2014 Amendments to Washington’s Derelict Vessel Act
In April of 2014, Washington amended its Derelict Vessel Act (the “Act”) by implementing Second Substitute House Bill 2457, Chapter 195, Laws of 2014. The amendments to the Act include significant changes to Washington law regarding the insurance of vessels titled or registered in the State, as well as to potential liability associated with the sale of certain vessels within the State of Washington. The key changes to the Act are summarized here:
1. Effective January 1, 2015, a new derelict vessel fee equal to $1 per lineal foot of a vessel’s length overall is imposed on all vessels are registered or required to be registered Washington law or otherwise required to be listed with the State of Washington (see RCW § 88.02 and § 94.40).
2. The Act imposes new vessel insurance requirements that apply equally to vessel and marina owners. Under these new requirements, a moorage facility must (in addition to obtaining its own coverage) require all vessels – other than transient vessels – provide proof of complying insurance upon entering into or renewing a moorage agreement. For the purposes of this requirement, satisfactory coverage must (a) contain liability limits of not less than $300,000 per occurrence, (b) provide “general, legal, and pollution” coverage. For private moorage facility operators, the failure to obtain proof of coverage (as required by the Act) can result in secondary liability if a vessel subsequently becomes derelict.
3. The Act also imposes new insurance requirements in connection with the sale or transfer of vessels greater than sixty-five feet and more than forty years old, if those vessels are registered or required to be registered Washington law or otherwise required to be listed with the State of Washington (see RCW § 88.02 and § 94.40).
a. This new requirement applies to all transfers occurring after July 1, 2014.
b. Purchaser must acquire marine insurance (i) with a term of at least 12 months; (ii) with at least $300,000 coverage; (iii) that provides for removal of the vessel should it sink; and (iv) provides for pollution coverage.
c. Proof of insurance must be provided to the seller of the vessel and the Department of Licensing upon registration of the vessel (if applicable) or Department of Revenue upon payment of taxes.
d. The seller is obliged to make sure that the purchaser obtains insurance complying with these provisions; if a vessel is transferred without applicable insurance, the seller is secondarily liable if the vessel subsequently becomes derelict.
e. Failure to obtain a policy that complies with this section or cancellation of the policy before 12 months after the acquisition (except in connection with another sale) is a misdemeanor under Washington law.
f. Washington Department of Natural Resources has the authority to request vessel owners provide proof of insurance in compliance with these requirements.
4. The Act mandates that a marine survey be obtained in connection with the sale or transfer of vessels greater than sixty-five feet and more than forty years old, if those vessels are registered or required to be registered Washington law or otherwise required to be listed with the State of Washington (see RCW § 88.02 and § 94.40).
a. Not more than thirty days prior to the actual transfer, a survey of the vessel must be conducted by a professional marine surveyor with no connection to the transaction. This survey (i) must be provided to seller, purchaser, and Department of Natural Resources prior to the transfer; and must meet the minimum survey requirements specified by the State (see WAC 332-08-123). A current Coast Guard Certificate of Inspection may be submitted instead of the required survey.
b. If the survey determines the vessel is not “seaworthy” and the value of the vessel is less than the costs required to return it to seaworthiness, then the vessel may not be transferred unless (i) it is returned to a “seaworthy” state prior to transfer; or (ii) it is sold for scrap, restoration, salvage, or another use that will remove the vessel from state waters and the person scrapping the vessel is both registered to do business in Washington and is reasonably believed to have the capability and intent to do so.
c. A seller that does not comply with these survey requirements, it can be found secondarily liable if the vessel subsequently becomes derelict.
5. Finally, the Act requires that moorage providers obtain and keep additional data in connection with any “long-term” (i.e., more than 30 day) moorage arrangements. Notable among these new requirements is that which mandates that moorage providers must collect proof of vessel registration, a written statement of the vessel owner’s intent to register the vessel, or an affidavit confirming that the vessel is exempt from registration. This data must be maintained for at least two years, and upon request, the moorage provider must either (a) provide portions of the data to the requesting agency (Department of Revenue, Department of Licensing, or Department of Natural Resources), or (b) permit the requesting agency to inspect the moorage facility for non-registered vessels and inspect and copy the records the facility is required to maintain under the Act.
Hopefully this overview is helpful to you and your efforts to comply with the changes to the Act that were adopted last year. If you have any questions regarding these changes or other aspects of the Act, please do not hesitate to contact me.