Coast Guard To Issue Notice Regarding Coastwise Citizenship for Public Companies


The Coast Guard intends to issue a Notice in the Federal Register asking for ideas on how public companies comply with the citizenship requirements to own and operate vessels in the U.S. coastwise trade. The Notice is being issued in response to a recommendation included in the Coast Guard’s report of its investigation of the citizenship of Trico Marine Services, Inc., a public company that, through subsidiaries, owned vessels that operated in the coastwise trade. In this investigation, the Coast Guard found that Trico Marine failed to meet the applicable citizenship requirements.

In order to be eligible to participate in the coastwise trade, 75% of the stock or other ownership interests in a company must be held by United States citizens. This test is applied at each tier of ownership. The citizenship test is applied not only to vessel owner-operators but also to passive lessors that document vessels in the coastwise trade as United States citizens. (It does not apply to those lessors who document vessels under the foreign leasing exception). Public companies have many challenges in confirming their citizenship status because they usually do not know the citizenship of the underlying beneficial owners of their shares. In addition, if the stock and other ownership interests are held by entities rather than individuals (which is often the case), such entities must individually also establish their citizenship.

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