FLIBS18: Industry talks about new U.S. flag option to seek solutions

Nov 1, 2018 by Dorie Cox

By Dorie Cox

The docks of the Fort Lauderdale International Boat Show are a flurry of yacht registry flags flying on sterns. As of Aug. 13, there is a new option for large yachts to choose: a United States flag.

Right now, there are many questions as to what this entails. To get answers, about 50 people joined a U.S. Flag Registry open forum on board the M/V Grand Floridian on the Bahia Mar dock during the show yesterday. The event, hosted by the U.S. Superyacht Association, featured two representatives of the U.S. Coast Guard.

The U.S. flag amendment was included in a bill signed by U.S. President Donald Trump that received bipartisan support in Congress. It reforms a law written in 1920 that defined a yacht as a vessel with a maximum volume of 300 gross tons, meaning Americans with yachts exceeding that limit were only able to flag their yachts in the U.S. if they registered them as commercial vessels. The intention of the change is to exempt recreational vessels from the operational and construction standards of commercial vessels, such as cargo ships.

Lt. Cmdr. Peter Bizzaro, USCG office of Commercial Vessel Compliance (left), and Charles Rawson, a naval architect working with the USCG, discussed the new U.S. flag option at a seminar yesterday. Photos by Tom Serio

While details are in the works to implement the mandate from the U.S. Congress, Lt. Cmdr. Peter Bizzaro, USCG office of Commercial Vessel Compliance, and Charles Rawson, a naval architect working with the USCG, are tasked with creating an interim procedure for yachts that apply. They will do that from data gathered from comments and concerns from yacht captains, brokers, agents, management companies, lawyers and others.

With no allocated funding, staff or resources, the goal is to implement a simple path to exempt yachts from vessel inspections, but a variety of national and international laws make easy answers elusive. One option is for yachts to  comply with the Large Yacht Code, currently LY3.

“This is not open to all yachts,” Rawson said. “Yachts are eligible for the exemption if the yacht is greater than 300gt, seagoing and carries no passengers for hire.”

He clarified that the yacht cannot be chartered with a crew. If the yacht is bareboat chartered, it may carry no more than 12 passengers. It must be a recreational vessel, not an uninspected passenger vessel. And it will not be subject to SOLAS, load lines or STCW because of its status as “pleasure yacht not engaged in trade.”

“It exempts yachts from some requirement for inspected vessels, but not every requirement,” Rawson said. “Yachts are still subject to manning requirements in the U.S. code.”

Lt. Cmdr. Bizzaro explained which parts of code would be affected.

“We need to protect our fleet in regard to manning,” he said. “Yachts may still have to comply with USCG requirements for manning, immersion suits and certificates of financial responsibility, navigate with required safety equipment, and comply with marine casualty and accident reporting.”

“If you are 12 passengers or more and charter, then you are a passenger vessel and subject to inspection,” Rawson said. “Therefore you are not eligible for this exemption. To carry the U.S. flag, you need Subchapter H. While you may be eligible, it is virtually impossible to meet the requirements.”

About 50 people attended the discussion.

An audience member asked if this can only be a private vessel not engaged in trade.

“If there are more than 12 passengers, it must not be charter,” Rawson said. If there are less, a yacht can have an  owner with non-paying guests and bareboat charter.

Some citizenship requirements for crew will go away, Rawson said.

“They will have requirements for masters and mates who will stand watches under other laws,” he said. “They have to have USCG credentials, that’s where citizenship comes in. As far as we know, it’s master and mate. I’m not sure about engineers, it is a topic of debate. Tweaks have to happen with standing-watch positions.”

Two yachts have successfully navigated the path, according to Alex Bernhard, yacht manager with Burgess in Miami.

“In the absence of a path, we took the guidance we knew existed and made it happen for our clients,” Bernhard said. “We are excited, as you can obviously understand, and are happy to keep in touch as it all progresses.”

As conversations continue, Lt. Cmdr. Bizzaro said, “we will look at yachts case-by-case.”

To offer suggestions or comments for the U.S. flag process, contact Lt. Cmdr. Peter Bizzaro at peter.a.bizzaro@uscg.mil; Charles Rawson at charles.e.rawson@uscg.mil; or Kitty McGowan, president of the U.S. Superyacht Association, at info@ussuperyacht.com.

Dorie Cox is editor of Triton Today. Comments are welcome below.

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About Dorie Cox

Dorie Cox is a writer with Triton News.

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