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UPDATE 1-US lamakers reject higher fuel standard for SUVs

By Tom Doggett

WASHINGTON, April 29 (Reuters) - A week after U.S. crude oil imports hit a record high, a Senate committee on Tuesday rejected a proposal to make trucks and SUVs meet the more stringent federal mileage requirement for passenger cars.

Democratic Sen. Dianne Feinstein of California offered the proposal to an energy bill being debated by the Senate Energy Committee. She said the higher fuel standard would have reduced U.S. oil imports by 1 million barrels a day, equal to 10 percent of America's daily foreign crude purchases.

When the U.S. government imposed vehicle fuel standards in the mid-1970s after the Arab oil embargo, trucks were allowed lower gasoline mileage because they were used mainly by farmers and small businesses.

Over the years, the "light truck" category has expanded to include minivans and SUVs, which now account for about half of the vehicles sold in the United States.

Feinstein wanted to boost the current 20.7 miles-per-gallon (mpg) federal mileage requirement for trucks and gas-guzzling SUVs to the 27.5 mpg imposed on cars.

"You can in fact with existing technology bring the SUV and light truck up to the fuel efficiency standard of 27.5 mpg," Feinstein said.

Automakers would have had until 2011 to meet the higher standard.

The energy panel rejected the plan 15 to 7, with several of Feinstein's fellow Democrats joining the committee's Republican majority to kill the proposal.

Opponents said a higher fuel standard would result in SUVs made of lighter materials that could be more dangerous on the highway and not popular with consumers.

"You may have a vehicle you can't sell," warned Republican Don Nickles of Oklahoma.

The Bush administration, earlier this month, already ordered automakers to boost the fuel economy of light trucks and SUVs by 1.5 mpg by the 2007 model year.

Democrats argued that it made no sense for the committee to pass an energy bill that encouraged more oil production but did little to reduce oil use.

Feinstein pointed out that the United States has just 5 percent of the world's population, but accounts for about 25 percent of total global energy consumption.

The U.S. market consumes about 20 million barrels a day, and the Energy Department said last week that weekly crude oil imports reached a record 10.6 million barrels a day.

The committee expects to finish writing its energy bill on Wednesday, when it tackles controversial provisions in the legislation to overhaul the U.S. electricity sector.

Separately, sponsors of an amendment to double the production of ethanol-blended gasoline -- which burns more cleanly than conventional gasoline -- to 5 billion gallons a year by 2012 decided on Tuesday to delay their proposal until the energy legislation is debated on the Senate floor.

The chairman of the Senate energy committee, Pete Domenici of New Mexico, said the bill may be considered by the full Senate as early as next week.

The Senate bill would have to be reconciled with energy legislation passed by the House of Representatives earlier in April, before President George W. Bush can sign a final energy bill into law.

One of those major difference is the House bill allows oil drilling in the Arctic National Wildlife Refuge, while the Senate legislation denies energy firms access to the area.