Appeals court reshapes marine insurer liability in Margara case
A federal appeals court overturned a liability decision against the owner and insurer of the T/V Margara after the tanker damaged nearly 7,000 square meters of coral reef off Puerto Rico in April 2006. The First Circuit ruled on Oct. 23 that the government must prove by preponderance of evidence that the vessel posed a substantial threat of oil discharge rather than rely on Coast Guard determinations.
The United States and Puerto Rico sought millions in restoration costs under the Oil Pollution Act after the National Pollution Funds Center paid more than $5 million from the Oil Spill Liability Trust Fund. The district court granted summary judgment for the government against Ernst Jacob GmbH and Shipowners Insurance and Guaranty Company, applying arbitrary-and-capricious review to the agency’s findings.
The appellate court found that the government must also establish that the damaged resources fell under federal management and control, as the statute requires. The case returns to the district court for additional fact-finding on liability standards and resource jurisdiction.
