Transocean Reaches Civil and Criminal Settlement with Department of Justice Over 2010 Deepwater Horizon Disaster

By Scott Madere

300px-Deepwater Horizon offshore drilling unit on fire 2010Louisiana and its neighboring Gulf Coast States stand to benefit from a settlement reached between the U.S. Department of Justice and Transocean Ltd., the owner of the Deepwater Horizon drilling rig that exploded and sank in 2010 in the Gulf of Mexico. Today’s settlement requires Transocean to pay $1.4 billion in fines and is expected to resolve both the U.S. government’s criminal and civil cases resulting from their role in the disaster.

How the Settlement Breaks Down

The big news is that of the $1.4 billion settlement, $1 billion results from civil penalties associated with the Clean Water Act. By law, 80% of these funds will be directed back to Louisiana and its fellow Gulf states for coastal recovery and restoration efforts associated with the Deepwater Horizon disaster. This allocation of funds is mandated in the 2012 RESTORE Act. The settlement represents the first flow of dollars into the Gulf states as a result of this new law.

Also, in accordance with the settlement, Transocean has pleaded guilty to a misdemeanor violation of the Clean Water Act. This results in a $400,000 criminal penalty. This fine will be paid in the manner below:

  • $150 million to the National Academy of Sciences (NAS) over a five-year period for the purposes of oil spill prevention and response in the Gulf of Mexico.
  • $150 million to the National Fish and Wildlife Foundation (NFWF) over a three-year period to be directed to natural resource restoration projects and coastal habitat restoration, including restoration of the barrier islands off the coast of Louisiana and diversion projects on the Mississippi and Atchafalaya Rivers.

Potential claims associated with the Natural Resources Damage Assessment (NRDA) process are not included in this agreement between Transocean and the Department of Justice.

What About BP?

Today’s agreement with Transocean is completely independent of ongoing legal proceedings against BP.

In November 2012, BP agreed to pay a record $4.5 billion in penalties to settle its criminal charges associated with the disaster. That deal does not resolve the civil claims levied against the oil company by the U.S. Department of Justice.

Transocean was the owner of the Deepwater Horizon rig. BP leased the rig from Transocean. The Department of Justice’s cases against each company are separate.

CRCL’s Take

This is a historic agreement because the $1 billion in civil fines under the Clean Water Act will be affected by the RESTORE Act. This means $800 million in badly needed relief funds will make its way to Louisiana and its neighboring Gulf states, who were profoundly affected by the massive environmental disaster.

Today’s Transocean settlement reflects how important the effort was to get the RESTORE Act passed through Congress in 2012. With this measure in place, Louisiana and the Gulf states are guaranteed by statute to receive recovery funds from these critical civil penalties. Not only was it important to pass the RESTORE Act, it was crucial to get the Act in place before these penalties were levied. Our Congressional leaders should be commended, along with the thousands of people who wrote letters and spoke out about the RESTORE Act, for getting this crucial law passed for the Gulf states.

Today’s settlement, and future civil fines against BP, will play a key role in funding coastal restoration in Louisiana. It is a major victory for the citizens of our state.

03 January 2013, 20:56
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