[Federal Register Volume 78, Number 39 (Wednesday, February 27, 2013)]
[Rules and Regulations]
[Pages 13268-13284]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-04417]


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FEDERAL MARITIME COMMISSION

46 CFR Parts 501 and 540

[Docket No. 11-16]
RIN 3072-AC45


Passenger Vessel Operator Financial Responsibility Requirements 
for Nonperformance of Transportation

AGENCY: Federal Maritime Commission.

ACTION: Final rule.

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SUMMARY: The Federal Maritime Commission amends its rules regarding the 
establishment of passenger vessel financial responsibility for 
nonperformance of transportation. The amount of coverage required for 
performance is modified to increase the cap on required performance 
coverage to $30 million over a two year period and thereafter adjust 
the cap every two years using the Consumer Price Index; adjust the 
amount of coverage required for smaller passenger vessel operators by 
providing for consideration of alternative forms of protection; remove 
the application form for issuance of certificates of financial 
responsibility from the Commission's regulations and make it available 
at its Web site; add an expiration date to the Certificate 
(Performance); and make technical adjustments to the regulations.

DATES: The Final Rule is effective: April 2, 2013.

FOR FURTHER INFORMATION CONTACT:  Karen V. Gregory, Secretary, Federal 
Maritime Commission, 800 North

[[Page 13269]]

Capitol Street NW., Washington, DC 20573-0001, Phone: (202) 523-5725, 
Email: secretary@fmc.gov. Vern W. Hill, Director, Bureau of 
Certification and Licensing, 800 North Capitol Street NW., Washington, 
DC 20573-0001, Phone: (202) 523-5787, Email: bcl@fmc.gov.

SUPPLEMENTARY INFORMATION: 
    By Notice of Proposed Rulemaking (NPRM) published on September 20, 
2011, 76 FR 58227, the Federal Maritime Commission (Commission or FMC) 
proposed to amend its rules regarding the establishment of passenger 
vessel financial responsibility under 46 U.S.C. 44102 (formerly 
contained in section 3(a) of Pub. L. 89-777).\1\ After receipt of 
public comments responding to the NPRM, the Commission issued a Request 
for Additional Comments and Information (RFI) relevant to the 
Commission's analysis whether revision of the Commission's regulations 
governing passenger vessel operators could have a significant economic 
impact on a substantial number of small entities.\2\
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    \1\ See 46 U.S.C. 44102 (a) through (c).
    \2\ Docket No. 11-16, Request for Additional Comments and 
Information, 77 FR 11995 (February 28, 2012).
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    The Commission adopts the Final Rule as set forth below. Also the 
Chairman of the Commission certifies below pursuant to section 5 U.S.C. 
605(b) of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., that 
the Final Rule will not have a significant economic impact on a 
substantial number of small entities as none of the nine small PVOs 
that are subject to the Commission's Part 540 regulations are found to 
be significantly impacted by the changes adopted.

Current and Final Rules

    The Commission's current rules provide that ``[n]o person in the 
United States may arrange, offer, advertise or provide passage on a 
vessel unless a Certificate (Performance) has been issued to or covers 
such person,'' 46 CFR 540.3. Such persons must apply for a Certificate 
(Performance), 46 CFR 540.4, and provide financial responsibility ``in 
an amount determined by the Commission to be no less than 110 percent 
of the unearned passenger revenue of the [PVO] applicant'' for the two 
immediately preceding years, ``reflect[ing] the greatest amount of 
unearned passenger revenue,'' 46 CFR 540.5.\3\ The amount of required 
financial responsibility, however, is capped at $15 million. 46 CFR 
540.9(j).
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    \3\ ``Unearned passenger revenue'' is defined as ``passenger 
revenue received for water transportation and all other 
accommodations, services, and facilities relating thereto not yet 
performed.'' 46 CFR 540.2(i).
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    Substantive Revisions. The final rule increases the cap on 
financial responsibility required of PVOs from $15 million to $30 
million. The rule includes a phase-in period of two years in order to 
allow the industry time to adjust. One year after the rule becomes 
effective the cap increases to $22 million. The second year after the 
rule goes into effect the cap increases to $30 million. Biennially, 
thereafter, the limit will be adjusted to the nearest $1 million using 
the Consumer Price Index for all Urban Consumers (CPI).\4\
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    \4\ The Bureau of Labor Statistics' Consumer Price Index for all 
Urban Consumers is the most widely used measure to track changes in 
prices by federal agencies and financial institutions.
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    Whereas the Supplementary Information of the NPRM provided for 
notice to be given of any increase in the cap, the proposed rule 
omitted the notice requirement. The attached final rule includes a 
formal notice, requiring the Bureau of Certification and Licensing 
(BCL) to calculate the adjusted cap amount and transmit that 
information to the Commission's Office of the Secretary (Secretary). 
The Secretary will then publish the notice of the new amount and the 
date on which it is to become effective on the Commission's Web site 
(www.fmc.gov) and in the Federal Register. The Secretary will establish 
an effective date that is no less than sixty (60) days after Federal 
Register publication.
    The final rule also provides that PVOs with unearned passenger 
revenue (UPR) that is no more than 150% of the cap (i.e., UPR of 
$45,000,000 or less) may request relief from coverage requirements by 
means of substituting alternative forms of protection. The Final Rule 
requires that requests be submitted to the Bureau of Certification and 
Licensing and authorizes the Director of BCL to grant requests based 
upon the already existing protections applicable to credit card 
receipts for PVOs whose payment policies provide for final payment by 
passengers to be made within 60 days of the vessel sailing.\5\ If such 
a request is granted, the PVO would meet its coverage requirements by a 
combination of the substituted financial responsibility alternative and 
financial responsibility covered by any insurance, guaranty, bond or 
escrow agreement.
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    \5\ Corresponding revisions to sections 501.5(g)(2) and 
501.26(d) are made to provide the necessary delegation of authority 
to BCL to review and grant requests for substituting alternative 
financial responsibility.
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    Other Revisions. A number of other revisions are included that 
refine the rules to address issues and make corrections based upon the 
staff's experience. For example, the definition of ``Unearned passenger 
revenue'' in section 540.2(i) is revised to clarify that UPR ``includes 
port fees and taxes paid'' by passengers but excludes ``such items as 
airfare, hotel accommodations, and tour excursions'' that passengers 
also pay for but are not part of the passenger vessel transportation 
element of the cruise. The matter of whether port fees and taxes must 
be reimbursed has arisen repeatedly over the years. The staff has 
consistently advised that such costs are included in the water 
transportation related costs that are covered within the ambit of the 
statute and the Commission's regulations. This change will help PVOs 
and the public to quickly ascertain from the Commission's regulations 
that these amounts are reimbursable from the financial responsibility 
established by PVOs.
    Sections 540.4(b) and 540.23(a) have been modified to direct 
applicants to file application form FMC-131 directly with the Bureau of 
Certification and Licensing, rather than the Office of the Secretary, 
reflecting actual practice over many years. The Final Rule removes form 
FMC-131 from the Commission's regulations, instead it will be made 
available on the Commission's web site (www.fmc.gov) or from the Bureau 
of Certification and Licensing.
    The sample surety bond, guaranty, and escrow agreements that are 
set forth in the Commission's regulations are also amended and were 
included in the NPRM for public comment.\6\
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    \6\ These forms were submitted to the Office of Management and 
Budget for its review at the time of the NPRM was issued.
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    Section 540.7 is revised to require that each Certificate 
(Performance) expires 5 years from the date of issuance. This varies 
from the current rule that provides that the certificate continues in 
effect for an indeterminate time. The Final Rule also provides that, 
for good cause shown, the Commission may issue a certificate with an 
expiration date less than 5 years.

Public Comments

1. Comments on the Current and New Caps

    Cruise Lines International Association, Inc. (CLIA) submitted 
comments on behalf of its members, sixteen of which are PVOs currently 
in the Commission's program. All sixteen have UPR exceeding the current 
$15 million cap. CLIA opined that the

[[Page 13270]]

current cap of $15 million was adequate, but did not oppose increasing 
the cap to $30 million. CLIA indicated that a $30 million cap would 
more than adequately cover the risks of nonperformance. CLIA also does 
not oppose the use of the CPI to adjust the $30 million cap every two 
years.
    Lindblad Expeditions, Inc., an operator of U.S. flag passenger 
vessels under the program, supports increasing the cap ``commensurate 
with the UPR exposure of all PVOs'' but indicates that such exposure 
``would best be accomplished by eliminating the cap altogether.'' 
Linblad supported the adjustment of Part 540 financial responsibility 
coverage to take into consideration overlapping financial protection 
provided by credit card issuers. Specifically, Lindblad recommended the 
Commission take into account PVO bonds with the U.S. Tour Operator 
Association and private trip insurance.
    American Cruise Lines, Inc. (ACL) (an operator of U.S. flag 
vessels), InnerSea Discoveries, LLC (InnerSea) (an operator of U.S. 
flag vessels), Congressman Andy Harris, M.D., the Passenger Vessel 
Association (PVA) (the national trade association representing owners 
and operators of U.S. flagged passenger vessels), the National 
Association of Surety Bond Producers (NASBP) oppose increasing the cap 
to $30 million. The Surety & Fidelity Association of America (SFAA) 
neither supports nor opposes the increase.
    ACL, Lindblad, InnerSea, PVA, and Congressman Harris assert that 
the current cap and increased cap unfairly discriminate against smaller 
U.S. flagged PVOs as they must devote a large portion of their capital 
to comply with the financial responsibility requirement of 110% UPR. In 
contrast, the larger, foreign-flagged PVOs have to cover a much smaller 
percentage of their UPR. ACL and InnerSea consider their financial 
responsibility burden to be disproportionate to their risk of non-
performance.
    NASBP and SFAA advise that, because sureties demand reimbursement 
for losses, sureties conduct a thorough financial assessment of each 
PVO in order to assure the PVO has sufficient financial strength for 
the bond amount sought. NASBP and SFAA expressed concern that a PVO 
faced with a higher bond amount due to an increase in the cap may not 
be able to demonstrate financial strength necessary to obtain a bond. 
NASBP recommends that the Commission eliminate any cap and that a flat 
15 percent of UPR be set as the financial responsibility level for all 
PVOs, regardless of size. NASBP calculates that the flat rate would 
produce $555 million in financial responsibility industry-wide (in 
comparison to the amount indicated in the Commission's NPRM).
    InnerSea proposes that regulations be adopted that concentrate on a 
PVO's financial stability, regardless of size. InnerSea recommends that 
financial responsibility be tied to familiar financial ratios, such as 
debt to equity ratios, when setting coverage levels.
    PVA suggests that a two-tier cap be implemented; one that applies a 
$15 million cap to PVOs with UPR between $15 million and $30 million 
and a $30 million cap for those PVOs with UPR of greater than $30 
million. PVA indicates that such a two-tier cap approach would protect 
small U.S. flagged operators from the adverse impact of the cap 
increase.

2. Comments on Alternative Forms of Financial Responsibility

    ACL, Lindblad, PVA, Royal Caribbean and CLIA all support the 
concept of alternative protection in order to take into consideration 
duplicative coverage derived from sources other than the Part 540 
financial responsibility. ACL and CLIA assert that such alternative 
protection should include consideration of credit card sales, given 
that additional financial protections exist for credit card purchasers 
under the Fair Credit Billing Act (FCBA), 15 U.S.C 1666(a). CLIA also 
suggests, in its response to the NPRM, that the U.S. Bankruptcy Code 
protects passengers. CLIA points to protections provided to unsecured 
creditors under the Bankruptcy Code priority set out in section 
503(a)(7), 11 U.S.C. 503(a)(7), which covers money paid for services 
that are not delivered. ACL and Lindblad suggest that the Commission 
needs to consider factors other than credit cards with respect to 
alternative forms of protection. Lindblad suggests that travel 
insurance be considered as alternative protection.
    ACL supports reliance upon credit card refunds but cautions that 
credit card issuers may require increased collateral as further 
protection. ACL cites an American Express letter dated May 29, 2003 
indicating that if the Commission offset bond amounts based upon 
refunds from credit card sales, then card issuers would ``require PVOs 
to post collateral that covers all UPR charges [made] with the 
company's credit cards.'' PVA expressed a similar concern that if 
credit card companies perceive increased risk they would alter the 
terms of their agreements with PVOs. Lindblad indicates that PVOs are 
required to pay fees and establish cash reserves with a third party 
which exceeds 10 percent of high UPR.
    With respect to the requirement establishing the limitation for 
making a request at 150 percent of the highest UPR, ACL asserts that 
such a limit would create a disincentive to growth as smaller PVOs will 
attempt to assure that their UPR not reach $45 million in order to 
continue qualifying for alternative protection consideration. CLIA 
likewise suggests that the 150 percent limitation is too low and will 
provide a disincentive for small cruise lines to embark passengers at 
U.S. ports as their UPR approaches the 150 percent mark.
    Congressman Harris and InnerSea oppose reliance upon credit card 
refunds or travel insurance as sources for alternative financial 
protection. Echoing other PVOs, cited supra, Innnersea states that 
greater industry reliance on credit cards and travel insurance will 
result in increased usage costs for these services to offset the 
increased risk to the credit card and travel insurance providers. 
InnerSea thus opposes this alternative as detrimental for the cruise 
industry as a whole.
    Congressman Harris asserts that offsetting travel insurance and 
credit card payments would not eliminate the discriminatory effect 
against smaller, U.S. flag PVOs. Instead, the likely effect of 
recognizing such alternative methods is to substitute credit card 
issuers in place of the Commission as the party demanding increased 
financial security.
    As indicated above, SFAA asserts that because sureties demand 
reimbursement for losses they conduct a thorough financial assessment 
of each PVO in order to assure it has sufficient financial strength to 
reimburse the surety. SFAA suggests that, in analyzing any alternative 
financial security, the Commission should consider whether the 
alternative security includes a process that performs a similar 
prequalification function (as that provided by sureties) as well as 
providing sufficient financial protection in the event the PVO 
defaults.

3. Other Comments

    ACL and CLIA both recommend eliminating the 10 percent 
``administrative fee'' for PVOs below the $30 million cap. ACL asserts 
that it should be eliminated as it ``is intended to cover the cost of 
administration'' of the Commission's ``nonperformance financial 
security program'' and that there is no sound basis for it being 
imposed on smaller U.S. flag coastwise trade PVOs and not on the larger 
PVOs that meet the cap. Similarly, CLIA suggests the ``administrative 
fee'' be

[[Page 13271]]

eliminated as requiring 100 percent of UPR is burdensome enough without 
the added 10 percent.
    The NPRM also requested comment as to whether a model similar to 
PVO casualty requirements employing the number of berths on a PVO's 
largest vessel might be appropriate for the nonperformance program. ACL 
supports the idea from the standpoint that it would appear to eliminate 
the cap but is concerned whether it would foster growth in the 
industry. CLIA opposes a casualty model, asserting that Congress 
specifically created a model of financial security for death or injury 
and created a very different model for nonperformance. CLIA points out 
that Congress created the casualty provisions at the same time it 
created the nonperformance requirements of Public Law 89-777 and, in 
doing so, manifested a clear intention that the claims be treated 
differently.
    Carnival suggests that financially sound PVOs that have a number of 
cruise brands be treated as a single applicant for purposes of the 
financial responsibility requirements. Carnival recommends that such 
applicants be covered by a single $50 million bond backed by the parent 
company's guaranty. Carnival explains that such a bond and parental 
guaranty would provide greater security by assuring that the parent 
stands behind its group of companies.

Discussion

The $30 Million Cap

    Those opposing the increase in the cap are ACL and the PVA, which 
represents U.S. flag passenger vessel operators, including ACL, 
InnerSea and Lindblad. Their comments focus on the disparity between 
the 110 percent of UPR that they must secure versus the large PVOs, 
with UPR exceeding the current and increased cap limitations. 
Commission-mandated coverage for large PVOs has been capped for 20 
years at $15 million and, under the final rule, will rise to $30 
million. The comments underscore that small U.S. flag PVOs are 
particularly disadvantaged because they must operate vessels meeting 
U.S. build limitations and must hire U.S. crews, neither of which 
burden the large foreign flag PVOs. Congressman Harris shares this 
concern.
    These comments accurately reflect that the large PVOs that qualify 
for the current cap have enjoyed unchanging financial responsibility 
burdens for all of their UPR above $15 million for 20 years. In 
contrast, smaller PVOs' financial responsibility requirements have been 
subject to increases during those 20 years, as their high two-year 
reported UPR increased. Those opposing the new cap do not see the 
increase as a change that meaningfully narrows the gap between the 110% 
financial responsibility requirements applicable to small PVOs vis-a-
vis the small fraction of financial responsibility required of much 
larger PVOs.
    It is clear that the larger PVOs with UPR exceeding the current cap 
have had the benefit of an unchanging burden of financial 
responsibility for the past twenty years; during this same period the 
PVO industry's highest UPR quadrupled from $1 billion to approximately 
$4 billion. In effect, the overall financial burdens of the 
Commission's requirements have diminished over time as the percentage 
of the UPR covered by financial responsibility dropped from 25% to 7.9% 
of UPR.\7\
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    \7\ In 1990, the total financial coverage provided was nearly 
25% of outstanding UPR, amounting to slightly more than $250 
million. With the total two-year high UPR for all PVOs in the 
Commission's program now at approximately $4 billion, only 8% of UPR 
($323 million) is covered by financial responsibility.
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    The $30 million cap will result in a significant increase in the 
UPR covered by PVOs' financial responsibility, with the preponderance 
of the increase falling on large PVOs. Based upon the recent reported 
UPR of PVOs providing nonperformance coverage, it appears that coverage 
requirements for fifteen of the large PVOs would increase to $30 
million, increasing total coverage for the industry by $225 million. 
This would increase industry-wide coverage requirements to 
approximately 13.5 percent of outstanding UPR.
    Without recognition of alternative forms of coverage, three of the 
commenting PVOs that benefit from the current cap would be immediately 
impacted by adoption of the rule, as they would be subject to 
increasing their financial responsibility. However, alternative forms 
of coverage, discussed below, would potentially reduce their coverage 
requirements below the $15 million currently maintained by these PVOs.
    Adoption of the $30 million cap on the basis of the quadrupling of 
UPR for the largest PVOs over the past 20 years is sufficient reason 
for increasing the cap. However, the Commission has, in the past, found 
the effects of inflation are relevant to increasing the cap.\8\ In 
Docket No. 90-01, the Commission stated that the increase was 
``predicated, for the most part, upon the increase in the consumer 
price index.'' \9\ Since 1967, when the cap was set at $5 million, the 
Consumer Price Index has increased more than five-fold. Use of the CPI, 
adjusted from the last increase in 1990, would equate to a cap of over 
$25 million. Yet, as described, the amount of UPR that is outstanding, 
and thus passenger monies at risk, has increased much more than general 
inflation based upon the CPI.
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    \8\ Docket No. 79-93, Final Rule, 45 FR 23428 (April 7, 1980) 
and Docket No. 90-01, Final Rule, 55 FR 34564 (August 23, 1990).
    \9\ Docket No. 90-01, Final Rule, 55 FR 34564, 34566 (August 23, 
1990).
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    The Commission adopts the increased cap based upon the large 
increase of UPR of large PVOs over the last twenty years with no 
increase in the cap. The Commission also adopts the requirement that 
the $30 million cap will be adjusted every two years based upon the 
CPI-U. Based on past history, the use of the CPI-U would not account 
for all of the increase in UPR of the largest PVOs, but will serve to 
capture some of the increases in large PVOs' UPR.
    As described above, the final rule is amended to provide notice of 
each biennial cap adjustment. The final rule provides that: (1) the 
Bureau of Certification and Licensing will calculate the adjusted cap 
amount and transmit that information to the Secretary; and (2) the 
Secretary will then publish in the Federal Register and the 
Commission's Web site notice of the new amount and its effective date. 
The Secretary will establish an effective date for the new cap that is 
no less than sixty (60) days after Federal Register publication.
    The suggestions by NASBP (that a flat 15% of UPR financial 
responsibility requirement be set for all PVOs), by InnerSea (that all 
PVOs' financial responsibility be established using familiar financial 
ratios such as debt/equity), and by PVA (that a two-tier cap system be 
put in place) create concerns and uncertainty that the final rule 
avoids. Application of the NASBP's flat 15% would apply a low and 
potentially inadequate percentage to all PVOs that do not meet the 
current $15 million cap. Inasmuch as 12 of the 15 PVOs that have ceased 
operations since September 2000 were PVOs whose UPR was below that 
threshold, the Commission's experience is that smaller PVOs have 
greater risks that performance coverage will be required to reimburse 
passengers for losses. Without current coverage requirements, many 
passengers would have suffered significant losses.
    InnerSea's suggestion that regulations should concentrate on a 
PVO's financial stability, regardless of size, would seem similarly 
problematic. The Commission

[[Page 13272]]

would need to define what sound financial health means and then conduct 
thorough and intrusive financial reviews to determine ``financial 
health.'' Experience has shown that financial reports significantly lag 
actual events. Under InnerSea's suggestion, upon discovering a PVO no 
longer was of sound financial health, the Commission would likely be 
faced with the quandary of increasing coverage requirements at a time 
that would potentially expedite the PVO's financial failure, or risk 
standing by while the PVO fails and leaves customers financially 
imperiled.
    Those suggestions would require the Commission to continuously 
monitor the financial health of every PVO. Financial reports not 
required to be filed currently would of necessity be mandated. The 
Commission's previous experience with American Classic Voyages Company 
(American Classic), when it ceased operating, demonstrated the short 
comings of reporting requirements as well as the inadequacy of self-
insurance as a means for PVOs to meet their financial responsibility 
requirements. See Financial Responsibility Requirements for 
Nonperformance of Transportation--Discontinuance of Self-Insurance and 
the Sliding Scale, and Guarantor Limitations, 29 SRR 685 (June 26, 
2002). The Commission noted that ``experience demonstrates that the lag 
time in receiving financial data may prevent the Commission from 
knowing about a PVO's financial deterioration until well after it is 
too late to remedy the lack of coverage.'' Id. at 688.
    PVA's suggestion of a two-tier cap system would leave the $15 
million cap in place for those PVOs with up to $30 million in UPR. 
While this would provide greater certainty, it would also necessitate a 
significant increase in requirements at the point $30 million UPR is 
reached. A PVO would move immediately from a $15 million cap to a $30 
million cap. The Commission's final rule allows for alternative forms 
of coverage for those whose UPR is less than $45 million and provides 
greater relief to smaller operators, such as those represented by PVA.
    The Commission's experience with respect to PVOs that have ceased 
operation is relevant to consideration of the $30 million cap and to 
consideration of individual proposals for alternative financial 
protection, provided the PVO's UPR is less than 150% of the cap. For 
example, American Classic had UPR of $51 million.\10\ Approximately 60% 
of American Classic's passengers were reimbursed through credit card 
issuers and travel insurance. Only after ten years of bankruptcy 
proceedings did the remaining 40% of the American Classic passengers, 
specifically, those who had paid by cash or check, finally receive 
reimbursement of up to $2,100 each. The $2,100 reimbursement was the 
maximum amount provided for under the Bankruptcy Code priority 
applicable at the time.
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    \10\ Fifteen PVOs covered by the Commission's regulations have 
ceased operations since 2000. They were: Premier Cruise Operations 
Ltd. (Premier), New Commodore Cruise Lines Limited (New Commodore), 
Cape Canaveral Cruise Lines, Inc., MP Ferrymar, Inc., 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.
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    CLIA indicated, in its response to the NOI, that it understood most 
of American Classic's passengers received full ``Fair Credit Billing 
Act * * * refunds'' and refunds via the bankruptcy process. CLIA stated 
that the passengers of one American Classic vessel received ``100 
percent of their fare payments through the bankruptcy process within 
17-18 months after the [American Classic] bankruptcy filing.'' However, 
according to the bankruptcy plan administrator's office, the 40% of 
passengers who paid by cash or check were classified as priority 
claimants in the bankruptcy proceeding and received only the maximum 
amount available under the bankruptcy code for that category of 
customer deposits, which was $2100 per person at that time. If any 
individual passengers' deposit equaled more than $2100 per person, they 
would not have been fully reimbursed via the American Classic 
bankruptcy proceeding. With respect to passengers of the American 
Classic vessel M.S. PATRIOT, a compromise was structured after 
extensive negotiations whereby the passengers received reimbursements 
of 26% of their initial deposits.

Requests for Substitution of Alternative Forms of Financial Protection.

    The final rule provides a process by which a PVO whose UPR is less 
than 150% of the $30 million cap (i.e., $45 million) may request relief 
from the Commission by seeking recognition of additional financial 
protection(s) in substitution for coverage otherwise required by the 
Commission's regulations. This case-by-case process is supported 
broadly by the vessel interests that submitted comments. Alternative 
sources suggested include recognition of existing credit card refund 
requirements (whether under the Fair Credit Billing Act or not), 
Bankruptcy Code priorities that allow recovery of consumer deposits 
made for services rendered but not performed, private travel insurance, 
and U.S. Tour Operator Association (USTOA) performance bonds that are 
purchased by some PVOs.
    Several commenters indicate, however, that reliance on credit card 
refunds can be problematic in that, if the Commission grants a request, 
the credit card companies could increase security to cover some or all 
of the UPR relief granted. This could include hold-backs or letters of 
credit to protect the credit card company in the event of 
nonperformance. One commenter, InnerSea, indicates this outcome is a 
near-certainty.
    The Commission has rarely recognized alternative forms of financial 
responsibility. The Commission decided to grant a request by a PVO for 
relief from the otherwise applicable financial responsibility 
requirements pursuant to 46 CFR 540.5. The Commission accepted credit 
card receipts and the PVO's USTOA performance bond in recognition of 
the increased collateralization by its credit card company requiring 
funds to be held back to cover nonperformance. Since credit card 
issuers had set up a separate escrow type fund to protect its 
cardholders, it was deemed unnecessary to mandate a duplicate escrow 
set up under Commission regulations. A concern with the relief given to 
the PVO, however, was that the ``hold-back'' funds also would be 
available to be used to reimburse the passenger for services unrelated 
to the ocean transportation, including air fare, shore excursions, port 
transfer and baggage charges.
    Comments responding to the NOI, NPRM and RFI indicate that PVO 
credit card receipts account for 50 percent to 94 percent of passenger 
fares. The concern was expressed that credit card sales in effect 
result in double coverage because some are required by the card 
companies to provide collateral and pay extra fees in addition to the 
costs associated with obtaining financial responsibility to comply with 
the Commission's regulations in Part 540. Though the extra collateral 
and fees may be used to refund unearned revenues that fall under the 
Commission's regulations, credit card refunds are not limited to 
payment of the unearned revenues covered by Part 540.
    With respect to the consumer protections under the Fair Credit 
Billing Act, the cardholder must give written notice of non-performance 
to the card issuer within sixty days after the credit card issuer 
mailed the statement containing the charges. See Federal

[[Page 13273]]

Trade Commission Letter, addressed to the Commission's General Counsel 
dated November 16, 2010. Though credit card issuers must give such 
refunds for billing error claims received within that 60-day window, 
they do not appear to be legally required to make refunds for written 
claims notified after 60 days of transmittal of billing statements.
    As indicated in comments, common PVO industry practice requires 
full payment of cruise fares from 60 to 90 days prior to sailing, 
though booking usually occurs months before the sailing date. 
Passengers may be required to make substantial initial deposits at the 
time of booking. Such booking deposits may account for up to 30 percent 
of the total fare. Hence, booking deposits made by credit cards 
normally do not fall within the 60 day window of the FCBA. CLIA 
indicates in its response to the NOI, however, that approximately 50 
percent of cruise fares are paid within the 60-day FCBA window.
    Notwithstanding that credit card companies have consistently 
reimbursed cardholders, even where nonperformance occurred beyond the 
60-day window, the increased reliance on credit card refunds as an 
alternative form of protection can present other concerns. For example, 
credit cardholder contracts vary by card issuer and cardholder, and are 
subject to unilateral changes by the card issuer; the Commission has no 
authority to assure that credit card issuers will make Part 540 refunds 
in preference to other non-statutory claims associated with passengers' 
broader travel plans (e.g., hotels, airfare, land-side excursions, 
etc.). There is no assurance that the card issuer will make such 
reimbursements in certain circumstances or, as a general matter, 
continue to make such refunds. Nonetheless, recognition of credit card 
protection may serve, on a case-by-case basis, as the primary source of 
alternative financial responsibility.
    Credit card reimbursement requirements and policies exist 
regardless of Commission requirements. Such requirements may be imposed 
by statute, regulation or policies of credit card issuers. 
Consideration of credit card protections by the Commission does not 
change those requirements. However, it is true that credit card issuers 
may require collateral based upon a risk assessment of a PVO or other 
company. Nonetheless, imposition of such a requirement presumably is 
based on the perceived risk of failure of the enterprise. That risk 
would exist whether or not the Commission required additional 
coverage.\11\ Accordingly, requests to provide alternative financial 
responsibility based upon credit card reimbursements may be granted but 
the amount of such protection to be recognized will be determined on a 
case-by-case basis.
---------------------------------------------------------------------------

    \11\ Of note, Commission filed bonds and guaranties historically 
have paid reimbursements only after existing protections have been 
exhausted. As credit card issuers have been found not to have 
subrogation rights to such instruments, they are responsible 
irrespective of Commission requirements.
---------------------------------------------------------------------------

    Private travel insurance policies differ widely. For example, some 
policies only reimburse passengers in the event the PVO formally 
declares bankruptcy. Others will reimburse passengers only after the 
PVO officially announces that it has suspended operations due to 
insolvency or bankruptcy. Still others may not cover nonperformance by 
the PVO, but only the inability of the passenger to travel as 
scheduled. Some PVOs offer travel insurance that have portions of 
coverage which are not in fact underwritten by insurance providers, 
with the passenger protected only to the extent of the PVO's ability to 
reimburse.\12\
---------------------------------------------------------------------------

    \12\ In addition to the Commission's concerns with one PVO over 
the use of hold back funds, the Commission learned that private 
travel insurance offered by the PVO proved illusory. When PVO failed 
to perform, the passengers were not reimbursed from the 
``insurance.'' The premiums paid by passengers to the PVO were gone; 
as the PVO had used the money for other purposes.
---------------------------------------------------------------------------

    The wide variability of travel insurance policies makes it 
difficult for the Commission to assure that the proceeds are adequately 
and reliably targeted to reimburse passengers for their unperformed 
water transportation. Therefore, it appears to the Commission that 
private travel insurance as a form of alternative financial 
responsibility is not sufficiently reliable at this time to support a 
request to provide substitute financial responsibility.
    The performance bonds that PVOs purchase from the U.S. Tour 
Operators Association are also suggested as a source of substitute 
financial responsibility. The Commission has had some experience with 
respect to the USTOA bond performance. Unlike private travel insurance, 
the USTOA bond is an agreement between the PVO and the association, not 
the individual passenger. Also, the USTOA bond varies less from bond to 
bond and appears to have been administered with consistent results. The 
USTOA bond may merit consideration with respect to a request for 
relief, provided the bond text were amended to provide specifically for 
coverage of Part 540 unearned revenues; or if amended to provide a 
mechanism whereby passengers are paid directly, not via the insolvent 
PVO.
    As indicated by passenger experience with respect to the American 
Classic bankruptcy, it would appear that the Bankruptcy Code priority 
for services not performed is a source of last resort for refund of 
unearned passenger revenues. Not only did some American Classic 
passengers have to wait almost ten years for refunds, some received 
refunds of only 26 percent. Bankruptcy would, therefore, be an 
unreliable source of passenger protection. Bankruptcy likely would not 
be anticipated and, even if a bankruptcy were to occur, there would be 
no assurance of sufficient assets to reimburse any passenger, much less 
fully reimburse all of them.
    The process provided in the final rule enables the Commission, on a 
case-by-case basis, to consider additional protections submitted by an 
applicant. The rule provides that PVOs with UPR not exceeding 150% of 
the cap may submit requests for relief from coverage requirements by 
substituting alternative forms of protection. ACL and CLIA both suggest 
that the 150% level is too low, and that more small PVOs would be able 
to take advantage of the process if the level were higher. The most 
significant effect of increasing the percentage would be to lessen the 
amount of UPR that is covered by established financial instruments 
under the Commission's nonperformance program in substitution for 
security that is not as certain, such as credit card refunds.
    Currently, 28 of the 40 PVOs in the Commission's program have UPR 
below $45,000,000 and each therefore may qualify for lowering their 
current coverage requirements. However, raising it to 200% would allow 
consideration of only one additional PVO. Accordingly, the Commission 
adopts the 150% threshold for submission of requests for relief.
    ACL commented that the Commission did not indicate what criteria 
governed the process. This point is well taken. Accordingly, the final 
rule has been amended to set out criteria the Commission will use in 
considering such requests.
    The final rule requires that requests be submitted to the Bureau of 
Certification and Licensing. PVOs must include their most recently 
available annual and quarterly reports, irrespective of the alternative 
financial responsibility upon which a request may be based.
    For requests based upon the already existing protections applicable 
to credit card receipts, the PVO must, for voyages

[[Page 13274]]

occurring during the most recent twelve months, include: The total 
deposits and payments received for passenger vessel transportation 
(whether by cash, checks or credit cards), the total credit card 
receipts; and a copy of the PVO's policy(ies) governing payments by 
passengers (i.e., deposits and the number of days prior to sailing the 
passenger must make final payment).
    The final rule provides that the Commission may permit a reduction 
in financial responsibility to be based upon credit card receipts. The 
amount of such a reduction is determined by halving the proportion of 
credit card receipts to the PVO's total receipts, and applying the 
resulting percentage to the PVO's highest two-year UPR. For example, 
where the total credit card receipts for the twelve-month period equals 
30 percent of the total receipts for the period, the PVO would receive 
a 15 percent reduction off of its highest UPR. Such requests ordinarily 
will be granted for PVOs whose payment policies provide for payment 
within 60 days of the vessel's sailing date and financial condition 
appears to be sound. Requests based upon payment policies that require 
final payment more than 60 days from the date of sailing may be granted 
for a lower percentage reduction. The Director of BCL, may, however, 
refer such requests to the Commission for decision.
    The final rule also provides that the alternative financial 
responsibility granted will remain in effect until its Certificate 
(Performance) expires pursuant to 540.7(b) unless the Commission 
determines otherwise based upon paragraph 5 of this section.
    Additionally, BCL may request additional information, at the time 
of the initial request, from the PVO. Such requests are made now by BCL 
when, for example, it receives information that may bear on a PVO's 
ability to perform. Similarly, the final rule adds a provision enabling 
the BCL to request such information from PVOs after their requests are 
granted. Of course, the PVO may provide any other information related 
to the alternative financial responsibility or its financial condition 
that it considers relevant to its request.

Other Matters Raised

    ACL and CLIA each suggest elimination of the 10% ``administrative 
fee.'' They refer to the last ten percent in the 110% of UPR required 
of PVOs that do not qualify for the cap. ACL asserts that the 10% is 
used to administer the Commission's nonperformance program. To clarify, 
the 10% is not an ``administrative fee'' in any sense and the 
Commission does not receive any of the 10%. All 110 percent of a PVO's 
financial responsibility is devoted to refunds in the event of 
nonperformance and, in some instances, to cover costs associated with 
payment of reimbursements, such as standard check processing fees by 
banks.
    Further, in promulgating the original regulations implementing 
section 3 of Public Law 89-777 in 1967, the Commission established the 
requirement that PVOs provide financial responsibility equal to 110% of 
UPR. The Commission stated that the rule is designed to recover 100% of 
unearned revenue based on two years' performance ``to give an 
indication of the general operating condition of the applicant, plus a 
safety factor of 10 percent.'' 32 FR 3986 (March 11, 1967). In short, 
this 10 percent ``safety factor'' assures reimbursement where the 
actual amount of UPR at the time a PVO fails to perform is greater than 
the amount last reported.
    For example, as reflected in the Regulatory Flexibility Act 
Threshold Analysis described below, escrow agreements are obtained more 
often by smaller PVOs. Such PVOs may have difficulty obtaining a bond 
or guaranty or have seasonal services or operations that otherwise 
experience drastic change in the amount of UPR through the year. Escrow 
agreements require a fixed 10% to be kept in escrow during the slow 
season and require that funds received from voyage deposits and final 
fare payments be deposited on a timely basis into the escrow account. 
Among other requirements, escrow PVOs are required to submit reports of 
monies received and deposited on a weekly and monthly basis so that the 
Commission can confirm that the rapidly accumulating funds have, in 
fact, been deposited. Most escrow agreements provide that ``the 
Customer may, at any time, deposit additional funds consisting 
exclusively of UPR and the Fixed Amount into the Escrow Account.'' 
Hence, the 10 percent safety factor helps bridge gaps between the most 
recent report of weekly deposits and amounts received but not yet 
deposited.
    As described by ACL and CLIA, their suggestion would result in an 
``across the board'' cut for all PVOs that do not qualify for the cap. 
The recognition of alternative coverage to reduce current coverage 
requirements, however, negates the need to consider eliminating the 10% 
safety factor, as fewer small PVOs may be submitting coverage of 110% 
of UPR. Therefore in light of the Commission's experience that 
significant shortfalls in UPR (deposited and revenue received but not 
yet deposited) frequently occur with respect to escrow agreements, the 
110% coverage requirement remains unchanged for all PVOs, except those 
that qualify for the $30 million cap or who receive relief under the 
new rule providing for substitution of alternative financial 
responsibility. In any event, escrow agreements will continue to 
require a minimum of 10 percent to be held in escrow at all times; even 
where an escrow PVO obtains relief to provide alternative financial 
responsibility for the remaining 90% of its UPR.
    The Commission also requested comment as to whether nonperformance 
financial responsibility levels might be established using a 
methodology similar to that for the casualty program for PVO financial 
responsibility. CLIA commented in response to this suggestion and 
strongly opposes it, asserting that the casualty methodology was 
established by statute at the same time, and in the same statute, as 
the nonperformance provisions, which CLIA asserts indicates that 
Congress intended separate and distinct systems for casualty and 
performance coverage. CLIA's comments imply that new statutory 
authority would be needed to make such a change. ACL indicated that the 
idea had some merit but that they would need more information on such a 
proposal. As the Commission adopts the rule as proposed, there is no 
need to consider the use of a methodology similar to that for 
establishing financial responsibility under the Commission's casualty 
program.
    As described above, Carnival suggests that financially sound PVOs 
that have a number of cruise brands be treated as a single applicant 
for purposes of the financial responsibility requirements. Carnival 
recommends that such applicants be covered by a single $50 million bond 
backed by the parent company's guaranty. Carnival explains that such a 
bond and parental guaranty would provide greater security by assuring 
that the parent stands behind its group of companies. The adoption of 
the final rule also obviates the need to consider a financial 
responsibility methodology that would potentially reduce the financial 
responsibility requirements of larger PVOs.

Technical Changes

    The Commission also adopts certain technical changes to its 
passenger vessel financial responsibility regulations in Part 540. 
Those changes include the revision of the definition of ``unearned 
passenger revenue'' in section 540.2(i) to clarify that UPR ``includes 
port fees and taxes paid'' by passengers but excludes ``items as 
airfare, hotel

[[Page 13275]]

accommodations, and tour excursions.'' The wording adopted varies from 
that contained in the NPRM but reflects the Commission intention to 
clarify the coverage of the term.
    The changes to section 540.4(b) and section 540.23(a) are also 
adopted. Applicants will file their applications directly with the 
Bureau of Certification and Licensing instead of with the Office of the 
Secretary. Form FMC-131 will be deleted from the Code of Federal 
Regulations and instead made available on the Commission's web site 
(www.fmc.gov) or directly from the Bureau of Certification and 
Licensing.
    The revision to section 540.7 is adopted and requires that each 
Certificate (Performance) expire 5 years from the date of issuance. The 
current rule provides that the certificate may continue in effect 
indefinitely. The Final Rule does not, however, require expiration of 
the underlying financial responsibility instruments.
    This revision will assist the U.S. Customs and Border Protection to 
verify the validity of a certificate under 46 U.S.C. 44105, and ensure 
that the Commission periodically confirms PVO information previously 
submitted. This change harmonizes the Commission's PVO certificates 
with domestic and international certificates (e.g., the U.S. Coast 
Guard's Certificate of Inspection, those issued under The Safety of 
Life at Sea Convention, and the International Convention on Load 
Lines).\13\ Further, the final rule also provides that the Commission, 
for good cause, could issue a certificate with an expiration date of 
less than 5 years, which creates a flexible process that permits short-
term certificates to be issued to PVOs that operate from U.S. ports 
episodically.
---------------------------------------------------------------------------

    \13\ On October 31, 1988, the International Maritime 
Organization (IMO) convened the International Conference on the 
Harmonized Systems of Survey and Certification to adopt the Protocol 
of 1988 relating to the International Convention for Safety of Life 
at Sea (SOLAS), 1974, and the Protocol of 1988 relating to the 
International Convention on Load Lines, 1966. By adopting these 1988 
Protocols, IMO standardized the term of validity for certificates 
and intervals for vessel inspections required by the Conventions. 
These 1988 Protocols entered into force as international law on 
February 3, 2000. See also 65 FR 6494 (February 9, 2000).
---------------------------------------------------------------------------

    NASBP supports expiration dates for each Certificate (Performance), 
indicating that surety bonds were not meant to be indefinite. The final 
rule, however, is not intended to affect the underlying financial 
responsibility. Rather the certificate expiration provides the 
opportunity for the updating of each PVO's information with the 
Commission as well as the broader reasons indicated. However, should 
the PVO and its surety include an expiration date less than five years 
for the underlying security, the certificate could be issued with that 
expiration date.
    The sample surety bond, guaranty, and escrow agreement are amended 
as contained in the NPRM and will continue to be set out in the 
Commission's regulations.

Regulatory Flexibility Act--Threshold Analysis

    The Regulatory Flexibility Act of 1980 (RFA),\14\ as modified by 
the Small Business Regulatory Enforcement Fairness Act (SBREFA),\15\ 
requires Federal agencies to consider the impact of regulatory 
proposals on small entities and determine, in good faith, whether there 
were equally effective alternatives that would make the regulatory 
burden on small business more equitable.\16\ Agencies must first 
conduct a threshold analysis to determine whether regulatory actions 
are expected to have significant economic impact on a substantial 
number of small entities. If the threshold analysis indicates a 
significant economic impact on a substantial number of small entities, 
an ``initial regulatory flexibility analysis'' must be produced and 
made available for public review and comment along with the proposed 
regulatory action. A ``final regulatory flexibility analysis'' that 
considers public comments must then be produced and made publicly 
available with the final regulatory action. Agencies must publish a 
certification of no significant impact on a substantial number of small 
entities if the threshold analysis does not indicate such impacts.
---------------------------------------------------------------------------

    \14\ Regulatory Flexibility Act, Pub. L. 96-354, 94 Stat. 1164 
(codified at 5 U.S.C. 601 et seq.).
    \15\ Small Business Regulatory Enforcement Fairness Act of 1996, 
Pub. L. 104-121, 110 Stat. 857 (codified at 5 U.S.C. 601 et seq.).
    \16\ The term ``small entities'' comprises small business and 
not-for-profit organizations that are independently owned and 
operated and are not dominant in their field, and governmental 
jurisdictions with populations of less than 50,000.
---------------------------------------------------------------------------

    The threshold analysis considered the economic impact on small 
businesses of the rule changes in Docket 11-16: Passenger Vessel 
Operator Financial Responsibility Requirements for Nonperformance of 
Transportation. It outlines the proceedings; provides a brief overview 
of the Passenger Vessel Operator (PVO), or cruise line, industry; 
discusses the small PVOs affected; and evaluates the economic impact of 
the rule on small PVOs based on the substantial number and the 
significant economic impact criteria of the RFA.
    Based upon the following factual basis, the threshold analysis 
concludes that none of the PVOs in the Commission's program that are 
identified as small entities under the Small Business Act (SBA) \17\ 
will be significantly economically impacted by the Final Rule. Those 
small PVOs are all eligible to request reductions in their current 
financial responsibility by substituting alternative protection based 
upon credit card receipts.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 632. The RFA uses the definition of small 
business found in the Small Business Act.
---------------------------------------------------------------------------

1. Background

    The Commission issued a Request for Additional Information and 
Comments (RFI) on February 22, 2012. Comments were submitted by four 
PVOs: Royal Caribbean, Carnival, American Cruise Lines, and InnerSeas 
Discoveries. The analysis compiles confidential data provided in 
response to the Commission's questions about their companies' 
operations and demonstrates the huge differences in operational scale 
among the respondents.

2. The Regulated Industry

    The industry regulated under Part 540 of the Commission's 
regulations consists of ``persons'' in the U.S. who arrange, offer, 
advertise or provide passage on a vessel having berth or state room 
accommodations for 50 or more passengers and embark passengers at U.S. 
ports.\18\ The industry is referred to as the U.S. cruise line 
industry. The North American Industry Classification System (NAICS) 
codes for the U.S. cruise industry include the following: 483112-Deep 
Sea Passenger Transportation, 483114-Coastal and Great Lakes Passenger 
Transportation, and 483212-Inland Water Passenger Transportation.
---------------------------------------------------------------------------

    \18\ The Commission's rules define ``person'' to include 
individuals, corporations, partnerships, associations, and other 
legal entities existing under or authorized by the laws of the 
Unites States or any State thereof or the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands or any territory or 
possession of the United States, or the laws of any foreign country. 
See 46 CFR 540.2 (a).
---------------------------------------------------------------------------

    As of June 30, 2012, the FMC Passenger Vessel Operator program had 
40 participants. The threshold analysis reviewed each of the 40 program 
participants along with their 2-year high UPR, amount of performance 
coverage, the type of instrument used, percentage of UPR protected by 
bonds or escrows, and the primary market segment in which they operate. 
The analysis determined whether a PVO meets or exceeds the SBA size 
standard for the NAICs codes indentified.

[[Page 13276]]

3. Description of Small PVOs Affected

    The SBA defines a small business as any firm that is independently 
owned and operated and not dominant in its field of operation. The SBA 
size standard for a small company in the U.S. cruise industry is 500 or 
fewer employees. For the purposes of this analysis, any operator in the 
PVO program that is affiliated with, or a subsidiary of, a larger 
entity is considered to exceed the SBA size standard. For example, a 
PVO that operates one vessel in the Commission's PVO program, has a 2-
year high UPR of less than $1 million, and may have fewer than 500 
employees in the U.S. However, it is considered to have exceeded the 
SBA size standard because it is a subsidiary of a large global 
enterprise. Such a single vessel operator does not meet the 
``independently owned and operated'' criteria for a small business. A 
total of nine operators in the PVO program are considered to have 
exceeded the SBA size standard by the same reasoning.
    Seven PVOs were eliminated from this analysis because they have 
either no UPR or no financial responsibility instrument (performance) 
on file with the Commission. These PVOs maintain a casualty certificate 
and many embark passengers from U.S. ports on a very limited basis 
(i.e., embark very few passengers at one U.S. port on a rare occasion 
or perform several short-term chartered cruises once a year or every 2 
or 3 years). Historically, UPR for these seven PVOs has been well under 
the $15 million cap.
    Staff identified nine PVOs in the program that meet the SBA size 
standard and are considered to be small businesses. Six of the nine 
small PVOs are exploration/soft adventure operators which operate U.S. 
flag vessels in Alaska, U.S. coastal waters, or on inland waterways. 
These operators would be classified in the NAICS codes of 483112-Deep 
Sea Passenger Transportation, 483114-Coastal and Great Lakes Passenger 
Transportation, and 483212-Inland Water Passenger Transportation. 
Because they are U.S. flag operators, they are required to have U.S. 
ownership, use U.S.-built ships, and use U.S. citizens as crew members. 
The remaining three small PVOs are foreign flag operators operating in 
various U.S./foreign cruise and ferry markets using Panamanian and 
Bahamian flag vessels, and they are classified in NAICS code 483112-
Deep Sea Passenger Transportation.

4. Economic Impact of the Rule on Small PVOs

    Assessing economic impact involves estimating the cost of any 
increased financial performance coverage. On a per-passenger basis, the 
cost of financial coverage can vary significantly depending on the size 
of the PVO. For example, the cost per passenger for a large PVO whose 
coverage is capped at $15 million level can be very small. In contrast, 
a small PVO's coverage can be many times that of the large operator for 
the same time period.
Increase of Financial Responsibility
    The economic impact on small PVOs depends upon the instrument used 
to establish financial responsibility. Five of the program's small PVOs 
have bonds. Based on conversations with a surety association, BCL finds 
that the least risky PVOs would probably pay about 0.5 percent of the 
instrument's face value, while the most risky would probably pay about 
3 percent. These estimates were used for the baseline estimate of 
economic impact of the current rule. The threshold analysis shows the 
range of possibilities for those small PVOs using bonds. The level of 
coverage based on 110% UPR with the increased cap also was calculated 
as was the range of annual premiums. Differences in anticipated annual 
premiums under the current and proposed rules were calculated. Only one 
operator with UPR exceeding the $15 million cap would be expected to 
have increased premium costs.
    One commenter provided the percentage of the bond amount that it 
must pay to its surety as an annual premium and advised that the surety 
requires it to obtain a letter of credit in an amount that is a 
percentage of the bond value. The PVO also provided the amount of its 
current letter of credit and advised that the process of obtaining the 
surety bond and letter of credit also incurs additional bank and legal 
fees.
    The threshold analysis reviewed the estimated cost of increasing 
financial responsibility to $30 million on the five small PVOs using 
bonds in comparison to their costs under the current rule using each 
PVO's current 2 year high UPR, its current performance coverage, the 
estimated cost of coverage using the .5 and 3 percentages provided by 
the surety association. One small PVO commented that one of the most 
important additional costs would be the opportunity cost of tying up 
additional credit availability to secure its bond.
    The threshold analysis, however, indicated that the cost of 
coverage when the cap increases to $30 million for one PVO may increase 
the average ticket price by less than one percent. The other four PVOs 
using bonds would experience no increase in their surety bonds as a 
result of the cap increase.
    The threshold analysis also reviewed the remaining four small PVOs 
that use escrow accounts. Balances in these accounts change weekly as 
additional fares are deposited; cruises are completed; and the 
``unearned'' revenue associated with the completed cruise becomes 
``earned'' and is withdrawn from the account. Escrow account holders 
are assessed administrative fees, unlike PVOs using surety bonds or 
guarantees that are charged premiums linked to the amount of the 
instrument. Administrative fees, on the other hand, are generally not 
based on the value of the account. Rather escrow agents or managers 
have fee schedules which are dependent upon the number and types of 
transactions or services provided. These include deposits, wire 
transfers, number of checks processed and issued, number of transfer 
payments, and documentation preparation. In addition, escrow agents may 
charge a monthly service fee. The new rule would not affect the basis 
on which administrative fees are assessed.
    To determine the economic impact for these operators, the 
``opportunity cost'' \19\ of the capital that the operators are 
required to maintain in the escrow accounts (but otherwise could have 
used for other purposes) was calculated. For the purposes of 
calculating this cost, it was assumed that the small PVOs would need to 
obtain commercial loans to meet working capital requirements or to fund 
capital investments or improvements, in lieu of not being able to use 
the funds held in escrow. For purposes of this analysis, and because 
escrow account balances change frequently, the mean of the operators' 
UPR reported weekly over a recent twelve month period (July 2011 
through June 2012) was calculated for each operator using interest 
rates for short-term commercial loans.\20\
---------------------------------------------------------------------------

    \19\ The opportunity cost of an action is the value of the 
foregone alternative action. Source: The MIT Dictionary of Modern 
Economics, 4th Edition, p. 315.
    \20\ Interest rate information for short-term loans obtained 
from the National Federation of Independent Business (NFIB), NFIB 
Small Business Economic Trends, July 2012, p. 14. The interest rate 
used assumes that the operators have good credit standing.
---------------------------------------------------------------------------

    Because these four small PVOs have UPR levels well below the 
current $15 million cap, they will not be required to obtain additional 
performance coverage under the regulations. As a result, these small 
PVOs would not be subject to any immediate additional economic impact.

[[Page 13277]]

Additional Forms of Financial Protection
    With respect to the new provision contained in the Final Rule at 46 
CFR 540(j)(ii), based on the current levels of their 2-year high UPR 
with respect to the required cap (both existing and proposed), it 
appears that all nine small PVOs may be able to demonstrate the 
existence of additional forms of protection. To the extent that those 
proposals are acceptable to the Commission, it would be expected that 
the elimination of coverage duplication would result in no additional 
economic impact for any small PVO, and may even reduce it in some 
cases.

5. Threshold Analysis--Conclusion

    Forty operators participate in the FMC's PVO program. Nine are 
small PVOs as defined by the SBA's small business size standards for 
NAICS codes of 483112-Deep Sea Passenger Transportation, 483114-Coastal 
and Great Lakes Passenger Transportation, and 483212-Inland Water 
Passenger Transportation.
    With one exception, all small operators will be left unaffected 
economically by the rule changes, even without consideration of 
alternative forms of coverage. The amount of required coverage should 
remain the same for these operators. After the evaluation reflected in 
the threshold analysis, the economic impact on the one small operator 
does not appear likely to be significantly adverse. Should that 
operator not avail itself of a reduction under the alternative form of 
coverage provided in the Final Rule, the compliance cost increase 
brought about by the rule change would increase costs per passenger by 
a small amount. If this cost is passed on in its entirety to the cruise 
passengers, it would raise that operator's average fare by less than 
one percent and still leave the cruise line profitable. It does not 
seem likely that this level of impact will drive a small PVO out of 
business or decrease its ability to make future capital investments or 
harm its competitiveness against larger firms.
    However, the Final Rule would allow the Commission, on a case-by-
case basis, to recognize additional protections submitted by small PVOs 
with UPR not exceeding 150 percent of the $30 million cap. Most likely, 
the one operator that would be affected by the increased cap, should it 
choose to avail itself of this provision, would be required to produce 
less coverage and incur less cost than it does now. Consequently, the 
threshold analysis does not indicate that the Final Rule in this 
proceeding will have a significant economic impact on a substantial 
number of small business entities.
    Even without recognition of alternative forms of coverage, the 
threshold analysis concludes that this rule will not have a significant 
economic impact on a substantial number of small entities and, 
therefore, the analysis recommends that the Chairman so certify 
pursuant to section 605(b) of the RFA.

The Final Rule Is Not a Major Rule

    This rule is not a ``major rule'' under 5 U.S.C. 804(2).
    As described in the NPRM, the collection of information 
requirements contained in the rule have been submitted to the Office of 
Management and Budget for review under section 3504(h) of the Paperwork 
Reduction Act of 1980, as amended. OMB has withheld approval of the 
forms affected by the rule pending receipt of a summary of comments 
pertaining to information collection burden imposed by the rule or 
change made in response to comments. No comments were received relating 
to information collection burden of the rule.
    Inasmuch as the PVOs that are subject to the Commission's passenger 
vessel financial responsibility regulations at 46 CFR part 540 are 
already subject to requirements to submit application forms, financial 
responsibility instruments and periodic reports of their unearned 
passenger revenues, the final rule does not impose any new 
recordkeeping or reporting requirements on PVOs that would be 
``collection of information'' requiring approval under the Paperwork 
Reduction Act, 44 U.S.C. 3501 et seq.

List of Subjects

46 CFR Part 501

    Administrative practice and procedure, Authority delegations, 
Organization and functions, Seals and insignia.

46 CFR Part 540

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

    For the reasons stated in the supplementary information, the 
Federal Maritime Commission amends 46 CFR Parts 501 and 540 as follows.

PART 501--THE FEDERAL MARITIME COMMISSION--GENERAL

0
1. Revise the authority citation for Part 501 to read as follows:

    Authority: 5 U.S.C. 551-557, 701-706, 2903 and 6304; 31 U.S.C. 
3721; 41 U.S.C. 414 and 418; 44 U.S.C. 501-520 and 3501-3520; 46 
U.S.C. 301-307, 40101-41309, 42101-42109, 44101-44106; Pub. L. 89-
56, 70 Stat. 195; 5 CFR Part 2638; Pub. L. 104-320, 110 Stat. 3870.


0
2. Revise Sec.  501.5(g)(2) to read as follows:


Sec.  501.5  Functions of the organizational components of the Federal 
Maritime Commission.

* * * * *
    (g) * * *
    (2) Through the Office of Passenger Vessels and Information 
Processing, has responsibility for reviewing applications for 
certificates of financial responsibility with respect to passenger 
vessels, reviewing requests for substitution of alternative forms of 
financial protection, managing all activities with respect to evidence 
of financial responsibility for OTIs and passenger vessel owner/
operators, and for developing and maintaining all Bureau database and 
records of OTI applicants and licensees.
* * * * *

0
3. Amend Sec.  501.26 introductory text by removing the word 
``redelgated'' and adding the word ``redelegated'' in its place, and 
add Sec.  501.26(d) to provide as follows:


Sec.  501.26  Delegation to and redelegation by Director, Bureau of 
Certification and Licensing.

* * * * *
    (d) Authority to the Director, Bureau of Certification and 
Licensing to grant requests to substitute alternative financial 
responsibility pursuant to Sec.  540.9(l) of this chapter based upon 
existing protection available to purchases of passenger vessel 
transportation by credit card by an amount up to fifty (50) percent of 
the passenger vessel operator's highest two-year unearned passenger 
revenues.

PART 540--PASSENGER VESSEL FINANCIAL RESPONSIBILITY

0
4. The authority citation for Part 540 continues to read as follows:

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


0
5. Amend Sec.  540.1 by revising the second sentence of paragraph (b) 
to read as follows:


Sec.  540.1  Scope.

* * * * *
    (b) * * * Vessels operating without the proper certificate may be 
denied clearance by the Department of Homeland Security and their 
owners may also be subject to a civil penalty of not more than $5,000 
in addition to a civil penalty of $200 for each passage

[[Page 13278]]

sold, such penalties to be assessed by the Federal Maritime Commission 
(46 U.S.C. 44101-44106, 60105).

0
6. Amend Sec.  540.2 by revising paragraphs (a) and (i) to read as 
follows:


Sec.  540.2  Definitions.

* * * * *
    (a) Person includes individuals, limited liability companies, 
corporations, partnerships, associations, and other legal entities 
existing under or authorized by the laws of the United States or any 
State thereof or the District of Columbia, the Commonwealth of Puerto 
Rico, the Virgin Islands or any territory or possession of the United 
States, or the laws of any foreign country.
* * * * *
    (i) Unearned passenger revenue means that 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.
* * * * *

0
7. Revise Sec.  540.4 to read as follows:


Sec.  540.4  Procedure for establishing financial responsibility.

    (a) In order to comply with section 3 of Public Law 89-777 (46 
U.S.C. 44101-44102, 44104-44106) enacted November 6, 1966, there must 
be filed with the Federal Maritime Commission an application on Form 
FMC-131 for a Certificate of Financial Responsibility for 
Indemnification of Passengers for Nonperformance of Transportation. 
Copies of Form FMC-131 may be obtained from the Commission's Web site 
at http://www.fmc.gov, or from the Bureau of Certification and 
Licensing, Federal Maritime Commission, Washington, DC 20573.
    (b) An application for a Certificate (Performance) shall be filed 
with the Bureau of Certification and Licensing, Federal Maritime 
Commission, by the vessel owner or charterer at least 60 days in 
advance of the arranging, offering, advertising, or providing of any 
water transportation or tickets in connection therewith except that any 
person other than the owner or charterer who arranges, offers, 
advertises, or provides passage on a vessel may apply for a Certificate 
(Performance). Late filing of the application will be permitted without 
penalty only for good cause shown.
    (c) All applications and evidence required to be filed with the 
Commission shall be in English, and any monetary terms shall be 
expressed in terms of U.S. currency.
    (d) The Commission shall have the privilege of verifying any 
statements made or any evidence submitted under the rules of this 
subpart.
    (e) An application for a Certificate (Performance), excluding an 
application for the addition or substitution of a vessel to the 
applicant's fleet, shall be accompanied by a filing fee remittance of 
$2,767. An application for a Certificate (Performance) for the addition 
or substitution of a vessel to the applicant's fleet shall be 
accompanied by a filing fee remittance of $1,382. Administrative 
changes, such as the renaming of a vessel will not incur any additional 
fees.
    (f) The application shall be signed by a duly authorized officer or 
representative of the applicant with a copy of evidence of his or her 
authority.
    (g) In the event of any material change in the facts as reflected 
in the application, an amendment to the application shall be filed no 
later than fifteen (15) days following such change. For the purpose of 
this subpart, a material change shall be one which:
    (1) Results in a decrease in the amount submitted to establish 
financial responsibility to a level below that required to be 
maintained under the rules of this subpart, or
    (2) Requires that the amount to be maintained be increased above 
the amount submitted to establish financial responsibility.
    (h) Notice of the application for issuance, denial, revocation, 
suspension, or modification of any such Certificate will be published 
on the Commission's web site at http://www.fmc.gov.

0
8. Amend Sec.  540.5 as follows:
0
a. Revise paragraph (a)(1)(i) to read as follows; and
0
b. Amend paragraph (c) by adding a sentence at the end of the paragraph 
to read as follows.


Sec.  540.5  Insurance, guaranties, and escrow accounts.

* * * * *
    (a) * * *
    (1) * * * (i) Until notice in writing has been given to the assured 
or to the insurer and to the Bureau of Certification and Licensing at 
its office in Washington, DC 20573, by certified mail or courier 
service, * * *
* * * * *
    (c) * * * Copies of Form FMC-133A may be obtained from the 
Commission's Web site at http://www.fmc.gov or from the Bureau of 
Certification and Licensing.
* * * * *

0
9. Amend Sec.  540.6 by adding a sentence at the end of paragraph (a) 
to read as follows:


Sec.  540.6  Surety bonds.

    (a) * * * Copies of Form FMC-132A may be obtained from the 
Commission's Web site at http://www.fmc.gov or from the Bureau of 
Certification and Licensing.
* * * * *

0
10. Revise Sec.  540.7 to read as follows:


Sec.  540.7  Evidence of financial responsibility.

    Where satisfactory proof of financial responsibility has been 
established:
    (a) A Certificate (Performance) covering specified vessels shall be 
issued evidencing the Commission's finding of adequate financial 
responsibility to indemnify passengers for nonperformance of water 
transportation.
    (b) The period covered by the Certificate (Performance) shall be 
five (5) years, unless another termination date has been specified 
thereon.

0
11. Amend Sec.  540.8 by revising paragraphs (a) and (b)(3) to read as 
follows:


Sec.  540.8  Denial, revocation, suspension, or modification.

    (a) Prior to the denial, revocation, suspension, or modification of 
a Certificate (Performance), the Commission shall notify the applicant 
of its intention to deny, revoke, suspend, or modify and shall include 
with the notice the reason(s) for such action. If the applicant, within 
20 days after the receipt of such notice, requests a hearing to show 
that the evidence of financial responsibility filed with the Commission 
does meet the rules of this subpart, such hearing shall be granted by 
the Commission. Regardless of a hearing, a Certificate (Performance) 
shall become null and void upon cancellation or termination of the 
surety bond, evidence of insurance, guaranty, or escrow account.
    (b) * * *
    (3) Failure to comply with or respond to lawful inquiries, requests 
for information, rules, regulations, or orders of the Commission 
pursuant to the rules of this subpart.
* * * * *

0
12. Amend Sec.  540.9 by revising paragraphs (c), (e), (h), (j), and 
(k), and adding a new paragraph (l) to read as follows:


Sec.  540.9  Miscellaneous.

* * * * *
    (c) The Commission's bond (Form FMC-132A), guaranty (Form FMC-

[[Page 13279]]

133A), and application (Form FMC-131) forms may be obtained from the 
Commission's Web site at http://www.fmc.gov or from the Bureau of 
Certification and Licensing at its office in Washington, DC 20573.
* * * * *
    (e) Each applicant, insurer, escrow agent and guarantor shall 
furnish a written designation of a person in the United States as legal 
agent for service of process for the purposes of the rules of this 
subpart. Such designation must be acknowledged, in writing, by the 
designee and filed with the Commission. In any instance in which the 
designated agent cannot be served because of death, disability, or 
unavailability, the Secretary, Federal Maritime Commission, will be 
deemed to be the agent for service of process. A party serving the 
Secretary in accordance with the above provision must also serve the 
certificant, insurer, escrow agent, or guarantor, as the case may be, 
by certified mail or courier service at the last known address of them 
on file with the Commission.
* * * * *
    (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. Such statements will be due within 30 days after the 
close of every such 6-month period. The reports required by this 
paragraph shall be submitted to the Bureau of Certification and 
Licensing at its office in Washington, DC 20573 by certified mail, 
courier service, or electronic submission.
* * * * *
    (j) The amount of: the insurance as specified in Sec.  540.5(a), 
the escrow account as specified in Sec.  540.5(b), the guaranty as 
specified in Sec.  540.5(c), or the surety bond as specified in Sec.  
540.6 shall not be required to exceed $15 million for one year after 
April 2, 2013. Twelve (12) months after April 2, 2013, the amount shall 
not exceed $22 million, and twenty four (24) months after April 2, 
2013, the amount shall not exceed $30 million. Every two years, on the 
anniversary after the cap on required financial responsibility reaches 
$30 million, the cap shall automatically adjust to the nearest $1 
million based on changes as reflected in the U.S. Bureau of Labor 
Statistics' Consumer Price Index. The Bureau of Certification and 
Licensing will determine the amount of each adjustment and transmit 
that information to the Secretary of the Federal Maritime Commission 
for publication on the Commission's Web site (www.fmc.gov) and in the 
Federal Register with an effective date that is no less than sixty (60) 
days after Federal Register publication.
    (k) Every person in whose name a Certificate (Performance) has been 
issued shall be deemed to be responsible for any unearned passage money 
or deposits held by its agents or any other person authorized by the 
certificant to sell the certificant's tickets. Certificants shall 
promptly notify the Commission of any arrangements, including charters 
and subcharters, made by it or its agent with any person pursuant to 
which the certificant does not assume responsibility for all passenger 
fares and deposits collected by such person or organization and held by 
such person or organization as deposits or payment for services to be 
performed by the certificant. If responsibility is not assumed by the 
certificant, the certificant also must inform such person or 
organization of the certification requirements of Public Law 89-777 and 
not permit use of its vessel, name or tickets in any manner unless and 
until such person or organization has obtained the requisite 
Certificate (Performance) from the Commission. Failure to follow the 
procedures in this paragraph means the certificant shall retain full 
financial responsibility for indemnification of passengers for 
nonperformance of the transportation.
    (l) Requests to substitute alternative financial responsibility. 
(1) A certificant whose unearned passenger revenue at no time for the 
two immediately prior fiscal years has exceeded 150% of the required 
cap may submit a request to the Director, Bureau of Certification and 
Licensing, to substitute alternative forms of financial protection to 
evidence the financial responsibility as otherwise provided in this 
part.
    (2) The Commission will consider such requests on a case-by-case 
basis.
    (3) The request must include copies of the requesting PVO's most 
recently available annual and quarterly financial and income 
statements. Other documents and information in support of its request 
may also be submitted.
    (4) For requests based upon the already existing protections 
available to credit card purchases of passenger vessel transportation, 
the requesting PVO must supply the following information for the most 
recent twelve months preceding the request: Total deposits and payments 
received for passenger vessel transportation; Credit card receipt 
totals; Copy of the PVO's policy(ies) governing payments by passengers 
(i.e., deposits and the number of days prior to sailing the passenger 
must make final payment).
    (5) In determining whether and to what level to reduce the required 
amount, the Commission may consider the extent to which other statutory 
requirements provide relevant protections, the certificant's financial 
data, and other specific facts and circumstances.
    (6) For PVOs with payment policies that provide for final payment 
for the passenger vessel transportation no later than 60 days before 
the vessel's sailing date, requests based upon credit card receipts may 
be granted by the Commission permitting a reduction in the financial 
responsibility otherwise required under this Part. The amount of such a 
reduction will be established by determining the proportion that the 
PVO's total credit card receipts bears to its total receipts and 
applying one half of that percentage to the PVO's highest two-year UPR.
    (7) The Bureau of Certification and Licensing may request 
additional information as may assist it in considering the request.
    (8) Where a request is granted, the alternative financial 
responsibility shall remain in effect until the PVO's Certificate 
(Performance) expires under Sec.  540.7(b) or until the Director, 
Bureau of Certification and Licensing determines otherwise based upon 
changing information pursuant to this paragraph or paragraph (l)(5) of 
this section. Additional information may be requested at any time by 
the Commission or BCL from a PVO whose request under this section has 
been granted.

0
13. Remove Form FMC-131 to Subpart A of Part 540.

0
14. Revise Form FMC-132A to Subpart A of Part 540 to read follows:

FORM FMC--132A TO SUBPART A OF PART 540

FORM FMC-132A

FEDERAL MARITIME COMMISSION

Passenger Vessel Surety Bond (Performance)

Surety Co. Bond No.----------------------------------------------------

FMC Certificate No.----------------------------------------------------

    Know all men by these presents, that we -------------------- (Name 
of

[[Page 13280]]

applicant), of ---------------- (City), ---------------- (State and 
country), as Principal (hereinafter called Principal), and ------------
---- (Name of surety), a company created and existing under the laws of 
------------ (State and country) and authorized to do business in the 
United States as Surety (hereinafter called Surety) are held and firmly 
bound unto the United States of America in the penal sum of ----------
------, for which payment, well and truly to be made, we bind ourselves 
and our heirs, executors, administrators, successors, and assigns, 
jointly and severally, firmly by these presents. Whereas the Principal 
intends to become a holder of a Certificate (Performance) pursuant to 
the provisions of subpart A of part 540 of title 46, Code of Federal 
Regulations and has elected to file with the Federal Maritime 
Commission such a bond to insure financial responsibility and the 
supplying transportation and other services subject to subpart A of 
part 540 of title 46, Code of Federal Regulations, in accordance with 
the ticket contract between the Principal and the passenger, and
    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 in accordance with 
the ticket contract 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.
    The liability of the Surety with respect to any passenger shall not 
exceed the passage price paid by or on behalf of such passenger. The 
liability of the Surety shall not be discharged by any payment or 
succession of payments hereunder, unless and until such payment or 
payments shall amount in the aggregate to the penalty of the bond, but 
in no event shall the Surety's obligation hereunder exceed the amount 
of said penalty. The Surety agrees to furnish written notice to the 
Federal Maritime Commission forthwith of all suits filed, judgments 
rendered, and payments made by said Surety under this bond.
    This bond is effective the ------------ day of ----------------, 
20----, 12:01 a.m., standard time at the address of the Principal as 
stated herein and shall continue in force until terminated as 
hereinafter provided. The Principal or the Surety may at any time 
terminate this bond by written notice sent by certified mail, courier 
service, or other electronic means such as email and fax to the other 
and to the Federal Maritime Commission at its office in Washington, DC, 
such termination to become effective thirty (30) days after actual 
receipt of said notice by the Commission, except that no such 
termination shall become effective while a voyage is in progress. The 
Surety shall not be liable hereunder for any refunds due under ticket 
contracts made by the Principal for the supplying of transportation and 
other services after the termination of this bond as herein provided, 
but such termination shall not affect the liability of the Surety 
hereunder for refunds arising from ticket contracts made by the 
Principal for the supplying of transportation and other services prior 
to the date such termination becomes effective.
    The underwriting Surety will promptly notify the Director, Bureau 
of Certification and Licensing, Federal Maritime Commission, 
Washington, DC 20573, of any claim(s) or disbursements against this 
bond.
    In witness whereof, the said Principal and Surety have executed 
this instrument on ------------ day of ----------------, 20----.

PRINCIPAL

Name-------------------------------------------------------------------

By---------------------------------------------------------------------
     (Signature and title)

Witness----------------------------------------------------------------

SURETY

[SEAL]

Name-------------------------------------------------------------------

By---------------------------------------------------------------------
     (Signature and title)

Witness----------------------------------------------------------------

    Only corporations or associations of individual insurers may 
qualify to act as surety, and they must establish to the satisfaction 
of the Federal Maritime Commission legal authority to assume the 
obligations of surety and financial ability to discharge them.

0
15. Revise Form FMC-133A to Subpart A of Part 540 to read as follows:

FORM FMC-133A TO SUBPART A OF PART 540

FORM FMC-133A

FEDERAL MARITIME COMMISSION

Guaranty in Respect of Liability for Nonperformance, Section 3 of the 
Act

Guaranty No.-----------------------------------------------------------

FMC Certificate No.----------------------------------------------------

    1. Whereas ---------------- (Name of applicant) (Hereinafter 
referred to as the ``Applicant'') is the Owner or Charterer of the 
passenger Vessel(s) specified in the annexed Schedule (``the 
Vessels'''), which are or may become engaged in voyages to or from 
United States ports, and the Applicant desires to establish its 
financial responsibility in accordance with section 3 of Pub. L. 89-
777, 89th Congress, approved November 6, 1966 (``the Act'') then, 
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 section 3 of the 
Act, in the event that such legal liability has not been discharged by 
the Applicant within 21 days after any such passenger has obtained a 
final judgment (after appeal, if any) against the Applicant from a 
United States Federal or State Court of competent jurisdiction, or has 
become entitled to payment of a specified sum by virtue of a compromise 
settlement agreement made with the Applicant, with the approval of the 
Guarantor, whereby, upon payment of the agreed sum, the Applicant is to 
be fully, irrevocably and unconditionally discharged from all further 
liability to such passenger for such nonperformance.
    2. The Guarantor's liability under this Guaranty in respect to any 
passenger shall not exceed the amount paid by such passenger; and the 
aggregate amount of the Guarantor's liability under this Guaranty shall 
not exceed $------------.
    3. The Guarantor's liability under this Guaranty shall attach only 
in respect of events giving rise to a cause of action against the 
Applicant, in respect of any of the Vessels, for nonperformance of 
transportation within the meaning of Section 3 of the Act, occurring 
after the Certificate has been granted to the Applicant, and before the 
expiration

[[Page 13281]]

date of this Guaranty, which shall be the earlier of the following 
dates:
    (a) The date whereon the Certificate is withdrawn, or for any 
reason becomes invalid or ineffective; or
    (b) The date 30 days after the date of receipt by FMC of notice in 
writing delivered by certified mail, courier service or other 
electronic means such as email and fax, that the Guarantor has elected 
to terminate this Guaranty except that: (i) If, on the date which would 
otherwise have been the expiration date under the foregoing provisions 
(a) or (b) of this Clause 3, any of the Vessels is on a voyage whereon 
passengers have been embarked at a United States port, then the 
expiration date of this Guaranty shall, in respect of such Vessel, be 
postponed to the date on which the last passenger on such voyage shall 
have finally disembarked; and (ii) Such termination shall not affect 
the liability of the Guarantor for refunds arising from ticket 
contracts made by the Applicant for the supplying of transportation and 
other services prior to the date such termination becomes effective.
    4. If, during the currency of this Guaranty, the Applicant requests 
that a vessel owned or operated by the Applicant, and not specified in 
the annexed Schedule, should become subject to this Guaranty, and if 
the Guarantor accedes to such request and so notifies FMC in writing or 
other electronic means such as email and fax, then, provided that 
within 30 days of receipt of such notice, FMC shall have granted a 
Certificate, such Vessel shall thereupon be deemed to be one of the 
Vessels included in the said Schedule and subject to this Guaranty.
    5. The Guarantor hereby designates ------------, with offices at --
----------, as the Guarantor's legal agent for service of process for 
the purposes of the Rules of the Federal Maritime Commission, subpart A 
of part 540 of title 46, Code of Federal Regulations, issued under 
Section 3 of Pub. L. 89-777 (80 Stat. 1357, 1358), entitled ``Security 
for the Protection of the Public.''

-----------------------------------------------------------------------
(Place and Date of Execution)

-----------------------------------------------------------------------
(Type Name of Guarantor)

-----------------------------------------------------------------------
(Type Address of Guarantor)

By---------------------------------------------------------------------
(Signature and Title)

Schedule of Vessels Referred to in Clause 1
Vessels Added to This Schedule in Accordance With Clause 4

0
16. Revise Appendix A to Subpart A of Part 540 to read as follows:

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

ESCROW AGREEMENT

    THIS ESCROW AGREEMENT, made as of this ---- day of (month & 
year), by and between (Customer), a corporation/company having a 
place of business at (``Customer'') ---------------- --------------
---- and (Banking Institution name & address) a banking corporation, 
having a place of business at (``Escrow Agent'').
    Witnesseth:
    WHEREAS, Customer wishes to establish an escrow account in order 
to provide for the indemnification of passengers in the event of 
non-performance of water transportation to which such passengers 
would be entitled, and to establish Customer's financial 
responsibility therefore; and
    WHEREAS, Escrow Agent wishes to act as Escrow Agent of the 
escrow account established hereunder;
    NOW, THEREFORE, in consideration of the premises and covenants 
contained herein and other good and valuable consideration, the 
receipt and sufficiency of which is hereby acknowledged, the parties 
hereto agree as follows:
    1. Customer has established on (month, & year) (the 
``Commencement Date'') an escrow account with the Escrow Agent which 
escrow account shall hereafter be governed by the terms of this 
Agreement (the ``Escrow Account''). Escrow Agent shall maintain the 
Escrow Account in its name, in its capacity as Escrow Agent.
    2. Customer will determine, as of the date prior to the 
Commencement Date, the amount of unearned passenger revenue, 
including any funds to be transferred from any predecessor Escrow 
Agent. Escrow Agent shall have no duty to calculate the amount of 
unearned passenger revenue. Unearned Passenger Revenues are defined 
as that passenger revenue received for water transportation and all 
other accommodations, services and facilities relating thereto not 
yet performed. 46 C.F.R. 540.2(i).
    3. Customer will deposit on the Commencement Date into the 
Escrow Account cash in an amount equal to the amount of Unearned 
Passenger Revenue determined under Paragraph 2 above plus a cash 
amount (``the Fixed Amount'') equal to (10 percent of the Customer's 
highest Unearned Passenger Revenue for the prior two fiscal years. 
For periods on or after (year of agreement (2009)), the Fixed Amount 
shall be determined by the Commission on an annual basis, in 
accordance with 46 CFR Part 540.
    4. Customer acknowledges and agrees that until such time as a 
cruise has been completed and Customer has taken the actions 
described herein, Customer shall not be entitled, nor shall it have 
any interest in any funds deposited with Escrow Agent to the extent 
such funds represent Unearned Passenger Revenue.
    5. Customer may, at any time, deposit additional funds 
consisting exclusively of Unearned Passenger Revenue and the Fixed 
Amount, into the Escrow Account and Escrow Agent shall accept all 
such funds for deposit and shall manage all such funds pursuant to 
the terms of this Agreement.
    6. After the establishment of the Escrow Account, as provided in 
Paragraph 1, Customer shall on a weekly basis on each (identify day 
of week), or if Customer or Escrow Agent is not open for business on 
(identify day of week) then on the next business day that Customer 
and Escrow Agent are open for business recompute the amount of 
Unearned Passenger Revenue as of the close of business on the 
preceding business day (hereinafter referred to as the 
``Determination Date'') and deliver a Recomputation Certificate to 
Escrow Agent on such date. In each such weekly recomputation 
Customer shall calculate the amount by which Unearned Passenger 
Revenue has decreased due to (i) the cancellation of reservations 
and the corresponding refund of monies from Customer to the persons 
or entities canceling such reservations; (ii) the amount which 
Customer has earned as revenue as a result of any cancellation fee 
charged upon the cancellation of any reservations; (iii) the amount 
which Customer has earned due to the completion of cruises; and (iv) 
the amount by which Unearned Passenger Revenue has increased due to 
receipts from passengers for future water transportation and all 
other accommodations, services and facilities relating thereto and 
not yet performed.
    The amount of Unearned Passenger Revenue as recomputed shall be 
compared with the amount of Unearned Passenger Revenue for the 
immediately preceding period to determine whether there has been a 
net increase or decrease in Unearned Passenger Revenue. If the 
balance of the Escrow Account as of the Determination Date exceeds 
the sum of the amount of Unearned Passenger Revenue, as recomputed, 
plus the Fixed Amount then applicable, then Escrow Agent shall make 
any excess funds in the Escrow Account available to Customer. If the 
balance in the Escrow Account as of the Determination Date is less 
than the sum of the amount of Unearned Passenger Revenue, as 
recomputed, plus an amount equal to the Fixed Amount, Customer shall 
deposit an amount equal to such deficiency with the Escrow Agent. 
Such deposit shall be made in immediately available funds via wire 
transfer or by direct transfer from the Customer's U.S. Bank 
checking account before the close of business on the next business 
day following the day on which the Recomputation Certificate is 
received by Escrow Agent. The Escrow Agent shall promptly notify the 
Commission within two business days any time a deposit required by a 
Recomputation Certificate delivered to the Escrow Agent is not 
timely made.
    7. Customer shall furnish a Recomputation Certificate, in 
substantially the form attached hereto as Annex 1, to the Federal 
Maritime

[[Page 13282]]

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 Section 3 of Public Law 89-777, 89th Congress, 
approved November 6, 1966 (the ``Act''). 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 Paragraph 3 of the Act. 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.
    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

[[Page 13283]]

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

Title:-----------------------------------------------------------------

By:--------------------------------------------------------------------

Title:-----------------------------------------------------------------

EXHIBIT A

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

Passenger Vessels Owned or Chartered

ANNEX 1

RECOMPUTATION CERTIFICATE

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

I. Unearned Passenger Revenue as of (``Date'') was: $------------
a. Additions to unearned Passenger Revenue since such date were:
1. Passenger Receipts: $------------
2. Other (Specify) $------------
3. Total Additions: $------------
b. Reductions in Unearned Passenger Revenue since such date were:
1. Completed Cruises: $------------
2. Refunds and Cancellations: $------------
3. Other (Specify) $------------
4. Total Reductions: $------------
II. Unearned Passenger Revenue as of the date of this Recomputation 
Certificate is: $------------

[[Page 13284]]

a. Excess Escrow Amount $------------
III. Plus the Required Fixed Amount: $------------
IV. Total Required in Escrow: $------------
V. Current Balance in Escrow Account: $------------
VI. Amount to be Deposited in Escrow Account: $------------
VII. Amount of Escrow Account available to Operator: $------------
VIII. I declare under penalty of perjury that the above information 
is true and correct.
Dated:-----------------------------------------------------------------

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

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

    By the Commission.
Karen V. Gregory,
Secretary.
[FR Doc. 2013-04417 Filed 2-26-13; 8:45 am]
BILLING CODE 6730-01-P