USCG Releases Rules to Streamline and Consolidate U.S. Reflagging Process

The U.S. Coast Guard released a series of new rules on May 9 that it says are designed to streamline and consolidate the process for foreign ships to be certified under the American registry. It reflects the dual ambitions of the Trump administration to grow the American merchant marine and reduce excess regulations imposed by the U.S. government on industry.

According to the announcement from USCG, the process of reflagging into the American registry is being consolidated under a single program based on international standards. Historically, it has been considered to be an onerous process requiring a demonstration of need, review and acceptance by the Maritime Administration and other government agencies, a planning process, and entailed inspection.

USCG reports the changes to the process reduces pre-inspection plan review, which will result in avoiding scheduling delays and minimizing modification costs. They contend it will provide more job opportunities for American mariners.

One of the common means that foreign ships have entered the U.S. registry is through the Maritime Security Program established nearly 30 years ago by the Clinton administration. The U.S. Congress extended the program till 2035, guaranteeing 60 positions (all currently filled) for ships to operate under the U.S. flag and receive what MARAD calls a “financial stipend” (or incentive). It is to offset U.S. operating costs in exchange for making their ships and commercial transportation resources available upon request by the Secretary of Defense during times of war or national emergency. It provides a simplified certification process for ships to enter the U.S. registry.

USCG in the new iteration is offering foreign-built vessels the option of enrolling in voluntary sealift support without being in the 60 spots that receive financial incentives. They write that receiving payments as part of MSP enrollment is not a precondition for certification. This also includes vessels reflagging as part of the Ready Reserve Force recapitalization.

The change was reportedly spearheaded by Captain Cory Heard, who is the Chief, Office of Commercial Vessel Compliance from USCG, and heading an interagency team to support Donald Trump’s executive orders. Wayne Arguin Jr., Assistant Commandant for Prevention Policy at the U.S. Coast Guard, writes online that simplifying reflagging and certification for foreign-built vessels is the “first of many (initiatives) as we work to Restore American Maritime Dominance.”

This comes as the Governor of the U.S. Virgin Islands on Saturday, May 10, confirmed in a social media posting a report from Reuters that the Trump administration is reviewing an idea that was first floated a few years ago to create a second U.S. flag registry in the U.S. Virgin Islands. It would be an open registry administered by a third-party commercial organization.

The plan was put forward by a private group in 2021 calling itself the Center for Ocean Policy and Economics, and winning support from conservative groups, including in 2023 from the Hudson Institute, a conservative think-tank. The groups said it would be a way to bypass burdensome domestic regulations that restrict entry into the U.S. registry for foreign-built ships and deal with the limited U.S. shipbuilding capacity. They argue it would create jobs and support the development of a shipyard in the Virgin Islands for maintenance work. The Hudson Institute set a target for 250 U.S.-registered ships, a goal that has now found its way into the recently introduced legislation in the U.S. Congress to support reinvigorating the U.S. merchant marine and shipbuilding.

The U.S.’s leading maritime unions have repeatedly joined together to oppose the proposed open registry. The unions in the past opposed the plan as it would permit foreign seafarers to crew the vessels, a move they said made the plan nothing more than a ploy to generate registry fees.

Reports say the Trump administration is looking at it as a possible “bold, private-sector driven initiative.” Reuters wrote in an exclusive story on May 9 that the National Security Council was aware of the proposed USVI Registry and was possibly considering the plan.