Transocean, the drilling company that owned the oil rig implicated in the catastrophic Deepwater Horizon oil spill in the Gulf of Mexico, will plead guilty to violating the Clean Water Act and pay a $1.4 billion fine, the Justice Department said Thursday.
Justice filed the agreement in a Louisiana court Thursday. A judge must approve the settlement.
Shares of Transocean jumped with news of the settlement, closing up more than 6% at $49.20 a share.
The settlement reflects the government's contention that BP, a multi-national oil company based in London, is ultimately responsible for the April 20, 2010, blowout of the Macondo well that killed 11 rig workers and led to the largest oil spill in U. S. history.
BP, which owned the drilling rights to the Macondo well, leased the rig from Transocean and BP employees directed the drilling operations. BP has agreed to pay a record $4 billion in criminal penalties and plead guilty to manslaughter and other criminal charges related to the spill, but the government's civil claims against the company remain unresolved.
In the agreement, Transocean admits criminal conduct and agrees to improve its safety procedures and emergency response at all its drilling rigs operating in U.S. waters.
Transocean's crew continued operating even after they saw signs of problems that resulted in the explosion, assistant attorney general Lanny Breuer said.
The guilty plea acknowledges that the Transocean crew, under direction of BP's onsite employees, failed to investigate "clear indications" that the Macondo well was not secure and that oil and gas were flowing into the well, the Justice Department said.
The settlement "brings us one significant step closer to justice for the human, environmental and economic devastation wrought by the Deepwater Horizon disaster," Attorney General Eric Holder said. "This agreement holds Transocean criminally accountable for its conduct."
The order filed in court Thursday dedicates $150 million of a $400 million criminal fine to restoring coastal areas and barrier islands damaged by the spill.
Another $150 million will pay for improved oil spill prevention and response development and training. At least 80% of the $1 billion civil fine will fund environmental and economic projects in the five Gulf states affected by the spill.
The agreement also mandates new safety features, which include requiring the company to certify the maintenance and repair of blowout prevention gear before each new drilling job, to train its employees for oil spill response and spend $10 million to explore new safety technologies. The company must also create a public website that details lessons learned from the incident, posts its progress reports on compliance with the agreement and list all violations of the agreement.
Transocean in a statement said it planned to pay the penalties over five years.
"These important agreements, which the company believes to be in the best interest of its shareholders and employees, remove much of the uncertainty associated with the accident," the company said. "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."
Lousiana Sen. David Vitter called the settlement "an important, positive step" toward restoring the Gulf.
"Hopefully this leads soon to much bigger final action with BP, the main culprit in this horrible disaster," Vitter said.
Transocean should have paid more, said New Orleans attorney Stuart Smith, an environmental plaintiff's lawyer who represents fisherman and other Gulf coast businesses with oil spill claims.
"The amount reflects the size of the company, not its responsibility or its liability," Smith said. "I think it's too little, but the government probably does not want to bankrupt them. Transocean is a little bitty baby company compared to BP."
BP will bear most of the blame and pay most of the money, he said. "BP can afford it."
The federal government sued BP, Transocean and other oil exploration companies on Dec. 15, 2010, for causing what the Justice Department called "one of the worst environmental disasters in American history." Oil from the well flowed into the Gulf of Mexico for nearly five months, from April 20 until Sept. 19, 2010, when the well was sealed.
"By that time, millions of barrels of oil had been discharged into the Gulf and upon adjoining shorelines, causing immense environmental and economic harm to the entire region," the Justice Department said.
The government has reached settlements with several of the defendants in the lawsuit. Last February, Moex Offshore, a minority investor in the lease for the Macondo well, agreed to pay $90 million for its role in the spill.
In November, BP Exploration and Production agreed to pay $4 billion in criminal penalties and fines -- the largest criminal payout in U.S. history; $525 million to settle securities claims; and plead guilty to 11 counts of felony manslaughter. The company also pleaded guilty to environmental and obstruction charges. BP admitted that the two highest ranking company supervisors on the rig saw "clear indications" that the well had breached, but did not take appropriate steps to prevent the blowout that led to the explosion and spill.
A grand jury has indicted the two BP supervisors on the oil rig for negligence, involuntary manslaughter and violations of the Clean Water Act, and a BP executive for obstruction of Congress and making false statements to law enforcement officers that underestimated the amount of oil pouring into the Gulf of Mexico.
The Justice Department is also pursuing civil penalties against BP for violations of the Clean Water Act. That trial is set to begin Feb. 25. BP said in a statement that it would "vigorously defend itself" against the remaining civil claims.
The civil case against BP "is where fairness will be found - or lost," said Audubon President and CEO David Yarnold.
If the Justice Department recovers money from BP for violations of the Clean Water Act, the law requires most of it to be spent to restore the Gulf of Mexico, Yarnold said.