UPDATE 1-BP loses bid to cut maximum $13.7 bln Gulf spill fine

(Adds details from decision, BP argument, case citation,byline)

By Jonathan Stempel

Feb 19 (Reuters) - A U.S. judge on Thursday rejected BPPlc's attempt to reduce the maximum civil fine it couldface for its role in the 2010 Gulf of Mexico oil spill, leavingit potentially liable to pay $13.7 billion under the federalClean Water Act.

U.S. District Judge Carl Barbier in New Orleans agreed withthe federal government that the maximum civil penalty that BPcould face is $4,300 per barrel spilled.

BP had sought a $3,000 per barrel maximum, equal to amaximum $9.57 billion civil fine. Barbier has not decided howmuch BP should pay, and it is unclear when he will.

Setting a fine is the last step in a civil trial overseen byBarbier to determine responsibility and penalties for the April20, 2010 blowout of the Macondo oil well, which killed 11workers and caused the largest U.S. offshore oil spill.

BP spokesman Geoff Morrell said the company disagrees withthe decision and is considering its legal options.

Barbier previously ruled that BP had acted with grossnegligence or willful misconduct and that 3.19 million barrelsof oil were spilled. These factors are used to set the maximumcivil fine.

BP had argued that the Clean Water Act in 1990 capped themaximum fine at $3,000 per barrel in cases of gross negligenceor willful misconduct.

But the judge agreed with the government that the U.S.Environmental Protection Agency could raise the maximum toaccount for inflation and was required to do so by Congress.

Accepting BP's position "would invalidate nearly everyagency's attempt to inflate civil penalties that can be soughtin federal court," Barbier said.

BP has incurred more than $42 billion of costs for thespill, including for cleanup, fines and compensation to victims.

It has said any Clean Water Act penalty should reflect thecompany's extensive cleanup efforts and that the Gulf region hashad a solid recovery from the spill.

The case is In re: Oil Spill by the Oil Rig "DeepwaterHorizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179. (Reporting by Jonathan Stempel in New York; Editing by CynthiaOsterman and Steve Orlofsky)