The Senate's new Democratic leaders and the Bush administration are promoting a growing number of measures to bolster ethanol demand significantly, including a nationwide mandate to blend ethanol with gasoline. Supporters say that using ethanol, a renewable fuel, helps struggling farmers, combats greenhouse gas emissions and reduces the nation's reliance on imported oil.

Just last month, the Bush administration, heavily lobbied by lawmakers, governors and agricultural trade groups, required California to use ethanol as a fuel additive to comply with the Clear Air Act. The order is expected to increase the nation's ethanol production by about 25 percent by 2003.

Administration officials say their decision was a matter of air quality and current law, not politics, explaining that ethanol allows gasoline to burn more cleanly. New York may also have to rely on ethanol as an additive to its gasoline.

Hoping to build on Mr. Bush's decision, farm state lawmakers, including Senator Tom Daschle, Democrat of South Dakota, who is the new Senate majority leader, have drafted several bills, among them one that would create up to 10 times as much ethanol demand over the next 15 years as there is now.

The backing of a powerful group of senators, which also includes Tom Harkin, the Iowa Democrat who heads the Agriculture Committee, gives such measures their best chance in years. The legislation also has the advantage of coming up while Congress is focusing on energy policy and a major new farm bill.

But ethanol, which has been heavily subsidized for years, also has its detractors. The ethanol program, as some experts describe it, essentially takes money that would have gone to the Federal Highway Trust Fund, through gasoline taxes, and shifts it to American agriculture.

"It is a program to help farmers at the expense of another sector of the economy," Keith Collins, the chief economist at the Department of Agriculture, said.

The demand for ethanol raises corn prices, according to many studies, and backers of the subsidies say that farmers benefit substantially. The National Corn Growers Association estimates that ethanol production raises the price of corn by about 30 cents a bushel. The need for other agricultural subsidies, the association says, is therefore reduced.

But there is mounting evidence questioning the environmental benefits of using ethanol and the advantages to farmers. Critics say that most of the benefits go to large, corporate ethanol distillers.

In some cases, ethanol programs have backfired. One of the smaller programs, meant to raise fuel efficiency by encouraging automakers to produce cars capable of using ethanol, has relied on incentives that allow them to sell more gas-guzzlers. A federal panel, in a draft report, has recommended that the program be eliminated.

Some studies suggest that ethanol, a form of alcohol, offers no significant environmental benefits. In 1999, the National Academy of Sciences reported that when ethanol is blended with gasoline, it does not significantly reduce pollution and may even increase the pollutants that cause smog.

Still, many small farmers are convinced that soaring demand for ethanol will help lift depressed corn prices. Lawmakers from farm states say the tax incentives that are encouraging the boom in ethanol production, a figure that approaches $1 billion a year, could help prop up a flagging farm economy.

"We have an obligation to help agriculture get on its feet," said Senator Ben Nelson, Democrat of Nebraska, which is a major producer of corn and ethanol. "There have always been enough tax benefits to go around for virtually everybody. That's the way the system works to promote the economy."

In the wake of the California decision, farmers and big agricultural companies are scrambling to build new ethanol plants in the Midwest and Plains states.

But, according to many economists and agricultural experts, the bulk of the profits generated from ethanol go to agriculture processors like the Archer Daniels Midland Company (news/quote), which is turning greater volumes of low-priced corn into a high-priced fuel.

A.D.M., Cargill Inc. and other processors benefit from federal tax incentives, worth 53 cents for each gallon of ethanol, that encourage gasoline refiners to create a blend containing about 10 percent ethanol. Because of that subsidy, which has cost about $10 billion since the program began in 1979, ethanol consumption is expected to approach two billion gallons this year.

A.D.M., the nation's largest producer of ethanol, with about 50 percent of the market, has seen its earnings from ethanol surge over the last year as gasoline and ethanol prices have jumped. Over the last two decades, ethanol has yielded the company profits of about $1 billion, according to Prudential Securities.

If prices remain stable, Wall Street analysts say, the company could earn $200 million on about $1 billion in ethanol sales in the fiscal year that began last month. A.D.M. is a major campaign contributor to both parties.

Larry H. Cunningham, an A.D.M. spokesman, said that ethanol's advantages are broad. "There are several parties that have benefited the corn farmer, the processor, the refiner and the consumer," he said. Unlike M.T.B.E., another additive to make fuel cleaner that is formally known as methyl tertiary butyl ether, ethanol poses no threat of water contamination, he added.

The benefits to small farmers are difficult to gauge. Because corn prices are so depressed, farmers have gained the most from the government support program that guarantees them $1.89 a bushel. Only if corn prices went higher would added demand from ethanol make a difference to them, but the price of corn has not reached $1.89 since 1998.

As a result, some farmer cooperatives are building ethanol plants in the hopes of reaping greater rewards by acting as processors, not simply corn growers. "We want to move further up the value chain to make more money," said David Kolsrud, a corn farmer who invested in an ethanol plant in Luverne, Minn. "This is a hedge against low corn prices."

Critics say the government is creating a market that would not otherwise exist. "The highest and best use of corn is not to artificially make it into ethanol," said former Representative Bill Archer, a Texas Republican and an ethanol opponent.

But Senator Daschle says that for struggling farmers, every penny from producing corn counts. "Producers get the crumbs," he said. "But these crumbs are very important."

Farmers' investments in ethanol plants, through their cooperatives, could raise their returns and enhance ethanol's political stature. "It would be politically very difficult to remove the ethanol subsidy because there are a lot of co-ops out there," said Wallace E. Tyner, an agricultural economist at Purdue University. "Everybody who's building a plant today is assuming the subsidy will go on forever, or at least for 20 years."

In Washington, ethanol's clout only grows. In persuading Mr. Bush to force California to use ethanol, the ethanol industry countered the powerful oil lobby and California's considerable political influence. California had asked to be exempted from having to use ethanol after it banned M.T.B.E. because it leaks from storage tanks and pollutes groundwater.

Administration officials said that politics played no role in their decision. "To suggest that the administration has the ability to waive off the Clean Air Act is not found in the law," said Dan Bartlett, an aide to President Bush.

New York, which is also phasing out M.T.B.E., may wind up having to use more ethanol as well in a few years. The state is considering whether to apply for a waiver from the Clean Air Act, as California did.

One of the most ambitious measures for raising ethanol demand is sponsored by Senators Chuck Hagel, Republican of Nebraska, and Tim Johnson, Democrat of South Dakota. The bill would require a rising percentage of the nation's fuel to come from renewable resources, which, its backers say, would increase ethanol output as much as 10 times by 2016.

Chief among ethanol's backers are lawmakers who represent farmers. In the Midwest, attacking ethanol is political suicide. Many farmers live in states that swing between parties. Iowa is also the home of the nation's earliest presidential caucus.

Senator Charles E. Grassley, Republican of Iowa and until recently chairman of the Senate Finance Committee, got to know Mr. Bush during the last election season. In January 2000, he and Mr. Bush took a five-day car trip across Iowa, and Mr. Grassley said he discussed ethanol with Mr. Bush several times.

This year, Mr. Grassley, who repeatedly met with Mr. Bush about the tax-cut bill, said he veered off whenever he could into ethanol and the California case.

On May 16, Mr. Bush called Mr. Grassley to thank him for his pivotal work on the tax cut. "I want to tell you something," Mr. Bush continued, as Mr. Grassley recalls. "I don't know when we are going to announce it or how, but I don't want you to worry about ethanol."

Democrats like Senator Nelson, a moderate whose support for the tax cut Mr. Bush heavily courted, also made themselves heard. Just a few days before the California decision. Mr. Nelson was aboard Air Force One with Mr. Bush. "I made it clear that this would be very helpful to agriculture," Mr. Nelson said.