Except for very limited exceptions, federal law requires aircraft owners to be United States citizens. This article: (1) details the requirements to satisfy the US citizenship requirement; (2) examines exceptions to the US citizenship requirement; and (3) potential consequences for running afoul of the US citizenship requirement.
Under 49 U.S.C. § 44102(a)(1)(A), an aircraft may be registered on the Federal Aviation Administration (“FAA”) Civil Aviation Registry only where “it is not registered under the laws of a foreign country and is owned by ... a citizen of the United States....” Under 49 USC § 40102(a)(15), a “citizen of the United States” is defined specifically as: “(A) an individual who is a citizen of the United States; (B) a partnership each of whose partners is an individual who is a citizen of the United States; or (C) a corporation or association organized under the laws of the United States or a State, the District of Columbia, or a territory or possession of the United States, of which the president and at least two-thirds of the board of directors and other managing officers are citizens of the United States, which is under the actual control of citizens of the United States, and in which at least 75 percent of the voting interest is owned or controlled by persons that are citizens of the United States.” Thus, unless an exception applies, an individual or entity must satisfy these US citizenship requirements.
There are three common exceptions to the US citizen requirement for aircraft ownership. First, under 49 U.S.C. § 44102(a)(1)(B), “an individual citizen of a foreign country lawfully admitted for permanent residence in the United States” may own an aircraft if the aircraft is not registered under the laws of a foreign country. A citizen of a foreign country lawfully admitted for permanent residence in the US (“Authorized Foreign Citizen”) generally is a green card holder. Information about what constitutes an Authorized Foreign Citizen can be found through the US Citizenship and Immigration Services. It should be noted that although an Authorized Foreign Citizen can own an aircraft in his or her individual capacity, an Authorized Foreign Citizen does not satisfy the US citizenship requirements for the composition of business entities under 49 U.S.C. § 40102(a)(15)(B) and (C).
The second exception to the US citizen requirement for aircraft ownership is found at 49 U.S.C § 44102(a)(1)(C), which permits ownership of an aircraft by “a corporation not a citizen of the United States when the corporation is organized and doing business under the laws of the United States or a State, and the aircraft is based and primarily used in the United States.” The criteria to determine whether an aircraft is “based and primarily used in the United States” is set forth in 14 C.F.R. § 47.9. Moreover, an aircraft owned by a corporation under 49 U.S.C. § 44102(a)(1)(C) must also comply with various additional reporting requirements to the FAA along with separate record-keeping obligations, including those outlined in 14 C.F.R. § 47.9.
The third common exception to the US citizenship requirement for aircraft ownership is to use an owner trust. In an owner trust, a non-US citizen individual or entity, as trustor, forms a trust with a third-party entity, as trustee, whereby the trustee holds legal title to the aircraft for the benefit of the trustor. The trustee is the registered owner on the Civil Aviation Registry. The trustee then generally leases or licenses the aircraft back to the trustor, and the trustor operates the aircraft. An owner trust must comply with, among other things, the requirements of 14 C.F.R. § 47.7. Additionally, in 2013 the FAA published AFS-751 Information Bulletin 13-01, which provides policy clarification for the registration of aircraft to US citizen trustees in situations involving non-US citizen trustors. This structure has been approved by the FAA and has been used in the aviation industry for decades. The exact structure of an owner trust can vary depending on the specific circumstances.
Operating an aircraft with an invalid registration is illegal. See 49 U.S.C. §§ 44101 and 46306; 14 C.F.R. § 91.203. To the extent that an aircraft owner does not satisfy the US citizenship requirements, or one of the limited exceptions thereto, the aircraft’s registration is invalid as a matter of law. See 14 C.F.R. §§ 47.3 and 47.43. Doing so can result in severe consequences, including but not limited to: (1) incurring a monetary civil penalty for the aircraft’s owner or operator for each individual flight operated without a valid registration; (2) a possible declination of insurance coverage, which could lead to significant monetary exposure in the event of an accident; (3) possible criminal repercussions; and (4) possible forfeiture of the aircraft.
Considering the potentially severe consequences of operating an aircraft with an invalid registration, you should contact aviation counsel if you have any questions or doubts about whether you satisfy the US citizenship requirement.
