Since the Arab oil embargo in 1973-1974, Congress has periodically taken up energy policylegislation with a comprehensive scope -- often spurred by the price of oil and U.S. dependence uponimported oil. The price of crude oil began to rise in 2003 -- exceeding $60/barrel (bbl) in early July2005 -- setting much of the context for renewed debate over omnibus energy legislation in the 109thCongress. National and world demand for oil continues to grow. However, domestic oil production inthe United States continues to decline. As a consequence, the gap between U.S. production andconsumption has had to be covered by increased oil imports. These imports, roughly 6 millionbarrels per day (mbd) after the Arab oil embargo, now exceed 10 mbd to satisfy total U.S. oilconsumption of nearly 21 mbd. (1) Addressing dependence on imported oil raises a number of issues touching on both demandand consumption of fossil fuels. Chief among these are the production of additional fossil fuels,development of alternative energy sources, and conservation and energy efficiency. Energyinfrastructure has also been a growing issue, including the oil refining and distribution sector, andelectricity transmission, reliability, and regulation. Increased use of domestic coal and reassessmentof many issues associated with nuclear energy have drawn attention as well. Developing a comprehensive approach to energy policy that balances economic, security, andenvironmental issues -- as well as competing regional priorities in the United States -- is anenormous challenge for policymakers. Keeping a clear eye on distinguishing between short- andlong-term policies is also difficult but important in keeping expectations realistic for whatcomprehensive legislation can achieve. In the 109th Congress, the House approved an omnibus energy bill ( H.R. 6 ) onApril 21, 2005, that would open the Arctic National Wildlife Refuge (ANWR) to oil and gas leasing,substantially change oversight of electric utilities, increase the use of alternative motor fuels, provide$8.1 billion in energy tax incentives, extend the nuclear accident liability system, and authorizenumerous energy R&D programs. The Senate passed its version of H.R. 6 on June 28without ANWR provisions but including $14.1 billion in tax incentives and provisions on globalclimate change. The two versions of the bill contain many provisions from the conference report onan omnibus energy bill (also numbered H.R. 6 ) in the 108th Congress that was blockedby a Senate filibuster. The House- and Senate-passed bills in the 109th Congress would mandate increasing levelsof ethanol production through 2012 but allow regions to opt out under certain conditions. Use ofmethyl tertiary butyl ether (MTBE) as a domestic gasoline additive would be phased out, but statescould authorize continued use and under the House bill the President could void the ban. Producersof MTBE and renewable fuels would be granted protection (a "safe harbor") from product liabilitylawsuits under the House bill, while only renewable fuels would be covered in the Senate bill. MTBE liability protection proved highly contentious in the Senate in the 108th Congress. The Senate bill includes a "renewable portfolio standard" (RPS) -- rejected by the HouseEnergy and Commerce Committee -- requiring utilities to generate at least 10% of their electricityfrom renewable energy sources by 2020. Also, the Senate bill would establish a credit-baseddeployment program to encourage technologies to reduce greenhouse gas intensity and establishprograms to deploy technologies in developing countries. Neither of those provisions is in the Housebill. Provisions are also included in both bills to increase access by energy developers to federallands. Several new statutory efficiency standards would be established for consumer and commercialproducts and appliances, and other standards would be set by the Department of Energy (DOE). Electricity Regulation. Title XII in the House-and Senate-passed bills would create an electric reliability organization (ERO) that would enforcemandatory reliability standards for the bulk-power system. All ERO standards would be approvedby the Federal Energy Regulatory Commission (FERC). Under this title, the ERO could imposepenalties on a user, owner, or operator of the bulk-power system that violates any FERC-approvedreliability standard. This title also addresses transmission infrastructure issues. The Secretary ofEnergy would be able to certify congestion on the transmission lines and issue permits totransmission owners. Permit holders would be able to petition in U.S. District Court to acquirerights-of-way for the construction of transmission lines through the exercise of the right of eminentdomain. In the Senate bill, FERC could approve participant funding for transmission lineconstruction. A provision that would have required FERC to approve participant funding for newtransmission lines was removed in markup by the House Committee on Energy and Commerce. Under the House bill, FERC's Standard Market Design notice of proposed rulemaking wouldbe remanded. The Senate bill would terminate FERC's Standard Market Design notice of proposedrulemaking. Under both Senate- and House-passed bills, native load service obligations would beclarified, and federal utilities would be allowed to participate in regional transmission organizations. Under both bills, the electricity title would repeal the mandatory purchase requirements underthe Public Utility Regulatory Policies Act (PURPA). The Public Utility Holding Company Act of1935 (PUHCA) would be repealed. The Federal Energy Regulatory Commission and stateregulatory bodies would be given access to utility books and records. FERC would be required to issue rules to establish an electronic system that providesinformation about the availability and price of wholesale electric energy and transmission servicesunder the House version, and could issue such rules under the Senate version. Under both versions,for electric rates that the Federal Energy Regulatory Commission finds to be unjust, unreasonable,or unduly discriminatory, the effective date for refunds would begin at the time of the filing of acomplaint with FERC but not later than five months after filing of a complaint. Criminal and civilpenalties would be increased. Under the House version, the Federal Power Act would be amendedto give FERC review authority for transfer of assets valued in excess of $10 million. The Senateversion would also apply to the purchase, lease, or acquisition of an existing generating facility thathas a value in excess of $10 million and is used to generate electricity for FERC jurisdictionalinterstate wholesale sales. In addition to the House requirements, the Senate version would requireFERC to determine that the proposed transaction would not result in harmful cross-subsidizationwith a non-utility associate company. (For additional discussion on these issues, see CRS Report RL32728 , Electric UtilityRegulatory Reform: Issues for the 109th Congress ; and CRS Report RL32133 , Federal MergerReview Authority .) Renewable Fuel Standard and MTBE. The Houseand Senate versions of H.R. 6 would amend the Clean Air Act to eliminate therequirement that reformulated gasoline (RFG) contain 2% oxygen to reduce automotive emissions,a requirement which prompted the widespread use of MTBE and, to a lesser degree, ethanol. Instead, the bills would establish a new requirement that an increasing amount of gasoline containrenewable fuels such as ethanol. The House bill would require that 3.1 billion gallons of renewablefuel be used in 2005, increasing to 5.0 billion gallons by 2012, and the Senate bill would require 8.0billion gallons by 2012 (compared with 3.4 billion gallons used in 2004). However, concerns havebeen raised that this requirement could significantly increase the pump price for gasoline in someareas. Because of concerns over drinking water contamination by MTBE (a major competitor withethanol), both bills would ban the use of MTBE in motor vehicle fuel, except in states thatspecifically authorize its use, not later than December 31, 2014, under the House version and fouryears after enactment in the Senate version. The ban has two possible exceptions. First, theEnvironmental Protection Agency (EPA) may allow MTBE in motor fuel up to 0.5 percent byvolume, in cases that the Administrator determines to be appropriate; and second, under the Houseversion, the President may make a determination, not later than June 30, 2014, that the restrictionson the use of MTBE shall not take place. The House bill would authorize $2.0 billion and theSenate bill $1.0 billion to assist the conversion of merchant MTBE production facilities to theproduction of other fuel additives. Further, the bills would preserve the reductions in emissions oftoxic substances achieved by the RFG program (although they use different baselines for determiningrequired reductions). One of the most controversial provisions in the House version of H.R. 6 is theestablishment of a "safe harbor" from product liability lawsuits for producers of MTBE andrenewable fuels (such as ethanol). The safe harbor provision would protect anyone in the productchain, from manufacturers down to retailers, from liability for cleanup of MTBE and renewable fuelsor for personal injury or property damage based on the product being deemed defective. (That legalapproach has been used in California to require refiners to shoulder liability for MTBE cleanup.) Thesafe harbor would be retroactive to September 5, 2003. Prior to that date, five lawsuits had beenfiled. After that date, at least 150 suits were filed, on behalf of 210 communities in 15 differentstates. The Senate bill includes the safe harbor provision for renewable fuels but not MTBE; theSenate safe harbor would not be retroactive. (For additional information, see CRS Report RL32865(pdf) , Renewable Fuels and MTBE: AComparison of Selected Legislative Initiatives ; CRS Report RL30369, Fuel Ethanol: Backgroundand Public Policy Issues ; and CRS Report RL32787 , MTBE in Gasoline: Clean Air and DrinkingWater Issues .) Energy Taxes.