CITGO Liable for All of $143.5 Million in Oil Spill Cleanup Costs: Third Circuit

CITGO Liable for All of $143.5 Million in Oil Spill Cleanup Costs:  Third Circuit

In a case involving a 2004 oil spill in the Delaware River, the U.S. Court of Appeals for the Third Circuit affirmed a $71.5 million judgment in favor of the owner of an oil tanker against CITGO, and reversed a district court finding that the United States could recover only 50 percent of its roughly $72 million in cleanup costs. The District Court found that CITGO, as charterer of the ship, had breached a contractual “safe berth warranty” because the ship struck an abandoned anchor as it was being maneuvered into port. CITGO appealed, arguing that the ship must have had a draft exceeding 37 feet – the depth below which the warranty would not apply – and that the District Court erred in failing to explain how the abandoned anchor could have moved from a horizontal position suggested by pre-incident sonar data to the upright position necessary for it to have damaged the ship at a draft less than 37 feet. The court of appeals held that the District Court did not need to provide a specific mechanism for the change in the anchor’s position, because ample evidence supported the finding that the ship’s draft was less than 37 feet. The court of appeals also found that CITGO had failed to establish an equitable recoupment defense, and held that the United States could recover the full amount of its cleanup costs from CITGO. [3/30/18]

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