When in the water a seaplane is a boat, must follow boat rules and regulations.
Correct.
And when two vessels have crossing paths, the vessel to the other's right has the right-of-way.
Code of Federal Regulations ยง 91.115 Right-of-way rules: Water operations.
In this case the boat that couldn't fly was to the right of the boat that could, therefore the FAA is about to jerk a knot in that pilot's arse.