BP potentially faces billions of dollars in new fines after a New Orleans judge concluded it acted with "gross negligence" ahead of the massive 2010 Gulf of Mexico oil spill.
Federal court judge Carl Barbier said that the April 20, 2010 Deepwater Horizon drilling rig blowout, which killed 11 and spilled millions of barrels of oil into Gulf waters, happened because BP's US subsidiaries, along with oil-services company Halliburton and rig owner Transocean, did not take adequate care in drilling a risky well.
Barbier said that the British oil giant knew that the Macondo well it was drilling, called by some working on it the "well from hell", was particularly dangerous because of the high danger of a blowout.
BP's decisions throughout the drilling process qualified as "gross negligence" because they were "an extreme departure from the care required under the circumstances or a failure to exercise even a slight care."
He also said BP's role involved "willful misconduct", adding to the penalties that, based on a maximum fine of $4,300 per barrel spilled, could result in a fine of up to $18 billion under the Clean Water Act.
As the operator of the project, BP is solely liable for the penalties arising from violations of the Clean Water Act.
BP said it would immediately appeal the decision to a higher court, saying Barbier's ruling was "not supported by the evidence."
"The law is clear that proving gross negligence is a very high bar that was not met in this case," the company said. "BP believes that an impartial view of the record does not support the erroneous conclusion reached by the District Court."
BP says that it has already spent more than $26 billion in claims payments and spill response in the wake of the disaster, which layered crude oil onto popular beaches and forced the shutdown of fishing industries along the US Gulf coast.
It has also commuted $1 billion to fund Gulf restoration projects.
But BP continues to struggle to further limit its exposure. In August, it filed an appeal with the US Supreme Court challenging a lower court ruling that required it to pay settlements to claimants BP says were not directly harmed by the spill.
In June the high court already turned back BP's request to freeze required payouts to claimants while it seeks to narrow the definition of who qualifies for payments.
A Justice Department spokesman applauded Barbier for "finding that BP acted with gross negligence and willful misconduct in its role in causing the largest oil spill in US history."
- BP ignored signs of trouble -
Barbier said in his ruling Thursday that BP was warned about the dangers of numerous unexpected pressure "kicks" on the Macondo well ahead of the disaster.
BP's decision to keep drilling was "dangerous" and "motivated by profit," Barbier wrote.
BP also erred when it concluded that a well test conducted on the day of the explosion implied the site was safe, ignoring evidence that suggested possible looming disaster.
The judge faulted BP for not ordering additional tests as the situation would normally have required.
Barbier's ruling is the culmination of the first phase of a New Orleans trial that took place over two months beginning in February 2013. A second phase later that year probed the amount of oil spilled, a key component in determining total damages.
The government estimates 5 million barrels spilled in the accident, with 4.2 million entering the Gulf. BP has argued that no more than 2.45 million barrels spilled into the Gulf as a result of the accident. Barbier has yet to rule on the matter.
Barbier, who is also considering a number of private maritime suits on the spill, ruled that Halliburton and Transocean were both "negligent" and assigned them a portion of the responsibility that could affect damages in these cases.
BP was 67 percent responsible for the accident, Transocean was 30 percent responsible and Halliburton three percent responsible.
Transocean called Thursday's ruling "favorable and welcome" because the judge "has again ratified the industry-standard allocation of liability between drilling contractors and the owners and operators of oil wells."
Halliburton said it was "pleased" with the ruling, which means "the Macondo case is essentially over for Halliburton." On Monday, Halliburton announced a $1.1 billion settlement with the Gulf fishing industry and other victims of the disaster.
In afternoon New York trade, BP shares were 5.9 percent lower at $44.90, Halliburton was down 1.8 percent at $66.36, and Transocean down 1.6 percent at $37.45.
- Disasters & Accidents
- Gulf of Mexico oil spill