U.S. district court says Jones Act must be read literally

U.S. district court says Jones Act must be read literally

U.S. district court says Jones Act must be read literally

   The U.S. District Court for the District of Columbia has determined that Customs and Border Protection rulings allowing the shipment of frozen fish from Alaska to the U.S. East Coast in foreign-flag vessels via Canadian ports and rail lines are 'arbitrary, capricious and not in accordance with law' — unless rate tariffs for such shipments are filed with the U.S. Surface Transportation Board.

   The court ruling means that the third proviso to Section 27 of the Merchant Marine Act of 1920, better known as the Jones Act, must be read literally.

   Although the Jones Act generally prohibits transport of goods in the coastwise trade from one U.S. port to another except on U.S.-flag vessels, an exception in the act's third proviso allows shipments on routes using Canadian ports and railroads when such routes are recognized by the STB and rate tariffs have been filed with the board.

   In the case at hand, Horizon Lines LLC, a U.S.-flag carrier active in Jones Act trades, sued in federal to thwart CBP's approval of a plan by Sunmar Shipping Inc., a competitor of Horizon's, to transport frozen fish from Dutch Harbor, Alaska, to Boston.

   Sunmar had received CBP approval to charter non-Jones Act vessels to bring fish from Alaska to Bayside, New Brunswick, a port about six miles south of St. Stephen, New Brunswick, which is across the St. Croix River from the Calais, Maine, U.S. point of entry.

   Rather than proceed directly to Calais, Sunmar proposed to move the fish in a triangular pattern, first by truck and then by rail, to several towns in New Brunswick, adding 145 miles to the route prior to entry into the United States. Sunmar did not intend to file rate tariffs for any portion of the route.

   CBP, in approving Sunmar's plans, had noted that subsequent to the enactment of the Jones Act's third proviso, Congress had largely deregulated the rail industry and virtually eliminated required filings of tariffs. CBP thus reasoned that the rate tariff filing requirement of the third proviso should be ignored, on grounds that 'mechanistic adherence' to statutes requiring the filing of rate tariffs with the STB 'in the present climate of deregulation would lead to an absurd result that cannot be justified.'

   At trial, Horizon Lines argued that Sunmar's proposed route was 'commercially pointless' and in violation of the Jones Act's third proviso.

   U.S. District Judge Ellen Segal Huvelle ruled that CBP had gone too far in expanding the third proviso of the Jones Act 'to permit a non-coastwise-qualified private shipper to engage in noncontiguous domestic trade without filing a rate tariff with the Surface Transportation Board. This interpretation ignores both the plain language of the (Jones Act) and the congressional intent in enacting it.'

   'It is within the authority of Congress,' Huvelle added, 'to expand the scope' of the third proviso. 'The fact that certain foreign vessels wish to take advantage of the proviso — yet are unable to — is the concern of the legislature and not the agency,' meaning CBP, Huvelle noted in her ruling. She ordered that the case be sent back to CBP 'for further proceedings not inconsistent with this ' opinion.'

   The title of this case is 'Horizon Lines LLC v. the United States of America and American Seafoods Co. LLC.; U.S. District Court for the District of Columbia, civil action docket number 05-0952(ESH). The court ruled on Feb. 10.