Here’s What Transocean’s Guilty Plea Means
On April 20, 2010, Transocean’s (NYSE:RIG) Deepwater Horizon rig, under contract with BP (NYSE:BP), experienced a surge of gas that killed 11 workers and spewed 4.9 million barrels of oil into the ocean over 87 days. It’s a date that will remain memorable for both companies until the incident has faded from public consciousness and the tremendous criminal and civil penalties have been paid off.
But that time has not yet come, with both Transocean and BP still facing huge fines. For the largest accidental marine oil spill in the history of the petroleum industry, a federal judge in New Orleans accepted a guilty plea by Transocean on Thursday along with a $400 million criminal fine, Reuters reported.
As the rig contractor announced in a press release dated January 3, in its overall settlement with the U.S. Department of Justice, the company agreed to plead guilty to one misdemeanor violation of the Clean Water Act for negligent discharge of oil into the Gulf of Mexico. It also agreed to pay $1 billion in civil penalties, in addition to the $400 million in criminal penalties.
Of the $400-million fine, $150 million will go toward the protection and restitution of the Gulf of Mexico, while another $150 million will fund spill-prevention and response efforts. But Transocean was hit with more than just fines…
As part of the settlement, the company must also implement measures to improve safety and emergency response on its rigs.
Furthermore, Transocean must arrange a settlement with the plaintiffs’ committee that represents more than 100,000 individuals and business owners claiming medical and economic damages.
With U.S. District Judge Jane Triche Milazzo agreeing to the deal, the last legal hurdle ahead of the civil trial due to begin later this month has been cleared. In her ruling, Milazzo wrote that the large fine was a good example of the “deterrent effect of the plea process,” when compared to the relatively small fine Exxon Mobil (NYSE:XOM) received for the 1989 Valdez oil spill in Alaska, according to Reuters.
Exxon was only given a $25 million criminal fine and a $100 million penalty for restitution.
The nine-month long deepwater drilling ban that followed the disaster has come and gone, but authorities are still handing out punishments to both companies. The upcoming trial, which will begin in New Orleans on February 25, could result in Clean Water Act fines of up to $21 billion for BP if it is found to have acted with gross negligence.
Don’t Miss: To Russia, With Little Love From BP.