U.S. District Judge Carl Barbier said BP was "reckless" before and after the events of April 2010, when the Deepwater Horizon oil rig exploded and blew out underwater in the Gulf of Mexico, killing 11 people and devastating thousands of kilometres of shoreline.
The ruling opens the company up to almost $18 billion in penalties under U.S. law — far more than many experts had been expecting.
BP has already agreed to pay up to $4 billion in criminal fines and compensation to individuals and businesses affected by the disaster.
But the judge's ruling — because of the use of that word "reckless" — nearly quadruples what the company can face in civil fines. (A finding of mere "negligence" would have limited the potential damages to much lower.)
The company could now face fines as much as $4,300 for every barrel of oil lost. Based on government estimates from the time of how much was lost, the company could end up with a fine of almost $18 billion.
11 men died in disaster
Barbier presided over a trial in 2013 to apportion blame for the spill that spewed oil for 87 days in 2010. Eleven men died after the well blew.
The judge essentially divided blame among the three companies involved in the spill:- BP: 67 per cent to blame
- Rig owner Transocean: 30 per cent to blame
- Cement work contractor Halliburton: Three per cent to blame.
While the judge called BP's actions "reckless" in his 153-page ruling, Transocean and Halliburton were described as "negligent."
Although all companies made costly errors, "BP had a hand in most of these failures," the judge wrote.
Barbier said BP made "profit-driven decisions" during the drilling of the well that led to the deadly blowout.
"These instances of negligence, taken together, evince an extreme deviation from the standard of care and a conscious disregard of known risks," he wrote.
BP said it will appeal the ruling, noting in a press release that the company "believes that an impartial view of the record does not support the erroneous conclusion reached by the District Court."
The ruling means BP could face as much as $17.6 billion in civil fines under the Clean Water Act, said David Uhlmann, a University of Michigan law professor and former chief of the Justice Department's environmental crimes section.
"It also repudiates BP's claims that it was merely negligent and will further damage BP's already badly damaged reputation," Uhlmann wrote in an email.
Just this week, Halliburton agreed to pay $1.1 billion to settle claims related to its role in the disaster.
The judge was assigned to oversee most of the federal litigation spawned by BP's spill.
Last year, he presided over two phases of a trial for claims against BP and its contractors brought by the federal government, the five Gulf states and private lawyers representing businesses and residents.
Barbier heard eight weeks of testimony without a jury for the trial's first phase, which was designed to identity the causes of the blowout of BP's Macondo well and assign percentages of fault to the companies involved in the drilling project.
Techniques fail to stop gusher
The judge heard three weeks of testimony for the second phase, which focused on duelling estimates of how much oil spilled into the Gulf and examined BP's efforts to seal the well.
Millions of gallons of crude gushed into the Gulf after the well blew and triggered an explosion on the Deepwater Horizon drilling rig, killing wildlife, staining beaches and polluting marshes. BP ultimately sealed its well after several techniques failed to stop the gusher.
BP says it has spent more than $24 billion in spill-related expenses, including cleanup costs and payments to businesses and residents who claim the spill cost them money. The company also has estimated that it will pay a total of $42 billion to fully resolve its spill-related liability.
BP pleaded guilty in January 2013 to manslaughter charges for the rig workers' deaths. BP also agreed to pay a record $4 billion in penalties as part of its deal with the Justice Department, but the plea agreement didn't resolve the federal government's civil claims against BP.
Under the Clean Water Act, a polluter can be forced to pay a maximum of either $1,100 or $4,300 per barrel of spilled oil. The higher limit applies if the company is found grossly negligent — as BP was in Barbier's ruling. But penalties can be assessed at amounts lower than those caps.
Government experts estimated that 4.2 million barrels, or 176 million gallons, spilled into the Gulf. BP urged Barbier to use an estimate of 2.45 million barrels, or nearly 103 million gallons, in calculating any Clean Water Act penalties. Both sides agreed that 810,000 barrels, or 34 million gallons, of oil escaped the well but were captured before it could pollute the Gulf.