BP's oil spill cleanup and closing tax loops

HUNTSVILLE, AL (WAFF) - BP's more than three years of clean-up of the Gulf Coast cost the company millions of dollars, but it also saved them billions of dollars in tax write-offs which in turn hit tax payers.

It's a story WAFF 48 first reported in April, and a story that ended with an Alabama senator saying nothing could be done to close that tax loophole. But Congress has more power than Senator Richard Shelby led the public to believe.

A few months ago, WAFF 48 news visited the gulf to ask BP tough questions about a tax loophole they were using to save billions in tax write offs. The story cited a public interest research group or PIRG report that showed the petroleum company saved $10 billion by writing off costs from the oil spill. PIRG's report was clear, it "forces taxpayers to ultimately foot the bill for these deductions. Every dollar these companies avoid paying gets made up through cuts to public programs, higher national debt, or increases to other taxes."

In addition to BP, we also brought our concerns to the locals

"It makes me sick," said Bayou La Batre resident Ashley Broadus. "BP, everything about them makes me sick. Everything they did was crooked, slow; they waited until the last minute to offer any kind of work when they shut down our waters."

"Taxpayers shouldn't have to pay. BP should have to pay any fines and damages because the taxpayers didn't do this, BP did it," said Alabama Senator Richard Shelby. "I don't know if you can stop it because a lot of that is business deductions and this is a business going on and they will have to probably decide that through the tax courts."

So WAFF 48 did some digging into Shelby's answer. It turns out he and the rest of Congress have a lot more power than he alluded to. Cumberland School of Law at Samford University Professor Michael Debow explained.

"They write the tax code," Debow said.

And the law school professor said the process is pretty simple.

"You'd introduce a bill to amend a section of the tax code and it'd follow the normal course for legislation in the house and the senate," said Debow. "It'd be passed there, go on to the president, and signed into law."

"[Shelby's response] was probably a smart answer," said WAFF 48 political analyst Dr. Waymon Burke. "Legislators, governors, [and] presidents always give measured answers on things they're not sure which way the wind is blowing."

Again, WAFF 48 News was told nothing could be done about the tax loophole by the very organization that can do something about it. More than 48 hours ago we reached out to Senator Shelby's office. We asked if the senator could clarify his original comments. We also asked why he wasn't fighting for taxpayers to make it so that when a company causes harm and settles to avoid trial they can't write-off the settlement money. Finally, we wanted to know if he'd looked into the issue since we brought it to his attention a few months ago.

A spokesperson for Senator Shelby did email WAFF 48 News a day after the story aired. "[Senator Shelby] has taken action for the last several Congresses to address our nation's tax code on a going forward basis.  His flat tax bill would lower individuals' rates by knocking deductions and loopholes out of the code. You can read more about that on his website if you'd like.  He had already introduced that legislation by the time the spill occurred, and he introduced it again this Congress.  In addition, as you know, Democrats control the majority in the Senate.  As such, I would suggest that you contact the Chairman of the Senate Finance Committee and the Majority Leader to inquire as to why the Senate has not moved Sen. Shelby's legislation or any other significant tax reform since they've been in power," said spokesperson Jonathan Graffeo. "No member of the Alabama delegation has done more legislatively to address the oil spill.  Are you aware of the RESTORE Act, legislation that Senator Shelby co-authored with Senator Landrieu?  If not, there's a ton of information about it on the senator's website as well.  Without the RESTORE Act, 100% of Clean Water Act fines assessed in the courts against BP would go to the federal government.  Because Shelby and Landrieu got it signed into law (via the process that the professor in your piece described), 80% of CWA fines assessed against BP will go straight to areas actually affected by the spill, such as Mobile and Baldwin Counties."

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