UPDATE 2-US judge accepts Transocean $400 mln Macondo settlement

Thu Feb 14, 2013 12:57pm EST

NEW ORLEANS, Feb 14 (Reuters) - A federal judge on Thursday
accepted a guilty plea by rig contractor Transocean Ltd 
for violating the U.S. Clean Water Act along with a $400 million
criminal fine for its role in the 2010 disaster at BP Plc's
 Macondo well.
    The overall settlement by Transocean Ltd, unveiled last
month by the U.S. Department of Justice (DOJ), included $1
billion in civil penalties, in addition to the $400 million in
criminal penalties. 
    After a hearing in New Orleans lasting less than an hour,
U.S. District Judge Jane Triche Milazzo accepted the Transocean
plea. Her ruling is yet another legal hurdle cleared ahead of a
trial due to start this month in the city to sort out the
remaining civil claims related to the Gulf of Mexico spill.
    Transocean's Deepwater Horizon rig, under contract with BP,
had been drilling a mile-deep well on April 20, 2010, when a
surge of gas caused a blowout that killed 11 workers. The well
then spewed 4.9 million barrels of oil over 87 straight days,
fouling the shores of Gulf Coast states and eclipsing the 1989
Exxon Valdez spill in Alaska in severity. 
    Milazzo, of the U.S. District Court for the Eastern District
of Louisiana, cited the resulting large fine as a good example
of the "deterrent effect of the plea process" when compared with
Exxon's comparatively smaller fine for the Valdez: a $25 million
criminal fine and $100 million for restitution.
    The Macondo accident led to a months-long U.S. deepwater ban
and intense scrutiny of the offshore drilling industry, which is
now booming worldwide despite lingering public concerns.
    Transocean, employer of nine of the 11 workers killed, had
set aside $1.5 billion for the DOJ out of a $1.95 billion loss
provision for the disaster. 
    Transocean must still seek a settlement with the plaintiffs
committee representing more than 100,000 individuals and
business owners claiming economic and medical damages, so the
ultimate cost of Macondo to Transocean could end up being
higher. Milazzo said on Thursday that Transocean had already
settled 98 of 99 personal injury claims.
    BP agreed in November to a U.S. federal settlement of its
own that was worth $4.5 billion, including the largest criminal
fine ever at $1.256 billion. The company also pleaded guilty to
obstruction of Congress, a felony; a judge approved that
criminal settlement late last month. 
    Weighing the relative size of Transocean's criminal fine,
Milazzo noted BP was a far larger company and cited BP's role as
operator of the well. "Transocean carried out the work under the
supervision of BP," she said.
    Of the $400 million in Transocean criminal fines, $150
million will help protect and restore the Gulf of Mexico, while
another $150 million will fund spill prevention and response
efforts there. Transocean must also implement court-enforceable
measures to improve safety and emergency response on U.S. rigs.
    The National Fish and Wildlife Federation told the court it
would manage the distribution of the $150 million for Gulf Coast
environmental restoration through a new Baton Rouge office.
    The plea mandates that Louisiana gets half of the funds for
restoration of barrier islands off the coast and river diversion
projects to help build critical marshlands, the NFWF said. The
other half will be split among Florida, Alabama, Mississippi and
Texas, according to a fixed formula in the settlement documents.
    Attention now turns to any other possible settlements ahead
of the trial in New Orleans starting Feb. 25, including for
Clean Water Act violations that may cost BP $21 billion if it is
found grossly negligent. 
    The Gulf coast states are also making economic damage claims
totaling $34 billion, according to BP.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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