Mike Wales

Update Re The Conception Dive Boat Fire

November 22, 2023 by Mike Wales

1 conception wreckage 0 — Post-fire Conception Wreckage

Many of you have read my previous posts regarding the dive boat tragedy that occurred the coast of Santa Barbara on September 2, 2019.

Following a 10-day trial, a federal jury last week, on November 6, 2023, four years after the incident, found scuba dive boat captain Jerry Boylan was criminally negligent in the deaths of 34 people killed in a fire aboard the vessel in 2019, the deadliest maritime disaster in recent US history.

According to a press release from the U.S. Attorney’s Office for the Central District of California, Jerry Boylan, 69, of Santa Barbara, was found guilty on November 6 of one count of misconduct or neglect of ship officers — an offense known as “seaman’s manslaughter.”

Per the release, the crime carries a maximum penalty of 10 years in federal prison.

“This ship captain’s unpardonable cowardice led to the deaths of 34 lives on Labor Day 2019,” said attorney Martin Estrada. “As the jury found, this tragedy could have been avoided had Mr. Boylan simply performed the duties he was entrusted to carry out. We hope that today’s verdict brings some solace and closure to the victims’ loved ones.”

The US attorney’s office said Boylan failed to post the required roving night watch and never properly trained his crew in firefighting. The lack of the roving watch meant the fire was able to spread undetected across the 75ft boat.

District Judge George H. Wu scheduled sentencing for Feb. 8. Boylan remains free on a $75,000 bond.

The Conception was anchored off the Channel Islands, 25 miles (40km) south of Santa Barbara, when it caught fire before dawn on the final day of a three-day excursion.

Thirty-three passengers and a crew member perished, trapped in a bunkroom below deck. Among the dead were the deckhand, who had landed her dream job; an environmental scientist who did research in Antarctica; a globe-trotting couple; a Singaporean data scientist; and a family of three sisters, their father and his wife.

Boylan was the first to abandon ship and jump overboard. Four crew members who joined him also survived.

The verdict comes more than four years after the 2 September 2019 tragedy, which prompted changes to maritime regulations, congressional reform and civil lawsuits.

Michael Wales is the owner of The Wales Law Firm, P.I., a Maritime, Business and Injury Law Firm in San Diego and co-owner of AGL Yacht Sales, Inc.

Does My Charter Vessel Need to Be Inspected By the USCG?

February 26, 2023 by Mike Wales

Dive Boat If you are going to carry more than 6 paying passengers, the vessel must be inspected.

A small passenger vessel is a vessel of less than 100 gross tons carrying more than six passengers. A small passenger vessel is required to have a valid U.S. Coast Guard Certificate of Inspection and to be in full compliance with this certificate when passengers are aboard. The Certificate of Inspection is valid for five years from the date it is issued and describes the vessel, the route that the vessel may travel, the minimum number of required crew members, the number and types of safety and survival gear which must be on board, the maximum number of passengers, andthe total number of persons (including crew) that may be carried.

In order to obtain a Certificate of Inspection, a boat owner must apply for an initial inspection by the U.S. Coast Guard Officer in Charge of Marine Inspections for the area. The application for this inspection (Form CG 3752) must be submitted before an existing boat is converted to take passengers for hire.

The initial inspection includes review of construction materials, workmanship, and condition of all parts of the vessel, its machinery and equipment, including all life- saving, fire-detecting and fire-extinguishing equipment. Operating boats will likely be dry-docked for this inspection.

A stability test will also be performed to ensure that the vessel meets seaworthiness regulations and also to assist in determining the number of passengers that can be safely carried. This is done by fully loading the boat’s deck with known test weights, such as barrels of water or bags of sand, and shifting the test weights to the rail to simulate the movement of passengers. The boat passes if a line on the outside hull does not submerge.

The U.S. Coast Guard Officer in Charge of Marine Inspections will determine the number of passengers that a vessel can legally carry and issue a Certificate of Inspection that is very specific for the boat.

By the way, many boat captains will tell you that, as a general rule-of-thumb, multiplying your vessel’s length by its maximum width and dividing that number by 15 (or sometimes 18) will give you the total number of passengers that your boat can safely carry. For example a 40’ sailboat with a 13’ beam divided by 15 equals a maximum capacity of 34 passengers. There is no way I am going to pack even one-half that number on my boat!

Mike Wales is a California-licensed attorney and co-owner of AGL Yacht Sales, Inc., along with his wife Leilani Wales, CYPB, a licensed, bonded, and certified professional Yacht Broker. You may contact Mike at mike@aglyachtsales.com or at 480.250.5651.

Do I Need a MARAD Waiver To Carry Passengers on My Foreign-Built Vessel?

February 26, 2023 by Mike Wales

The Jones Act, 46 U.S.C § 55102, provides that the transportation of merchandise between United States points is reserved for U.S.- built, owned, and documented vessels.

The Passenger Vessel Services Act, (PVSA), 46 U.S.C. § 55103 (b), places the same restrictions on the coastwise movement of people. It is this act that prohibits vessels that do not have a Coastwise Endorsement from allowing passengers to board at one U.S. port and debark at another U.S. port. The applicable to the U.S. Customs and Border Protection (CBP) regulation regarding penalties for violating the PVSA is found in 19 C.F. R. Section 4.80, which provides that “[t]he penalty imposed for the unlawful transportation of passengers between coastwise points is $300.00 for each passenger landed on or before November 2, 2015 and $778.00 for each passenger so transported and landed after November 2, 2015 (46 U.S.C. 55103, as adjusted by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015).

Restrictions are placed on a Certificate of Documentation when the Documented vessel is foreign-built. According to federal law, commercial endorsements such as Coastwise (charter and passenger vessels) can only be granted to vessels built entirely within the United States, unless a Maritime Administration (MARAD) waiver is granted. For US flag yachts that are owned by a US Citizen but were not built in the US, the MARAD Waiver offers the yacht owner an opportunity to apply for and obtain a waiver to the Jones Act restrictions placed on any commercial use of foreign built yachts in US waters.

To be eligible for a Small Vessel Waiver, the vessel must:

be owned by a U.S. citizen or organization,
be at least three years old,
intend to carry passengers only,
carry no more than 12 passengers at a time when in service, and
satisfy a series of separate U.S. Coast Guard requirements.

The application fee is $500.

A MARAD Waiver is only required, however, if your foreign-built vessel engages in coastwise transportation. In order for an activity to constitute coastwise trade or transportation, there must be a transportation between “coastwise points.” In other words, coastwide trade or transportation has not occurred if the vessel and its passengers leave and return to the same port. This is known as a “cruise to nowhere”.

A “cruise to nowhere” is the transportation of passengers from a U.S. point to the high seas or foreign waters and back to the same point from which the passengers embarked, assuming the passengers do not go ashore, even temporarily, at another U.S. point. See 29 O.A.G. 318 (1912). A “cruise to nowhere” is not considered coastwise transportation.

The CBP takes the position that any vessel that leaves from a United States port and returns to the same port without calling on a foreign port or place, has not departed the United States. Thus, a foreign-built vessel which carries paying passengers out for fishing, sightseeing, or whale-watching trip, and returns to the same port, without going ashore anywhere else, does not need a MARAD waiver for its charter operations.

A Few “TIPs” If You Are Heading to Mexico In An LLC-Owned Vessel

February 20, 2023 by Mike Wales

It is very common for a vessel to owned by an LLC. If that is the case, there are a few things you should know before taking the LLC-owned vessel to Mexico.

When travelling in Mexican waters, your vessel must have a Mexican Temporary Import Permit (“TIP”) issued to the vessel. Before heading to Mexico be sure that the vessel either never had a Mexican TIP, or that it has been cancelled.

A TIP remains recorded with the foreign vessel identified in the permit and will not be transferred to another owner. In fact, without cancellation of TIP by the original permit holder, a new owner of any TIP-registered vessel can never be issued a new TIP, even if the old TIP is expired.

You can obtain the TIP at your first port of entry, which, for most of us here in Southern California is Ensenada. Helpful contacts in Ensenada to assist you with obtaining a TIP include Fito Espinoza, dockmaster at the Hotel Coral Marina, and Mario Niza, owner of Niza Marine.READ MORE

Vessel Collisions – Be Safe!

February 7, 2023 by Mike Wales

boat acident 1

According to the US Coast Guard (USCG) ‘s recreational boating statistics from 2019, the most common cause of boating accidents is operator inattention. There are other causes as well, of course. Those causes include:

Improper Lookout. Rule 5 of Convention on the International Regulations for Preventing Collisions at Sea, 1972 (COLREGs) states “Every vessel shall at all times maintain a proper look-out by sight and hearing as well as by all available means appropriate in the prevailing circumstances and conditions so as to make a full appraisal of the situation and or the risk of collision.”
Operator Inexperience. If the operator does not have sufficient training, experience and skill required to operate the vessel, or is unfamiliar with the area, weather patterns, or various navigational aides, this could lead to a catastrophic accident. Failure to understand the right-of-way rules set forth in the COLREGS can also lead to a serious collision.
Alcohol Use. It is illegal to operate a vessel while under the influence of alcohol or any drug. Doing so can lead to a catastrophic accident.
Excessive Speed. Even an experienced operator can lose control of a vessel when travelling at a speed which is not appropriate for the weather, sea conditions or vessel capabilities. Excessive speed can lead to a vessel capsizing, flooding, or sinking, as well as the possibility of someone falling overboard.
Man Overboard Situations (MOBs). These are the most common cause of boating deaths. The vessel operator must know how to properly handle MOB situations and how to spot, track and retrieve a MOB. MOB training and practice are important aspects of good seamanship, as is proper understanding of the stages and treatment of hypothermia.

A worst-case scenario involves a combination of alcohol use, excessive speed and inattention. It is very important to constantly be aware and responsible whether you are simply aboard a vessel of operating the vessel. Wear your lifejacket. 90% of those who drown while boating were not wearing a lifejacket or PFD even though there were enough lifejackets and PFDs on the pleasure craft. Consider taking classes on navigation, weather and seamanship with America’s Boating Club.

If you or a loved one are injured in a boating accident you may be entitled to compensation. Please feel free to call me to discuss your case.

Be safe and happy boating!

Mike Wales is a maritime attorney and co-owner of AGL Yacht Sales, Inc., along with his wife Leilani Wales, a licensed California Yacht Broker. You may contact Mike at mwales@waleslaw.com or at 619.493.1700.

LLC-Owned Vessel Purchases, New EIN Applications & Tax Status Considerations

June 13, 2022 by Mike Wales

Mike-Wales-7 As a yacht brokerage owner and maritime lawyer, I often encounter transactions involving the purchase of an LLC which owns a vessel. I have previously written posts regarding the potential California Use Tax Exemption applicable to such a purchase. Today I post about whether the IRS requires a new post-purchase EIN, even though the LLC itself will not be paying federal taxes.

When I am hired to prepare the LLC purchase documents, i.e., the Membership Interest Purchase Agreement, Bill of Sale, Written Consent of Members, Resolutions, and other ancillary documents, one question that routinely comes up from my clients is whether to keep the existing EIN for the LLC they are purchasing or whether they need to apply for a new EIN. The answer is that a new EIN should be obtained.

The IRS does require existing businesses to apply for a new EIN, for either an ownership change or structure change.