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Senate Passes Energy Bill
Democrats Prevail; Mileage Standard Would Be Raised

By Sholnn Freeman
Washington Post Staff Writer
Friday, June 22, 2007

The Senate passed a sweeping energy legislation package last night that would mandate the first substantial change in the nation's vehicle fuel-efficiency law since 1975 despite opposition from auto companies and their Senate supporters.

After three days of intense debate and complex maneuvering, Democratic leaders won passage of the bill shortly before midnight by a 65 to 27 vote.

The package, which still must pass the House, would also require that the use of biofuels climb to 36 billion gallons by 2022, would set penalties for gasoline price-gouging and would give the government new powers to investigate oil companies' pricing. It would provide federal grants and loan guarantees to promote research into fuel-efficient vehicles and would support test projects to capture carbon dioxide from coal-burning power plants to be stored underground.

Democratic leaders said they hoped the legislation will be a rallying point for voters concerned about national security, climate change and near-record gasoline prices.

"This bill starts America on a path toward reducing our reliance on oil by increasing the nation's use of renewable fuels and for the first time in decades significantly improving the fuel efficiency of cars and trucks," said Sen. Harry M. Reid (D-Nev.), the majority leader.

Final passage of the bill capped an otherwise rancorous week in which senators grappled over energy policy. Early yesterday, Democrats accused Republicans of obstruction after a $32 billion package of energy tax cuts was blocked on a procedural vote. But late in the day, a bipartisan group of senators came together to break an impasse on vehicle fuel-efficiency standards that would require cars, trucks and sport-utility vehicle to achieve 35 miles per gallon by 2020.

Earlier in the week, the Senate rejected additions to the bill that would have pumped billions of federal dollars into efforts to ramp up production of a coal-based fuel for cars and trucks, which proponents had called an important alternative to petroleum. Additionally, Sen. John W. Warner (R-Va.) failed to win approval for a proposal to allow exploration for natural gas off the Virginia coast, and Republicans blocked an effort to require that more of the nation's electricity come for renewable sources.

The passage of fuel-efficiency measure was viewed as a major triumph for the Democrats, particularly the last-minute dealmaking that enabled passage of the comprehensive change to mileage standards.

The politics of fuel economy had gone virtually unchanged since Congress passed the first nationwide standards -- known as corporate average fuel economy, or CAFE -- in 1975. The last time the full Senate tried to boost fuel-economy standards was in 2002, and the effort was defeated handily.

The auto industry successfully argued that large increases in efficiency standards would force them to build smaller vehicles -- the kind American consumers won't buy. In recent years, however, low mileage standards left U.S. automakers with little market defense against higher-mileage Japanese cars, particularly at times when gas prices soar. As consumers have moved gradually from SUVs and pickup trucks to smaller vehicles, Detroit's Big Three automakers have gone through a painful restructuring period.

The United States, with current efficiency standards of 27.5 miles per gallon for cars and 22.2 per gallon for SUVs and small trucks, has lagged behind the rest of the developed world. In the European Union, automakers have agreed to voluntary increases in fuel-economy standards that next year will lift the average to 44.2 miles per gallon, according to the Pew Center on Global Climate Change. In Japan, average vehicle fuel economy tops 45 miles per gallon. China's level is in the mid-30s and projected to rise, propelled by government policy.

The fuel-efficiency language in the Senate energy package originally had coupled a 35 mile-per-gallon standard with a requirement of 4 percent annual increases for the decade after 2020. A group led by the two Michigan senators -- Democrats Carl M. Levin and Debbie Stabenow -- and Sen. Christopher S. Bond (R-Mo.) had sought instead to gain support for an amendment that would impose less-stringent standards while satisfying growing demands for change in the fuel-efficiency laws.

In the compromise-- shepherded principally by Sens. Ted Stevens (R-Alaska), Thomas R. Carper (D-Del.), Dianne Feinstein (D-Calif.) and Olympia J. Snowe (R-Maine) -- lawmakers dropped a provision that would have mandated additional 4 percent annual increases in fuel efficiency between 2021 and 2030. They also softened a provision that would have required all automakers to build substantially more vehicles that can run on ethanol and other biofuels.

After the fuel-economy vote, Sen. Byron L. Dorgan (D-N.D.), another architect of the compromise, said the nation's desire to be less dependent on foreign oil would be a "hopeless journey" without more efficient cars and trucks.

"Now, in our vehicles, we have better cup-holders, we have keyless entry, we have better music systems, we have heated seats," Dorgan said. "It is time that we expect more automobile efficiency."

Senators who had previously been friendly to the auto industry said they were changing their position after growing weary of the industry's position. "I listened and I listened, year after year," Sen. Barbara A. Mikulski (D-Md.) said on the Senate floor. "And now, after 20 years, I firmly do believe it is time for a change."

In the end, Senate aides said, Levin's group did not have the votes.

Democratic leaders said the bipartisan backing of the compromise worked out in the Senate would help build support in the House when that chamber House begins debate on its energy package. Already, Rep. John D. Dingell, (D-Mich.) and House Speaker Nancy Pelosi (D-Calif.) have battled over fuel economy.

In another Senate battle yesterday, Democrats lost a fight against oil companies when Republicans blocked a $32 billion tax package that would have poured money into alternative fuel projects by raising taxes on oil and gas companies.

President Bush, meanwhile, visited the Browns Ferry nuclear power plant in Athens, Ala., where he touted nuclear power as a clean, dependable and safe source of electricity and promised to streamline the federal regulatory process to ease the way for the construction of new plants.

"Nuclear energy produces no greenhouse gases," Bush said. "If you're interested in cleaning up the air you ought to be for nuclear power."

Staff writer Michael A. Fletcher in Athens, Ala., contributed to this report.

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