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

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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.

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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
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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 Commissions 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 Commissions program for certifying the financial responsibility of PVOs. This rulemaking thus falls within the categorical exclusion for certification of financial responsibility of passenger vessels under 46 CFR 504.4a2. Therefore, no environmental assessment or environmental impact statement is required.
Paperwork Reduction Act The Paperwork Reduction Act of 1995
44 U.S.C. 35013521 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 30720012. 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 540Application for Certificate of Financial Responsibility.
OMB Control Number: 30720012.
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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