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Commission Strengthens Cruise Line Passenger Protections and Proposes to Extend Tariff Rate Publication Exemption to Foreign Registered NVOCCs

February 22, 2013

NR 13-02

Contact: Karen V. Gregory, Secretary (202-523-5725)

During its meeting on February 13, 2013, the Federal Maritime Commission approved measures that would strengthen protections for cruise line customer deposits and prepayments, while reducing financial responsibility requirements imposed on smaller cruise lines.

By statute, 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 decided to issue a final rule increasing the maximum coverage requirement from $15 million to $30 million per cruise line, and require that this cap be adjusted every two years based on the Consumer Price Index for All Urban Consumers (CPI-U). This increase reflects the effects of inflation and the growth of the cruise industry since the current $15 million cap was set in 1990. The final rule also provides relief to smaller cruise lines by recognizing the existence of additional forms of financial protection.

In a separate action, the Commission approved for public comment a proposed rule that would require foreign-based unlicensed Non-Vessel-Operating Common Carriers (NVOCCs) 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.

Chairman Richard A. Lidinsky, Jr. stated: "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. 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.

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. 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."

The Federal Maritime Commission is the federal agency responsible for regulating the nation’s international ocean transportation for the benefit of exporters, importers, and the American consumer. The FMC’s mission is to foster a fair, efficient, and reliable international ocean transportation system while protecting the public from unfair and deceptive practices.