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A new $350 million Bering Sea fish fight could hinge on a miniature Canadian railroad

Kloosterboer
KUCB
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A high-seas legal fight is causing havoc for one of Alaska’s biggest commercial fisheries, the Bering Sea pollock harvest out of Dutch Harbor.

The quickly escalating saga involves hundreds of millions of dollars in fines, a miniature Canadian railway and Donald Trump’s personal lawyer. And it stems from the way that one of Alaska’s biggest fishing companies, American Seafoods, is using an exemption in the federal law that typically allows only U.S. ships to move cargo between U.S. ports.

American Seafoods’ shipping subsidiary and an affiliate company, Kloosterboer International Forwarding, sued U.S. Customs and Border Protection in federal court Thursday.

They’re challenging $46 million in fines issued directly to American Seafoods, plus more than $300 million levied against industry partners over the past month — some of which are holding American Seafoods’ subsidiary liable.

In legal filings, the companies say the threatened penalties are paralyzing the Alaska seafood industry’s supply chain to a port called Bayside, on the East Coast, and have stranded millions of pounds of frozen fish destined for American customers.

“Cargo vessels are no longer being sent to Bayside with seafood for the eastern United States. Fishing vessels returning from the Bering Sea to Dutch Harbor are facing dangerously tight conditions as the limited cold storage capacity fills up with cargo that was destined to the United States,” an Anchorage-based lawyer for the companies, David Gross, said in a court filing Tuesday. “The entire transportation route used by plaintiffs has been paralyzed and will be irreparably damaged, absent court intervention.”

Officials at the American subsidiary that filed the lawsuit, Alaska Reefer Management, declined to comment beyond a prepared statement. A CBP spokesman also declined to comment.

American Seafoods says it has the world’s largest operation processing $400 million worth of pollock each year, on its huge ships with onboard factories.

The company, like other major Alaska seafood players, sells much of its harvest to Asian and European markets.

But it’s also a major supplier of pollock to U.S. customers, with products like fish sticks that end up at food banks and in school lunches. A little less than 15% of the company’s catch is shipped to the eastern U.S. on ships coordinated by Kloosterboer and American Seafoods’ shipping subsidiary, Alaska Reefer Management, according to court documents.

The Jones Act, a century-old federal law, typically requires American-flagged ships to move cargo between American ports. But the legislation contains an exception known as the “Third Proviso,” which allows companies to use foreign-flagged ships between U.S. ports if the routes include “Canadian rail lines” — and if they’re certified by an obscure federal agency called the Surface Transportation Board.

Alaska seafood companies have been using that exception since 2000, according to court documents.

Vessels flagged in countries like Singapore and the Bahamas first pick up frozen seafood products in Dutch Harbor, then travel to the Canadian port of Bayside, New Brunswick, just across the border from Maine.

From Bayside, the seafood would be trucked to a Canadian train, loaded and moved 20 miles between two stations — sometimes in the opposite direction of the U.S. border. Then the cargo would be loaded back onto the trucks to drive into the U.S.