Gas Firm Fined $10 million for Jones Act Violation (8/2)


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The following news release was issued by the International Transport Workers' Federation (ITF) on August 1. It can also be viewed here.


US gas firm fined record $10m for using foreign ship


The ITF has welcomed a fine of $10 million imposed on the natural gas producer Furie Operating Alaska LLC for breaking the Jones Act, which protects U.S. shipping against the use of foreign ships to move merchandise between U.S. ports (a protection known as “cabotage”).


The case dates back to 2011 when Furie’s predecessor company Escopeta Oil and Gas used a Chinese ship, Kang Sheng Kou, to move a drill rig from the Gulf of Mexico to Alaska. However, in the same month, the Department of Homeland Security (DHS) had denied the company’s application for an extension of a Jones Act waiver issued to them in 2006 to use a foreign ship to move equipment to Alaska, on the grounds that U.S. barges could make the trip.


When Furie acquired Escopeta in June 2011, it used U.S. tugboats to finish the trip, but was later charged with Jones Act violation by U.S. Customs and Border Protection for using a foreign vessel for part of the trip, and assessed a penalty of $15 million.


Furie appealed against this fine but the DHS ruled that Escopeta had violated the Jones Act. After a protracted legal process, the U.S. District Court for Alaska agreed to reduce the fine to $10 million. Even with the agreed reduction, the fine is the largest ever brought against a U.S. company for violating the Jones Act, which dates back to 1920.


Welcoming the penalty against Furie, David Heindel, chair of the ITF seafarers’ section, commented that: “We are pleased to see that due legal process has been enforced to ensure that companies do not evade our cabotage law, the Jones Act, which has proved a vitally important cornerstone to protect U.S. shipping and our national interest. Those who break the rules must pay a price.”


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