Alaska Company to Pay Record $10 Million Jones Act Penalty

Photo: Furie Operations Alaska

An Alaskan company whose main focus is on the exploration and production of natural gas and oil in the Cook Inlet, AK has agreed pay a record $10 million fine for violating the Jones Act when it moved a drilling rig from the Gulf of Mexico to Alaska using a foreign-flagged vessel.

The settlement is the largest Jones Act penalty in the history of the Act.

Acting U.S. Attorney Bryan Schroder announced Tuesday that Furie Operating Alaska LLC of Anchorage, Alaska has agreed to pay $10 million to satisfy a civil penalty handed down by U.S. Customs and Border Protection for violating the Jones Act. The penalty was assessed after the company 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 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 it is believed to be in the interest of national defense or if there is no U.S. vessel available.

“Resolution of this case demonstrates that the Jones Act will be actively enforced and that an intentional violation will not be rewarded,” the U.S. Justice Department said in a press release. “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 settlement announced Tuesday resolves a civil lawsuit filed by Furie in 2012 challenging the original assessment of the civil penalty.

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