No APA Deference for OPA Liability; Third-Party Admiralty Claims Trigger § 1292(a)(3): The First Circuit’s Framework in United States v. Ernst Jacob GmbH & Co. KG

Court: United States Court of Appeals for the First Circuit

Decision Date: October 23, 2025

Introduction

The First Circuit’s opinion in United States v. Ernst Jacob GmbH & Co. KG addresses two significant questions at the intersection of admiralty jurisdiction and federal oil pollution liability under the Oil Pollution Act of 1990 (OPA). First, the court holds that a case “includes” an admiralty claim for purposes of 28 U.S.C. § 1292(a)(3) when it contains third-party admiralty claims—even if the plaintiff’s own claims are non-admiralty—thereby permitting interlocutory appellate review of liability determinations. Second, on the merits, the court rejects the application of Administrative Procedure Act (APA) deferential review to an OPA liability element. It holds that whether an “incident” posed a “substantial threat of a discharge of oil” under 33 U.S.C. § 2702(a) is a question of liability to be decided de novo under the ordinary preponderance-of-the-evidence standard, not by reviewing a Coast Guard Federal On-Scene Coordinator’s (FOSC) determination for arbitrariness.

The case stems from the 2006 grounding of the T/V Margara, a large tanker that stranded on coral reefs off Tallaboa, Puerto Rico. No oil was discharged, but response efforts to free the vessel and mitigate spill risk damaged thousands of square meters of coral reef. After the National Oceanic and Atmospheric Administration (NOAA) and Puerto Rico’s Department of Natural and Environmental Resources (PRDNER) pursued restoration planning and claims, the National Pollution Funds Center (NPFC) paid over $5 million from the Oil Spill Liability Trust Fund, then the United States sued the owner, Ernst Jacob, and guarantor, SIGCo, under OPA for natural resource damages (NRD), including on the Fund’s subrogated claim.

The district court granted partial summary judgment to the United States on liability, applying APA arbitrary-and-capricious review to the FOSC’s determination that the grounding posed a “substantial threat” of discharge. Defendants appealed interlocutorily. The First Circuit (Chief Judge Barron, joined by Judges Thompson and Rikelman) held § 1292(a)(3) appellate jurisdiction exists and that the district court erred on the merits. It vacated in part, reversed the liability summary judgment, and remanded for further proceedings.

Summary of the Opinion

  • Interlocutory Appellate Jurisdiction (§ 1292(a)(3) and Rule 9(h)(2)): The court holds that this “case includes an admiralty claim” because defendants impleaded third-party defendants (a shipowner and P&I club) in admiralty. Federal Rule of Civil Procedure 9(h)(2) provides that a case that includes an admiralty claim is “an admiralty case within 28 U.S.C. § 1292(a)(3).” The court rejects the government’s argument that only the original plaintiff’s designation controls, and further rejects any requirement that the appealed order resolve the rights and liabilities of all parties. Accordingly, it exercises interlocutory jurisdiction to review the district court’s liability ruling.
  • OPA Liability: “Substantial Threat” Is a Liability Element Proven by Preponderance, Not via APA Review: The court holds that the “substantial threat of a discharge of oil” requirement (defining an OPA “incident” in § 2702(a)) is a substantive liability element to be proven by the plaintiff under the ordinary preponderance-of-the-evidence standard. It is not a delegated agency determination subject to APA arbitrary-and-capricious review. The FOSC’s determination may be considered as evidence, but it does not control the liability analysis.
  • “Managed or Controlled” Natural Resources (33 U.S.C. § 2706(a)): To recover NRD, the United States must prove the injured “natural resources” are “belonging to, managed by, controlled by, or appertaining to the United States.” The court rejects defendants’ reading of the Federal Relations Act (48 U.S.C. § 749) as giving Puerto Rico exclusive control over submerged lands and associated natural resources; the Act does not bar overlapping federal management or control. However, the district court did not address whether the United States, on the record, established federal management or control. The First Circuit vacates the implicit finding and remands for the district court to decide this threshold issue with any necessary factual development.
  • Disposition: The court vacates in part, reverses the liability summary judgment, and remands for discovery and further proceedings consistent with its opinion, including a de novo liability determination on “substantial threat” and a determination whether the injured resources are federally “managed or controlled.”

Analysis

Precedents Cited and Their Role

OPA’s purposes and structure

The court situates OPA within its remedial context: Congress enacted OPA after Exxon Valdez to promote prompt cleanup and establish a comprehensive liability scheme for oil-pollution harms. See CITGO Asphalt Refining Co. v. Frescati Shipping Co., 589 U.S. 348, 353 (2020); S. Port Marine, LLC v. Gulf Oil Ltd. P’ship, 234 F.3d 58, 64 (1st Cir. 2000). OPA’s liability provision, 33 U.S.C. § 2702(a), attaches when a vessel “discharges, or which poses the substantial threat of a discharge of oil” into specified waters, and encompasses both removal costs and a broad suite of damages, including NRD. OPA’s trustee scheme (33 U.S.C. § 2706) distinguishes between federal and state trustees and authorizes damage assessments with a rebuttable presumption for damages determinations, § 2706(e)(2).

Interlocutory appeal in admiralty cases

On jurisdiction, the panel invokes 28 U.S.C. § 1292(a)(3) and Rule 9(h)(2), relying on the provision’s purpose “to permit a party found liable to take an immediate appeal from that finding and thereby possibly avoid [a] costly and protracted trial of the damage issues.” Martha’s Vineyard Scuba Headquarters, Inc. v. Unidentified, Wrecked & Abandoned Steam Vessel, 833 F.2d 1059, 1063 (1st Cir. 1987). The court emphasizes:

  • United Mine Workers v. Gibbs, 383 U.S. 715 (1966): Even assuming Gibbs’s “same case” logic applies, supplemental jurisdiction often extends to third-party indemnity claims ripening post-judgment; such third-party claims are logically dependent on the main action. See Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 376 (1978); Bank of India v. Trendi Sportswear, Inc., 239 F.3d 428, 436–37 (2d Cir. 2000).
  • Clausen v. Sea-3, Inc., 21 F.3d 1181, 1186 (1st Cir. 1994): Third-party claims must generally be resolved for a final judgment; they are part of “the case.” This supports treating the present action as a single case that “includes” admiralty claims.
  • Roco Carriers, Ltd. v. M/V Nurnberg Express, 899 F.2d 1292 (2d Cir. 1990): The court rejects reading Roco as imposing an “integrally linked” requirement for § 1292(a)(3); no such limitation appears in the text, and the First Circuit declines to graft it onto the statute.
  • Doyle v. Huntress, Inc., 419 F.3d 3 (1st Cir. 2005): The court distinguishes Doyle’s reference to the plaintiff’s designation: Doyle did not involve third-party admiralty claims and does not bar admiralty designation via other parties’ claims.
  • Poincon v. Offshore Marine Contractors, Inc., 9 F.4th 289 (5th Cir. 2021): The panel declines to follow Poincon insofar as it suggests only the plaintiff can designate the case as admiralty, noting (1) ambiguity whether the third-party claim there was Rule 9(h)-designated, (2) Poincon’s focus on appeals not re-designating a case, and (3) earlier Fifth Circuit authority allowing § 1292(a)(3) jurisdiction on a defendant’s counterclaim designated in admiralty. See Noble Drilling, Inc. v. Davis, 64 F.3d 191, 194–95 (5th Cir. 1995).
  • Martha’s Vineyard and sister circuits confirm § 1292(a)(3) does not require the appealed order to resolve all rights/liabilities of all parties. See also Kingstate Oil v. M/V Green Star, 815 F.2d 918, 921 (3d Cir. 1987); O’Donnell v. Latham, 525 F.2d 650, 652 (5th Cir. 1976).
  • Seventh Amendment concerns: The court notes Rule 9(h)(2) speaks only to § 1292(a)(3), and other circuits have recognized jury rights in mixed cases; designation for interlocutory jurisdiction does not decide jury entitlement. See Concordia Co. v. Panek, 115 F.3d 67, 70–72 (1st Cir. 1997); In re Lockheed Martin Corp., 503 F.3d 351, 357–60 (4th Cir. 2007); Fitzgerald v. U.S. Lines Co., 374 U.S. 16, 21 (1963).

“Managed or controlled” natural resources and the Federal Relations Act

The panel turns to whether the injured coral reef resources are federally “managed or controlled” under § 2706(a)(1). It rejects defendants’ argument that 48 U.S.C. § 749 (the Federal Relations Act) gives Puerto Rico exclusive control. Applying textual canons, the court reads the statute’s two “includes” clauses not to extend the word “all” from the first to the second; thus, the Act does not grant exclusivity. See Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 152 (2012) (nearest-referent canon).

On the substantive federal-management showing, the court looks to CERCLA analogs for guidance on “belonging to, managed by, held in trust by, appertaining to, or otherwise controlled by” government. See Ohio v. U.S. Dep’t of the Interior, 880 F.2d 432, 459–61 (D.C. Cir. 1989) (substantial government regulation/management/control can suffice; not every regulatory touchpoint does). Interior’s NRD regulations similarly counsel caution in defining the scope. 59 Fed. Reg. 14262, 14265 (Mar. 25, 1994).

Standard of proof for OPA liability

The court relies on the presumption that civil liability elements are proven by a preponderance of the evidence absent statutory instruction to the contrary. Fishman Transducers, Inc. v. Paul, 684 F.3d 187, 192 (1st Cir. 2012). It finds no OPA text delegating the “substantial threat” liability element to an agency decisionmaker or tying liability to a Coast Guard determination under an APA standard.

By contrast, OPA expressly grants a rebuttable presumption for NRD assessments made by trustees—but only as to damages quantification, not liability. 33 U.S.C. § 2706(e)(2); see Dep’t of Homeland Sec. v. MacLean, 574 U.S. 383, 391 (2015) (Congress acts intentionally when it includes language in one provision but omits it in another).

Distinguishing agency-response cost cases

The court distinguishes CERCLA cases reviewing agency response classifications and costs for arbitrariness (e.g., United States v. JG-24, Inc., 478 F.3d 28, 32 (1st Cir. 2007)) and OPA cases reviewing reasonableness of removal costs (e.g., United States v. Hyundai Merchant Marine Co., 172 F.3d 1187 (9th Cir. 1999)). Those precedents concern whether the government’s response complied with the National Contingency Plan and whether costs are recoverable—not whether a private party’s liability element has been established.

The court declines to follow United States v. Kilroy & Assocs., Inc., 2009 WL 3633891 (W.D. Wash. Oct. 30, 2009), which applied APA-style deference to a substantial-threat finding. It notes Kilroy relied on cost-recovery review doctrines and, in any event, involved an actual oil discharge (rendering the substantial-threat question unnecessary) and a one-sided factual record. It identifies United States v. Brothers Enterprises, Inc., 113 F. Supp. 3d 907 (E.D. Tex. 2015), as applying a de novo standard to the substantial-threat question.

Legal Reasoning

1) Jurisdiction: Third-party admiralty claims suffice under Rule 9(h)(2)

The panel’s jurisdictional reasoning is textual and functional:

  • Rule 9(h)(2) speaks in terms of a “case that includes an admiralty … claim,” not “a case designated in admiralty by the plaintiff.” The defendants’ third-party claims are admittedly in admiralty, so the “case” includes such claims.
  • Section 1292(a)(3)’s purpose—to enable early review of liability determinations and avoid protracted damages proceedings—would be undermined if third-party admiralty claims could not trigger interlocutory jurisdiction.
  • “The parties” in § 1292(a)(3) does not mean “all parties”; an order determining some parties’ rights and liabilities can be appealed. Martha’s Vineyard Scuba and sister circuits confirm this reading.

2) OPA “substantial threat” is a liability element for the court, not an agency, to decide

The First Circuit holds that § 2702(a) contains no delegation of the liability determination to the Coast Guard or any other agency. The government’s fallback to 33 U.S.C. § 1321(c) (a Federal Water Pollution Control Act provision governing response authority) fails because § 1321(c) authorizes federal response to a substantial threat; it does not convert the FOSC’s operational judgment into a binding or presumptively valid determination of a private party’s OPA liability.

In short, liability under § 2702(a) requires the plaintiff to persuade the finder of fact that it is more likely than not that the incident posed a substantial threat of a discharge of oil. The FOSC’s views may be probative but are not dispositive under deferential APA review.

3) “Managed or controlled” NRD: The Federal Relations Act does not exclude overlapping federal trusteeship

The court rejects the argument that Puerto Rico’s control is exclusive by statute. However, it emphasizes that the United States still bears the burden to prove, with record evidence, that the particular injured natural resources fall within federal “management or control” under § 2706(a)(1).

The United States invoked NOAA’s trustee status (40 C.F.R. § 300.600(b)(1)) and several federal conservation statutes (Endangered Species Act; Magnuson–Stevens Act; Coral Reef Conservation Act; Coastal Zone Management Act; and an Executive Order). But the court observes that the record and briefing did not connect these authorities to concrete federal management or control of the specific resources at issue at the relevant time. The court also notes factual disputes (e.g., which species and habitats existed at the site in 2006) that may affect whether federal management or control is established.

A memorandum of agreement (MOA) with Puerto Rico establishing co-trusteeship does not, by itself, answer the liability allocation question in § 2706(a), which asks to whom liability is owed (United States or State) based on whose resources (federally or state-managed/controlled) were injured.

4) Summary judgment posture: Reversal due to wrong standard and undeveloped record

Because the district court applied the wrong standard (APA review) and discovery had not proceeded, the First Circuit reverses the grant of partial summary judgment. The government did not argue that it would prevail on the “substantial threat” element under a preponderance standard at this stage, and disputes of material fact appear apparent. The court remands for discovery and de novo adjudication.

Impact and Practical Consequences

Interlocutory appeals in mixed claims litigation

  • In the First Circuit, any properly designated admiralty claim—whether asserted by a plaintiff, defendant, counterclaimant, or third-party plaintiff—renders the entire “case” an admiralty case for § 1292(a)(3) purposes. Parties should anticipate the possibility of early appellate review of liability rulings in mixed admiralty-civil actions.
  • Counsel should be mindful that impleader of admiralty third parties can open the door to § 1292(a)(3) jurisdiction. This is not a “re-designation by appeal,” but rather a consequence of Rule 9(h)(2)’s text.

OPA litigation: Liability proof, FOSC determinations, and discovery

  • Government and private plaintiffs cannot rely on APA deference to a FOSC’s “substantial threat” determination to establish OPA liability. The FOSC’s assessment remains relevant evidence, but plaintiffs must carry the preponderance burden with admissible proof (e.g., vessel condition, environment, weather, cargo, hull integrity, operational constraints, expert risk analysis).
  • Early summary judgment on OPA liability will be harder to obtain without a strong, undisputed factual record. Courts should permit reasonable discovery on “substantial threat,” especially where no spill occurred.

NRD trustee claims: Proving federal “management or control”

  • When the United States, as trustee, pursues NRD under § 2706(a)(1), it must prove that the injured resources are federally “belonging to, managed by, controlled by, or appertaining to” the United States. Mere existence of general regulatory authority may not suffice; plaintiffs should tie federal statutory duties or designations to the specific resource and location at the relevant time.
  • MOAs establishing co-trusteeship do not displace § 2706(a)’s allocation of to whom liability is owed. Agencies should anticipate the need to show statutory and factual grounds for federal management or control (e.g., ESA-listed species present; EFH designations under Magnuson–Stevens; specific federal management plans; conservation measures actually undertaken).
  • The decision clarifies that Puerto Rico’s control over submerged lands under the Federal Relations Act is not exclusive and does not bar the federal government from proving management or control in appropriate circumstances.

Fund subrogation actions (NPFC)

  • Fund subrogation does not expand the substantive reach of § 2706(a): the Fund “takes” only the trustee’s rights. If the injured resources are not federally managed or controlled, the United States cannot recover as federal trustee for NRD, even if the Fund has paid restoration costs.

Seventh Amendment and jury trial

  • Although not decided here, the court’s jurisdictional holding does not preclude jury rights in mixed claims. Litigants should separately brief jury entitlement for claims at law in cases that also include admiralty claims.

Complex Concepts Simplified

  • OPA “incident” and “substantial threat”: OPA imposes liability when oil is actually discharged, or when an occurrence involving a vessel poses a substantial threat that such a discharge will happen. “Substantial threat” is a fact question: was a spill more than a speculative possibility given the vessel’s condition and circumstances?
  • FOSC (Federal On-Scene Coordinator): The Coast Guard officer responsible for directing federal response to oil spills and substantial threats under the National Contingency Plan. The FOSC’s determinations guide emergency response but do not control OPA liability in court.
  • APA arbitrary-and-capricious review: A deferential standard courts use to review agency action. Here, it is inapplicable to OPA’s liability element; the court instead applies a de novo preponderance standard.
  • NRD and trustees: Natural Resource Damages compensate the public for injuries to natural resources. Federal and state trustees assess damages and plan restoration. Under § 2706(a), liability is “to” the United States for federal resources and “to” a State for state resources.
  • “Managed or controlled” (NRD ownership/control test): This phrase requires substantial government involvement—not mere incidental regulation. Evidence can include statutory management responsibilities, designations, management plans, or other concrete control over the resource and area.
  • § 1292(a)(3) interlocutory appeals in admiralty: Allows immediate appeals of orders determining rights and liabilities in admiralty cases. A case “includes” an admiralty claim if any party properly asserts one (e.g., a third-party admiralty claim), and the appealed order need not cover all parties.
  • NPFC and subrogation: The Fund pays certain removal costs and damages; when it pays, it steps into the claimant-trustee’s shoes and can sue responsible parties under OPA to recover those amounts. It cannot recover more than the claimant could have recovered.

Conclusion

United States v. Ernst Jacob GmbH & Co. KG establishes two important rules in the First Circuit:

  • For interlocutory appellate jurisdiction under § 1292(a)(3), a case “includes” an admiralty claim when any party asserts a properly designated admiralty claim (including third-party claims). The appealed order need not resolve the rights and liabilities of all parties.
  • Under OPA, whether an incident posed a “substantial threat of a discharge of oil” is a liability element to be proved de novo by a preponderance of the evidence. Courts do not review a FOSC’s operational determination under the APA to decide liability.

Additionally, the court clarifies that Puerto Rico’s authority under the Federal Relations Act does not exclude overlapping federal management or control of submerged lands’ natural resources. However, the United States must still establish—with specific statutory and factual support—that the injured resources are federally “managed or controlled” to recover NRD as federal trustee under § 2706(a)(1).

Practically, the decision will reshape OPA NRD litigation strategy in the First Circuit. Plaintiffs must be prepared to prove substantial-threat liability with evidence and to demonstrate federal trusteeship over the particular injured resources. Defendants, for their part, can contest both elements and may obtain interlocutory review of adverse liability determinations in mixed admiralty cases. The ruling promotes careful factual development and clarifies the distinct roles of emergency response decisions and judicial determinations of civil liability.