Alaska Seafood Companies Renew Bid for Injunction Against Jones Act Penalties

Two Alaska shipping companies renewed their bid for an expedited temporary restraining order against CBP penalties for seafood shipments found to be in violation of the Jones Act, in an Oct. 1 motion at the Alaska U.S. District Court. The court recently denied the companies' bid for the TRO on the grounds that they had not properly satisfied all the conditions to qualify for an exception to the Jones Act, finding that if the conditions were not met, the companies were likely to fail on the merits of the case (see 2109290075).

Kloosterboer International Forwarding and Alaska Reefer Management, the two companies, face massive penalties in excess of $25 million for the alleged Jones Act violations. KIF and ARM ship seafood from Alaska to the eastern U.S. via the Bayside, New Brunswick, Canada port. CBP said this violates the Jones Act -- the law that says that shipping between U.S. ports must be conducted by U.S.-flagged, -made and -owned ships. The companies shipped seafood from a U.S. port in Alaska to the East Coast on a Canada-flagged ship.

KIF and ARM argue that their shipments quality for the Third Proviso exception of the Jones Act, which says that the act doesn't apply to the transportation of merchandise between points in the U.S. "over through routes in part over Canadian rail lines and connecting water facilities if the routes are recognized by the Surface Transportation Board (STB) and rate tariffs for the routes have been filed with the Board." The companies sought to fulfill the requirements of this exception by putting their fish shipments on a train in Canada, sending them to a destination 100 feet away and bringing the train right back. From there, the shipments finished their journey to Maine (see 2109170048).

There exists a three-part test to qualify for the Third Proviso. A shipping company must prove that the transportation of the merchandise was with the use of a through route in part over Canadian rail lines, used a route recognized by the STB and that it had filed rate tariffs for the routes with the STB. The court denied KIF and ARM's TRO bid since they didn't file a tariff rate for the Canadian rail route with the STB.

In the renewed TRO motion, the companies assured the court that this condition has been met on Sept. 30, when KIF filed a rate tariff with STB for the Bayside Canadian Rail (BCR) Route.

"The Court should grant the injunctive relief sought in Plaintiffs’ Motion and permit the administrative dispute process to proceed while granting Plaintiffs and others involved with the BCR Route the protection they desperately need during the pendency of this action so that they can resume their shipments without the looming threat that CBP will issue additional -- enormous -- Jones Act penalties," the renewed motion said.