Oil giant BP will face a maximum penalty of $13.7 billion for its Deepwater Horizon oil spill in the Gulf of Mexico in 2010.
U.S. District Judge Carl Barbier ruled that the spill dumped 3.2 million barrels of oil 41 miles off the Louisiana coast. The U.S. Government's estimation of 4.2 million barrel spill was rejected, along with its pursuit of a maximum fine of $18 billion.
Barbier had previously ruled that BP acted with gross negligence in causing the largest offshore oil spill in U.S. history, pushing the British company to face penalties in the billions under the Clean Water Act. The law permits for penalties up to $4,300 per barrel spill.
Bloomberg reported that BP has already paid out $9.7 billion in settlement claims from private parties.
News of the maximum fine of $13.7 billion has seen investors produce a 4.7 percent increase in BP's stock on the day of the ruling, Jan. 16, as some expected the fine to be greater.
“Today’s ruling is a major victory for BP and reduces by billions their potential liability,” said David Uhlmann, who used to run the Justice Department’s environmental crimes division.
As for what BP thinks of the news, it never thought it deserved the maximum penalty. Fadel Gheit, an analyst at Oppenheimer &Co., says BP deserves credit for its response to the spill.
“They went beyond what any other company would do,” Gheit said. “I would hope the judge takes this into consideration.”
But BP isn't the only company at fault for the spill. Barbier allocated 67 percent of fault to BP, 30 percent to Transocean, the company that maintained the drilling rig that exploded, and 3 percent to Halliburton, the company that provided defective cementing services.
Penalties will be assigned on Jan. 20 as the third and final phase of the trial begins.