The Deepwater Horizon lawsuit resolved thousands of claims arising from the April 20, 2010 explosion and oil spill in the Gulf of Mexico, producing the largest environmental settlement in U.S. history. BP alone paid an estimated $61.6 billion in total costs, with Transocean and Halliburton contributing billions more. Most filing deadlines have passed: the economic and property damage claims window closed on June 8, 2015, and the Court-Supervised Settlement Program wound down in 2021. One path remains open. People diagnosed years after the spill with a qualifying medical condition may still file, generally within four years of the diagnosis date.
Who Paid What
Three companies carried the civil liability. BP Exploration & Production held the lease on the Macondo well and directed drilling. Transocean owned and operated the Deepwater Horizon rig. Halliburton Energy Services performed the cement work that investigators found contributed to the blowout.
In September 2014, Judge Carl Barbier apportioned fault at 67 percent to BP, 30 percent to Transocean, and 3 percent to Halliburton. The court also found BP acted with gross negligence. That finding mattered because the Oil Pollution Act normally caps an offshore facility’s liability at removal costs plus $75 million, and that cap disappears when a spill results from gross negligence or a federal safety violation.1Office of the Law Revision Counsel. 33 U.S. Code 2704 – Limits on Liability BP faced unlimited liability as a result.
The Clean Water Act separately authorized civil penalties per barrel spilled, and the court set the maximum at $4,300 per barrel against roughly 3.19 million barrels discharged.2U.S. Environmental Protection Agency. Ruling on Maximum Dollars-Per-Barrel Penalty Amount
The headline civil resolutions:
- BP agreed in July 2015 to pay up to $18.7 billion over 18 years to settle all federal and state government claims, covering Clean Water Act penalties, natural resource damages, and economic claims from the five Gulf states.3BP. BP to Settle Federal, State and Local Deepwater Horizon Claims for Up to $18.7 Billion
- Transocean paid a $1 billion civil penalty for its Clean Water Act violations.4U.S. Environmental Protection Agency. Transocean Settlement
- Halliburton settled a substantial portion of the private claims against it for $1.1 billion.
BP’s own estimate of its total disaster cost, $61.6 billion, includes the private class action settlements, criminal fines, and cleanup expenses on top of the government settlement.5National Oceanic and Atmospheric Administration. Deepwater Horizon Oil Spill Settlements: Where the Money Went
Criminal Consequences
BP pleaded guilty in 2013 to 14 criminal counts, including 11 felony manslaughter charges for the workers killed in the explosion, one felony count of obstruction of Congress, and violations of the Clean Water Act and the Migratory Bird Treaty Act. The criminal fine was $4 billion.6Federal Bureau of Investigation. BP Exploration and Production Inc. Pleads Guilty, Is Sentenced to Pay Record $4 Billion for Crimes Surrounding Deepwater Horizon Incident Transocean pleaded guilty to a criminal charge and paid $400 million.4U.S. Environmental Protection Agency. Transocean Settlement Manslaughter charges against two BP supervisors were later dropped. A BP executive was convicted of obstruction for lying to Congress about the flow rate of oil escaping the well.
Can You Still File a Claim?
For most claim types, no. The economic and property damage settlement stopped accepting new filings on June 8, 2015, and the court issued wind-down orders for the Court-Supervised Settlement Program on August 5, 2021.7United States District Court Eastern District of Louisiana. MDL – 2179 Oil Spill by the Oil Rig Deepwater Horizon If you were a business or individual with pre-spill and post-spill income losses and did not file by 2015, that avenue is closed.
The one live path is for medical conditions first diagnosed years after the spill. This is the only remaining route into the litigation for people who were not previously part of the economic settlement class.
The Later-Manifested Medical Condition Window
The medical class action settlement recognized that some effects of oil and dispersant exposure take years to appear. Any qualifying medical condition first diagnosed after April 16, 2012, is classified as a Later-Manifested Physical Condition. Examples include cancer, liver damage, kidney failure, memory loss, and post-traumatic stress disorder.8Supreme Court of the United States. Petition for Writ of Certiorari – Galan v. BP Exploration and Production, Inc.
Two groups of people fall within the medical class:
- Clean-up workers who performed tasks like beach remediation or operated vessels of opportunity between April 2010 and April 2012.
- Residents of designated coastal zones who lived near the affected waters for at least 60 days during the spill period.9Deepwater Horizon Medical Settlement. Deepwater Horizon Medical Settlement
Rather than a fixed payout from a settlement matrix, individuals with a later-manifested condition retain the right to sue BP directly. To preserve that right, you must mail a Notice of Intent to Sue and supporting documentation to the Claims Administrator within four years of the date the condition was first diagnosed, or by February 12, 2018, whichever is later.10Deepwater Horizon Medical Settlement. Deepwater Horizon Settlement – FAQ For any diagnosis after February 2018, the four-year clock runs from the diagnosis date. A condition diagnosed in 2024, for example, would need a Notice of Intent to Sue filed by 2028.
Separately, the medical settlement created a Periodic Medical Consultation Program that runs 21 years. Eligible class members can receive a medical consultation every three years during that window, though participation is optional.10Deepwater Horizon Medical Settlement. Deepwater Horizon Settlement – FAQ
Documented chronic conditions diagnosed within the earlier settlement matrix carried set payouts. Clean-up workers with qualifying conditions such as chronic contact dermatitis, reactive airways dysfunction syndrome, or lasting eye damage could receive up to $60,700 under the Level B1 category. Residents with the same conditions could receive up to $36,950.11United States District Court Eastern District of Louisiana. Order and Reasons Regarding Medical Benefits Settlement Matrix claims required a declaration, medical records establishing the chronic nature of the condition, and documentation connecting the condition to spill exposure.
How Settlement Payments Are Taxed
The IRS treats a Deepwater Horizon payment according to what it compensates. Payments for physical injuries or property damage are generally nontaxable. Payments that replace lost wages or business income are taxable.12Internal Revenue Service. Gulf Oil Spill Overview and Guidance for Assisting Taxpayers Impacted by the Gulf Oil Spill
- Lost wages as an employee are subject to income tax but not Social Security or Medicare taxes, and are reported on Form 1099-MISC.
- Lost business income is subject to both income tax and self-employment tax, because it replaces trade or business earnings.
- Physical injury or property damage payments are generally nontaxable and may not need to be reported as income at all.
The Claims Administrator issued Form 1099-MISC to recipients of taxable payments. Anyone who received a payment and has not addressed the tax consequences should speak with a tax professional; unreported settlement income is treated the same as any other unreported income.
Where the Money Went
A large share of the settlement funds went to Gulf restoration. Federal and state trustees conducted a Natural Resource Damage Assessment under the Oil Pollution Act, and BP agreed to fund up to $1 billion in early restoration projects before the full assessment was complete.13U.S. Department of the Interior. Deepwater Horizon Natural Resource Damage Assessment In total, about $16 billion was made available for Gulf of Mexico restoration, funding habitat rebuilding, water quality work, wildlife recovery, and recreational access along the coast.5National Oceanic and Atmospheric Administration. Deepwater Horizon Oil Spill Settlements: Where the Money Went Those projects continue.