The state court of appeals takes up the Ethan Allen tour boat tragedy that happened seven years ago on Lake George. They're determining whether state inspectors can be held liable for the accident that claimed the lives of 20 people. Lori Chung has the details.

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ALBANY, N.Y. -- State lawyers urge New York's highest court to throw out the liability lawsuit involving the sinking of the Ethan Allen Tour boat.

It was seven years ago that the Lake George tour boat capsized, killing 20 of the boat's 47 passengers.

Attorneys representing the victims say inspectors were negligent. They say it was inspectors' job to make modifications to the boats capacity.

Federal investigators say the boats capacity should have been limited to 14 passengers.

The state's attorney argues governmental immunity, saying the state's not liable since it didn't operate or maintain the boat.

"In this case, the state didn't own, operate or maintain the vessel. The inspectors, as part of a safety inspection, certified the ship as safe," said State Deputy Solicitor General Andrew Bing.

"Everyone said they knew they had to do it. Every one of them said they knew it was for the safety of the passengers. Every one of them said it was an obvious modification. Every one said they knew it would affect stability and every one said we didn't do it because we relied on the previous year," said respondent attorney James Hacker.

The National Transportation Safety Board concluded “insufficient stability'' was the probable accident cause, partly from the passenger load.