FMC Grants First Request to Provide Alternative Financial Responsibility

Contacts:
David J. Tubman, Jr. Counsel to Commissioner Doyle
Michael Gordon, Counsel to Commissioner Lidinsky

The Federal Maritime Commission has granted the request of a passenger vessel operator (PVO) for partial relief from its financial responsibility requirements used to reimburse passengers when a PVO fails to perform cruises as contracted. This is the first request granted to a PVO since the Commission updated its regulations in 2013. On February 13, 2013, the Commission voted to approve the Passenger Vessel Operator Financial Responsibility Requirements for Nonperformance of Transportation and Technical Revision to Passenger Vessel Operator Regulations. The new rule includes provisions that allow the Commission to recognize alternative protections submitted by certain PVOs. In this particular case, the PVO was granted a decrease in the amount of the financial responsibility it is required to maintain. The potential relief will vary depending on a number of factors unique to each operator.

PVOs typically require that prospective passengers provide a deposit in advance of a voyage. To protect the consumer, the FMC requires cruise lines embarking from a U.S. port to have a bond or other financial security for refunding passenger deposits should a cruise line fail to provide or conclude a scheduled cruise. The Commission always performs an in depth review to ensure proper safeguards for consumers while recognizing the circumstances of certain PVOs.

Commissioner Richard A. Lidinsky, Jr. stated, “Making sure that small passenger vessel operators were not harmed by regulations was of the highest priority in crafting the new PVO financial responsibility regulations during my chairmanship.”

“Regulators and industry can sit down and reach an agreement that helps small business such as certain PVOs move forward by fashioning economical financial protections beneficial for both passengers and PVOs — it’s really good to see us work out things like this,” commented, Commissioner William P. Doyle.