Feds, Transocean reach $1.4B deal over Gulf spill

NEW ORLEANS (AP) — The Justice Department reached a $1.4 billion settlement Thursday with Transocean Ltd., the owner of the

drilling rig that sank after an explosion killed 11 workers and spawned the massive 2010 oil spill in the Gulf of Mexico.

The proposed settlement resolves the department's civil and criminal probes of Transocean's role in the Deepwater Horizon

rig disaster. It requires the Switzerland-based company to pay $1 billion in civil penalties and $400 million in criminal

penalties and plead guilty to a misdemeanor charge of violating the Clean Water Act, according to a court filing.

The deal, which is subject to a federal judge's approval, also calls for Transocean to implement a series of operational safety

and emergency response improvements on its rigs.

"This resolution of criminal allegations and

civil claims against Transocean 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 in a statement.

Transocean said it believes the settlement is in the best interest of its shareholders and employees and eliminates "much

of the uncertainty associated with the accident."

"This is a positive step forward, but it is

also a time to reflect on the 11 men who lost their lives aboard the


Horizon," the company said in a statement. "Their families

continue to be in the thoughts and prayers of all of us at Transocean."

Much of the $1.4 billion will fund environmental restoration projects and spill-prevention research and training.

The company has two years to pay the $1 billion civil penalty. Congress approved legislation that dedicates 80 percent of

the civil penalty for environmental and economic recovery projects in the Gulf states.

BP PLC, which leased the rig from Transocean, already has agreed to pay a record $4.5 billion in penalties and plead guilty

to manslaughter and other criminal charges related to the spill. The deal with BP doesn't resolve the federal government's

civil claims against the London-based oil company.

Transocean previously announced it had reserved $2 billion for paying claims related to the Deepwater Horizon disaster.

David Uhlmann, a University of Michigan law professor and former chief of the Justice Department's environmental crimes section,

said the $1 billion civil penalty is a record amount for an environmental case. But he expressed surprise that Transocean

isn't paying more in criminal penalties or facing manslaughter charges of its own.

"The Justice Department clearly views BP as the most culpable party in the criminal cases," Uhlmann said. "But Transocean's

negligence also is responsible for the workers' deaths and the spill."

Transocean also said in a September

regulatory filing that it had rejected settlement offers last year from

BP and a group

of attorneys for Gulf Coast residents and businesses who blame the

spill for economic damages. Those claims are still pending.

Last month, U.S. District Judge Carl Barbier

in New Orleans gave final approval to a class-action settlement

agreement between

BP and a team of private plaintiffs' attorneys. BP estimates it

will pay about $7.8 billion to resolve these claims, but the

settlement isn't capped.

Barbier also is set to preside over a trial designed to identify the causes of BP's deadly well blowout and assign percentages

of fault to the companies involved. The first phase of the trial is scheduled to start Feb. 25.

BP reported profits of more than $25 billion in 2011, but for Transocean the year resulted in a loss of about $5.7 billion,

some of it attributed to contingencies for litigation resulting from the sinking of the Deepwater Horizon.

A series of government investigations has spread out the blame for the nation's worst offshore oil spill among BP, Transocean

and other partners on the project, including cementing contractor Halliburton.

Halliburton hasn't settled with the Justice Department, BP or Transocean.

The Deepwater Horizon was drilling in water a mile deep about 50 miles southeast of the Louisiana coast when it exploded on

the night of April 20, 2010.

The Justice Department says Transocean crew members on the rig, acting at the direction of BP supervisors, failed to fully

investigate clear signs that the well was not secure and that oil and gas were flowing into the well.

The rig burned for about 36 hours before sinking.

As engineers made repeated attempts to halt the flow of oil from BP's burst well, millions of gallons of crude flowed out.

Marshes, beaches and fishing grounds across the northern Gulf were fouled by the oil.

Two BP employees who worked as well-site

leaders on the rig were indicted in November on manslaughter charges

stemming from

the 11 workers' deaths. The indictment accuses Robert Kaluza and

Donald Vidrine of disregarding high pressure readings that

should have indicated trouble before the blowout.

No criminal charges have been filed against individual Transocean employees.

One of Kaluza's attorneys, Shaun Clarke, said the Transocean deal is part of prosecutors' efforts to "sell a fiction" about

the events leading up to the explosion.

"The companies want to get on with their business. The government wants a scapegoat. Bob and Don just want to get their day

in court and have the truth be told," Clarke said.