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Escopeta Fined $15 Million for Jones Act Violation


The U.S.-flag maritime industry is applauding a recent decision handed down by the U.S. Customs and Border Protection (CBP), which levied a $15 million fine against Escopeta Oil Co. for violating the Jones Act, America’s freight cabotage law. A critical component of U.S. maritime regulatory law, the 1920 statute states ocean-borne movements of cargoes between U.S. ports to U.S.-flag, U.S.-crewed vessels.

The fine is the largest ever assessed. The case arises out of a decision by the company to use a foreign-flag vessel, the M/V Kang Sheng Kou, to transport a Spartan 151 jack-up oil drilling rig from Texas to Canada. It then had the rig towed to Alaska, thereby completing the voyage. Since it was between two U.S. ports, it constituted a violation of U.S. maritime law.

The company had obtained a waiver of the Jones Act from the Department of Homeland Security in 2006, but it was for a different rig. It applied for another one in 2011, but the CBP stressed that the earlier waiver no longer was applicable.

Escopeta requested a new waiver, which the CBP rejected. The company went ahead with the voyage anyway. The CBP looked into the matter and decided that the company’s claim—that it had reason to believe the agency would grant the waiver—was not true.

U.S. maritime officials noted that at a time when the Jones Act has come under intense attack from special interest groups, it is imperative that the law’s integrity be maintained




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