Transocean agrees to $1.4b in fines and penalties

WASHINGTON – The Department of Justice announced this week that Transocean Deepwater Inc. has agreed to plead guilty to violating the Clean Water Act (CWA) and to pay a total of $1.4 billion in civil and criminal fines and penalties, for its conduct in relation to the Deepwater Horizon disaster.

Transocean signed a cooperation and guilty plea agreement with the government, on Jan. 3, admitting its criminal conduct. As part of the plea agreement, Transocean agreed, according to a press release and subject to the court’s approval, to pay $400 million in criminal fines and penalties “and to continue its on-going cooperation in the government’s criminal investigation.”

Further, according to 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 spill at the Macondo Well and the Transocean drilling rig Deepwater Horizon in April 2010. 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.

However, as the Houston Chronicle notes, Transocean is agreeing to pay less than it indicated it thought it would pay in an earlier regulatory filing and the company appears to have avoided seaman’s manslaughter charges. Further, the company has up to five years to pay off some of the penalties.

This announcement follows BP agreeing to pay $4.5 billion in fines over its role in the Deepwater Horizon spill. Halliburton, the cement contractor involved in the spill, may yet also agree to fines and penalties.

“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,” said Attorney General Eric Holder in a statement.

The criminal resolution is structured to directly benefit the Gulf region, the DoJ said. Under the order presented to the court, $150 million of the $400 million criminal recovery “is dedicated to acquiring, restoring, preserving and conserving 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.” 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 civil settlement secures $1 billion in civil penalties for violations of the CWA, a record amount that significantly exceeds 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. This civil resolution reserves claims for natural resource damages and clean-up costs. The proposed civil settlement is subject to a public comment period and final court approval.   Information on submitting comment will be available at