A 200-foot railway at the center of a U.S. Customs and Border Protection investigation into alleged avoidance of the Jones Act by two American Seafoods subsidiaries has been dismantled, according to The Drive.
Satellite images from November 2022 provided by Planet Labs appear to reveal the Bayside Canadian Railway no longer exists at the port facility in Bayside, New Brunswick, Canada.
In August 2021, CBP began issuing fines against American Seafoods and other companies associated the Bayside Program, which involved the use of the dead-end rail track, allegedly solely used to maintain the route’s historical compliance with a Jones Act exception.
Seafood sent to the port would take a back-and-forth trip on the rail track and was then loaded onto trucks that took it into the U.S. via the border crossing in Calais, Maine, U.S.A. American Seafoods subsidiary Alaska Reefer Management (ARM) and the company that operates the New Brunswick facility, Kloosterboer International Forwarding (KIF), argued the railway, which was built in 2012, allowed the seafood transported on it to be exempted from Jones Act requirements prohibiting transportation of domestically-caught seafood and any other goods of U.S. origin inside the country unless the vessel is U.S.-built and U.S.-owned.
The companies claimed an exemption under the so-called “third proviso,” which allows for limited exceptions to the Jones Act for companies transporting goods from Alaska, due to the fact it is not contiguously connected to the rest of the country. The trio sued the U.S. federal government, challenging approximately USD 350 million (EUR 294.3 million) in fines issued by U.S. Customs and Border Protection against them and their contracted transportation partners.
However, in responding to the suit, the CBP and the U.S. Department of Homeland Security said the scheme was a “blatant” attempt to evade the requirements of the Jones Act.
“The BCR was constructed and is operated for the sole purpose to attempt to evade the requirements of the Jones Act,” they wrote.
In May 2022, U.S. District Court Judge for the District of Alaska Sharon L. Gleason ruled ARM and KIF had to rework their network for bringing Alaska pollock into the U.S., but she waived all fines issued by CBP against them for their previous use of the Bayside Program. In July 2022, Gleason lifted an injunction she had imposed on CBP in October 2021 to prevent it from issuing additional fines on the companies if they continued to use the railway.
The case, which is still working its way through the U.S. court system, may still allow CBP to collect on the fines it issued. Expert discovery is currently underway and is due to be finalized by August 2023, according to court documents.
A representative of American Seafoods declined comment, citing ongoing litigation related to the railway, and representatives of ARM and KIF did not respond to a request from SeafoodSource for comment.
Photo courtesy of Google Maps
