Ship boat

U.S. Virgin Islands Announces First Open International Registry of U.S.-Flag Vessels and Ambitious Plan to Boost U.S. Commercial Maritime Sector

On February 1, 2022, the Governor of the United States Virgin Islands (USVI) signed an agreement with the Northeast Maritime Institute’s Center for Ocean Policy and Economics (COPE) to establish the first open international ship registry in the United States. Press releases from January and February indicate that the new ship registry will be managed by USVI in partnership with the Northeast Maritime Institute, a private maritime college based in Massachusetts.

According to recent press releases, the policy for this open USVI vessel registry is outlined in A Revitalization Plan for US Maritime Trade, Commerce and Strategic Competition (“The Revitalization Plan” or “Plan”) authored by COPE. The six-point revitalization plan proposes to lay the foundation for reviving the U.S. commercial maritime sector, helping resolve the U.S. supply chain crisis, and ensuring maritime sovereignty and security.

The revitalization plan outlines six action items:

1. Launch of USVI Open International Vessel Registry;

2. Development of a short sea transshipment center in the Caribbean Sea region to reduce supply chain congestion;

3. Establish a green shipping strategy, including the decarbonization of the US-flagged fleet;

4. Create a maritime venture capital fund to finance commercially advanced technologies that solve problems in the maritime and ocean industry with a focus on environmental vulnerabilities;

5. Build international public and private partnerships to address strategic maritime issues, increase transparency and enforce legal and ethical standards; and

6. Modernize the maritime workforce by deploying state-of-the-art education and training tools in the United States and abroad.

It will be interesting to watch the development of the new USVI ship registry, which would be separate from the current US flag registry. This raises unusual legal questions about the authority of USVI and the Northeast Maritime Institute to create and operate an international ship registry. It is unclear at this time whether the US federal government, US Coast Guard and ship classification societies agree with this new registry. Descriptions of the USVI Ship Registry indicate that proponents of the registry believe that ships trading under the USVI flag would receive enhanced security protection from the US Navy, if necessary, although that the legal authority on this point is not obvious.

Some commentators have questioned whether US law allows the USVI to create an international ship registry separate from the US ship documentation system in place under current US federal law. The USVI is US territory, so it is not a US state, and it does not act with the authority of the US federal government. The US coastal commerce laws, commonly known as the Jones Act, provide an exception for USVI. Under this exception, transporting cargo and passengers between the USVI and other US ports does not require a US-flagged vessel with a cabotage approval. The Jones Act prohibits the carriage of goods between coastal points in the United States on any vessel that is not: (1) owned by United States citizens; (2) built in the USA; (3) documented under the laws of the United States; and (4) crewed by licensed United States sailors. It appears that USVI-flagged vessels would not be allowed to engage in US coastal trade, but of course the new registry is for vessels engaged in international trade.

Currently, the largest ship registers in the world are open registers, which means that anyone can register a ship there without having substantial links with the flag state that maintains the register.

The revitalization plan released by COPE offers several arguments in support of the new USVI flag registry. The plan says the new registry would allow a US territory flag, with no ties to the US, to fly a much larger fleet of ships and engage in international trade around the world. The Plan argues that “[n]New international standards are needed to create a safer, cleaner and more transparent shipping industry. The plan also asserts that the creation of the registry could facilitate the growth of the American commercial fleet and increase the role of the United States in influencing international flag practices.