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Transocean Fined $1.4B in Gulf Blast

Monday, January 7, 2013

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The world's largest offshore drilling contractor will pay $1.4 billion in fines and plead guilty to environmental crimes to resolve federal civil and criminal cases stemming from the 2010 Deepwater Horizon disaster, U.S. authorities announced Friday (Jan. 4).

Switzerland-based Transocean Deepwater Inc. has agreed to plead guilty to violating the Clean Water Act and to pay a total of $1.4 billion in civil and criminal fines and penalties over five years "for its conduct in relation to the Deepwater Horizon disaster," the Department of Justice and the Environmental Protection Agency said in a release.

Deepwater Horizon
U.S. Coast Guard

Transocean called the $1.4 billion settlement "a positive step forward" but said it was "also a time to reflect on the 11 men who lost their lives aboard the Deepwater Horizon" on April 20, 2010.

Transocean owned and operated the Deepwater Horizon oil rig that sank after an explosion killed 11 workers on April 20, 2010, and set off the nation's largest oil spill. BP PLC leased the rig from Transocean to drill the Macondo well; the oil company's criminal and civil penalties have also run into the billions of dollars.

The criminal information and a proposed partial civil consent decree to resolve the U.S. government’s civil penalty claims against Transocean Deepwater and four related companies were filed in U.S. District Court in the Eastern District of Louisiana.

The proposed civil settlement is subject to a public comment period and final court approval.

Settlement Terms

Under the settlement, Transocean Deepwater Inc. has signed a cooperation and guilty plea agreement with the government, admitting its criminal conduct. Those documents were also filed Friday.

As part of the plea agreement, the company will pay $400 million in criminal fines and penalties and continue its ongoing cooperation in the government’s criminal investigation.

In addition, four corporate entities—Transocean Ocean Holdings LLC, Transocean Offshore Deepwater Drilling Inc., Transocean Deepwater Inc. and Triton Asset Leasing GMBH—have agreed to pay a record $1 billion to resolve federal Clean Water Act civil penalty claims for the three-month-long oil spill.

Under the civil settlement, the Transocean defendants "also must implement court-enforceable measures to improve the operational safety and emergency response capabilities at all their drilling rigs working in waters of the United States," the EPA announced.

'One Significant Step Closer'

“This resolution of criminal allegations and civil claims against Transocean brings us one significant step closer to justice for the human, environmental and economic devastation wrought by the Deepwater Horizon disaster,” said Attorney General Eric Holder.

“This agreement holds Transocean criminally accountable for its conduct and provides nearly a billion dollars in criminal and civil penalties for the benefit of the Gulf states."

Restoring the Gulf

Authorities said the fines would aid in the Gulf region's continuing recovery and help prevent such events in the future. The penalties are earmarked primarily for restoring and protecting the marine and coastal environments and for spill prevention and response.

“This settlement will provide immediate relief and benefits to the people of the five Gulf states, and requires Transocean to implement significant safety measures, as well as stringent auditing and monitoring to reduce the risk of any future disasters,” said Ignacia S. Moreno, assistant attorney general for the Justice Department's Environment and Natural Resources Division.

Lanny A. Breuer, assistant attorney general for the Justice Department’s Criminal Division, focused on the company's crimes.

“Transocean’s rig crew accepted the direction of BP well site leaders to proceed in the face of clear danger signs—at a tragic cost to many of them,” said Breuer. “Transocean’s agreement to plead guilty to a federal crime, and to pay a total of $1.4 billion in criminal and civil penalties, appropriately reflects its role in the Deepwater Horizon disaster.”

Criminal Liability

The explosions and fire followed an "uncontrolled blowout" on the rig, according to court documents.

"In agreeing to plead guilty, Transocean Deepwater Inc. has admitted that members of its crew onboard the Deepwater Horizon, acting at the direction of BP’s 'Well Site Leaders' or 'company men,' were negligent in failing fully to investigate clear indications that the Macondo well was not secure and that oil and gas were flowing into the well," the Justice Department said.

Company Responds

Transocean has posted voluminous reports detailing its investigations and findings on its website.

In a statement, the company said that the disaster and its losses "are felt throughout our entire Transocean family."

Blowout Preventer

Transocean owned the rig, including the blowout preventer, that was cited in the disaster.

Transocean noted that the violation of the Clean Water Act to which it would plead guilty was a misdemeanor "for negligent discharge of oil into the Gulf of Mexico. This violation pertains to well monitoring in connection with specific operations during the temporary abandonment procedure on April 20, 2010."

The fine for that violation is $100 million. The subsidiary will also serve five years of probation.

"These important agreements, which the company believes to be in the best interest of its shareholders and employees, remove much of the uncertainty associated with the accident," the company said.

"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.  Their families continue to be in the thoughts and prayers of all of us at Transocean."

BP Crimes and Penalties

In November, the Justice Department announced that BP would pay $4.5 billion—the largest criminal penalty in U.S. history—and plead guilty to 14 criminal charges, including manslaughter, in the disaster. It also announced indictments against three BP employees.

Two weeks later, the  EPA temporarily stripped BP Exploration and Production Inc. and its affiliated companies from receiving new federal contracts, saying the company had shown a “lack of business integrity.”


Tagged categories: Accidents; BP; EPA; Explosions; Fatalities; Offshore; Oil and Gas; Workers

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