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.
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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.
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