Answer: All recreational vessels with installed toilet facilities must have an operable marine sanitation device (MSD) on board. Direct discharge toilets are illegal unless the vessel is operating under a waiver granted by the Commandant of the Coast Guard. Installed toilets that are not equipped with an MSD, and that discharge raw sewage directly over the side, are illegal.
Vessels 65 feet and under may install a Type I, II, or III MSD. The Marine Sanitation Device web page describes the different type of MSDs. The exception is portable toilets. Portable toilets are not considered installed devices and are therefore not subject to the regulations. Sewage from portable toilets may not be dumped overboard in U.S. waters.
If you cannot install a MSD on your vessel, than it is advisable that you remove the marine toilet. Your option if you wanted toilet facilities would be to carry a portable toilet.
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