Coast Guard to Look into How Public Companies Comply with Jones Act Citizenship Requirements

U.S. coastwise laws, commonly referred to as the Jones Act, restrict the ownership and operation of vessels to qualified U.S. citizens which, among other things, meet stringent 75 percent U.S. citizen beneficial ownership requirements. On November 3, the U.S. Coast Guard issued a public notice seeking comments and "information on the various mechanisms that publicly traded companies have chosen to employ in order to assure compliance with those citizenship requirements." Comments are due by February 1, 2012. Earlier this year the Coast Guard posted on its web site an internal memorandum regarding an investigation of the citizenship of a public company recommending that considerable fines be levied against that company. The November 3 Notice reminds Jones Act companies that the "documentation laws are meant to be restrictive," that the "Coast Guard will not be bound by any presumptions or inferences in making eligibility determinations for documentation purposes," and that corporations must "be able to prove their qualifications."