UPDATE 1-US Senate struggles for deal on auto fuel standards


(Updates with lawmaker comments, new proposal)

By John Crawley

WASHINGTON, June 20 (Reuters) - The U.S. Senate struggled on Wednesday to reach a compromise proposal to increase vehicle fuel efficiency, a major disagreement point holding up progress on broad-based energy legislation.

"We're hoping we'll find some middle ground," said Sen. Debbie Stabenow, a Michigan Democrat fighting alongside other auto industry allies to soften the bill's vehicle efficiency plan.

"We're still a ways a part," Stabenow said in an interview with reporters outside the Senate chamber.

With lawmakers hoping to vote on the energy bill this week, time worked against prospects for a deal among those who favor sharply higher mileage standards to cut U.S. oil dependence and those, like Stabenow and other lawmakers from manufacturing states in the Midwest, who prefer more modest increases.

A deal was not likely until Thursday, if at all, key players said.

Senate Majority Leader Harry Reid, a Nevada Democrat, strongly backs the proposal in the bill to raise efficiency targets from roughly 25 miles per gallon for all passenger vehicles to 35 mpg by 2020. After 2020 the bill would require 4 percent gains annually.

He also hoped for compromise, but lashed out at financially struggling Detroit auto giants who have lobbied furiously with some overseas manufacturers to undercut the Senate proposal.

"The time has come to speak for the American people, not three car manufacturers that are closing plants and laying off people," Reid said at a news conference on electric vehicles, referring to General Motors Corp. , Ford Motor Co. , and DaimlerChrysler AG's Chrysler Group.

The Senate may work through the weekend on the energy legislation. In addition to fuel economy, other major provisions would eliminate billions of dollars in tax incentives for oil companies and promote home-grown energy sources, like wind power and alternative automotive fuels.

Lawmakers have braced for a bitter fight over the first rewrite of the Corporate Average Fuel Economy (CAFE) legislation since Congress created the program as a response to oil price shocks of the mid 1970s.

Automakers are resigned to some increase as Congress and the Bush administration face public pressure to reduce dependence on imported oil with war raging in Iraq, gasoline prices at more than $3 a gallon, and crude oil near $70 per barrel.

But U.S. automakers say the proposal in the bill was too expensive and would break them.

An amendment proposed by Sen. Carl Levin, a Michigan Democrat, and Sen. Christopher Bond, a Missouri Republican, that opponents say would weaken the bill's 35-mpg measure has gained support, but not enough to prevail on the Senate floor.

However, there are enough lawmakers, apparently, who do not want to hurt auto companies or their workers and retirees, and are open to compromise.

Stabenow and Levin met with Sen. Dianne Feinstein, a California Democrat and a chief sponsor of the stricter Senate efficiency proposal, to discuss alternatives. Feinstein said her team would "run the numbers" overnight and revisit the issue on Thursday.

Another proposal led by Sen. Ted Stevens, an Alaska Republican, that would soften the Senate language was circulated late Wednesday, but its prospects were unclear.

Unable to reach a consensus among Democrats earlier this week, the House of Representatives committee writing energy legislation said it would delay consideration of its fuel economy and global warming proposals until fall, something Reid said the Senate would not do.



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