Washington, D.C. – House Judiciary Committee Chairman Bob Goodlatte (R-Va.) delivered the following remarks at a hearing by the Subcommittee on Regulatory Reform, Commercial and Antitrust Law on  the No Oil Producing and Exporting Cartels Act

Chairman Goodlatte: Welcome.  The No Oil Producing and Exporting Cartels Act (NOPEC) is a bipartisan bill whose enactment is long overdue.

The fact that the Organization of the Petroleum Exporting Countries (OPEC) is not being held accountable for its anticompetitive behavior makes a mockery of U.S. antitrust law.

Consider that the Justice Department is currently blocking a high-profile merger over consumers potentially paying fifty cents more a month.  Academics call for greater regulation to protect consumer welfare based on increasingly exotic antitrust theories.  Meanwhile, nothing is done about OPEC’s collusive activity, even though it appears illegal per se and is behind a rise in gas prices of over fifty cents a gallon since 2016.

The lack of action is not a function of gaps in the underlying antitrust statutes.

As the Supreme Court has explained, “[u]nder the Sherman Act, a combination formed for the purpose and with the effect of . . . stabilizing the price of a commodity in interstate or foreign commerce is illegal per se.”  OPEC’s organizational document, under the heading “[o]bjectives,” states that the “[o]rganization shall devise ways and means of ensuring the stabilization of prices in international oil markets.”

Federal law specifically provides that the Sherman Act applies to foreign conduct that has “a direct, substantial, and reasonably foreseeable effect” on U.S. domestic commerce.  That is certainly true of oil prices.  A recent Wall Street Journal article warned that rising prices are “posing a threat to U.S. growth as the cost of fuel and gasoline weighs on drivers, airlines, delivery companies and other big consumers.”

Unfortunately, courts have blocked efforts to hold OPEC accountable under these provisions.

In 1979, a federal district court dismissed on the ground of sovereign immunity a lawsuit against OPEC brought by a labor union.  But the same federal law that creates that immunity contains an exception for commercial activity.  Nevertheless, the judge read that exception narrowly to avoid having to decide the case.

On appeal, the Ninth Circuit did not reach the sovereign immunity question.  Instead, it held that the suit was barred by the act of state doctrine, which is a judge-made doctrine designed to avoid judicial action in sensitive areas.

These concerns were echoed in subsequent cases.  In 2010, the Obama Administration urged the Fifth Circuit to dismiss a case against OPEC brought by private parties on act of state and political question grounds, because “it is for the Executive Branch, not the courts, to determine how best to protect United States foreign policy and national security interests in regard to foreign oil-producing states.”

The NOPEC legislation under consideration fully addresses these concerns, because it does not create a private right of action.  It entrusts discretion whether to bring a case solely to the Executive Branch.  Courts would only be hearing cases that the Executive Branch affirmatively elected to bring after considering the foreign policy and national security implications.

No wonder that NOPEC has enjoyed robust bipartisan support since it was first introduced in the 106th Congress.  For example, the bill that is the subject of this hearing is identical to the version offered in both Chambers of the 110th Congress.  The House version was cosponsored by Representatives Conyers, Chabot, Lofgren, and Cohen, among others.  The bill passed the House on suspension.  Then-Speaker Pelosi lauded it as a “critical tool,” declaring that “American consumers must not be at the mercy of foreign oil cartels that conspire to fix prices and allocate production.”  The Senate version of the bill during the 110th Congress had 14 cosponsors, including Senators Grassley, Schumer and Durbin.  The Senate Judiciary Committee reported it favorably by unanimous consent.

Despite strong support in Congress over a period of years, NOPEC has not yet become law.  However, recently, President Trump signaled that he may be more receptive than prior presidents to NOPEC.  This creates a real opportunity to enact this long overdue law.

I look forward to hearing from our witnesses and to moving the bill forward.

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