A coastwise endorsement is a notation on a vessel’s federal Certificate of Documentation that authorizes it to carry cargo or passengers between two points in the United States. The U.S. Coast Guard, through the National Vessel Documentation Center (NVDC), issues the endorsement only to vessels that are U.S.-built, at least 75 percent U.S.-owned, and crewed by U.S. citizens in the required proportions. The rules trace back to the Merchant Marine Act of 1920, commonly called the Jones Act, and operating in domestic trade without a valid endorsement can cost you the cargo, the vessel, or both.
What Activities Require a Coastwise Endorsement
The endorsement is not limited to hauling containers between seaports. It applies to transporting merchandise or passengers between any two U.S. points reachable by water, even if the route passes through a foreign port along the way.1Office of the Law Revision Counsel. 46 USC 55102 – Transportation of Merchandise Dredging in U.S. navigable waters requires a coastwise-endorsed vessel,2Office of the Law Revision Counsel. 46 USC 55109 – Dredging as does towing between domestic points. Gold dredging in Alaska is the one carve-out: a vessel with a registry endorsement can perform that work instead.
If your vessel will only move between a U.S. port and a foreign port, or operate purely as a pleasure vessel, you don’t need the coastwise notation. But the moment you pick up a paying passenger in Miami and drop them in Key West, or move a piece of cargo from one U.S. point to another, coastwise rules apply.
Who Qualifies: The Three Tests
U.S. Ownership at 75 Percent
Every documented vessel must be wholly owned by eligible U.S. persons under 46 U.S.C. § 12103. For corporations, the CEO and board chairman must be U.S. citizens, and noncitizen directors cannot exceed a minority of a quorum.3Office of the Law Revision Counsel. 46 USC 12103 – General Eligibility Requirements
Coastwise trade adds a second layer. Under 46 U.S.C. § 50501, at least 75 percent of the ownership interest in the corporation or partnership must be held by U.S. citizens. That means 75 percent of the stock held free from any trust or obligation favoring a non-citizen, 75 percent of voting power in citizen hands, and no arrangement giving a non-citizen control over more than 25 percent of any interest.4Office of the Law Revision Counsel. 46 USC 50501 – Entities Deemed Citizens of the United States The test applies through every tier of the corporate structure, so a U.S. shell with a foreign parent will not qualify. For partnerships, every general partner must be a U.S. citizen and citizens must hold the controlling interest.
U.S.-Built
A vessel counts as built in the United States only if all major hull and superstructure components were fabricated domestically and the entire assembly happened at a U.S. shipyard.5eCFR. 46 CFR 67.97 – United States Built A hull cut and welded overseas and shipped to a U.S. yard for final assembly fails the test. There is no partial credit.
Eligibility can also be lost after the fact if too much structural work is performed in a foreign yard. For steel or aluminum vessels, the NVDC applies a percentage-of-steelweight test to decide whether a vessel has been “rebuilt foreign”:6eCFR. 46 CFR 67.177 – Application for Foreign Rebuilding Determination
- Over 10 percent of steelweight: automatically deemed rebuilt foreign, coastwise eligibility lost.
- Between 7.5 and 10 percent: may be deemed rebuilt depending on the specifics.
- 7.5 percent or less: not considered rebuilt.
Before sending a coastwise vessel to a foreign yard for anything more than minor work, request a foreign rebuild determination from the NVDC. The fees are non-refundable, and determinations are published on the NVDC website within 30 days of issuance. Learning after the fact that the work crossed the threshold has no administrative fix.
U.S. Crew
Every licensed officer on the vessel, meaning the master, chief engineer, radio officer, and anyone in charge of a deck or engineering watch, must be a U.S. citizen. There are no waivers.7United States Coast Guard. Citizenship Requirements – The 75/25 Rule
For unlicensed crew, at least 75 percent must be U.S. citizens. The other quarter can be lawful permanent residents or, in limited cases, foreign nationals enrolled at the U.S. Merchant Marine Academy. Permanent residents can fill unlicensed slots but cannot hold licensed officer positions.
How to Apply
Applications go to the National Vessel Documentation Center in Falling Waters, West Virginia, either by mail or through the agency’s eStorefront electronic filing portal. Electronic filing is generally faster.
The core form is CG-1258, the Application for Initial, Exchange, or Replacement of Certificate of Documentation.8U.S. Coast Guard. Application for Initial, Exchange, or Replacement of Certificate of Documentation You provide the vessel’s official number (if previously documented) or Hull Identification Number, the vessel name, and physical dimensions including gross and net tonnage. Vessels under 79 feet in overall length, non-self-propelled vessels of any length, and pleasure vessels can use the Simplified Regulatory Measurement System.9eCFR. 46 CFR Part 69 – Measurement of Vessels Most commercial coastwise vessels above that length need a formal Coast Guard measurement.
To prove domestic build, owners file Form CG-1261, the Builder’s Certification, containing a sworn statement from the builder that all major components were fabricated and assembled in the United States.10United States Coast Guard. Builder’s Certification and First Transfer of Title Corporate owners include articles of incorporation and documentation showing the 75 percent ownership threshold is met. Individual owners submit citizenship affidavits.
Fees are due before any service is performed.11eCFR. 46 CFR 67.550 – Fees The initial Certificate of Documentation for a commercial vessel is $133, an exchange is $84, and the coastwise endorsement itself is $29. When multiple trade endorsements are requested together, only the single highest endorsement fee applies. Once issued, the Certificate of Documentation must stay aboard the vessel at all times.
Renewing Each Year
Commercial Certificates of Documentation are valid for one year. Renewal costs $26 and uses Form CG-1280.12U.S. Coast Guard. Vessel Renewal Notification Application for Renewal CG-1280 Submission timing changes what you get back:
- More than 60 days before expiration: the NVDC issues a certificate with a fresh start date, which shortens the useful validity period.
- 60 days or fewer before expiration: the certificate keeps the same expiration month. This is the window to aim for.
- Up to 30 days after expiration: renewal is late and adds a $5 late fee.
- More than 30 days after expiration: reinstatement is required instead of renewal, a longer process.
Operating in coastwise trade with an expired certificate exposes the owner to the same penalties as operating with no endorsement at all.
The Small Vessel Waiver for Foreign-Built Boats
If your vessel was built abroad, one narrow path exists. Under 46 U.S.C. § 12121, a foreign-built vessel at least three years old can receive a coastwise endorsement if it will carry no more than 12 passengers for hire.13Office of the Law Revision Counsel. 46 USC 12121 – Small Passenger Vessels and Uninspected Passenger Vessels Cargo use is not permitted under this waiver. Small charter and tour boat operators are the primary users.
Applications go to the Maritime Administration (MARAD), not the Coast Guard, with a non-refundable $500 fee.14Maritime Administration. Small Vessel Waiver Program You must specify the geographic region where the vessel will operate, because MARAD evaluates whether granting the waiver would harm U.S. builders or existing coastwise operators in that area. MARAD publishes a Federal Register notice and opens a 30-day comment period, during which competitors can submit opposition through regulations.gov.15eCFR. 46 CFR Part 388 – Administrative Waivers of the Coastwise Trade Laws
If MARAD approves, the owner then applies to the NVDC for the endorsement in the normal way. Substantial changes in operating area require a fresh waiver application. If MARAD later finds fraud in the original application, it revokes the waiver, and the Coast Guard revokes the endorsement automatically.
Penalties for Operating Without an Endorsement
The penalties are structured to erase any profit motive for cheating. Merchandise moved in violation of the coastwise laws is subject to seizure and forfeiture. As an alternative, the government can collect a monetary penalty equal to the value of the merchandise or the actual cost of the transportation, whichever is greater.1Office of the Law Revision Counsel. 46 USC 55102 – Transportation of Merchandise The liability reaches anyone who transported the merchandise or caused it to be transported, not just the vessel owner.
A vessel that knowingly dredges U.S. waters without a coastwise endorsement is subject to seizure and forfeiture along with all its equipment.2Office of the Law Revision Counsel. 46 USC 55109 – Dredging Crewing violations run through the Coast Guard’s civil penalty process and are evaluated case by case. CBP can mitigate or cancel a penalty through a petition filed at the port where it was issued, but outside the narrow scenario of a vessel arriving in distress, mitigation is discretionary and should not be treated as a backstop.