protections while minimizing the 

impact on small entities was to delay 

the new definition of UPR for small 

entities. Therefore, the new definition of 

UPR created by this rulemaking will 

apply to small entities two years after 

the effective date of the regulation for all 

other PVOs. During this two-year 

period, the existing definition of UPR 

prior to this proposed rulemaking will 

remain in effect for small entities. The 

Commission believes the delay will 

lessen potentially disproportionate 

impacts of the regulation on small 

PVOs. 

The Commission defines and 

identifies small entities according to the 

Small Business Administration (SBA) 

regulations in 13 CFR 121.201. PVOs 

typically fall under the classification of 

the North American Industry 

Classification System (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. PVOs operating 

exclusively on coastal, the Great Lakes, 

and inland waterways fall under NAISC 

codes 483114 and 483212 and qualify as 

small if they have a total number of 500 

employees or less. Although 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 purpose 

of receiving regulatory relief under the 

RFA. See 13 CFR 121.106(b). 

As noted above, small PVOs 

expressed concerns about the regulation 

increasing the costs of financial 

responsibility instruments to 

demonstrate financial responsibility for 

nonperformance. Part of the concern is 

the uncertainty around how financial 

responsibility products will be priced 

given the expanded definition of UPR 

and new definition of nonperformance. 

A two-year delay of the new definition 

of UPR for small PVOs will allow the 

market for financial responsibility 

instruments to adjust. Providers of such 

financial responsibility instruments can 

analyze how the new definitions of UPR 

and nonperformance will impact large 

PVOs and better price such products for 

small PVOs after the delay. Large PVOs 

are likely better able to absorb potential 

costs of the regulation due to larger 

volume of sales, likely higher cash 

reserves, and the monetary cap on the 

amount of financial responsibility for 

nonperformance. The two-year delay 

will also allow small PVOs the chance 

to have two full seasons of operation to 

adjust to the coming regulatory changes. 

Small PVOs will have the opportunity 

to evaluate their business practices for 

potential changes that may make it less 

costly to comply with the regulation’s 

requirements and learn from changes 

already implemented by large PVOs. 

Description and Estimate of the Number 

of Small Entities Effected 

As part of the IRFA, the Commission 

estimated the number of small entities, 

small PVOs, to which the proposed rule 

would apply. The same methodology 

from the IRFA was used for the FRFA. 


khammond on DSKJM1Z7X2PROD with RULES
Federal Register / Vol. 87, No. 52 / Thursday, March 17, 2022 / Rules and Regulations 15131 

The Commission does not believe 

market conditions have changed to 

impact the number of small PVOs nor 

has the regulation changed enough 

between the IRFA and the FRFA that 

additional small PVOs would be 

impacted. 

The SBA has established regulations 

to determine whether businesses qualify 

as small entities. 13 CFR part 121. The 

regulations use the NAICS with codes 

and descriptions to classify businesses 

and measure their size by either annual 

receipts (gross annual revenue) or 

number of employees. See 13 CFR 

subpart A—Size Eligibility Provisions 

and Standards (January 1, 2020). 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. See 13 CFR 121.104 and 

121.106. 

The final rule modifies the regulations 

in 46 CFR part 540 governing evidence 

of PVOs financial responsibility for 

nonperformance of transportation. The 

regulated businesses that the 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 

codes 483112, 483114, and 483212. For 

Deep Sea Passenger Transportation, 

businesses with a total number of 1,500 

employees or less qualify as small. For 

coastal, the Great Lakes, and inland 

waters passenger transportation, 

businesses with a total of 500 employees 

or less qualify as small. Accordingly, the 

Commission estimates that 14 out of the 

43 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 or 

500 depending on where the PVO 

operates, lines that are subsidiaries of 

much larger companies would not 

qualify as small entities for the purpose 

of receiving regulatory relief under the 

RFA. See 13 CFR 121.106(b). 

Projected Reporting, Recordkeeping, 

and Other Compliance Requirements 

Cost to Government 

The Commission estimates the total 

annual cost of this final 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. 

Recordkeeping and Filing Costs to PVOs 

The final 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 

As part of the IRFA, the Commission 

discussed the types of costs likely to be 

incurred by PVOs and the challenges 

associated with accurately quantifying 

these costs. The Commission sought 

comments on additional data and 

methods that could help quantify 

compliance costs. ADC was the only 

commenter who responded with an 

estimate of compliance cost and 

believes the increased costs of 

instruments to demonstrate financial 

responsibility for nonperformance could 

be as high as $1–$1.5 million for their 

small family-owned business. 

In the IRFA, the Commission 

discussed what it believes to be the 

current costs to demonstrate financial 

responsibility for nonperformance. 

Based on interviews with PVOs as part 

of the investigation in Fact Finding No. 

30 and its additional research, the 

Commission estimates the cost of 

premiums for nonperformance coverage 

to range from $75,000 for the smallest of 

PVOs to around $600,000 for the largest. 

The total cost of current 

nonperformance coverage for all PVOs 

is estimated to be around $9,830,000. 

The Commission believes the regulation 

may increase the cost of 

nonperformance coverage to PVOs by 25 

percent due to the change in the 

definition of nonperformance and UPR. 

The Commission estimates the 

percentage increase in premiums based 

on discussions it had with members of 

the financial services industry. 

Assuming a 25 percent increase, 

nonperformance coverage would 

increase by $2,457,500 to a total of 

$12,287,500. 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. 

Determining exactly how much 

premiums will rise as a result of this 

regulation is difficult. Several factors 

impact the cost of premiums such as the 

incidence rate of nonperformance, how 

many customers would choose refunds 

over future cruise credits, and the total 

amount of ancillary fees collected by 

PVOs under the new definition of UPR. 

While the Commission was able to find 

data on rates of nonperformance, it was 

not able to find the other types of data 

necessary to fully quantify the costs of 

the regulation on PVOs. To minimize 

potential impacts to small PVOs, the 

Commission decided to delay 

compliance with the regulation for 

small PVOs. Based on the delay, the 

increase in the cost of premiums for 

small PVOs may be less than the 

initially estimated 25 percent increase. 


khammond on DSKJM1Z7X2PROD with RULESER17MR22.000</GPH>

Figure 1. Estimated Costs of Financial Responsibility Instruments for Nonperformance 

Current estimated cost of Financial New estimated cost of Financial 

Responsibility Instruments for Responsibility Instruments for 

Nonperformance Nonperformance 

Small $1,700,000 $2,125,000 

PVOs 

Large $8,130,000 $10,162,500 

PVOs 

Total $9,830,000 $12,287,500 
15132 Federal Register / Vol. 87, No. 52 / Thursday, March 17, 2022 / Rules and Regulations 

Steps To Minimize Significant 

Economic Impacts on Small Entities 

As part of complying with the RFA, 

the Commission estimated the number 

of small entities that would be impacted 

by this rulemaking. The Commission 

was not able to ascertain that the 

proposed rule would not have a 

significant economic impact on a 

substantial number of small entities and 

thus provided an IRFA in the NPRM. As 

part of the IRFA, the Commission 

considered three alternatives for small 

entities including exemption from the 

regulation, delayed compliance with the 

regulation, and a separate definition of 

nonperformance with a longer time 

period. The Commission decided that 

the best way to minimize the economic 

impacts on small entities while 

maintaining consumer protections 

would be to delay for two years the new 

definition of UPR in the rulemaking for 

small entities. Small entities will have 

two additional years before they have to 

comply with the new definition of UPR 

during which time they will have the 

opportunity to better understand and 

adjust to how the new definition will 

impact their businesses. The 

Commission believes the delay will 

lessen potential impacts stemming from 

the regulation on small entities. 

National Environmental Policy Act 

The Commission’s regulations 

categorically exclude certain actions 

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 final rule discusses 

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 in part 540 are currently 

authorized under OMB Control Number 

3072–0012. In compliance with the 

PRA, the Commission submitted the 

proposed revised information collection 

to the Office of Management and 

Budget. Notice of the revised 

information collections was published 

in the Federal Register and public 

comments were invited. See 86 FR 

47441 (Aug. 25, 2021). 

No comments specifically addressed 

the revised information collection in 

part 540. 

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 http://

www.reginfo.gov/public/do/ 

eAgendaMain. 

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 amends 46 CFR part 540 as 

follows: 

PART 540—PASSENGER FINANCIAL 

RESPONSIBILITY 

■ 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. 

■ 2. Amend § 540.2 by: 

■ a. Revising paragraph (i); and 

■ b. Adding Paragraph (m). 

The revision and addition read as 

follows: 

§ 540.2 Definitions. 

* * * * * 

(i) Unearned Passenger Revenue 

means: (1) 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; 

(2) From March 17, 2022 through 

March 17, 2024, for small businesses 

that operate in deep sea waters and have 

1,500 or fewer employees or operate 

exclusively in coastal, Great Lakes, and 

inland water ways and have 500 or 

fewer employees, Unearned Passenger 

Revenue means 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. 

* * * * * 

(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. 

■ 3. Amend § 540.9 by 

■ a. Adding paragraph (f); 

■ b. Revising paragraph (h); and 

■ c. Adding paragraph (i). 

The additions and revision read as 

follows: 

§ 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 procedure. 

(2) In the event the passenger is 

unable to resolve the claim within 180 

days, or such shorter claim resolution 

period for which the PVO’s claims 

procedure provides, 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 may 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 

(f)(1) of this section. All documentation 

must clearly display the vessel and 

voyage with the scheduled and actual 

date of sailing. 

(3) Nothing in this rule shall be 

interpreted to preclude the consumer 

and the PVO from entering into an 

alternative form of compensation in full 


khammond on DSKJM1Z7X2PROD with RULES
Federal Register / Vol. 87, No. 52 / Thursday, March 17, 2022 / Rules and Regulations 15133 

satisfaction of a required refund, such as 

a future cruise credit. 

* * * * * 

(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 

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, DC 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. 

* * * * * 

■ 4. Revise Form FMC–132A to Subpart 

A of Part 540 to read as 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. lllllllllll

FMC Certificate No. lllllllllll

Know all persons by these presents, 

that we lllll (Name of applicant), 

of (City), lllll (State and country), 

as Principal (hereinafter called 

Principal), and lllll (Name of 

surety), a company created and existing 

under the laws of lllll (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 lllll, 

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. 

(2) In the event the passenger is 

unable to resolve the claim within 180 

days, or such shorter claim resolution 

period for which the PVO’s claims 

procedure provides, after 

nonperformance of transportation 

occurs or if the claim is denied by the 

PVO, the passenger may submit a claim 

against the bond as per instructions on 

the Commission’s website. The claim 

may 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 ll day of 

llll, 20 l, 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. 


khammond on DSKJM1Z7X2PROD with RULES
15134 Federal Register / Vol. 87, No. 52 / Thursday, March 17, 2022 / Rules and Regulations 

In witness whereof, the said Principal and 

Surety have executed this instrument on ll 

day of llll, 20 l. 

Principal 

Name llllllllllllllllll

By lllllllllllllllllll

(Signature and title) 

Witness lllllllllllllllll

SURETY 

[SEAL] 

Name llllllllllllllllll

By lllllllllllllllllll

(Signature and title) 

Witness lllllllllllllllll

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 the 

obligations of surety and financial ability to 

discharge them. 

■ 5. Revise Form FMC–133A to Subpart 

A of Part 540 to read as 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. llllllllllllll

FMC Certificate No. lllllllllll

1. Whereas llll (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. 

(2) In the event the passenger is 

unable to resolve the claim within 180 

days, or such shorter claim resolution 

period for which the PVO’s claims 

procedure provides, after 

nonperformance of transportation 

occurs or if the claim is denied by the 

PVO, the passenger may submit a claim 

against the Guaranty as per instructions 

on the Commission website. The claim 

may 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 

llll $. 

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 

llll, with offices at llll, 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 

lllllllllllllllllllll

(Place and Date of Execution) 

lllllllllllllllllllll

(Type Name of Guarantor) 

lllllllllllllllllllll

(Type Address of Guarantor) 

lllllllllllllllllllll

By 

lllllllllllllllllllll

(Signature and Title) 

Schedule of Vessels Referred to in 

Clause 1 

Vessels Added to This Schedule in 

Accordance With Clause 4 

■ 6. Revise Appendix A to Subpart A of 

Part 540 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, ll made 

as of this ll_day of (month & year), by and 

between (Customer), a corporation/company 

having a place of business at (‘‘Customer’’) l

lllllla 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 


khammond on DSKJM1Z7X2PROD with RULES
Federal Register / Vol. 87, No. 52 / Thursday, March 17, 2022 / Rules and Regulations 15135 

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 

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, 


khammond on DSKJM1Z7X2PROD with RULES
15136 Federal Register / Vol. 87, No. 52 / Thursday, March 17, 2022 / Rules and Regulations 

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 

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. 

(2) In the event the passenger is unable to 

resolve the claim within 180 days, or such 

shorter claim resolution period for which the 

PVO’s claims procedure provides, after 

nonperformance of transportation occurs or if 

the claim is denied by the PVO, the 

passenger may submit a claim against the 

Escrow Account as per instructions on the 

Commission website. The claim may 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. 

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 


khammond on DSKJM1Z7X2PROD with RULES
Federal Register / Vol. 87, No. 52 / Thursday, March 17, 2022 / Rules and Regulations 15137 

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, 

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 llllwithout 

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: lllllllllllllllllll

Title: llllllllllllllllll

By: lllllllllllllllllll

Title: llllllllllllllllll

EXHIBIT A 

ESCROW AGREEMENT, dated llllby 

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 

llllhereby 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: $ llll

a. Additions to unearned Passenger 

Revenue since such date were: 

1. Passenger Receipts: $ lllllllll

2. Other (Specify) $ lllllllllll

3. Total Additions: $ lllllllllll

b. Reductions in Unearned Passenger 

Revenue since such date were: 

1. Completed Cruises: $ lllllllll

2. Refunds and Cancellations: $ llllll

3. Other (Specify) $ lllllllllll

4. Total Reductions: $ llllllllll

II. Unearned Passenger Revenue as of the 

date of this Recomputation Certificate is: 

$ llll 

a. Excess Escrow Amount $ llllllll

III. Plus the Required Fixed Amount: 

$ llll

IV. Total Required in Escrow: $ llll

V. Current Balance in Escrow Account: 

$ llll

VI. Amount to be Deposited in Escrow 

Account: $ llll

VII. Amount of Escrow Account available 

to Operator: $ llll

VIII. I declare under penalty of perjury that 

the above information is true and correct. 

Dated: lllllllllllllllll

(Signature) lllllllllllllll

Name: llllll

Title: llllll

(Signature) lllllllllllllll

Name: llllll

Title: llllll

By the Commission. 

William Cody, 

Secretary. 

[FR Doc. 2022–05568 Filed 3–16–22; 8:45 am] 

BILLING CODE 6730–02–P 

DEPARTMENT OF TRANSPORTATION 

Federal Railroad Administration 

49 CFR Part 214 

[Docket No. FRA–2019–0074] 

RIN 2130–AC78 

Railroad Workplace Safety 

AGENCY: Federal Railroad 

Administration (FRA), Department of 

Transportation (DOT). 

ACTION: Final rule. 

SUMMARY: FRA is revising its regulations 

governing railroad workplace safety to: 

Allow for the use of alternative 

cybersecurity standards for electronic 

display systems used to view track 

authority information for roadway 

worker safety, and exempt certain 

remotely operated roadway 

maintenance machines from existing 

heating, ventilation, and air 

conditioning (HVAC) requirements for 

enclosed cabs. 

DATES: This final rule is effective March 

17, 2022. 

FOR FURTHER INFORMATION CONTACT: 

Lance Hawks, Track Specialist, Office of 

Railroad Safety, Federal Railroad 

Administration, 1200 New Jersey 

Avenue SE, Washington, DC 20590, 

telephone: 678–633–7400, email: 

Lance.Hawks@dot.gov; or Sam Gilbert, 

Attorney Adviser, Office of Chief 

Counsel, Federal Railroad 

Administration, 1200 New Jersey 

Avenue SE, Washington, DC 20590, 

telephone: 202–493–0270, email: 

Samuel.Gilbert@dot.gov. 

SUPPLEMENTARY INFORMATION: 

I. Executive Summary 

To ensure that regulations remain 

current and effective for their intended 

purpose, agencies periodically review 

and propose amendments to their 

regulations. Within this context, FRA 

reviewed its 49 CFR part 214–Railroad 

Workplace Safety regulations. As a 

result of this review, on December 11, 

2020, FRA published a notice of 

proposed rulemaking (NPRM) proposing 

two amendments to subparts C and D of 

part 214 addressing Roadway Worker 

Protection and On-Track Roadway 

Maintenance Machines and Hi-Rail 

Vehicles, respectively. 85 FR 79973. 


khammond on DSKJM1Z7X2PROD with RULES