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Federal Register / Vol. 86, No. 162 / Wednesday, August 25, 2021 / Proposed Rules appropriate provisions of the Commissions 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. 2015 Passenger Vessel Financial Responsibility was published in the Federal Register on October 14, 2020, seeking comments on potential regulatory changes to implement the recommendations in the Interim Report.

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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 Commissions 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 Commissions 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 PVOs refund deadline, but the sailing is not cancelled, the PVO will provide a credit for a future cruise equal to the consumers amount of deposit. In all other cases in which a consumer cancels and embarkation and sailing occur within the prescribed timeline, the cruise lines rules for cancellation will apply.
4. A PVO may set a reasonable deadline for a consumer entitled to a refund to request the
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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 passengers 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 Commissions 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 Commissions 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 PVOs failure to provide transportation or other accommodations and services subject to part 540, subpart A,11 in accordance 9 Fact
Finding 30 Interim Report at 1112.
at 12.
11 The scope of the transportation, accommodations, and services covered is described in the definition of unearned passenger revenue in 540.2 and includes water transportation and all other accommodations, services, and facilities relating thereto, but excludes air transportation, hotel accommodations, or tour excursions. 46 CFR
540.2i.
10 Id.

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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 Commissions 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 12 See 46 CFR 540.1a 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 FMC132A 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 suretys liability is for refunds due under ticket contracts made by the PVO for the supplying of transportation and other services.
13 These forms include Form FMC132A, Passenger Vessel Surety Bond Performance; Form FMC133A, Guaranty in Respect of Liability for Nonperformance, Section 3 of the Act; Appendix A, Example of Escrow Agreement for Use Under 46
CFR 540.5b. There is no required or optional form for insurance, which must meet the requirement in 540.5a.

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