News Release

Contact

Mario K. Salazar,
U.S. PIRG

34 Thousand Tell Justice Dept: Deny BP Tax Write Off for Gulf Oil Spill

For Immediate Release

Today, the U.S. Public Interest Research Group delivered over 34,000 petitions to the Department of Justice calling on the agency to deny British Petroleum (BP) tax deductions for its remaining payments to address the 2010 Gulf Coast oil spill. A forthcoming decision to address BP’s liability under the Clean Water Act could earn the company a $4.9 billion tax windfall if the Justice Department signs an out-of-court settlement and fails to specify that the payments are non-deductible.

“Allowing tax deductions for BP's actions says that misdeeds will be subsidized by ordinary citizens,” said Mario Salazar, legislative director with U.S PIRG, at the Department of Justice this morning. “We are here today to ask the Department of Justice to stand by American taxpayers and to do the right thing."

BP, which has been found “grossly negligent” for its role in the Deepwater Horizon disaster, has already paid nearly $40 billion to clean up the environmental damage caused by the spill, pay penalties in connection with the deaths caused by the Deepwater Horizon explosion, and compensate local communities for widespread pollution. However, about 80 percent of the total payments made thus far qualify as “ordinary and necessary business costs,” allowing BP to reap at least $10 billion in tax windfalls already.

"A terrible oil spill should not be a regular cost of business nor should BP treat it like a tax deductible business expense,” said Representative Matt Cartwright (D-PA, 17th District). “When companies harm the public and write off their misdeeds as tax deductions, at a minimum, the public should know. That is why I am leading the effort in the House to pass the Truth in Settlements Bill."

The Truth in Settlements Act, introduced in the last Congressional session in both the House and Senate and yet to be introduced this year, would require government agencies to disclose the real, after-tax value of corporate wrongdoing settlement payments.

BP and the Justice Department continue to discuss a possible out of court settlement in lieu of a potential decision from Judge Barbier to resolve the oil giant’s liability under the Clean Water Act. The judge could assign up to $14 billion in fines, which are not tax deductible under law. If the Department of Justice agrees to a settlement, they would need to specifically forbid BP from claiming a tax deduction, as the department has sometimes done in the past.

If the Department of Justice allowed the charges to be resolved by a $14 billion tax-deductible settlement and BP claimed the payment as a tax deductible cost of doing business, the company would have $4.9 billion tax windfall, making the net value of the settlement only $9.1 billion.

The Department of Justice is able to prevent tax deductions for its settlement agreements. Earlier this month, the Department specified that its $1.4 billion settlement with Commerzbank for its U.S. sanctions violations was not permissible as a business expense for tax purposes.

“BP’s Deepwater Horizon offshore well blowout inflicted a massive toll on the environment, and especially on wildlife, one that continues to mount five years later,” said Adam Weil, Federal Conservation Advocate with Environment America. To save our coasts from these dangerous impacts, we need to stop offshore drilling and hold BP accountable for their actions.

MoveOn.org partnered with U.S. PIRG to help collect a substantial portion of the 34,000 petition signatures.

Support Us

Your donation supports U.S. PIRG’s work to stand up for consumers on the issues that matter, especially when powerful interests are blocking progress.

Consumer Alerts

Join our network and stay up to date on our campaigns, get important consumer updates and take action on critical issues.
Optional Member Code



U.S. PIRG is part of The Public Interest Network, which operates and supports organizations committed to a shared vision of a better world and a strategic approach to getting things done.