b'LEGISLATIVE REPORTLEGISLATIVE Nonperformance of Transportation by Overnight Cruise OperatorsED WELCH // PVA LEGISLATIVE DIRECTORT he Federal Maritime Commission that takes into account the vessel operatorswhen a passenger on a covered vessel may can anindependentfederalregulatoryunearned passenger income.For purposes ofseek reimbursement in the event of a cancelled agencyhasthestatutoryresponsi- computing the financial responsibility, there isor delayed voyage and the process for doing so.bility to ensure that an operator of a covereda cap (currently $32 million) on the unearned overnight cruise vessel that embarks passen- passenger income to be considered. This cap gers at U.S. ports has sufficient financial re- benefits larger cruise companies. The amount of sponsibilitytoreimbursepassengersinthe event of nonperformance of a booked trip.Methods of demonstrating financial responsi- financial responsibility A covered vessel has berths or stateroom ac- bility include surety bonds, guaranties and es-commodationsfor50ormorepassengers.crow agreements approved by the Commission. that must be OnlyafewPVAmembersarerequiredto comply with the Commissions financial re- In the past, some uncertainty existed as to howdemonstrated is based sponsibility rules. exactly to define nonperformance of transpor- on a formula that takes tation. On March 17, 2022, the Commission Theamountoffinancialresponsibilitythatpublished in the Federal Register a final ruleinto account the vessel must be demonstrated is based on a formulaon the subject(view the rule here). It clarifiesoperators unearned passenger income.The term nonperformance of transportation means cancelling or delaying a voyage by three (3)ormorecalendardays,ifthepassenger elects not to embark on the delayed voyage or a substitute voyage offered by the passenger ves-sel operator.The rule also allows a passenger on a delayed or cancelled voyage who unsuccessfully attempts to obtain a refund from the vessel operator to make direct claims against the financial respon-sibility instrument.Finally, the rule expands the definition of the term unearned passenger income. The term now includes all funds, including ancillary fees (airfare, hotel accommodations, and tour ex-cursions) paid in advance by a passenger to the vessel operator. As a result, required refunds may be larger than they were previously. For smallerovernightcruiseoperators,however, the effective date for including ancillary fees in the refund is delayed until March 17, 2024.In its comments to the Commissions regula-tory docket, the Passenger Vessel Association questioned whether the agency has the statu-tory authority to specify refund rules, as op-posed to rules for demonstration of financial responsibility. However, the Commission was not deterred in issuing the final rule.FOGHORN 24'