Federal Register / Vol. 86, No. 162 / Wednesday, August 25, 2021 / Proposed Rules 47441 

TABLE 4—RACT FOR MAJOR NON-CTG VOC/NOX SOURCES IN EKAPCD—2008 OZONE NAAQS 

Category Major non-CTG sources in 

District? 

Covered by SIP-Approved 

RACT-Level EKAPCD Rules EPA proposed action 

Major (100+ tpy) non-CTG VOC 

sources.

None listed .................................... N/A ................................................ Approval. 

Major (100+ tpy) non-CTG NOX

sources.

Yes ................................................ No ................................................. EPA is not acting on this element 

in this action 

We will accept comments from the 

public on this proposal until September 

24, 2021. If finalized, this action would 

incorporate the approved portions of the 

2017 RACT SIP and negative 

declarations into the SIP. 

III. Statutory and Executive Order 

Reviews 

Under the Clean Air Act, the 

Administrator is required to approve a 

SIP submission that complies with the 

provisions of the Act and applicable 

federal regulations. 42 U.S.C. 7410(k); 

40 CFR 52.02(a). Thus, in reviewing SIP 

submissions, the EPA’s role is to 

approve state choices, provided that 

they meet the criteria of the Clean Air 

Act. Accordingly, this proposed action 

merely proposes to approve state law as 

meeting federal requirements and does 

not impose additional requirements 

beyond those imposed by state law. For 

that reason, this proposed action: 

• Is not a ‘‘significant regulatory 

action’’ subject to review by the Office 

of Management and Budget under 

Executive Orders 12866 (58 FR 51735, 

October 4, 1993) and 13563 (76 FR 3821, 

January 21, 2011); 

• Does not impose an information 

collection burden under the provisions 

of the Paperwork Reduction Act (44 

U.S.C. 3501 et seq.); 

• Is certified as not having a 

significant economic impact on a 

substantial number of small entities 

under the Regulatory Flexibility Act (5 

U.S.C. 601 et seq.); 

• Does not contain any unfunded 

mandate or significantly or uniquely 

affect small governments, as described 

in the Unfunded Mandates Reform Act 

of 1995 (Pub. L. 104–4); 

• Does not have federalism 

implications as specified in Executive 

Order 13132 (64 FR 43255, August 10, 

1999); 

• Is not an economically significant 

regulatory action based on health or 

safety risks subject to Executive Order 

13045 (62 FR 19885, April 23, 1997); 

• Is not a significant regulatory action 

subject to Executive Order 13211 (66 FR 

28355, May 22, 2001); 

• Is not subject to requirements of 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (15 U.S.C. 272 note) because 

application of those requirements would 

be inconsistent with the Clean Air Act; 

and 

• Does not provide the EPA with the 

discretionary authority to address 

disproportionate human health or 

environmental effects with practical, 

appropriate, and legally permissible 

methods under Executive Order 12898 

(59 FR 7629, February 16, 1994). 

In addition, the SIP is not approved 

to apply on any Indian reservation land 

or in any other area where the EPA or 

an Indian tribe has demonstrated that a 

tribe has jurisdiction. In those areas of 

Indian country, the rule does not have 

tribal implications and will not impose 

substantial direct costs on tribal 

governments or preempt tribal law as 

specified by Executive Order 13175 (65 

FR 67249, November 9, 2000). 

List of Subjects in 40 CFR Part 52 

Environmental protection, Air 

pollution control, Incorporation by 

reference, Intergovernmental relations, 

Ozone, Reporting and recordkeeping 

requirements, Volatile organic 

compounds. 

Authority: 42 U.S.C. 7401 et seq. 

Dated: August 6, 2021. 

Deborah Jordan, 

Acting Regional Administrator, Region IX. 

[FR Doc. 2021–17239 Filed 8–24–21; 8:45 am] 

BILLING CODE 6560–50–P 

FEDERAL MARITIME COMMISSION 

46 CFR Part 540 

[Docket No. 20–15] 

RIN 3072–AC82 

Passenger Vessel Financial 

Responsibility 

AGENCY: Federal Maritime Commission. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: The Federal Maritime 

Commission (Commission) is issuing 

this NPRM to seek comment on 

potential regulatory changes to its 

passenger vessel operator financial 

responsibility requirements. The 

Commission is proposing to define 

when nonperformance of transportation 

has occurred and to establish uniform 

procedures regarding how and when 

passengers may make claims for refunds 

under a passenger vessel operator’s 

financial responsibility instrument 

when nonperformance occurs. This 

rulemaking resulted from 

recommendations in an Interim Report 

issued by the Fact Finding Officer in 

Commission Fact Finding Investigation 

No. 30: COVID–19 Impact on Cruise 

Industry. 

DATES: Submit comments on or before 

October 25, 2021. 

ADDRESSES: You may submit comments, 

identified by Docket No. 20–15, by the 

following methods: 

• Email: secretary@fmc.gov. For 

comments, include in the subject line: 

‘‘Docket No. 20–15, Comments on PVO 

Financial Responsibility Rulemaking.’’ 

Comments should be attached to the 

email as a Microsoft Word or textsearchable PDF document. 

Instructions: For detailed instructions 

on submitting comments, including 

requesting confidential treatment of 

comments, and additional information 

on the rulemaking process, see the 

Public Participation heading of the 

Supplementary Information section of 

this document. Note that all comments 

received will be posted without change 

to the Commission’s website, unless the 

commenter has requested confidential 

treatment. 

Docket: For access to the docket to 

read background documents or 

comments received, go to the 

Commission’s Electronic Reading Room 

at: https://www2.fmc.gov/readingroom/ 

proceeding/20-15/. 

FOR FURTHER INFORMATION CONTACT: 

Rachel E. Dickon, Secretary; Phone: 

(202) 523–5725; Email: secretary@

fmc.gov. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Introduction 

II. Background 

III. ANPRM Proposed Changes and Summary 

of Comments 

A. Defining Nonperformance of 

Transportation 


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1 Docket No. 20–15, Passenger Vessel Financial 

Responsibility, 85 FR 65020 (October 29, 2020). 

2Fact Finding Investigation No. 30: COVID–19 

Impact on Cruise Industry, Interim Report: Refund 

Policy, at 11–13 (July 27, 2020) (Fact Finding 30 

Interim Report or Interim Report). 

3 32 FR 3986 (Mar. 11, 1967) (establishing 

regulations governing nonperformance coverage); 

32 FR 7282 (May 16, 1967) (establishing regulations 

governing casualty coverage). 

4The Commission’s regulations also permit 

smaller PVOs to request to substitute alternative 

forms of financial protection as evidence of 

financial responsibility. See 46 CFR 540.9(l). 

5 In practice, passengers generally receive refunds 

for canceled cruises from the PVOs directly or, if 

the passenger paid by credit card, from the credit 

card issuer. Refund payments under the PVO 

financial responsibility instruments are rare and 

usually only occur if the PVO ceases operations or 

declares bankruptcy. 

6 46 CFR 540.9(j); Final Rule: Passenger Financial 

Responsibility Requirements for Nonperformance of 

Transportation, 78 FR 13268 (Feb. 27, 2013). 

7Notice: Financial Responsibility for 

Indemnification of Passengers for Nonperformance 

of Transportation—Cap Adjustment, 84 FR 17410 

(June 24, 2019). An increase of $1 million (from $32 

million to $33 million), based on the 2020 

Consumer Price Index, is pending as of April 1, 

2021. 

8Fact Finding 30: Covid–19 Impact on Cruise 

Industry, Interim Report: Refund Policy (July 27, 

2020). 

B. Process for Obtaining Refunds From 

PVO Financial Instruments After 

Nonperformance of Transportation 

1. General 

2. Deadline for Submitting Refund 

Requests Under the Financial Instrument 

3. Deadline for Refund Payment Under the 

Financial Instrument 

4. Form of Refund Payment Under the 

Financial Instrument 

5. Defining Unearned Passenger Revenue 

(UPR) 

6. Publishing Information on How To 

Obtain Refunds 

C. Passenger Cancellations 

IV. Discussion & NPRM Proposal 

A. Definition of Nonperformance of 

Transportation 

B. Process for Obtaining Refunds From 

PVO Financial Instruments for 

Nonperformance of Transportation 

C. Definition of Unearned Passenger 

Revenue (UPR) 

D. Publishing Information on How To 

Obtain Refunds 

V. Public Participation 

VI. Rulemaking Analyses and Notices 

VII. Proposed Regulatory Language 

I. Introduction 

On October 29, 2020, the Federal 

Maritime Commission (Commission) 

issued an Advance Notice of Proposed 

Rulemaking 1 (ANPRM) to obtain 

comments on potential regulatory 

changes recommended in the Fact 

Finding 30 Interim Report on passenger 

vessel operator (PVO) refund policies.2

The proposed changes are intended to 

provide a clear and consistent policy 

toward vessel passenger ticket refunds, 

from the PVOs’ financial responsibility 

instruments filed with the Commission, 

in the case of nonperformance by the 

vessel operator. Specifically, the 

Commission recommended modifying 

regulations in 46 CFR part 540 to (1) 

adopt a definition of nonperformance of 

transportation, and (2) detail the process 

for obtaining refunds under the PVOs’ 

financial responsibility instruments 

filed with the Commission. In response 

to the ANPRM, the Commission 

received four sets of comments from 

interested parties. These parties are 

Cruise Lines International Association 

(CLIA); Passenger Vessel Association 

(PVA); The Surety & Fidelity 

Association of America (SFAA); and 

Kacie Didier. Under this Notice of 

Proposed Rulemaking (NPRM), the 

Commission addresses the comments to 

the ANPRM and seeks further public 

comments on the proposed 

modifications to its regulations in part 

540. 

II. Background 

On November 6, 1966, Congress 

enacted Public Law 89–777. Section 2 of 

the statute (codified at 46 U.S.C. 44103) 

requires owners and charterers of 

vessels having berth or stateroom 

accommodations for 50 or more 

passengers, and embarking passengers at 

United States ports, to establish 

financial responsibility to meet any 

liability incurred for death or injury to 

passengers or other persons on voyages 

to or from United States ports. Section 

2 is commonly known as the ‘‘Casualty’’ 

section. Section 3 of the statute 

(codified at 46 U.S.C. 44102) requires 

persons arranging, offering, advertising, 

or providing transportation on such 

vessels to establish evidence of financial 

responsibility to indemnify passengers 

for nonperformance of the 

transportation. Section 3 is commonly 

known as the ‘‘Performance’’ section. 

The Commission published 

implementing regulations at 46 CFR part 

540 in 1967.3

Under this program, the Commission 

issues two types of certificates to PVOs 

of vessels that: (1) Have berths for 50 or 

more passengers; and (2) embark 

passengers from U.S. ports. The first 

type of Certificate (Performance) is 

issued by the Commission when a PVO 

provides the Commission with 

acceptable evidence of coverage to 

satisfy liability incurred for 

nonperformance of transportation up to 

the amount of unearned passenger 

revenue (UPR) held by the PVO or the 

monetary cap set in the Commission’s 

regulation. Such coverage may be in the 

form of insurance, a guaranty, a surety 

bond, or escrow agreement (collectively 

referred to as financial responsibility 

instruments).4 The coverage is used to 

reimburse passengers when the PVO 

fails to perform cruises as contracted 

and has taken no further actions to 

refund passengers.5 The second type of 

Certificate (Casualty) is issued by the 

Commission when a PVO provides the 

Commission with acceptable evidence 

of coverage to satisfy any liability 

incurred for death or injury during a 

voyage, as provided in the regulations 

and statute. 

There have been few changes to the 

regulations in part 540 since its 

inception. Changes have included 

several increases to the monetary cap for 

required performance coverage under 

section 44102, the elimination of the 

self-insurance option for PVOs, some 

limitations on the types of entities 

acceptable as guarantors, and the 

elimination of certain sliding-scale 

provisions as to the amount of coverage 

required. Most recently, the 

Commission increased the cap on 

required performance coverage in two 

annual steps, from $15 million to $22 

million in 2014, and then from $22 

million to $30 million in 2015.6 Since 

2015, the cap has been adjusted for 

inflation every two years based upon the 

U.S. Bureau of Labor Statistics’ 

Consumer Price Index. The current cap 

is $32 million.7

In March of 2020, following the 

arrival of COVID–19 in the U.S., the 

Centers for Disease Control and 

Prevention (CDC) issued a ‘‘No Sail 

Order and Suspension of Further 

Embarkation,’’ (CDC No Sail Order) 

causing most PVOs to cease operations. 

As a consequence, questions arose 

concerning future cruises and 

passengers’ ability to obtain refunds of 

monies paid for transportation 

disrupted by COVID–19. Fact Finding 

30 was initiated on April 30, 2020, to 

investigate the impact of COVID–19 and 

identify commercial solutions to 

COVID–19 related issues that interfered 

with the operation of the cruise 

industry. The Fact Finding Officer 

issued an Interim Report on PVO 

Refund Policies on July 27, 2020, 

concluding that clearer guidance is 

needed in determining whether a 

passenger is entitled to obtain a refund 

if a PVO cancels a voyage, makes a 

significant schedule change, or 

significantly delays a voyage.8 The Fact 

Finding Officer proposed 

recommending certain regulatory 

changes in order to provide a clear 

interpretation of nonperformance of 

transportation, and to modify the 


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9Fact Finding 30 Interim Report at 11–12. 

10 Id. at 12. 

11The 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). 

12See 46 CFR 540.1(a) (stating that PVOs must 

file evidence of financial responsibility or a bond 

or other security for obligations under the terms of 

ticket contracts to indemnify passengers for 

nonperformance of transportation to which they 

would be entitled; Form FMC–132A to Subpart A 

of Part 540 (stating that: (1) The purpose of the bond 

is to ensure financial responsibility and the 

supplying of transportation and other services 

subject to Subpart A of part 540, in accordance with 

the ticket contract between the PVO and the 

passenger; and (2) the scope of the surety’s liability 

is for refunds due under ticket contracts made by 

the PVO for the supplying of transportation and 

other services). 

13These forms include Form FMC–132A, 

Passenger Vessel Surety Bond (Performance); Form 

FMC–133A, Guaranty in Respect of Liability for 

Nonperformance, Section 3 of the Act; Appendix A, 

Example of Escrow Agreement for Use Under 46 

CFR 540.5(b)). There is no required or optional form 

for insurance, which must meet the requirement in 

§ 540.5(a). 

appropriate provisions of the 

Commission’s PVO regulations to make 

clear how passengers may obtain 

refunds under the PVOs’ financial 

responsibility instruments filed with the 

Commission. The Commission voted on 

August 10, 2020, to initiate a 

rulemaking to implement the 

recommended changes. The Advance 

Notice of Proposed Rulemaking 

(ANPRM) Docket No. 20–15 Passenger 

Vessel Financial Responsibility was 

published in the Federal Register on 

October 14, 2020, seeking comments on 

potential regulatory changes to 

implement the recommendations in the 

Interim Report. 

III. ANPRM Proposed Changes and 

Summary of Comments 

The Fact Finding Officer proposed, 

among other things, that the 

Commission provide a clear 

interpretation of nonperformance of 

transportation and modify the 

appropriate provisions of the 

Commission’s PVO regulations in part 

540 to make clear how passengers may 

obtain refunds under the PVOs’ 

financial instruments filed with the 

Commission. These recommendations 

were as follows: 

Therefore, it is proposed that the 

Commission: (1) Interpret ‘‘nonperformance 

of transportation’’ to include cancelling a 

sailing or delaying passenger boarding by 

twenty-four (24) hours or more; and (2) 

modify the appropriate provisions of the 

Commission’s PVO regulations to make clear 

how passengers may obtain refunds under 

the PVOs’ financial instruments: 

1. When a sailing is cancelled or consumer 

boarding is delayed by twenty-four (24) hours 

or more for any reason other than due to a 

government order or declaration in paragraph 

2 below, full refunds must be paid within 

sixty (60) days following a passenger refund 

request. 

2. When a sailing is cancelled or consumer 

boarding is delayed by twenty-four (24) hours 

or more due to a governmental order or 

declaration, full refunds must be paid within 

one hundred eighty (180) days following a 

passenger refund request. This includes all 

consumers who, at their own discretion, 

cancelled their booking within sixty (60) 

days prior to said governmental action and 

commensurate cancelled or delayed sailing. 

3. If, following a declaration of a public 

health emergency, any consumer cancels a 

cruise booking of a sailing that may be 

affected by such emergency after the PVO’s 

refund deadline, but the sailing is not 

cancelled, the PVO will provide a credit for 

a future cruise equal to the consumer’s 

amount of deposit. In all other cases in which 

a consumer cancels and embarkation and 

sailing occur within the prescribed timeline, 

the cruise line’s rules for cancellation will 

apply. 

4. A PVO may set a reasonable deadline for 

a consumer entitled to a refund to request the 

refund which shall not be less than 6 months 

after the scheduled voyage. 

5. Refunds should include all fees paid to 

carrier by consumer to include all ancillary 

fees remitted to the carrier by the consumer. 

6. Refunds to be given in same fashion as 

monies were originally remitted to the 

carrier. The PVO will be deemed to have 

made a refund payment if the deposited 

revenue as to a passenger requesting a refund 

is remitted by the PVO in the same manner 

as the passenger’s original payment, by: (1) 

Mailing a check payable in immediately 

available funds to the passenger at an address 

furnished by the passenger, (2) issuing an 

electronic funds transfer, including wire 

transfer, automated clearinghouse (ACH) or 

other electronic means, in immediately 

available funds, or (3) posting of a credit to 

the credit card processor for the benefit of the 

credit card account used by passenger to 

make payments to the applicant. The refund 

will be deemed timely notwithstanding that 

passenger may not immediately have access 

to the transferred funds in its account or any 

credit card account due to rules and 

processes of any third-party services 

provider. 

7. Nothing in this rulemaking shall be 

interpreted to preclude the consumer and the 

PVO from entering into an alternative form 

of compensation in full satisfaction of a 

required refund, such as a future cruise 

credit.9

The Fact Finding Officer also 

recommended the Commission mandate 

that: (1) PVOs provide on their websites 

clear instructions on how passengers 

may obtain refunds; and (2) PVOs 

submit current web addresses showing 

their refund instructions to the 

Commission for publication on the 

Commission’s website.10

A. Defining Nonperformance of 

Transportation 

As outlined in Section II above, 46 

U.S.C. 44102 requires that PVOs file 

with the Commission evidence of 

financial responsibility to indemnify 

passenger for nonperformance of 

transportation. The Commission’s 

regulations in 46 CFR part 540 do not 

expressly define what constitutes 

nonperformance of transportation, but 

the substantive provisions and required 

financial responsibility instrument 

terms indicate that it means the PVO’s 

failure to provide transportation or other 

accommodations and services subject to 

part 540, subpart A,11 in accordance 

with the terms of the ticket contract 

between the PVO and passenger.12

As discussed in the ANPRM, the 

Commission sought comment on 

adopting a definition of nonperformance 

of transportation. The Commission 

anticipated that implementing this 

change would involve amending the 

regulations in part 540, subpart A, to 

include the definition and revising the 

language of the forms for financial 

responsibility instruments (surety 

bonds, guaranties, and escrow 

agreements) to reflect coverage in 

situations under the definition.13 To 

that end, the Commission included in 

the ANPRM the following draft 

definition: 

Nonperformance of transportation means: 

(1) Canceling a voyage; or (2) delaying the 

boarding of passengers by more than twentyfour (24) hours if the passenger elects not to 

embark on the substitute or delayed voyage. 

Summary of Comments 

Passenger Vessel Association (PVA) 

PVA maintains that the regulatory 

changes proposed in the ANPRM are 

outside the Commission’s jurisdiction 

and believes that while the statutory 

provision at 46 U.S.C. 44102 imposes 

duties upon a covered PVO to file with 

the Commission evidence of financial 

responsibility to indemnify passengers 

for nonperformance of transport, it does 

not grant legal authority to the 

Commission to address the matter of 

what constitutes nonperformance. 

Nevertheless, PVA urges that if the 

Commission elects to go forward with 

the proposed rule, it should eliminate 

any reference to delayed sailing in its 

definition of nonperformance of 

transportation, and failing that, the time 

threshold should be a delay of at least 

48 hours. PVA is concerned that the 

proposed definition of nonperformance 

could provide incentive for a PVO to 

begin a cruise despite potentially unsafe 


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14Fact Finding 30 Interim Report at 11–12. 15Fact Finding 30 Interim Report at 11–12. 

16Fact Finding 30 Interim Report at 12. 

17For clarity and ease of calculation, the 

Commission contemplates using a deadline of 180 

days rather than six months. 

conditions, such as bad weather, in an 

effort to avoid a delay being deemed as 

nonperformance. PVA remarks that the 

proposal for a 24 hour delay to 

constitute nonperformance appears to 

be based on a U.S. Department of 

Transportation policy regarding delays 

in scheduled commercial airline 

transportation and is not an appropriate 

standard to apply to a scheduled cruise. 

The Surety & Fidelity Association of 

America (SFAA) 

SFAA believes the proposed 

definition of nonperformance is ‘‘overly 

stringent and will increase the number 

of claims against this obligation, thereby 

increasing the likelihood of exposure 

under the surety bond.’’ SFAA further 

states that a standard of requiring 

refunds if boarding is delayed by 24 

hours would add a significant burden to 

PVOs in terms of an increase in full 

refunds issued, as well as compliance 

costs to operationalize procedures to 

process refunds based on a 24-hour 

delay to the voyage. SFAA contends the 

24-hour delay standard for 

nonperformance would increase 

‘‘nuisance’’ claims against PVOs, which 

would impact how sureties underwrite 

the obligation. SFAA believes the 

proposed definition of nonperformance 

would cause sureties to require PVOs to 

have more cash on hand or larger lines 

of credit, and ultimately decrease the 

number of PVOs eligible to receive a 

surety bond. SFAA recommends 

changing the definition of 

nonperformance to a minimum of 72 

hours. 

SFAA also expresses concern over 

uncertainty about what is covered under 

the bond in response to a claim based 

on the new definition of 

nonperformance. Specifically, SFAA 

argues that a passenger’s unilateral 

cancellation should be excluded from 

coverage under the bond. SFAA also 

requests clarity as to what passenger 

expenses are covered as a result of PVO 

nonperformance. 

B. Process for Obtaining Refunds From 

PVO Instruments for Nonperformance of 

Transportation 

1. General 

Although the Commission regulations 

require certain coverage and terms to be 

included in financial responsibility 

instruments, the regulations do not 

include uniform procedures regarding 

how and when passengers may make 

claims for refunds against the various 

financial responsibility instruments. 

The Fact Finding 30 Interim Report 

recommended that the Commission 

revise its regulations to make clear how 

passengers may obtain refunds under 

these instruments and include specific 

provisions related to such claims and 

the timing of refund payments.14

Neither part 540 nor the financial 

responsibility instrument forms provide 

specific instructions on how or when 

passengers may obtain refunds under a 

PVO’s financial responsibility 

instrument. For example, the Guaranty 

Form (Form FMC–133A) provides that 

Guarantor will make refund payments to 

passengers when: (1) The PVO and 

passenger enter into settlement 

agreement, approved by the Guarantor; 

or (2) the passenger obtains a final 

judgment against the PVO and the PVO 

does not make payment within 21 days. 

Similarly, the suggested language for 

Escrow Agreements in Appendix A 

states that an Escrow Agent will make 

refund payments to passengers when 

either: (1) The PVO provides written 

instructions to the Escrow Agent to 

make such payment; or (2) the passenger 

obtains a final judgment against the 

PVO, the PVO does not make payment 

within 21 days, and the Escrow Agent 

receives a certified copy of the court 

order. 

The Fact Finding 30 Interim Report 

recommended and the ANPRM 

requested comments on the following 

general procedure: (1) The passenger 

makes a request for a refund from a PVO 

financial responsibility instrument 

when nonperformance has occurred; 

and (2) the refund payment is made 

within a certain period, depending on 

certain conditions.15 The Commission 

anticipates that implementing these 

changes would involve amending the 

regulations in part 540, Subpart A and 

the language of the financial 

responsibility instruments forms to 

reflect the new procedure. 

Summary of Comments 

Passenger Vessel Association (PVA) 

PVA comments that while there is a 

business relationship between a PVO 

and its financial responsibility 

instrument provider, no comparable 

relationship exists between the provider 

and the cruise ship passenger. PVA 

believes the Commission should not 

attempt to create or force such a 

relationship. Instead, should the 

Commission go forward with 

establishing a process for a passenger to 

claim a refund for nonperformance of 

transportation, it should specify that the 

passenger must submit the refund claim 

directly to the PVO. The PVO would 

then be responsible to submit the claim 

to the financial responsibility 

instrument provider, if the PVO agrees 

that nonperformance of transportation 

has occurred and that satisfaction of a 

claim is warranted. 

The Surety & Fidelity Association of 

America (SFAA) 

SFAA ‘‘strongly believes’’ that the 

PVO should continue to serve as the 

primary party designated to receive and 

handle claims submitted by passengers. 

In a case of liquidation of the PVO, or 

if there is no response from the PVO, 

then claims could be submitted to the 

surety. SFAA maintains that sureties do 

not generally have the claims handling 

capability to process individual claims 

against the financial responsibility 

instrument. SFAA believes that 

implementing a system that allows a 

direct right of action against the surety 

bond without requiring a judgment will 

make claim handling more involved, 

expensive, and tedious. Further, SFAA 

asserts that if sureties are designated as 

the direct claims handling entity with 

an investigatory requirement under the 

new regulatory regime, many will likely 

exit the market. SFAA believes that the 

net effect of the proposed changes 

would increase the cost of a surety 

bond, or a lack of availability of surety 

bonds. SFAA recommends two 

alternative approaches to the proposed 

process: 

(1) Claims be submitted directly to the 

Federal Maritime Commission as the obligee 

and beneficiary of said surety bonds, and the 

FMC may then submit verified requests for 

payment to the sureties based on its review 

of the claim; or 

(2) Claimants be required to obtain 

adjudication of its claim before submitting 

their claims to the surety. 

2. Deadline for Submitting Refund 

Requests Under the Financial 

Instrument 

Commission regulations do not 

currently prescribe how long passengers 

have after a scheduled voyage to seek a 

refund from a PVO financial 

responsibility instrument. The Fact 

Finding 30 Interim Report 

recommended that the Commission 

specify that a PVO may set a reasonable 

deadline for passenger refund requests, 

but the deadline may not be less than 

six months after the scheduled voyage.16

The Commission included the following 

draft provision to reflect this 

recommendation: 

A passenger must submit a request for 

refund no later than 180 days 17 after 


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18Fact Finding Interim Report at 11. 

19 Id. at 12. 20Fact Finding 30 Interim Report at 11–12. 21 46 CFR 540.2(i). 

nonperformance occurs unless the ticket 

contract or other passenger vessel operator 

policy allows a longer period of time for such 

requests. 

The Commission could include this 

provision in part 540 and require that 

the financial responsibility instrument 

specify the time period for passengers to 

file refund requests. 

Summary of Comments 

No comments were received which 

specifically address the submission of 

refund requests. 

3. Deadline for Refund Payment Under 

the Financial Instrument 

Commission regulations do not 

currently specify a time period within 

which passengers must receive a refund 

under a PVO financial responsibility 

instrument. The Fact Finding 30 Interim 

Report recommended that the 

Commission specify two different 

timeframes for payment depending on 

whether nonperformance was due to ‘‘a 

governmental order or declaration’’: (1) 

When nonperformance is due to a 

governmental order or declaration, full 

refund payments must be made within 

180 days after the passenger requests a 

refund; and (2) in all other cases, full 

refund payments must be made within 

60 days after the passenger requests a 

refund.18 The Interim Report also 

recommended that a refund payment be 

deemed timely notwithstanding that the 

passenger may not immediately have 

access to the funds due to the rules and 

processes of any third party services 

provider.19

The Commission requested comment 

on prescribing a deadline for payment of 

refunds from financial responsibility 

instruments providers as a general 

matter. The ANPRM proposed two 

different timeframes for payment 

depending on whether nonperformance 

is due to a governmental order or 

declaration, and the ANPRM adopted 

the deadlines recommended in the 

Interim Report (180 days when there is 

a governmental order or declaration; 60 

days in all other cases). 

Summary of Comments 

Passenger Vessel Association (PVA) 

It is PVA’s position that the 

Commission’s proposed bifurcated time 

frame for refunds, which varies 

depending on the reason for the 

cancellation, is potentially confusing 

and unfair. PVA poses the question of 

how the regulation would be applied in 

the case of a governmental order to 

cancel sailings that applies to some 

PVOs that are regulated by the 

Commission, but not all. PVA states that 

in such a case, smaller PVOs, that may 

not be subject to a No Sail Order but 

that voluntarily choose to cancel a 

cruise in the interest of passenger and 

crew health and safety, would have to 

provide requested refunds in a shorter 

time period than larger PVOs. PVA 

believes this is an unfair policy 

distinction and recommends that a 

period of payment of the refund be no 

more than 180 days after the customer’s 

claim is submitted, no matter the reason 

for the nonperformance of 

transportation. 

Should the Commission choose to 

retain a specific refund process in the 

event of nonperformance due to a 

governmental order or declaration, PVA 

maintains that it should be ‘‘very 

precise’’ as to what triggers this process. 

PVA believes that, as a general rule, 

states, counties, and municipalities have 

no or very limited authority over vessel 

safety and navigation. PVA therefore 

recommends that only orders and 

declarations from federal agencies with 

‘‘clear maritime authority’’ be specified 

as the triggering events for the refund 

process. 

4. Form of Refund Payment Under the 

Financial Instrument 

Commission regulations do not 

specify in what form refund payments 

must be made under PVO financial 

responsibility instruments. 

The Fact Finding 30 Interim Report 

recommended the Commission specify 

that refund payments must be made in 

the same manner as the passenger’s 

original payment, e.g., check, electronic 

funds transfer, or credit card 

chargeback.20 The ANPRM requested 

comments on the recommendation. 

Summary of Comments 

No comments were received which 

specifically address the form of refunds. 

However, it is the Commission’s 

experience that financial instrument 

providers will not likely be able to 

provide refunds in the same manner as 

the passenger’s original payment. The 

Commission understands refunds 

provided by financial instruments are 

typically in the form of checks that are 

mailed to the passenger. 

5. Defining Unearned Passenger 

Revenue 

Commission regulations provide that 

the PVO financial responsibility 

instruments must provide coverage for 

‘‘unearned passenger revenue,’’ which is 

defined as passenger revenue received 

for water transportation and all other 

accommodations, services, and facilities 

relating thereto not yet performed; this 

includes port fees and taxes paid, but 

excludes such items as airfare, hotel 

accommodations, and tour excursions.21

The Fact Finding 30 Interim Report 

recommended the Commission specify 

that refund payments must include all 

fees, including ancillary fees, paid to the 

PVO by the passenger. The Commission 

requested comment on whether to 

expand the definition of unearned 

passenger revenue and the scope of the 

ancillary fees to be included in any 

revised definition. The Fact Finding 30 

Interim Report discusses the following 

types of ancillary charges paid by 

passengers to PVOs prior to sailing: 

Gratuities, shore excursions, pre-cruise 

onboard purchases, port fees, and taxes. 

Of these, the current definition of 

unearned passenger revenue expressly 

includes port fees and taxes and 

excludes excursions. The Interim Report 

does not discuss refunds for airfare or 

hotel accommodation. 

To facilitate comment, the 

Commission included the following 

draft definition in the ANPRM: 

Unearned passenger revenue means that 

passenger revenue received for water 

transportation and all other related 

accommodations, services, and facilities 

relating thereto not yet performed; this 

includes port fees, taxes, and all ancillary 

fees remitted to the passenger vessel operator 

by the passenger. 

Summary of Comments 

Cruise Lines International Association 

(CLIA) 

CLIA urges the Commission to clarify 

that ‘‘unearned passenger revenue’’ 

(UPR) should include cruise passage 

fare and related cruise lines goods and 

services amounts collected by the cruise 

line, such as port charges and taxes, prepaid on-board purchases, gratuities, and 

shore excursions at the cruise line’s own 

or affiliated destinations. CLIA argues 

that UPR should not include deposits 

for airfare, non-affiliated shore 

excursions or other third party provider 

costs for which the cruise line is not 

still holding the passenger’s deposit or 

is contractually obligated to pay such 

deposit to a third-party provider. 

CLIA maintains that if a cruise line 

contracts with an airline, shore hotel 

resort, attraction or other unaffiliated 

‘‘arm’s length’’ third party services 

provider, the cruise line would be acting 

as an agent for the passenger in booking 

such accommodations or activities for 

the passenger’s benefit. 


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22Fact Finding 30 Interim Report at 12. 

If the cruise line has not yet paid or 

contractually committed any passenger 

deposits for such items to the thirdparty provider, the cruise line may 

refund them to the passenger. However, 

if these funds have been paid or 

contractually committed to such thirdparty providers, the cruise line will 

have paid, or will have to pay, those 

funds to the third-party provider on 

behalf of the passengers. CLIA states 

that passengers may be entitled to seek 

funds directly from such third parties. 

CLIA believes that statutory law and 

current Commission regulations support 

its interpretation that UPR is limited to 

the passenger vessel transportation only 

and does not extend to other goods and 

services for which passengers may make 

advance payments to the cruise line. 

CLIA also notes that most cruise 

passengers are offered cancellation 

insurance arrangements, or other means 

of protecting such third-party refunds, 

at time of booking. 

6. Publishing Information on How To 

Obtain Refunds 

The Fact Finding 30 Interim Report 

recommended the Commission mandate 

that: (1) PVOs provide on their websites 

clear instructions on how passengers 

may obtain refunds; and (2) PVOs 

submit current website addresses for 

their refund instructions to the 

Commission for publication on the 

Commission’s website.22 The ANPRM 

envisioned that this recommendation 

could be implemented by: (1) Revising 

the Form FMC–131, Application for 

Certificate of Financial Responsibility, 

to require PVOs to provide the uniform 

resource locator (URL) for their refund 

instructions; and (2) amending § 540.4 

to require PVOs to amend their 

application if the URL changes. The 

Commission requested comment on this 

potential change. 

C. Passenger Cancellations 

In addition to recommendations 

related to passenger refunds in the event 

of nonperformance of transportation, the 

Fact Finding 30 Interim Report also 

proposed that the Commission amend 

its regulations to ensure PVO financial 

responsibility in the event passengers 

cancel their booking with a PVO prior 

to or following certain governmental 

orders or declarations. Specifically, the 

Fact Finding 30 Interim Report 

recommended that: (1) A passenger be 

entitled to a refund if they cancel their 

booking no more than 60 days prior to 

a governmental order or declaration that 

results in the PVO canceling the voyage 

or delaying boarding of passengers by 

more than 24 hours; and (2) a passenger 

be entitled to a future cruise credit if 

they cancel their booking following the 

declaration of a public health 

emergency and the voyage occurs as 

scheduled. 

The ANPRM requested comments on 

the recommendation regarding 

passenger refunds when the passenger 

cancels their booking, and the voyage is 

subsequently canceled as a result of 

governmental orders or declarations. 

The ANPRM also requested comments 

on the recommendation regarding the 

provision of future cruise credit when 

the passenger cancels their booking 

following declaration of a public health 

emergency, but the voyage occurs as 

scheduled. 

Summary of Comments 

Cruise Lines International Association 

(CLIA) 

CLIA commented on the provision of 

the proposed rule which entitles 

passengers to a full refund when the 

passenger themselves canceled their 

booking within 60 days prior to a 

governmental order or declaration and 

the commensurate cancelled or delayed 

sailing (so-called ‘‘lookback’’ refunds). It 

is CLIA’s recommendation that the 

proposed rule should apply only in 

cases of: 

(i) A declaration by the Secretary of Health 

and Human Services of a nationwide Public 

Health Emergency that 

(ii) Results from events that were public 

knowledge prior to the passenger’s 

cancellation. 

CLIA maintains the correct standard 

for the type of emergency that would 

trigger the rulemaking is a federal 

nationwide ‘‘Public Health Emergency’’ 

declaration which affects most or all of 

the country and the cruise industry, 

such as the COVID–19 pandemic. CLIA 

also distinguishes an emergency such as 

the current pandemic, which was slowdeveloping and uncertain, from a local 

or regional event such as storm, which 

may develop quickly. Cruise line 

cancellations in the case of a local event 

give rise to a refund for passengers who 

were booked on the scheduled sailing, 

but do not lead to anticipatory 

passenger cancellations as much as 60 

days before the sailing date. CLIA also 

asserts that state and local authorities 

have jurisdiction over only localized or 

regional situations that tend to be more 

limited in geographic scope, such as a 

highway obstruction that temporarily 

disrupts traffic to a cruise port. CLIA 

believes that the inclusion of 

emergencies that do not at some point 

directly require cancellation would 

allow subjective interpretations as to 

whether the passengers were acting 

reasonably when they cancelled 

bookings due to the advent of the 

situation. Further, CLIA believes this 

would create incentives for passengers 

who had terminated bookings for 

personal reasons to try to capitalize on 

later cancellation rationales that had no 

bearing on their decision to cancel. 

CLIA also believes that declarations 

from international organizations should 

not qualify as governmental declarations 

for this provision. CLIA contends that 

cruise lines are not likely to cancel U.S. 

sailings based on a multinational 

organizations’ warnings unless the U.S. 

government also decides to issue an 

order. Further, even if a foreign 

government took action to prevent 

embarking passengers at U.S. ports from 

calling in their jurisdiction, cruise lines 

could change their itineraries or omit 

foreign calls, and this would not likely 

result in either cancellation of the 

sailing or anticipatory passenger 

cancellations. 

Passenger Vessel Association (PVA) 

PVA asks the Commission to refrain 

from imposing a refund policy to 

include a situation in which a passenger 

voluntarily cancels a booking following 

the declaration of a public health 

emergency, but the voyage nevertheless 

occurs as scheduled. PVA believes that 

the proposed rule would go beyond the 

problem of nonperformance of 

transportation, as in this case there is no 

‘‘nonperformance of transportation’’ as 

envisioned by 46 U.S.C. 44102. PVA 

further poses the question of by whom 

is the public health emergency to be 

declared (whether a federal, state, or 

local official). PVA maintains that this 

type of situation is best handled in the 

context of the commercial relationship 

between the cruise operator and the 

customer. PVA states that while the 

vessel operator may wish to provide a 

refund or cruise credit as a matter of 

company policy, it should not be 

required to do so by the Commission. 

PVA also requests the Commission to 

make clear that the term ‘‘public health 

emergency’’ includes only events such 

as the coronavirus pandemic, in which 

the gathering of persons on a vessel has 

the potential to worsen the emergency. 

IV. Discussion & NPRM Proposal 

A. Definition of Nonperformance 

The Commission believes that adding 

a definition for nonperformance to 46 

CFR part 540 would provide clarity to 

passengers, PVOs, and the participating 

financial institutions as to when 

nonperformance has occurred. The 

Commission has also taken into 


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consideration the potential negative 

effects of the proposed definition of 

nonperformance raised by the 

commenters, particularly the period of 

time a vessel is delayed as it relates to 

the definition of nonperformance of 

transportation. SFAA proposed the 

definition of nonperformance to be a 

period of time greater than 24 hours, a 

minimum of 72 hours, to ensure PVOs 

are not inundated with claims. The 

Commission proposes to define 

nonperformance as when a passenger 

vessel operator cancels or delays a 

voyage by three or more calendar days, 

if the passenger elects not to embark on 

the delayed or a substitute voyage 

offered by the PVO. Adoption of the 

proposed definition will require 

corresponding changes to all financial 

instruments. 

Due to the proposed definition of 

nonperformance of transportation and to 

ensure that passengers are indemnified 

for nonperformance of transportation, 

the Commission is proposing a change 

to require PVOs to report 

nonperformance of transportation 

events to the Commission semiannually. This reporting is necessary in 

order for the Commission to be 

responsive to the public and to provide 

adequate monitoring and statistical 

information on occurrences of 

nonperformance. Nonperformance of 

transportation events occurring between 

January 1 and June 30 would be 

reported no later than July 30 of the 

same calendar year, and events 

occurring between July 1 and December 

31 would be reported no later than 

January 31 of the following calendar 

year. 

B. Process for Obtaining Refunds From 

PVO Financial Instruments for 

Nonperformance of Transportation 

The Commission reiterates its 

position on the importance of a clear 

and consistent policy toward refunds 

from financial instruments in the event 

of nonperformance of transportation, in 

an effort to eliminate uncertainty on the 

part of passengers. The Commission 

therefore proposes changes to 46 CFR 

part 540 by adding a Process for 

obtaining refunds from the financial 

instrument in the event of 

nonperformance by a PVO. This process 

would apply in a situation where the 

PVO claims procedure provides less 

than 180 days for submission of claims 

after nonperformance of transportation, 

and the passenger wishes to submit a 

claim after the PVO’s deadline for 

submission has passed, the passenger 

may still seek reimbursement from the 

financial instrument after providing 

written notification to the PVO. This 

provides the passenger with up to 180 

days to submit their claim, first to the 

PVO or, secondarily, to the financial 

instrument provider. If proper 

documentation is provided, the refund 

payment shall be issued within 90 days 

of submission of the claim to the 

financial instrument provider. 

The Commission elected the period of 

90 days for the refund payment 

considering PVA’s comments which 

stated that smaller PVOs may be 

unfairly treated under the ANPRM 

language. They cited an example 

wherein smaller PVOs were not subject 

to Centers for Disease Control and 

Prevention’s (CDC) No Sail Orders, but 

nonetheless they chose to voluntarily 

cancel planned cruises for safety 

reasons. In this example, smaller PVOs 

would be required to provide refunds in 

a shorter time period (60 days) relative 

to larger PVOs (180 days). To address 

this concern, the NPRM proposes a 

refund payment, under a PVO financial 

responsibility instrument, to be made 

within 90 days of submission of claims 

to the financial responsibility provider, 

regardless of the reason for 

nonperformance. 

Subsequent to receiving formal 

comments to the ANPRM, the 

Commission engaged in additional 

discussions regarding cost and 

availability of PVO financial 

instruments with representatives of 

financial instrument providers. It was 

indicated there likely would be an 

abandonment of the PVO program by 

many of the financial instrument 

providers due to the possible direct 

interaction with passengers and the lack 

of a formal judgement. The NPRM 

proposes passengers first seek refunds 

from the PVO in order to minimize the 

direct interaction between passengers 

and financial instrument providers, and 

that the financial instrument providers 

would be permitted to require a formal 

court judgement. 

The Commission is interested in 

receiving comments from industry 

stakeholders regarding the potential 

availability of financial instruments 

resulting from the proposed change to 

the definition of nonperformance, and 

on the proposed process of obtaining 

refunds from the financial instrument. 

As discussed in this NPRM, comments 

received in response to the ANPRM 

indicate a concern by some stakeholders 

that the proposed regulatory changes 

will constrain the current providers of 

financial instruments from continuing 

to provide such instruments to PVOs. 

Commenters have stated that surety 

companies would be largely unwilling 

to act as the direct claims handling 

entity in cases of alleged 

nonperformance. The Commission is 

also aware of a concern that banks may 

view the new regulations as too 

burdensome and choose not to offer 

PVOs the option of an escrow account 

to satisfy PVOs’ financial responsibility 

requirement. In addition, the increased 

claims activity of commercial providers 

of travel insurance during the pandemic 

may influence their determination 

whether to offer financial instruments to 

PVOs. Subsequent to receiving formal 

comments to the ANPRM, the 

Commission had additional discussions 

regarding cost and availability of PVO 

financial instruments with SFAA and 

Allianz Partners, the largest U.S. travel 

insurance provider. SFAA reiterated 

many of the comments received in 

response to the ANPRM including the 

likely abandonment of the PVO program 

by many, if not all, of the surety 

participants due to the possible direct 

interaction of passengers with the surety 

companies and the lack of a court 

judgement. Further discussion revealed 

the lack of a court judgement seemed to 

be the largest obstacle to continued 

participation. The Commission also 

spoke with Allianz Partners in an 

attempt to determine the availability 

and cost of insurance to fill the void left 

by the potential abandonment of other 

financial instruments. It was surprising 

to learn that Allianz, and likely other 

travel insurance providers, would have 

little interest in providing financial 

coverage to PVOs in the event of 

nonperformance. The lack of interest 

appears to be due to the hesitancy of 

travel insurance providers to broaden 

their exposure in the cruise sector due 

to the impact of the pandemic. The 

Commission seeks further comment on 

these and any other anticipated effects 

on the availability of financial 

instruments, should the proposed 

regulations take effect. The NPRM 

proposes that: (1) The passenger makes 

a request for refund from the Principal 

in accordance with the ticket contract. 

If the ticket contract refund procedure 

provides less than 180 days to submit a 

claim, the financial instrument will be 

available after written notification to 

Principal; (2) If the passenger is unable 

to resolve the claim within 180 days 

after nonperformance, as defined in 46 

CFR 540.2, occurs, the passenger may 

submit a claim against the financial 

instrument as per instructions on the 

Commission website. The claim must 

include a copy of the boarding pass, 

proof and amount of payment, 

cancellation notice, and dated proof of 

properly filed claim against the 

Principal. All documentation must 

clearly display the vessel and voyage 


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23Under 5 U.S.C. 601, the term small entity is 

defined as a small business, a not-for-profit 

enterprise which is independently owned and 

operated and is not dominant in its field, or a 

governmental jurisdiction with a population of less 

than 50,000. A small business is defined as a small 

business concern under section 3 of the Small 

Business Act. The Small Business Administration 

interprets the meaning of business concern as a 

business entity organized for profit, with a place of 

business located in the U.S., and which operates 

primarily within the U.S. or which makes a 

significant contribution to the U.S. economy 

through payment of taxes or use of American 

products, materials, or labor. 13 CFR 121.105(a)(1). 

24Office of Advocacy, U.S. Small Business 

Administration, A Guide for Government Agencies 

How to Comply with the Regulatory Flexibility Act 

(August 2017), p. 37. 

with scheduled and actual date of 

sailing. At the discretion of the financial 

instrument provider a judgment may be 

required prior to resolving the claim; 

and (3) valid claims must be paid within 

90 days of submission of claim to the 

financial instrument provider. 

Additionally, the Commission 

decided not to propose a refund process 

that would apply in a situation when 

the passenger unilaterally cancels their 

cruise, which is supported by the 

ANPRM comments questioning whether 

those cancellations are nonperformance. 

C. Definition of Unearned Passenger 

Revenue (UPR) 

The Commission proposes defining 

Unearned Passenger Revenue as 

passenger revenue received for water 

transportation and all other 

accommodations, services and facilities 

that have not been performed by the 

PVO. Passenger revenue will include 

port fees, taxes and all ancillary fees 

submitted to the PVO by the passenger. 

CLIA recommended to modify the 

definition to exclude such items as 

airfare, non-affiliated shore excursions, 

or other third-party provider costs for 

which the PVO is no longer holding the 

passenger’s deposit or is contractually 

obligated to pay such deposit to a thirdparty provider. In order to provide 

better protection to the consumer, and 

because PVOs have the existing 

relationship with the providers of 

ancillary services, the Commission 

believes PVOs should be responsible for 

refunding all monies collected by the 

PVOs for all services, and facilities not 

yet performed. 

D. Publishing Information on How To 

Obtain Refunds 

The Commission proposes: 

(1) PVOs provide on their websites clear 

and precise instructions on how passengers 

may obtain refunds in the event of 

nonperformance of transportation; and 

(2) PVOs shall submit an active web page 

address with their refund instructions for 

nonperformance of transportation to the 

Commission for publication on the 

Commission’s website. 

(3) Form FMC–131 ‘‘Application for 

Certificate of Financial Responsibility’’ will 

include a required field for PVOs to provide 

the web page address of their refund 

instructions for nonperformance of 

transportation. 

The Commission seeks further 

comment on whether the Commission 

should provide an example web page 

with refund instructions in Part 540 and 

if so, what it should include. 

V. Public Participation 

How do I prepare and submit 

comments? 

Your comments must be written and 

in English. To ensure that your 

comments are correctly filed in the 

docket, please include the docket 

number of this document in your 

comments. 

You may submit your comments via 

email to the email address listed above 

under ADDRESSES. Please include the 

docket number associated with this 

notice and the subject matter in the 

subject line of the email. Comments 

should be attached to the email as a 

Microsoft Word or text-searchable PDF 

document. 

How do I submit confidential business 

information? 

The Commission will provide 

confidential treatment for identified 

confidential information to the extent 

allowed by law. If your comments 

contain confidential information, you 

must submit the following by email to 

the address listed above under 

ADDRESSES: 

• A transmittal letter requesting 

confidential treatment that identifies the 

specific information in the comments 

for which protection is sought and 

demonstrates that the information is a 

trade secret or other confidential 

research, development, or commercial 

information. 

• A confidential copy of your 

comments, consisting of the complete 

filing with a cover page marked 

‘‘Confidential-Restricted,’’ and the 

confidential material clearly marked on 

each page. 

• A public version of your comments 

with the confidential information 

excluded. The public version must state 

‘‘Public Version—confidential materials 

excluded’’ on the cover page and on 

each affected page, and must clearly 

indicate any information withheld. 

Will the Commission consider late 

comments? 

The Commission will consider all 

comments received before the close of 

business on the comment closing date 

indicated above under DATES. To the 

extent possible, we will also consider 

comments received after that date. 

How can I read comments submitted by 

other people? 

You may read the comments received 

by the Commission at the Commission’s 

Electronic Reading Room at the address 

listed above under ADDRESSES. 

VI. Rulemaking Analyses and Notices 

Regulatory Flexibility Act 

Initial Regulatory Flexibility Analysis 

Under the Regulatory Flexibility Act 

(RFA), whenever an agency is required 

to publish general notice of proposed 

rulemaking, the agency must prepare 

and make available for public comments 

an initial regulatory flexibility analysis 

(IRFA) describing the impact of the 

proposed rule on small entities, which 

in this case are PVOs.23 5 U.S.C. 603. As 

discussed below in more detail, the 

Commission does not collect 

performance data from small PVOs, nor 

is such specific information published. 

Therefore, in this analysis, the 

Commission has used industry-wide 

published data as a proxy to estimate 

the impact of the proposed rule on both 

small and larger PVOs with a 

comparative assessment as 

recommended in the RFA guide of the 

Small Business Administration (SBA).24

The Commission encourages comments 

on its analysis from interested parties 

with supporting data and information. 

The requirements for preparing an 

IRFA of a proposed rule are set forth in 

5 U.S.C. 603 and direct federal agencies 

to address the following topics: 

Why the Commission Is Considering the 

Proposed Rule 

The proposed rule stems from the 

Commission’s Fact Finding 

Investigation No. 30: COVID–19 Impact 

on Cruise Industry, which concluded 

that clearer guidance is needed in 

determining whether a passenger is 

entitled to obtain a refund if a PVO 

cancels a voyage, makes a significant 

schedule change, or significantly delays 

a voyage. 

Objectives and Legal Basis for the 

Proposed Rule 

As discussed in the background 

section, 46 U.S.C. 44102 requires certain 

persons arranging, offering, advertising, 

or providing transportation on vessels to 


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25See 13 CFR subpart A—Size Eligibility 

Provisions and Standards (January 1, 2020). 

26See 13 CFR 121.104 and 121.106. 

establish financial responsibility for 

indemnification of passengers for 

nonperformance of transportation. The 

proposed rule seeks to provide a clear 

and consistent policy toward vessel 

passenger ticket refunds from the PVOs’ 

financial responsibility instruments 

filed with the Commission, in the case 

of nonperformance by the vessel 

operator. The proposed rule primarily 

does this by defining nonperformance. 

The proposed rule would add a 

definition of nonperformance for which 

passengers would be entitled to a refund 

of their prepaid fares where voyages are 

canceled or delayed for three or more 

days and the passenger does not opt to 

accept an alternative voyage. 

Additionally, the proposed rule changes 

the definition of UPR to remove the 

language ‘‘excludes such items as 

airfare, hotel accommodations, and tour 

excursions,’’ to include such items in 

the definition of UPR, if the PVO offers 

and collects money from the passenger 

for such items. 

Determine and Estimate the Number of 

Small Entities to Which the New Rule 

Will Apply 

As part of this analysis, 5 U.S.C. 

603(b)(3) requires a description of and, 

where feasible, an estimate of the 

number of small entities to which the 

proposed rule will apply. The SBA has 

established regulations to determine 

whether businesses qualify as small 

entities. 13 CFR part 121. The 

regulations use the North American 

Industry Classification System (NAICS) 

with codes and descriptions to classify 

businesses and measure their size by 

either annual receipts (gross annual 

revenue) or number of employees.25 The 

calculation of total annual receipts or 

number of employees for the purpose of 

determining the size of a business 

includes those of the business itself plus 

those of its domestic and foreign 

affiliates.26

As discussed, the proposed rule 

would modify the regulations in 46 CFR 

Subpart A of part 540 governing 

evidence of PVOs financial 

responsibility for nonperformance of 

transportation. The regulated businesses 

that the proposed rule applies to are 

PVOs. At present, there are a total of 43 

PVOs with certificates of financial 

responsibility for nonperformance 

issued by the Commission. Pursuant to 

the SBA regulations in 13 CFR 121.201, 

PVOs fall under the classification of 

NAICS code 483112, Deep Sea 

Passenger Transportation, and under 

this classification, businesses with a 

total number of 1,500 employees or less 

qualify as small. Accordingly, the 

Commission estimates that 14 out of the 

43 certified PVOs (or 33 percent) qualify 

as small businesses under the size 

standard of the SBA. While there may 

be PVOs that report employees of less 

than 1,500, lines that are subsidiaries of 

much larger companies would not 

qualify as small entities for the intent of 

receiving regulatory relief under the 

RFA. See 13 CFR 121.106(b). 

In terms of the economic impact on 

small PVOs, the proposed rule would 

add a definition of nonperformance for 

which passengers would be entitled to 

a refund of their prepaid fares where 

voyages are canceled or delayed for 

three or more days and the passenger 

does not opt to accept an alternative 

voyage. This new definition would 

potentially increase the number of 

claims for refunds, which in turn may 

affect the cost and method used by a 

PVO to cover the passengers’ prepaid 

fares. In effect, under the proposed 

definition, PVOs that perform well and 

on time as scheduled would be less 

impacted than PVOs that perform 

poorly. The Commission has no data or 

information on the performance of the 

14 small PVOs (per the specifics of the 

proposed definition) by which to gauge 

which ones would be more significantly 

impacted by the proposed rule, and no 

such information is published. The 

proposed rule would require that all 

certified PVOs semi-annually report 

instances of non-performance by which 

the Commission could make this 

determination in the future. Therefore, 

the Commission assumes that all of the 

14 small PVOs would be impacted by 

the proposed rule by varying degrees 

depending on their performance and 

other factors affecting their 

performance. The Commission seeks 

public comments on its assumption and 

the economic impact of the proposed 

rule on small PVOs supported by 

performance data on the cancelation or 

delay of voyages, as per the proposed 

definition of nonperformance. 

Projected Reporting, Record Keeping, 

and Other Compliance Requirements of 

the New Rule 

Cost to Government 

The Commission estimates the total 

annual cost of this proposed rule to the 

Federal government to be $145,356, 

offset by the collection of $64,482 in 

filing fees, for a net annual cost of 

$80,874. 

Record Keeping and File Costs to PVOs 

The proposed rule would require that 

PVOs submit additional semi-annual 

reports on their instances of 

nonperformance. The estimated annual 

cost of the additional reports would be 

$41,670. 

Other Costs to PVOs 

The definition of nonperformance 

under the proposed rule would likely 

increase instances of non-performance 

by PVOs and thus obligations on 

financial instruments filed with the 

Commission. The obligations on 

financial instruments may occur when a 

cruise has been delayed by more than 

three days or canceled and the 

passenger desires a refund instead of a 

credit on a future cruise. In turn, the 

change in the definition of UPR to 

include other items in addition to cruise 

fare (plus fees and taxes) offered and 

collected by the PVO could increase the 

amount of the refund and the cost to the 

PVO or discourage PVOs from offering 

such items to passengers. Prior to the 

proposed rule, the passenger vessel 

program focused on when PVOs ceased 

operations and canceled remaining 

cruises. Existing policies regarding 

cancelations and refunds vary by PVO. 

In general, most PVOs provide refunds 

or credits for cancelled voyages or 

partial refunds for voyages that are 

forced to end early, but it is unclear 

whether PVOs may provide refunds for 

delayed voyages. 

In response to the ANPRM, the Surety 

and Fidelity Association of America 

noted that because of the likely increase 

of instances of nonperformance 

‘‘sureties likely will require PVOs to 

have stronger balance sheets, 

specifically more cash on hand or larger 

lines of credit, thereby narrowing the 

universe of PVOs eligible to receive a 

surety bond guaranteeing this 

obligation.’’ Also, they claimed that the 

required amount or value of collateral 

could be increased. 

The increased costs to the PVOs 

would be from three factors. First, the 

increased cost of financial instruments 

to cover UPR because of possible 

increases in non-performance and issue 

more credits or refunds for certain 

delayed voyages now defined as 

nonperformance under this NPRM. 

Second, PVOs would have to refund 

additional purchases by passengers such 

as airfare and third-party excursions 

that were previously excluded from the 

definition of UPR before the proposed 

rule. Third, for PVOs using escrow 

accounts, the opportunity cost of having 

to hold additional cash on hand that is 


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27See Report on Operational Incidents 2009 to 

2019, Cruise Line International Association, https:// 

cruising.org/en/news-and-research/research/2020/ 

may/report-on-operational-incidents-2009-to-2019. 

28The PVOs that ceased operations are: Premier 

Cruise Operations Ltd. (Premier), New Commodore 

Cruise Lines Limited (New Commodore), Cape 

Canaveral Cruise Lines, Inc., MP Ferrymar, Inc., 

American Classic Voyages Company (American 

Classic), Royal Olympic, Regal Cruises, Ocean Club 

Cruise Line, Society Expeditions, Scotia Prince, 

Glacier Bay, Great American Rivers, RiverBarge 

Excursion Lines, Inc., Majestic America Line, and 

West Travel, Inc. d/b/a Cruise West, and French 

American Lines. Most of these incidents occurred 

in the 2000s with only one company ceasing 

operations in the last decade. At least one 

additional company, Haimark Line Ltd, declared 

bankruptcy and emerged successfully from it to 

continue operations. 

unable to be deployed as capital 

elsewhere. 

To estimate the total cost to the 

industry, the Commission would need 

to know: 

• The estimated rate of 

nonperformance by PVOs; 

• The likelihood that passengers 

would request refunds instead of opting 

for future cruise credits; 

• The impact of the prior two items 

on the cost of financial instruments; 

• Whether or not companies offering 

financial instruments would leave the 

market, or if PVOs could meet the 

requirements to obtain financial 

instruments; and 

• Estimated changes to UPR by 

removing the exclusion of ‘‘such items 

as airfare, hotel accommodations, and 

tour excursions’’ from the definition of 

UPR, to the extent offered and collected 

by PVOs. 

The Commission believes it has an 

estimate for historical rates of 

nonperformance. The Commission is 

not certain on the likelihood that 

consumers would request refunds 

instead of receiving credits, nor the size 

of increase the proposed rule would 

have on premiums and the ability of 

PVOs to obtain financial instruments. 

The lack of data on these items makes 

it difficult to provide an accurate cost 

estimate. The Commission seeks public 

comments on the aforementioned items 

from interested parties supported by 

data and additional information. 

The Cruise Line International 

Association (CLIA) publishes data on 

significant operational incidents that 

can be used to estimate past 

nonperformance by PVOs. Significant 

operational incidents are defined as 

delays of more than 24 hours to 

published itinerary, fatalities occurring 

to either passengers or crew, and serious 

injury occurring to either passengers or 

crew.27

It is difficult to separate out all the 

significant operational incidents to 

know for certain which ones would 

meet the definition of nonperformance 

under the proposed rule. However, the 

total number of significant operational 

incidents reported by CLIA sets an 

upper bound limit for how often 

instances of nonperformance, as defined 

by the proposed rule, have occurred in 

the past. 

Between 2009 and 2019, there were 

195 significant operational incidents for 

an average of 17.7 annually. The data for 

significant operational incidents is 

reported globally so the number of 

instances occurring from U.S. 

embarkations would be lower. To 

estimate the number of incidents in the 

U.S., the ratio of global incidents to 

global number of passengers was 

applied to the number of passengers 

embarking from the U.S. on an annual 

basis. The estimated number of annual 

incidents for the U.S. is 8.4. 

As previously stated, this estimate 

serves as an upper bound of how many 

instances of nonperformance may occur 

under the proposed rule. U.S. per capita 

incident rates may vary from the global 

per capita incident rates. Additionally, 

CLIA reports that incidents appear to be 

trending downward. 

Year Significant 

incidents 

Global 

passengers 

U.S. 

embarkations 

Estimated U.S. 

incidents 

2009 ................................................................................................................. 21 17,800,000 8,900,000 10.5 

2010 ................................................................................................................. 27 19,100,000 9,690,000 13.7 

2011 ................................................................................................................. 15 20,500,000 9,840,000 7.2 

2012 ................................................................................................................. 18 20,900,000 10,090,000 8.7 

2013 ................................................................................................................. 21 21,300,000 9,960,000 9.8 

2014 ................................................................................................................. 16 22,340,000 11,060,000 7.9 

2015 ................................................................................................................. 21 26,060,000 10,920,000 8.8 

2016 ................................................................................................................. 16 25,155,000 11,660,000 7.4 

2017 ................................................................................................................. 13 26,716,000 12,200,000 5.9 

2018 ................................................................................................................. 14 28,515,000 12,680,000 6.2 

2019 ................................................................................................................. 13 29,673,000 13,790,000 6.0 

Data on significant incidents compiled from CLIA’s Report on Operational Incidents 2009 to 2019. Data on global passengers compiled from 

CLIA’s annual reports. Data on U.S. embarkations compiled from CLIA’s Economic Contribution of the International Cruise Industry in the United 

States publications. 

Using significant operational 

incidents as a proxy for 

nonperformance, the next step in this 

analysis is to compare it to how many 

instances of nonperformance occur 

under the existing program. 

Under its program, the Commission 

records when PVOs cease their 

operations. Since September 2000, 16 

PVOs covered by the Commission’s 

program have ceased operations and 

another company declared bankruptcy 

but successfully restarted operations 

later.28 There have been 17 PVOs over 

the last 21 years that ceased operations 

for an average of 0.81 incidents per year, 

where a company either declared 

bankruptcy or ceased operations. 

Significant operational incidents 

occur much more frequently than 

incidents where PVOs cease operations 

or declare bankruptcy. The estimated 

number of significant operational 

incidents is 8.4 annually compared to a 

rate of 0.81 under the Commission’s 

current program. Adding the average 

incident rate of a company ceasing 

operations or declaring bankruptcy to 

the rate of significant operation 

incidents would equate to a rate of 9.21 

incidents per year where a PVOs 

financial instrument may be impacted 

or a 10-fold increase from the current 

incident rate of nonperformance, when 

PVOs cease operating. However, this 

impact is mitigated by the fact that 

many PVOs on their own terms, 

including those determined to be small 

under the SBA guidelines, already 

provide refunds of prepaid fares to 

passengers in the case of voyage 

cancellations. The Commission seeks 

public comments from interested parties 

on the above methodology for incidents 

of nonperformance, other estimates of 

PVO nonperformance, and the impact 

the rate of nonperformance would have 

on surety bond premiums and other 


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PVO financial instruments, with 

supporting data and information. 

For these reasons, the Commission 

believes that the proposed rule could 

increase the cost of UPR coverage to 

PVOs by 25 percent. Based on the 

investigation in Fact Finding No. 30 and 

its own research, the Commission 

estimates the cost of UPR coverage to 

range from $75,000 for the smallest of 

PVOs to around $600,000 for the largest. 

The total cost of current UPR coverage 

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

Assuming a 25 percent increase, the cost 

would rise by $2,457,500 to a total of 

$12,287,500. However, there is 

uncertainty about how much the cost 

would rise given the variance in the rate 

of incidents of nonperformance for each 

PVO. Breaking down the costs increases 

by size of PVOs, the total increase for 

small PVOs would be $425,000 for a 

total cost of $2,125,000 and for large 

PVOs would be $2,032,500 for a total 

cost of $10,162,500. 

The removal of the language 

‘‘excludes such items as airfare, hotel 

accommodations, and tour excursions’’ 

from the definition of unearned 

passenger revenue might also increase 

the amount of refunds to passengers 

(and the cost to the PVO) and the 

amount of UPR held by PVOs, to the 

extent that PVOs offered and collected 

money for such items. Currently, 22 

companies’ UPR exceeds the $32 

million coverage cap set by the 

Commission and pegged to inflation and 

thus would be unaffected by rising UPR. 

For the remaining 21 companies, their 

UPR would likely rise causing their 

premiums or money held in escrow to 

increase. This change may 

disproportionately impact smaller PVOs 

since their UPR is below the current 

coverage cap. The Commission seeks 

comments on how the change in the 

definition would increase the amount of 

refunds to passengers and UPR for 

PVOs. 

Alternatives for Small Entities 

The RFA requires agencies to consider 

significant alternatives for small 

businesses. The Commission has 

demonstrated flexibility during the 

rulemaking process by publishing an 

ANPRM and taking into consideration 

the comments from parties impacted by 

the proposed rule. The Commission 

responded to comments about the 

definition of nonperformance by 

changing the timing element in the 

proposed definition of nonperformance 

from 24 hours to three calendar days. 

Other Possible Alternatives Are 

Discussed 

Exempt Small Entities From the 

Proposed Rule 

Exempting small entities from the 

proposed rule would likely keep costs of 

obtaining certification the same as they 

are now for small entities. The 

commission could move forward with 

the definition of nonperformance and 

expanded UPR for entities above a 

specific revenue threshold. However, 

exempting small entities would mean 

the consumer protections from the 

proposed rule would not apply to 

passengers booking cruises on small 

PVOs. Therefore, simply exempting 

small entities would not meet the 

consumer protection objectives of the 

proposed rule. 

Delayed Compliance of the Proposed for 

Small Entities 

In comments in response to the 

ANPRM, the Commission has received 

feedback that there is uncertainty 

regarding how financial institutions will 

respond to the proposed rule with 

respect to the financial instruments they 

offer. In the most extreme scenario, 

some surety companies may leave the 

market entirely and certain PVOs would 

be forced to switch to escrow accounts 

or other forms of financial instruments. 

Delaying the compliance deadline of the 

proposed rule for small PVOs would 

allow for the market for financial 

instruments to adjust to the new 

conditions resulting from the proposed 

rule and potentially new financial 

instruments to emerge. The transition 

costs of the proposal would be mainly 

borne by large PVOs. Companies 

offering financial instruments would 

have additional time to study the 

impacts of the proposed rule on small 

entities. The Commission requests 

comments on whether a delay for small 

PVOs would be beneficial and how long 

of a delay to allow the market for 

financial instruments to adjust. 

Longer Period Before Nonperformance 

for Small Entities 

The proposed rule could be amended 

to allow for a longer period of delay 

before a cruise is defined as 

nonperforming. For small PVOs, the 

proposed rule could allow 4 or 5-day 

delay of scheduled departure. This 

would reduce the cost to small entities 

as they would have a lower likelihood 

of nonperformance. The drawback to 

this alternative is that it would create a 

two-tier structure of refund policies for 

consumers. One of the main objectives 

of the proposed rule is to provide clarity 

to consumers on refunds by creating a 

standard policy. A separate definition of 

noncompliance for small entities would 

lessen consumer protections and go 

against the objectives of the proposed 

rule by straying from a standard refund 

policy. 

Relevant Federal Rules That May 

Duplicate, Overlap, or Conflict With the 

Proposed Rule 

The Commission is not aware of any 

other federal rules that duplicate, 

overlap, or conflict with the proposed 

rule. 

National Environmental Policy Act 

The Commission’s regulations 

categorically exclude certain 

rulemakings from any requirement to 

prepare an environmental assessment or 

an environmental impact statement 

because they do not increase or decrease 

air, water or noise pollution or the use 

of fossil fuels, recyclables, or energy. 46 

CFR 504.4. The NPRM discusses 

potential amendments to Commission’s 

program for certifying the financial 

responsibility of PVOs. This rulemaking 

thus falls within the categorical 

exclusion for ‘‘[c]ertification of financial 

responsibility of passenger vessels’’ 

under 46 CFR 504.4(a)(2). Therefore, no 

environmental assessment or 

environmental impact statement is 

required. 

Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3521) (PRA) requires an 

agency to seek and receive approval 

from the Office of Management and 

Budget (OMB) before collecting 

information from the public. 44 U.S.C. 

3507. The agency must submit 

collections of information in proposed 

rules to OMB in conjunction with the 

publication of the notice of proposed 

rulemaking. 5 CFR 1320.11. 

The information collection 

requirements associated with the 

Application for Certificate of Financial 

Responsibility filing requirements in 

part 540 are currently authorized under 

OMB Control Number 3072–0012. In 

compliance with the PRA, the 

Commission has submitted the 

proposed revised information collection 

to the Office of Management and Budget 

and is requesting comment on the 

proposed revision. 

Title: 46 CFR part 540—Application 

for Certificate of Financial 

Responsibility. 

OMB Control Number: 3072–0012. 

Abstract: 46 U.S.C. 44102, 44103 and 

46 CFR part 540 require passenger 

vessel operators to file unearned 

passenger revenue reports confidentially 

with the Commission. 


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47452 Federal Register / Vol. 86, No. 162 / Wednesday, August 25, 2021 / Proposed Rules 

Current Action: The proposed rule 

would amend (1) the Application for 

Certificate of Financial Responsibility 

filing requirements adding the website 

and (2) unearned passenger revenue 

reports by PVOs adding 

nonperformance of transportation 

occurrences. Currently, part 540 

requires that passenger vessel operators 

file unearned passenger revenue only, 

on a semiannual basis. 

Type of Request: Revision of a 

previously approved collection. 

Needs and Uses: The Commission 

issues certificates (Performance and 

Casualty) to PVOs for the 

Indemnification of Passengers for 

Nonperformance of Transportation and 

Financial Responsibility to Meet 

Liability Incurred for Death or Injury to 

Passengers or Other Persons under 

Public Law 89–777 (codified as 46 

U.S.C. 44102 and 44103). 

Frequency: Filings are submitted to 

the Commission on a semiannual basis. 

Type of Respondents: Passenger 

vessel operators or their duly appointed 

agents are required to file applications 

and unearned passenger revenue reports 

with the Commission. 

Number of Annual Respondents: The 

Commission does not anticipate that the 

proposed revisions would affect the 

number of respondents. As a general 

matter, however, the number of 

respondents has decreased since the last 

revision to the information collection. 

The Commission estimates an annual 

respondent universe of 48 passenger 

vessel operators. 

Estimated Time per Response: The 

Commission does not anticipate that the 

proposed revisions would affect the 

estimated time per response, which 

would continue to be 8 person-hours for 

reporting and recordkeeping 

requirements contained in the 

regulations and for completing Form131. 

Total Annual Burden: The 

Commission does not anticipate that the 

proposed revisions would affect the 

number of applications or unearned 

passenger revenue reports filed, 

however there will be an increase in the 

burden associated with each filing and 

would in fact affect the total annual 

burden. Due to the increase in the 

amount of information being collected 

since the last revision, the Commission 

expects that the total annual burden will 

increase. The Commission estimates the 

total person-hour burden at 2,087 

person-hours. 

Comments are invited on: 

• Whether the collection of 

information is necessary for the proper 

performance of the functions of the 

Commission, including whether the 

information will have practical utility; 

• Whether the Commission’s estimate 

for the burden of the information 

collection is accurate; 

• Ways to enhance the quality, utility, 

and clarity of the information to be 

collected; and 

• Ways to minimize the burden of the 

collection of information on 

respondents, including the use of 

automated collection techniques or 

other forms of information technology. 

Please submit any comments, 

identified by the docket number in the 

heading of this document, by the 

methods described in the ADDRESSES

section of this document. 

Executive Order 12988 (Civil Justice 

Reform) 

The Commission will ensure that any 

proposed or final rule issued in this 

proceeding meets the applicable 

standards in E.O. 12988 titled, ‘‘Civil 

Justice Reform,’’ to minimize litigation, 

eliminate ambiguity, and reduce 

burden. 

Regulation Identifier Number 

The Commission assigns a regulation 

identifier number (RIN) to each 

regulatory action listed in the Unified 

Agenda of Federal Regulatory and 

Deregulatory Actions (Unified Agenda). 

The Regulatory Information Service 

Center publishes the Unified Agenda in 

April and October of each year. You 

may use the RIN contained in the 

heading at the beginning of this 

document to find this action in the 

Unified Agenda, available at http://

www.reginfo.gov/public/do/ 

eAgendaMain. 

VII. Proposed Regulatory Language 

List of Subjects in 46 CFR Part 540 

Insurance, Maritime carriers, 

Penalties, Reporting and recordkeeping 

requirements, Surety bonds. 

For the reasons stated in the 

preamble, the Federal Maritime 

Commission proposes to amend part 

540 of Title 46 Code of Federal 

Regulations as follows: 

PART 540—PASSENGER FINANCIAL 

RESPONSIBILITY 

■ 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 revising 

paragraph (i) and adding paragraph (m) 

to read as follows: 

§ 540.2 Definitions. 

* * * * * 

(i) Unearned Passenger Revenue 

means that passenger revenue received 

for water transportation and all other 

accommodations, services, and facilities 

that have not been performed by the 

PVO. Passenger revenue includes port 

fees, taxes, and all ancillary fees 

remitted to the PVO by the passenger. 

* * * * * 

(m) Nonperformance of transportation 

means cancelling or delaying a voyage 

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

passenger elects not to embark on the 

delayed voyage or a substitute voyage 

offered by the passenger vessel operator. 

■ 3. Amend § 540.9 by revising 

paragraphs (f), (h), and (i) to 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 procedures. If 

the PVO claims procedure provides less 

than 180 days for submission of claims 

after nonperformance of transportation, 

the passenger may seek reimbursement 

from the financial instrument provider 

after providing written notification to 

the PVO. 

(2) In the event the passenger is 

unable to resolve the claim within 180 

days after nonperformance of 

transportation occurs or if the claim is 

denied by the PVO, the passenger may 

submit a claim against the financial 

instrument as per instructions on the 

Commission website. The claim must 

include a copy of the boarding pass, 

proof and amount of payment, the 

cancellation or delay notice, and dated 

proof of properly filed claim against the 

PVO or written notification as required 

in paragraph (1) above. All 

documentation must clearly display the 

vessel and voyage with the scheduled 

and actual date of sailing. 

* * * * * 

(h) Every person who has been issued 

a Certificate (Performance) must submit 

to the Commission a semi-annual 

statement of any changes with respect to 

the information contained in the 

application or documents submitted in 

support thereof or a statement that no 

changes have occurred. Negative 

statements are required to indicate no 

change. These statements must cover 

the 6-month period of January through 

June and July through December and 

include a statement of the highest 

unearned passenger vessel revenue 

accrued for each month in the 6-month 

reporting period as well as any 


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instances of nonperformance of 

transportation. Such statements will be 

due within 30 days after the close of 

every such 6-month period. The reports 

required by this paragraph shall be 

submitted to the Bureau of Certification 

and Licensing at its office in 

Washington by certified mail, courier 

service, or electronic submission. 

(i) Information on How to Obtain 

Refunds. (1) PVOs shall provide on their 

websites clear instructions on how 

passengers may obtain refunds in the 

event of nonperformance of 

transportation; and 

(2) PVOs shall submit an active web 

page address with their refund 

instructions for nonperformance of 

transportation to the Commission for 

publication on the Commission’s 

website. 

(3) Form FMC–131 ‘‘Application for 

Certificate of Financial Responsibility’’ 

will include a required field for PVOs to 

provide the web page address of their 

refund instructions for nonperformance 

of transportation. 

* * * * * 

■ 4. In subpart A of Part 540, revise 

Form FMC–132A to read follows: 

Form FMC–132A to Subpart A of Part 

540 

FORM FMC–132A 

FEDERAL MARITIME COMMISSION 

Passenger Vessel Surety Bond 

(Performance) 

Surety Co. Bond No.lllll

FMC Certificate No.lllll

Know all persons by these presents, 

that we ll (Name of applicant), of 

ll( (City), ll (State and country), as 

Principal (hereinafter called Principal), 

and ll (Name of Surety), a company 

created and existing under the laws of 

ll (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 

ll, for which payment, well and truly 

to be made, we bind ourselves and our 

heirs, executors, administrators, 

successors, and assigns, jointly and 

severally, firmly by these presents. 

Whereas the Principal intends to 

become a holder of a Certificate 

(Performance) pursuant to the 

provisions of 46 CFR part 540, subpart 

A, and has elected to file with the 

Federal Maritime Commission 

(Commission) such a bond to insure 

financial responsibility and the 

supplying transportation and other 

services subject to 46 CFR part 540, 

subpart A. 

Whereas this bond is written to assure 

compliance by the Principal as an 

authorized holder of a Certificate 

(Performance) pursuant to subpart A of 

part 540 of title 46, Code of Federal 

Regulations, and shall inure to the 

benefit of any and all passengers to 

whom the Principal may be held legally 

liable for any of the damages herein 

described. Now, therefore, the condition 

of this obligation is such that if the 

Principal shall pay or cause to be paid 

to passengers any sum or sums for 

which the Principal may be held legally 

liable by reason of the Principal’s failure 

faithfully to provide such transportation 

and other accommodations and services 

46 CFR 540, subpart A made by the 

Principal and the passenger while this 

bond is in effect for the supplying of 

transportation and other services 

pursuant to and in accordance with the 

provisions of subpart A of part 540 of 

title 46, Code of Federal Regulations, 

then this obligation shall be void, 

otherwise, to remain in full force and 

effect. Whereas this bond is written to 

assure compliance by the Principal as 

an authorized holder of a Certificate 

(Performance) pursuant to 46 CFR part 

540, subpart A, and shall inure to the 

benefit of any and all passengers to 

whom the Principal may be held legally 

liable for any of the damages herein 

described. Now, Therefore, the 

condition of this obligation is that the 

penalty amount of this bond shall be 

available to pay damages made pursuant 

to passenger claims, if: 

(1) The passenger makes a request for 

refund from the Principal in accordance 

with the ticket contract. If, the ticket 

contract refund procedure provides less 

than 180 days, this bond shall be 

available after written notification to 

Principal. 

(2) If the passenger is unable to 

resolve the claim within 180 days after 

nonperformance, as defined in 46 CFR 

540.2, occurs, the passenger may submit 

a claim against the bond as per 

instructions on the Commission 

website. The claim must include a copy 

of the boarding pass, proof and amount 

of payment, cancellation notice, and 

dated proof of properly filed claim 

against the Principal. All documentation 

must clearly display the vessel and 

voyage with scheduled and actual date 

of sailing. And, Surety reserves the 

discretion to require a judgement prior 

to resolving the claim. 

(3) Valid claims must be paid within 

90 days of submission to the Surety. 

The liability of the Surety with 

respect to any passenger shall not 

exceed the passage price paid by or on 

behalf of such passenger. The liability of 

the Surety shall not be discharged by 

any payment or succession of payments 

hereunder, unless and until such 

payment or payments shall amount in 

the aggregate to the penalty of the bond, 

but in no event shall the Surety’s 

obligation hereunder exceed the amount 

of said penalty. The Surety agrees to 

furnish written notice to the Federal 

Maritime Commission forthwith of all 

suits filed, judgments rendered, and 

payments made by said Surety under 

this bond. 

This bond is effective the ll day of 

ll, 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. 

In witness whereof, the said Principal 

and Surety have executed this 

instrument on ll day of ll, 20l. 

Principal 

Name lllllllllllllll

By lllllllllllllllll

(Signature and title) 

Witness llllllllllllll

Surety 

[SEAL] 

Name lllllllllllllll

By lllllllllllllllll

(Signature and title) 

Witness llllllllllllll

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 


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the obligations of Surety and financial 

ability to discharge them. 

■ 5. In subpart A of Part 540, revise 

Form FMC–133A to read follows: 

Form FMC–133A to Subpart A of Part 

540 

FORM FMC–133A 

FEDERAL MARITIME COMMISSION 

Guaranty in Respect of Liability for 

Nonperformance 

Guaranty No. lllll

FMC Certificate No.lllll

1. Whereas ll (Name of applicant) 

(Hereinafter referred to as the 

‘‘Applicant’’) is the Owner or Charterer 

of the passenger Vessel(s) specified in 

the annexed Schedule (‘‘the Vessels’’), 

which are or may become engaged in 

voyages to or from United States ports, 

and the Applicant desires to establish 

its financial responsibility in 

accordance with 46 CFR part 540, 

subpart A, provided that the Federal 

Maritime Commission (‘‘FMC’’) shall 

have accepted, as sufficient for that 

purpose, the Applicant’s application, 

supported by this Guaranty, and 

provided that FMC shall issue to the 

Applicant a Certificate (Performance) 

(‘‘Certificate’’), the undersigned 

Guarantor hereby guarantees to 

discharge the Applicant’s legal liability 

to indemnify the passengers of the 

Vessels for nonperformance of 

transportation within the meaning of 46 

CFR part 540.2, in the event that: 

(1) The passenger makes a request for 

refund from the Principal in accordance 

with the ticket contract. If, the ticket 

contract refund procedure provides less 

than 180 days, this Guaranty shall be 

available after written notification to 

Principal. 

(2) If the passenger is unable to 

resolve the claim within 180 days after 

nonperformance, as defined in 46 CFR 

540.2, occurs, the passenger may submit 

a claim against the Guaranty as per 

instructions on the Commission 

website. The claim must include a copy 

of the boarding pass, proof and amount 

of payment, cancellation notice, and 

dated proof of properly filed claim 

against the Principal. All documentation 

must clearly display the vessel and 

voyage with scheduled and actual date 

of sailing. And, Guarantor reserves the 

discretion to require a judgement prior 

to resolving the claim. 

(3) Valid claims must be paid within 

90 days of submission to the Guarantor. 

2. The Guarantor’s liability under this 

Guaranty in respect to any passenger 

shall not exceed the amount paid by 

such passenger; and the aggregate 

amount of the Guarantor’s liability 

under this Guaranty shall not exceed 

$ ll. 

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 l

l, with offices at ll, 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 

lllllllllllllllllll

(Place and Date of Execution) 

lllllllllllllllllll

(Type Name of Guarantor) 

lllllllllllllllllll

(Type Address of Guarantor) 

By 

lllllllllllllllllll

(Signature and Title) 

Schedule of Vessels Referred to in 

Clause 1 

Vessels Added to This Schedule in 

Accordance With Clause 4 

D 6. In Subpart A of Part 540, revise 

Appendix A to Subpart A of Part 540— 

Example of Escrow Agreement for Use 

Under 46 CFR 540.5(b) to read as 

follows: 

Appendix A to Subpart A of Part 540— 

Example of Escrow Agreement for Use 

Under 46 CFR 540.5(b) 

Escrow Agreement 

This Escrow Agreement, made as of this 

llday of (month & year), by and between 

(Customer), a corporation/company having a 

place of business at (‘‘Customer’’) ll and 

(Banking Institution name & address) a 

banking corporation, having a place of 

business at (‘‘Escrow Agent’’). 

Witnesseth: 

Whereas, Customer wishes to establish an 

escrow account in order to provide for the 

indemnification of passengers in the event of 

non-performance of water transportation to 

which such passengers would be entitled, 

and to establish Customer’s financial 

responsibility therefore; and 

Whereas, Escrow Agent wishes to act as 

Escrow Agent of the escrow account 

established hereunder; 

Now, Therefore, in consideration of the 

premises and covenants contained herein 

and other good and valuable consideration, 

the receipt and sufficiency of which is hereby 

acknowledged, the parties hereto agree as 

follows: 

1. Customer has established on (month, & 

year) (the ‘‘Commencement Date’’) an escrow 

account with the Escrow Agent which escrow 

account shall hereafter be governed by the 

terms of this Agreement (the ‘‘Escrow 

Account’’). Escrow Agent shall maintain the 

Escrow Account in its name, in its capacity 

as Escrow Agent. 

2. Customer will determine, as of the date 

prior to the Commencement Date, the amount 

of unearned passenger revenue, including 

any funds to be transferred from any 

predecessor Escrow Agent. Escrow Agent 

shall have no duty to calculate the amount 

of unearned passenger revenue. Unearned 

Passenger Revenues are defined as that 

passenger revenue received for water 

transportation and all other accommodations, 

services and facilities relating thereto not yet 

performed. 46 CFR 540.2(i). 

3. Customer will deposit on the 

Commencement Date into the Escrow 

Account cash in an amount equal to the 

amount of Unearned Passenger Revenue 

determined under Paragraph 2 above plus a 

cash amount (‘‘the Fixed Amount’’) equal to 

(10 percent of the Customer’s highest 

Unearned Passenger Revenue for the prior 

two fiscal years. For periods on or after (year 

of agreement (2009)), the Fixed Amount shall 

be determined by the Commission on an 


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Federal Register / Vol. 86, No. 162 / Wednesday, August 25, 2021 / Proposed Rules 47455 

annual basis, in accordance with 46 CFR part 

540. 

4. Customer acknowledges and agrees that 

until such time as a cruise has been 

completed and Customer has taken the 

actions described herein, Customer shall not 

be entitled, nor shall it have any interest in 

any funds deposited with Escrow Agent to 

the extent such funds represent Unearned 

Passenger Revenue. 

5. Customer may, at any time, deposit 

additional funds consisting exclusively of 

Unearned Passenger Revenue and the Fixed 

Amount, into the Escrow Account and 

Escrow Agent shall accept all such funds for 

deposit and shall manage all such funds 

pursuant to the terms of this Agreement. 

6. After the establishment of the Escrow 

Account, as provided in Paragraph 1, 

Customer shall on a weekly basis on each 

(identify day of week), or if Customer or 

Escrow Agent is not open for business on 

(identify day of week) then on the next 

business day that Customer and Escrow 

Agent are open for business recompute the 

amount of Unearned Passenger Revenue as of 

the close of business on the preceding 

business day (hereinafter referred to as the 

‘‘Determination Date’’) and deliver a 

Recomputation Certificate to Escrow Agent 

on such date. In each such weekly 

recomputation Customer shall calculate the 

amount by which Unearned Passenger 

Revenue has decreased due to (i) the 

cancellation of reservations and the 

corresponding refund of monies from 

Customer to the persons or entities canceling 

such reservations; (ii) the amount which 

Customer has earned as revenue as a result 

of any cancellation fee charged upon the 

cancellation of any reservations; (iii) the 

amount which Customer has earned due to 

the completion of cruises; and (iv) the 

amount by which Unearned Passenger 

Revenue has increased due to receipts from 

passengers for future water transportation 

and all other accommodations, services and 

facilities relating thereto and not yet 

performed. 

The amount of Unearned Passenger 

Revenue as recomputed shall be compared 

with the amount of Unearned Passenger 

Revenue for the immediately preceding 

period to determine whether there has been 

a net increase or decrease in Unearned 

Passenger Revenue. If the balance of the 

Escrow Account as of the Determination Date 

exceeds the sum of the amount of Unearned 

Passenger Revenue, as recomputed, plus the 

Fixed Amount then applicable, then Escrow 

Agent shall make any excess funds in the 

Escrow Account available to Customer. If the 

balance in the Escrow Account as of the 

Determination Date is less than the sum of 

the amount of Unearned Passenger Revenue, 

as recomputed, plus an amount equal to the 

Fixed Amount, Customer shall deposit an 

amount equal to such deficiency with the 

Escrow Agent. Such deposit shall be made in 

immediately available funds via wire transfer 

or by direct transfer from the Customer’s U.S. 

Bank checking account before the close of 

business on the next business day following 

the day on which the Recomputation 

Certificate is received by Escrow Agent. The 

Escrow Agent shall promptly notify the 

Commission within two business days any 

time a deposit required by a Recomputation 

Certificate delivered to the Escrow Agent is 

not timely made. 

7. Customer shall furnish a Recomputation 

Certificate, in substantially the form attached 

hereto as Annex 1, to the Federal Maritime 

Commission (the ‘‘Commission’’) and to the 

Escrow Agent setting forth the weekly 

recomputation of Unearned Passenger 

Revenue required by the terms of Paragraph 

6 above. Customer shall mail or fax to the 

Commission and deliver to the Escrow Agent 

the required Recomputation Certificate before 

the close of business on the business day on 

which Customer recomputes the amount of 

Unearned Passenger Revenue. 

Notwithstanding any other provision herein 

to the contrary, Escrow Agent shall not make 

any funds available to Customer out of the 

Escrow Account because of a decrease in the 

amount of Unearned Passenger Revenue or 

otherwise, until such time as Escrow Agent 

receives the above described Recomputation 

Certificate from Customer, which 

Recomputation Certificate shall include the 

Customer’s verification certification in the 

form attached hereto as Annex 1. The copies 

of each Recomputation Certificate to be 

furnished to the Commission shall be mailed 

to the Commission at the address provided in 

Paragraph 25 herein. If copies are not mailed 

to the Commission, faxed or emailed copies 

shall be treated with the same legal effect as 

if an original signature was furnished. No 

repayment of the Fixed Amount may be 

made except upon approval of the 

Commission. 

Within fifteen (15) days after the end of 

each calendar month, Escrow Agent shall 

provide to Customer and to the Commission 

at the addresses provided in Paragraph 25 

below, a comprehensive statement of the 

Escrow Account. Such statement shall 

provide a list of assets in the Escrow 

Account, the balance thereof as of the 

beginning and end of the month together 

with the original cost and current market 

value thereof, and shall detail all transactions 

that took place with respect to the assets and 

investments in the Escrow Account during 

the preceding month. 

8. At the end of each quarter of Customer’s 

fiscal year, Customer shall cause the 

independent auditors then acting for it to 

conduct an examination in accordance with 

generally accepted auditing standards with 

respect to the weekly Recomputation 

Certificates furnished by Customer of the 

Unearned Passenger Revenues and the 

amounts to be deposited in the Escrow 

Account and to express their opinion within 

forty-five (45) days after the end of such 

quarter as to whether the calculations at the 

end of each fiscal quarter are in accordance 

with the provisions of Paragraph 6 of this 

Agreement. The determination of Unearned 

Passenger Revenue of such independent 

auditors shall have control over any 

computation of Unearned Passenger Revenue 

by Customer in the event of any difference 

between such determinations. To the extent 

that the actual amount of the Escrow Account 

is less than the amount determined by such 

independent auditors to be required to be on 

deposit in the Escrow Account, Customer 

shall immediately deposit an amount of cash 

into the Escrow Account sufficient to cause 

the balance of the Escrow Account to equal 

the amount determined to be so required. 

Such deposit shall be completed no later 

than the business day after receipt by the 

Escrow Agent of the auditor’s opinion 

containing the amount of such deficiency. 

The opinion of such independent auditors 

shall be furnished by such auditors directly 

to Customer, to the Commission and to the 

Escrow Agent at their addresses contained in 

this Agreement. In the event that a required 

deposit to the Escrow Agent is not made 

within one Business Day after receipt of an 

auditor’s report or a Recomputation 

Certificate, Escrow Agent shall send 

notification to the Commission within the 

next two Business Days. 

9. Escrow Agent shall invest the funds in 

the Escrow Account in Qualified Investments 

as directed by Customer in its sole and 

absolute discretion. ‘‘Qualified Investments’’ 

means, to the extent permitted by applicable 

law: 

(a) Government obligations or obligations 

of any agency or instrumentality of the 

United States of America; 

(b) Commercial paper issued by a United 

States company rated in the two highest 

numerical ‘‘A’’ categories (without regard to 

further gradation or refinement of such rating 

category) by Standard & Poor’s Corporation, 

or in the two highest numerical ‘‘Prime’’ 

categories (without regard to further 

gradation or refinement of such rating) by 

Moody’s Investor Services, Inc.; 

(c) Certificates of deposit and money 

market accounts issued by any United States 

bank, savings institution or trust company, 

including the Escrow Agent, and time 

deposits of any bank, savings institution or 

trust company, including the Escrow Agent, 

which are fully insured by the Federal 

Deposit Insurance Corporation; 

(d) Corporate bonds or obligations which 

are rated by Standard & Poor’s Corporation or 

Moody’s Investors Service, Inc. in one of 

their three highest rating categories (without 

regard to any gradation or refinement of such 

rating category by a numerical or other 

modifier); and 

(e) Money market funds registered under 

the Federal Investment Company Act of 

1940, as amended, and whose shares are 

registered under the Securities Act of 1933, 

as amended, and whose shares are rated 

‘‘AAA’’, ‘‘AA + ’’ or ‘‘AA’’ by Standard & 

Poor’s Corporation. 

10. All interest and other profits earned on 

the amounts placed in the Escrow Account 

shall be credited to Escrow Account. 

11. This Agreement has been entered into 

by the parties hereto, and the Escrow 

Account has been established hereunder by 

Customer, to establish the financial 

responsibility of Customer as the owner, 

operator or charterer of the passenger 

vessel(s) (see Exhibit A), in accordance with 

46 CFR part 540, subpart A. The Escrow 

Account shall be held by Escrow Agent in 

accordance with the terms hereof, to be 

utilized to discharge Customer’s legal 

liability to indemnify the passengers of the 

named vessel(s) for non-performance of 

transportation within the meaning of 46 CFR 


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540.2(m). The Escrow Agent shall make 

indemnification payments pursuant to 

written instructions from Customer, on 

which the Escrow Agent may rely, or in the 

event that: 

(1) The passenger makes a request for 

refund from the Principal in accordance with 

the ticket contract. If, the ticket contract 

refund procedure provides less than 180 

days, this Escrow Account shall be available 

after written notification to Principal. 

(2) If the passenger is unable to resolve the 

claim within 180 days after nonperformance, 

as defined in 46 CFR 540.2, occurs, the 

passenger may submit a claim against the 

Escrow Account as per instructions on the 

Commission website. The claim must include 

a copy of the boarding pass, proof and 

amount of payment, cancellation notice, and 

dated proof of properly filed claim against 

the Principal. All documentation must 

clearly display the vessel and voyage with 

scheduled and actual date of sailing. And, 

The Escrow Agent shall make 

indemnification payments pursuant to 

written instructions from Customer, on 

which the Escrow Agent may rely, or in the 

event that such legal liability has not been 

discharged by Customer within twenty-one 

(21) days after any such passenger has 

obtained a final judgment (after appeal, if 

any) against Customer from a United States 

Federal or State Court of competent 

jurisdiction the Escrow Agent is authorized 

to pay funds out of the Escrow Account, after 

such twenty-one day period, in accordance 

with and pursuant to the terms of an 

appropriate order of a court of competent 

jurisdiction on receipt of a certified copy of 

such order. 

(3) Valid claims must be paid within 90 

days of submission to the Escrow Agent. 

As further security for Customer’s 

obligation to provide water transportation to 

passengers holding tickets for transportation 

on the passenger vessel(s) (see Exhibit A) 

Customer will pledge to each passenger who 

has made full or partial payment for future 

passage on the named vessel(s) an interest in 

the Escrow Account equal to such payment. 

Escrow Agent is hereby notified of and 

acknowledges such pledges. Customers’ 

instructions to Escrow Agent to release funds 

from the Escrow Account as described in this 

Agreement shall constitute a certification by 

Customer of the release of pledge with 

respect to such funds due to completed, 

canceled or terminated cruises. Furthermore, 

Escrow Agent agrees to hold funds in the 

Escrow Account until directed by Customer 

or a court order to release such funds as 

described in this Agreement. Escrow Agent 

shall accept instructions only from Customer, 

acting on its own behalf or as agent for its 

passengers, and shall not have any 

obligations at any time to act pursuant to 

instructions of Customer’s passengers or any 

other third parties except as expressly 

described herein. Escrow Agent hereby 

waives any right of offset to which it is or 

may become entitled with regard to the funds 

on deposit in the Escrow Account which 

constitute Unearned Passenger Revenue. 

12. Customer agrees to provide to the 

Escrow Agent all information necessary to 

facilitate the administration of this 

Agreement and the Escrow Agent may rely 

upon any information so provided. 

13. Customer hereby warrants and 

represents that it is a corporation in good 

standing in its State of organization and that 

is qualified to do business in the State of. 

Customer further warrants and represents 

that (i) it possesses full power and authority 

to enter into this Agreement and fulfill its 

obligations hereunder and (ii) that the 

execution, delivery and performance of this 

Agreement have been authorized and 

approved by all required corporate actions. 

14. Escrow Agent hereby warrants and 

represents that it is a national banking 

association in good standing. Escrow Agent 

further warrants and represents that (i) it has 

full power and authority to enter into this 

Agreement and fulfill its obligations 

hereunder and (ii) that the execution, 

delivery and performance of this Agreement 

have been authorized and approved by all 

required corporate actions. 

15. This Agreement shall have a term of 

one (1) year and shall be automatically 

renewed for successive one (1) year terms 

unless notice of intent not to renew is 

delivered to the other party to this Agreement 

and to the Commission at least 90 days prior 

to the expiration of the current term of this 

Agreement. Notice shall be given by certified 

mail to the parties at the addresses provided 

in Paragraph 25 below. Notice shall be given 

by certified mail to the Commission at the 

address specified in this Agreement. 

16. (a) Customer hereby agrees to 

indemnify and hold harmless Escrow Agent 

against any and all claims, losses, damages, 

liabilities, cost and expenses, including 

litigation, arising hereunder, which might be 

imposed or incurred on Escrow Agent for any 

acts or omissions of the Escrow Agent or 

Customer, not caused by the negligence or 

willful misconduct of the Escrow Agent. The 

indemnification set forth herein shall survive 

the resignation or removal of the Escrow 

Agent and the termination of this agreement. 

(b) In the event of any disagreement 

between parties which result in adverse 

claims with respect to funds on deposit with 

Escrow Agent or the threat thereof, Escrow 

Agent may refuse to comply with any 

demands on it with respect thereto as long 

as such disagreement shall continue and in 

so refusing, Escrow Agent need not make any 

payment and Escrow Agent shall not be or 

become liable in any way to Customer or any 

third party (whether for direct, incidental, 

consequential damages or otherwise) for its 

failure or refusal to comply with such 

demands and it shall be entitled to continue 

so to refrain from acting and so refuse to act 

until such conflicting or adverse demands 

shall finally terminate by mutual written 

agreement acceptable to Escrow Agent or by 

a final, non-appealable order of a court of 

competent jurisdiction. 

17. Escrow Agent shall be entitled to such 

compensation for its services hereunder as 

may be agreed upon from time to time by 

Escrow Agent and Customer and which shall 

initially be set forth in a separate letter 

agreement between Escrow Agent and 

Customer. This Agreement shall not become 

effective until such letter agreement has been 

executed by both parties hereto and 

confirmed in writing to the Commission. 

18. Customer may terminate this 

Agreement and engage a successor escrow 

agent, after giving at least 90 days written 

termination notice to Escrow Agent prior to 

terminating Escrow Agent if such successor 

agent is a commercial bank whose passbook 

accounts are insured by the Federal Deposit 

Insurance Corporation and such successor 

agrees to the terms of this agreement, or if 

there is a new agreement then such 

termination shall not be effective until the 

new agreement is approved in writing by the 

Commission. Upon giving the written notice 

to Customer and the Commission, Escrow 

Agent may terminate any and all duties and 

obligations imposed on Escrow Agent by this 

Agreement effective as of the date specified 

in such notice, which date shall be at least 

90 days after the date such notice is given. 

All escrowed funds as of the termination date 

specified in the notice shall be turned over 

to the successor escrow agent, or if no 

successor escrow agent has been named 

within 90 days after the giving of such notice, 

then all such escrowed funds for sailing 

scheduled to commence after the specified 

termination date shall be returned to the 

person who paid such passage fares upon 

written approval of the Commission. In the 

event of any such termination where the 

Escrow Agent shall be returning payments to 

the passengers, then Escrow Agent shall 

request from Customer a list of passenger 

names, addresses, deposit/fare amounts and 

other information needed to make refunds. 

On receipt of such list, Escrow Agent shall 

return all passage fares held in the Escrow 

Account as of the date of termination 

specified in the notice to the passengers, 

excepting only amounts Customer is entitled 

to receive pursuant to the terms of this 

Agreement for cruises completed through the 

termination date specified in the notice, and 

all interest which shall be paid to Customer. 

In the event of termination of this 

Agreement and if alternative evidence of 

financial responsibility has been accepted by 

the Commission and written evidence 

satisfactory to Escrow Agent of the 

Commission’s acceptance is presented to 

Escrow Agent, then Escrow Agent shall 

release to Customer all passage fares held in 

the Escrow Account as of the date of 

termination specified in the notice. In the 

event of any such termination where written 

evidence satisfactory to Escrow Agent of the 

Commission’s acceptance has not been 

presented to Escrow Agent, then Escrow 

Agent shall request from Customer a list of 

passenger names, addresses, deposit/fare 

amounts and other information needed to 

make refunds. On receipt of such list, Escrow 

Agent shall return all passage fares held in 

the Escrow Account as of the date of 

termination specified in the notice to the 

passengers, excepting only amounts 

Customer is entitled to receive pursuant to 

the terms of this Agreement for cruises 

completed through the termination date 

specified in the notice, and all interest which 

shall be paid to Customer. Upon termination, 

Customer shall pay all costs and fees 

previously earned or incurred by Escrow 

Agent through the termination date. 

19. Neither Customer nor Escrow Agent 

shall have the right to sell, pledge, 


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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 ll of without regard 

to the choice of law rules. 

In witness whereof, the undersigned have 

each caused this Agreement to be executed 

on their behalf as of the date first above 

written. 

By: lllllllllllllllllll

Title: llllllllllllllllll

By: lllllllllllllllllll

Title: llllllllllllllllll

EXHIBIT A 

ESCROW AGREEMENT, dated ll by and 

between (Customer) and (Escrow Agent). 

Passenger Vessels Owned or Chartered 

ANNEX 1 

RECOMPUTATION CERTIFICATE 

To: Federal Maritime Commission 

And To: (‘‘Bank’’) 

The undersigned, the Controller of ll

hereby furnishes this Recomputation 

Certificate pursuant to the terms of the 

Escrow Agreement dated ll, 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: $ll

a. Additions to unearned Passenger 

Revenue since such date were: 

1. Passenger Receipts: $ll

2. Other (Specify) $ll

3. Total Additions: $ll

b. Reductions in Unearned Passenger 

Revenue since such date were: 

1. Completed Cruises: $ll

2. Refunds and Cancellations: $ll

3. Other (Specify) $ll

4. Total Reductions: $ll

II. Unearned Passenger Revenue as of the 

date of this Recomputation Certificate is: 

$ll

a. Excess Escrow Amount $ll

III. Plus the Required Fixed Amount: $ll 

IV. Total Required in Escrow: $ll 

V. Current Balance in Escrow Account: 

$ll 

VI. Amount to be Deposited in Escrow 

Account: $ll 

VII. Amount of Escrow Account available to 

Operator: $ll 

VIII. I declare under penalty of perjury that 

the above information is true and correct. 

Dated: lllllllllllllllll

(Signature) lllllllllllllll

Name: lllllllllllllllll

Title: llllllllllllllllll

(Signature) lllllllllllllll

Name: lllllllllllllllll

Title: llllllllllllllllll

By the Commission. 

Rachel Dickon, 

Secretary. 

[FR Doc. 2021–18220 Filed 8–24–21; 8:45 am] 

BILLING CODE 6730–02–P 

DEPARTMENT OF THE INTERIOR 

Fish and Wildlife Service 

50 CFR Part 17 

[Docket No. FWS–HQ–ES–2020–0100; 

FF09E22000 FXES11180900000 212] 

RIN 1018–BE92 

Endangered and Threatened Wildlife 

and Plants; Endangered Species 

Status for Amur Sturgeon 

AGENCY: Fish and Wildlife Service, 

Interior. 

ACTION: Proposed rule. 

SUMMARY: We, the U.S. Fish and 

Wildlife Service (Service), announce a 

12-month finding on a petition to list 

the Amur sturgeon (Acipenser 

schrenckii), a fish species from the 

Amur River basin in Russia and China, 

as an endangered species under the 

Endangered Species Act of 1973, as 

amended (Act). After a review of the 

best scientific and commercial 

information available, we find that 

listing the species is warranted. 

Accordingly, we propose to list the 

Amur sturgeon as an endangered 

species under the Act. If we finalize this 

rule as proposed, it would add this 

species to the List of Endangered and 

Threatened Wildlife and extend the 

Act’s protections to the species. 

DATES: We will accept comments 

received or postmarked on or before 

October 25, 2021. Comments submitted 

electronically using the Federal 

eRulemaking Portal (see ADDRESSES, 

below) must be received by 11:59 p.m. 

Eastern Time on the closing date. We 

must receive requests for a public 

hearing, in writing, at the address 

shown in FOR FURTHER INFORMATION

CONTACT by October 12, 2021. 

ADDRESSES: You may submit comments 

by one of the following methods: 

(1) Electronically: Go to the Federal 

eRulemaking Portal: http://

www.regulations.gov. In the Search box, 

enter FWS–HQ–ES–2020–0100, which 

is the docket number for this 

rulemaking. Then, click on the Search 

button. On the resulting page, in the 

Search panel on the left side of the 

screen, under the Document Type 

heading, check the Proposed Rule box to 

locate this document. You may submit 

a comment by clicking on ‘‘Comment 

Now!’’ 

(2) By hard copy: Submit by U.S. mail 

to: Public Comments Processing, Attn: 

FWS–HQ–ES–2020–0100, U.S. Fish and 

Wildlife Service, MS: PRB/3W, 5275 

Leesburg Pike, Falls Church, VA 22041– 

3803. 


khammond on DSKJM1Z7X2PROD with PROPOSALS