There’s something fishy going on in Alaska—it’s called the seafood industry, which is estimated by a 2017 study to contribute $12.8 billion in economic output. While most of the industry is on the legal up-and-up, commercial seafood processor American Seafoods Group has been accused of fishy business by the United States Department of Justice, which has slapped it and affiliates with over $350 million in fines. Why? It’s all down to a roughly 200-foot railway it operates in Canada to give fish a ride to nowhere at all.
The Bayside Canadian Railway is said by the DOJ to fly afoul of the Merchant Marine Act of 1920, according to Anchorage Daily News. Also known as the Jones Act, the law requires shipping between American ports be done with American-built, American-flagged vessels, which the ASG reportedly doesn’t operate. An exemption known as the third proviso, however, apparently accommodates goods that make part of the journey via rail in Canada.
Bayside Canadian Railway circa 2019
Hence, when transporting its catch from Dutch Harbor, Alaska to the east coast, ASG used to ship its products over 30 miles by way of the New Brunswick Southern Railway. Since approximately 2012, though, ASG has unloaded its catch onto a truck, which is then loaded onto a flatcar on the short Bayside Canadian Railway, which travels to the end of the line and back according to The Maritime Executive—a distance of only a couple hundred feet. From there, the truck disembarks the train and crosses the border to arrive in Calais, Maine.
“All was good” between the DOJ and ASG until last fall when the DOJ allegedly followed a tip from an insider to discover the line, which was apparently not known to Bayside port officials. DOJ attorneys have reportedly accused ASG subsidiaries Kloosterboer International Forwarding and Alaska Reefer Management of trying to circumvent the Jones Act, stating the company’s “actions were not a one-time error or oversight, but rather part of a calculated and secret scheme to find a loophole in the Jones Act, which was only revealed when the government received a tip from a third party.”
ASG reportedly insists the rail line fulfills the criteria for Jones Act exemption, stating that the Bayside Canadian Railway is “indisputably a registered Canadian rail line; the goods are loaded onto it and travel a short distance,” adding that its products are not legally required to travel a minimum distance. In response, ASG is suing the Department of Homeland Security to deflect fines that amount to over $350 million—nearly 90 percent of the company’s 2015 revenue, according to The Seattle Times. That the ASG flouted the spirit of the law seems incontrovertible, but whether it violated the letter is another matter entirely, and one for the court to decide.
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