The No Oil Producing and Exporting Cartels Act (NOPEC) was a U.S. Congressional bill, never enacted, known as (in 2007) and then as part of (in 2008). NOPEC was designed to remove the state immunity shield and to allow the international oil cartel, OPEC, and its national oil companies to be sued under U.S. antitrust law for anti-competitive attempts to limit the world's supply of petroleum and the consequent impact on oil prices. Despite popular sentiment against OPEC, legislative proposals to limit the organization's sovereign immunity have so far been unsuccessful. "Varied forms of a NOPEC bill have been introduced some 16 times since 2000, only to be vehemently resisted by the oil industry and its allied oil interests like the American Petroleum Institute and their legion of 'K' Street Lobbyists."Learsy, Raymond J. (September 10, 2012). "NOPEC ('No Oil Producing and Exporting Cartels Act'): A Presidential Issue and a Test of Political Integrity". Huffington Post.
The NOPEC Act was initially sponsored and introduced by Sen. Herb Kohl, D-WI, in June 2000 (S. 2778). The bill had 9 bipartisan cosponsors, including Sen. Chuck Schumer, D-NY, Sen. Patrick Leahy, D-VT; Sen. Chuck Grassley, R-IA; Sen. Arlen Specter, R-PA; and Sen. Joe Lieberman, D-CT. That bill passed the Senate Judiciary Committee on September 21, 2000."S.2778 - No Oil Producing and Exporting Cartels Act of 2000". United States Congress. June 22, 2000. Accessed August 22, 2023. NOPEC was reintroduced in the Senate by Sen. Kohl in every Congress until his retirement in 2013 and passed the Senate Judiciary Committee in Congress.
The identical text of the NOPEC bill was also introduced in the House of Representatives by Representative John Conyers (D-Michigan), in May 2007 and then as H.R. 6074 by Representative Steve Kagan (D-Wisconsin). In the U.S. House of Representatives, the 2007 bill had 12 bipartisan co-sponsors in the House, which included Rep. Dennis J. Kucinich (D-Ohio)."H.R. 2264 (110th): No Oil Producing and Exporting Cartels Act of 2007 Overview". GovernmentTrack.us. Accessed March 24, 2014."H.R. 2264 (pcs) – No Oil Producing and Exporting Cartels Act of 2007". U.S. Government Printing Office. Accessed March 24, 2014."Bill Summary & Status 110th Congress (2007–2008) H.R.6074 Titles". . Thomas. Library of Congress. Accessed March 26, 2014. H.R. 2264 also had strong bipartisan support in the U.S. Senate."Placed on Calendar Senate". Thomas. Library of Congress. Accessed March 26, 2014."U.S. Senate Passes Amdmt. to Outlaw OPEC". Daily Kos. June 21, 2007. Judiciary Committee Chairman Patrick Leahy (D-Vermont) said: "It is long past time for this to become law."Leahy, Patrick (March 9, 2008). "Leahy Among Senators Saying 'NOPEC' To OPEC And Joins In Calling On Bush To Deploy Reserve To Lower Oil Prices" (Press release). United States Senate. H.R. 2264 was passed by the House of Representatives in May 2007 as a stand-alone bill by a vote of 345–72."Senate OKs plan to sue OPEC for price-fixing". Reuters. June 19, 2007. That same month, it also passed the Senate by a vote of 70-23 as part of its energy measure.Fialka, John J. (July 6, 2007). "Why Bid to Allow Lawsuits Against OPEC May Fly". The Wall Street Journal. As part of the Gas Price Relief Act, NOPEC (H.R. 6074) was then passed in the House of Representatives, in May 2008, by a vote of 324–84."Bill Summary & Status 110th Congress (2007 - 2008) H.R.6074 Major Congressional Actions". . Thomas. Library of Congress. Accessed March 26, 2014. President George W. Bush reiterated his previous promise to veto the bill."Senate Energy Bill: I Want My MPG". Daily Kos. June 20, 2007. Under a continued veto threat, a team of senators reintroduced the bill just a week before President Bush left office."Senators Revive NOPEC Bill As Bush Exit Nears". Law360. January 13, 2009. However, NOPEC/H.R. 6074 did not then come to a final Senate vote. With continued bipartisan support, Rep. Steve Chabot (R-Ohio) sponsored NOPEC in 2011, as H.R. 1346."H.R.1346 – NOPEC: 112th Congress (2011-2012)". April 4, 2011. NOPEC has not gone beyond its introduction subsequently."S.394 – 112 Congress, Actions". United States Congress. February 17, 2011.
NOPEC has been the Congressional effort to address the issue that, under federal law, foreign governments cannot be sued for predatory pricing or failing to comply with federal antitrust laws. Thus, the purpose of the bill was to extend similar Sherman Antitrust consumer protection, so as to include protection against collusion and predatory pricing by foreign governments and international cartels, such as the Organization of the Petroleum Exporting Countries (OPEC)."Congress takes aim at OPEC; Bush vows veto". The Houston Chronicle. May 23, 2007.
As written and passed, H.R. 2264:
It also summarizes enforcement parameters as follows:
Controversy surrounding passage under veto threat
At the time of passage, U.S. motorists were paying $3.21/gallon for gasoline. The London-based Center for Global Energy Studies cited OPEC restrictions on output as the driving force in pushing oil prices in 2008 to above $60/barrel. The study proposed that this OPEC-driven price increase was the central cause of the consumer gas price increase at the pump. Open Congress, accessed 03/23/14.
The many bipartisan supporters of the bill, in Congress and elsewhere, felt disavowed by President Bush's staunch veto threats. Representative Conyers stated: "The Bush administration's threat to veto this bill is just further proof that the administration favors the international oil cartel over the American consumer." Then-senators Barack Obama and Hillary Clinton both voted "yes" on NOPEC. Commodities trader and author Raymond J. Learsy put it this way: "In defiance of oil interests Congress voted overwhelmingly for the Bill (70 votes to 23 in the Senate and 345 to 72 in the House). This was an act of refreshing and courageous leadership by our Congress only to be abandoned after President George W. Bush, that great stalwart of oil interests and friend of Saudi Arabia, made it clear that he would veto the bill should it land on his desk."NOPEC ('No Oil Producing and Exporting Cartels Act'): A Presidential Issue and a Test of Political Integrity 09/11/2012.
Supporters of the Bush veto included the U.S. Chamber of Commerce (USCC). In its 2007 letter to House members, the USCC stated opposition to the bill: "Although H.R. 2264 limits itself to restraint of trade in oil, natural gas, or petroleum products, it would create a dangerous precedent. There would be a domino effect: once sovereign immunity has been eliminated for one action of a state or its agents, it can be eliminated for all state actions and the actions of agents of the state.""Letter Opposing H.R. 2264, the "No Oil Producing and Exporting Cartels Act of 2007" U.S. Chamber of Commerce/R. Bruce Josten, accessed 02/12/22. Energy analyst Kevin Book noted that increased regulatory fears, as a result of NOPEC, could prompt a flight of capital. Others, including some officials in the oil-producing countries, also expressed concerns that "a nation caught up in the throes of a populist movement" might look to seize energy-related plants and even non-energy assets in the United States that are owned by these foreign governments or their affiliated companies. Some officials in the Bush Administration agreed that OPEC countries' United States assets could be targeted, if a court were to award damages in a resulting antitrust lawsuit. They further feared that this "would likely spur retaliatory action against American interests in those countries and lead to a reduction in oil available to U.S. refiners."HoustonChronicle: Search NOPEC
In 2012, economist Dambisa Moyo wrote: "It is beyond question that if OPEC member nations were private companies, they would have been fined heavily and/or had their executives put in jail in the United States or the United Kingdom." Beyond energy alone, Moyo then cited the Bush veto of NOPEC, "for reasons of public policy" and in order to support market-based economies, as an indication to China that it too could also expect continued "lack of any forceful international law" regarding China's potential future international monopolistic policies for "influencing prices, and violating antitrust rules."Dambisa Moyo (2012), Winner Take All: China's race for resources and what it means for us, pp.134-135.Dambisa Moyo (2012), Winner Take All: China's race for resources and what it means for us, YouTube presentation: 06/27/2012.
Litigation
In 2011 a U.S. District Court case involving two class actions was brought by private gasoline retailers against oil production companies most of which were owned in whole or in part by OPEC member nations (Citgo and the Venezuelan State Oil Company (PDVSA)), alleging antitrust violations. As has been the case since first introduced, public discord on the issues was widely disparate. With an apparent policy reversal of his position as senator, the Obama administration favored dismissal in an amicus brief supporting the "sovereign immunity" defense for international commodity producers. "NOPEC Legislation and U.S. Energy Security" CSIS, June 14, 2011. "NOPEC ('No Oil Producing and Exporting Cartels Act'): A Presidential Issue and a Test of Political Integrity" HuffPost, November 9, 2012.
The United States Court of Appeals, Fifth Circuit held that if a case presents a political question, they lacked subject matter jurisdiction, agreeing with the district court that adjudication of the case is barred by application of the political question doctrine. Given that the OPEC member nations included Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela, the Fifth Circuit's opinion sited much case precedence and stated: "Such matters are so exclusively entrusted to the political branches of government as to be largely immune from judicial inquiry or interference."
Textually, the 111th Congress NOPEC Act of 2009 would also expressly exclude a private right of action, and "leaves the decision to prosecute OPEC members in the hands of the executive branch by giving the Justice Department sole authority to prosecute." (statement of Sen. Arlen Specter). This view reinforces the court's conclusion that there is an unusual need for unquestioning adherence to the political decision made by the branches of government that are accountable to the electorate: "Relations with OPEC nations regarding U.S. oil supplies are not to be conducted through private litigation." In their amicus brief the Obama Administration agreed that the appropriate means for achieving United States objectives, involving international energy markets, lies in diplomatic efforts, encompassing the executive branch and the justice department, with the countries involved rather than private lawsuits by each individual company, against sovereign nations in U.S. courts. Convinced that these matters deeply implicate concerns of foreign and defense policy, concerns that constitutionally belong in the executive and legislative departments, the Fifth Circuit concluded that they lacked jurisdiction to adjudicate the claims presented. Spectrum Stores, Inc. v. Citgo Petroleum Corp., 632 F.3d 938, 943 (5th Cir. 2011).
Ongoing debate and future possibilities
As with all cartels, compliance from cartel members is a central factor in any price-fixing effectiveness."Cartels: Myths and realities" Alexander's Gas & Oil Connections, June 4, 2007.