Image: Workers gather oil-soaked seaweed in Gulfport, Mississippi
Ben Gruber  /  Reuters
Workers gather oil-soaked seaweed on a beach in Gulfport, Mississippi, on Tuesday.
msnbc.com news services
updated 5/5/2010 7:48:05 AM ET 2010-05-05T11:48:05

As calmer weather in the Gulf gave crews a chance to help buffer the Gulf Coast from the massive oil leak still offshore, the White House and Democratic lawmakers on Tuesday moved to change a law that caps BP's liability for economic damages at $75 million. The goal: Raise that cap to $10 billion.

Democratic Sen. Robert Menendez is co-sponsoring a measure that would raise the liability limit for impacts like lost wages or dwindling tourism to $10 billion. Those payments would be aside from the total spill cleanup costs, which analysts estimate as high as $14 billion.

Menendez also wants it to be made retroactive so it can apply to the huge spill that began after an oil rig exploded in the Gulf on April 20.

White House spokesman Robert Gibbs said the Obama administration supported Menendez's attempts to raise the limit retroactively. He also noted that if BP is found to have acted negligently or violated the law, the cap would not be in effect. The Oil Pollution Act was passed in 1990 in response to the Exxon Valdez spill.

Menendez said he was confident that the liability measure could be applied retroactively. He cited the 30-year-old Superfund law that has forced companies to pay for previously polluted hazardous waste sites.

"This is about making Big Oil responsible for its excesses," Menendez said.

"I don't trust Big Oil," added Sen. Frank Lautenberg, a Democrat and another one of the bill's co-sponsors.

BP chief executive Tony Hayward declined to comment on the bill. "We won't be entering into that legislative discussion," Hayward said at a news conference Tuesday.

Asked whether the company expected to spend money beyond the $75 million limit, Hayward said the cap was largely irrelevant.

"It's got nothing to do with caps. All legitimate claims ... will be honored," he said.

BP says on its website that it is committed to paying "all necessary and appropriate cleanup costs" as well as "legitimate and objectively verifiable claims for other loss and damage caused by the spill."

The federal government also maintains an Oil Spill Liability Trust Fund supported by industry fees. It can make a total of $1 billion in payouts per incident to individuals, businesses and governments.

Booms placed, repaired
Along the Gulf, a flotilla of nearly 200 boats tackled the massive oil slick, while a least one coastal community — Gulfport, Mississippi — started to see oil-soaked seaweed wash up on its beaches.

Energy giant BP, meanwhile, struggled to plug three undersea leaks that threatened to wreak havoc on Gulf Coast fishing and tourism and reshape the political debate on offshore drilling.

It hopes to drop a containment dome on the seafloor on Thursday and then have it operating by late next week. The idea is to suck the oil a mile up to a waiting ship as a stopgap measure until a relief well can be drilled in two or three months.

Calmer seas after days of high winds aided one of the biggest oil containment operations ever attempted.

Boats were laying down and repairing miles of boom lines strung along shores to try to fend off and contain a drifting slick estimated to be at least 130 miles by 70 miles in size.

Weather forecaster Accuweather.com said favorable winds and waves could keep the slick from reaching the Gulf coastline for a few more days or longer.

"With the conditions turning better and better, it's encouraging," Coast Guard Petty Officer Matthew Schofield said from the Joint Information Center in Roberts, Louisiana.

In the Chandeleur Sound on Monday, about 40 miles northeast of Venice, Louisiana, thick, heavy oil formed long clumps that looked like raw sewage. Dying jellyfish could be seen in the water.

Video: Fishermen join attempt to battle oil slick The news was better from Mississippi to northwestern Florida, where the sheen isn't expected to touch beaches before Thursday. Wind and sea currents have helped to keep the oil away from points farther west, said Coast Guard Capt. Steve Poulin.

Inns and restaurants that count on tourists attracted to the beautiful blue-green waters and sandy white beaches already are getting calls about the spill, which has flirted with the coastlines before receding, mostly because of the weather.

"You mentally want to push it back to the west, and then you feel guilty for doing so," said Jan Grant, manager at the St. George Inn on St. George Island, Florida, about the path the spill might take.

The looming disaster threatens to eclipse the 1989 Exxon Valdez catastrophe in Alaska, the worst previous U.S. oil spill to date.

Fishing has been shut down in federal waters from the Mississippi River to northwestern Florida, leaving boats idle Monday in the middle of the prime spring season. A special shrimping season will close Tuesday evening.

"Our biggest concern is that the oil comes in any kind of volume and settles in the cane. Once it settles it destroys the cane and kills the shrimp," charter boat captain Dan Dix said in Venice.

"If you kill the shrimp, you kill the fish that feed off the shrimp, and if you kill the fish then there is nothing left in the Gulf of Mexico. That would absolutely be a disaster for years and years," he said.

More National Guard orders
U.S. Defense Secretary Robert Gates approved requests from three more governors of Gulf Coast states to fund the deployment of thousands of National Guard troops to respond to the oil slick, the Pentagon said.

In addition to backing Louisiana's request for up to 6,000 Guard members, Gates also approved requests from Mississippi for 6,000 Guard members, Alabama for 3,000 and Florida for 2,500.

"We are committed to preventing as much of the economic damage as possible by working to contain the impact of this potentially devastating spill," President Barack Obama said.

Slideshow: Oil disaster BP, a London-based energy giant, said it has completed the first of three massive steel and concrete domes it will try to place this week over one of three leaks nearly a mile under the water's surface. The 98-ton, 40-foot iron box is designed to channel oil through a pipe to the surface where it can be collected on a barge.

But BP has never deployed the structure at a depth of 5,000 feet and cannot guarantee the effort will pay off.

Over the weekend it started a relief well that could stop the leak, the company said. Still, this operation is expected to take two to three months to complete.

Crews have reported progress with a new method for cutting the amount of oil that reaches the surface. They're using a remotely operated underwater vehicle to pump chemicals called dispersants into the oil as it pours from the well, to break it up before it rises. Results were encouraging but the approach is still being evaluated, BP and Coast Guard officials said.

The latest satellite image of the slick, taken Sunday night, indicates that it has actually shrunk since last week, but that only means some of the oil has gone underwater.

The new image found oil covering about 2,000 square miles, rather than the roughly 3,400 square miles observed last Thursday, said Hans Graber of the University of Miami.

The politics of drilling
The accident highlighted the difficult politics of balancing U.S. energy security and worries about protecting the environment and industries that depend on it, like fishing.

Video: Bottom line It forced Obama to suspend plans to expand offshore oil drilling, unveiled last month partly to woo Republican support for climate legislation.

Florida Democratic Senator Bill Nelson, a fierce opponent of offshore drilling because of the environmental risks it entails, said the expanded drilling proposals were "dead on arrival" in Congress.

California Governor Arnold Schwarzenegger on Monday pulled his support for expanded drilling off his state's coast, citing the Gulf spill. His reversal came after he had called for more oil drilling off California to raise money to help cover a $20 billion state budget shortfall.

The Mississippi River delta and other areas of the Gulf Coast are threatened by the leak, spewing from the ocean floor at a rate estimated at more than 5,000 barrels (210,000 gallons) a day.

BP said it is releasing $25 million each in block grants to Louisiana, Mississippi, Alabama and Florida to jump-start cleanup projects. The funding can be used for numerous expenses such as vessels for hire.

Slideshow: Aftermath of the spill BP has spent several years working to burnish its environmental image. It now faces a public relations nightmare as well as intense pressure from the Obama administration to get the situation under control.

By all accounts, the disaster is certain to cost BP billions. But analysts said the company could handle it; BP is the world's third-largest oil company and made more than $6 billion in the first three months of this year. The oil spill has drained $32 billion from BP's stock market value.

Reuters and The Associated Press contributed to this report.

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