Coast Guard Backs Off on Charters--but Not all the Way

Backing off its earlier interpretation of law, the Coast Guard agreed Thursday that yacht owners may continue leasing boats to companies carrying employees without meeting the rigorous safety standards of charter boats.

But it was unclear what effect the decision will have on the Dec. 17-23 Newport Harbor Festival of Lights Christmas boat parade in which as many as half the 200 lighted boats in the water are yachts leased for company Christmas parties.

Some boat owners and renters, according to Newport Beach charter operators, have already canceled their plans because of the controversy stemming from an earlier Coast Guard decision that such leases be considered commercial charters requiring inspections and government certifications.

The Coast Guard re-evaluated its position Thursday after complaints from Newport Beach boaters and an inquiry by Rep. Robert E. Badham (R-Newport Beach). The new interpretation partly backs off the Coast Guard’s crackdown on pleasure boats and gives yacht owners and charter brokers some, but not all, of what they wanted.

“It’s a step in the right direction,” said Carlton Russell, attorney for the Yachtmasters’ and Mariners’ Assn. in Newport Beach. “(But) it’s not a giant step.”

U.S. Coast Guard Adm. J. William Kime, 11th District commander, termed the new position “a relaxation at least for the time being on the interpretation previously given by our headquarters.”

“It is not necessarily the final position,” said Kime, who stressed that the matter remains under review. He said the crackdown on pleasure boats was initiated for legal and safety reasons.

The decision exempts from inspection and certification boats leased by individuals or companies as long as they carry only employees, excepting up to six passengers who may be non-employees.

However, a point of contention in the dispute is that the Coast Guard still regards spouses of employees to be “passengers,” not exempt from federal regulations.

Therefore, if more than six employees’ spouses are aboard, the boat will be regarded as a commercial charter vessel, subject to inspection and requiring government certification, Coast Guard Capt. Jim Card said Thursday. Violators can be fined up to $2,000 a day.

“I am finding that kind of hard to swallow,” said Diane Fraser, secretary of the Yachtmasters’ and Mariners’ Assn. in Newport Beach. “I can’t think of one party where people would not want to bring their spouses or boyfriends or girlfriends. Isn’t the definition of a pleasure boat one that you are supposed to have a good time on? Their narrow interpretation is amazing.”

Fraser said “it’s too premature” to know how much of an effect the Coast Guard’s latest decision will have on the parade.

“Some boats want to cancel,” said Fraser, a broker who arranges the leasing of private yachts. “It’s definitely going to be an impact in the parade.”

Another option for individuals and companies looking for a boat to lease is commercial charter boats already licensed and inspected by the Coast Guard to carry paying customers.

Review in Washington

“The majority of people who come to me want (to lease) the private pleasure yachts, the uninspected vessels because they are more aesthetically pleasing,” Fraser said.

Card said he does not expect the Coast Guard’s legal review to be completed before the Festival of Lights parade takes place.

Kime said the Coast Guard’s revised position Thursday “was based on the deliberations by our program people and our legal people in Washington who have responsibility for this issue.

“We asked for review of this policy and confirmation or modification,” he said.

Fraser said the Coast Guard’s crackdown on pleasure boating will have national implications.

“I just think it’s going to create a lot of uproar,” she said. “People aren’t going to want to buy boats . . . if they can only take friends and family out. It’s ridiculous.”

The Coast Guard interpretation of federal boating regulations says a commercial use includes a boat used for any business-related purpose, Coast Guard Lt. John Sarubbi said earlier this week. If a company president takes clients or employees on his own boat or rents a boat for them, the boat is considered commercially chartered and must meet rigorous design and safety standards.

‘Going to Board Vessels’

“We’re going to board vessels during the (Newport Beach) boat parade,” Sarubbi vowed. He said the Coast Guard did not intend to destroy the boat parade but was concerned about passenger safety.

The Coast Guard’s stringent interpretation of commercial charter regulations is relatively new but was upheld in an Aug. 18 ruling by Coast Guard administrative law judge H.J.Gardner.

In a Newport Beach case involving the motor yacht Roman Holiday last Dec. 11, Gardner ruled that the chartering of the yacht by a company for its workers was “an employee bonus.” He said the employees should be considered “passengers” aboard a commercial charter rather than “guests” on a pleasure boat.

Gardner’s decision is being appealed.