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Congress Proposes to Limit Protections of the Limitations Act

On September 22, 2021, Senator Dianne Feinstein and Representative Salud Carbajal introduced new legislation seeking to modify ship owners’ liability with respect to small vessels. Named the “Small Passenger Vessel Liability Fairness Act of 2021”, is in response to the tragic fire on board the dive boat Conception, which claimed the lives of thirty-four on board, where the the Owner of the Conception can only be held liable for the post-casualty value of the vessel. This is due to the Limitation of Liability Act of 1851, presently codified at 46 U.S.C. §§ 30501–12. Since the Conception was a total loss as a result of the fire, the Owner is effectively shielded from the claims of the estates of those who lost their lives.

The proposed new legislation, if enacted, would hold the owners of small passenger vessels responsible for damage irrespective of the post-casualty value of the vessel. Small passenger vessels are defined as those “less than 100 gross tons,” which are carrying no more than forty-nine passengers while engaged in “overnight domestic voyages,” and no more than 150 passengers while engaged in “all other voyages.” Small passenger vessels also include “any wooden vessel constructed prior to March 11, 1996, that carries passengers on overnight domestic voyages.” The proposed legislation directs the Commandant of the Unites States Coast Guard to promulgate rules that relate to the “exoneration and limitation of liability for all covered small passenger vessels” which “provide just compensation in any claim for which the owner or operator of a covered small passenger vessel is found liable[.]” Furthermore, for personal injury and death claims, the “privity or knowledge of the [vessel’s] master or the owner’s superintendent or managing agent, at or before the beginning of each voyage, is imputed to the owner.”

If passed as currently drafted, the law will take effect as of September 2, 2019—the same day as the Conception fire.

For more information on Limitation of Liability Act, please click here.

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USCG Suggests to Allow for Ship Mortgage on State Titles

Currently titling of vessels in the United States is controlled by both State and Federal law. Over 99 percent of vessels in the United States are exempt from documentation, as documented vessels are typically large and commercial in nature. For these 99 percent of vessels, which fall outside of the United States Coast Guard’s (“USCG”) documentation requirements, titling and registration is left up to the States, and the laws vary from State to State. At present, 38 States participate in the Identification System (“VIS”) — a centralized database which relies on information provided by the participating States—which provides the USCG with information relating to undocumented vessels. Although a State’s participation in VIS is voluntary, States are incentivized by the availability of preferred mortgages — a perfected lien that enjoys priority over all non-maritime liens and certain maritime liens in an in rem admiralty foreclosure action. Because a preferred mortgage must be filed or perfected in compliance with several statutory requirements, it is available only to: (1) vessels documented with the USCG; or (2) undocumented vessels titled in a State which satisfies certain Federal requirements and receives approval from the USCG.

Despite 38 States participating in VIS, no State has titling laws that satisfy current USCG requirements, and therefore, undocumented vessels are not eligible for Ships Preferred Mortgage. The reason for this shortfall is well understood: There is a conflict between USCG guidelines and Articles 2 and 9 of the Uniform Commercial Code (“UCC”), on which most States rely to conduct commercial transactions. Recently published in the Federal Register, the United States Coast Guard (“USCG”) has issued a Notice of Proposed Rulemaking which seeks to revise the conflicting USCG guideline by allowing for State titling laws modeled after the Uniform Certificate of Title Act for Vessels (“UCOTA-V”) to satisfy USCG certification requirements. If the proposed change to the USCG guideline is implemented, States’ participation in VIS would likely increase, and owners of undocumented vessels in States with titling laws patterned off UCOTA-V and participating in VIS would have access to preferred mortgages.

Additionally, the proposed rule implements a “branding” system, whereby a damaged vessel’s title is permanently marked, effectively preventing “title washing”, the practice of transferring the vessel’s title to another state to conceal the damage.

For more information on Ships Mortgage, please click here.

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USCG to Crack Down on Illegal Charters on the Bay

Over the summer, the United States Coast Guard has stopped and fined several illegal charter operations on the Chesapeake Bay and intends to carry out further enforcement. This appears to be an extension of the enforcement carried out in Florida. An illegal charter is taking of passengers or cargo from one port in the United States to another without proper endorsements on your USCG title. This is the other part of the Jones Act that people do not know about.

In 1920 congress passed the Merchant Marine Act, most known as the “Jones Act”, in order to protect the U.S. flag fleet, to stimulate the merchant marine profession and national security/defense reasons. When applying for USCG Certificate of Documentation, you must choose endorsements to be applied to the vessel. Those are "Recreational"|"Coastwise"|"Fisheries"|"Registry". To carry passangers, charters for hire, the vessel must have a "coastwise" endorsement, otheriwse it is an illegal charter. This does not apply to Bareboat/Demise Charters.

Only vessels built in the United States, or those foreign built that are over three years old with a MARAD Waiver, are eligble for Coastwise endorsement. Further, the owner must be a US citizen. In case of the companies, this means the persons who manage the Company and the majority of members/shareholders.

Lochner Law Frim, P.C. has extensive experience with charter operations. For more information or to review your use of the vessel in a charter fleet, please contact us.

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Aid to Independent Contractors under CARES Act

On March 25, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act, or the “CARES Act”. The act is the largest stimulus package in US history and designed to help Americans through the COVID-19 crisis. The bill covers a multitude of areas, including help to individuals and various industries that are impacted by the epidemic.

Today, April 10, Lender’s will begin to accept applications for independent contractors and sole proprietors for the Payroll Protection Program. Based on the most recent SOP issued by the Small Business Administration, here is our office's FAQ on the program.

Lochner Law Frim, P.C. will be providing an overview of some of the issues that impact and help business operations. Read More...

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COVID 19 Updates

The United States, and many states, declared a state of emergency regarding the spread of the coronavirus (COVID-19), forcing school closures, limitations on gatherings and other disruptions to the normal business operations. As the nation braces for the effects of this unprecedented time, both state and federal agencies are working on solutions to help businesses, employers and employees.

Lochner Law Frim, P.C. will be providing an overview of some of the issues that impact and help business operations. Read More...

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2020 Maryland Legislative Recap

The Maryland General Assembly has proposed a series of legislative changes that will significantly impact the Maryland maritime community. The proposed changes range from from updating fishing regulations to changing the statutory dates for "abandoned" boats, including in some circumstances, removing them without notice. This office is not a lobbying firm, but we have received much correspondence from clients and the maritime community asking for us to share this information with the general public. Below is the link to all the proposed 2020 legislation and its current status with the Maryland General Assembly:

• Proposed Legislature for 2020

We would like to thank the Marine Trades Association of Maryland, and other Maryland maritime business and persons who have helped contribute information about these and other proposed changes. For more information on these and other proposed legislature, please contact your Representative and/or Senator.

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Lawsuit of Megayacht vs. 420

It seems that Tony Buckingham, owner of “The Beast” Ngoni, has no love for racing dinghies in his exclusion zone. In July a 420 sailing out of Courageous Sailing Center for Youth, the well-known and well-regarded nonprofit sailing center in Boston, Mass, allegedly scratched Buckingham’s $50 million sailing yacht, and it looks like the oil executive is trying to get even. Courageous has filed a limitation of liability action in federal court, using an obscure 1851 law to limit their liability for the allision to the value of the 420, estimated at $1,000. If successful, then despite all the lawyers’ fees in the world Courageous would not have to pay more than $1,000 to repair the damages Ngoni allegedly suffered.

The case is currently pending before the United States District Court for the District of Massachusetts (Case No. 1:19-CV-10137-DPW). This case is Read More...

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USCG to Raise Marine Casualty Reporting Property Damage Thresholds

USCG Rule Change on 3/19/2018

Effective April 18, 2018, The Coast Guard is amending the monetary property damage threshold amounts for reporting a marine casualty and for reporting a type of marine casualty called a “serious marine incident” (an incidnet that triggers mandatory drug and alchohol testing). The original regulations were set in 1980s and have not been updated since. Updating the Updating the original regulations will reduce the burden on vessel owners and operators, and will also reduce the amount of Coast Guard resources expended to investigate these incidents.

The new threshold amounts are as folows:

• Property Damage Threshold: $75,000
• Serious Marine Incident: $200,000.00

USCG to begin Clean Up Efforts of Hurricane Irma

USCG Press Release 10/25/2017

State and federal responders are scheduled to begin vessel removal operations in Miami-Dade County on 10/26/2017 as part of ongoing response efforts following Hurricane Irma. Read More...

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Lawsuit Filed for Arrest of America's Cup Boat

A federal judge has ordered the arrested AC45 released from judicial custody after hearing arguments from both sides yesterday.  Team Oracle is now free to ship the AC45 to Bermuda, where it is expected to be based in the lead-up to the America's Cup World Series. The America's Cup AC45 "4 Oracle Team USA" was arrested by the U.S. Marshals, pursuant to a lawsuit filed in Federal Court by a former crew member against Oracle Racing and the AC45 itself.

Joe Spooner, Oracle Racing's former grinder and crew for two America's Cup titles and three Fastnet Race wins, is claiming a lien against the vessel for necessearies, and approximately $725,000 in unpaid wages plus punitive damages, for an alleged wrongful discharge by Team Oracle. Read More...

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Cape Wind Farm Legal Battle

Todd Lochner of Lochner Law Firm, P.C. and John Fulweiler of Fulweiler, LLC joined forces to file "a friend of the court" motion inserting themselves in the ongoing federal lawsuit against Cape Wind Associates. Lochner and Fulweiler are the first to articulate a case against the wind farm based on the navigational argument, and they arte asking the court to order the United States Coast Guard, which has already blessed the project, to take another look at the dangers posed by the Cape Cod wind farm project. Read More...

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2013 Changes to Boating Laws

Below is a summry of the major laws affecting the boating industry that were inacted during the 2013 legislative session. The States affected include Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Maryland, New York, Oklahoma, Pennsylvania, Texas, and Virginia. Read More...

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FMC Consumer Alert - Warning to Yacht Purchasers

The Federal Maritime Commission issues a warning to yacht purchasers. The commission has recieved a rising number of complaints involving international transaport of yachts purchased by individual consumers. Examples include:

• Delays in shipping and delivering cargo
• Use of boilerplate contracts to allow shipping company to wait as long as a year to ship the yacht while requiring the consumer to pay storage fees and a significant penalty should the consumer cancel the transportation service
• Failure of the shipping company to accurately disclose costs and delivery terms of service

• Ensure that the shipping company is FMC licensed and bonded. A list of licensed companies is available on the FMC Web Site
• Read and understand the shipping company's written terms and conditions prior to contracting for services
• Understand the shipping company's written terms and conditions prior to contracting for services
• Ensure that any required delivery windows are specifically provided for in the written contract

Senate Passes Bill to Cap Vessel Excise Tax for Boats Over $300,000

The Maryland General Assembly has passed Senate Bill 90, a law that caps Maryland’s vessel excise tax at $15,000 per vessel. For vessels under $300,000 the tax cap offers no benefit, but for vessels over $300,000 the tax savings can be enormous. The bill was proposed by John C. Astle, D-Annapolis, and the tax cap will last for three years.

The passage of the bill is a huge boon for yacht dealers, buyers, and maritime service professionals in Maryland. For years Maryland’s vessel excise tax was far above that of Virginia (2% with a $2,000 cap) and Delaware (no tax whatsoever). Any vessel registered in Maryland, sold in Maryland, or used for more than 90 days in Maryland was is required to pay the tax. More...

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US Supreme Court Defines What is a Vessel

In Lozman v. Riviera Beach, 568 U. S. ____ (2013), The Supreme Court decided that many structures which float and move on the water – floating homes, for instance – will no longer be considered “vessels” for purposes of federal law. This decision has sent shockwaves through the maritime community as the implications are enormous, for business and individuals alike. In a 7-2 decision, the Supreme Court has thrown out the century old definition and test for vessels and ordered that the lower courts decide on a case-by-case basis whether structures, like floating homes and casinos, are vessels or not. For the majority of these situations, nothing will change; if a structure looks and operates like a boat, it will still be a “vessel.” But for borderline cases, whether a floating structure is a “vessel” under Lozman will become a crucial issue. For now it’s clear the Court has narrowed the legal meaning of the word “vessel” considerably, and that owners of floating structures should consult their attorneys to determine whether the new rule will affect their interests. More...

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New Volatile Organic Compounds Emissions Regulations

The State of Maryland’s Department of the Environment (MDE) has proposed new regulations governing the emissions of volatile organic compounds (VOCs) from pleasure craft coating operations. VOCs, for the purposes of this regulation, are chemicals that are commonly found in many products used in boat construction and maintenance, such as bottom paints and gelcoats. The proposed regulations (COMAR §§ 26.11.19.27-1) will affect many marinas and private boat owners throughout the state, as they will make some commonly-used paints and coatings obsolete, and impose greater liability upon the yards where coating operations are permitted. More...

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2012 Maryland Legislative Recap

The Maryland General Assembly has proposed a series of legislative changes that will significantly impact the Maryland maritime community. The proposed changes range from imposing a new tax on vessel purchase of new and used boats to increasing fees for boat registration. Moreover, the newly proposed fee schedule for water based construction projects could make a simple pier repair cost thousands in application fees alone. This office is not a lobbying firm, but we have received much correspondence from clients and the maritime community asking for us to share this information with the general public. Below, we have identified some of the proposed legislation that will impact the maritime industry. Some of the proposed bills maybe beneficial to the maritime community, however we have singled out those bills that will directly have a “negative” impact on the maritime industry and the casual boat user:

• Proposed Legislature for 2012
• House Bill 1307
• House Bill 1345
• House Bill 1411

We would like to thank Boat US, Marine Trades Association of Maryland, and other Maryland maritime business and persons who have helped contribute information about these and other proposed changes. For more information on these and other proposed legislature, please contact your Representative and/or Senator.

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US Coast Guard Weight Restriction Now in Effect

As of December 1, 2011, the US Coast Guard calculated weight capacity has been increased to 185 pounds per passenger, regardless of gender. Recreational vessels and cruise ships are not effected by this new regulation. The new restriction follows a 2004 report by the Center for Disease Control and Prevention, where it found that the average weight for a man between the ages of 20 to 75 is 191 pounds and 164 for women. Moreover, the change comes shortly after two tragic boating accidents, in Baltimore and New York, where the vessels involved were carrying the proper amount of passangers, but an excessive amount of weight.

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Maritime Law Enforcement Information Network

A new system of surveillance is coming to the Chesapeake Bay. Called the Maritime Law Enforcement Information Network, it is a network of cameras and radar to help monitor activity on the bay. This system will allow dispatchers to track and intercept suspicious vessels and to better assist distressed boaters. The cameras have a 3 to 5 mile range, while the radar can pick up 3-foot objects from up to 7 miles away. Law enforcement officers and dispatchers will be able to monitor situations in real time and respond to them accordingly. The system will also allow officers to set up electronic "lines" around sensitive areas that would activate alarms and cameras when crossed by a vessel. It is a powerful surveillance system that could transform maritime law enforcement on the Chesapeake Bay.

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2010 Changes to Boating Laws

Below is a summry of the major laws affecting the boating industry that were inacted during the 2010 legislative session. The States affected include Arizon, California, Florida, Kansas, Louisiana, Maryland, North Carolina,and Vermont. Read More...

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