How Coastwise Trade Regulations and Endorsements Work

A coastwise endorsement is the notation on a federal Certificate of Documentation that lets a vessel carry merchandise or passengers between two points in the United States. It is issued by the Coast Guard’s National Vessel Documentation Center (NVDC) under the Merchant Marine Act of 1920, better known as the Jones Act, and it is available only to vessels that are built in the United States, wholly owned by U.S. citizens or qualifying U.S. entities, and operated by qualifying U.S. crews.¹ Operating in domestic trade without one is expensive: the government can seize the cargo outright or charge $300 for every passenger carried without authorization.²

What the Endorsement Authorizes

The coastwise endorsement covers domestic shipping between U.S. ports, including towing and dredging in navigable U.S. waters. A vessel towing between U.S. ports must be wholly citizen-owned and hold the endorsement, with a single carve-out for towing a vessel in distress, which any vessel may do. Dredging carries the same ownership and endorsement requirements, and if a charterer is running the dredge, the charterer must independently qualify as a U.S. citizen for coastwise purposes. Knowing violations of the dredging rules can result in seizure and forfeiture of the vessel and its equipment.³

Federal documentation offers several endorsements, and the coastwise one is the most restrictive. A registry endorsement covers foreign trade and commerce with U.S. territories like Guam and American Samoa. A fishery endorsement covers commercial fishing and landing catch. A recreational endorsement limits the vessel to pleasure use only. A single vessel can carry more than one of these at once, but each has its own eligibility rules, and only the coastwise endorsement imposes the U.S.-build requirement.⁴

Vessel Eligibility

Build and Size

The vessel must have been built in the United States. This is where most disqualifications happen. The statute recognizes only three exceptions for foreign-built vessels: those captured in wartime and legally condemned as prizes, those forfeited for violating U.S. law, and wrecked vessels recovered in U.S. waters.⁵ A foreign-built vessel purchased abroad does not qualify, no matter how long the current owner has held it.

Federal documentation itself requires a vessel of at least 5 net tons.⁶ Smaller vessels can still engage in coastwise trade without a Certificate of Documentation, but they lose the legal protections and mortgage recording that come with one.⁷

Ownership

The vessel must be wholly owned by U.S. citizens or qualifying U.S. entities, and it cannot be documented under any foreign country’s laws at the time of application.⁶ The specific rules depend on entity type:

Individuals must be U.S. citizens.
In a partnership, every general partner must be a U.S. citizen, and citizens must hold the controlling interest.
Corporations must be incorporated in the United States or a state. The CEO and the board chairman must be U.S. citizens, and noncitizens cannot hold more than a minority of the directors needed for a quorum.
In associations, trusts, and joint ventures, every member must be a U.S. citizen.

LLCs face additional certifications on the application form. The owner must certify that no more than 25 percent of the LLC’s voting power is held or exercised by non-U.S. citizens. In a member-managed LLC, every member must be a U.S. citizen. In a manager-managed LLC, all managers and anyone in a role equivalent to CEO or board chairman must also be citizens, and noncitizens cannot hold veto power or combined voting control within any management group.⁸

Crew Requirements

An eligible vessel still needs a qualifying crew. Under 46 U.S.C. §8103, every master, chief engineer, radio officer, and officer in charge of a deck or engineering watch must be a U.S. citizen or noncitizen national.⁹

Unlicensed crew have broader eligibility. They can be citizens, noncitizen nationals, or lawful permanent residents, but permanent residents cannot make up more than 25 percent of the total unlicensed crew.⁹ A single hiring or departure can shift the ratio on a lean crew and put the vessel out of compliance.

How Foreign Repair Work Can Void Eligibility

A U.S.-built vessel can permanently lose its coastwise standing if too much structural work happens overseas. The Coast Guard measures overseas work against the vessel’s steelweight before the work began.¹⁰

At 7.5 percent of steelweight or less, the vessel is not considered rebuilt.
Above 7.5 percent but no more than 10 percent, the vessel may be considered rebuilt, and the Coast Guard investigates case by case.
Above 10 percent, the vessel is automatically deemed rebuilt and loses its coastwise eligibility.

One absolute trigger overrides the percentages: adding any major component of the hull or superstructure that was not built in the United States counts as a rebuild regardless of weight.¹⁰ Operators planning overseas drydocking should request a rebuilding determination before the work starts. There is no path to reinstate a lost coastwise endorsement after the fact.

How to Apply

The application is Form CG-1258, filed with the NVDC. You provide the vessel’s official number, name, and dimensions, and you check the “Coastwise” box under trade endorsements.⁸

A Builder’s Certificate proving the vessel was constructed in the United States is essential; it establishes where and when the hull was completed. Citizenship affidavits for every individual or entity with an ownership interest must accompany the application, and incomplete affidavits are among the most common reasons for delay. If the vessel has ever flown a foreign flag, you also need proof of removal from that foreign registry before the Coast Guard will process the application.¹¹

The fees are itemized. An initial Certificate of Documentation costs $133, and the coastwise endorsement adds $29. Exchanging an existing certificate costs $84 plus the $29 endorsement fee. If you request multiple trade endorsements on one application, only the single highest endorsement fee applies.¹² Payment runs through Pay.gov by bank transfer or card.¹³

Processing often stretches to several weeks or longer, depending on NVDC workload. Once approved, you receive Form CG-1270, the Certificate of Documentation, with the coastwise endorsement printed on it. Keep it aboard the vessel. Priority handling is available at no additional fee but is not guaranteed; you submit a letter through the NVDC eStorefront explaining the need, with supporting documentation, signed personally by the managing owner.¹⁴

Renewal and Ongoing Compliance

A coastwise endorsement on a commercial vessel is valid for one year. Renewal uses Form CG-1280 and costs $26. Paying online through the NVDC website satisfies the requirement without a separate paper form.¹⁵

Timing affects what you get. A renewal submitted more than 60 days before expiration receives a new issue date, effectively shortening your validity period. Renewals inside the 60-day window keep the same expiration month. A renewal received within 30 days after expiration carries a $5 late fee. Past 31 days, you face full reinstatement rather than a simple renewal.¹⁵

You must also notify the NVDC within 10 days of any change to the managing owner’s address. Replacing a lost or destroyed certificate costs $50 and requires another CG-1258.⁴

The Narrow Exception for Foreign-Built Vessels

Foreign-built vessels can occasionally enter coastwise trade through a small vessel waiver administered by the Maritime Administration (MARAD), not the Coast Guard. The waiver is limited to small passenger vessels carrying no more than 12 passengers for hire, and the vessel must be at least three years old.¹⁶ It does not cover cargo vessels.

MARAD evaluates whether the waiver would harm U.S. shipbuilders or existing domestic operators, including a public notice period for competitors to comment. Applications go through MARAD’s online portal on Form MA-1023(E), with a $500 fee per vessel.¹⁷ Sequencing matters: the waiver must be in hand before you file the CG-1258 with the Coast Guard, and the resulting Certificate of Documentation will cite the waiver as the legal basis for coastwise eligibility.

Penalties for Operating Without a Coastwise Endorsement

Moving merchandise between U.S. ports without a coastwise endorsement carries two possible consequences under 46 U.S.C. §55102. The government can seize and forfeit the merchandise, or it can recover an amount equal to the value of the merchandise or the actual cost of transportation, whichever is greater.¹⁸

Carrying passengers without authorization is $300 per passenger transported and landed.² A charter running 12 passengers on one unauthorized trip is looking at $3,600 before any other enforcement.

Knowingly falsifying information on a documentation application, whether by misrepresenting citizenship, fabricating a build location, or concealing foreign ownership, can result in seizure and forfeiture of the vessel and its equipment.¹⁹ The NVDC can also revoke the Certificate of Documentation entirely, which shuts down commercial operations across every endorsement, not just coastwise. If you receive a penalty assessment, you have 30 days from receipt to respond in writing, submit evidence, or request a formal hearing; missing that window waives the hearing right.²⁰

1
Legal Information Institute. Jones Act
2
Office of the Law Revision Counsel. 46 USC 55103 – Transportation of Passengers
3
Office of the Law Revision Counsel. 46 USC 55109 – Dredging
4
eCFR. 46 CFR Part 67 – Documentation of Vessels
5
Office of the Law Revision Counsel. 46 USC 12112 – Coastwise Endorsement
6
Office of the Law Revision Counsel. 46 USC 12103 – General Eligibility Requirements
7
Office of the Law Revision Counsel. 46 USC 12102 – Vessels Eligible for Documentation
8
U.S. Coast Guard. Application for Initial, Exchange, or Replacement of Certificate of Documentation (Form CG-1258)
9
Office of the Law Revision Counsel. 46 USC 8103 – Citizenship or Noncitizen Nationality and Navy Reserve Requirements
10
eCFR. 46 CFR 67.177 – Application for Foreign Rebuilding Determination
11
eCFR. 46 CFR 67.55 – Requirement for Removal From Foreign Registry
12
United States Coast Guard. National Vessel Documentation Center Table of Fees
13
Pay.gov. USCG Vessel Documentation Payment Form
14
United States Coast Guard. Priority Handling Requests (NVDCINST 16713)
15
United States Coast Guard. Vessel Renewal Notification – Application for Renewal (CG-1280)
16
eCFR. 46 CFR Part 388 – Administrative Waivers of the Coastwise Trade Laws
17
Maritime Administration. Application for Small Vessel Waiver of the Passenger Vessel Services Act
18
Office of the Law Revision Counsel. 46 USC 55102 – Transportation of Merchandise
19
Office of the Law Revision Counsel. 46 USC 12151 – Penalties
20
U.S. Coast Guard. Commandant Instruction 16200.5C – Hearing Officer Procedural Administration of Civil Penalty Cases