Obama to Force BP to Pay More Cleanup Costs for Deepwater Disaster

BP announces cost of dealing with disaster has hit $450m but figure likely to rise after White House proposes scrapping cap on liability

Barack Obama has set out new measures to force BP to pay more of the costs of the cleanup operation for the Deepwater oil rig disaster.

BP, which has released the first underwater footage of the spill, told the City this morning that the cost of dealing with it had now hit $450m. The company's eventual bill looks set to rise steeply after the White House proposed scrapping a cap on its liability for the spill.

Boosted by a poll that showed the public did not regard this as Obama's Katrina (a reference to the Bush administration's ineffectual handling of the New Orleans hurricane), the White House set out new funding measures to tackle the impact of the spill.

The administration wants to increase from $1bn (PS673m) to $1.5bn (PS1bn) the amount that could be spent from an emergency cleanup fund paid with industry fees.

This could force the industry to pay for the wider economic costs of the spill such as lost wages for fishermen and the impact on tourism.

BP, which continues to struggle to stem the flow from the well, will pay as much as possible, White House officials told reporters.

White House energy adviser Carol Browner: "We take BP at their word. They say they intend to pay for all costs. And when we hear 'all' we take it to mean all."

Yesterday BP came under fire in Congress for minimising the risks of offshore drilling and trying to shirk blame for the disaster.

A 1990 law passed in the wake of the Exxon Valdez oil tanker spill in Alaska makes responsible parties liable for cleanup costs from oil spills but limits to $75m their exposure to other kinds of claims. The administration did not propose a new figure for the liability limit, but Democrats have introduced legislation raising the limit to $10bn.

Browner said the White House believes the legislation unveiled Wednesday could apply retrospectively.

Jeff Liebman, acting deputy director of the Office of Management and Budget, said the administration wants to pass the legislation in the next few weeks.

The White House proposal would also raises taxes on the industry for an oil spill fund and raise the amount that can be spent from the fund on a single incident to $1.5bn.

Other funding measures include monitoring seafood safety, studies on the safety of offshore drilling, and support for out-of-work fishermen and self-employed workers.

Rightwing pundits have dubbed the disaster Obama's Katrina - a reference to the George Bush's plummeting poll ratings following his handling of hurricane's aftermath. But a poll for the Associated Press today showed more people approved than disapproved of Obama's response to the spill.

As it struggles to salvage its reputation, BP is preparing for another attempt to staunch the flow from the well today. It said it hoped to have a small containment dome in place by late today.

Meanwhile efforts continue to try to contain and clean up the existing spill. Federal authorities said more than 510 boats were involved in the operation.

Fourteen staging areas have been set up and around 500km of boom have been deployed to along the cost.

Nearly 100 lawsuits have already been filed across the Gulf region and the disaster, which lawyers see becoming one of the biggest class actions in US history, involves billions of dollars in potential liabilities.

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