Kloosterboer International Forwarding LLC v. United States, Department of Homeland Security

PROPERTY LAW
United States District Court, District of Alaska (2022)

Rachel Reiss


In Kloosterboer International Forwarding LLC v. United States, Department of Homeland
Security, 604 F.3d 853 (D. Alaska 2022), the district court held that a transporter of frozen
seafood products from Alaska to the east coast of the United States did not qualify for the Third
Proviso exception to the Jones Act. (Id. at 859, 869). The transportation route in question began
in Dutch Harbor, Alaska, after which products were moved to New Brunswick, Canada. (Id. at
859). There, a trucking company would pick up the products and drive onto a rail car that would
carry the products about 100 feet from point A to point B and back. (Id.). Finally, the trucks
would drive to Maine, where the products would enter the United States. (Id.). In 2017, after
investigation, United States Customs and Border Protection found that this transportation route
violated the Jones Act as it did not qualify for the Third Proviso exception. (Id. at 860). The
Jones Act requires transporters to use coastwisequalified vessels (those that are U.S. built and
owned). (Id. at 861). In the transportation process at issue here, the company used a non
coastwisequalified vessel. (Id. at 859). However, the Third Proviso grants an exception to the
coastwisequalified vessel requirement so long as transporters meet the following: (1) the
transportation includes “through routes in part over Canadian rail lines,” (2) routes must have
been recognized by the Surface Transportation Board, and (3) rate tariffs were filed with the
Surface Transportation Board. (Id. at 862). As an initial matter, the district court determined that,
since the Jones Act is regulatory in nature rather than penal, it should be construed broadly and
thus its exceptions, including the Third Proviso, should be construed narrowly. (Id. at 863). Next,
the court held that simple outandback movement along the rail car did not constitute
transportation via a Canadian rail line as required by the Third Proviso, because it did not make
actual progress on the through route. (Id. at 867). Further, the transportation company’s filing of
a tariff for another transportation route did not satisfy the tariff requirement for the transportation
route in question. (Id. at 869). Accordingly, the district court held that the transporter of frozen
seafood products from Alaska to the east coast of the United States did not qualify for the Third
Proviso exception to the Jones Act. (Id. at 859, 869).

Kloosterboer International Forwarding LLC v. United States, Department of Homeland Security

PROPERTY LAW
United States District Court, District of Alaska (2022)

Rachel Reiss


In Kloosterboer International Forwarding LLC v. United States, Department of Homeland
Security, 604 F.3d 853 (D. Alaska 2022), the district court held that a transporter of frozen
seafood products from Alaska to the east coast of the United States did not qualify for the Third
Proviso exception to the Jones Act. (Id. at 859, 869). The transportation route in question began
in Dutch Harbor, Alaska, after which products were moved to New Brunswick, Canada. (Id. at
859). There, a trucking company would pick up the products and drive onto a rail car that would
carry the products about 100 feet from point A to point B and back. (Id.). Finally, the trucks
would drive to Maine, where the products would enter the United States. (Id.). In 2017, after
investigation, United States Customs and Border Protection found that this transportation route
violated the Jones Act as it did not qualify for the Third Proviso exception. (Id. at 860). The
Jones Act requires transporters to use coastwisequalified vessels (those that are U.S. built and
owned). (Id. at 861). In the transportation process at issue here, the company used a non
coastwisequalified vessel. (Id. at 859). However, the Third Proviso grants an exception to the
coastwisequalified vessel requirement so long as transporters meet the following: (1) the
transportation includes “through routes in part over Canadian rail lines,” (2) routes must have
been recognized by the Surface Transportation Board, and (3) rate tariffs were filed with the
Surface Transportation Board. (Id. at 862). As an initial matter, the district court determined that,
since the Jones Act is regulatory in nature rather than penal, it should be construed broadly and
thus its exceptions, including the Third Proviso, should be construed narrowly. (Id. at 863). Next,
the court held that simple outandback movement along the rail car did not constitute
transportation via a Canadian rail line as required by the Third Proviso, because it did not make
actual progress on the through route. (Id. at 867). Further, the transportation company’s filing of
a tariff for another transportation route did not satisfy the tariff requirement for the transportation
route in question. (Id. at 869). Accordingly, the district court held that the transporter of frozen
seafood products from Alaska to the east coast of the United States did not qualify for the Third
Proviso exception to the Jones Act. (Id. at 859, 869).