Do Coast Guard Charter Regulations Apply to Charity Auction Boat Trips?

I have been asked by my yacht club to research Coast Guard vessel and operator licensing issues relating to our club’s activities. We conduct several charity auctions every year, and our members will sometimes donate time aboard their boats for fishing trips to be auctioned. Will these fishing trips be subject to Coast Guard charter vessel regulations?

Our reader is referring to Coast Guard regulations, which require passenger vessels to be inspected by the Coast Guard and the vessel operators to be licensed captains.

Generally speaking, Coast Guard inspection and a licensed captain are required for any boat that is carrying any passengers for hire. An exception to the vessel inspection requirement exists for vessels carrying six or fewer passengers (commonly known as “six-pack” charters), but the operator must be licensed whenever a vessel is carrying at least one passenger for hire. 

Federal law (Title 46 U.S. Code, sec. 2101) defines a passenger for hire as a person for whom an economic benefit is contributed as a condition of carriage on the vessel, where that benefit flows directly or indirectly to the owner or any other person having an interest in the vessel.

The “for hire” definition isn’t as clear as it could be, but if consideration is paid as a condition of carriage, it’s pretty clear that a license is required. A gray area arises, however, when we look at who is receiving the consideration.

The donated fishing trips described by our reader will award a day aboard a boat to the winning bidder at the charity auction. This presents an interesting scenario because the passenger is paying for the trip, but the money is going to a charity rather than to the owner of the boat.

As noted above, a licensed captain is required when the economic benefit directly or indirectly flows to “the owner or any other person having an interest in the vessel.” In this case, since the charity (presumably) has no interest at all in the vessel, a license would not be required  — even if the charitable gift is a condition of carriage.

Regardless of the inspection and licensing requirements, the boat owners on these charitable voyages should review the provisions of their boat insurance policies carefully. Policies may limit or even exclude coverage for this type of voyage, and a casualty at sea without insurance coverage could turn a charitable gesture into a financial nightmare. A maritime attorney experienced in marine insurance and charter operations should be consulted for more specific information.