Leahy Says ‘NOPEC' to OPEC Bipartisan Plan Would Permit Legal Action Against Oil Cartel

June 30, 2000

Sen. Patrick Leahy has joined in introduced new legislation that would allow the U.S. Department of Justice and the Federal Trade Commission to file anti-trust lawsuits against foreign states – such as members of the Oil Producing and Exporting Countries (OPEC) – for price fixing and other anticompetitive activities. High oil import costs this year have driven up gasoline prices and threaten to boost Vermont's home heating oil costs even higher this winter.

Leahy joined U.S. Sens. Mike DeWine (R-Ohio) and Herb Kohl (D-Wisc.), the Chairman and the Democratic leader of the Judiciary Committee's Subcommittee on Antitrust, Business Rights and Competition, in drafting the bill in response to skyrocketing gas prices across the nation, which can be partially attributed to price-fixing activities of the OPEC countries. Leahy is the Democratic leader of the Judiciary Committee.

"OPEC nations openly conspire to violate the norms of our antitrust laws," said Leahy, a senior member of the subcommittee. "And yet they expect to do business with the United States and to continue to reap the benefits of this relationship."

The new bill, "The No Oil Producing and Exporting Cartels Act" (NOPEC), exempts OPEC and other nations from the provisions of FSIA to the extent that those governments are engaged in price fixing or other anticompetitive activites with regard to pricing, production and distribution of petroleum products. NOPEC would make OPEC's activities actionable under antitrust laws. The bill also authorizes lawsuits in U.S. federal court against oil cartel members by the Justice Department and Federal Trade Commission.

In response to soaring Summer gas prices, the Federal Trade Commission is investigating whether U.S. oil companies are driving up prices unnecessarily. Leahy has raised concerns that oil companies are profiting at the expense of American consumers. On average, gas prices in New England have been hovering around $1.68 per gallon.

Last winter, a tripling in crude oil prices led to sharp increases in the price of home heating oil and diesel fuel throughout the Northeast. According to the Department of Energy, a price increase in home heating oil looms this winter. Last year, heating oil customers in the Northeast were paying nearly $2 a gallon, more than double last year's price. [MORE] . "This price-gouging by overseas oil cartels will put a strain on Vermonters who need to be able to afford the oil that heats their homes," said Leahy.

Earlier this year, Leahy sponsored legislation which would ensure stable, affordable prices of home heating oil in New England. Leahy has also signed letters urging President Clinton and the Senate to establish and fund a home heating oil reserve in New England.

Under current law, antitrust actions may be filed against private companies, but OPEC nations are currently protected by the Foreign Sovereign Immunities Act, which allows for the prosecution of foreign governments who are engaged in ‘commercial activity,' but prohibits prosecution in those states are engaged in ‘governmental activity.' A federal court ruled that the actions of OPEC are governmental actions and thus not commercial activity.