Consequences for Running an Illegal Charter

You stand to make a profit by taking passengers out on your boat. Even one fishing charter could profit hundreds if you’re a licensed captain.

Charging passengers a fee without a U.S. Coast Guard captain’s license can cost you up to $10,000 per occurrence. Plus, you must pay another $5,000 each day you run your “business” without enrolling in an approved random drug testing program.

Unless you’re independently wealthy and enjoy handing your money over to the authorities, running an illegal charter is an idea you should abandon.

And by the way, the Coast Guard won’t listen to excuses. Even if you’re unfamiliar with the regulations around legal charters, you’re still on the hook for fines and other punitive measures. Learn what activities require a captain’s license to avoid those painful consequences.

Legal and Illegal Charter Definitions

You need a captain’s license to take paying passengers aboard your boat — but what is a “paying passenger”?

On December 20, 1993, President Bill Clinton signed the Passenger Vessel Safety Act of 1993 into law. This law clearly defines a “paying passenger.” You may read the full text in Title 46 of the U.S. Code of Federal Regulations, but here are the basic terms:

Consideration: An economic benefit, inducement, right, or profit, including monetary payment, accruing to an individual or entity. Consideration doesn’t include a voluntary sharing of the actual voyage expenses, such as donating or chipping in for fuel, food, beverages, or other supplies.

Passenger: An individual carried on a vessel, except:

• The owner or an individual representative of the owner
• The master
• A crewmember engaged in the vessel’s business who hasn’t contributed consideration and who is paid for onboard services

Passenger-for-hire: A passenger who contributes consideration as a condition of carriage on the vessel, whether directly or indirectly, flowing to the owner, charterer, operator, agent, or any other person with an interest in the boat.

Examples of Legal and Illegal Charters

So, what does this mean for you? Let’s explore some examples of illegal charters to ensure you’re not operating one.

Example 1

Consider a fishing trip with your friends. Passengers can share the fuel, food, and bait expenses without being considered passengers-for-hire. This also applies if you’re doing a sunset cruise with your family.

The key element is that, in each of these cases, the time spent out on the water is with friends and family who have gathered socially. Remove the “social” aspect from these scenarios, and the situation changes. 

Example 2

If you purchased a ticket to ride a ferry or fishing boat, that’s an example of being a “paying” passenger. However, what if a salesperson takes clients out on their boat to build a business relationship and receive an economic benefit in the future? 

Though no one exchanged money during the trip, those passengers are considered “for hire.” However, the salesperson must be a licensed captain.

Run Legal Charters

“Sea lawyers” love to argue the meaning of legal and illegal charter regulations. However, the law is clear, and penalties for making the wrong decision are severe.

Operate legal charters by getting your captain’s license from Mariners Learning System. Our courses are accessible anytime and anywhere, so you can learn, study, and test on your schedule. Get started today!