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Transocean to pay $1.4 billion for role in 2010 Gulf oil spill

Published: Friday, Jan. 4, 2013 1:15 a.m. CDT

WASHINGTON – The offshore oil and gas drilling company Transocean has agreed to a $1.4 billion settlement with the Justice Department to resolve civil and criminal claims against the company for its role in the April 2010 Gulf of Mexico oil spill.

Transocean owned the Deepwater Horizon drilling rig leased by BP that exploded and sank after the Macondo well blew out, killing 11 workers and spewing nearly 5 million barrels of oil into the sea.

In a statement, Transocean said that as part of the settlement, a “subsidiary has agreed to plead guilty to one misdemeanor violation of the Clean Water Act (CWA) for negligent discharge of oil into the Gulf of Mexico and pay $1.4 billion in fines, recoveries and penalties, excluding interest.”

Along with BP, Transocean was criticized repeatedly by various independent panels that reviewed the spill for its role in a highly dangerous deep-water drilling project that was marked by lax safety, poor communication and ad hoc decision-making. In November, BP agreed to pay a $4 billion criminal fine, the largest in U.S. history, and two of its employees were charged with manslaughter in connection with the deaths of the Deepwater Horizon workers.

The Transocean settlement concludes the Justice Department’s criminal investigation of the Swiss-based company and resolves civil claims against it.

“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 H. Holder Jr.

The $1 billion civil penalty is the largest civil environmental penalty to date, according to David w, a former chief of the Justice Department’s environmental crimes section and a law professor at the University of Michigan. Some of the money will go to coastal habitat restoration efforts and to research into oil spill prevention by the National Academy of Sciences, Transocean said.

Uhlmann commended the Justice Department for the $1 billion civil penalty but questioned aspects of the criminal settlement, including the much smaller criminal fine of $400 million.

“The Justice Department typically tries to get at least the same amount for a criminal violation as a civil one because the thinking is that criminal behavior constitutes more serious misconduct,” Uhlmann said. “It’s also surprising that the Justice Department decided not to charge Transocean with manslaughter, since the same negligence that caused the oil spill caused the death of 11 Transocean employees.”

The next major legal dispute that needs to be resolved is the scope of the civil penalties against BP. A trial is set for February but the charges could be settled before then. It is estimated that the Macondo blowout spilled about 4.9 million barrels of crude oil into the gulf.

The Justice Department is weighing penalties per barrel for 4.1 million barrels that remained in the gulf. The remaining 800,000 barrels were captured in containment efforts. BP has argued that the real amount was less.

The civil penalty could range between $4.55 billion to more than $17 billion, depending on whether the government finds BP acted with gross negligence, Uhlmann said. In levying the fine, the Justice Department is required to take into account, however, the billions the company has already paid for clean-up, economic damage and legal penalties.

Said Audubon Society President David Yarnold: “The truly big move is the next one. The DOJ is representing all of us in the civil case against BP. That’s where fairness will be found – or lost.”

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