Why did BP create a compensation fund after the Deepwater Horizon oil spill?

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Fireboats battle a blaze on the Deepwater Horizon drilling rig in the Gulf of Mexico, April 2010. — Deepwater Horizon oil spill Fireboat response crews attempt to extinguish the blaze aboard the Deepwater Horizon oil rig in the Gulf of Mexico, April 21, 2010.

BP established a $20 billion compensation fund following the Deepwater Horizon oil spill in response to direct demands from the administration of U.S. President Barack Obama.1

The fund was created to provide financial relief to those affected by the disaster, as the spill had severely impacted regional industries, including fishing and tourism, and left many residents struggling to supplement their incomes. While the fund was initially managed by Kenneth Feinberg, it was later transferred to court control as part of a 2012 settlement agreement to cover economic losses and medical claims resulting from the oil spill.12