The U.S. Coast Guard spells out the federal regulation for dive flag use in Rule 27e - Vessel Engaged in Diving Operations:

Whenever the size of a vessel engaged in diving operations makes it impracticable to exhibit all lights and shapes prescribed in paragraph (d) of this Rule [most civilian vessels], the following shall be exhibited:

Three all-round lights in a vertical line where they can best be seen. The highest and lowest of these lights shall be red and the middle light shall be white; a rigid replica of the International Code flag "A" not less than 1 meter in height. Measures shall be taken to ensure its all-round visibility.

All divers shall display a 12 by 12 inch minimum, white diagonal stripe on a red background divers-down flag on a buoy in the area in which the diving occurs. Alternatively, the diver-down flag may be flown upon a boat, in which case the flag shall be at least 18" x 18." Divers shall attempt to stay within 50 feet of the divers-down flag.

Boaters should stay at least 50 feet away from a diver-down flag. (Like they pay attention!)

Divers shall not, except in case of emergency, display the divers-down flag in an area which would constitute a navigational hazard.

If diving operations take place after sunset the dive flag shall be illuminated.

Massachusetts Dive-Flag Law

Massachusetts Dive Flag Law The following paragraph is taken verbatim from Mass. General laws, public ways and works 90B 13A:

"Every Scuba diver or group of scuba divers while swimming on or under the surface of the waters of the Commonwealth shall display for each diver or group of divers as a warning device to boat operators, a diver's flag, so called, constructed of rigidly supported material at least 12" by 15" in area of red backgroud with a diagonal stripe. Such diver's flag shall be displayed on a boat or surface float and shall extend a minimum distance of three feet from the surface of the water. A boat operator within sight of a diver's flag shall proceed with caution and within 100' of such flag shall proceed at a speed not to exceed three-mph".

Penalty for violation is $50, so always fly a flag and consider towing it with you, rather than just anchoring it in your general area. This law is strictly enforced both on land and at sea, especially during summer months.

Connecticut Dive-Flag Law

Anyone involved in underwater swimming or diving is required to display a clearly visible red flag with a white diagonal stripe. The flag must be two-sided, not less than 13 inches high and 15 inches long. The white diagonal stripe must be reflectorized if the flag is to be used at night. It is extremely dangerous and a violation of the law for a diver to surface or swim more than 50 feet from this flag. No more than four divers may use the same diver flag unless it is displayed from a boat, in which case the number of divers must be limited to the legal capacity of the boat. The blue/white ALPHA flag is also used to show underwater operations from a vessel in federal waters. It may be used in addition to the state’s diver down flag.

It is illegal to snorkel or SCUBA dive from a state boat launch.