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Vedder Thinking | Articles Maritime Cases to Watch: American Cruise Lines v. United States, No. 22-1029 (2d Cir. Mar. 6, 2022)


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In February 2022, the 386-passenger U.S.-documented river cruise vessel VIKING MISSISSIPPI, which was built to transport passengers to and from shoreside expeditions up and down the Mississippi River, floated out at LaShip shipyard not far from New Orleans, Louisiana, on a voyage that her owner, River 1 LLC (“River 1”), and charterer (i.e., lessee), Viking USA LLC (“Viking USA”), never anticipated would ultimately take her to the steps of the United States Court of Appeals for the Second Circuit in New York City.  

Among the issues brought before the Court by Petitioner and Viking USA competitor American Cruise Lines, Inc. (“ACL”), is whether the determination of the United States Maritime Administration (“MARAD”) that the charter (i.e., lease) between River 1 and Viking USA is a time charter was “arbitrary and capricious, without evidence to support key findings, and contrary to law,”1  or as is argued by the Respondents, including MARAD,2  MARAD “reasonably found that River 1 and Viking [USA]’s charter agreement is a time charter, not a bareboat charter . . . .”3   At the core of this issue is the distinction between a vessel time charter, in which the owner of the chartered vessel is in control of the vessel, and a bareboat charter, in which control rests with the charterer.4

The Passenger Vessel Services Act of 1886, as amended, provides that, with limited exceptions, “a vessel may not transport passengers between ports or places in the United States . . . unless the vessel . . . is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade”5  and satisfies certain other requirements, including, in most cases, having been built in the United States.6  For a corporation or a partnership, or by extension, a limited liability company like River 1 or Viking USA to be a “citizen of the United States” for the purpose of engaging in coastwise trade, including the transportation of passengers between ports or places in the United States, at least 75% of the controlling and equity interests in the corporation, partnership or limited liability company must be owned by citizens of the United States.7

But the citizenship of VIKING MISSISSIPPI’s owner is not what is in dispute in American Cruise Lines.  Rather, the dispute is whether VIKING MISSISSIPPI’s charter transfers an impermissible amount of control over VIKING MISSISSIPPI from her owner, River 1, which Petitioner ACL does not dispute is a citizen, to her charterer, Viking USA, which as a wholly owned subsidiary of global river cruise company Viking Cruises (Switzerland) AG,8 intervenor Viking USA concedes,9 and none of the other parties appears to dispute, is not a citizen.

Section 9 of the Merchant Marine Act of 1916, as amended, provides that, with certain exceptions, “a person may not, without the approval of the Secretary of Transportation [in this case acting through MARAD,] sell, lease, charter, deliver, or in any other manner transfer, . . . to a person not a citizen of the United States, an interest in or control of [a U.S.-] documented vessel owned by a citizen of the United States . . . .” 10  MARAD has granted a broad general approval for time charters of U.S.-documented vessels from citizens to non-citizens,11  but has consistently withheld its approval of bareboat charters on the grounds that bareboat charters would in such cases transfer too much control from citizen owners to non-citizen charterers.12  Petitioner ACL argues that MARAD erroneously, arbitrarily and capriciously determined that the charter of VIKING MISSISSIPPI from River 1 to Viking USA is a time charter13  and asks the Court to vacate MARAD’s determination.14

In support of its argument, Petitioner ACL asserts that the charter of VIKING MISSISSIPPI transfers many key aspects of control over VIKING MISSISSIPPI from River 1, as owner, to Viking USA, as charterer, as evidenced in part by terms requiring the vessel’s master, an officer appointed by River 1 and responsible for VIKING MISSISSIPPI’s operation, to comply with the reasonable requests of Viking USA’s on-board “brand manager”15  and terms giving Viking USA the right to require the removal of the vessel’s manager and vessel management team for unsatisfactory performance.16   Petitioner ACL also asserts that the charter contains other terms indicative of a transfer of control from River 1 to Viking USA, including terms making Viking USA responsible for all of the costs and expenses of operating, repairing and maintaining the vessel,17  terms shielding River 1 from the economic risk associated with owning the vessel,18  terms requiring Viking USA to make payments of charter hire (i.e., rent) even if the vessel is off hire (i.e., out of service),19  and terms requiring Viking USA to pay advance charter hire used by River 1 to pay a portion of River 1’s cost of building the vessel.20 

The Respondents deny or dispute the significance of each of the Petitioner’s assertions in light of certain other factors and argue that MARAD’s determination was reasonable.21

Regardless of how the Court rules, its decision in American Cruise Lines is likely to have a significant impact not just on the chartering and financing of river cruise vessels transporting passengers up and down the Mississippi River, but also on the financing and chartering of other vessels in U.S. coastwise trade, including those transporting merchandise between points in the United States in accordance with the Jones Act.  If the Court rules in favor of the Respondents, foreign companies hoping to enter coastwise trades currently reserved to citizens of the United States, including those involving everything from the transportation of crude oil and refined petroleum to the installation of wind farms on the U.S. outer Continental Shelf, may turn to the use of charters similar to the VIKING MISSISSIPPI charter as a means of accessing those trades.  

Oral arguments are expected in the second half of 2023.


(1) Brief for Petitioner (Redacted) at 3, American Cruise Lines v. United States (2d Cir. 2022) (No. 22-1029) (filed Dec. 15, 2022).
(2) The other Respondents are the United States of America, the United States Department of Transportation, Pete Buttigieg in his official capacity as the Secretary of Transportation, and Lucinda Lessley in her official capacity as the Acting Maritime Administrator.
(3) Redacted Brief for Respondents at 13, American Cruise Lines v. United States (2d Cir. 2022) (No. 22-1029) (filed Apr. 11, 2023).
(4) See Brief for Petitioner (Redacted) at 25, and Redacted Brief for Respondents at 13-16.
(5) 46 U.S.C. § 55103(a)(1). 
(6) See id. §§ 12103(a)(2), 12112(a) and 55103(a)(2).
(7) See id. § 50501(a)-(d). 
(8) See Brief for Intervenor Viking USA LLC in Support of Respondents (Redacted), Disclosure Statement, American Cruise Lines v. United States (2d Cir. 2022) (No. 22-1029) (filed Apr. 13, 2023).
(9) See id. at 1. 
(10) 46 U.S.C. § 56101(a)(1)(A)(i); see also 46 C.F.R. § 221.11(a).
(11) See 46 C.F.R. § 221.13(a)(1).
(12) See id.; see also, e.g., 55 Fed. Reg. 14040, 14046 (Apr. 13, 1990).
(13) See Brief for Petitioner (Redacted) at 3.
(14) See id. at 26.
(15) See Reply Brief [for Petitioner] (Redacted) at 1, American Cruise Lines v. United States (2d Cir. 2022) (No. 22-1029) (filed May 18, 2023); see also Brief for Petitioner (Redacted) at 17.
(16) See Brief for Petitioner (Redacted) at 38, citing MARAD’s own regulations at 46 C.F.R. § 356.11(a)(3), which provide that “an impermissible transfer of control will be deemed to exist where a Non-Citizen . . . [h]as the right to direct the transfer, operation, or manning of” a vessel.  The regulations at 46 C.F.R. § 356.11 relate to fishing industry vessels, but certain principles underlying those regulations were used by MARAD in rendering its VIKING MISSISSIPPI determination.  See id. at 10, referencing MARAD’s Response to Comments and Final Action at p. 2.
(17) See id. at 32-33, citing 46 C.F.R. § 356.11(a)(8), which provides that an impermissible transfer of control will also be deemed to exist where a non-citizen “[a]bsorbs all of the costs and normal business risks associated with ownership and operation of” a fishing industry vessel; see also supra note 16.
(18) See id. at 34.
(19) See id. at 34-37.
(20) See id. at 39-48, citing, inter alia, Meacham Corp. v. United States, 207 F.2d 535 (4th Cir. 1953), in which certain factors, including the much larger investment by a non-citizen in the acquisition of a vessel relative to the much smaller investment by citizens, were found to give the non-citizen control of the vessel notwithstanding that the vessel was otherwise controlled by the citizens.
(21) See Redacted Brief for Respondents at 17-28.


John F. Imhof Jr.