Skip to main content

Sign up for our newsletter.

Quality journalism. Progressive values. Direct to your inbox.

The U.S. Coast Guard battles flames following the explosion on BP's offshore oil rig Deepwater Horizon. (Photo: US Coast Guard/ Wikimedia Commons)

The U.S. Coast Guard battles flames following the explosion on BP's offshore oil rig Deepwater Horizon. (Photo: US Coast Guard/ Wikimedia Commons)

Will BP's Record Gulf Spill Settlement Amount to a Record Tax Break?

Groups are warning that much of the $20.8 billion in settlement payments could be written off as the 'cost of doing business'

Lauren McCauley

As the U.S. Department of Justice announced on Monday a final settlement with BP over the devastating 2010 Deepwater Horizon oil spill, groups are warning that the oil giant may still nab a substantial tax break under the deal.

Attorney General Loretta Lynch said the $20.8 billion settlement agreement marks the "the largest settlement with a single entity in American history." The resolution includes $5.5 billion to settle civil claims under the Clean Water Act; $7.1 billion in natural resources damages claims under the Oil Pollution Act, in addition to the $1 billion previously committed for early restoration; and $4.9 billion in economic damages claims to the five Gulf states and up to $1 billion for local governments.

However, reporting by the Times-Picayune highlighted the little-noticed detail that, while the DOJ has explicitly forbidden BP from deducting its Clean Water Act penalties, no restrictions have been placed on the billions labeled natural resource damages payments, restoration, and reimbursement to government, which it can treat as a business expense.

U.S. Public Interest Research Group (PIRG) says this amounts to $15.3 billion that can be written off as the "cost of doing business"—$5.35 billion of which can be claimed as a tax windfall.

"BP was found to be grossly negligent in the Deepwater Horizon case, and yet the vast majority of what they are paying to make up for their gross negligence is legally considered just business as usual under the tax code unless the DOJ explicitly prohibits a write-off," said Michelle Surka, program associate with U.S. PIRG. "This not only sends the wrong message, but it also hurts taxpayers by forcing us to shoulder the burden of BP’s tax windfall in the form of higher taxes, cuts to public programs, and more national debt."

Environmental watchdog group Friends of the Earth also noted that the Deepwater Horizon disaster has already allowed BP sizable tax benefits, including the $10 billion windfall it was able to secure by deducting the cost of its cleanup expenses. 

"BP should not be allowed to treat the costs of their disaster as the cost of doing business," said FOE climate and energy campaigner Lukas Ross. "We are concerned that this settlement doesn’t protect taxpayers. The Justice Department must ensure that no further tax benefits can accrue to the company responsible for perhaps the biggest environmental disaster in U.S. history."


Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.

This is the world we live in. This is the world we cover.

Because of people like you, another world is possible. There are many battles to be won, but we will battle them together—all of us. Common Dreams is not your normal news site. We don't survive on clicks. We don't want advertising dollars. We want the world to be a better place. But we can't do it alone. It doesn't work that way. We need you. If you can help today—because every gift of every size matters—please do. Without Your Support We Simply Don't Exist.

Critics Fume as ICC Excludes US From Probe Into Afghan War Crimes

"Allowing powerful states to get away with multi-year, multi-continent torture against so many feeds impunity for all."

Andrea Germanos ·


Social Democrats, Greens Eye Coalition After Outgoing Merkel's Bloc Ousted in German Elections

Citing the need to act on the climate crisis, center-left SPD leader Olaf Scholz declared that "voters have clearly spoken."

Jon Queally ·


Trump's CIA Considered Kidnapping or Assassinating Assange: Report

"The Biden administration must drop its charges against Assange immediately."

Jake Johnson ·


'Carrying Water for Big Corporations': Sinema Faces Backlash for Opposing Tax Hikes

"Make no mistake, if she sides with her wealthy donors and kills popular investments to jump-start the economy, everyday families—including across Arizona—will pay the price."

Jake Johnson ·


UN Chief Warns Humanity Is 'Unacceptably Close to Nuclear Annihilation'

"Now is the time to lift the cloud of nuclear conflict for good," United Nations Secretary-General António Guterres said ahead of the International Day for the Total Elimination of Nuclear Weapons.

Jake Johnson ·

Support our work.

We are independent, non-profit, advertising-free and 100% reader supported.

Subscribe to our newsletter.

Quality journalism. Progressive values.
Direct to your inbox.

Subscribe to our Newsletter.


Common Dreams, Inc. Founded 1997. Registered 501(c3) Non-Profit | Privacy Policy
Common Dreams Logo