Judge rejects BP attempt to lessen fines for Gulf spill; company faces up to $13.7B in fines

EnergyAssociated Press

A federal judge has rejected an attempt by BP to lower the fines it faces from its catastrophic Gulf of Mexico oil spill in 2010.

U.S. District Judge Carl Barbier on Thursday agreed with government lawyers that BP should face paying up to $4,300 for each barrel of oil spilled.

Continue Reading Below

BP wanted Barbier to cap the amount at $3,000 per barrel, the same amount set by the Clean Water Act in 1990 for gross negligence fines. But federal prosecutors argued that those amounts need to be adjusted for inflation and Barbier agreed.

The ruling leaves BP facing up to $13.7 billion in civil fines for the spill.

Barbier still has not ruled on how much BP should pay. Attorneys may file briefs in the case as late as April and it remains unclear how soon after that Barbier will rule.

Establishing what fine BP should pay is the final act in a long-running civil trial over the company's Macondo oil well blowout, which killed 11 men and led to oil spewing into the Gulf for 87 days until the well was brought under control.

Barbier has already issued key rulings after two earlier phases: that BP acted with "gross negligence" in the disaster, a decision BP is appealing; and that 3.19 million barrels of oil were discharged. Those two factors could lead to a maximum $13.7 billion fine based on a per-barrel penalty.

BP argued against a heavy penalty. It said its response to the spill and cleanup effort was robust, that the economy and environment of the Gulf has recovered strongly and that it already has run up $42 billion in costs including the cleanup, response, settlements with victims and criminal penalties.

Also, BP attorneys argued an excessive penalty would be too much of an economic hardship on BP Exploration and Production, the BP entity deemed responsible for the spill.

Government attorneys say a higher-end penalty is called for, given the economic and environmental harm caused by the spill, and they cast doubts about the effect of a high fine on BP Exploration and Production and other BP entities.