A $350 Million Jones Act Fight Over Frozen Fish

The Jones Act, legislation which basically reserves movements of cargo between U.S. ports (or factors in U.S. waters) for vessels, owned, crewed and registered in the States, arouses controversy at each and every transform. Additional usually than not, Jones Act controversies issue the vitality company, matters like waivers subsequent hurricanes (when Jones Act skilled tonnage is not in posture to move coastwise cargoes). An ongoing make a difference with significant penalties at stake, but small in the way of headline protection, worries the seafood market.

Starting up in August, 2021, a  group of Alaskan seafood organizations, relocating frozen fish, had been hit with $350 million of fines by the U.S. Customs and Border Safety (CBP) company for Jones Act violations. The corporations a short while ago appealed the CBP actions to the U.S. District Court docket in Alaska at the stop of September, the Choose in the scenario denied their request for a Temporary Restraining Purchase and Preliminary Injunction versus CBP. Most probably, this will be the to start with leg of an ongoing authorized saga. 

It’s complicated. The request in the new District Court docket ruling was introduced by two subsidiaries within the American Seafoods Company (ASC)- Kloosterboer Intercontinental Forwarding (KIF) and Alaska Reefer Management (ARM), who requested that no more fines be issued by CBP, and that already issued fines be waived. The logistics listed here had fish harvested in Pacific waters, processed at sea, despatched from amenities in Alaska by internationally flagged containerships to New Brunswick, Canada to cold-storage warehouse, and then place on vehicles.

Very briefly, the vehicles are loaded on to flat rail automobiles (back to that element in a next), transferred 100 ft, and then, following a 100 toes reverse shift, discharged from the railcars, a few minutes afterwards, at the very same destinations they loaded up. Then, the fish moves by way of surface area shipment onward to the U.S. East Coastline by around-the-street vans, by using a border crossing in northern Maine. 

There is also a supply chain angle, introducing to the ongoing disaster impacting seemingly every sort of purchaser superior- now, increase frozen pollock from Alaska to that record. In mid -September, a group of Jones Act capable U.S. carriers desirous of dealing with the fish business enterprise (on routes from Alaska down to the Pacific Northwest- the place the fish would presumably be trans-delivered cross nation by rail) submitted legal files supporting the CBP fines. The seafood shippers offered an opposing argument, indicating that the Jones Act carriers were overwhelmed, at this time, and could not handle the fish in a timely method. 

The difficult aspect, and the lynchpin for numerous of the arguments, concerns a small (approximately 100 feet) railway spur at the port of Bayside, New Brunswick- just throughout from Maine on Passamaquoddy Bay. The Jones Act laws features a small-identified function (known as “The 3rd Proviso”) which claims that logistical chains of the form utilised by the ASC subsidiaries, would be allowable, and exempt from Jones Act prerequisites if the Canadian railway, listed here- named the Bayside Canadian Rail, “BCR”, was adequately registered with the suitable U.S. regulatory agencies (in this situation, the Floor Transportation Board).

In the authorized again and forths here, it emerged that the 100 foot rail line represented an alteration (circa 2012) to a earlier route (in which a Jones Act exemption was authorized- with a different tariff filed in the early 2000’s with the STB). The pre -2012 routing experienced made use of various Canadian railroads, transporting the frozen fish in excess of distances varying between 34 and 91 miles (in contrast to the 100 feet). 

In the stop September Alaska courtroom ruling, which leaves the CBP penalties in spot, the Choose did not absolutely debunk the use of the 100 foot ultimate small line- creating: “Clearly, the BCR Route consists of, in element, the use of a rail in Canada. At the very least in conditions of performance, the BCR rail line would surface to be substantially similar to other Canadian rail lines on which merchandise is carried solely to comply with the 3rd Proviso.”

But, on the matter of tariffs, the Decide reported: “…a individual of everyday intelligence experienced a acceptable possibility to know….that a charge tariff necessary to be submitted with the STB to comply with the 3rd Proviso….Plaintiffs even possible had direct awareness of the tariff necessity and nevertheless failed to act accordingly.” Surely, there will be a lot more chapters in this saga.

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