Pictured above is a screenshot from the satellite view of Google Maps from a location in New Brunswick, Canada. (Here’s the map.) It’s not entirely clear what you’re seeing there, so let’s walk through it. The body of water on the left side of the picture is the St. Croix River, which divides the eastern part of Maine, U.S.A, from the southwestern part of New Brunswick, Canada. Just off the short is a long, rectangular thing indicated by the red Google Maps flag. That’s a train, composed of two train cars with a small blue locomotive on its southern side. The train is sitting on a train track, which you can see extending southward-ish from the train itself for what looks like less than one full train length. You can’t see the northern-ish part of the track because it’s under the train.
So, to recap: the picture above shows a really short train track with a tiny two-car train that can’t really go anywhere. That seems useless, right?
It’s not. In fact, it’s worth millions of dollars — well, maybe.
The train track above is called the Bayside Canadian Railway and as the picture above suggests, it covers only 200 feet (61 meters) from end to end, which is to say, it’s a railway to absolutely nowhere. But that’s okay because where the train goes isn’t nearly as important as where the train is. It isn’t a coincidence that the tiny train line is in Canada nor that it’s literally a stone’s throw away from the United States. Or, for that matter, that it’s near a bay.
The Bayside Canadian Railway was built in 2012 but its purpose dates back to 1920. That year, the United States passed the Merchant Marine Act, which, among other things, regulates maritime commerce. A section of that law, now called the Jones Act, deals with the rules around shipping from one U.S. port to another. As the blog of American law firm Seward & Kessel explains, “the Jones Act requires that any ship carrying merchandise between two points of the United States be built, owned, and crewed by U.S. citizens as prescribed by the Jones Act. The vessel also must be U.S.-flagged, meaning that it operates under American laws.”
You don’t need to know a lot about economics to see why shipping companies aren’t a big fan of the Jones Act. Complying with American laws adds to your costs, hiring American workers means paying a higher minimum wage, and using American-made ships may also add to the wrong side of your financial ledgers. So companies typically find ways around the Act. The easiest way is to stop off somewhere outside the U.S. to on- and off-board cargo or passengers (that’s why U.S. cruise ships almost always stop somewhere outside the United States), but there are other ways around it, too. For example, as Seward & Kessel explains, there’s something called the “third proviso,” which “exempts the transportation of merchandise between points in the continental United States, including Alaska, involving routes in part over Canadian rail lines” (with some details that aren’t relevant to our needs).
For many years, the American Seafood Group was using this proviso to get around the Jones Act. They shipped fish from Alaska to Maine via the Panama Canal, but instead of docking in Maine and offloading that cargo, they did so in New Brunswick. They transferred the fish onto the 30-mile New Brunswick Southern Railway, bringing it close to the American border, and then offloaded it onto trucks which took the fish the rest of the way into the United States. By taking that trip over that 30-mile railway, American Seafood met the requirements of that third proviso and was able to use foreign-flagged ships without violating the Jones Act. (If you’re wondering why they didn’t just offload the cargo in New Brunswick and drive it into Maine, it wouldn’t work; the Jones Act would still apply.)
But in 2012, American Seafood came up with a cheaper way to get the same impact. The third proviso doesn’t specify how long of a train ride the cargo needs to go on, and American Seafood figured that there was, therefore, no need to pay for a 30-mile ride when a 0.03-mile (200-foot) trip would do. So they built the Bayside Canadian Railway. Their ships would still go from Alaska to New Brunswick, just like before. This time, though, the fish would be transported to a truck which would then be driven onto the two-bed train above, pulled across the track and back, and then be driven off the track. (Here’s a brief video of the train in action.) The fish, now having been transported in part over Canadian rail lines, could go across the border into the United States without triggering the requirements of the Jones Act.
It’s a ridiculous loophole but for years, the U.S. federal government either didn’t notice or didn’t care. But that changed in 2021. That year, as Anchorage Daily News reported, the government finally filed a lawsuit against American Seafood’s relevant subsidiary, looking to collect approximately $350 million in fines. And earlier this year, the courts agreed — kind of. Per The Maritme Executive, the judge in the case ruled that “since the rail portion of the route starts and ends at the same point, it does not result in forward progress and therefore does not meet the statute’s standard for ‘transportation,'” But because the government didn’t follow its usual process in issuing the fines, American Seafood wasn’t liable for any penalties before the date of the ruling.
It’s unclear where the litigation will go from here — the decision from the judge came down only a few weeks ago — and it’s also unclear whether American Seafood can fix this flaw by having the train only go one way on the track, thereby achieving the required “forward progress.” Either way, for the time being, the fishy train is really going nowhere — although that’s not much of a change.
From the Archives: This is Cabotage: Another Jones Act story.