U.S. Senator Demands BP and Justice Dept Disclose Spill Settlement, Disallow Spill Tax Write Off


U.S. Senator Bill Nelson (D-FL) sent a letter to the U.S. Department of Justice demanding that the recent $18.7 billion out-of-court settlement between BP and the Department and five Gulf states for the 2010 Deepwater Horizon oil spill be publicly disclosed and that BP be forbidden from writing off their settlement payments as a tax deduction.

“Senator Nelson’s letter is common sense,” said Phineas Baxandall, Senior Policy Analyst for the U.S. Public Interest Research Group. “When the nation’s highest law enforcer cuts a deal with BP to pay its way out of facing trial for crimes that led to the nation’s biggest oil spill, then the public deserves to know right away what’s in the deal. The Justice Department must also ensure that the oil giant can’t just shift these costs back onto the public by treating the settlement as a giant tax deduction.”

Senator Nelson’s letter addressed to Attorney General Loretta Lynch urged her, “to get details out to the public and open up a comment period as soon as possible.” It also stated, “BP should not be allowed to claim a tax deduction for these dollars, and the final settlement should reflect that.”

The Senator furthermore noted that “The Department of Justice has agreed that BP will pay a civil Clean Water Act fine of only $1,724 per barrel of crude spilled into the Gulf of Mexico. This falls far short of the $4300 per barrel maximum fine faced by BP for gross negligence and willful misconduct.” A judge already concluded that BP’s behavior leading to the spill constituted gross negligence.

“There’s no question here about whether BP committed wrongdoing,” said Baxandall. “The law clearly states that fines and penalties not be allowed as tax deductions so businesses won’t regard such payments like business-as-usual. If there had been no settlement deal and the judge had been left to order BP to pay a penalty, then the sum wouldn’t be tax deductible. There will be a huge loophole unless the Justice Department specifies that their settlement likewise isn’t a deductible business expense. Unless they do so, BP will take at least a $4.6 billion tax windfall that will end up falling on the shoulders of ordinary taxpayers. That’s not right.”

You can read U.S. PIRG’s research report on settlement deductions here (link). 

You can also read U.S. PIRG’s July 2nd press release on the BP settlement here (link).