Transocean set to plead guilty to misdemeanor in spill case

It’s Transocean’s turn in the penalty box.

A lawyer for the Swiss drilling contractor is expected to enter a guilty plea on the company’s behalf Thursday in a New Orleans federal courtroom to a single misdemeanor charge of violating the Clean Water Act through negligent discharge of oil into the Gulf of Mexico.

Transocean has agreed to pay a $400 million criminal fine and serve five years on probation. The decision whether to approve the deal rests with U.S. District Judge Jane Triche Milazzo.

The charge stems from a U.S. government criminal investigation of the 2010 Gulf oil spill that also has ensnared British oil giant BP and four of its current and former employees. The probe continues nearly three years later.

Transocean owned the Deepwater Horizon drilling rig that exploded and sank about 50 miles off Louisiana after a well a mile beneath the sea blew out. Eleven rig workers, including nine of its own employees, were killed.

BP owned the well and was leasing the rig from Transocean. The resulting oil spill was the worst U.S. offshore spill ever, with some 206 million gallons of oil being discharged by the well, according to government estimates that BP disputes.

The hearing is expected to be relatively quick compared to BP’s plea hearing two weeks ago, when it admitted to 14 criminal charges, including manslaughter and the court heard from a number of victims.

By contrast, Milazzo granted Transocean’s request to move the hearing up an hour so the company’s lead attorney at the proceeding, Brad Brian, can make a 12:45 p.m. flight to Washington.

Among the many victims of the disaster and their representatives, only three are scheduled to speak at the hearing – Buddy Trahan, who was on the rig at the time of the blast and suffered numerous injuries; Laura Regan, a Gulf Coast property owner; and Anh-Dao Nguyen, coordinator for the Southeast Asian Fisherfolk Association.

Executive may appear

While Transocean’s board authorized a member of its legal team to enter the formal guilty plea – Brian, Steven Roberts and Kerry Miller are listed as designees – it’s possible a Transocean executive also will address the court, if the sequence of BP’s plea hearing is any indication.

A Transocean spokesman declined to comment on the possibility.

If Milazzo accepts the plea agreement Transocean reached with the Justice Department, she will impose the negotiated sentence. If she rejects it, she will allow Transocean to withdraw its guilty plea and proceed to trial. Federal probation officials filed a revised pre-sentence investigation report and recommendation under seal on Monday.

The company and federal prosecutors have urged Milazzo to accept the deal, arguing in a joint memo that the criminal plea deal and a $1 billion civil settlement “serve to deter and prevent future misconduct and protect the public from future criminal conduct by Transocean and others.”

Only three parties – BP and two environmental advocacy groups – submitted criticism of either deal. Transocean and the Justice Department agreed to tweak some wording in the civil settlement at BP’s request.

As of Monday, no victims of the spill or rig explosion had filed statements regarding the criminal settlement, according to the court’s public docket.

Pressure test is key

Transocean’s culpability stems in part from a procedure called a negative pressure test that was conducted on board the Deepwater Horizon prior to the well blowout. The failure to correctly interpret the test has been a key finding in several government investigations of the disaster.

A negative pressure test involves controlled reduction of pressure in a well to ensure that the casing and cement that separate the well from the oil and gas formation can hold without any leaks.

Federal prosecutors say Transocean’s crew was negligent, but argues the crew carried out drilling operations and the test under BP’s instruction and supervision.

Two BP well-site leaders face manslaughter charges stemming from the negative pressure test. A former BP executive and a former BP engineer face charges related to actions after the disaster. All four are preparing for trial.

A trial of spill-related civil litigation over the oil spill, meanwhile, is set to begin Feb. 25 in New Orleans.