WASHINGTON — Fines paid by BP and other companies for the 2010 Deepwater Horizon oil spill would not be tax deductible under legislation proposed by an Alabama congressman.
The states most damaged by the oil spill already face the possibility that they won’t receive most of the fine money, as promised in legislation President Barack Obama signed into law in July. Allowing BP and the other companies to take a tax deduction on the money would be an additional insult, Republican Rep. Jo Bonner of Mobile said Tuesday.
Reps. Martha Roby, R-Montgomery; Mike Rogers, R-Saks; Robert Aderholt, R-Haleyville; Spencer Bachus, R-Vestavia Hills; and Terri Sewell, D-Birmingham, are other members of Alabama’s congressional delagation who will co-sponsor the bill, Bonner’s office said.
BP and the Justice Department are in confidential talks over the 2010 disaster that dumped about 4.9 million barrels of oil into the Gulf of Mexico, causing widespread environmental damage and crippling local tourism economies.
A final deal could dramatically affect how much fine money is paid, who gets it, what it’s spent on, and whether it qualifies for certain tax breaks. Estimates are the fines could be between $5 billion and $21 billion.
Gulf Coast lawmakers told the Obama administration earlier this month that any deal should respect the RESTORE Act, under which 80 percent of the fines levied against BP under the Clean Water Act are to go directly to Alabama, Florida, Louisiana, Mississippi and Texas.
The law allows local officials in the five states to spend the money on environmental restoration or economic development projects. But Bonner, Sen. Richard Shelby, R-Tuscaloosa, and others say they’re worried the Justice Department might instead allow the companies to pay the fines through the Oil Pollution Act. In that case, federal officials would control the money and would spend it on ecological projects.
“It’s unconscionable to me to believe that the Obama Justice Department would be negotiating a global settlement to directly circumvent the RESTORE Act and basically pretend it doesn’t exist,” Bonner said.
Shelby noted that Obama has said on the campaign trail that he strongly opposes tax breaks for oil companies.
“He would have a lot of explaining to do if Big Oil got a huge tax break because his administration siphoned money from oil spill victims,” Shelby said Tuesday through a spokesman.
The Justice Department declined commented Wednesday. A spokesman could not be reached Tuesday.
BP indicated in its third-quarter earnings report Tuesday that a deal is not imminent and it is preparing “vigorously” for a trial set for February.
“A number of unresolved issues remain and there is significant uncertainty as to whether an agreement will ultimately be reached,” the company’s statement said.
Bonner said he would prefer a trial to a deal that is unfavorable to Alabama, even if it delays the fines for years.
He said his bill to prevent the tax breaks, introduced last week, is partly designed to stir up opposition to any deal that wouldn’t directly finance the economic recovery of Mobile and Baldwin counties.
“It was written for the purpose of sending a strong message that if the negotiations are being conducted to benefit (BP) over the true victims, I’d rather take my chances in court,” Bonner said.
Gulf Shores Mayor Robert Craft agreed that going to court would be better than a settlement that levied the fines under a provision — called the Natural Resource Damage Assessment — of the Oil Pollution Act.
“That’s the gamble I would be willing to take,” said Craft, one of the local officials who would help decide how to spend fine money levied under the Clean Water Act. “We don’t have a lot of damaged estuaries or anything like that, just white sandy beaches. And white sandy beaches are not eligible under NRDA.”
