Alaska Seafood Shipping Firms Agree $9.5M Settlement On Jones Act Violation Case With U.S.

One of the largest settlements under the Jones Act was reached when two seafood shipping firms operating in Alaska agreed to pay the U.S. government $9.5 million for their violations.

The Jones Act, also known as the Merchant Marine Act of 1920, is an essential federal law created to support and maintain the American merchant marine. The law mainly regulates maritime trade between and within U.S. ports and waters. It requires that any cargo moved by water between ports in the United States be carried on ships that meet specific requirements. These vessels must be built in the United States, fly the American flag, be owned by citizens of the United States, and have crews consisting of citizens and permanent residents.

The action against U.S. Customs and Border Protection (CBP) challenged the penalties imposed for violations of the legislation. Alaska Reefer Management LLC (ARM) and Kloosterboer International Forwarding LLC (KIF) took advantage of a Jones Act exemption allowing Alaskan seafood to be transported by Canadian rail to the United States mainland. However, they employed a small rail track in Canada as part of their arrangement, which CBP considered an unlawful attempt to get around the Act’s provisions.

The enterprises shipped frozen fish via a port in New Brunswick, Canada, from Dutch Harbor, Alaska, to the U.S. East Coast for over ten years. After arriving in Canada on foreign-flagged vessels, the seafood was loaded onto trucks and placed onto a flatbed rail car on the specially constructed “Bayside Canadian Railway (BCR),” a roughly 100-foot railroad track in the Port of Bayside.

Following an inquiry, CBP found that the BCR did not fit the requirements for the Canadian rail exception, which led to Jones Act violations. The corporations were hit with hefty fines, which sparked a legal dispute in which they claimed the fines were illegal.

According to the Act’s exceptions, the U.S. District Court for the District of Alaska decided against the corporations, finding that their use of the BCR for transportation was illegal. As a result, a settlement was achieved that mandates KIF and ARM to give the U.S. government $9.5 million.

U.S. Attorney S. Lane Tucker for the District of Alaska stated that this is the second-largest settlement of a case brought under the Jones Act in the history of the United States, highlighting the significance of obeying rules associated with marine commerce.

The Executive Assistant Commissioner of the Office of Trade, U.S. Customs and Border Protection, AnnMarie R. Highsmith, said that the settlement demonstrates the CBP’s dedication to upholding regulations such as the Jones Act to safeguard American industry. The resolution emphasises the value of lawful marine trade and clarifies that breaking the law will result in consequences.

Reference: Justice.gov

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