[Congressional Record Volume 147, Number 45 (Friday, March 30, 2001)]
[Senate]
[Pages S3216-S3217]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KOHL (for himself, Mr. DeWine, Mr. Leahy, Mr. Thurmond, 
        Mr. Feingold, Mr. Grassley, Mr. Schumer, and Mr. Specter):
  S. 665. A bill to amend the Sherman Act to make oil-producing and 
exporting cartels illegal; to the Committee on the Judiciary.
  Mr. KOHL. Mr. President, in the last year, consumers all across the 
nation have watched gas prices rise, seemingly without any end in 
sight. And, if consumers weren't paying enough already, just a few days 
ago the OPEC nations agreed to cut production by a million barrels a 
day, an action sure to drive up prices even higher. Such blatantly 
anti-competitive action by the oil cartel violates the most basic 
principles of fair competition and free markets and should not be 
tolerated. It is for this reason that I rise today, with my colleagues 
Senators DeWine, Specter, Leahy, Feingold, Thurmond, and Grassley, to 
reintroduce the ``No Oil Producing and Exporting Cartels Act'', 
``NOPEC''. This legislation is identical to our NOPEC bill introduced 
last year, which passed the Judiciary Committee unanimously.
  Real people suffer real consequences every day in our nation because 
of OPEC's actions. Rising gas prices--prices that averaged above $2 per 
gallon in many places last summer, are a silent tax that takes hard-
earned money away from Americans every time they visit the gas pump. 
Higher oil prices drive up the cost of transportation, harming 
thousands of companies throughout the economy from trucking to 
aviation. And those costs are passed on to consumers in the form of 
higher prices for manufactured goods. Higher oil prices mean higher 
heating oil and electricity costs. Anyone who has gone through a 
Midwest winter or a deep South summer can tell you about the tremendous 
personal costs associated with higher home heating or cooling bills.
  We have all heard many explanations offered for rising energy prices. 
Some say that the oil companies are gouging consumers. Some blame 
disruptions in supply. Others point to EPA requirement mandating use of 
a new and more expensive type of ``reformulated'' gas in the Midwest. 
After last spring's gas price spike, which dove prices above $2 per 
gallon for a time in the Midwest, some even claimed that refiners and 
distributors were illegally fixing prices. At the request of the 
Wisconsin delegation and Senator DeWine, the Federal Trade Commission 
launched an investigation last year to figure out if those allegations 
were true. After an exhaustive, nearly year-long investigation, they 
found no evidence of illegal price fixing as a cause of higher gas 
prices.
  But one cause of these escalating prices is indisputable: the price 
fixing conspiracy of the OPEC nations. For years, this conspiracy 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. NOPEC will, for the first time, 
establish clearly and plainly that when a group of competing oil 
producers like the OPEC nations act together to restrict supply or set 
prices, they are violating U.S. law. 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.

[[Page S3217]]

  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 hold General Augusto Pinochet accountable for human rights 
abuses and torture that occurred when he was President of Chile are two 
prominent examples. The rouge 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. There can be no free market without this 
foundation. In this era of globalization, we truly need to open 
international markets to ensure the prosperity of all. And we should 
not permit any nation to flout this fundamental principle.

  Some critics of this legislation have argued that suing OPEC will not 
work or that threatening suit will hurt more than help. I disagree. 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. It 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. This legislation will be the first real weapon the U.S. 
government has ever had to deter OPEC from its seemingly endless cycle 
of price increases.
  There is nothing remarkable about applying U.S. antitrust law 
overseas. Our government has not hesitated to do so when faced with 
clear evidence of anti-competitive conduct that harms American 
consumers. Just last year, in fact, the Justice Department secured a 
record $500 million dollar criminal fine against German and Swiss 
companies engaged in a price fixing conspiracy to raise and fix the 
price of vitamins sold in the United States and elsewhere. The mere 
fact that the conspirators are foreign nations is no basis to shield 
them from violating these most basic standards of fair economic 
behavior.
  There is also nothing remarkable about suing a foreign government 
about its commercial activity. There are many recent cases in which 
foreign governments have been held answerable for their commercial 
activities in U.S. courts, including a case against Iran for failure to 
pay for aircraft parts, a case against Argentina for breach of its 
obligations arising out of issuance of bonds, and a case against Costa 
Rica for violating the terms of a lease. Our NOPEC legislation falls 
squarely within this tradition.
  Even under current law, there is no doubt that the actions of the 
international oil cartel would be in gross violation of antitrust law 
if engaged in by private companies. If OPEC were a group of 
international private companies rather than foreign governments, their 
actions would be nothing more than an illegal price fixing scheme. 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 decision 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.
  In the last few weeks, I have grown more certain than ever that this 
legislation is necessary. Between OPEC's decision last week to cut oil 
production and the FTC's conclusion that American companies do not bear 
primary responsibility for last summer's gas price spike, I am 
convinced that we need to take action, and take action now, before the 
damage spreads too far.
  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.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 665

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``No Oil Producing and 
     Exporting Cartels Act of 2001'' or ``NOPEC''.

     SEC. 2. SHERMAN ACT.

       The Sherman Act (15 U.S.C. 1 et seq.) is amended by adding 
     after section 7 the following:

     ``SEC. 7A. OIL PRODUCING CARTELS.

       ``(a) In General.--It shall be illegal and a violation of 
     this Act for any foreign state, or any instrumentality or 
     agent of any foreign state, to act collectively or in 
     combination with any other foreign state, any instrumentality 
     or agent of any other foreign state, or any other person, 
     whether by cartel or any other association or form of 
     cooperation or joint action--
       ``(1) to limit the production or distribution of oil, 
     natural gas, or any other petroleum product;

       ``(2) to set or maintain the price of oil, natural gas, or 
     any petroleum product; or
       ``(3) to otherwise take any action in restraint of trade 
     for oil, natural gas, or any petroleum product;
     when such action, combination, or collective action has a 
     direct, substantial, and reasonably foreseeable effect on the 
     market, supply, price, or distribution of oil, natural gas, 
     or other petroleum product in the United States.
       ``(b) Sovereign Immunity.--A foreign state engaged in 
     conduct in violation of subsection (a) shall not be immune 
     under the doctrine of sovereign immunity from the 
     jurisdiction or judgments of the courts of the United States 
     in any action brought to enforce this section.
       ``(c) Inapplicability of Act of State Doctrine.--No court 
     of the United States shall decline, based on the act of state 
     doctrine, to make a determination on the merits in an action 
     brought under this section.
       ``(d) Enforcement.--The Attorney General of the United 
     States and the Federal Trade Commission may bring an action 
     to enforce this section in any district court of the United 
     States as provided under the antitrust laws.''.

     SEC. 3. SOVEREIGN IMMUNITY.

       Section 1605(a) of title 28, United States Code, is 
     amended--
       (1) in paragraph (6), by striking ``or'' after the 
     semicolon;
       (2) in paragraph (7), by striking the period and inserting 
     ``; or''; and
       (3) by adding at the end the following:
       ``(8) in which the action is brought under section 7A of 
     the Sherman Act.''.
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