[Congressional Record Volume 150, Number 44 (Thursday, April 1, 2004)]
[Senate]
[Pages S3569-S3570]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DeWINE (for himself, Mr. Kohl, Mr. Grassley, Mr. Schumer, 
        Mr. Specter, Mr. Feingold, Mr. Leahy, and Mr. Coleman):
  S. 2270. A bill to amend the Sherman Act to make oil-producing and 
exporting cartels illegal; to the Committee on the Judiciary.
  Mr. DeWINE. Mr. President, I wish to talk this afternoon about a bill 
that my colleagues, Senator Kohl, Senator Grassley, Senator Feingold, 
Senator Specter, Senator Schumer, Senator Leahy, Senator Coleman, and I 
are introducing, which is called the No Oil Producing and Exporting 
Cartels Act of 2004. We are introducing this bill to address the 
longstanding problem of foreign governments acting in the commercial 
arena to fix, allocate, and establish production and price levels of 
petroleum products.
  Every consumer in America knows that gasoline prices have reached 
record highs over the last couple of weeks. The national average has 
reached a new record high for self-serve unleaded gas. That is 
approximately $1.80 per gallon. But over the last week in my home State 
of Ohio gas prices have been even higher. In Marietta, gas was $1.84; 
in Cleveland, $1.86; in Columbus, it topped out at $1.88 in some 
stations. Many analysts predict that prices could get as high as $2 per 
gallon, or higher, by the summer.
  This is of particular interest to me because Ohio and the Midwestern 
States always seem to be hit especially hard by gas prices spikes. 
These spikes are acutely painful to persons who commute long distances 
and to those who live on fixed incomes such as the elderly.
  What is the cause? Certainly there are many causes, but as we might 
expect, there are a number of factors at play. But there is surprising 
agreement among industry experts about the primary cause of high gas 
prices and that is the increase in imported crude oil prices.
  We also know the biggest factor in setting crude oil prices is OPEC. 
The unacceptably high price of imported crude oil is a direct result of 
collusive agreements among OPEC nations to maintain the price of oil.
  Despite the fact that gasoline prices are going through the roof, 
OPEC members met yesterday in Austria and decided to cut the output of 
oil even further. We have been through this process more than enough to 
know what that means for the American consumer. When demand is high and 
supplies are cut, that obviously means higher prices. That is exactly 
what OPEC did to us yesterday. It ripped off American consumers by 
raising gas prices even more.
  this is an outrage. In fact, OPEC is probably the most notorious 
example of an illegal cartel in the world today, even at a time when it 
is widely understood that such conduct is counterproductive and ill-
suited for our global economy. Supreme Court Justice Scalia in a recent 
case described collusion among competitors as ``the supreme evil of 
antitrust.'' Nation after nation has adopted antitrust enforcement 
principles that recognize the illegality of price fixing and output 
restrictions among competitors. In 1998, the Organization for Economic 
Cooperation and Development, then composed of twenty-nine member 
nations, issued a formal recommendation denouncing price fixing. OPEC's 
continued actions, in ongoing defiance of American and international 
antitrust principles, should not be tolerated.

  Until now, however, OPEC has effectively received special treatment 
under U.S. antitrust laws--despite the fact that oil is a commodity 
that touches the lives of nearly every American consumer. It is time 
that we take steps to assure that oil is subject to the principles of 
the free market. The bill that we are introducing today would do just 
that and help in the fight to lower gas prices.
  Senator Kohl and I have introduced this bill twice before--in 2000 
and 2001. It is an idea whose time has come. The purpose of our NOPEC 
bill is simple--it would treat OPEC like any other cartel. If OPEC were 
a group of private companies colluding on prices, the executives could 
be prosecuted and sent to jail, and the firms would pay millions of 
dollars in fines or maybe even billions in fines. Unfortunately, 
however, for years enforcement has been constrained by two related 
court opinions.
  In 1979, a Federal District Court found that OPEC's price-setting 
decisions were ``governmental'' acts and accordingly that they were 
given sovereignty status and protected by the Foreign Sovereign 
Immunities Act. Subsequently, in 1981, a Federal Court of Appeals 
declined to consider the appeal of that antitrust case based on the so-
called ``act of state'' doctrine.
  NOPEC would effectively reverse these decisions by making it clear 
that OPEC's activities are not protected by sovereign immunity and that 
the Federal courts should not decline to hear such a case based on the 
``act of state'' doctrine. As a result, under NOPEC, the Department of 
Justice and the Federal Trade Commission could bring a legal antitrust 
enforcement action against foreign states engaging in the restraint of 
trade regarding oil and other petroleum products. Simply put, NOPEC 
assures that our U.S. antitrust agencies have jurisdiction and 
authority to bring such cases.
  We don't intend to give up the fight for lower gasoline prices. 
Today, I want the members of OPEC to hear a message loud and clear--we 
won't quit fighting for American consumers. When OPEC wants to do 
business with America, it must abide by our antitrust laws.
  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. 2270

       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 2004 '' 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

[[Page S3570]]

     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.''.

  Mr. KOHL. Mr. President, in recent weeks, consumers all across the 
Nation have watched gas prices rise, seemingly without any end in 
sight. On March 24, U.S. gasoline prices reached a record high average 
of $ 1.74 a gallon. And, if consumers weren't paying enough already, 
just yesterday the OPEC nations decided to cut production by a million 
barrels a day, an action sure to drive 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, Schumer, Coleman and 
Grassley, to reintroduce the ``No Oil Producing and Exporting Cartels 
Act'' ( ``NOPEC"). This legislation is identical to our NOPEC bill 
introduced in the last two Congresses, a bill which passed the 
Judiciary Committee unanimously in 2000.
  Real people suffer real consequences every day in our nation because 
of OPEC's actions. Rising gas prices 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 the EPA requirement mandating 
use of a new and more expensive type of ``reformulated'' gas in the 
Midwest or other ``boutique'' fuels around the country. Some even claim 
that refiners and distributors have illegally fixed prices. On this 
issue, Senator DeWine and I have asked the Federal Trade Commission to 
investigate these allegations. As a result of our inquiries, the FTC 
has put a task force in place to find out if those allegations were 
true. While we continue to urge the FTC to be vigilant, the FTC has to 
date found no evidence of illegal domestic 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, no one in 
government has yet 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.
  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. 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. A few years ago, for example, the Justice Department secured 
record fines totaling $725 million 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. Their behavior harmed 
consumers by raising the prices consumers paid for vitamins every day 
and plainly needed to be addressed. As this and other cases show, 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.
  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 Foreign 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 yesterday to cut oil 
production and the FTC's conclusion for the last several years that 
there is no illegal conduct by domestic companies responsible for 
rising gas prices, 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.
                                 ______