The sluggish storm lurked just offshore for several hours as it slowly crawled to the north early Sunday, poised to turn further to the northeast in coming hours. The National Hurricane Center in Miami said Lee had moved very near to the south Louisiana coast in the early hours Sunday.
At 2 a.m. EDT, the Miami forecasting center said Lee was about 60 miles (95 kilometers) southwest of the southern Louisiana city of Lafayette and had maximum sustained winds of 45 mph (75 kph). Lee was crawling to the north at 2 mph (4 kph) on a path that was expected to take the center of the storm onshore in just a few more hours, forecasters said.
The storm threatened to dump more than a foot of rain across the Gulf Coast and into the Southeast in coming days. No injuries were reported, but there were scattered instances of water entering low-lying homes and businesses in Louisiana.
To the east, coffers were suffering at many coastal businesses that depend on a strong Labor Day weekend. Alabama beaches that would normally be packed were largely empty, and rough seas closed the Port of Mobile. Mississippi's coastal casinos, however, were open and reporting brisk business.
In Jean Laffite, water was a foot deep under Eva Alexie's house, which is raised about eight feet off the flat ground.
"I should be used to this," said Alexie, a 76-year-old storm veteran who lost a home to Hurricane Ike in 2008. "It happens pretty often. I just thank God it won't be getting in my house this time."
She clutched an umbrella and a pair of blue rubber gloves as she walked down Louisiana Highway 45, on her way to her husband's shrimp boat to clean a recent catch.
The center of the slow-moving storm was spinning off intermittent bands of stormy weather, alternating with light rain and occasional sunshine.
The maximum sustained winds had dropped slightly as the storm weakened slightly early Sunday. Tropical storm warnings stretched from the Louisiana-Texas state line to Destin, Fla.
The National Weather Service in Slidell said parts of New Orleans received between 6 and 9 inches of rain between Thursday morning and Saturday afternoon, and that some coastal Mississippi areas reported more than 6 inches. Nearly 10 inches had fallen in Pascagoula, Miss.
The Entergy utility company reported more than 37,000 customer outages at one point Saturday morning but that was down to below 18,000 by afternoon as the utility restored electricity. Cleco Corp., another major utility, reported 3,500 outages.
In New Orleans, sporadic downpours caused some street flooding in low-lying areas early Saturday, but pumps were sucking up the water and sending it into Lake Pontchartrain. Lee's surge so far had not penetrated levees along the coast, said National Weather Service forecaster Robert Ricks in Slidell, La.
New Orleans Mayor Mitch Landrieu warned residents not to let their guard down, saying: "We're not out of the woods. Don't go to sleep on this storm."
The storm was denting offshore energy production. The Bureau of Ocean Energy Management, Regulation and Enforcement said 237 oil and gas production platforms and 23 drilling rigs have been evacuated by Lee. The agency estimates that about 60 percent of the current oil production in the Gulf and almost 55 percent of the natural gas production has been shut in.
To the east, coastal Mississippi officials expected their worst from the storm late Saturday.
"We've been getting some pretty good onshore rains," said Jackson County emergency director Donald Langham.
Harrison County officials said travel on U.S. Highway 90 had become hazardous because winds from Lee have pushed sand from beach onto the eastbound lanes and the rain has created a situation where drivers cannot see the roadway.
"This layer of sand has gotten up on the highway and you can't determine if you're on the road, up on the median or the curb," said emergency director Rupert Lacy.
Flooding in Hancock County left several roadways impassable, and the rain on parts of Interstate 10 at times has been so heavy that visibility was down to only a few feet.
Casinos along the coast remained open and reported brisk business despite the storm.
At the Beau Rivage in Biloxi, which was hosting an IBF welterweight title bout Saturday night, resort spokeswoman Mary Cracchiolo-Spain said business was going on as usual.
"We're open for business and we are safe and secure," she said.
In Alabama, rough seas forced the closure of the Port of Mobile. Pockets of heavy rain pounded the beaches Saturday, and strong winds whipped up the surf and bowed palm trees. But just a couple miles inland, wind and rain dropped significantly.
Wet and windy conditions hovered over Dauphin Island, a barrier island in the Gulf of Mexico, but conditions weren't too threatening, Mayor Jeff Collier said. High surf caused some roads to flood, but all were still passable Saturday afternoon.
Precautions were taken to secure anything that could be swept away by wind or waves, and Labor Day concerts and other festivities were canceled.
"The weekend is literally a wash," Collier said. "It's really a shame that it happened on a holiday weekend."
Beaches that would normally be packed were nearly empty. Melinda Fondren, who moved to Gulf Shores about three months ago, visited the beach to experience her first tropical storm.
"I'm excited but a little afraid of the storm surge," she said, adding that her middle name is Lee. "I've been telling my family that I hit Gulf Shores twice."
At the Hangout, a beachside bar and restaurant, a healthy crowd gathered to watch the University of Alabama and Auburn University football season openers. Manager Matt Dagen said there should be more people on a holiday weekend.
"Obviously, it's not as good as we want because of the weather," he said, but added that rough weather sometimes gives his business a boost because people can't go to the beach.
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