Quantcast

Will American Taxpayers Continue to Foot the Bill for BP's Gulf Oil Disaster?

Energy

Oil Change International

By Andy Rowell

The devil is always in the detail.

If you read the headlines about BP’s trial in New Orleans you will see that if BP is found guilty it will pay out billions in fines.

Take the Washington Post headline on Monday: “Billions of dollars at stake for BP, other companies as trial opens for Gulf oil spill.”

But just how much money is at stake here?

We know that, depending if BP is found to be grossly negligent it faces fines of up to some $17.2 billion under the Clean Water Act. If it is just negligent the fine falls to as low as $4.4 billion

But what happens if BP settles before the trial ends, something that many observers believe is a distinct possibility?

Last week, in a last-minute settlement proposal reportedly offered by the Justice Department and the five affected gulf states—Alabama, Florida, Louisiana, Mississippi and Texas, BP was offered to pay $16 billion in spill-related fines and penalties.

But, this is where it gets interesting. Buried deep inside a New York Times article on the settlement are the details:

“The settlement proposal would cap the amount of fines that BP might pay for violations of the Clean Water Act to $6 billion, significantly less that it might face if the trial proceeds.” In fact that is more than $10 billion less than the full penalty.

And here comes the interesting thing: “The proposal would allow BP to pay an additional $9 billion to resolve environmental penalties related to the spill, an alternative that would lessen the impact on the company’s tax liabilities. The environmental penalties, under separate laws, are tax deductible, while fines like those imposed under the Clean Water Act are not.”

So any fine that BP pays under the Clean Water Act is not tax deductible, whereas any environmental penalty is.

This means that potentially BP could settle and offset a whopping $9 billion against it tax bill. BP essentially only pays $6 billion in fines, which is small fry for what it could have paid.

We know that BP has already set aside $42 billion for payouts from the spill. It has already paid $4.5 billion in fines and other penalties and $9 billion in a partial settlement with businesses, and individuals and local governments.

Add another $6 billion from Clean Water Act payments and the company could draw a line under the disaster, whilst offsetting the $9 billion against taxes now and in the future. Far from being financially crippling for the company, the sweet-heart tax scam is essentially BP’s get out of jail free card.

In 2010, BP paid no U.S. federal income tax in 2010 due to their massive write-offs related to the costs associated with the oil spill. BP received $10 billion in tax breaks by writing off earlier settlement costs related to the spill, but the Department of Justice forbid the company from taking its most recent $4 billion settlement as a tax write-off in November, reportedly at the urging of Attorney General Holder.

“We can’t penalize polluters like BP by rewarding them with tax deductions. BP, not the American people, should pay for the largest oil spill in U.S. history. Attorney General Holder should once again insist that any penalties imposed as part of a settlement are not tax deductible,” argues Steve Kretzmann of Oil Change International.

This essentially means that the American tax payer would be paying the largest payout from the spill. They are paying twice over: first for a devastated Gulf and now out of their pocket. Kind of makes you feel queasy, doesn’t it?

The Obama administration over the last four years has consistently called for ending oil subsidies. As White House Press Secretary Jay Carney said on Monday, Feb. 25: “Anybody fill up their gas tank this weekend? Think the oil and gas companies can maybe afford to give up their taxpayer—special interest break?”

Good question, Jay.

Visit EcoWatch’s GULF OIL SPILL and OFFSHORE OIL DRILLING pages for more related news on this topic.

——–

Click here to tell Congress to Expedite Renewable Energy.

 

EcoWatch Daily Newsletter

Bumblebees flying and pollinating a creeping thyme flower. emeliemaria / iStock / Getty Images

It pays to pollinate in Minnesota.

Read More Show Less
Aerial view of icebergs on Arctic Ocean in Greenland. Explora_2005 / iStock / Getty Images

The annual Arctic thaw has kicked off with record-setting ice melt and sea ice loss that is several weeks ahead of schedule, scientists said, as the New York Times reported.

Read More Show Less
Sponsored
Sled dog teams pull researchers from the Danish Meteorological Institute through meltwater on the Greenland ice sheet in early June, 2019. Danish Meteorological Institute / Steffen M. Olsen

By Jon Queally

In yet the latest shocking image depicting just how fast the world's natural systems are changing due to the global climate emergency, a photograph showing a vast expanse of melted Arctic ice in Greenland — one in which a pair of sled dog teams appear to be walking on water — has gone viral.

Read More Show Less
CAFOs often store animal waste in massive, open-air lagoons, like this one at Vanguard Farms in Chocowinity, North Carolina. Bacteria feeding on the animal waste turns the mixture a bright pink. picstever / Flickr / CC BY-ND 2.0

By Tia Schwab

It has been almost a year since Hurricane Florence slammed the Carolinas, dumping a record 30 inches of rainfall in some parts of the states. At least 52 people died, and property and economic losses reached $24 billion, with nearly $17 billion in North Carolina alone. Flood waters also killed an estimated 3.5 million chickens and 5,500 hogs.

Read More Show Less
Members of the NY Renews coalition gathered before New York lawmakers reached a deal on the Climate and Communities Protection Act. NYRenews / Twitter

By Julia Conley

Grassroots climate campaigners in New York applauded on Monday after state lawmakers reached a deal on sweeping climate legislation, paving the way for the passage of what could be some of the country's most ambitious environmental reforms.

Read More Show Less
Sponsored
In this picture taken on June 4, an Indian boatman walks amid boats on the dried bed of a lake at Nalsarovar Bird Sanctuary, on the eve of World Environment Day. Sam Panthaky / AFP / Getty Images

By Julia Conley

Nearly 50 people died on Saturday in one Indian state as record-breaking heatwaves across the country have caused an increasingly desperate situation.

Read More Show Less
A man carries a poster in New York City during the second annual nationwide March For Science on April 14, 2018. Kena Betancur / Getty Images

By Will J. Grant

In an ideal world, people would look at issues with a clear focus only on the facts. But in the real world, we know that doesn't happen often.

People often look at issues through the prism of their own particular political identity — and have probably always done so.

Read More Show Less

YinYang / E+ / Getty Images

In a blow to the Trump administration, the Supreme Court ruled Monday to uphold a Virginia ban on mining uranium, Reuters reported.

Read More Show Less