NEW ORLEANS - The U.S. 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.
It was the worst environmental disaster in U.S. history.
The proposed settlement resolves the department's civil and criminal investigation of Switzerland-based Transocean's role in the Deepwater Horizon rig disaster.
It requires the company to pay $1 billion in civil penalties and $400 million in criminal penalties and plead guilty to a misdemeanour 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 described the settlement as a positive development.
"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 in a statement. "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. Their families continue to be in the thoughts and prayers of all of us at Transocean."
Much of $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.
British oil giant 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 oil company.
Transocean previously announced it had reserved $2 billion for paying claims related to the Deepwater Horizon disaster.
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.
The Deepwater Horizon was drilling in water a mile deep 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 over several weeks, millions of gallons of crude flowed out. Marshes, beaches and fishing grounds across the northern Gulf were fouled by the oil.
Associated Press writer Pete Yost in Washington contributed to this report.