[Congressional Record Volume 146, Number 80 (Thursday, June 22, 2000)]
[Senate]
[Pages S5683-S5684]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KOHL (for himself, Mr. DeWine, Mr. Specter, Mr. Leahy, Mr. 
        Grassley, and Mr. Feingold):
  S. 2778. A bill to amend the Sherman Act to make oil-producing and 
exporting cartels illegal; to the Committee on the Judiciary.


     the no oil producing and exporting cartels (nopec) act of 2000

  Mr. KOHL. Mr. President, we have all watched in the last few weeks as 
gas prices have skyrocketed across the country, reaching an average 
price for regular gas of $ 1.68 per gallon. The situation is even worse 
in Wisconsin and other Midwestern states. The Milwaukee Journal 
Sentinel reported on June 21 that the average price in Milwaukee for 
regular gas has reached $2.05 per gallon, and reports of consumers 
paying as much as $2.30 or more are not uncommon. We need to take 
action, and take action now, to combat this unjustified rise in gas 
prices that takes hard-earned dollars away from average citizens every 
time they visit the gas pump. It is for this reason that I rise today, 
with my colleagues Senators DeWine, Specter, Leahy, and Grassley, to 
introduce the ``No Oil Producing and Exporting Cartels Act of 2000'', 
``NOPEC''.
  We have all heard many explanations offered for this rise in gas 
prices. Some say that the oil companies are gouging consumers. Some 
blame disruptions in supply. Others point to the EPA requirement 
mandating use of a new and more expensive type of ``reformulated'' gas 
in the Midwest. Some even claim that refiners and distributors are 
illegally fixing prices, and I am glad to see that the Federal Trade 
Commission, at the request of the Wisconsin delegation and Senator 
DeWine, has now launched an investigation to figure out if these 
allegations are true. And these are just a few of the reasons that have 
been offered.
  But one cause of these escalating prices is indisputable. This is the 
price fixing conspiracy of the OPEC nations, a conspiracy that for 
years has unfairly driven up the cost of imported crude oil to satisfy 
the greed of the oil exporters. We have long decried OPEC but, sadly, 
until now no one has tried to take any action to put it out of 
business. NOPEC will, for the first time, establish, clearly and 
plainly, that when a group of competing oil producers like OPEC agrees 
to act together to restrict supply or set prices they are violating 
U.S. law, and it will authorize the Attorney General or FTC to file 
suit under the antitrust laws for redress. Our bill will also make 
plain that the nations of OPEC cannot hide behind the doctrines of 
``Sovereign Immunity'' or ``Act of State'' to escape the reach of 
American justice.
  Even under current law, there is no doubt that the actions of the 
international oil cartel would be in gross violation of our most basic 
principles of antitrust law as nothing more than an illegal price 
fixing scheme if this cartel was a group of international private 
companies rather than foreign governments. But OPEC members have used 
the shield of ``sovereign immunity'' to escape accountability for their 
price-fixing. The Federal Sovereign Immunities Act, though, already 
recognizes that the ``commercial'' activity of nations is not protected 
by sovereign immunity. And it is hard to imagine an activity that is 
more obviously commercial than selling oil for profit, as the OPEC 
nations do. Our legislation will correct one erroneous twenty-year-old 
lower federal court holding and establish that sovereign immunity 
doctrine will not divest a U.S. court from jurisdiction to hear a 
lawsuit alleging that members of the oil cartel are violating antitrust 
law.
  Mr. President, in recent years a consensus has developed in 
international law that certain basic standards are universal, and that 
the international community can, and should, take action when a nation 
violates these fundamental standards. The response of the international 
community to ethnic cleansing in the former Yugoslavia and action by 
the courts of Britain to recognize that Mr. Pinochet could be held 
accountable in Britain for allegations of human rights abuses and 
torture that occurred when he was President of Chile are two prominent 
examples. The rogue actions of the international oil cartel should be 
treated no differently. The most fundamental principle of a free market 
is that competitors cannot be permitted to conspire to limit supply or 
fix price. This principle is the foundation upon which the entire body 
of competition law rests. In this era of increasing globalization, when 
we truly need to open international markets to ensure the prosperity of 
all, we should not permit any nation to flout this fundamental 
principle.
  Our NOPEC legislation will, for the first time, enable our 
authorities to take legal action to combat the illegitimate price-
fixing conspiracy of the oil cartel and will, at a minimum, have a real 
deterrent effect on nations that seek to join forces to fix oil prices 
to the detriment of consumers. For these reasons, I urge that my 
colleagues support this bill so that our nation will finally have an 
effective means to combat this selfish conspiracy of oil-rich nations.
  Mr. DeWINE. Mr. President, today Senators Kohl, Specter, Leahy, 
Grassley, Feingold, and I have introduced the ``No Oil Producing and 
Exporting Cartels Act of 2000'', NOPEC. We do so to address the long-
standing problem of foreign governments acting in the commercial arena 
to fix, allocate, and establish production and price levels of 
petroleum products.
  More than two months ago, Senators Specter, Kohl, Thurmond, Schumer, 
Biden, and I sent a letter to the President asking him to seriously 
consider legal action to put an end to the cartel behavior of OPEC 
nations. The White House has failed to take any action,

[[Page S5684]]

and it appears that there are some within the Administration who 
believe there may be legal stumbling blocks to such a lawsuit. During 
the time in which the Administration has failed to take action, we have 
witnessed gas prices begin to rise again. Most notable are the 
unexplainable, sharp price increases in several Midwestern states. 
These price increases have harmed many in Ohio and across the Midwest. 
There is no relief in sight. Many are speculating about the cause of 
the price-spikes. One cause is indisputable--the unacceptably high 
price of imported crude oil set by the OPEC cartel.
  Nation after nation has adopted antitrust enforcement principles that 
recognize the illegality of price fixing and other restraints of trade. 
Yet OPEC is undeterred, and continues to flout broadly accepted legal 
principles and artificially restrains the production of oil. It is time 
for internationally recognized principles of competition to operate in 
the oil and petroleum industry--just as they do in other markets.
  The purpose of NOPEC is simple and straightforward. It makes clear 
that the U.S. enforcement agencies may bring antitrust enforcement 
actions against foreign states which violate antitrust laws in the 
production and sale of oil and other petroleum products, and it 
establishes that the district courts have jurisdiction and authority to 
consider such cases.
  NOPEC does this by amending the Sherman Antitrust Act and the Foreign 
Sovereign Immunities Act, ``FSIA''. Under FSIA, the governmental 
activities of foreign governments are immune from the jurisdiction of 
the federal courts. A lower federal court has ruled--we believe 
erroneously--that the conduct of OPEC nations in relation to oil 
production and exportation are governmental, not commercial activities, 
and thus immune. NOPEC corrects this ruling, and clarifies the law, 
specifically removing immunity from foreign governments when they are 
engaged in the limitation of the production or distribution of oil and 
other petroleum products. NOPEC also makes clear that the federal 
courts should not decline to make a determination on the merits of an 
action brought under NOPEC based on the ``act of state'' doctrine.
  This legislation will send a strong signal to OPEC nations that their 
agreements restrain trade and harm American consumers. This will no 
longer be accepted. Our legislation will allow the U.S. enforcement 
agencies to do their jobs and enforce the antitrust laws.
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