Alaska Oil Company to Pay Record Fine for Jones Act Violation

Image Courtesy: Spartan Offshore

An oil and gas company from Alaska has agreed to pay a record USD 10 million civil penalty for violating the Jones Act by using a foreign-flagged vessel to transport a rig from the Gulf of Mexico to Alaska without prior authorization, the US Justice Department said.

Furie Operating Alaska, a company whose focus is exploration and production of natural gas and oil in Cook Inlet, was originally penalised by US Customs and Border Protection when it transported the Spartan 151 jack-up drill rig from the Gulf of Mexico to Alaska in 2011 using a foreign-flagged vessel without acquiring a waiver of the Jones Act from the Secretary of Homeland Security.

The agreement to pay resolves a civil lawsuit filed by Furie in 2012 challenging the assessment of the civil penalty. The settlement in this case is the largest Jones Act penalty in the history of the Act.

The Jones Act, passed in 1920, prohibits a foreign vessel from transporting merchandise between points in the United States. A violation of the Jones Act may result in the assessment of a civil penalty equal to the value of the merchandise. A waiver may be obtained, in limited circumstances, from the Secretary of the Department of Homeland Security when he or she believes it is in the interest of national defense, following a determination that there is no US vessel available to engage in the transport.

”Resolution of this case demonstrates that the Jones Act will be actively enforced and that an intentional violation will not be rewarded. The settlement also provides closure to Furie and is designed not to undermine its ability to bring natural gas to market in Southcentral Alaska,” the Department of Justice said.

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