As an Obama administration official acknowledged lax regulation prior to the Gulf oil spill, Senate Democrats on Tuesday were foiled in their bid to dramatically lift a cap on oil companies' economic liability for spills.
President Barack Obama said he was disappointed that the proposal had stalled in the U.S. Senate, and blasted Republicans he said had stopped it.
"I am disappointed that an effort to ensure that oil companies pay fully for disasters they cause has stalled in the United States Senate on a partisan basis," Obama said in a statement.
"This maneuver threatens to leave taxpayers, rather than the oil companies, on the hook for future disasters like the BP oil spill," he said.
Republican Sen. James Inhofe of Oklahoma used procedural move to stop the bill from coming to the Senate floor, saying that raising the cap would hurt smaller drillers.
"Big Oil would love to have these caps up there so they can shut out all the independents," he said.
Federal law requires companies to pay for all environmental damage, but economic damages are now capped at $75 million. Some Democrats want to raise the cap to $10 billion, and a few want to take it off completely.
Salazar: Regulators were lax
Also in the Senate Tuesday, Interior Secretary Ken Salazar testified that the "collective responsibility" to make sure the disaster is never repeated starts with his department, and specifically, the agency that regulates offshore drilling.
"We need to clean up that house," Salazar said, referring to the Minerals Management Service. He testified before the Senate Energy Committee.
Asked if the MMS had properly regulated the blowout preventers like the one that failed on the Deepwater Horizon rig, Salazar said: "No."
Sen. Jim Bunning, R-Ky., asked whether both government and industry had become lax since the Gulf had not seen a major well blowout for decades. "I would say, yes," replied Salazar.
Sen. Ron Wyden, D-Ore., was vehement in his criticism of MMS. "It is long past time to drain the safety and environmental swamp that is MMS," he declared. "This agency has been in denial about safety problems for years."
Salazar, a former senator from Colorado, put some of the blame on Congress. A law specifying that approval of a deepwater drilling permit must be approved within 30 days "is an impediment to being able to do the kind of assessment that's needed to be done," he said.
The MMS has been criticized for rushing through BP's permit for the Deepwater Horizon well without an additional broad environmental impact review, something that would have taken much longer than a month.
Salazar did deny reports that MMS had approved a number of new oil drilling applications in deep waters of the Gulf since the spill.
"We have hit the pause button," Salazar said. He said no new deep water drilling applications have been approved since April 20, or will be drilled until a safety report is completed on the BP spill.
Deputy Interior Secretary David Hayes told the committee that about a dozen applications had been received since April 20.
Salazar last week announced the MMS would be split into two agencies, one that deals with collecting the $15 billion in annual royalty revenue and another that deals with regulating the industry.
Obama himself has cited a "cozy relationship" that MMS had traditionally had with the oil industry.
With a shakeup of MMS imminent, Chris Oynes, the top official overseeing its offshore oil and gas drilling, announced Monday that he would retire at the end of the month.
Obama is also expected to announce later this week a presidential commission to probe the MMS as well as industry.
Fishing shutdown widened
In other developments, Coast Guard Admiral Thad Allen told the Senate Commerce Committee the growing size and scattershot nature of the oil spill was creating "severe challenges" in containing it and cleaning it up. He called it more complicated than any spill he's ever seen.
"What we're basically trying to do is protect the whole coast at one time," Allen said.
Also, the federal area where fishing is shut down because of the spill was widened on Tuesday.
The National Oceanic and Atmospheric Administration said nearly 46,000 square miles, or about 19 percent of federal waters in the Gulf of Mexico, will be shut under the expanded ban.
NOAA had earlier shut down fishing in nearly 10 percent of Gulf of Mexico waters.
The agency said it has been testing fish to make sure it is safe to eat.
BP, for its part, on Tuesday doubled the estimate of how much oil it was managing to siphon from the leak in the Gulf of Mexico, as it also lifted the total bill for the clean-up to $625 million.
BP said its "quick fix" mile-long siphon tube deployed on the leaking well was now collecting 40 percent of the estimated 5,000 barrels of oil flowing into the sea per day, double the 1,000 barrels it was capturing on Monday.
"I do feel that we have, for the first time, turned the corner in this challenge," BP Chief Executive Tony Hayward said in Florida on Monday.
Still, concerns remain. The U.S. Coast Guard said 20 tar balls were found off Florida's Key West, but the agency stopped short of saying whether they came from the massive oil spill.
Roughly five million gallons of crude have spewed into the Gulf and tar balls have been washing ashore in several states along the coast since the April 20 rig explosion that killed 11 workers.
Scientists are now worried that oil is streaming into a major ocean current that could carry it through the Florida Keys and up the East Coast.
The Coast Guard said the Florida Park Service found the tar balls on Monday during a shoreline survey. The balls were three-to-eight inches in diameter.
Coast Guard Lt. Anna K. Dixon said no one at the station in Key West was qualified to determine where the tar balls originated. They have been sent to a lab for analysis.
The updated cost of the oil spill was $175 million more than reported five days ago and includes the spill response, containment, relief well drilling, grants to the Gulf Coast states, settlements and federal costs.
"The costs were always going to go up," said Panmure Gordon analyst Peter Hitchens, who believes the costs could top $2 billion. "They are managing to get about 2,000 barrels a day and hopefully get that higher ... which means there is less oil floating to the surface which is good news."
Analyst forecasts for the clean-up costs and compensation for the spill off the coast of Louisiana have ranged from a few hundred million dollars to over $12 billion.
The company also said 15,600 claims have been filed, more than double the 6,700 filed by last Thursday, of which 2,700 have already been paid.
The disaster has hurt BP's image, already tarnished in the United States from a 2006 spill in Alaska from a BP-owned pipeline and 2005 fire at the company's Texas City refinery that killed 15 workers and injured 180.
Investors have also knocked $30 billion off BP's value over the spill.
Battling to salvage its reputation, BP said on Monday it was providing grants to Gulf Coast states to help them promote tourism, which, along with fishing, is a mainstay of the region's economy.