CBP: Bayside "Canadian Rail" Facility Switched to Russian Seafood

Bayside Canadian Railroad (CBP)

Published Oct 8, 2021 7:13 PM by The Maritime Executive

In a brief filed Friday, a senior U.S. Customs and Border Protection officer testified that the cargoes coming from the Bayside facility in New Brunswick, Canada switched suddenly from U.S.-origin seafood to Russian-origin seafood - three days after the agency hit the facility's operator with record fines for alleged violations of the Jones Act.

CBP contends that Bayside's operator, Kloosterboer International Forwarding, was a participant in a scheme to use a sham "Canadian railway" to circumvent the Jones Act. ASC would ship its fish from Alaska to New Brunswick, Canada via the Panama Canal - a voyage of more than 7,500 nm - aboard foreign flag reefer vessels. At the Bayside terminal in New Brunswick, the fish would be offloaded into cargo trucks; driven onto a miniature "Canadian railway;" moved back and forth about 100 feet; and then driven by truck over the border at Calais, Maine for delivery in the United States. 

ASC asserts that this foreign-flag domestic voyage fits within the so-called "Third Proviso" of the Jones Act, which exempts shipments involving a properly-documented Canadian railroad on "through routes." The "Bayside Canadian Railway" is a railroad, if a very small one, and it is in Canada; however, CBP believes that it was not properly documented during the period in question. Further, federal attorneys have argued that it does not constitute a "through route," as the trucks drive on and off at the same ramp without making material progress towards their destination.

On August 16, CBP sent Alaska Reefer Management, Kloosterboer and related parties a long list of alleged Jones Act violations for shipments that passed over the Bayside Canadian Railway. The total potential fines come to as much as $350 million, including tens of millions in possible penalties for foreign shipowners. 

On August 19, three days after the penalty notices went out, the U.S. border station at Calais, Maine began to register a new, never-before-seen kind of cargo coming from Bayside. The same trucking companies that once carried Bayside's American-caught fish were now arriving with Russian-origin seafood. Kloosterboer's name was on the bill of lading, and the truck weights for the Russian seafood were the same as they were when Kloosterboer was sending Alaskan seafood. The next day, shipments of Alaskan seafood stopped; the Russian product kept arriving.

"In the ten years prior to August 19, 2021, there were no entries of Russian-origin frozen seafood to the United States through the Calais Port of Entry," testified CBP Assistant Port Director (APD) Nicholas Chambers. "The weight of product for the seafood, per truckload, is equivalent to prior shipments of Alaskan frozen seafood."

A Kloosterboer official declined to comment on the origin of the Russian cargo and referred questions to a general media email inbox. 

In a separate declaration, a senior CBP agent testified that to the best of his knowledge, no CBP personnel had ever visited or approved of the Bayside Canadian Railway operation, before or after its construction. Previous declarations by a witness for Alaska Reefer Management suggested that CBP agents had given the green-light during the facility's construction. 

"Neither I, nor any of [our] current or former employees have any knowledge of CBP officers being present before, during, or after construction of the Bayside Canadian Railway. Additionally, we can locate no records reflecting that this inspection occurred," testified Calais Port Director Herm Gadway. "It would be highly unusual for CBP officers to inspect transportation or import operations on foreign soil."