Taking On the Energy Cartels

Timothey Noah at Slate takes an interesting look at the NOPEC Bill in U.S. Congress, which although it is unlikely to go anywhere, does raise interesting issues of anti-trust law and sovereign immunity.

The American legal system’s bizarre tolerance of the OPEC oil cartel has long irritated Sen. Herb Kohl, D.-Wis., who around the time the Prewitts filed their OPEC lawsuit undertook to remove any legal doubt as to whether OPEC was susceptible to U.S. antitrust enforcement. That doubt, more imaginary than real, arises from whether OPEC’s member nations enjoy “sovereign immunity” because they are countries, not private companies. “Sovereign immunity” is a red herring because OPEC itself is not a sovereign nation. And anyway, Kohl has pointed out, “The Foreign Sovereign Immunities Act … already recognizes that the ‘commercial’ activity of nations is not protected by sovereign immunity.” To wit:

Under international law, states are not immune from the jurisdiction of foreign courts insofar as their commercial activities are concerned, and their commercial property may be levied upon for the satisfaction of judgments rendered against them in connection with their commercial activities.

Is conspiring to set the price of oil a “commercial” activity? Of course it is. OPEC’s member nations get paid for the oil they export. Kohl drafted a bill, dubbed “NOPEC,” that said OPEC could no longer protect itself from antitrust prosecution by citing “sovereign immunity,” and explicitly granted the Justice department jurisdiction. The bill went nowhere back in 2000. But this past spring Kohl dusted it off, and John Fialka reports in the July 6 Wall Street Journal that NOPEC has won the support of veto-proof majorities in the House and Senate. The appeal of NOPEC extends from left to right; House Speaker Nancy Pelosi, D.-Calif., is pushing it, and so is the Heritage Foundation. The Bush administration, however, can’t stand the idea.

Read the full article here.