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* BP to appeal ruling over blame for disaster
* Judge has yet to assign damages from spill
* BP shares fall 5.9 percent in U.S. trading (Adds quote on heightened liability risks for energy sector,paragraphs 9-10)
By Anna Driver and Mica Rosenberg
HOUSTON/NEW YORK, Sept 4 (Reuters) - A U.S. judge hasdecided that BP Plc was "grossly negligent" and"reckless" in the Gulf of Mexico oil spill four years ago, aruling that could add nearly $18 billion in fines to more than$42 billion in charges the company took for the worst offshoreenvironmental disaster in U.S. history.
BP said it would appeal Thursday's ruling by U.S. DistrictJudge Carl Barbier in New Orleans, Louisiana, who held a trialwithout a jury last year to determine who was responsible forthe April 20, 2010 rig explosion and spill that killed 11workers and spewed oil for nearly three months onto theshorelines of several states.
Barbier ruled that BP was mostly at fault and that two othercompanies in the case, Transocean Ltd and Halliburton, were not as much to blame. The disaster struck when asurge of methane gas known to rig hands as a "kick" sparked anexplosion aboard the Deepwater Horizon rig as it was drillingthe mile-deep Macondo 252 well off Louisiana.
Barbier has yet to assign damages from the spill under thefederal Clean Water Act or rule on how many barrels spilled, butDavid Uhlmann, a University of Michigan law professor and formerchief of the Justice Department's environmental crimes section,said the ruling "dramatically increases" BP's liability forcivil penalties under the act.
Previous calculations by Reuters have shown fines could runto $17.6 billion in the costliest scenario under a 'grossnegligence' finding. The amount is far more than the $4.5billion maximum fine that could have been levied under a simple'negligence' ruling.
BP has set aside only $3.5 billion for fines under the CleanWater Act, part of a much broader series of provisions forcleanup, compensation and damages that exceed $42 billion.
"The Court concludes that the discharge of oil 'was theresult of gross negligence or willful misconduct' by BP,"Barbier said in his written ruling. "BP's conduct was reckless."
In response, BP said it would challenge the ruling becauseit believes the standard for proving "gross negligence" was notmet. "BP believes that an impartial view of the record does notsupport the erroneous conclusion reached by the District Court."
If the gross negligence ruling stands, it could create atough new standard and raise liability risks for the deepwaterdrilling and other high risk industries, legal and businessexperts said.
There will be "long-term repercussions," Gianna Bern, whoteaches international finance at the University of Notre Dame,said of the energy sector. "Potential liability is now in thestratosphere and that limits the number of players that canengage in this type of activity."
Shares of BP in the United States closed down 5.9 percent at$44.89. BP shares in London also closed down nearly 6 percent,the worst one day slide in more than four years.
A separate criminal case was settled with the U.S.government in late 2012. BP agreed to pay $4.5 billion in fines.
Even after the Clean Water Act fines are set, BP may faceother bills from a lengthy Natural Resources Damage Assessment,which could require BP to carry out or fund environmentalrestoration work in the Gulf, and other claims.
DIVIDEND SAFE FOR NOW
The case will go on for months or even years with Barbierset to assign damages after the next phase of a civil trial overthe accident, scheduled for January 2015. The two earlier phasesof the trial looked at how to apportion blame and examined howmuch oil spilled.
BP has been forced to shrink by selling assets to pay forthe cleanup. Those sales erased about a fifth of its earningpower and it may be pressured by investors to delay making newinvestments until the lawsuit is resolved.
In addition to the court case, Philip Adams, analyst atGimme Credit, said BP is vulnerable to growing tensions betweenthe West and Russia. London-based BP holds a 19.75 percent stakein Russian energy giant Rosneft.
Still, the company had $27.5 billion in cash and equivalentson its balance sheet at the end of the second quarter, andanalysts think it will keep paying dividends that yield about 5percent.
Jason Gammel, an equity analyst at Jefferies in London wrotethat even with a maximum fine, BP has sufficient liquidity tomeet its obligations. "We would expect a lengthy appeals processfirst. We thus do not believe there is risk to the current BPdividend."
PARTNERS PROTECTED
Under federal rules, a gross negligence verdict carries apotential fine of $4,300 per barrel, far higher than thestatutory limit on a simple "negligence" of $1,100 per barrel.
BP says 3.26 million barrels leaked from the well and theU.S government says 4.9 million barrels spilled. The fines willexclude about 810,000 barrels collected during cleanup.
The judge apportioned 67 percent of the fault to BP, 30percent to Transocean, which owned the drillship, and 3 percentto Halliburton, which did cement work on the Macondo well.
Transocean and Halliburton have settled some liabilities andthe judge said they were shielded by indemnity clauses with BP.Texas-based Anadarko Petroleum Corp, which owned aquarter of the well, might have to pay fines under the CleanWater Act, though it has settled other claims with BP.
Gulf Coast states would receive a portion of any fines BPpays to the government.
On Thursday, U.S. Attorney General Eric Holder said in astatement, "We are confident this decision will serve as astrong deterrent to anyone tempted to sacrifice safety and theenvironment in the pursuit of profit."
The civil case is In re: Oil Spill by the Oil Rig "DeepwaterHorizon" in the Gulf of Mexico, on April 20, 2010, U.S. DistrictCourt, Eastern District of Louisiana, No. 10-md-02179. (Additional reporting by Sudip Kar-Gupta, Karolin Schaps andKarey Van Hall; Writing by Terry Wade; Editing by Grant McCool)
