FMC Mulls Changes to Cruise Rules on Non-Performance & Refunds

The Federal Maritime Commission is gathering information about possible changes to regulations governing the definition of “non-performance” by a cruise line and the process for obtaining a refund when a vessel does not sail.

Interested parties may comment on the Advanced Notice of Proposed Rulemaking (ANPRM) until Friday, November 13, 2020. Individuals may share comments responsive to the ANPRM via secretary@fmc.gov.

The ANPRM is based on a recommendation made by Commissioner Louis E. Sola in his July Fact Finding 30 Interim Report examining the refund policies of cruise lines. Commissioner Sola recommended that the FMC interpret “non-performance of transportation” to include cancelling a sailing or delaying passenger boarding by 24 hours or more. Commissioner Sola also wants the FMC to make clear how passengers may obtain refunds under a cruise line’s financial instruments in certain circumstances.

The specific economic impacts of COVID-19 on Florida ports from Key West to Jacksonville and on the Atlantic and Gulf Coasts have not been limited to passenger cruise lines. These impacts extended to port authorities and cities throughout Florida with cancelled sailings resulting in loss of revenue to public ports, government at all levels, and private companies that do business with cruise lines.

In his Interim Report, Commissioner Sola chronicles specific steps each port is taking to resume operations, including what distinct measures will be instituted to protect passengers, crews, longshore, and others from any potential exposure to COVID-19 or other pathogens.

Ports that also serve ocean cargo customers are not insulated from the impacts of COVID-19. Not all Florida ports serve both cruise and cargo businesses. Furthermore, in some ports, the cruise business accounts for a larger percentage of revenue than cargo. Finally, diminished consumer demand has contributed to lower volumes of containerized freight transiting gateways.

Florida ports that do handle cargo are also seeing lower export volumes. A significant amount of the cargo shipped from Florida to Caribbean ports supports the cruise industry in those foreign ports of call.

Commissioner Sola also conducted a regional assessment in Alaska as passenger cruise operations are an important part of its tourism economy.  U.S. Senator Dan Sullivan (R-AK) invited Commissioner Sola to witness firsthand the consequences that Alaskans are bearing from the loss of the 2020 cruise season.

Carriers Have 30 Days to File New Service Contracts

Vessel operating common carriers, non-vessel-operating common carriers, and shippers are allowed to file initial service contracts with the Federal Maritime Commission up to 30 days after the agreement’s effective date.

This extended relief remains effective until June 1, 2021, and is intended to provide continued flexibility through the service contracting season which generally takes place annually between March and June.

The FMC has voted to initiate a Notice of Proposed Rulemaking (NPRM) that will, if ultimately approved, make permanent the current temporary exemption.

Current FMC regulations require ocean carriers to file initial service contracts with the FMC before they are permitted to receive and move cargo under the terms of that contract. Service contract amendments may be filed up to 30 days after the commercial effective date of the amendment.

The FMC granted temporary regulatory relief that allowed ocean carriers to file initial service contracts up to 30 days after contract terms had been agreed to, to address COVID-related impacts to the supply chain.

Once the NPRM is in final form, and assuming a favorable interim Commission vote, then ocean container industry stakeholders will have the opportunity to share their views through a public comment period. The Commission will consider all public comments before voting on final regulatory actions.

“The health of the Nation’s economy requires a high performing supply chain system. Each of us should applaud the hard work and selflessness of those individuals who have kept essential goods flowing throughout this pandemic. Extending this relief on service contract filing deadlines through the upcoming negotiating season assures that carriers and shippers are able to continue to do business without running afoul of the law,” said Commissioner Rebecca F. Dye.

Companies Pay $350,000 Penalty for Illegal Operations in American Samoa

The Federal Maritime Commission ordered PDL International Pte Ltd.; Sofrana Unilines (NZ) Ltd. and ANL Singapore Pte Ltd dba Sofrana ANL Pte Ltd.; Pacific Forum Line (Group) Limited and Pacific Forum Line (NZ) Limited; and Neptune Pacific Line, Inc. to pay $350,000 in compromise of its violations relating to their transportation activities and practices between Australia, American Samoa and other islands in the South Pacific, and between New Zealand, American Samoa and other islands in the South Pacific.

The compromise agreement alleged that PDL et al. operated under an agreement in the American Samoa trades, which agreement had not been filed with the Commission or become effective under the Shipping Act; provided service in the trades that was not in accordance with the rates, charges, or rules contained in published tariffs or service contracts; and knowingly disclosed and shared information concerning the nature, consignee, or routing of property tendered or delivered to a common carrier without consent of the shipper or consignee.

The FMC approved the compromise agreement on April 12, 2019.