Federal government issues more than $ 350 million penalty notices to companies involved in shipping seafood from Alaska, complaint says
U.S. Customs and Border Protection issued more than $ 350 million penalty notices to several companies involved in shipping seafood from Dutch Harbor in western Alaska to eastern states United, according to a complaint filed in court by two of these companies.
The federal agency alleges violations of the Jones Act, according to documents filed in the case. The law requires that ships carrying cargo between two points in the United States be American-made and fly the United States flag.
Kloosterboer International Forwarding and Alaska Reefer Management, which provide transportation and logistics services within the American Seafoods Group family, filed a 35-page lawsuit on Thursday in U.S. District Court Anchorage.
The two complainants ask for an end to the sanctions. They contract with shipowners, cold storage operators, and trucking and fishing companies to transport frozen seafood. American Seafoods is a frozen offshore processor of Alaskan pollock and other fish.
The supply chain works like this: frozen fish leave on ships from Dutch Harbor to Lower 48, traveling through the Panama Canal to a port in eastern Canada near the US border.
From there, the fish are loaded onto trucks which are temporarily loaded onto flat cars along 100 feet of track before entering Maine. Seafood ends up reaching fast food restaurants and other outlets in several states.
The East Coast supply chain uses foreign-flagged vessels to deliver seafood. But the companies claim they are in compliance with the Jones Act because of a provision allowing an exemption, in part because Frozen seafood makes the brief trip from Canada by train before reaching Maine, according to the complaint.
However, penalty notices have apparently been issued because the Canadian rail route is used, even though the agency has supported the route in its published interpretative rulings, the complaint says.
The companies in court say the notices threaten this long-established supply chain and jobs in Alaska and the Lower 48, according to the complaint.
“The CBP penalty notices have effectively closed a critical shipping route which – for over 20 years – has been approved by CBP as Jones Act compliant, and which is essential to the delivery of frozen seafood to consumers, fast food chains and schools. lunch and food bank programs across the United States, ”the complaint states.
Customs and border protection “do not comment on disputed cases,” the agency said in an emailed statement.
“Nonetheless, the absence of a comment should not be interpreted as an agreement or a stipulation with any of the allegations,” the statement said.
The penalties for Kloosterboer alone total $ 25 million, according to the complaint. Numerous other companies in the complainant’s supply chain have also received notices totaling more than $ 325 million, according to the complaint.
“We’re reeling from the crippling sanctions, Customs has been unwilling to share details, and long-standing Customs guidelines tell us we are operating in compliance,” said Per Brautaset, president of Alaska Reefer Management, in a statement prepared Thursday. “We simply had no choice but to try to save our business and the businesses of our partners, and all the jobs in Alaska and other communities that will be lost.”
The fines are significant, more than double the annual value of frozen Alaskan seafood transported through the port of Bayside to U.S. destinations, the statement said.
Dutch Harbor, in the Aleutian Islands, is home to the country’s leading fishing port in terms of volume landed. Nearly 800 million pounds of fish, valued at $ 190 million, were landed there in 2019.
This unjustifiable overbreadth of the agency is crippling and threatens to destroy the businesses of the plaintiffs, as well as an entire supply chain transporting frozen seafood from Alaska to the eastern United States via (the port de Bayside in New Brunswick, Canada), ”the complaint states. “Additionally, penalty notices threaten hundreds of jobs in Alaska and the United States in the frozen seafood shipping industry, and unless they are withdrawn, they will likely drive up prices. and frozen seafood shortages in the eastern United States. “
The companies are suing the US Department of Homeland Security, the border protection agency, which reports to Homeland Security, and Troy Miller, acting border protection commissioner.