The Maritime Administration (Marad) has simplified the process that vessel owners and other maritime businesses use to demonstrate U.S. citizenship when participating in federal programs, reducing paperwork and eliminating some personal-information requirements.
The final rule, which took effect June 4, does not change the underlying citizenship standards established by federal law. Instead, it updates how corporations and other business entities document their eligibility for Marad programs.
“It’s the demonstration part,” said Leon Rittenberg III, a tax and maritime attorney and shareholder at Liskow, New Orleans. “The basic citizenship rules are statutory, so Marad can’t change those by regulation. The new regulations really are just simplifications more than anything else.”
The changes apply to businesses required to prove citizenship as part of their participation in programs such as the Capital Construction Fund, Construction Reserve Fund, and Title XI Federal Ship Financing Program. Marad also issued a companion rule simplifying annual citizenship filings for owners of certain U.S.-flag fishing vessels.
Under the previous regulations, citizenship affidavits required companies to provide the dates and places of birth of certain executives, directors, and shareholders. The revised process allows a company officer to certify that those individuals are U.S. citizens without including those details.
“You used to have to go dig up the date and place of birth of everyone who is an owner, an officer, or director of your company,” Rittenberg said. “Now you just have to check a box and say they’re a U.S. citizen.” In the final rule, Marad said the information did not significantly increase the agency’s certainty that an individual was a citizen. Eliminating it also reduces the collection of personally identifiable information that could create privacy and cybersecurity risks.
“If you have my birth date and where I was born, it makes it easier for you to steal other information about me,” Rittenberg said. “If I don’t have to put that information in forms I’m filing with the government, it’s one less place where that information is more public.”
The rule also eliminates the notarization requirement, changes some of the information publicly traded companies must provide, and creates a shorter annual recertification option for businesses whose citizenship information has not materially changed. The final rule states that the public-company provisions better reflect how shares are held and traded in modern equity markets.
The separate American Fisheries Act rule streamlines annual renewal filings for qualifying vessel owners whose citizenship information remains unchanged. It also removes requirements to submit Social Security numbers, birth dates, and birthplaces for corporate officers and directors.
The changes do not loosen restrictions involving foreign ownership or resolve the more complicated questions that can arise when a foreign company or investor becomes involved with a U.S.-flag vessel. Those issues can still affect a vessel’s eligibility for coastwise trade and participation in federal maritime programs.
“There are real consequences of non-U.S. citizens owning U.S.-flag vessels, which we run into in our practice frequently,” Rittenberg said. “But this particular regulation just simplifies the basic reporting. It doesn’t change the substance of how you solve those problems.”
For most closely held vessel businesses, the immediate impact will be limited to shorter forms and fewer administrative steps during initial applications and annual filings.
“This one isn’t a revolutionary change in a program,” Rittenberg said. “It’s much more basic nuts and bolts. Let’s simplify a rule, make a form easier for somebody to fill out, and get rid of information we really don’t need.”
