Is a USCG Certificate of Inspection Required for a Nonprofit Group’s Boat?

Posted: July 17, 2013  |  By: David Weil, Esq.

I volunteer for a nonprofit organization in Northern California whose services include taking inner-city kids and their parents out for tours of San Francisco Bay. We were recently approached by the Coast Guard and advised that this kind of operation must be run on a vessel with a Certificate of Inspection issued by the Coast Guard. We operate one vessel, and we simply don’t have the funds to complete the modifications to the vessel that would be required to pass the rigorous standards established by the Coast Guard. We are a mostly volunteer organization that is funded solely by donations. Those donations are used to cover rent, wages for our small staff, electricity and other overhead expenses, and the costs of operating our boat. Can an organization such as ours qualify for some kind of waiver that would allow us to continue operating the vessel?
A Coast Guard Certificate of Inspection (COI) is required for any vessel that is carrying more than six passengers for hire on U.S. navigable waters. Our reader has asked whether a waiver may be issued to exempt the vessel from the COI requirements, and the short answer under most circumstances is “no.”            

Under 46 U.S. Code §2113, the Coast Guard may issue a permit to the operator of a passenger vessel, allowing the vessel to engage in excursions that carry additional numbers of passengers, extend an existing route, or both. These “excursion permits” are generally limited to special events and are issued after close scrutiny of the operation, for a very limited time period.            

It appears that the problems faced by our reader and his nonprofit organization will not be solved by an excursion permit, but let’s take a closer look at the order issued by the Coast Guard.  Is a COI actually required for an operation such as this?            

Compliance with the COI regulations may amount to a significant expense for the vessel owner. The provisions of 46 U.S. Code sections 2101(22), 2101(35), and 3301 collectively require comprehensive Coast Guard inspections of the vessel’s structural condition, fuel, electrical, fire and mechanical systems, safety equipment and other components if the vessel will have more than six passengers aboard (or 12 passengers if the vessel measures greater than 100 gross tons).            

As noted above, a COI is required whenever a vessel is carrying more than six passengers for hire. A “passenger” is defined under 46 U.S. Code §2101(21) as anyone who is aboard the boat except for the owner or owner’s representative, or the captain or the crew. And, 46 U.S.C. §2101(21a) defines “passenger for hire” as a passenger for whom payment to the owner is required as a condition for boarding the vessel.            

Our reader indicated that his nonprofit operation is funded by donations, and those donations are used to cover the general operating expenses of the organization, as well as the costs of operating and maintaining the vessel. Referring to the definition of “passenger for hire” noted above, it does not appear that this organization requires payment, either from the passengers aboard the vessel or from the donors, as a condition for boarding the vessel.            

The Coast Guard may have concluded that the charitable donations received by the organization were paid “as a condition for boarding the vessel.” However, unless those funds were paid specifically to cover the costs of specific voyages this conclusion may be challenged.            

Our reader should appeal the Coast Guard’s order.

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