(a) The regulations in this subchapter, as well as referenced requirements in other subchapters in this chapter, take into account the passenger vessel's size, construction, and equipment, as well as its intended service on the routes or waters on which it is desired to be operated or navigated, which are indications of the hazards to which such vessel may be subjected. The Commandant's determinations in this respect for a particular passenger vessel are stipulated in a certificate of inspection, which states certain terms and conditions governing such vessel when in operation.

(b) In applying the laws and regulations to passenger vessels, one criterion for invocation of safety standards is the description of passenger vessels by relative size in gross tons. When it is determined by the Commandant that the gross register tonnage for a particular passenger vessel, which is attained by exemptions, reductions, or other devices in the basic gross tonnage formulation, will circumvent or be incompatible with the application of specific safety requirements in the passenger vessel regulations for a vessel of such physical size, the Commandant shall prescribe the regulations to be made applicable to such vessel.

(c) When the Commandant determines that the gross register tonnage is not a valid criterion for the invocation of safety requirements based on relative size, the parties involved will be informed of the determination and of the regulations applicable to such passenger vessel, and before being permitted to operate such vessel, compliance therewith shall be required. Endorsements or notations on the passenger vessel's certificate of inspection may be made as appropriate.