British energy giant BP will pay a record US$20.8 billion (NZ$32.13 billion) to settle government claims for damages stemming from the deadly 2010 Gulf of Mexico oil spill, US Attorney General Loretta Lynch says.
"This historic resolution is a strong and fitting response to the worst environmental disaster in American history," Lynch said at a press conference on Monday. "BP is receiving the punishment it deserves, while also providing critical compensation for the injuries it caused to the environment and the economy of the Gulf region."
The spill was sparked by an explosion on the Deepwater Horizon rig which killed 11 men and saw millions of barrels of oil flow into Gulf waters, in one of the worst environmental disasters to strike the United States.
It took 87 days to cap BP's runaway well - some 1500 metres below sea level off the coast of Louisiana.
Beaches were blackened in five states and the region's tourism and fishing industries were crippled in a tragedy that riveted the nation.
The global settlement resolves the governments' civil claims under the Clean Water Act and natural resources damage claims under the Oil Pollution Act, as well as economic damage claims of the five Gulf states - Texas, Louisiana, Mississippi, Alabama and Florida - along with hundreds of local governments.
"With this settlement, federal, state and local governments and the Gulf coast communities will have the resources to make significant progress toward restoring ecosystems, economies, and businesses of the region," said Secretary of Commerce Penny Pritzker.
"We are committed to ensuring the Gulf Coast comes back stronger and more vibrant than before the disaster. If made final, the settlement will provide the US and Gulf states with the resources and certainty needed for effective restoration planning and improvements."
It is the largest settlement with a single entity in the history of the US justice department.