U.S. law stemming from the need for the United States to control vessels in World War I provides vessels must be owned by a “citizen of the United States” to be U.S. registered and fly the U.S. flag. Those requirements had not been substantially revised to account for current forms of company ownership in decades until the U.S. Maritime Administration (MARAD) simplified those requirements on June 4, 2026.
U.S. citizenship requirements rest on a documentation or registration foundation. Every entity intending to qualify as a “citizen of the United States” must satisfy those foundational requirements. The requirements vary by business entity but in each instance the entity must be organized in the United States and have U.S. citizen management. Specifically, a corporation must have a U.S. citizen chief executive officer, a U.S. citizen chairman of the board, and no more than a minority of a quorum of the board of directors can be non-citizens. There is no beneficial ownership requirement to document a vessel in the United States, and the U.S. registry acts like an “open registry” for purposes of registering a vessel for U.S. foreign trade.
For the U.S. coastwise or “Jones Act” trade, however, 75% of the stock or interests must be beneficially owned by U.S. citizens or business entities that can in turn satisfy the U.S. citizenship requirements. There are also overarching control tests by which such stock or interests cannot be controlled by non-citizens, and the test is applied through each level of ownership to the ultimate beneficial owners.
This is known as “section 2” citizenship because it was first defined in section 2 of the Shipping Act, 1916 and then modified in 1918 and 1920 more or less the way it is today. There is, confusingly, a second form of section 2 citizenship which can be important for participation in certain MARAD promotional programs whereby the U.S. citizen beneficial ownership test is 50.1% rather than 75%. MARAD requires a citizenship affidavit for initial participation in such programs updated annually.
MARAD started a process of modernizing its citizenship implementing regulations in 2019. An ad hoc committee of the U.S. Maritime Law Association (MLA) submitted comments in July 2019. Those comments were informed by an earlier U.S. Coast Guard investigation involving the public Jones Act company Trico Marine Services, Inc. The Coast Guard had made certain statements in early 2011 regarding public company compliance in that investigation that it subsequently converted into public company guidance on Nov. 26, 2012 (77 Fed. Reg. 70,452 (Nov. 26, 2012)).
MARAD accepted the MLA committee’s recommendations in its June 4, 2026 final rule:
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Affidavits:
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eliminated inclusion of birth dates and places of birth for individuals
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streamlined certifications for follow-on affidavits (MARAD did the same for fishing vessels greater than 100 feet in length).
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Public Company Compliance:
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aligned MARAD guidance with Coast Guard guidance such that public companies can establish beneficial ownership by practical methods such as monitoring public SEC filings, geographic surveys, and statistical analyses
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permitted other compliance measures if approved by MARAD such as those used to establish citizenship for the Federal Aviation Administration
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modified the “fair inference rule” to account for the difficulties in ascertaining the addresses of the ultimate beneficial owners (the “fair inference rule” permits relying on U.S. addresses to presume U.S. citizenship)
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included an option for companies to submit their compliance programs to MARAD for approval.
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