By ERICA WERNER
Associated Press

WASHINGTON - Clean-up costs for last month's oil spill in San Francisco Bay are on track to exceed the $61 million federal limit on insurance liability, the U.S. Coast Guard said Tuesday.

As of Dec. 15, $54.7 million has been spent to respond to the 58,000-gallon spill, with clean-up costs averaging about $770,000 per day, the agency said. The Coast Guard has contributed $1.25 million of the $54.7 million.

The cost of clean-up is expected to surpass the $61 million liability cap on insurance payments by the owner of the Cosco Busan, the cargo ship that sideswiped the San Francisco-Oakland Bay Bridge in heavy fog Nov. 7.

After testifying to a Senate subcommittee Tuesday, Coast Guard Commandant Adm. Thad Allen said the agency and the Justice Department were discussing how to proceed after that limit is reached.

"Any scenario that would have them liable over that level would involve some extraordinary circumstances, and we are in discussions right now about what breaching that level means," Allen told reporters.

The Justice Department already has sued the ship's owner, Regal Stone Ltd., and pilot, alleging violation of several federal laws and seeking unspecified damages.

"No one should think that Regal Stone is going to do anything other than meet its legal responsibilities," company spokesman Jim Lawrence said Tuesday.

In the wake of the spill, Sens. Barbara Boxer and Dianne Feinstein have introduced legislation to raise the insurance liability limits set by the Oil Pollution Act of 1990.

Under that law, the liability limit is calculated according to the size of the ship, and liability caps are higher for oil tankers than for cargo ships like the Cosco Busan.

Lawmakers at Tuesday's hearing of the Senate Commerce oceans subcommittee noted that cargo ships are getting bigger and carrying more fuel.

The Boxer-Feinstein bill would raise the liability limit for cargo ships to the same level as that of tankers, which would also create incentives for cargo-ship fuel tanks to have double hulls.

Double-hulling is currently required on tankers but not on cargo ships.

"The incident has brought to light how vulnerable our oceans are to ships that carry massive amounts of oil not as cargo but as fuel," said Sen. Maria Cantwell, D-Wash.

Boxer also wants to eliminate the use of "bunker fuel," the heavy and polluting fuel that powers ships like the Cosco Busan in U.S. waters.

Allen declined to embrace that idea Tuesday, saying ships would have to carry two different kinds of fuel and switch to a cleaner fuel upon nearing the U.S. coastline.

"We can do that, ma'am, but I'm not sure it would have a constructive effect," he said.

Under current law, the liability cap would be lifted if gross negligence were found in the accident. Other ways also can be found for the so-called responsible party to pay above the liability limit.