U.S. Coast Guard Draws Legal Line on App-Based Boat Services as Charters

Attempts on the part of many App-based boat ride services to avoid using licensed captains will not be allowed, according to the U.S. Coast Guard.

by Amy Wilson, Lake Sun Leader, Camdenton, Mo. / June 30, 2017
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(TNS) -- A clarification from the U.S. Coast Guard on bareboat charter operations aims to clear up questions around the legality of app-based boat ride services using owner-operators under what's called a bareboat charter. The clarification — this type of service is not a legal bareboat charter.

The statement from the USCG Sector Upper Mississippi last weekend appears to close what could have been a loophole for owner-operated passenger-for-hire vessels without a licensed captain or other licensing through the USCG by operating under a bareboat charter.

A bareboat charter is the hiring of a vessel with no crew provided by the owner of the vessel and with full control of the vessel by the person chartering or renting the boat.

While USCG Navigation and Vessel Inspection Circular No. 7-94 states that the vessel owner cannot be aboard a bareboat charter, recent technological changes brought these general guidelines for bareboat charters, outlined more specifically in the Passenger Vessel Safety Act of 1993, into question.

Owner-operators, regular people working mainly part-time as a side job, are a key component of smartphone app-based ride services, on the rise nationwide in boating following the trend that started on roadways.

Many of the app-based boat ride services have attempted to operate as bareboat charters - as their argument for legality - to avoid having to used USCG-licensed captains which requires a significant training and certification process.

The USCG, however, is working to clarify this issue across the country in addition to Lake of the Ozarks where Anchor Charter Services opened this spring.

"There's been a lot of speculation because of the novel technology for app-based charter services, not specifically on Lake of the Ozarks but nationwide," commented USCG spokesperson Lt. Sean Haley. "There's a lot of these charters. The rules are not new, but the technology is new and novel and it's forced the Coast Guard to readdress existing regulations with new technologies."

As the USCG press release stated, they are clarifying certain requirements as pertaining to bareboat charter operations "to facilitate compliance with existing laws and regulations."

The press release explains, "when full possession and control of the vessel is not retained by a bareboat customer, then the Coast Guard is mandated by law to enforce vessel inspections, documentation, and crew credentialing requirements. See 46 U.S.C. § 2101; 8902-8903."

An owner of the vessel acting as crew was cited in the press release as a specific example of non-compliance with the 1994 law.

"Examples of non-compliance would include when a customer selects the owner of the vessel as the crew, then full possession and control of the vessel has presumptively not been passed to the customer.

Additionally, when a customer selects a crew, other than the owner, and the owner or agent pays the crew, selects the crew, or has the authority to dismiss the crew for cause, full possession and control of the vessel has presumptively not been passed to the customer," the press release stated.

Those found in violation of these regulations are subject to civil penalties under 46 U.S.C. § 3318, 8906.

"We're just trying to be consistent in enforcement. It's not just app-based operations on Lake of the Ozarks or Table Rock Lake. It's any waters in America's heartland or coastal areas," said Haley. "The clarification makes clear that an owner on board a bareboat charter is not valid."

The clarification comes as the St. Louis-based USCG office received word on a legal review of a business model proposed by Anchor Charter Services on Lake of the Ozarks. An app-based boat ride service using unlicensed captains in their own boats, Anchor and its drivers have been operating on Lake of the Ozarks after launching the service Memorial Weekend.

Hatraf has openly stated multiple times to the media and on Anchor's social media accounts that the service plan, using captains with their own boats unlicensed by the USCG, was operating under the umbrella of a bareboat charter.

According to Haley, the legal determination completed by a USCG legal team in New Orleans has been provided to Anchor, however that report is not being released to the public as it has proprietary information regarding Anchor's business model.

In an operation on the Lake of the Ozark Friday, June 16 through Sunday, June 18, the Coast Guard conducted law enforcement of nine vessels, five of which were chartered vessels. Chartered vessels includes water taxi and bareboat charter rental boats.

The emphasis of the boardings was to promote marine safety, identify unsafe or hazardous conditions, educate the boating public and enforce applicable laws and regulations, a separate press release from the USCG at the time stated.

Water taxis can legally operate as uninspected passenger vessels (UPVs) operated by USCG-licensed captains under the law. It's a system established as a safety measure to try to ensure knowledgeable operators and safety equipment on the water where operating a vessel is more complicated than driving a vehicle on the roadway.

There are multiple such services offered on Lake of the Ozarks, and with the rise of Uber-type services on the water, USCG-licensed captains here recently organized as the Lake of the Ozarks Captains Association.

Their stated mission is to promote safety, education and good fellowship between operators, the Lake of the Ozarks Water Safety Council, USCG and the Water Patrol Division of the Missouri State Highway Patrol. Much of their posting on social media has focused on illegal passenger boat charters.

A Facebook post by Lake of the Ozarks Water Taxi indicated their 13-passenger vessel was boarded for a routine safety check, and everything was found to be in good order. The taxi service was operating with a USCG-licensed captain and the boat had a certificate of inspection in order to charge for rides. The boat was on its way after 15 minutes.

The USCG press release on the operation confirmed that all of the charter operations that were boarded were found to be operating legally. The boarding teams also assisted the Water Patrol Division of the Missouri Highway Patrol with the processing of an intoxicated boater and issued a warning for a missing rental agreement on board a bareboat charter.

Via the press release, USCG Captain Martin Malloy, Officer in Charge, Marine Inspection commented, "The Coast Guard will continue to interpret, apply and enforce applicable laws and regulations on the Heartland's navigable waters, to include our lakes and rivers."

©2017 Lake Sun Leader, Camdenton, Mo. Distributed by Tribune Content Agency, LLC.