Alaska oil firm to pay largest ever Jones Act violation penalty

Oil and gas firm Furie Operating Alaska will pay the largest Jones Act penalty in the history of the act.

Furie was penalized when it transported the Spartan 151 jack-up drill rig from the Gulf of Mexico to Alaska in 2011 using a foreign-flagged vessel.

The Jones Act, passed in 1920 prevents foreign-flagged ships from shipping merchandise between points in the United States.

According to the U.S. Justice Department, Furie, a company with the focus on exploration and production of natural gas and oil in Cook Inlet, has agreed to pay $10 million to satisfy a civil penalty originally assessed against it by U.S. Customs and Border Protection (“CBP”) for violating the Jones Act.

A waiver to the Jones Act 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 U.S. vessel available to engage in the transport. Furie did not acquire such a waiver prior to the transportation of the rig.

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

“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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