Bareboat Charters Regs....

DISCUSSION.
a. Bareboat charter agreements have traditionally been used in the marine industry as a mechanism to allow long-term charterers the ability to assume operational control of a vessel. In these agreements the charterer assumes the rights and liabilities of ownership for the vessel. The charterer is usually responsible for conducting a precharter and postcharter vessel survey, providing a crew, and assuming complete operational control of the vessel. Individuals soon began using bareboat charter agreements for short-term charters (as short as 4 hours in duration) to carry large numbers of people for events such as wedding receptions, graduation parties, or business meetings. Although these vessels were similar to comparable inspected vessels, under previous statutes these vessels were neither subject to, nor inspected as, passenger vessels. Previous statutes did not limit the number of individuals that could qualify for the owner (charterer) exception to the definition of passenger and also contained an exception for guests carried on vessels being operated only for pleasure. The Act limits the exception for owner (charterer) to one individual and eliminated the guest exception.
Additionally, many charter agreements allowed the owner of the vessel to either be a member of the crew or to provide the crew. The Act clearly delineates between charters that allow the owner to provide or specify the crew and those that do not. With the exception of those vessels subject to special regulation in paragraph 3.c below, vessels chartered with the crew provided or specified by the owner are subject to inspection as either small passenger vessels (under 100 gross tons and carrying more than six passengers) or passenger vessels (100 gross tons or more and carrying more than 12 passengers). It is important to note that the extension provision for charter vessels discussed in paragraph 3.b below is not afforded when the crew is provided or specified by the owner.
b. The Act provides for Coast Guard inspection and certification of vessels that are chartered without a crew provided or specified by the owner and carrying more than 12 passengers. These vessels were afforded a grace period until June 21, 1994, before they become subject to the provisions of the Act. Additionally, these vessels are eligible, upon meeting certain conditions, to receive a maximum 30 month extension period to come into compliance with the inspected vessel regulations. To be eligible for this extension, owners were required to make application for inspection before June 21, 1994. Applications received after this date cannot be considered for an extension.
c. Several existing vessels that are chartered and over 100 gross tons are constructed from materials that preclude them from meeting the structural fire protection requirements of Title 46 Code of Federal Regulations Subchapter H. With the change in the definition of a passenger vessel, these chartered vessels will now fall into the passenger vessel category. As their construction does not comply with the existing regulations, the Act authorizes the Coast Guard to develop special regulations. Special regulations will include structural fire protection, manning, operating and equipment requirements. Detailed guidance is provided in enclosure (1).
d. Under previous statutes, the U.S. inspection threshold (the minimum number of passengers that determines when a vessel must be inspected by the Coast Guard) for passenger vessels was significantly different than international criteria. The Act brings our domestic statutes regarding passenger vessel inspection more into line with the international standards by adopting the 12 passenger criteria for vessels over 100 gross tons. Vessels of 100 gross tons or more carrying 12 or less passengers, including at least one passenger for hire, or that are chartered with the crew provided or specified by the owner are now uninspected passenger vessels. Interim guidance is provided in enclosure (1) for this new class of uninspected vessels.
NOTE: Vessels of less than 100 gross tons carrying more than six passengers one of which is for hire or are chartered with a crew provided are still subject to inspection. The 12 passenger threshold applies when such vessels are chartered without the crew provided or specified by the owner.
e. The Act amends and adds several definitions in Title 46 United States Code (U.S.C.) Section 2101. The Act provides a single consolidated definition of "passenger" for all passenger vessels. It also defines the terms "passenger for hire" and "consideration," and amends the definition of a "passenger vessel," "small passenger vessel," "sailing school vessel," "submersible vessel," "offshore supply vessel" and "uninspected passenger vessel."
f. Many existing vessels that are chartered are of foreign build. Under 46 U.S.C. 883 (Jones Act) these vessels are not allowed to engage in coastwise trade. Under 46 U.S.C. 289 et seq., these vessels are generally prohibited from transporting passengers between ports or places in the U.S., either directly or by way of a foreign port. Carriage of passengers for hire on a domestic voyage is considered coastwise trade. However, under existing U.S. Customs determinations, it is not coastwise trade when foreign vessels carry passengers for hire on foreign voyages or in bareboat charter operations where the charterer receives consideration from the passengers (becoming for hire) on domestic voyages. Additional information on foreign vessels is contained in enclosure (1).
g. The Act amends the definition of Offshore Supply Vessel to include vessels carrying "individuals in addition to the crew." Thus, crewboats carrying individuals employed in the exploration, exploitation, or production of offshore mineral or energy resources are now within the definition of Offshore Supply Vessel. This allows crewboats that do not carry persons other than oil industry personnel to be certificated as offshore supply vessels rather than small passenger vessels. These vessels will be subject to the safety standards of Title 46 CFR Subchapter T or the final version of Title 46 CFR Subchapter L at the owners option.
h. The Act expands the Coast Guard's excursion permit authority to allow the issuance of special permits to vessels that are not certificated. This authority still has limitations and must be implemented by regulation.