You're Gonna Need A Bigger Boat Part 2: US Fifth Circuit Addresses The SPVA Amendments To The Limitation Of Liability Act

In January 2023, we reported on the 2022 amendments to the Shipowners’ Limitation of Liability Act, 46 U.S.C. § 30501, et seq. (Limitation Act), wherein Congress removed “covered small passenger vessels” from the ambit of the Limitation Act’s protections pursuant to the Small Passenger Vessel Act (SPVA).

On August 14, the US Court of Appeals for the Fifth Circuit addressed these amendments for the first time and provided clarity on the meaning and scope of “covered small passenger vessels” in the case of M/V MS ADALYN v. Inland Dredging Co., L.L.C.¹ Specifically, the Fifth Circuit considered who qualifies as a “passenger for hire.”² This decision has serious ramifications for the maritime industry as it has curtailed the instances in which a work boat or a crew boat may seek limitation of liability.

The Adalyn was a 38-foot aluminum-hulled commercial work boat weighing less than 100 gross tons. Michael Quain Neward Pittman was the registered owner of the Adalyn, while Hunter Marine Group, LLC (Hunter Marine) was the bareboat charterer and owner pro hac vice.

In December 2018, Hunter Marine entered into a contract with Encore Dredging Partners, LLC d/b/a Inland Dredging Co., LLC (Encore) to “provide equipment and perform services for” Encore. The equipment included the Adalyn and the John D, a tugboat. In connection with the contract, Encore paid a flat rate of $2,000 per day regardless of how or whether the vessel was used. Encore likewise also provided fuel and paid charter hire.

In November 2024, Encore utilized the Adalyn and the John D in connection with a maintenance dredging project on the Alabama River. On November 3, 2024, while transporting eight Encore employees from an Encore dredge to another project location, the Adalyn ran aground and struck a steel pipe. As a result of the incident, several Encore employees reported sustaining injuries.

Following the incident, in May 2025, Hunter Marine and Pittman (Limitation Petitioners) filed a limitation action pursuant to the Limitation Act in the US District Court for the Southern District of Texas. Various parties, including the Encore employees, filed claims into the limitation action (hereinafter “claimants”), and the claimants subsequently moved for summary judgment contending that the Adalyn qualified as a “covered small passenger vessel” and, therefore, the Limitation Petitioners could not invoke the protections of the Limitation Act. The district court held that the Adalyn did in fact qualify as a covered small passenger vessel and dismissed the limitation action; an appeal ensued.

On appeal, the Fifth Circuit began with setting forth the statutory definition of “covered small passenger vessels.” Specifically, the Limitation Act defines a “covered small passenger vessel” as a “small passenger vessel” that is (i) “not a wing-in-ground craft” and, pertinent to this matter, (ii) “carrying not more than 49 passengers on an overnight domestic voyage.”³ The Limitation Act then further defines a “small passenger vessel” as a:

[A] wing-in-ground craft, regardless of tonnage, carrying at least one passenger for hire, and a vessel of less than 100 gross tons as measured under section 14502 of this title, or an alternate tonnage measured under section 14302 of this title as prescribed by the Secretary under section 14104 of this title —

(A) carrying more than 6 passengers, including at least one passenger for hire;

(B) that is chartered with the crew provided or specified by the owner or the owner’s representative and carrying more than 6 passengers;

(C) that is chartered with no crew provided or specified by the owner or the owner’s representative and carrying more than 12 passengers;

(D) that is a submersible vessel carrying at least one passenger for hire; or

(E) that is a ferry carrying more than 6 passengers.⁴

First, the Fifth Circuit considered whether the statutory definition of a “small passenger vessel” was disjunctive or conjunctive. At the district court level, the Limitation Petitioners contended that a “small passenger vessel” must be both a “wing-in-ground craft . . . and a vessel of less than 100 gross tons.” Likewise, the Limitation Petitioners argued that the claimants did not satisfy the definition of “passenger” or “passenger for hire.”

In analyzing the plain text of the Limitation Act, the Fifth Circuit held that the language is disjunctive and that a “small passenger vessel” means either a wing-in-ground craft, regardless of tonnage, carrying at least one passenger for hire or it means a vessel of less than 100 gross tons.⁵ Because the Adalyn was a vessel of less than 100 gross tons, the Fifth Circuit then turned to the subsections of 46 U.S.C. § 2102(49), noted above.

Specifically, the Fifth Circuit focused on subsection (A) and whether the Adalyn carried “more than 6 passengers, including at least one passenger for hire.” This analysis required the court to examine the definition of “passenger” under 46 U.S.C. § 2101(31)(A)(iii) and “passenger for hire” under 46 U.S.C. § 2101(32).

Under the Limitation Act, a “passenger” is defined as an “individual carried on the vessel” with three exceptions.⁶ Under the third exception — the most relevant to this case — a passenger is not a “member of the crew engaged in the business of the vessel who has not contributed consideration for carriage and who is paid for on board services.”⁷ In deciding whether the claimants met this three-part exception, the Fifth Circuit focused on the second clause — “who has not contributed consideration for carriage.” In short, the court explained that in order to be considered a “passenger” or a “passenger for hire,” consideration had to be paid for the carriage.

The issue before the court then turned to whether the consideration paid must be directly paid by that passenger or indirectly paid by another person or entity. On this point, the Limitation Petitioners contended that the passenger must personally or directly provide consideration or an economic benefit as a condition for carriage.

The Fifth Circuit summarily rejected this argument. Citing to 46 U.S.C. § 2102(32), the Fifth Circuit noted that Congress has defined a “passenger for hire” as a “passenger for whom consideration is contributed as a condition of carriage on the vessel, whether directly or indirectly flowing to the owner, charterer, operator, agent, or any other person having an interest in the vessel.”⁸ Relying on this plain “directly or indirectly” language, the Fifth Circuit turned to the facts of the case before it and held that because Encore paid consideration to the Limitation Petitioners for the use of the Adalyn, the claimants qualified as “passengers for hire” because consideration had been “indirectly” paid on their behalf for carriage aboard the Adalyn. Considering the foregoing, the Fifth Circuit held that the Adalyn qualified as a “covered small passenger vessel,” and, therefore, the Limitation Petitioners could not seek the protections afforded by the Limitation Act.

The Fifth Circuit’s decision will have far-reaching consequences for the maritime industry and creates substantial legal and operational consequences for vessel owners, operators, and maritime employers alike. Small crew boats and work boats are frequently used on inland waters, and should those work boats be involved in a maritime casualty, they may no longer be afforded the protections of the Limitation Act. As we last reported, the SPVA may also create procedural and substantive conundrums in cases involving work boats. For example, had the Adalyn only been carrying 5 employees of Encore (or only 5 passengers for hire), it seemingly could still seek limitation of liability. As written, arguably, the definition of small passenger vessel excludes any small passenger vessel carrying less than 6 passengers. Again, the specific carve out of “small passenger vessels” has left open-ended questions. Jones Walker routinely advises clients on maritime disasters and limitation actions. We will continue to monitor this new decision and its effects on the industry.

Footnotes

1. C.A. No. 25-20584, 2026 U.S. App. LEXIS 24660 (5th Cir. Aug. 14, 2026).

2. 46 U.S.C. § 2102(32).

3. 46 U.S.C. § 30501(1)(A).

4. 46 U.S.C. § 2101(49) (emphasis in the original).

5. Adalyn, 2026 U.S. App. LEXIS 24660, at *6–7.

6. 46 U.S.C. § 2101(31)(A).

7. 46 U.S.C. § 2101(31)(A)(iii) (emphasis added).

8. 46 U.S.C. § 2101(32) (emphasis added).