Proposed Small Passenger Vessel Legislation and the Limitation of Liability Act

On September 28, 2022, California’s Senator Dianne Feinstein introduced an amendment to the National Defense Authorization Act 2023 (SA.5887) that would amend the Shipowner’s Limitation of Liability Act for small passenger vessels. 

Currently, the liability of a vessel owner for an accident involving the vessel is limited to the value of the vessel, if the accident is from a cause without the “privity or knowledge” of the owner; in other words, without the negligence on the part of the owner.  The proposed amendment would carve out small passenger vessels from that rule and would instead direct the Commandant of the Coast Guard to issue rules for the limitation of liability of small passenger vessels that would provide “just compensation” for persons with claims against such vessels.

Those small passenger vessels that would be subject to the proposed legislative change would include passenger vessels that are less than 100 gross tons and carry fewer than 151 passengers or 50 overnight domestic passengers, as well as wooden vessels constructed prior to March 11, 1996 that carry passengers on overnight domestic voyages.

 The proposed amendment largely mirrors legislation that was introduced in September of 2021 in both the Senate (S.2805) and the House (H.R.5329).  The proposed legislation faces a number of hurdles, some of which are integral to the draft itself.  The proposal to delegate to the Coast Guard the responsibility for deciding what constitutes “just compensation” for a vessel accident raises questions concerning the Constitutional limits on the delegation of legislative authority.  Likewise, the amendment’s language making it effective “as if enacted into law on September 2, 2019,” could give rise to challenges of such retro-active effect.

 The legislation is clearly targeted against the complaint for limitation of liability filed by Truth Aquatics, the owners of the former dive excursion vessel CONCEPTION, which caught fire and sank, with the loss of 33 passengers and 1 crewmember off of Santa Cruz Island, California on September 2, 2019.  That limitation case is currently stayed by the federal court while the claimants pursue cases against the owners in the Superior Court of California for Los Angeles County.

If ultimately enacted into law, the carve-out of small passenger vessels from the Shipowners Limitation of Liability Act would have a far-reaching impact, not only on the current small passenger vessel industry throughout the United States, but also on the offshore industry, including the nascent offshore wind industry, which relies (or in the case of offshore wind, will rely) on the use of Crew Transfer Vessels to ferry industrial workers to and from offshore energy development sites.