Oil Pollution Act: Insurance; Coverage

摘要

Jefferson Block was a part owner and operator of seven offshore oil and gas leases in the Gulf of Mexico. In November 2007, an accident occurred that led to an oil spill from one of Jefferson Block's offshore facilities. It remedied the oil spill and incurred approximately $3 million in "removal" costs. At the time of the spill it had an insurance policy specifically geared to potential liability under the Oil Pollution Act, 33 U.S.C. §§2701 et seq. (OPA). The policy, however, is limited to certain liabilities incurred where it is the responsible party of the offshore area and facilities. After submitting a claim, the insurance companies denied the claim saying that the source of the spill, a sixteen-inch pipeline, was not covered by the policy. The District Court granted the insurance companies' motion for summary judgment. Held: reversed and remanded. The insurance policy has a choice of law provision designating New York as the applicable law. Under New York law, the policyholder bears the burden of showing that the insurance policy covers the claimed loss. After applying canons of construction applicable to insurance contracts, the court determines that the subject matter of the policy was to cover potential liabilities under the OPA.