[§468L-22]  Charter tour operator financial
performance requirements.  (a)  The department shall not approve the
initial registration or the renewal of registration of a travel agency that
wishes to engage in the business of a charter tour operator and to operate not
more than six charter tours during any twelve-month period of the registration
period, or during the remainder of the registration period if less than twelve
months, for which application is made unless the applicant provides proof that
the applicant has obtained a bond, letter of credit, or other security in
compliance with Title 14, Code of Federal Regulations, section 380.34, as the
same may be amended, or any successor or replacement federal statute or
regulation thereto.



(b)  The department shall not approve the
initial registration or the renewal of registration of a travel agency that
wishes to engage in the business of a charter tour operator and to operate
seven or more charter tours during any twelve months or shorter period of the registration
period for which application is made unless the applicant either:



(1)  Posts a performance or financial guaranty-type
bond naming the director as the obligee that may be canceled only if the
charter tour operator gives ninety days' prior written notice to the surety and
the surety gives sixty days' prior written notice to the director of
cancellation of the bond; or



(2)  Obtains an irrevocable letter of credit that is a
guarantee of payment for a term of one year naming the director as beneficiary,
with a provision for automatic extension for additional annual periods, and
that may be canceled only if the charter tour operator gives prior written
notice by certified mail to the director and to the issuer at least ninety days
before the letter's expiration date or the date on which the charter tour
operator intends the letter to cease being effective, or the issuer gives prior
written notice by certified mail to the director at least sixty days before the
expiration date.



(c)  The bond or letter of credit shall be
issued by a surety or federally-insured lending institution authorized to do
business in the State to indemnify any consumer who may suffer loss as a result
of nonperformance by a charter tour operator.



(d)  A charter tour operator shall not provide
the required coverage through multiple bonds or irrevocable letters of credit
but shall provide either a single bond or a single irrevocable letter of
credit.  A charter tour operator may substitute the bond with an irrevocable
letter of credit and vice versa pursuant to subsection (h), but shall not
provide one in addition to the other to reach the required aggregate amount of
coverage.



(e)  Upon cancellation or expiration of the
bond or letter of credit, the surety or insurer shall remain liable for any
claims against the bond or letter of credit for a period of six months;
provided that:



(1)  The debts were incurred while the bond or letter
of credit was in effect; and



(2)  The director notifies the surety or insurer, as
the case may be, of any claims within ninety days of discovery of any claims.



(f)  The surety or insurer shall not be
required to release any moneys or collateral to the charter tour operator
during the six months after cancellation of the bond or expiration of the
letter of credit.



(g)  The amount of coverage of the bond or
irrevocable letter of credit shall be:



(1)  Equal to $300,000, less the amount of any
security provided by the applicant under Title 14, Code of Federal Regulations,
section 380.34, as the same may be amended, or any successor or replacement
federal statute or regulation thereto, for a travel agency planning to engage
in the business of a charter tour operator and to operate seven to fifteen
charter tours during any twelve months or shorter period of the registration
period for which application is made; or



(2)  Equal to $1,000,000, less the amount of any
security provided by the applicant under Title 14, Code of Federal Regulations,
section 380.34, as the same may be amended, or any successor or replacement
federal statute or regulation thereto, for a travel agency planning to engage
in the business of a charter tour operator and to operate more than fifteen
charter tours during any twelve months or shorter period of the registration
period for which application is made.



(h)  A bond shall be accepted as replacement
for another bond or an irrevocable letter of credit and an irrevocable letter
of credit shall be accepted as replacement for another irrevocable letter of
credit or a bond if:



(1)  The effective date of a replacement bond is prior
to or on the cancellation date of the bond being replaced or the expiration
date of the irrevocable letter of credit being replaced, as the case may be,
and the replacement bond is received by the director before the cancellation
date or the expiration date, as the case may be; or



(2)  The replacement irrevocable letter of credit is
received by the director at least fifteen days prior to the expiration date of
the irrevocable letter of credit being replaced or is received by the director
on or before the cancellation date of the bond being replaced, as the case may
be.



(i)  A charter tour operator shall not operate
more than six charter tours during any twelve-month period unless the charter
tour operator has provided and maintains in effect a bond or letter of credit
in accordance with subsection (b), in the amount specified in subsection
(g)(1), if the charter tour operator operates between seven and fifteen charter
tours, or in the amount specified in subsection (g)(2), if the charter tour
operator operates more than fifteen charter tours. [L 1999, c 258, pt of §3]