Tag Archives: BP

Big Bad Corporations Get to Rip and Run on Settlements and Taxes

BP Oil Spill 2010 REUTERS/U.S. Coast Guard/Handout/Files

Little Rock   When we read the headlines on the big settlements wrung from corporate baddies for egregious conduct like banks stealing peoples’ homes, plants polluting entire city water systems, or oil companies negligently polluting something as immense as the Gulf of Mexico, we see that they are paying billions and billions of dollars to make amends, and we take the bait, nod our heads, and, say to ourselves at least that’s some justice. Reading a report recently issued by the US-Public Interest Research Group called “Settling for a Lack of Accountability,” and talking to one of the co-authors, Michelle Surka, on the radio quickly takes the bloom off of that rosy view.

Why? Simply put, the top-line figure on a settlement is often overshadowing the bottom line for the corporation when many of the evildoers are being allowed to write off huge amounts of what we were hoping was restitution on their taxes as business expenses. The report makes clear that fines and penalties assessed by the various government agencies, according to the US tax code, cannot be claimed as business expenses. Hold the applause! But, things like modifying mortgages, restitution for lost business paid by British Petroleum in the Gulf spill, and other steps to make victims of such evil doing a little bit more whole, that’s just business for these outfits, and therefore, it’s a tax write-off.

Not to hit everyone with too blunt a weapon, because the PIRG report at least softens the blows a bit, but make no mistake a tax write-off of billions by these boys means that essentially that you and me as taxpayers are funding their restitution efforts. That hurts, and the numbers are big. More than $5 billion of the $20 odd billion from BP for the Gulf disaster was written off. PIRG lists as one of its findings:

For the ten largest settlements an­nounced by these major agencies dur­ing the three year period, companies were required to pay nearly $80 billion to resolve federal charges of wrongdo­ing, but companies can readily write off at least $48 billion of this amount as a tax deduction.

They found this figure by just looking at the settlements in recent years from the EPA, Justice, SEC, and a couple of other agencies. Michelle and the PIRG report made it clear that some agencies are better than others at specifically requiring in dollars and cents what part of their settlements cannot be treated as tax deductions. Some are bad at even making the terms of the settlements public, and that’s outrageous. She made the point in our interview that the government should begin negotiations with theses miscreants by saying that none of the settlement should be tax deductible, rather than bargaining with themselves. Excellent point!

The most painful and inescapable irony as noted in the report and by just plain common sense is that as these businesses sign the settlements and send it to their tax accountants they are essentially confessing, as they fill out their tax forms, that this kind of criminal behavior is part of the heart and soul of their business model. If these settlements are valid, deductible business expenses, how are these outfits not criminal enterprises?


“Gasland” and the Powder River Coal Basin

Laramie Throughout our journey through the west, the HBO documentary, Gasland, was a frequent topic of conversation.  I’ll have to wait until I get home to track it down, but I gather there were shots throughout Wyoming and this area of water coming out of taps in flames and other wildness that would naturally rivet your attention.  Last night stopping in at the legendary Buckhorn bar along the Laramie railroad tracks, a woman next to me, hearing I was lived in New Orleans, made the oil spill a topic of conversation bringing agreement from the entire bar filled with oil hands and cowboys on this evening that the BP oil spill was a “royal screw.”  There was an argument from the crowd on whether or not Tebow, fumbling in the 4th quarter for the Broncos, would make it in the pros, but total agreement on the spill.  Then, she confounded me by saying she was heading soon for North Dakota, which is usually the lead-in to a joke in Montana and Wyoming, because all of the “guys were going there for the methane.”  What was up?

CBM is the common abbreviation out here as shorthand for coal-based methane.  Methane is a natural gas that is held on coal deposits by water pressure, essentially.  As prices for oil and gas have risen, the economies of pulling the water out in order to release the methane for commercial production have improved.   Like oil shale for years more of this has been talk than action, but if there is going to be action, this is the part of the country where it will be front and center because of the giant Powder River coal deposit that lies under not only the Powder River Basin in eastern Wyoming, but also a good chunk of eastern Montana and western and central North Dakota.  Our buddies at British Petroleum announced a huge project in Canada a couple of years ago, but for a lot of the first decade of this century this was just more boom-and-bust talk at the bars.  According to the website of my friends at Dakota Resource Council, one of the well respected WORC affiliates, test drilling and other activity has been heating up in their area.

Anything that has combines water and coal out here is guaranteed to create controversy that’s a given.  The Bismarck Tribune touted a recently released study by a sub-group of the National Academy of Science that claims that within a certain cost range some of the water released and wasted could be used for agricultural and livestock uses, but was vague on the costs and where this might be possible.

Dakota Resource Council and pretty much everyone else seemed to feel that the states had not moved to sufficiently protect the land or the ranchers and farmers from the impact of CBM production either in bonding for damages, spacing of the wells, or understanding of consequences of the recovery and production.  In these states resources are big business and often the only business, but it doesn’t take a documentary to prove to most people that it makes sense to be prepared before the drilling goes wild and wooly, rather than pretend to clean up the mess later.

I bet I could have gotten agreement at the Buckhorn that it’s best to keep the firewater at the bar, rather than on tap at the house.