[Congressional Record Volume 151, Number 26 (Tuesday, March 8, 2005)]
[Senate]
[Pages S2256-S2258]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DeWINE (for himself, Mr. Kohl, Mr. Leahy, Mr. Grassley, 
        Mr. Feingold, Ms. Snowe, Mr. Schumer, Mr. Durbin, Mr. Levin, 
        Mrs. Boxer, Mr. Wyden, Mr. Corzine, and Mr. Dayton):
  S. 555. 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 rise today, along with my colleagues--
Senators Kohl, Leahy, Grassley, Feingold, Snowe, Schumer, Durbin, 
Levin, Boxer, Wyden, Corzine, and Dayton--to introduce the No Oil 
Producing and Exporting Cartels Act of 2005 (NOPEC). This legislation 
would give the Department of Justice and Federal Trade Commission legal 
authority to bring an antitrust case against the Organization of 
Petroleum Exporting Countries (OPEC).
  Every consumer in America knows that gasoline prices have reached 
record highs recently. Likewise, the price of home heating oil has 
dramatically increased. These price increases have been acutely painful 
to people in my home State of Ohio.
  Moreover, the rise in jet fuel prices is crippling our already weak 
airline industry. One of the main reasons that many U.S. airlines have 
not been able to make a profit has been due to skyrocketing jet fuel 
costs. For example, in the fourth quarter of 2004, Continental 
Airlines' jet fuel costs were $453 million, which was a 48 percent 
increase compared to last year, and Delta's jet fuel costs were $385 
million, which was 76 percent increase compared to last year. No wonder 
so many U.S. airlines are teetering on the edge of bankruptcy or are 
already in bankruptcy.
  What is the cause of these high gas and fuel prices? There are a 
number of factors at play, but there is clear agreement among industry 
experts about the primary cause of high gas and fuel prices--and that 
is the increase in imported crude oil prices. Who sets crude oil 
prices? OPEC does. The unacceptably high price of imported crude oil is 
a direct result of price fixing by the OPEC nations to keep the price 
of oil unnaturally high.
  OPEC's hunger for ill-gotten gains is astounding. It seems its 
appetite can never be satisfied. For example, despite the fact that oil 
prices recently hit the historic high of $55 a barrel, OPEC members met 
in December 2004 and decided to cut the output of oil by another 1 
million barrels. When demand is high and supplies are cut, that means 
prices will increase. Nonetheless, OPEC cut production. This is an 
outrage.
  OPEC is probably the most notorious example of an illegal cartel in 
the world today. It is an affront to the principle that markets should 
be free. Nation after nation has adopted antitrust laws that make it 
illegal to fix prices. In 1998, the Organization for Economic 
Cooperation and Development, then composed of 29 member nations, issued 
a formal recommendation denouncing price fixing. OPEC's continued 
actions, in ongoing defiance of American and international antitrust 
norms, should not be tolerated.
  Until now, however, OPEC has effectively received a ``free pass'' 
from prosecution under U.S. antitrust laws. For over two decades, 
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. As a result, they were given 
sovereign 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, which holds that a court will not consider a case 
regarding the legality of the acts of a foreign nation.
  Our bill would effectively reverse these decisions. It makes it clear 
that OPEC's activities are not protected by sovereign immunity and that 
the Federal courts should not decline to hear a case against OPEC based 
on the ``act of state'' doctrine. As a result, under NOPEC, the 
Department of Justice and the Federal Trade Commission could bring an 
antitrust enforcement action against OPEC's member nations. This bill 
would force OPEC to begin pricing in a competitive, free-market manner 
or face the possibility of civil or criminal antitrust prosecution.
  Senator Kohl and I have introduced this bill three times before--in 
2000, 2001, and 2004. We intend to keep fighting for American consumers 
and businesses so that they will not be fleeced by OPEC in the future.
  NOPEC says to OPEC: When you want to do business with America, you 
must abide by our antitrust laws and the rules of the free market. And 
when OPEC, one day, abides by the rules of the free market, we will all 
see lower oil and gas prices.
  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. 555

       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 2005'' 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--

[[Page S2257]]

       ``(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, I rise today to introduce, with Senator 
DeWine and 11 co-sponsors, of the No Oil Producing and Exporting 
Cartels Act of 2005 (``NOPEC''). It is time for the U.S. government to 
fight back on the price of oil and hold OPEC accountable when it acts 
illegally. This bill will hold OPEC member nations to account under 
U.S. antitrust law when they agree to limit supply or fix price in 
violation of the most basic principles of free competition.
  Our bill will authorize the Attorney General and Federal Trade 
Commission to file suit against nations or other entities that 
participate in a conspiracy to limit the supply, or fix the price, of 
oil. In addition, it will expressly specify that the doctrines of 
sovereign immunity and act of state do not exempt nations that 
participate in oil cartels from basic antitrust law. Senator DeWine and 
I have introduced this bill in each of the last three Congresses. This 
legislation was the subject of an extensive hearing at the Antitrust 
Subcommittee last year, and subsequently passed the Judiciary Committee 
without dissent. It is now time, in this new Congress, to finally pass 
this legislation into law and give our nation a long needed tool to 
counteract this pernicious and anti-consumer conspiracy.
  Throughout the last year, consumers all across the Nation have 
watched gas prices rise to previously unimagined levels. As crude oil 
prices exceeded $40, then $50 and then $55 per barrel, retail prices of 
gasoline over $2.00 per gallon became commonplace. While prices 
temporarily receded for short periods, the general trend was 
significantly upwards, and rising even today. We now hear predictions 
that the price of crude oil may soon break the $60 barrier, and oil 
industry analysts even say $80 per barrel is not unthinkable. And one 
fact has remained consistent--any move downwards in price would end as 
soon as OPEC decided to cut production. The price of crude oil danced 
to the tune set by OPEC members. Such blatantly anti-competitive 
conduct by the oil cartel violates the most basic principles of fair 
competition and free markets and should not be tolerated.
  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 can tell you about the tremendous personal costs 
associated with higher home heating 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 repeatedly asked the Federal Trade 
Commission to investigate these allegations. As a result of our 
requests, 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. And we conducted our own 
inquiry in the Antitrust Subcommittee last year which found no basis to 
challenge the FTC's conclusions.
  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. Our bill 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. The bill will not 
authorize private lawsuits, but 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. In so doing, our bill will overrule one 
twenty-year old lower court decision which incorrectly failed to 
recognize that the actions of OPEC member nations was commercial 
activity exempt from the protections of sovereign immunity.
  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 antitrust 
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 establish that 
the 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.

[[Page S2258]]

  The suffering of consumers across the Nation in the last year has 
made me more certain than ever that this legislation is necessary. 
Between OPEC's repeated decisions 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.
  I urge my colleagues to support our legislation so that our Nation 
will finally have an effective means to combat this price-fixing 
conspiracy of oil-rich nations.
                                 ______