The Jones Act forbids foreign built vessels from operating in the inland and coastwise trade of the United States. However, owners may apply to Marad Small Vessel Waiver, which allows otherwise-ineligible vessels to operate for limited purposes, such as on passenger charters, on the waters of the United States.
The United States Department of Transportation’s Maritime Administration’s waiver program offers American maritime opportunities to small businesses and vessels that do not comply. Knowing the waiver’s scope, eligibility and application requirements and compliance details helps one obtain and retain the waiver.
What Is the Marad Small Vessel Waiver?
The Marad Small Vessel Waiver is a federal waiver that applies to described foreign-built or foreign-reconstructed vessels doing business in United States waters for limited commercial use. This waiver allows these vessels to be exempt from the Passenger Vessel Services Act (PVSA) limitations where they involve vessels carrying passengers. Specific eligibility requirements apply.
| Aspect | Description | Key Detail / Importance |
|---|---|---|
| Governing Authority | U.S. Department of Transportation, Maritime Administration (MARAD) | Oversees vessel documentation and licensing for maritime operations |
| Purpose | Allows foreign-built vessels to operate commercially in passenger services | Expands eligibility for tourism and charter industries |
| Limitations | Cannot transport merchandise or engage in commercial fishing | Restricts operations to non-cargo, non-fishing commercial activities |
| Primary Use | Passenger charters, tours, and recreational trips | Commonly used by leisure and tourism operators |
It provides opportunities for small businesses, tourism and the maritime industry while also ensuring that the United States continues to reap the benefits of its national shipping policy.
Importance of the Waiver
- Tourism gets encouragement from legal charter boat services and operators.
- Promotes Economic Growth: Assists small businesses in coastal and lakefront communities.
- Preserves Legal Compliance: Ensures adherence to federal maritime laws.
- Simplifies Documentation: Simplifies the process for vessel owners seeking to commercialize their vessels.
Without this waiver, under the PVSA, foreign-built vessels may not provide any commercial passenger service in U.S. waters.
Eligibility Criteria for the Marad Small Vessel Waiver
Not every vessel is necessarily eligible for a Marad Small Vessel Waiver; and there are rules in place to protect the domestic shipbuilding industry, while also providing flexibility to small operators.
- Vessel Size: Must not exceed 100 gross tons.
- Vessel Type: Passenger service only.
- Construction Origin: Foreign-built or substantially foreign-modified.
- Age Requirement: Must be three years old.
- Not cargo or commercial fishing, but passenger transport only.
Vessel Age and Purpose
A ship must be old and have a typical shipping purpose. Within this criteria, MARAD would require the vessel to be at least three years old to prevent the waiver from incentivizing new foreign construction at the expense of domestic shipbuilding.
The waiver is also limited to passenger service, defined as carrying no more than 12 passengers for hire. Vessels that transport cargo or are used for fishing are not eligible for the program.
Ownership Requirements
The U.S. citizenship requirement extends to corporations, even vessels built outside of the United States. Corporations must supply Articles of Incorporation or business registration certificates to prove their ownership of the registered vessel.
Step-by-Step Process to Obtain a Marad Small Vessel Waiver
The Marad Small Vessel Waiver Application is organized following a few steps in order to comply with United States maritime law and ensure transparency in review.
Verify Eligibility
The vessel must be less than 100 gross tons, of foreign build, over three years old, and only used for passenger service.
Prepare Application Materials
You need to collect and send to:
- Vessel details such as name, official number, tonnage and year built.
- Ownership information (individual or corporate).
- Intended area of operation (specific U.S. waters).
- Statement of intended use (passenger service description).
| Required Item | Purpose |
|---|---|
| Vessel Identification | Confirms eligibility by tonnage and age. |
| Ownership Documents | Proves U.S. citizen or corporate ownership. |
| Service Description | Ensures compliance with passenger-only limitation. |
| Application Fee | Covers MARAD administrative processing. |
Submit Application to MARAD
Applications may be submitted electronically or by mail to the Maritime Administration (MARAD) for an initial review of completeness prior to publication.
Final Approval and Issuance
If no one raises valid objections and the vessel meets all legal requirements, MARAD grants the waiver and allows the owner to conduct passenger operations with the vessel in commercial service in the United States.
Marad Waiver vs. Jones Act Compliance
It is a small exemption to the Jones Act, which is more broad and stringent than the Marad Small Vessel Waiver.
- About 50 waiver requests had been approved by 2015 while about 160 waiver requests were approved during 2024, coinciding with an increase in small passenger charter operations.
- Recent years saw U.S.-flagged vessel owners trend toward seeking exemption from the Passenger Vessel Services Act.
- Approvals increased after 2020. Tourism and coastal charter businesses expanded.
- The data show the waivers are important for small maritime businesses and the region’s tourism economy.
This steady rise further shows that the waiver program has been successful in fostering entrepreneurship among small maritime operators in coastal tourism.
Common Challenges in the Application Process
Despite its accessibility, the Marad Small Vessel Waiver application process can face challenges related to documentation, eligibility, or timing.
Common Issues
- Incomplete Applications: Missing ownership or build details can delay processing.
- Ineligible Vessels: Under construction vessels and vessels intended for fishing are rejected.
- Public Objections: These may occur during the Federal Register publication phase.
- Ambiguous ownership structure: especially common in LLC or partnership organizations.
Issue Impact Solution
Since incomplete information can slow approval and since a vessel that does not meet the requirements will be automatically denied, an applicant should read the checklist and verify eligibility before submitting a vessel. The review may suffer a delay if the public objects, in which case a prompt and precise response matters. However, if people dispute who owns the application, the applicant must provide proof regarding ownership.
To properly document and communicate with the insurer can help avoid long delays in approval.
Practical Tips for a Successful Marad Small Vessel Waiver Application
- Know the vessel’s tonnage, age, and construction materials before registration: Verify Vessel Eligibility Early.
- Use Clear Ownership Documentation: Obtain clear documentation of U.S. ownership, particularly from corporate entities.
- Be Transparent About Operations: Provide an accurate depiction of your intended service area and activities.
- Monitor publication of Federal Register Notices for 30 days after publication.
| Tip | Benefit | Key Importance |
|---|---|---|
| Confirm eligibility | Avoid rejections | Ensures the applicant meets all program or regulatory requirements before submission |
| Submit complete documents | Streamlines approval | Prevents delays caused by missing or inaccurate paperwork |
| Monitor publication | Allows timely response | Enables quick action if corrections or follow-ups are required |
| Maintain compliance | Protects business reputation | Demonstrates reliability and adherence to legal standards |
Complete these steps to process your waiver and comply with maritime law.
Charter Business Success Through a Marad Waiver
The second example involves a Florida-based businessman with the purchase of a 45-foot foreign-built yacht for starting a coastal sightseeing charter. Without the Marad Small Vessel Waiver, he would have been unable to give sight-seeing tours of a foreign-built yacht.
- The owner established a successful passenger charter service.
- Business expanded to include sunset cruises and eco-tours.
- Adhering to MARAD regulations ensured business reputation and insurance eligibility.
This example shows how the waiver supports entrepreneurs in its provision of oversight.
Legal Framework Governing the Marad Small Vessel Waiver
The Marad Small Vessel Waiver was put into effect and statutes that relate to vessel documentation and passenger services.
Core Legal Principles
- Under the Passenger Vessel Services Act: Foreign-built ships require a waiver for U.S. passenger service.
- Maritime Administration Authority: MARAD can grant waivers.
- Limitations: Waivers do not apply in regard to cargo, fishing, or towing operations.
Expanding Opportunities Through Compliance
Vessel Registrar LLC is a compromise between protectionism and access to a freer market. It allows some maritime commerce under the U.S. flag to be conducted while complying with existing federal laws.
This waiver can open a number of economic opportunities for small business owners and entrepreneurs including charter operators and create maritime tourism across the country.
By understanding the statutory criteria, by taking proactive steps along the way, and by providing candid information during the entire review process, vessel owners can operate lawfully and contribute to the continued growth of America’s dynamic maritime economy.
