Created on: January 05, 2013
The Justice Department announced January 3, 2013, that Transocean would pay a record $1.4 billion fine for its part in the Gulf oil spill. The Swiss firm agreed to pay $1 billion for a civil fine and $400 million in criminal penalties for violating the US Clean Water Act, reported the British Broadcasting Corporation (BBC).
The offshore drilling company (which provided the Deepwater Horizon rig and supporting crew), together with British Petroleum (BP), was responsible for the 2010 Gulf disaster. For its part, BP admitted its guilt and paid a record $4.5 billion in November 2012, of which more than $1.25 billion was a criminal fine. BP has also paid another $14 billion for clean-up and compensation costs.
One of biggest environmental disasters in history
The Gulf Oil spill, which led to the death of 11 crew members, was one of the largest environmental disasters in the world, and certainly the most stunning maritime disaster in US history. The oil well went uncapped for three months, spilling millions of gallons of crude into the Gulf of Mexico. From Florida to Louisiana, the natural environment and wildlife were greatly impacted by disaster, as were the livelihoods of many individuals who earn a living in the impacted areas.
While BP leased the rig and contracted the staff from Transocean, “Transocean’s rig crew accepted the direction of BP well site leaders to proceed in the face of clear danger signs at a tragic cost to many of them,” remarked Lanny Breuer, Assistant Attorney General.
According to CNN, the government had spelled out in earlier court documents that, “BP did not act alone, by any means, and its gross negligence and willful misconduct are inextricably joined with the acts and omissions of Transocean.”
Changes in safety
While the fines and penalties agreed upon with the Department of Justice (DOJ) have yet to be approved by a federal judge, it is likely that this settlement will come with an agreement to make a “series of improvements to the safety and emergency responses on its rigs,” according to the BBC.
A July 2012 report from the Chemical Safety Board of the United States criticized both Transocean and BP for shirking safety rules that could have prevented (or at least mediated) the disaster. Among some of the fiercest fighting between the two entities was about the issue of who was responsible for the negative pressure test that would have warned of the impending crisis aboard the rig.
Impact on the company
While Transocean is likely to pay out its penalties and fines over the next five years, both its stock and that of BP rose (6.4 percent and 1.7 percent respectively) on the news of the fine. Ironically, the announcement was good news for shareholders who, along with Barclays, had anticipated an even greater financial punishment by the DOJ.
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