U.S. Customs and Border Patrol officials fined a natural gas exploration company $15 million for towing a rig to Alaska, prompting the company to accuse Homeland Security Secretary Janet Napolitano of double-dealing in a legal complaint.
“Secretary Napolitano’s denial of a waiver was arbitrary and capricious,” Furie Operating Alaska LLC told a federal judge.
The complaint springs from DHS’s application of the Jones Act, a law requiring that merchandise transported between U.S. ports must be carried on American ships. Furie Operating Alaska LLC received a national defense waiver in 2006 to enable it to tow a rig from the Gulf of Mexico to Alaska, but Napolitano refused to grant another waiver even though “the U.S.-flag Jones Act fleet does not contain a vessel capable of safely making such a voyage,” Furie says in the complaint.
Napolitano initially denied the waiver because the Maritime Administration (MARAD) wrongly told her an American ship was available to do the job. “MARAD subsequently acknowledged that this finding was not correct in a letter to Secretary Napolitano,” Furie says, but the DHS chief again refused to grant the waiver because the Defense Department and Energy Department chose to say that “did not oppose a waiver” rather than say they “affirmatively support[ed] a waiver.”
The accusation that Napolitano dealt dishonestly with Furie derives from the penalty that followed when Furie towed their rig to Alaska without a waiver.
“Even though she denied the waiver request, Secretary Napolitano expressed her Department’s desire to work with Furie ‘to find an equitable way to allow transportation of your rig to Cook Inlet [Alaska]‘ and invited Furie’s representatives to meet immediately with DHS officials to discuss mitigation of any Jones Act penalties,” Furie says in the complaint.
CBP Assitant Commissioner Allen Gina told Furie that he would recommend that the Jones Act penalty not exceed 15 percent of the value of the vessel, and that promise — together with Napolitano’s letter – resulted in Furie towing their rig to Alaska in order to begin drilling for natural gas. It was towed by a foreign ship from the Gulf to Vancouver, and then American tug boats towed it from Vancouver to Alaska.
CBP hit Furie with the maximum penalty of $15 million for using a foreign ship on the first leg of the trip and refused to review Furie’s appeals. “In refusing to mitigate the penalty, DHS and CBP have not honored Secretary Napolitano’s offer to work with Furie to find an equitable way to allow transportation of the Vessel to Alaska . . . [nor have they] honored Assistant Commissioner Gina’s commitment to recommend a penalty in an amount approximating 15 percent of the vessel’s value.”
Furie asked the court to block the penalty and rule that the rig “is not ‘merchandise’ within the meaning of the Jones Act,” which would thus relieve them of the need to get a waiver from Napolitano.
Courthouse News Service has the full complaint.