[Congressional Record Volume 153, Number 44 (Wednesday, March 14, 2007)]
[Senate]
[Pages S3133-S3136]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KOHL (for himself, Mr. Specter, Mr. Leahy, Mr. Grassley, 
        Mr. Feingold, Ms. Snowe, Mr. Schumer, Mr. Coburn, Mr. Durbin, 
        Mrs. Boxer, and Mr. Levin):
  S. 879. 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, I rise today to introduce the No Oil 
Producing and Exporting Cartels Act of 2007 (``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 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. I have introduced this bill in each Congress since 2000. This 
legislation has passed the Judiciary Committee unanimously three times 
since it was first introduced, and in 2005 passed the full Senate by 
voice vote as an amendment to the Energy Bill before being stripped 
from that bill in the conference committee. 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 watched gas 
prices rise to previously unimagined levels. As crude oil prices 
exceeded $40, then $50 and then $60 per barrel, retail prices of 
gasoline over $3.00 per gallon became commonplace. While prices 
temporarily receded last fall, the general trend is significantly 
upwards, and prices are rising even today. Gas prices have increased 32 
cents in the last month alone to a national average of

[[Page S3135]]

$2.56 per gallon, a nearly 15 percent increase in just one month.
  As we consider gas price changes, one fact has remained consistent 
any move downwards in price ends as soon as OPEC decides to cut 
production. Referring to the 18 percent rise in worldwide crude oil 
prices since the start of the year, OPEC President Mohammed al-Hamli 
commented ``we had a bad situation at the beginning of the year. It is 
much better now.'' The difference--combined output cuts of 1.7 million 
barrels of oil a day adopted by OPEC last October and December driving 
up crude oil prices. And while OPEC enjoys its newfound riches, the 
average American consumer suffers every time he or she visits the gas 
pump or pays a home heating bill.
  So there is no doubt that the price of crude oil dances 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, 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.
  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 
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 Justice 
Department 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.
  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. Thank you.
  I ask unanimous consent that the text of this bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 879

       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 2007'' 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 may bring an action to enforce this section in any 
     district court of

[[Page S3136]]

     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. LEAHY. Mr. President, I am pleased to join Senator Kohl, the 
chairman of the Subcommittee on Antitrust and Competition Policy, by 
cosponsoring once again the No Oil Producing and Exporting Cartels, 
NOPEC, Act. I thank Senator Kohl for his leadership on this important 
issue, and Senators Specter, Grassley, Feingold, Snowe, Schumer, 
Durbin, Boxer and Coburn the other cosponsors, for their continued 
support of this critically important effort.
  The collusive behavior of certain oil producing nations has 
artificially--and drastically reduced the supply and inflated the price 
of fuel. Put simply, the behavior of these oil cartels, which would be 
illegal under antitrust laws, grievously harms American consumers and 
businesses.
  We have introduced this measure in each of the last four Congresses. 
We introduce it again today, in our never-ending effort to make OPEC 
accountable for its anticompetitive behavior by allowing the Justice 
Department to crack down on illegal price manipulation by oil cartels.
  This bill will allow the Federal Government to take legal action 
against any foreign state, including members of OPEC, for price fixing 
and artificially limiting the amount of available oil. While OPEC 
actions remain protected from antitrust enforcement, the ability of the 
governments involved to wreak havoc on the American economy will remain 
unchecked.
  When the President took office, Americans could fill their cars, heat 
their homes, and run their businesses on gasoline that cost $1.45 a 
gallon. Fuel prices have skyrocketed since then. Prices will at times 
fall, but because fuel prices are not properly subject to competition 
oversight and enforcement, the American consumer will only benefit from 
lower prices when it serves some other purpose of the cartel and 
foreign governments.
  President Bush has said he is concerned about gasoline costs and has 
pledged that the government would keep a close watch on unacceptable 
profiteering. It is time for the President to join us in supporting 
this legislation.
  Our antitrust laws have been called the ``Magna Carta of free 
enterprise.'' If OPEC were simply a foreign business engaged in this 
type of behavior, it would already be subject to them. It is wrong to 
let OPEC producers off the hook just because their anticompetitive 
practices come with the seal of approval of national governments. I 
urge my colleagues to support this bill and to say ``No'' to OPEC.
                                 ______