Skip to main content

Sign up for our newsletter.

Quality journalism. Progressive values. Direct to your inbox.

"Making the American taxpayer pick up BP's bill for cleaning the disastrous Deepwater Horizon spill is an outrage," presidential hopeful Bernie Sanders tweeted on Monday. (Photo: Sean Gardner/Reuters)

Tax Windfall for Deepwater Horizon Settlement a 'Major Coup for BP'

'Treating the worst oil spill in U.S. history as an ordinary and necessary business expense boggles the mind'

Nika Knight Beauchamp

In the six years since BP's catastrophic Deepwater Horizon spill poured millions of gallons of oil into the Gulf of Mexico, environmentalists, Gulf coast residents, and politicians have clamored for justice. But Monday's historic $20 billion settlement against the oil giant is not what they hoped it would be.

The settlement's terms are so generous to BP that it amounts to a tax break worth billions—as some observers predicted.

A whopping $15 billion of the $20 billion settlement can be written off by BP as a "normal operating expense," meaning the multinational corporation will pay only a fraction of the total settlement amount and American taxpayers will be left with the majority of the astronomical costs of the company's mistake.

"We are saddened to learn that the gross negligence of BP continues to enjoy taxpayer subsidies," said Lukas Ross, climate and energy campaigner with the environmental group Friends of the Earth.

"Treating the worst oil spill in U.S. history as an ordinary and necessary business expense boggles the mind," Ross continued. "Nearly six years to the day since this tragedy began to unfold, it is clear that we have still failed to learn all the lessons of the Deepwater Horizon."

Presidential hopeful Bernie Sanders also voiced his disapproval of the deal:

Legal journalist at Forbes Robert W. Wood notes that just $5.5 billion of the settlement "is indicated explicitly as a penalty under the Clean Water Act," and it is only this portion of the settlement which is not tax-deductible. However, "the federal government could have received as much as a $13.7 billion penalty under that Act based on a recent finding by a New Orleans judge that the spill was the result of 'gross negligence,'" he argues.

"The oil giant already wrote off the cost of its cleanup effort after the spill," Wood writes, "Yet remediation is supposed to be tax deductible and penalties are not. Even for this penalty money, though, companies often find a way to deduct payments unless the settlement or consent documents expressly prohibit it."

The massive tax break "is a major coup for BP," says Wood, "which is doing all it can to make sure BP doesn’t stand for 'big penalty.'"

Of course, BP wasn't the only player making sure this was the outcome. Huffington Post reporter Nick Visser delves into how U.S. officials took deliberate steps to ensure BP could evade paying the majority of the settlement:

Shortly after BP agreed to the terms of the settlement last year, 53 members of Congress asked Attorney General Loretta Lynch to deny the company the ability to deduct the expenses from its taxes. Such a provision would've matched the terms of the $5.5 billion in fines for the company's violation of the Clean Water Act, which prohibit the company from claiming them as a business expense.

The International Business Times notes the U.S. tax code allows punitive damages to be written off as a business expense, as BP will be allowed. But provisions added to settlements can restrict this freedom.

BP is not only receiving this eye-popping tax break for being behind the worst oil spill in U.S. history—the company has actually expanded operations in the Gulf in the years since, as the Atlantic reported in 2014.


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

We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.

Despite Housing Crisis, Mississippi May Return Up to Millions in Federal Rent Aid to DC

"For them to suggest people like me aren't working? It's a slap in the face," said one woman affected by the end of the pandemic assistance program. "It's very insulting and degrading."

Brett Wilkins ·


80% of US Voters Across Party Lines Support Expanding Social Security

"With Republicans threatening to cut benefits—and worse, eliminate the program entirely—Dems need to make clear they're fighting to protect and expand benefits."

Jessica Corbett ·


Rich Nations Again Accused of Vaccine Hoarding as UK OKs Moderna Omicron Booster

"While countries like the U.K. buy updated vaccines for their fourth doses, people in low- and middle-income countries are fighting today's variants with yesterday's vaccines."

Brett Wilkins ·


With Trumpian Claims of Cheating, Starbucks Demands Halt to Union Elections

"Unfortunately, it's now in vogue for the losers of some elections nationwide to attempt to reverse elections by any means they think are necessary," said Starbucks Workers United.

Jake Johnson ·


Richest Country on Earth to One of Its Poorest: We're Keeping the Money We Stole From You

A foreign affairs columnist called the move by the Biden administration a "shortsighted, morally unconscionable, and potentially calamitous decision for a country on the cusp of universal poverty."

Julia Conley ·

Common Dreams Logo