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Furie Operating Alaska, LLC v. U.S. Department of Homeland Security

United States District Court, D. Alaska

July 6, 2015



JOHN W. SEDWICK, Senior District Judge.


At docket 116, Defendants U.S. Department of Homeland Security ("DHS"), Secretary of Homeland Security Jeh Johnson, U.S. Customs and Border Protection ("CBP"), and CBP Commissioner Gil Kerlikowske (collectively, the "Government" or "Defendants") filed a motion to dismiss Counts II, III, and IV of the complaint pursuant to Rule 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. The motion challenges the reviewability of Furie's Administrative Procedure Act ("APA")[1] claims. Plaintiff Furie Operating Alaska, LLC ("Plaintiff" or "Furie") filed its response at docket 118. Defendants reply at docket 113. Oral argument was not requested and would not assist the court.


The challenged agency actions at issue relate to Furie's 2011 transportation of the Spartan Rig from the Gulf of Mexico in Texas to Vancouver, British Columbia, using a foreign vessel and then from Vancouver to Cook Inlet, Alaska, using a U.S. vessel. Furie's use of a foreign vessel to transport the Spartan Rig implicates the Jones Act, specifically 46 U.S.C. § 55102(b), which provides that no "merchandise" can be transported by water between points in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel transporting the merchandise is one that is built in, documented under the laws of, and owned by citizens of the United States. The penalty for violating this U.S.-vessel requirement is forfeiture of the merchandise transported or, alternatively, a sanction in an amount equal to the value of the merchandise or the actual cost of the transportation of the merchandise, whichever is greater.[2]

The U.S.-vessel requirement can be waived by the Secretary of DHS ("Secretary"), but only if there is no qualified vessel from the United States available for the transport and if the Secretary "considers it necessary in the interest of national defense...."[3] Furie sought and received a waiver from then-Secretary Michael Chertoff in 2006 when Furie had planned to transport a different rig, the Tellus, to Alaska with the use of a foreign vessel. Furie was unable to transport the Tellus in 2006 because of repairs and legal disputes. In the meantime, the Tellus was sold to foreign interests, and Furie could no longer use it for its natural gas exploration in Alaska.

By 2010, Furie had made alternate plans, entering into a contract to use the Spartan Rig instead. It had also located a different vessel to transport the Spartan Rig to Alaska, but again it was a foreign vessel. Furie requested that then-Secretary Janet Napolitano reconfirm the Jones Act waiver that Secretary Chertoff had granted in 2006. When Furie did not get a response, it informed CBP of its intention to ship the Spartan Rig to Alaska with a foreign vessel based on the former waiver. CBP informed Furie that the waiver was no longer valid and that it would need a new waiver or face penalties if it transported the Spartan Rig as planned.

Furie sought a new waiver from Secretary Napolitano but was denied in March of 2011. The denial was based on the Maritime Administration's conclusion that there was a U.S. vessel capable of transporting the Spartan Rig from Texas to Alaska. Furie believed that the Maritime Administration was incorrect and anticipated that a waiver would be granted given the corrected information, and thus, in March of 2011, Furie had the Spartan Rig depart from Texas using a foreign vessel for transportation without a waiver. Indeed, on March 22, 2011, the Maritime Administration received new information and concluded that the qualified U.S. vessel could not transport the Spartan Rig to Alaska until October, outside Furie's requested time frame.

In May of 2011, Furie asked Secretary Napolitano to reconsider her denial on an expedited basis because the Spartan Rig was already on its way to Alaska and scheduled to arrive at the end of May. On May 20, 2011, Secretary Napolitano denied the request because a waiver was not in the interest of national defense, as neither the Department of Defense nor the Department of Energy supported it. Her denial indicated, however, that DHS wanted to work with Furie to find an equitable way to allow transportation of the Spartan Rig to the Cook Inlet. She indicated that CBP officials would be prepared to meet with Furie representatives to discuss possible mitigation of the penalties that would result if the Spartan Rig were offloaded in Alaska. Furie advocated for mitigated penalties, and the rig was diverted to Vancouver, Canada. After further negotiations and communications regarding penalty mitigation, in July of 2011, CBP official Allen Gina indicated in an email that he would recommend a mitigated penalty of $6.9 million.

On July 22, 2011, the Spartan Rig left Vancouver for Alaska, towed by a U.S. vessel. It arrived in Alaska a few weeks later. On October 13, 2011, CBP sent Furie a notice of violation based on the transport of the rig from Texas to Alaska via in part by a non-qualifying vessel. The notice assessed a penalty of $15 million, which it stated to be the full value of the Spartan Rig. On December 12, 2011, Furie submitted a petition for mitigation, which CBP denied in January of 2012. In March of 2012, Furie submitted a supplemental petition for mitigation. CBP denied that request in May of 2012. On June 6, 2012, Furie informed CBP that it would file a request for reconsideration, but the next day CBP informed Furie that the regulations did not authorize a request for reconsideration. Furie did not pay the penalty and instead filed this lawsuit. Defendants filed a counterclaim at docket 38, requesting that the court enforce the penalty against Furie.

Furie's complaint has three remaining APA claims: (1) Count II alleges that the Secretary failed to exercise independent judgment when she denied Furie's waiver request, which it alleges was arbitrary, capricious, and an abuse of discretion, (2) Count III alleges that the Secretary's refusal to grant a waiver when her predecessor had previously done so on the same set of facts was an unexplained action which was arbitrary, capricious, and an abuse of discretion; and (3) Count IV alleges that Defendants' assessment of an unmitigated penalty was arbitrary and capricious in light of the Secretary's promise to come up with an equitable way to allow transportation and CBP's acknowledgment of mitigating factors.[4] Defendants argue that the court lacks jurisdiction over Counts II through IV of Furie's complaint because the Secretary's decision to deny Furie a waiver of the Jones Act under 46 U.S.C. § 501(b) and CBP's decision to not mitigate the resulting penalty are unreviewable under the APA.


Under Federal Rule of Civil Procedure 12(b)(1), a party may seek dismissal of an action for lack of subject matter jurisdiction. In order to survive a defendant's motion to dismiss, the plaintiff has the burden of proving jurisdiction.[5] Where the defendant brings a facial attack on the subject matter of the district court, the court assumes the factual allegations in the plaintiff's complaint are true and draws all reasonable inferences in the plaintiff's favor.[6] The court does not, however, accept the truth of legal conclusions cast in the form of factual allegations.

Rule 12(b)(6) tests the legal sufficiency of a plaintiff's claims. To avoid dismissal, a plaintiff must plead facts sufficient to "state a claim to relief that is plausible on its face.'"[7] That is, "[f]or a complaint to survive a motion to dismiss, the non-conclusory factual content, ' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." In reviewing such a motion, "[a]ll allegations of material fact in the complaint are taken as true and construed in the light most favorable to the nonmoving party."[8] To be assumed true, the allegations "may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively."[9] Dismissal for failure to state a claim can be ...

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