MARAD Maritime Security Program and Tanker Security Program

The United States maintains two parallel federal subsidy programs — the Maritime Security Program (MSP) and the Tanker Security Program (TSP) — that pay U.S.-flag commercial vessel operators to keep their ships available for military cargo in national emergencies. Without these operating agreement payments, the economics of international shipping strongly favor re-flagging under flags of convenience (Panama, Liberia, Marshall Islands) that offer lower crews costs, less regulation, and no citizenship requirements. Both programs are run jointly by the Department of Transportation (Maritime Administration, MARAD) and the Department of Defense (U.S. Transportation Command), with the operating agreement structure ensuring that DoD can requisition the vessels during a national emergency without negotiating from scratch.

Legal Authority

• 46 U.S.C. § 53101 et seq. — Maritime Security Program; codifies the MSP operating agreement structure; requires participating vessel operators to enter operating agreements with MARAD and DoD and make vessels available for military cargo upon activation; authorizes annual operating payments to MSP participants
• 46 U.S.C. § 53104 — MSP operating agreement provisions; specifies the terms of agreements including vessel availability requirements, crewing standards, and the Department of Defense activation right
• 46 U.S.C. § 53108 — Activation authority; authorizes DoD to requisition MSP vessels during a declaration of national emergency or in response to a named threat; establishes compensation terms for activated vessels
• NDAA FY2021 § 3511 / FY2022 § 3515 — Tanker Security Program authorizations; establish the TSP as a parallel program to MSP for petroleum tankers; 46 CFR Part 294 implements the TSP

Key Mechanics

Both the MSP and TSP pay operating subsidies to U.S.-flag commercial vessel operators through annual "operating agreement payments" (approximately $5 million per MSP vessel per year; $6 million per TSP tanker) in exchange for keeping the vessels available for rapid government activation. To qualify, vessels must be U.S.-flagged, U.S.-owned, U.S.-crewed (officers must be U.S. citizens; most ratings must be U.S. citizens or permanent residents), and maintained to U.S. Coast Guard standards. Participating operators continue commercial trading routes during normal times; the vessels are their operators' commercial assets but are obligated to MARAD/DoD if activated. Activation is triggered by DoD's declaration of a need; upon activation, DoD takes operational control of the vessels at pre-negotiated compensation rates. The programs exist because U.S.-flag shipping is structurally more expensive than flag-of-convenience shipping (due to higher crew wages, Jones Act manning requirements, and U.S. safety regulations), creating a market failure where without subsidies, commercially viable operators would re-flag vessels to save costs. MSP focuses on dry cargo and container vessels critical to military sealift; TSP focuses on product tankers for petroleum supply logistics. Combined, they represent a small but strategically significant element of the U.S. defense industrial base in maritime logistics.

Current Rule (2026)

What These Programs Do

Both programs address the same problem: the United States depends on sealift — oceangoing cargo ships — to deploy and sustain military forces overseas. The Department of Defense maintains a fleet of government-owned vessels (Ready Reserve Force, Military Sealift Command ships), but those government ships cannot cover the full cargo requirements of a major military mobilization. In every large deployment since the Gulf War, DoD has had to requisition commercial vessels. The MSP and TSP ensure a pool of commercial ships flying U.S. flags are available to be requisitioned, staffed by U.S. mariners who hold security clearances and can operate in conflict zones.

The Maritime Security Program (Part 296) was established by the Maritime Security Act of 2003, succeeding an earlier program with the same name. It covers up to 60 vessels — primarily container ships, roll-on/roll-off vessels (RoRos), and breakbulk cargo ships — operating in the U.S. foreign trade. Operators receive annual MSP operating agreement payments in exchange for maintaining their vessels under U.S. flag and available for DoD requisition. The amount of each payment is set by Congress in appropriations, not in the regulations themselves.

The Tanker Security Program (Part 294) was created by the FY2021 National Defense Authorization Act and covers up to 10 product tank vessels — ships that carry petroleum products (gasoline, jet fuel, diesel) rather than crude oil. TSP addresses a specific gap: the U.S. military needs tankers to deliver fuel in forward operating areas, and the U.S.-flag product tanker fleet has declined sharply over decades. The TSP structure mirrors the MSP, with TSP operating agreement payments in exchange for vessel availability.

Key Provisions — Maritime Security Program (46 CFR Part 296)

• § 296.10 — Citizenship requirements: during the entire MSP operating agreement period, vessels must be owned and operated by Section 2 Citizens (U.S. citizens under 46 U.S.C. § 50501), or by entities meeting detailed conditions for board of directors composition, citizenship of key officers, and U.S. government approval of any ownership or board changes; vessels owned by U.S. citizens but demise chartered to non-citizen entities may qualify if the entity meets specific structural requirements; MARAD and DoD must jointly approve any proposed changes to the vessel owner, charterer, or operator during the agreement period
• § 296.11 — Vessel eligibility: vessels must be U.S.-documented (flying the U.S. flag), commercially trading in U.S. foreign trade or mixed domestic/foreign commerce, and must be either a liner or bulk carrier of types designated by the Secretary; vessels must meet condition and age standards set by the Secretary in concurrence with DoD; the vessel's vessel identification, flag endorsement, and classification society documentation must be provided at application
• § 296.15 — Priority for granting applications: when there are more eligible applications than available fleet slots (60 vessels maximum), MARAD and DoD prioritize based on vessel capabilities (as established by DoD), the applicant's record of vessel ownership and operation, and the applicant's citizenship status (preference for pure Section 2 Citizens); this priority order gives DoD control over which vessel types fill the fleet — vessels with strategic lift capability (large RoRos capable of carrying military equipment) score higher than vessels DoD does not need as urgently
• §§ 296.30–296.35 — MSP Operating Agreement terms: the operating agreement requires the vessel operator to: (1) maintain the vessel under U.S. flag throughout the agreement; (2) maintain the vessel's commercial viability (no drydocking for extended periods without DoD notification); (3) make the vessel available to DoD within days of a requisition order; (4) employ U.S. citizen mariners in the proportion required by the agreement; (5) maintain the vessel in class (meeting classification society standards for seaworthiness); and (6) not transfer the vessel to a foreign flag without terminating the agreement

Key Provisions — Tanker Security Program (46 CFR Part 294)

• § 294.11 — Citizenship requirements: the same citizenship framework as MSP — owners, charterers, and operators must be Section 2 Citizens or entities structured to meet OCC/MARAD board and officer citizenship tests; the TSP's U.S.-mariner employment requirements flow from this citizenship framework
• § 294.13 — Special rule for fleet vessel entry age: a TSP applicant may apply with a vessel that exceeds the maximum entry age limit if the applicant demonstrates intent to replace the non-compliant vessel within 30 months; vessels 15 years or older must enroll in a classification society's Condition Assessment Program (CAP) and be rated equivalent to ABS CAP 2 or better; this provision allows aging U.S.-flag tankers to enter the program while new vessels are sourced, preserving the existing U.S.-flag product tanker base
• § 294.15 — Initial award of TSP Operating Agreements: MARAD and DoD may award up to 10 TSP Operating Agreements; selection criteria prioritize vessel capabilities (DoD-specified tanker performance requirements), operator's tanker ownership and operation record, and citizenship (preference for Section 2 Citizens); if fewer than 10 qualified applicants apply in the initial round, MARAD may accept additional applications
• § 294.40–294.41 — TSP Operating Agreement obligations: TSP operators must maintain the vessel under U.S. flag; make the vessel available to DoD for national defense purposes upon requisition; comply with U.S. mariner employment requirements; maintain the vessel in classification; and report any change in ownership, operation, or commercial employment that could affect the vessel's eligibility or availability to DoD

How It Affects You

If you operate a U.S.-flag vessel in international trade: The MSP and TSP programs are the primary federal mechanism for making U.S.-flag vessel operation economically competitive with foreign-flag alternatives. Flag of convenience registries (Panama, Liberia, Marshall Islands) typically offer lower crewing costs because they impose no citizenship requirements on officers or crew — a U.S.-flag vessel must employ U.S. mariners under Coast Guard licensing requirements. MSP and TSP operating agreement payments offset this cost differential for enrolled vessels. Applications for both programs are competitive and require substantial documentation of vessel eligibility, owner citizenship, and vessel condition; MARAD's Office of Sealift Support manages the programs and provides application guidance. Both programs have periodic enrollment windows; contact MARAD directly about current availability of agreement slots within the statutory maximums.

If you are a U.S. mariner: Both programs include U.S.-mariner employment requirements as a condition of operating agreement receipt — operators must maintain U.S. citizen mariner employment at or above levels specified in the agreement. This is the programs' direct benefit to the U.S. maritime labor force: MSP and TSP vessels provide steady employment for licensed U.S. deck and engineering officers and unlicensed crew. The programs help maintain the pool of qualified U.S. mariners with the skills and clearances needed for military sealift — an asset that cannot be quickly rebuilt if the merchant marine declines further.

If you work in defense logistics or national security policy: The MSP and TSP programs are among the few federal programs that explicitly maintain commercial industrial capacity as a national security asset. The sealift requirement for any major overseas military deployment far exceeds what DoD can provide from government-owned ships alone. MSP has been validated in multiple DoD transportation studies as cost-effective compared to the alternative — relying on foreign-flag commercial ships during mobilization, which would require negotiating access and prices under wartime conditions and with no guarantee that foreign-flag vessels would be available. The TSP addresses a newer gap: petroleum product delivery to forward areas requires product tankers, not crude tankers, and U.S.-flag product tanker capacity had fallen to near zero before TSP authorization.

Statutory Authority

These rules implement:

• Maritime Security Act of 2003 (NDAA FY2004, Pub. L. 108-136, Title XXXV, Subtitle C) — codified at 46 U.S.C. §§ 53101–53112; establishes MSP, authorizes up to 60 MSP vessels, defines operating agreement terms, provides for DoD requisition authority
• NDAA FY2021 § 3511, Pub. L. 116-283 — establishes TSP, codified at 46 U.S.C. Chapter 534; authorizes up to 10 TSP product tankers
• NDAA FY2022 § 3515, Pub. L. 117-81 — amends TSP provisions, clarifies vessel eligibility and operating agreement requirements
• 46 U.S.C. § 50501 — defines "Section 2 Citizen" (U.S. citizen for purposes of vessel documentation and maritime program eligibility)

Recent Rulemakings

46 CFR Part 296 (MSP): The foundational rule was published at 70 FR 55588 (September 22, 2005) implementing the Maritime Security Act of 2003; 82 FR 56897 and 56898 (December 2017) — updated operating agreement terms and vessel eligibility standards.

46 CFR Part 294 (TSP): Final rule published in 2022 implementing NDAA FY2021 and FY2022 TSP authorization. The TSP program is newer and has not had major standalone rulemakings since its initial implementation.

Program reauthorization: Both MSP and TSP require annual Congressional appropriations for operating agreement payments; program continuity depends on appropriations as well as the underlying statutory authorization. Congress has consistently appropriated MSP funds since 2003, treating the program as an essential defense readiness investment.

Pending Action