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110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    110-160

======================================================================



 
          NO OIL PRODUCING AND EXPORTING CARTELS ACT OF 2007 
                                (NOPEC)

                                _______
                                

  May 21, 2007.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Conyers, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                             together with

                           SUPPLEMENTAL VIEWS

                        [To accompany H.R. 2264]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(H.R. 2264) to amend the Sherman Act to make oil-producing and 
exporting cartels illegal, having considered the same, reports 
favorably thereon with an amendment and recommends that the 
bill as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     3
Hearings.........................................................     6
Committee Consideration..........................................     6
Committee Votes..................................................     6
Committee Oversight Findings.....................................     6
New Budget Authority and Tax Expenditures........................     6
Congressional Budget Office Cost Estimate........................     6
Performance Goals and Objectives.................................     7
Constitutional Authority Statement...............................     8
Advisory on Earmarks.............................................     8
Section-by-Section Analysis......................................     8
Changes in Existing Law Made by the Bill, as Reported............     8
Supplemental Views...............................................    10

                             The Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

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. (a) 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) 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) 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) 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.''.

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.''.

                          Purpose and Summary

    With control of 40% of the world's production, OPEC has 
substantial influence over the price of oil. OPEC member 
nations have extensive oil reserves and therefore can readily 
increase supply and lower prices. In addition, many of the non-
OPEC oil-producing countries--such as the United States--have 
large private oil-producing sectors. These companies have very 
little spare production capacity and cannot easily increase 
production in the event of shortages or otherwise expand to 
increase market share. \1\
---------------------------------------------------------------------------
    \1\ U.S. Energy Information Administration, Country Analysis Briefs 
--Non-OPEC Fact Sheet, Nov. 2005, at http://www.eia.doe.gov.
---------------------------------------------------------------------------
    H.R. 2264, the ``No Oil Producing and Exporting Cartels Act 
of 2007 or `NOPEC,' '' deems it to be illegal and a violation 
of our Nation's antitrust law for any foreign state, or any 
instrumentality or agent of any foreign state, to act 
collectively whether by cartel or any other form of cooperative 
action to limit the production or distribution of oil, natural 
gas, or any other petroleum product or to set the price of such 
commodities. The bill exempts OPEC and other Nations from the 
provisions of the Foreign Sovereign Immunities Act to the 
extent those governments are engaged in price-fixing and other 
anticompetitive activities with regard to pricing, production, 
and distribution of petroleum products. It also makes clear 
that the so-called ``act of state'' doctrine does not prevent 
courts from ruling on antitrust charges brought against foreign 
governments, and that foreign governments are ``persons'' 
subject to suit under the antitrust laws. Finally, it 
authorizes the Department of Justice to bring lawsuits in 
Federal court against oil cartel members.

                Background and Need for the Legislation

                           BACKGROUND ON OPEC

    The Organization of Petroleum Exporting Countries (OPEC) 
produces approximately 40% of the world's petroleum. The OPEC 
countries include Algeria, Indonesia, Iran, Iraq, Kuwait, 
Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, 
and Venezuela. OPEC states that its mission ``to coordinate & 
unify the petroleum policies of Member Countries & ensure the 
stabilization of oil prices in order to secure an efficient, 
economic & regular supply of petroleum to consumers, a steady 
income to producers & a fair return on capital to those 
investing in the petroleum industry.'' \2\
---------------------------------------------------------------------------
    \2\ See http://www.opec.org/home.
---------------------------------------------------------------------------
    OPEC, to fulfill its stated mission, has taken steps 
throughout the years to control the supply and price of crude 
oil in an effort to ``stabilize'' prices and secure ``a steady 
income to producers.'' To this end, OPEC has undertaken 
numerous actions, as a matter of routine, to fix supply and 
prices. These actions, as compiled by the United States Energy 
Information Administration, include the following concerted 
actions taken in recent years:

         LSeptember 24, 2003: OPEC decides to lower its 
        production quota from 25.4 million barrels per day to 
        24.5 million barrels per day, effective November 1, 
        2003.

         LFebruary 10, 2004: OPEC decides to lower 
        OPEC's production quota from 24.5 million barrels per 
        day to 23.5 million barrels per day, effective April 1, 
        2004.

         LMarch 31, 2004: OPEC re-confirms the new 
        production ceiling of 23.5 million barrels per day 
        effective April 1, 2004, which was agreed upon on 
        February 10, 2004.

         LJune 3, 2004: OPEC decides to increase its 
        production quota to 25.5 million barrels per day 
        effective July 1, 2004, and to 26.0 million barrels per 
        day effective August 1, 2004.

         LSeptember 15, 2004: OPEC decides to increase 
        its production quota to 27.0 million barrels per day 
        effective November 1, 2004.

         LDecember 10, 2004: OPEC decides to output 
        quotas unchanged, but pledges to cut overproduction 
        over quota levels by 1 million barrels per day 
        effective January 1, 2005.

         LJanuary 30, 2005: OPEC decides to leave its 
        target production levels unchanged, and to temporarily 
        suspend its price band mechanism.

         LMarch 16, 2005: OPEC decides to increase its 
        production quota to 27.5 million barrels per day 
        effective immediately.

         LJune 15, 2005: OPEC decides to increase its 
        production quota to 28 million barrels per day 
        effective July 1, 2005 and authorizes an additional 
        500,000 barrels per day increase in its quotas ``should 
        oil prices remain at current levels or continue to rise 
        further.'' OPEC also decides to replace its previous 
        OPEC reference basket of seven crude oils with a new 
        one consisting of eleven crude streams, effective June 
        16, 2005.

         LSeptember 19, 2005: OPEC agrees to make 
        available to the market all of the spare capacity in 
        member countries (estimated at 2 million barrels per 
        day by OPEC), should it be called for, for a period of 
        3 months, starting October 1, 2005.

         LDecember 12, 2005: OPEC decides to leave 
        output quotas unchanged.

         LJanuary 31 , 2006: OPEC decides to leave 
        output quotas unchanged.

         LMarch 8, 2006: OPEC decides to leave output 
        quotas unchanged.

         LJune 1, 2006: OPEC decides to leave output 
        quotas unchanged. \3\
---------------------------------------------------------------------------
    \3\ U.S. Energy Information Administration, Country Analysis 
Briefs--OPEC, Aug. 6, 2006, at http://www.eia.doe.gov.

    Even though OPEC controls ``only'' 40% of the world's 
production, its influence over prices is substantial. First, 
the OPEC countries have extensive reserves and can easily 
increase supply and lower prices. Second, many of the non-OPEC 
oil-producing countries--such as the United States--have large 
private oil-producing sectors. These companies have very little 
spare production capacity and cannot easily increase production 
in the event of shortages or otherwise expand to increase 
market share. \4\
---------------------------------------------------------------------------
    \4\ U.S. Energy Information Administration, Country Analysis 
Briefs--Non-OPEC Fact Sheet, Nov. 2005, at http://www.eia.doe.gov.
---------------------------------------------------------------------------

                           ANTITRUST ANALYSIS

    If private actors collusively controlled supply and prices 
in the manner that OPEC member nations do, there is no question 
that their conduct would be illegal as a per se violation of 
the Sherman Act, and that they would be subject to criminal and 
civil liability. \5\ Typically, however, foreign states are 
immune from suit in Federal court. Section 1604 of title 28 of 
the United States Code provides that a ``foreign state shall be 
immune from the jurisdiction of the courts of the United States 
and of the States [with specific exceptions].'' \6\
---------------------------------------------------------------------------
    \5\ Section 1 of the Sherman Act provides in pertinent part:

      Every contract, combination in the form of trust or 
      otherwise, or conspiracy, in restraint of trade or commerce 
      among the several States, or with foreign nations, is 
      declared to be illegal. Every person who shall make any 
      contract or engage in any combination or conspiracy hereby 
      declared to be illegal shall be deemed guilty of a felony 
---------------------------------------------------------------------------
      [punished as provided by law].

15 U.S.C.A. Sec. 1 (2006).
  Although Sec. 1 of the Sherman Act provides criminal penalties for 
price-fixing and other restraints of trade, other provisions of the 
antitrust laws provide for civil enforcement. For example, section 15 
of the Clayton Act provides, in pertinent part:

      That the several district courts of the United States are 
      hereby invested with jurisdiction to prevent and restrain 
      violations of this Act, and it shall be the duty of the 
      several district attorneys fo the United States, in their 
      respective districts, under the direction of the Attorney 
      General, to institute proceedings in equity to prevent and 
      restrain such violations.

15 U.S.C.A. Sec. 25 (2006).
---------------------------------------------------------------------------
    \6\ 28 U.S.C.A. Sec. 1604 (2006)
---------------------------------------------------------------------------
    One exception to sovereign immunity applies where the suit 
``is based upon a commercial activity carried on in the United 
States by the foreign state; or upon an act performed in the 
United States in connection with a commercial activity of the 
foreign state elsewhere; or upon an act outside the territory 
of the United States in connection with a commercial activity 
of the foreign state elsewhere and that act causes a direct 
effect in the United States.'' \7\
---------------------------------------------------------------------------
    \7\ 28 U.S.C.A. Sec. 1605(a)(2) (2006).
---------------------------------------------------------------------------
    Although the coordination of oil production by the OPEC 
countries as a means of controlling price levels would appear 
to be a ``commercial activity''--and therefore not protected by 
sovereign immunity--a district court in 1979 held otherwise. 
The district judge concluded that the act of an OPEC member 
nation ``establishing the terms and conditions for removal of 
natural resources from its territory'' was a ``governmental 
activity,'' not a commercial activity within the meaning of the 
exception to the principles of foreign sovereign immunity. \8\ 
The court dismissed the antitrust suit brought by a labor union 
against OPEC. One purpose of H.R. 2264 is to reaffirm that the 
antitrust laws do indeed apply to the OPEC nations in their 
role as commercial actors, engaging in such collusion, where 
such conduct impacts the United States.
---------------------------------------------------------------------------
    \8\ International Ass'n of Machinists v. Organization of Petroleum 
Exporting Countries, 477 F.Supp. 553, 568 (C.D. Cal 1979). The district 
judge reasoned, ``This Court agrees that this `commercial activity' 
should be defined narrowly. . . . From the evidence presented to this 
Court, it is clear that the nature of the activity engaged in by each 
of these OPEC member countries is the establishment by a sovereign 
state of the terms and conditions for the removal of a prime natural 
resource to wit, crude oil from its territory.'' Id. at 567.
---------------------------------------------------------------------------
    The other obstacle to antitrust lawsuits against OPEC is 
the ``act of state'' doctrine, which commands courts to avoid 
review of the actions of foreign governments and to defer 
certain disputes with foreign government to the political 
branches of the government. This doctrine was cited by the 
Ninth Circuit in affirming the dismissal of the case discussed 
above. \9\
---------------------------------------------------------------------------
    \9\ The Ninth Circuit rested its decision not on the grounds that 
sovereign immunity precluded the suit, but on the ``act of state 
doctrine.''
---------------------------------------------------------------------------
    H.R. 2264 minimizes any ``act of state'' doctrine concerns 
with bringing an antitrust action against the OPEC nations, 
because it entrusts to the Executive Branch the discretion 
whether to bring charges under this provision. \10\ A court's 
concern about insinuating itself in matters properly within the 
bailiwick of the political branches is mitigated when Congress, 
by this legislation, and the Executive Branch, by bringing the 
action, explicitly authorizes judicial involvement.
---------------------------------------------------------------------------
    \10\ Rus the bill authorizes only the Department of Justice to 
enforce NOPEC, the Executive Branch necessarily will consider the 
foreign policy implications of such a suit before bringing charges.
---------------------------------------------------------------------------
    The NOPEC legislation was first introduced in the 106th 
Congress, and has been reintroduced in every Congress since. It 
was reported by the Senate Committee on the Judiciary, with 
considerable bipartisan support, in the 106th Congress, again 
in the 108th Congress, and again in the 109th Congress. In the 
109th Congress, the bill passed the Senate as a provision in 
the Energy Policy Act of 2005. In the 110th Congress, the 
Senate Committee on the Judiciary ordered the bill favorably 
reported on April 25, 2007, by unanimous consent.

                                Hearings

    On May 16, 2007, the Antitrust Task Force of the Committee 
on the Judiciary held an oversight hearing on the subject of 
market failure in the oil industry and the possible uses of the 
antitrust laws to restore competition in that industry, during 
which the NOPEC legislation was a major topic of discussion. 
Witnesses at the hearing included Representatives Bart Stupak 
(D-MI) and Heather Wilson (R-NM); Richard Blumenthal, Attorney 
General for the State of Connecticut; Dr. John Felmy, chief 
economist at the American Petroleum Institute; and Mark Cooper, 
director of research for the Consumer Federation of America.

                        Committee Consideration

    On May 17, 2007, the Committee met in open session and 
ordered the bill, H.R. 2264, favorably reported with an 
amendment, by voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that there 
were no recorded votes during the Committee's consideration of 
H.R. 2264.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 2264, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 18, 2007.
Hon. John Conyers, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2264, the No Oil 
Producing and Exporting Cartels Act of 2007.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Daniel 
Hoople, who can be reached at 226-2860.
            Sincerely,
                                           Peter R. Orszag,
                                                  Director.

Enclosure

cc:
        Honorable Lamar S. Smith.
        Ranking Member
H.R. 2264--No Oil Producing and Exporting Cartels Act of 2007.
    H.R. 2264 would seek to prohibit foreign states from 
working collectively to limit the production, set the price, or 
otherwise restrain the trading of petroleum and natural gas 
when such actions affect U.S. markets. The bill would authorize 
the Department of Justice (DOJ) to enforce the legislation by 
filing antitrust actions in federal courts. The bill also would 
provide that foreign states that restrain trade in petroleum 
and natural gas would not be immune from the judgment of U.S. 
courts under the doctrine of sovereign immunity.
    CBO cannot estimate a precise cost of implementing H.R. 
2264 because we have no basis for assessing the likelihood that 
the Administration might initiate antitrust actions against 
foreign states under the bill. Based on information from DOJ on 
the costs of investigations of alleged antitrust violations, 
CBO estimates that similar investigations to those that might 
be brought under H.R. 2264 could cost up to $4 million per 
year, subject to appropriation of the necessary funds.
    H.R. 2264 could result in the collection of additional 
criminal or civil penalties. Collections of criminal fines are 
recorded in the budget as revenues, which are deposited in the 
Crime Victims Fund and later spent. Civil fines are also 
recorded as revenues. CBO cannot estimate the impact of H.R. 
2264 on direct spending and revenues because we cannot 
determine whether DOJ would file suit against alleged 
violators, whether the agencies would win such legal action, or 
how much in penalties might be collected by federal agencies. 
In any case, enacting those provisions would either have no 
significant net impact on the deficit or would reduce future 
deficits (through collections of civil fines).
    H.R. 2264 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on State, local, or tribal governments.
    On May 4, 2007, CBO transmitted a cost estimate for S. 879, 
the No Oil Producing and Exporting Cartels Act of 2007, as 
ordered reported by the Senate Committee on the Judiciary on 
April 25, 2007. The two bills are similar, and our cost 
estimates are the same.
    The CBO staff contact for this estimate is Daniel Hoople, 
who can be reached at 226-2860. This estimate was approved by 
Peter H. Fontaine, Deputy Assistant Director for Budget 
Analysis.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
2264 enables the United States Department of Justice to bring 
lawsuits in Federal court against nations that engage in 
conduct designed to fix the price of oil.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, section 8, clause 3 of the 
Constitution.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 2264 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(d), 9(e), or 9(f) of Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
    Sec. 1. Short title. This section sets forth the short 
title of the bill as the ``No Oil Producing and Exporting 
Cartels Act of 2007 or (NOPEC).''
    Sec. 2. Sherman Act. Section 2(a) makes it illegal for any 
foreign state, or instrumentality or agent of any foreign 
state, to act collectively with others to: (1) limit the 
production of, (2) set or maintain the price of, or (3) 
otherwise retrain trade for oil, natural gas, or any other 
petroleum product, when such 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 substance, this clarifies that the Sherman Act 
reaches international state actors in the petroleum production 
business.
    Subsection (b) provides that a foreign state engaged in 
conduct under subsection (a) shall not be immune under the 
doctrine of sovereign immunity from the jurisdiction or 
judgments of the courts of the United States. Subsection (c) 
provides that the courts shall not decline to hear cases 
brought under section 2 based on the ``act of state'' doctrine. 
Subsection (d) provides that the Attorney General of the United 
States may bring an action to enforce this section.
    Sec. 3. Sovereign Immunity. Section 3 amends the Foreign 
Sovereign Immunity Act, 28 U.S.C. Sec. 1605(a), to make it 
explicit that sovereign immunity does not protect a country for 
actions brought under new section 7A of the Sherman Act.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                              SHERMAN ACT

    Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, That this 
Act may be cited as the ``Sherman Act''.

           *       *       *       *       *       *       *

    Sec. 7A. (a) 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) 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) 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) 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.

           *       *       *       *       *       *       *

                              ----------                              


              SECTION 1605 OF TITLE 28, UNITED STATES CODE

Sec. 1605. General exceptions to the jurisdictional immunity of a 
                    foreign state

    (a) A foreign state shall not be immune from the 
jurisdiction of courts of the United States or of the states in 
any case--
            (1) * * *

           *       *       *       *       *       *       *

            (6) in which the action is brought, either to 
        enforce an agreement made by the foreign state with or 
        for the benefit of a private party to submit to 
        arbitration all or any differences which have arisen or 
        which may arise between the parties with respect to a 
        defined legal relationship, whether contractual or not, 
        concerning a subject matter capable of settlement by 
        arbitration under the laws of the United States, or to 
        confirm an award made pursuant to such an agreement to 
        arbitrate, if (A) the arbitration takes place or is 
        intended to take place in the United States, (B) the 
        agreement or award is or may be governed by a treaty or 
        other international agreement in force for the United 
        States calling for the recognition and enforcement of 
        arbitral awards, (C) the underlying claim, save for the 
        agreement to arbitrate, could have been brought in a 
        United States court under this section or section 1607, 
        or (D) paragraph (1) of this subsection is otherwise 
        applicable; [or]
            (7) Not otherwise covered by paragraph (2), in 
        which money damages are sought against a foreign state 
        for personal injury or death that was caused by an act 
        of torture, extrajudicial killing, aircraft sabotage, 
        hostage taking, or the provision of material support or 
        resources (as defined in section 2339a of title 18) for 
        such an act if such act or provision of material 
        support is engaged in by an official, employee, or 
        agent of such foreign state while acting within the 
        scope of his or her office, employment, or agency, 
        except that the court shall decline to hear a claim 
        under this paragraph--
                    (A) * * *
                    (B) Even if the foreign state is or was so 
                designated, if--
                            (i) * * *
                            (ii) neither the claimant nor the 
                        victim was a national of the United 
                        States (as that term is defined in 
                        section 101(a)(22) of the Immigration 
                        and Nationality Act) when the act upon 
                        which the claim is based occurred[.]; 
                        or
            (8) in which the action is brought under section 7A 
        of the Sherman Act.

           *       *       *       *       *       *       *


                           Supplemental Views

    The Organization of Petroleum Exporting Countries (OPEC) 
sits atop the world's supply of oil. Founded in Baghdad in 
1960, OPEC members' national oil ministers meet regularly to 
discuss prices and set crude oil production quotas. OPEC's 
member nations include Iran, Iraq, Kuwait, Saudi Arabia, 
Venezuela, Qatar, Indonesia, Libya, the United Arab Emirates, 
Algeria, and Nigeria. Together they control roughly 40% of 
world oil production, and about \2/3\ of the world's proven oil 
reserves. The Federal Trade Commission has found that ``OPEC . 
. . continues to have a significant influence on world crude 
oil prices, even though coordination among its members to 
reduce output is imperfect.'' \1\
---------------------------------------------------------------------------
    \1\ Federal Trade Commission, The Petroleum Industry: Mergers, 
Structural Change, and Antitrust Enforcement 5 (2004).
---------------------------------------------------------------------------
    Many of the OPEC regimes are either totalitarian or 
unstable states. Some are openly hostile to American interests. 
Few would seriously argue that the presence of such a cartel is 
beneficial to the United States.
    H.R. 2264, the ``No Oil Producing and Exporting Cartels Act 
of 2007 or `NOPEC,' '' is an effort to end the collusive 
behavior of OPEC by subjecting it to U.S. antitrust laws. H.R. 
2264 does this by amending the Sherman Antitrust Act (15 U.S.C. 
Sec. 1 et seq.) to make it illegal for foreign countries to 
collude to restrain output or fix prices of oil, gas, or any 
petroleum product, and would give authority to the U.S. 
Attorney General to enforce the provisions. The bill is a 
response to the Ninth Circuit's decision in International 
Association of Machinists and Aerospace Workers v. OPEC, which 
held that the countries constituting OPEC could not be held 
liable for antitrust violations because of the act of state 
doctrine.\2\ As such, the bill explicitly eliminates the 
concepts of sovereign immunity and the act of state doctrine as 
OPEC's defenses to an antitrust suit.
---------------------------------------------------------------------------
    \2\ 649 F.2d 1354 (9th Cir. 1981).
---------------------------------------------------------------------------
    H.R. 2264, while well intentioned, could have a litany of 
consequences for America, both at home and abroad. I have 
requested that GAO study the impact that the bill may have on 
U.S. foreign policy, our trade balances, and our ability to 
station troops in the Middle East. In addition, this bill could 
lead to a number of retaliatory actions by these foreign 
governments, including an oil embargo like the one that 
occurred in 1973 and the seizure of U.S. assets abroad. At my 
request, the GAO will study the likelihood of such retaliatory 
actions and their impact on the U.S. economy. Separate and 
apart from those concerns, the costs of enforcing a judgment 
against a foreign state-owned entity are unknown and might not 
be worth the effort.
    Finally, I would like to note the importance of regular 
order in the consideration of such important legislation. The 
Antitrust Task Force held one hearing on gas prices the day 
before the markup of this legislation. At that hearing, which 
was repeatedly interrupted by votes on the floor and other 
procedural anomalies, the legislation received scant attention. 
In fact, one of the witnesses observed that there was little 
that Congress could do to impact the price of gasoline in the 
short term. Given the potential wide-ranging impacts that this 
bill could have on the American economy and its extremely 
limited value in reducing the price of gasoline in the short 
term, I think it would have been wise to give it more thorough 
and deliberate consideration.

                                   Lamar Smith.