Federal government issues more than $350 million in penalty notices to companies involved in shipping seafood from Alaska, complaint says

A fishing boat returns to Port of Unalaska, Alaska, on August 31, 2012. The port of the city of Dutch Harbor is the largest fishing port in the United States (Loren Holmes / ADN file photo)

U.S. Customs and Border Protection has issued more than $ 350 million in penalties to several companies involved in shipping seafood from Dutch Harbor in western Alaska to the eastern United States, according to a lawsuit filed by two of these companies have been filed in court.

The federal agency alleges violations of the Jones Act, according to files filed in the case. The law requires that ships transporting goods between two US points be made in America and fly the American flag.

Kloosterboer International Forwarding and Alaska Reefer Management, which provide transportation and logistics services as part of the American Seafoods Group family, filed the 35-page lawsuit in the US District Court in Anchorage on Thursday.

The two plaintiffs are moving to stop the penalties. You enter into contracts with shipowners, cold store operators, and freight forwarding and fishing companies to transport frozen seafood. American Seafoods is a processor of Alaskan pollock and other fish frozen at sea.

The supply chain works like this: The frozen fish leaves on ships from Dutch Harbor to Lower 48 and travels through the Panama Canal to a port in eastern Canada near the US border.

From there, the fish is loaded onto trucks that are temporarily loaded onto flat wagons on 30-meter-long tracks before they travel to Maine. The seafood eventually reaches fast food restaurants and other outlets in several states.

The east coast supply chain uses foreign flag ships to deliver the seafood. However, the companies claim they are complying with the Jones Act due to an exemption, in part because the frozen seafood makes the short journey from Canada by rail before reaching Maine, the complaint said.

However, because of the use of the Canadian railway line, fines were apparently issued, although the authority supported the line in its published interpretative decisions, it says in the application.

The plaintiffs say the lawsuit notices threaten the long-established supply chain and jobs in Alaska and the Lower 48.

“CBP’s fines have effectively shut down a critical shipping route that has been upheld by CBP as compliant with the Jones Act for over 20 years and is essential for the delivery of frozen seafood to consumers, fast food chains and schools. Lunch- and food bank programs across the United States, ”the application stated.

Customs and Border Protection “does not comment on matters that are the subject of litigation,” the agency said in a statement it emailed.

“Nonetheless, the lack of comments should not be construed as consent or agreement with any of the allegations,” the statement said.

The fines for Kloosterboer alone amount to 25 million dollars, according to the lawsuit. Numerous other companies in the plaintiffs’ supply chain have also received notifications totaling more than $ 325 million, the complaint states.

“We are staggering with crippling penalties, customs have not come forward to provide details, and customs’ long-standing guidelines tell us we are in compliance,” Per Brautaset, president of Alaska Reefer Management, said in a prepared statement Thursday . “We just had no choice but to try to save our business and those of our partners, as well as any jobs in Alaska and other communities that are going to be lost.”

The fines are hefty and more than double the annual value of Alaskan frozen seafood shipped to U.S. destinations via the port of Bayside, the statement said.

Dutch Harbor in the Aleutian Islands is home to the country’s leading fishing port in terms of landed volume. Almost 800 million pounds of fish worth $ 190 million were landed there in 2019.

“This unjustified assault by the authorities paralyzes and threatens to destroy the plaintiffs’ businesses, along with an entire supply chain that transports frozen seafood from Alaska to the eastern United States through (the port of Bayside in New Brunswick, Canada),” said it in the lawsuit. “In addition, the fines threaten hundreds of frozen seafood shipping jobs in Alaska and across the US and, if not withdrawn, will likely result in higher frozen seafood prices and shortages throughout the eastern US.”

The companies are suing the Department of Homeland Security, the border patrol agency subordinate to Homeland Security, and Troy Miller, the acting border patrol commissioner.