Administration Reviving Plan to Require Clean Alternative Auto Fuels, Reilly Says : Air Pollution: A misunderstanding is blamed for contributing to the proposal’s defeat in a House panel’s vote.

The Bush Administration will fight to resurrect a defeated proposal requiring the American automobile industry to produce millions of cars capable of running on cleaner alternative fuels, the chief of the Environmental Protection Agency said Tuesday.

The centerpiece of a bill modernizing air pollution laws for the first time in more than a decade, the requirement was emasculated by a House panel last week after EPA Administrator William K. Reilly and White House Chief of Staff John H. Sununu appeared to take opposite sides.

Dismissing the episode as a misunderstanding, Reilly said in a breakfast interview with Los Angeles Times reporters and editors that both he and Sununu are “strongly behind” alternative fuels as part of the President’s program.

As proposed by the Administration, the clean air bill would require auto makers to produce a combined total of 500,000 cars capable of operating on alternative fuels by the 1995 model year, increasing to 1 million per year by 1997.

An amendment adopted by the House Energy and Commerce subcommittee on health and the environment eliminated the requirement and substituted language under which manufacturers would merely certify that they have the capability to build alternative fuel cars.

Other changes in the bill were seen by opponents as a move by auto makers and oil companies to weaken emission standards so that alternative fuel cars could operate on a mixture of methanol and gasoline, or even reformulated gasoline, instead of potentially cleaner fuels.

As the intensively lobbied amendment came to a vote, Rep. Norman F. Lent (R-N.Y.), one of the bill’s chief sponsors, said Sununu had informed him that the Administration had no objection to the substitute provisions.

But Rep. Henry A. Waxman (D-Los Angeles) said he had just been told by Reilly that the EPA chief wanted to stick with the original language requiring the manufacture of clean fuel cars and moving toward the use of pure methanol as an alternative fuel.

Reilly said he has subsequently discussed the incident with Sununu. The White House chief of staff now “wants to see the alternative fuels provision we proposed restored in committee,” he said. There apparently was a misunderstanding between Sununu and Lent in the conversations before the vote, he added.

The move away from gasoline to alternative fuels has been regarded as the key provision of the Administration’s clean air initiative and it has been one of the most fiercely debated.

Energy and Commerce Committee sources said Tuesday that the outlook for eliminating the subcommittee amendment is uncertain but Waxman has vowed to take the fight to the House floor, where the bill could come to a vote before the end of the year.

The alternative fuels section also is expected to be a subject of intense debate in the Senate.

Industry critics, citing potential health and safety hazards from extensive use of methanol, contend that the EPA is promoting the fuel without sufficient testing while overlooking other potential alternatives such as ethanol and compressed natural gas.

Until now, Reilly acknowledged, the emphasis has been on methanol as an alternative because for the near future, “it had characteristics that make it more plausible economically.”

For fleets, he said, compressed natural gas may prove to be competitive.

“The reason we’ve talked more about some of the alcohol-based fuels is that until the President’s legislation was proposed, we heard nothing from the energy industry that encouraged us to think that they were willing to consider changes in fuels,” Reilly said. “Everyone now is looking at fuels, trying to think of ways to take the toxics out, to reduce the aromatics and improve the pollution characteristics.”

Within the next few months, EPA officials are expected to follow up a recent report on methanol with an analysis of ethanol and compressed natural gas as alternative fuels.

Meanwhile, the big three auto manufacturers and 14 petroleum companies announced Tuesday that they would undertake a two-phase research and testing program to evaluate the performance of alternative fuels in both present and future motor vehicles.

Keith McHenry, a senior vice president of Amoco, said the program’s results “will permit objective assessment of relative reductions in vehicle emissions and improvements in urban air quality, especially ozone, achievable with reformulated gasolines and with methanol fuels.”

Ethanol also will be evaluated as a gasoline additive.

The joint announcement said that EPA, the California Air Resources Board and other government agencies had been asked to provide advice for the program.