BP faces paying the maximum possible fine of $17.6 billion over its Gulf of Mexico disaster after a judge in New Orleans ruled that the oil company was “grossly negligent”.
The verdict, which BP has bitterly contested, sent shares in the company diving by nearly 6 per cent, the worst one-day slide in more than four years.
In his damning 153-page ruling, Judge Carl Barbier said that the biggest oil spill in American history “was the result of gross negligence or wilful misconduct” and accused BP of being “reckless”.
The ruling of gross negligence, which BP said it would appeal, is the most serious possible outcome and leaves the company open to the maximum fine of $4,300 per barrel spilt under the Clean Water Act.
Based on the present official estimate of the size of the spill — which BP is also contesting — this could land it with a maximum fine of $17.6 billion.
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BP has earmarked only $3.5 billion to pay fines under the Clean Water Act, after assuming that it would not be found grossly negligent. Its appeal is likely to take months.
The verdict makes for grim reading for BP and its shareholders and has dealt another blow to its already tarnished reputation in the United States.
Judge Barbier said that BP made “profit-driven decisions” during the drilling of the well that led to the deadly blowout in April 2010. Eleven rig workers died in the accident.
“These instances of negligence, taken together, evince an extreme deviation from the standard of care and a conscious disregard of known risks,” he wrote.
As a result, BP is “subject to enhanced penalties under the Clean Water Act”, he added.
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Halliburton, BP’s American contractor that cemented the faulty well, and Transocean, owner of the Deepwater Horizon, escaped with lesser verdicts of simple negligence.
BP has argued that the disaster was the result of multiple causes by multiple parties.
Judge Barbier threw out the company’s argument, ascribing 67 per cent of the blame for the disaster to BP.
The verdict could also leave BP open to paying punitive damages to private claimants who were not part of the $9.2 billion settlement the company reached in 2012 with businesses and residents of the Gulf.
Analysts said that BP could afford to pay a maximum fine of $17.6 billion and that the current dividend was not at risk.
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Jason Gammel, an analyst from Jefferies, said: “Even in the event of a maximum fine, we believe that BP has sufficient liquidity to meet its obligations.
“We further expect that a worst-case scenario of fine level would not be paid in the near term; we would expect a lengthy appeals process first.”
In a statement, BP said: “BP strongly disagrees with the decision issued today by the United States District Court for the Eastern District of Louisiana and will immediately appeal to the United States Court of Appeals for the Fifth Circuit.
“BP believes that the finding that it was grossly negligent with respect to the accident and that its activities at the Macondo well amounted to wilful misconduct is not supported by the evidence at trial.
“The law is clear that proving gross negligence is a very high bar that was not met in this case. BP believes that an impartial view of the record does not support the erroneous conclusion reached by the District Court.”
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The marathon court case in New Orleans will resume early next year to determine the level of fines BP and its contractors should pay.
Judge Barbier has also not yet made a ruling on the size of the spill.
Shares in BP closed down 28¾p at 455p.