BP Could Get Billions in Tax Breaks on Oil Spill Settlement

In this June 4, 2010 file photo, a worker picks up blobs of oil with absorbent snare on Queen Bess Island at the mouth of Barataria Bay near the Gulf of Mexico in Plaquemines Parish, Louisiana. (photo: Gerald Herbert/AP)

 

Jennifer Larino | The Times-Picayune | Reader Supported News | July 11, 2015

ast Thursday (July 2), states attorneys general in Louisiana and four other Gulf Coast states celebrated an $18.7 billion settlement with BP over claims from the 2010 Gulf of Mexico oil spill. A report from the U.S. Public Interest Research Group says the true value of the deal could be far lower after BP files its taxes.

Federal tax law prevents companies from deducting penalties paid for breaking the law from their corporate taxes. But damage payments — such as money paid for coastal restoration — can be treated as a business expense.

According to the Public Interest Research Group, at least $13.2 billion in the settlement is not defined as a penalty, meaning BP could potentially get tax breaks on that chunk of money. This includes payments to restore natural resources the spill damaged.

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BP found ‘grossly negligent’ in 2010 Gulf oil spill

The 2010 explosion and subsequent oil spill cost 11 workers their lives and was the worst in US history

A US judge has ruled BP was “grossly negligent” in the lead-up to the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.

The ruling could potentially cost BP billions more in compensation payments.

The New Orleans judge Carl Barbier also found BP subcontractors Transocean and Halliburton “negligent”.

The 2010 oil spill was the worst in US history, and BP has set aside $43bn (£26bn) to cover fines, legal settlements, and clean-up costs.

BP said in a statement that it “strongly disagrees” with the ruling and that it would appeal to a higher court.

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