Bayside case nearly over as American Seafoods subsidiaries, US government agree to settlement

The U.S. government has agreed to a settlement with two American Seafoods subsidiaries to resolve penalties related to alleged Jones Act violations stemming from the use of a dead-end railway in Canada.

Facing a deadline of 5 February set by U.S. District Court Judge Sharon L. Gleason, Kloosterboer International Forwarding (KIF) and Alaska Reefer Management (ARM) filed for dismissal of the case after they “entered into a settlement agreement resolving all claims and counterclaims asserted in this litigation” with U.S. Customs and Border Protection (CBP) and the U.S. Department of Justice (DOJ).

As of 7 February, Gleason had not yet signed the order finalizing the case’s dismissal. She had threatened to require the CBP and the DOJ to show cause for their continued requests for delays in responding to the settlement agreement, crafted in July 2023, which called for a payment of USD 9.5 million (EUR 8.5 million) in exchange for the dismissal of nearly USD 400 million (EUR 359 million) in fines related to the companies' Bayside Program.

The program, created and operated by KIF and ARM, used an intermodal facility in the Canadian province of New Brunswick used to transport Alaskan seafood to the U.S. East Coast in a manner the U.S. government argued avoided Jones Act rules governing U.S. seafood.

The short, dead-end railway used in the scheme has since been dismantled, according to satellite imagery.

ARM CEO Per Brautaset said his firm was “very pleased” to reach the end of the legal process.

“The settlement will allow our companies to put all of our focus back to providing best-in-class transportation and logistics services, delivering the most sustainable, healthy, and affordable seafood products to customers around the world and across the United States,” Brautaset said.

American Seafoods Chief Commercial Officer Rasmus Soerensen said the finalization of the settlement – which took more than 180 days after it was announced – was significant for his company, which is now up for sale after Bregal Investments announced in May 2023 it planned to divest from its Bregal Partners Fund I portfolio companies, which includes American Seafoods.

“We are obviously relieved to finally have this matter behind us. It’s been a long wait since we reached a settlement last summer, so we are excited about being able to focus on the day job again now,” Soerensen told SeafoodSource.

Photo courtesy of Independent Marine Ports of Atlantic Canada