Senate Minority Leader Tom Daschle, a South Dakota Democrat, and Sen. Chuck Hagel, a Nebraska Republican, were among the 14 senators from both parties that re-introduced a bill to boost ethanol use.

Last year, a similar ethanol measure won the approval of 69 senators as part of a broad, unsuccessful energy bill that sought to boost US oil, natural gas and coal production. President George W. Bush also endorsed the ethanol proposal, which is backed by producers such as Archer Daniels Midland Co. (ADM.N).

"Our nation needs a broader, deeper and more diverse energy portfolio," Hagel said on the Senate floor when introducing the bill. "Under this energy bill, renewable fuel use would increase to approximately 3 percent of our total transportation fuel supply - tripling the amount of renewable fuel we now use."

The US ethanol industry has rapidly added new capacity with a dozen new plants opened in 2002 and another 10 plants under construction. US annual production is expected to top 3 billion gallons this year.

STATE WAIVER

The Senate bill would amend a section of the federal Clean Air Act and require US ethanol, biodiesel and renewable fuel use to grow from the current 1.7 billion gallons per year to 5 billion gallons by 2012.

The bill would also:

* Allow a state governor to request a waiver from the program if there is "severe" economic or environmental harm caused by the renewable fuel requirement. Last year, California lawmakers opposed the ethanol bill, contending that it would mean higher fuel prices and disruptions in supply because of ethanol is difficult to ship to the West Coast.

* Phase out the use of gasoline additive MTBE four years after enactment of the law. The program would spend $1 billion during that time to help the MTBE industry transition to other products. MTBE - methyl tertiary butyl ether - is used to limit air pollution from gasoline but has been found to contaminate groundwater

* Require the Environmental Protection Agency to study the impact of the program on Chicago and Milwaukee markets for reformulated gasoline.

* Require the Energy Department to conduct a study in 2004 of whether the renewable fuels mandate will affect consumer supplies of motor gasoline, prices, and blendstock supplies.

* Award credits to US oil refiners, blenders, distributors or importers of gasoline that use a greater quantity of ethanol than required by the law. The credits could be traded or sold to other companies to help reduce the cost of compliance.