[Congressional Record Volume 157, Number 26 (Thursday, February 17, 2011)]
[Senate]
[Pages S889-S890]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KOHL (for himself, Mr. Grassley, Mr. Leahy, Ms. Snowe, Mr. 
        Durbin, Mr. Schumer, and Mr. Lautenberg):
  S. 394. 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, NOPEC. This legislation will 
authorize our government, for the first time, to take action against 
the illegal conduct of the OPEC oil cartel. It is time for the U.S. 
government to fight back against efforts to fix the price of oil and 
hold OPEC accountable when it acts illegally. Our legislation 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.
  NOPEC 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 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 legislation in each Congress since 2000. This 
legislation passed the full Senate in the 110th Congress by a vote of 
70-23 in June 2007 as an amendment to the 2007 Energy Bill before

[[Page S890]]

being stripped from that bill in the conference committee. The 
identical House version of NOPEC also passed the other body as stand 
alone legislation in the 110th Congress in 2007 by an overwhelming 345-
72 vote. It is now time for us to at last pass this legislation into 
law and give our nation a long needed tool to counteract this 
pernicious and anti-consumer conspiracy.
  Since January 2009 the cost of crude oil has more than doubled, 
reaching today's level of $96 per barrel. Likewise, throughout 2009 and 
2010, gasoline prices have marched steadily upward, soaring to over $3 
a gallon in January 2011, a price that has nearly doubled in little 
over two years. And recently, OPEC ministers indicated that they may 
decide against an increase an output in 2011, saying in the final days 
of 2010 that the world economy can tolerate a $100 per barrel price. So 
it is clear that the global oil cartel remains a major force conspiring 
to raise oil prices to the detriment of American consumers.
  The actions of the OPEC cartel in recent years demonstrate the 
dangers it presents. A good example occurred at the end of 2008. On 
October 24, 2008, OPEC agreed to cut production by 1.5 million barrels 
a day, and less than two months later, on December 17, 2008, OPEC 
agreed to a further 2.2 million barrels a day production cut. OPEC made 
no secret of its motivation for these production cuts. OPEC President 
Chakib Khelil put it very simply in an interview published December 23, 
2008, ``Without these cuts, I don't think we'd be seeing $43 [per 
barrel] today, we'd have seen in the $20's. . . . [H]opefully by the 
third quarter [of 2009] we will see prices rising.'' In another 
interview in December, Khelil was quoted as saying ``The stronger the 
decision [to cut production], the faster prices will pick up.'' Sure 
enough, oil prices resumed their march upwards in 2009, and now is more 
than $90 per barrel.
  Since cutting its output in this manner at the end of 2008, OPEC has 
not officially changed its output policy for more than two years. Oil 
prices have surged nearly $30 since last summer, and OPEC's Secretary 
General Abdalla Salem El-Badri confirmed there would not be an increase 
in output, claiming in January 2011 that, ``At the moment there is more 
than enough oil on the market.''
  When the price of crude oil rises as a result of these actions by 
OPEC, there is no doubt that millions of American consumers feel the 
pinch every time they visit the gas pump. The Federal Trade Commission 
has estimated that 85 percent of the variability in the cost of 
gasoline is the result of changes in the cost of crude oil.
  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. If private companies engaged such an 
international price fixing conspiracy, there would no question that it 
would be illegal. The actions of OPEC should be treated no differently 
because it is a conspiracy of nations.
  For years, this price fixing conspiracy of OPEC nations 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. This NOPEC legislation 
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 is also important to point out that this legislation will not 
authorize private lawsuits. It only authorizes the Attorney General to 
file suit under the antitrust laws for redress. It will always be in 
the discretion of the Justice Department and the President as to 
whether to take action to enforce NOPEC. Our legislation will not 
require the government to bring a legal action against OPEC member 
nations, and no private party will have the ability to bring such an 
action. This decision will entirely remain in the discretion of the 
executive branch. Our NOPEC legislation will give our law enforcement 
agencies a tool to employ against the oil cartel but the decision on 
whether to use this tool will entirely be up to the Justice Department 
and, ultimately, the President. They can use this tool as they see 
fit--to file a legal action, to jawbone OPEC in diplomatic discussions, 
or defer from any action should they judge foreign policy or other 
considerations warrant it.
  NOPEC 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 amendment will 
overrule one 28 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.
  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 supply cutbacks designed to raise price. It 
will mean that OPEC member nations will face the possibility of real 
and substantial antitrust sanctions should they persist in their 
illegal conduct. It will also deter additional nations who may today be 
considering joining OPEC.
  I urge my colleagues to support our NOPEC legislation so that our 
nation will finally have an effective means to combat this price-fixing 
conspiracy of oil-rich nations.
  Mr. President, I ask unanimous consent that the text of the 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. 394

       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 2011'' 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.--
       ``(1) In general.--The Attorney General of the United 
     States may bring an action to enforce this section in any 
     district court of the United States as provided under the 
     antitrust laws.
       ``(2) No private right of action.--No private right of 
     action is authorized under this section.''.

     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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