POLITICS:

Obama's tough stand on drilling clouds climate effort, says a key senator

The president's temporary restrictions on deepwater oil drilling could complicate efforts to attract a handful of key senators to support a landmark climate bill, making the difficult climb toward 60 votes even "steeper," according to the measure's Republican author.

Sen. Lindsey Graham (R-S.C.) said the administration's toughening stance on domestic oil and gas exploration -- just two months after President Obama expanded drilling -- could disrupt delicate negotiations designed to gain crucial votes from lawmakers in Alaska and Louisiana.

Obama's decision, announced yesterday, comes five weeks after an underwater well began shooting thousands of barrels of crude daily into the Gulf of Mexico.

"It made the hill steeper," Graham said of the decision's effect on passing climate legislation in an interview yesterday. "I understand why the president is taking a pause on drilling, but when you talk about cancelling leases, when you talk about stopping Alaska exploration, it makes it harder for this concept to sell."

Graham, who recently retreated from the climate effort, helped to include concessions in the bill meant to win the support of the oil and gas industry, nuclear proponents, and lawmakers concerned that U.S. EPA would impose overbearing greenhouse restrictions on emitters.

The concessions were also meant to sweeten the bill for pro-drilling legislators, like Sens. Lisa Murkowski (R-Alaska) and Mary Landrieu (D-La.).

"If [Obama] says we're gonna not be able to drill along Alaska's coast, put a moratorium on that, that makes it harder for Lisa Murkowski to pursue this grand bargain we've got," Graham said.

Obama assisted in the concession effort when he announced in March that offshore oil drilling would be expanded, including in Alaskan waters. That provided an opportunity for the climate legislation to offer provisions letting coastal states receive revenue from new drilling and production at existing wells.

Then the spill came.

Spill is a 'wake-up call'

BP PLC's broken pipe is spitting between 12,000 and 19,000 barrels of oil a day into the Gulf, according to new estimates released yesterday, that is now coating wildlife, marshes and beaches. Obama's response has grown to a growl.

Yesterday, he accused the industry and government regulators of enjoying a "scandalously close relationship," before cancelling lease sales off the Atlantic Coast and in the Gulf, halting 33 deepwater drills searching for Gulf crude, and delaying for a year exploratory drilling in Alaskan waters.

Obama is also using the crisis to pressure the Senate to quickly consider the climate bill proposed by Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.). It would reduce emissions 17 percent under 2005 levels by 2020 by placing a price on most tons of carbon released. That would jump-start businesses to find cleaner methods of powering themselves and their customers, supporters say.

"If nothing else, this disaster should serve as a wake-up call that it's time to move forward on this legislation," Obama said. "It's time to accelerate the competition with countries like China, who have already realized the future lies in renewable energy. And it's time to seize that future ourselves. So I call on Democrats and Republicans in Congress, working with my administration, to answer this challenge once and for all."

But as the Senate's work schedule dwindles, moving lawmakers closer to midterm elections this fall, some senators are beginning to look at different pieces of legislation that they believe might have a better chance of passing.

Fla. spill blackens bill

Murkowski, for example, expressed concern that Obama's one-year suspension of exploratory drilling by Shell Oil Co. in two areas off the coast of Alaska might turn into a "life sentence" against oil production. She is supportive of passing legislation that would expand drilling, increase energy efficiency and bolster renewable power, while not pricing carbon. The bill has already been approved by the Energy and Natural Resources Committee.

"Let's be blunt here. Kerry-Lieberman doesn't have enough support on the Democratic side to come to the floor," said Robert Dillon, Murkowski's spokesman. "Sen. Murkowski continues to support economically sound climate legislation. Unfortunately, as of yet, we have not seen a proposal that meets her criteria of doing no harm to the economy."

The Democratic ledger is light, so far. Key members are concerned the climate bill would encourage new drilling, threatening fisheries and tourism. Obama's decision yesterday is a good step, said Sen. Bill Nelson (D-Fla.), but it appears not to have coaxed him to support the Kerry-Lieberman bill.

"I think clearly the climate bill ain't going to pass if it has drilling off of Florida," Nelson said yesterday.

The announcement yesterday could also complicate the fragile truce Kerry and Lieberman negotiated with the U.S. Chamber of Commerce and the American Petroleum Institute, two powerhouse advocacy groups that agreed to stay on the sidelines of the climate debate. Both groups have deep pockets they could use to launch media blitzes aimed at influencing lawmakers and constituents.

"Stopping the oil spill in the Gulf must be the top priority for both the federal government and industry," Karen Harbert, president of the U.S. Chamber's Institute for 21st Century Energy, said in a statement. "However, now is not the time to make long-term policy decisions that could severely impact our energy security for decades to come."

Kerry 'not worried'

Despite Graham's concerns with the shift away from drilling, he remains hopeful that legislative changes to the oil provisions within the climate bill, combined with successful efforts to stanch the oil spill, could put the legislation back on track. It could also get a boost from an economic analysis of the bill being performed by EPA and the Energy Information Administration.

"Maybe, if we get a resolution to the oil spill, we could come up with a drilling provision I could live with. I don't know yet," he said, noting that Kerry and Lieberman pulled drilling in the eastern Gulf of Mexico out of the bill. "Maybe there is a pathway forward on energy and climate. We'll have to see what the EPA says and where we're at on drilling after the [Memorial Day] break."

Supporters of the bill say Obama's announcement won't affect the bill, in part because the president's moratorium would end before the bill's provisions go into effect in 2013. The legislation's revenue sharing, meanwhile, is scheduled to take effect in 2017, providing time for delayed drilling to ramp up.

Also, the drilling concessions are just one part of a broader set of enticements for fence-sitting senators, one source said. Provisions encouraging nuclear power, overriding EPA emission regulations and regarding the allocation of allowances all play a role in attracting support.

"It doesn't affect it," Kerry said yesterday of the impact of Obama's announcement on the bill. "It's not saying we're not going to do [drilling]. It's just saying let's get our ducks in a row, and I think that's very justified."

"It's temporary," he added. "I'm not worried about it."

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