"If approved by the court, this settlement would be the largest settlement with a single entity in American history; it would help repair the damage done to the Gulf economy, fisheries, wetlands and wildlife; and it would bring lasting benefits to the Gulf region for generations to come," said US Attorney General Loretta E Lynch.
In addition, a total of of $4.9 billion will be paid to the five states over 18 years to cover economic damages, and up to $1 billion is to resolve claims made by more than 400 local government entities.
"This is a realistic outcome which provides clarity and certainty for all parties," said BP chief executive Bob Dudley in a statement.
"For BP, this agreement will resolve the largest liabilities remaining from the tragic accident and enable BP to focus on safely delivering the energy the world needs."
Prior to Thursday's settlement, the Deepwater disaster had already cost BP more than $42 billion in cleanup costs, fines and victim compensation.
The BP pipe at the source of the leak was capped on July 15, 87 days later, after an estimated 3.19 million barrels of oil had leaked into the sea, producing an oil spill covering as much as 16,000 square miles [41,424 square kilometers], an area about twice the size of the state of New Jersey.
