CBP Denies Escopeta's Petition for Relief of $15 Million Jones Act Fine

By MarEx 2012-02-06 15:05:58

U.S. Customs and Border Protection (CBP) has denied Escopeta’s petition for relief of the $15 million fine they face for violating the Jones Act last year. CBP says the full amount of the fine will be upheld with payment due at the end of March.

Last March, despite being denied a new Jones Act waiver and after being told by DHS Secretary Napolitano that they’re 2006 waiver was invalid, Escopeta set out to transport their Spartan 151 jack up rig to Alaska onboard a Chinese owned bulker. The oil company was in a race against time, trying to beat competitors to the state’s offer of $25 million in tax credits to the first company to drill in Cook Inlet. Ignoring multiple rejections of their petition to receive a Jones Act waiver the company moved the rig from Texas to Canada to Cook Inlet – a clear violation of law.

On October 13, 2011 CBP issued a penalty in the amount of $15 million against Escopeta. The oil comany continues to claim that there was no U.S. flagged vessel capable of making the trip for them. They also claim that energy shortages in Alaska required they’re need for urgency.

In their most recent petition to CBP, Escopeta asks that the assessed penalty be based on 5 percent of the rig’s value or $675,000, because of “extenuating and extraordinary circumstances.”

In a January 25th letter, John Connors, Chief, Penalties Branch, explains CBP’s position in determining their fine. He writes “we find the facts of the case support the conclusion that the Jones Act violation was deliberate, and thus aggravated.” Connors also says that in March MARAD determined that coastwise-qualified vessels were available to transport the rig. In fact, on March 22, 2011 Escopeta received a letter from MARAD stating that Crowley Maritime Corporation would have a suitable vessel available for transport in October 2011.

CBP also acknowledges that Escopeta was in a hurry to get to Cook Inlet to receive the $25 million tax credit. Connors reminds that CBP has the right to impose a fine that would offset any economic gain – in this case Escopeta stands to make $10 million profit of their Jones Act violation, a profit not likely to provoke a penalty reduction. 
 

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