Friday, March 1, 2013

FMC Approves Cruise Line Financial Rules

The Federal Maritime Commission has approved measures designed to strengthen customer protections and reduce financial responsibility requirements for smaller cruise lines. The measures were announced Feb. 22 and were approved during the commission’s most recent meeting.

Under law, cruise lines must file adequate evidence of financial responsibility to help ensure that passengers can obtain reimbursement in the event a cruise is not performed. The Commission’s new rule increases the maximum coverage requirement from $15 million to $30 million per cruise line and requires that the cap be adjusted every two years based on the Consumer Price Index for All Urban Consumers.

The coverage requirement increase, according to the Maritime Commission, reflects the effects of inflation and the growth of the cruise industry since the current $15 million cap was set in 1990. The rule also provides relief to smaller cruise lines by recognizing the existence of additional forms of financial protection.

“I am pleased that, after more than 20 years, the Commission has taken long overdue action to address increased performance coverage required in light of the growth of unearned passenger revenue in the hands of cruise operators,” FMC Chair Richard A. Lidinsky, Jr. said. “I am especially delighted that the Commission has developed a mechanism to reduce the regulatory burden on smaller operators while maintaining adequate protection for passengers.”

In a separate action during the same Feb. 13 meeting, the Commission approved for public comment a proposed rule that would require foreign-based unlicensed Non-Vessel-Operating Common Carriers to register with the Commission and expands a current tariff rate publication exemption that would allow foreign-based, unlicensed NVOCCs to enter into negotiated rate arrangements in lieu of publishing a rate for cargo shipments in its tariff.

“I also am pleased that we have moved to consider extending to foreign unlicensed NVOCCs the regulatory relief provided more than two years ago to licensed NVOCCs,” Lidinsky said. “As we move forward, I would hope that the Commission will undertake further review of its regulations governing ocean transportation intermediaries in order to make them more effective while providing further relief from unnecessary regulations.”