Transocean To Pay $1.4 Billion In Gulf Oil Spill Settlement

Jan 3, 2013
Originally published on January 3, 2013 6:10 pm

Transocean, the owner of the Deepwater Horizon rig where 11 men died in April 2010, has agreed to pay $1.4 billion in criminal and civil penalties to resolve Justice Department allegations over its role in the Gulf of Mexico oil spill.

A Transocean subsidiary also agreed to plead guilty to a single criminal misdemeanor charge for violating the Clean Water Act. Federal authorities blamed the company for acting negligently when the rig's crew proceeded with maneuvers to the deep-sea well in the face of clear danger signals that oil and natural gas were flowing. Transocean will operate under a form of corporate probation. A federal judge still needs to approve the plea agreement.

Attorney General Eric Holder said the deal "brings us one significant step closer to justice for the human, environmental and economic devastation wrought by the Deepwater Horizon disaster."

Under the terms of the agreement, Transocean will pay $400 million in criminal penalties, most of which will be transferred to the National Academy of Sciences and the National Fish and Wildlife Foundation. The company also agreed to turn over $1 billion in civil penalties, 80 percent of which could go to fund projects in the Gulf states under legislation passed by Congress in 2012 called the RESTORE Act.

In a written statement, Transocean said the deal is "in the best interest of its shareholders and employees" and will "remove much of the uncertainty associated with the accident."

"This is a positive step forward, but it is also a time to reflect on the 11 men who lost their lives aboard the Deepwater Horizon," the company added. "Their families continue to be in the thoughts and prayers of all of us at Transocean."

The resolution means Transocean will no longer face a massive civil trial over the Gulf spill, set to begin in New Orleans late next month.

"The Justice Department should be commended for negotiating a $1 billion civil settlement with Transocean, which is a record amount and reflects the scope of the Gulf oil spill tragedy," said David Uhlmann, a former environmental crimes prosecutor who now teaches at the University of Michigan. "But the criminal penalty also should have been at least $1 billion given Transocean's numerous failures to drill in a safe manner, which cost 11 workers their lives and billions of dollars in damages to communities along the Gulf. Transocean had disclosed in September that it was seeking a $1.5 billion settlement, so it is curious that the Justice Department has agreed to a settlement that is better than what Transocean was proposing — and that does not appear to include Seaman's Manslaughter charges."

The plea agreement with the rig owner comes weeks after oil giant BP agreed to pay $4.5 billion to resolve criminal and some civil Justice Department claims over the disaster. BP, federal and state officials continue to negotiate over the rest of those legal claims. Three former BP workers, including the top company men on the Macondo well, face individual criminal charges they are fighting in court.

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From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish.


And I'm Robert Siegel.

The Justice Department has announced a big settlement with the company that owned the Deepwater Horizon oil rig out in the Gulf of Mexico. Transocean will pay $1.4 billion to settle civil and criminal charges over the massive oil spill from that rig in 2010. A Transocean unit also agreed to plead guilty to violating the Clean Water Act.

Transocean is a Swiss company. The deal adds to the four-and-a-half billion dollar settlement with BP, which leased the rig from Transocean.

NPR's justice correspondent Carrie Johnson joins us now. And, Carrie, what does the Justice Department say Transocean did wrong and what did the company acknowledge today?

CARRIE JOHNSON, BYLINE: The heart of the matter, Robert, is that 11 workers died on that Deepwater Horizon rig on April 20th, 2010. And the Justice Department says Transocean acted negligently by, in the process of securing the oil well, moving ahead with some maneuvers in the face of clear signs that there was danger, and that oil and gas may have been leaking out of that well.

Transocean, also as you mentioned, acknowledged committing a misdemeanor criminal violation of the Clean Water Act. But there were no felony criminal charges in the settlement, no manslaughter charges in this settlement. And no individuals at Transocean were charged, unlike in the BP case you mentioned earlier. That's been a little bit controversial today.

SIEGEL: Where is that $1.4 billion going to go?

JOHNSON: Well, about $300 million of the criminal penalties are going to be going to restoration of the Gulf and trying to prevent future oil spills. Four hundred billion dollars are criminal fines, penalties. Another one billion are civil penalties. And much of that money is going to go to projects in the Gulf States under a law Congress passed in 2012 called the RESTORE Act.

SIEGEL: Well, is this the end of the federal case over this spill? Or if not, what happens next?

JOHNSON: It's the end for Transocean. Transocean pretty much has resolved a lot of the uncertainty hanging over it with this deal today, even though a federal judge still has to sign off on the settlement agreement.

Robert, but it's not the end for BP, who's always been the whale in this story. BP is still trying to settle with the Justice Department some huge remaining civil claims, over its violations - alleged violations of the Clean Water Act and the Oil Pollution Act. That law deals with ongoing damage to natural resources in the Gulf - to fish, to wildlife, to birds, and to the water and soil.

That case is scheduled to go to trial in New Orleans on February 25th. The company and the Justice Department will be engaged in negotiations, feverish negotiations, potentially right up to that date.

SIEGEL: OK. Thank you, Carrie.

JOHNSON: Thank you.

SIEGEL: That's NPR's Carrie Johnson. Transcript provided by NPR, Copyright NPR.