What is the American Fisheries Act?
The American Fisheries Act of 1998 (AFA) is a law that places restrictions on the types of entities allowed to hold mortgages on (or share ownership of) vessels with a registered length of 100 feet or more. Specifically, to operate as a fishing vessel in American waters, or have a documented 46 U.S.C. 12113 (2006). Fishery endorsement, 75 percent of a vessel's ownership and control must be vested in United States-held mortgages. The AFA also 1) places restrictions on what types of individuals can apply for and recieve these preferred mortgages and 2) eliminates exemptions for vessels that cannot meet pre-AFA citizenship standards.
The AFA is incorporated in the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999 (Public Law 105-277) and, in its early years, helped phase out the operation of many larger fishing vessels thought to be destructive to fishery resources.
Per the AFA, MARAD is responsible for determining whether vessels of 100 feet or greater in length are owned and controlled by U.S. citizens and eligible for a fishery endorsement. Foreign investment via mortgages is capped at 25 percent. MARAD also determines whether lenders are qualified to hold a preferred mortgage on such vessels. If a lender is deemed unqualified, the lender must use an approved mortgage trustee to hold the preferred mortgage for its benefit. See this list of Maritime Administration Approved Lenders and Mortgage Trustees. MARAD also reviews preferred mortgage transactions to determine if it resulted in an impermissable transfer of vessel control to a non-U.S. entity. MARAD's AFA implementing regulations can be found at 46 C.F.R. Part 356.
Requirements for Preferred Mortgage Eligibility
Per 46 CFR SEC. 356.19, in order for a mortgagee to be eligible to obtain a preferred mortgage on a fishing industry vessel after April 1, 2003, the mortgagee must be a:
- citizen of the United States,
- state or federally chartered financial institution that is insured by the Federal Deposit Insurance Corporation,
- farm credit lender established under title 12, chapter 23, of the United States Code (12 U.S.C. Sections 2001 et seq.),
- commercial fishing and agricultural bank established pursuant to State law,
- commercial lender organized under the laws of the United States or of a State and eligible to own a vessel under 46 U.S.C. Sec. 12113(c), or
- Mortgage Trustee that complies with the requirements of 46 U.S.C. Sec. 31322(f) and 46 C.F.R. Sections 356.27-356-31.
For information about what constitutes an entity's citizenship, see this document.
Apply for a Preferred Mortgage
- Review this list of Mortgage Trustee Requirements (46 CFR 356 Subpart E)
- Download, print and complete this Mortgage Trustee Application
- Download, print and complete the Form of Certificate appropriate to your organization:
- Federally Chartered Financial Institution
- State Chartered Financial Institution
- Farm Credit Lender
- Commercial Fishing and Agriculture Bank
- Commercial Lender
- Lender Syndicate
- Mortgage Trustee
- U.S. Citizen Mortgage
- Large Vessel Certificate (46 C.F.R. 356.47)
- Certificates for Preferred Mortgagee or Mortgage Trustee
- Download, print and complete the affidavit template appropriate to your organization type:
- Limited Liability Companies
- Limited Partnerships
- Limited Liability Partnerships
- Sole Proprietorships
- Send your completed materials to:
AFA Section 213(g)
In the event that any provision of section 12102(c) -- now codified at 46 U.S.C. Sec. 12113 or section 31322(a) of title 46, United States Code, as amended by this Act -- is determined to be inconsistent with an existing international agreement relating to foreign investment to which the United States is a party with respect to the owner or mortgagee of a vessel with a fishery endorsement, such provision shall not apply to that owner or mortgagee with respect to their ownership or mortgage interest in such vessel on that date to the extent of any inconsistency. The provision of section 12102(c) shall apply to all subsequent owners and mortgagees of such vessels, and shall apply, notwithstanding the preceding sentence, to the owner on such vessel if any ownership interest in that owner is transferred to or otherwise acquired by a foreign ownership in the vessel or is increased after the effective date of this subsection.
The United States fishing industry has several good faith agreements with foreign governments to foster fair and efficient ownership practices in light of AFA regulations:
- Treaty of Friendship, Commerce, and Navigation between the United States and Japan
- Treaty of Friendship, Commerce, and Navigation between the United States and the Republic of Korea
- Treaty of Friendship, Commerce, and Navigation between the United States and Denmark