FMC Provides Regulatory Flexibility to Small Passenger Vessel Operators

The Federal Maritime Commission voted to support a proposal put forward by Fact Finding Officer Commissioner Louis E. Sola that provides limited and temporary relief to small passenger vessel operators whose operations and business have been disrupted by the response to COVID-19.

In approving the “Policy Statement on Passenger Vessel Financial Responsibility”, which will be published on the Commission’s webpage and in the Federal Register in the near future, the FMC determined it will look favorably upon requests from small passenger vessel operators for alternative forms of evidence of financial responsibility provided applicants meet key conditions. The relief will remain in effect until April 1, 2021.

“Americans are resourceful, enterprising, and resilient, none more so than the men and women who make their living on our waterways. In times when these people need a hand, regulators should be nimble, adaptive, and willing to provide relief where it can make a difference. I believe my fellow Commissioners have once again demonstrated that they are up to the task,” said Commissioner Sola.

Commission regulations require that all passenger vessel operators demonstrate financial responsibility to the agency through the submission of some form of surety instrument equal to 110 percent of the highest amount of Unearned Passenger Revenue (UPR) the carrier held over the previous two years. This required surety amount is capped at $32 million. Currently, only the smaller carriers hold a surety at an amount below the cap.

Smaller passenger vessel operators are concentrated in the Pacific Northwest, have a very limited sailing season, and by the nature of their size, carry fewer passengers. The industry has been especially adversely affected in the wake of COVID-19. As a result, the UPR of these carriers is much less than the previous two seasons. This has created a disparity between the current UPR of smaller operators and the coverage amount these companies are required to maintain under the regulations.

To be considered for the relief the Commission is providing, cruise operators must agree to comply with two requirements. The first is that passenger vessel operators agree to provide monthly reports to the FMC that satisfactorily demonstrate the company’s UPR. The second is that if a passenger vessel operator fails to comply with the requirements and conditions of the alternative form of evidence of financial responsibility, they will be subject to the default requirements in the Commission’s regulations.

“With this vote, the Commission is able to provide relief to small enterprises, help those whose livelihoods depend on these businesses, all while continuing to protect the American consumer,” said Commissioner Sola.