News Alert: New Large Recreational Vessel Regulations (and exemption from Inspection)

Dear Committee members,

In what is perhaps the most significant development in U.S. law in recent memory relating to large recreational vessels, specifically those over 300 gross tons, Section 3529 (copy attached) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (H.R. 5515) directs the Secretary of the department in which the Coast Guard is operating to issue large recreational vessel regulations applicable to recreational vessels over 300 gross tons that do not carry any cargo or passengers for hire.  The regulations are to be comparable to the Large Commercial Yacht Code (LY3) promulgated by the the U.K.’s Maritime and Coastguard Agency, or an equivalent code, regulation, or standard acceptable to the Secretary.

Until the new regulations become effective, large recreational vessels will have an interim exemption from inspection under 46 USC 3301(7) as a “seagoing motor vessel” if they comply with LY3 or another acceptable code.  When the new regulations become effective, such vessels will not be subject to inspection under section 3301(7) if they comply with  the new large recreational vessel regulations issued by the Secretary.

This has the potential to significantly increase the number of large yachts flagged in the U.S., and decrease the number flagged in offshore registries.  There are at least a couple of downsides to this new law.  One is that it requires the disclosure of the identification and place of residence of the vessel owner, and if the owner is an entity, the beneficial owners of the entity (with certain exceptions).  The other is that the law does not benefit large yachts that carry any passengers for hire,  such as is the common practice with yachts that charter in the Mediterranean.

I am sure we will hear more about this in future Committee meetings.

Kind regards,

Mark Buhler

Chair