Swiss drilling contractor Transocean, which owned the rig that exploded in the Gulf of Mexico in 2010 after an undersea oil well erupted, will pay $1.4 billion, plus interest, to the U.S. government to resolve certain criminal and civil claims arising out of the disaster.
Thursday’s settlement, which includes a $400 million criminal penalty and a $1 billion civil penalty, relates to the first claim for relief in a lawsuit by the federal government against British oil giant BP and its partners on the doomed Macondo well project. The five Gulf Coast states will benefit from the terms of the deal.
The 78-page consent degree and criminal plea deal would resolve most, but not all, of the government’s claims against Transocean. Documents refer to the deal as a partial consent decree, and they note that, except as agreed in the deal, Transocean continues to deny any liability arising out of the incident.
Specifically, any potential claims associated with the Natural Resources Damage Assessment process are excluded from the agreement with the Justice Department.
A civil trial that will seek to assign percentages of fault to the companies involved in the disaster is scheduled to begin Feb. 25. The settlement could alter issues and parties addressed during the trial, but for now there has been no order to delay it. The companies continue to sue each other.
That continued friction was underscored by BP’s response to the Transocean developments.
BP said in a statement that Transocean is “finally starting, more than 2 1/2 years after the accident, to do its part for the Gulf Coast.”
The Transocean agreement follows a deal that BP reached with the government in November to resolve criminal liability and Securities and Exchange Commission violations. That agreement includes a $4 billion criminal penalty and $525 million for SEC fines. The SEC fines have been approved, but the criminal plea deal still must be approved by a judge. BP is set to enter its guilty plea to 14 charges, including manslaughter, on Jan. 29.
So far, cement contractor Halliburton hasn’t reached any deals with the government or other companies. And, according to a person familiar the matter who spoke on condition of anonymity, Halliburton isn’t currently in talks with the government about resolving any criminal liability from the disaster.
BP took a shot at Halliburton in its statement. “Unfortunately, Halliburton continues to deny its significant role,” BP said.
The Transocean agreement is subject to a public comment period and court approval, according to the documents filed Thursday in federal court in New Orleans. It’s not clear if any Transocean employees might face charges. Four current and former BP employees currently face criminal charges.
Transocean owned the Deepwater Horizon drilling rig that was working on BP’s Macondo well when the well blew out, leading to an explosion that destroyed the rig and killed 11 workers, and triggering the massive oil spill.
The Justice Department said in a statement that Transocean has agreed to plead guilty to violating the Clean Water Act for its conduct in relation to the Deepwater Horizon disaster.
In a statement, Transocean said the agreement is in the best interest of shareholders and employees because it removes some uncertainty associated with liability for the spill.
“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 said. “Their families continue to be in the thoughts and prayers of all of us at Transocean.”
In agreeing to plead guilty, Transocean admitted that members of its crew onboard the Deepwater Horizon, acting at the direction of BP’s “well site leaders” or “company men” — its representatives on the rig — 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, according to the Justice Department.
The violation pertains to well monitoring in connection with specific operations during the temporary abandonment procedure on April 20, 2010, the day the Macondo well blew out. Transocean is scheduled to make an initial court appearance on the criminal charge on Jan. 9.
“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. 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.”
The criminal resolution is structured to benefit the Gulf region directly, the government said.
Under the order presented to the court, $150 million of the $400 million criminal settlement 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 oil spill.
“This portion of the criminal recovery will also be directed to significant 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 Justice Department said.
Various payments under the agreement will be made over a period a five years.
The civil penalty is payable over two years, and is subject to interest from the date that the consent decree was lodged with the court, which was Thursday.
Neither settlement payments nor accrued interest are deductible for tax purposes, according to Transocean.
The agreement places significant restrictions on Transocean’s deepwater drilling operations. In particular, it requires the company to prove certain operations are safe and use of certain equipment, including blowout preventers, meet safety standards before they can be used. Enhanced training also is part of the agreement.
The agreement also calls for Transocean to make operational improvements.