Energy Bill Compromise Would
Mandate More Use Of Ethanol

WASHINGTON —(AP)— Bridging longtime differences between farm and oil interests, senators agreed late last week to triple the ethanol used in gasoline and to ban a fuel additive that has fouled drinking water.

The compromise assures that a package of new gasoline requirements — aimed at giving refiners more flexibility, helping farmers sell corn for ethanol and ensuring no backsliding in air quality — will be part of energy legislation now before the Senate.

But some California officials worried the ethanol requirement could cause fuel shortages and high prices because the state's refineries already operate at high capacity and there is little ethanol produced in the state. Ethanol takes up less volume than the fuel additive MTBE, meaning more gasoline will have to be refined, possibly causing shortages, they said.

``There's a big question about whether California can absorb this mandate without gasoline prices rising significantly,'' said Sen. Dianne Feinstein, D-Calif.

Ethanol industry spokesmen said California refiners under the legislation could either use ethanol or purchase credits from refiners in other parts of the country. The industry also has long insisted enough ethanol can be made available in the state.

The gasoline agreement would require refiners by 2012 to use at least five billion gallons of corn-based ethanol or other bio-fuel nationwide, about three times the amount produced today and a boon to farmers.

The first stage of the new ethanol mandate would go into effect in two years, when the volume must increase from the current 1.7 billion gallons to 2.3 billion gallons nationwide.

The deal also would allow states to ban MTBE, leading to a nationwide ban of the additive in four years. MTBE, which has been used to reduce tailpipe pollution, has been found to pollute waterways. At least 13 states already have enacted laws that either have prohibited or will ban MTBE, but those efforts have been hindered because of a federal requirement that gasoline contain an oxygenate like MTBE.

The compromise would end that federal requirement.

As more ethanol is required, a certain percentage of each refiner's gasoline volume will have to be ethanol. If the additive isn't available, refiners may purchase ethanol credits from a refiner that may be exceeding its allotted percentage. This, essentially, would create an ethanol credit market.

Senate Majority Leader Tom Daschle, D-S.D., a strong supporter of ethanol, called the compromise ``a fine balance'' that will make federal gasoline rules more flexible while still protecting air quality.

Separately, the Senate by a 94-0 vote, agreed Friday to put into the bill tougher interstate pipeline safety measures, including increased training of inspectors and a requirement for greater industry monitoring of the 1.6 million miles of fuel pipeline crossing the country.

Meanwhile, there were signs that support for drilling in Alaska's Arctic National Wildlife Refuge may be eroding as the controversy threatens approval of a number of widely supported measures in the energy bill, including the ethanol-MTBE compromise.

Refuge drilling supporters, including most Republicans, need to attract more Democrats to their side if they are to have a chance to overcome a threatened Democratic filibuster.

Sen. Benjamin Nelson, D-Neb., one of those thought to be on the fence, said Friday he opposes drilling. ``I look at ANWR as a poison pill in the energy bill,'' Nelson said in an interview.

Six Republicans oppose drilling, which is a top priority for President Bush, while only five Democrats have gone on record to support development of the refuge's oil.

Senators remain divided on automobile fuel economy, another issue in the 553-page legislation.

Sen. John Kerry, D-Mass., sought to attract wider support for his proposal that would require automakers to boost fleet fuel economy by 50 percent to 36 miles per gallon by 2015, by possibly exempting larger pickup trucks. He also proposed giving automakers more time to comply if they purchase ``greenhouse'' pollution credits from other industries.

But that has failed to sway many of the opponents including the White House, which maintains Kerry's proposal will lead to smaller cars and more traffic deaths. Kerry says auto companies can meet the standard without making cars or sport utility vehicles smaller.

A rival proposal, offered by Sens. Carl Levin, D-Mich., and Christopher Bond, R-Mo., would call on the Transportation Department to increase auto fuel economy but set no specific level.