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Oil Spill

Transocean to Pay $1.4B to Resolve DOJ Criminal Probe, Other Federal Claims re Gulf Oil Spill

Posted Jan 3, 2013 5:52 PM CDT
By Martha Neil

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The company that owned the Deepwater Horizon drilling rig and safety equipment involved in the massive Gulf of Mexico oil spill nearly three years ago has agreed to pay $1.4 billion to settle federal claims over the fatal environmental disaster.

Transocean Ltd. will plead guilty to violating the Clean Water Act, according to a consent decree filed Thursday in federal court in New Orleans. If approved by a federal court, the settlement may prevent the Switzerland-based company from working on future government contracts. Most of the money Transocean is to pay will go to civil penalties, but $400 million will cover a criminal penalty to resolve a criminal investigation by the U.S. Department of Justice, reports Bloomberg. Another $10 million is to be used by the company to establish a technology group that will promote drilling safety.

The Associated Press reports that law professor David Uhlmann of the University of Michigan said the $1 billion in civil penalties Transocean agreed to pay is a record high amount in an environmental case. But Uhlmann said he's surprised Transocean was able to avoid manslaughter charges and a higher criminal penalty.

Eleven people died in the record-breaking spill, which began April 20, 2010 with an explosion and fire on the Deepwater Horizon. The three companies involved, the experts they retained and investigators from various governmental entities differed in their interpretation of exactly what caused the disaster. However, the spill scenario raised multiple issues including safety procedures that weren't followed, blowout preventers that didn't work and an apparent attitude of complacency that resulted in a failure to notice danger signs that signaled a serious problem until it was too late to prevent the disaster.

BP Plc, which owned and operated the undersea Macondo oil well, previously agreed to pay the DOJ $4 billion to resolve spill-related charges and settled with the U.S. Securities and Exchange Commission for another $525 million concerning a claim that BP misled investors about the amount of oil that was being spilled. BP expects to pay an additional $7.8 billion to settle private claims, Bloomberg notes.

"Today’s settlement between Transocean and the U.S. underscores what every official investigation has found: that the Deepwater Horizon accident resulted from multiple causes, involving multiple parties,” said a spokesman for BP on Thursday. “Transocean has acknowledged that it played a significant role and has responsibility for the accident.”

Transocean said in a statement that it believes the civil and criminal settlements served the best interest of its shareholders by eliminating uncertainty, the AP article reports. The company also pointed to the 11 men who died and said their families "continue to be in the thoughts and prayers of all of us at Transocean."

A federal judge in New Orleans has been overseeing the private litigation over the spill, and a nonjury trial is scheduled to begin Feb. 25 to apportion fault, Bloomberg reports. In addition to BP and Transocean, a lawsuit by BP contends that two subcontractors bear some blame concerning the manufacture of blowout preventers and the installation of a concrete cap to seal off an exploratory undersea oil well.

Also unresolved is whether and in what amount Transocean may have to pay for natural resources damage under the Oil Pollution Act of 1990. Although the company says the judge has limited its liability for such damage, a higher court could view the situation differently, Bloomberg points out.

USA Today also has a story.

Earlier coverage:

ABAJournal.com: "Oil Spill Blame Game: Rig Owner & Sub Point Fingers at BP, Which Points Back"

ABAJournal.com: "Judge Rules Maritime Law Doesn’t Shield Transocean from Most Environmental Suits"

ABAJournal.com: "BP Corner-Cutting Led to Gulf Oil Disaster, Says Ex-EPA Lawyer; PBS Program Tonight Details Claims"

ABAJournal.com: "Despite Hi-Tech Safety Equipment, Lack of Training Aided Oil Rig Disaster, NY Times Reports"

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