It was announced on Tuesday by acting U.S. Attorney Bryan Schroder of the U.S. Justice Department, that Furie Operating Alaska LLC has agreed to pay a $10 million fine in a civil penalties case for violation of the Jones Act brought against them by U.S Customs and Border Protection.
The case had its start in 2011,, when Escopeta Oil Company transported the Spartan 151 jack-up rig from the Gulf of Mexico utilizing the foreign heavy-haul vessel, Kang Sheng Kou. Furie, Escopeta’s successor, pointed out that it was necessary to use the foreign vessel as no other U.S. vessels capable of hauling the rig was available at the time. CBP disagreed and leveled a $15 million penalty. Furie refused to pay, and in 2012 filed a coutersuit.
The Jones Act, passed in 1920, prohibits foreign vessels from transporting merchandise between any two points in the U.S. The exception to this rule is the granting of a waiver that is limited to cases of national security where no U.S. vessel is available.
Furie argued that the law expressed “merchandise” or “cargo” could not be transported, and attempted to categorize the jack-up rig as a vessel. The judge in the case disagreed and pointed out that the rig itself had been loaded aboard a vessel and thus was cargo.
The $10 million settlement between Furie and CBP marks the highest settlement made in the history of the 97-year-old act.