Transocean Deepwater Inc. has agreed to pay a record $1.4 billion to settle charges stemming from its part in the Deepwater Horizon catastrophe, where 11 workers were killed and almost 5 million barrels of oil were dumped into the Gulf of Mexico.
The U.S. Department of Justice and Transocean both announced the settlement Thursday, a deal that entails $1 billion in civil penalties and $400 million in criminal fines.
Transocean agreed to plead guilty to violating the Clean Water Act (CWA). The criminal information and a proposed partial civil consent decree to resolve the U.S. government’s civil penalty claims against Transocean and related entities were filed Thursday in U.S. District Court in the Eastern District of Louisiana.
Transocean was the owner of the Deepwater Horizon drilling rig that was leased by BP and then exploded and sank when a oil well blew out.
“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,” Transocean said in a statement. “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.”
Transocean signed a cooperation and guilty plea agreement with the government admitting its criminal conduct, according to the Justice Department. As part of the plea agreement, Transocean has agreed, subject to the court’s approval, to pay $400 million in criminal fines and penalties and to continue its ongoing cooperation in the government’s criminal investigation.
In addition, pursuant to the terms of a proposed partial civil consent decree, Transocean Ocean Holdings LLC, Transocean Offshore Deepwater Drilling Inc., Transocean Deepwater Inc. and Triton Asset Leasing GMBH have agreed to pay an additional $1 billion to resolve federal Clean Water Act civil penalty claims for the massive, three-month-long oil spill at the Macondo Well and the Transocean drilling rig Deepwater Horizon.
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 Department of Justice has agreed that it will not pursue further prosecution of Transocean and its subsidiaries for any conduct regarding any matters under investigation by the Deepwater Horizon Task Force relating to or arising out of the Macondo well blowout, explosion, spill or response, Transocean said in its press release.
“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,” Attorney General Eric Holder said in a statement.
“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,” he said. “I am particularly grateful today to the many Justice Department personnel and federal investigative agency partners for the hard work that led to today’s resolution and their continuing pursuit of justice for the people of the Gulf.”
Lanny Breuer, Assistant Attorney General for the Justice Department’s Criminal Division, also issued a statement.
“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,” Breuer said “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.”
Ignacia Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, also chimed in.
“The development and exploration of a domestic source of energy is vitally important, and it can and must be done in a responsible and sound manner. This unprecedented settlement under the Clean Water Act demonstrates that companies will be held fully accountable for their conduct and share responsibility for compliance with the laws that protect the public and the environment from harm,” Moreno said.
Court documents said that on April 20, 2010, while stationed at the Macondo well site in the Gulf of Mexico, the Deepwater Horizon rig underwent an uncontrolled blowout, setting off explosions and fire, which resulted in the deaths of 11 rig workers and the largest oil spill in U.S. history.
In agreeing to plead guilty, Transocean admitted that members of its crew on board 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 criminal resolution is structured to directly benefit the Gulf. According to court filings, $150 million of the $400 million criminal recovery “is dedicated to acquiring, restoring, preserving and conserving – in consultation with appropriate state and other resource managers – the marine and coastal environments, ecosystems and bird and wildlife habitat in the Gulf of Mexico and bordering states harmed by the Deepwater Horizon oil spill,” the Justice Department said.
This portion of the criminal penalty will also be directed to barrier-island restoration and/or river diversion off the coast of Louisiana to further benefit and improve coastal wetlands affected by the oil spill. An additional $150 million will be used to fund improved oil spill prevention and response efforts in the Gulf through research, development, education and training.
The civil settlement secures $1 billion in civil penalties for violations of the Clean Water Act, a record amount greater than last year’s $70 million civil penalty paid by MOEX Offshore 2007 LLC, a 10 percent partner with BP in the Macondo well venture.
The unprecedented $1 billion civil penalty is subject to the Resources and Ecosystems Sustainability, Tourist Opportunities and Revived Economies of the Gulf Coast States Act of 2012 (Restore Act), which provides that 80 percent of the penalty will be to be used to fund projects in and for the Gulf states for the environmental and economic benefit of the region.
Under the civil settlement, the Transocean defendants must also observe various court-enforceable strictures in its drilling operations, aimed at reducing the chances of another blowout and discharge of oil and at improving emergency response capabilities.
Examples of these requirements include certifications of maintenance and repair of blowout preventers before each new drilling job, consideration of process safety risks, and personnel training related to oil spills and responses to other emergencies. These measures apply to all rigs operated or owned by the Transocean defendants in all U.S. waters and will be in place for at least five years.
The Justice Department said that the guilty plea agreement and criminal charge announced today are part of the ongoing criminal investigation by the Deepwater Horizon Task Force into matters related to the April 2010 Gulf oil spill.
The Deepwater Horizon Task Force, based in New Orleans, is supervised by Assistant Attorney General Breuer and led by Deputy Assistant Attorney General John D. Buretta, who serves as the director of the task force. The task force includes prosecutors from the Criminal Division and the Environment and Natural Resources Division of the Department of Justice; the U.S. Attorney’s Office for the Eastern District of Louisiana, as well as other U.S. Attorneys’ Offices; and investigating agents from the FBI, EPA, Department of the Interior, National Oceanic and Atmospheric Administration Office of Law Enforcement, U.S. Coast Guard, U.S. Fish and Wildlife Service and the Louisiana Department of Environmental Quality.
The settlement is part of the ongoing litigation against defendants BP Exploration and Production Inc., the Transocean defendants, and Anadarko Petroleum Corporation (among others) for civil penalties, injunctive relief, and a declaration of unlimited liability for removal costs and damages under the Oil Pollution Act.
Attorney Gordon Johnson
Past Chair Traumatic Brain Injury Litigation Group, American Association of Justiceg@gordonjohnson.com
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