Nopec Bill: Law Or Not?

The No Oil Producing and Exporting Cartels Act, or NOPEC, is a US Congressional bill designed to remove the state immunity shield and allow the international oil cartel, OPEC, and its national oil companies to be sued under US antitrust law for anti-competitive attempts to limit the world's supply of petroleum. Despite bipartisan support and popular sentiment against OPEC, the bill has never been enacted into law. The bill has been introduced 16 times since 2000, most recently in 2022, but has faced resistance from oil industry groups and their lobbyists. For NOPEC to become law, it would need to pass the full Senate and House and be signed by the president.

The bill would revoke the sovereign immunity of OPEC+ members, allowing the US attorney general to sue the oil cartel or its members

The No Oil Producing and Exporting Cartels Act, or NOPEC, is a bill that seeks to revoke the sovereign immunity of OPEC+ members, allowing the US attorney general to sue the oil cartel or its members. The bill is designed to address the issue that, under federal law, foreign governments cannot be sued for predatory pricing or failing to comply with federal antitrust laws. By amending the Sherman Act, NOPEC would make it illegal for any foreign state to act collectively or in combination with any other foreign state to limit the production or distribution of oil, natural gas, or any other petroleum product, set or maintain prices, or otherwise take any action that restrains trade in petroleum when such action has a direct, substantial, and reasonably foreseeable effect on the US market, supply, price, or distribution.

The bill would deny a foreign state engaged in such conduct sovereign immunity from the jurisdiction or judgments of US courts and authorise the Attorney General to bring an action in US district court to enforce the Act. This would mean that the US government could take action against price fixing by OPEC and its partner nations, holding foreign oil producers accountable for harmful price fixing. NOPEC would clarify that neither sovereign immunity nor the "Act of State" doctrine prevents a court from ruling on antitrust charges brought against foreign governments for engaging in illegal pricing, production, and distribution of petroleum products.

The bill has been introduced in various forms since 2000 and has gained bipartisan support, including from then-Senator Joe Biden and former President Donald Trump. However, it has also faced resistance from oil industry groups, such as the American Petroleum Institute, and previous versions of the bill have failed to become law due to veto threats and concerns about potential unintended consequences. Despite this, the bill continues to be reintroduced, with the most recent version advancing in the Senate Judiciary Committee in 2024.

The bill has been introduced 16 times since 2000, but has never been enacted

The No Oil Producing and Exporting Cartels Act (NOPEC) is a US Congressional bill that has been introduced 16 times since 2000 but has never been enacted. The bill seeks to amend the Sherman Antitrust Act to enable the US Department of Justice to bring lawsuits against the Organization of the Petroleum Exporting Countries (OPEC) and its partner nations for antitrust violations associated with the organisation's collective setting of oil production targets based on oil market conditions.

The NOPEC bill was first introduced in June 2000 by Senator Herb Kohl, with nine bipartisan cosponsors. The bill passed the Senate Judiciary Committee on September 21, 2000, and was reintroduced by Senator Kohl in every Congress until his retirement in 2013, passing the committee each time. The bill has also been introduced in the House of Representatives several times, with bipartisan support. Despite this support, the bill has never become law due to resistance from the oil industry and its allies, such as the American Petroleum Institute.

One of the main obstacles to the bill's passage has been the threat of a presidential veto. In 2007, the Bush administration issued a statement saying that if the bill were presented to the president, "his senior advisors would recommend he veto it." This threat of a veto led to the bill not coming to a final Senate vote in 2008, despite it having passed the House and the Senate as part of separate bills. More recently, the Obama administration also opposed the bill, with the Obama Justice Department favouring dismissal in an amicus brief supporting the "sovereign immunity" defence for international commodity producers.

Another challenge to the bill's enactment has been the concern that it could have unintended negative consequences. Some analysts have warned that passing the bill could prompt OPEC nations to take retaliatory action against American interests in their countries, including seizing energy-related plants and other assets. There is also a concern that OPEC could flood the market with oil, causing prices to plummet and hurting the US oil and gas industry. Additionally, OPEC nations could undermine the US dollar's status as the world's main reserve currency by selling oil in other currencies.

Despite these challenges, the NOPEC bill continues to be reintroduced in Congress due to its popularity among those who see it as a way to hold OPEC accountable for anticompetitive behaviour and protect US consumers from engineered oil price spikes. With rising oil and gas prices affecting the Biden administration, there may be renewed momentum to pass the bill. However, as of December 2024, the bill had not yet become law.

The bill has bipartisan support, but has faced resistance from oil industry groups

The No Oil Producing and Exporting Cartels Act, or NOPEC, is a bill that has been introduced in the US Congress several times since 2000. The bill aims to amend the Sherman Antitrust Act to enable the US Department of Justice to take action against price fixing by the Organization of Petroleum Exporting Countries (OPEC) and its partner nations. While NOPEC has enjoyed bipartisan support, it has also faced significant resistance from oil industry groups, including the top US oil lobby group, the American Petroleum Institute (API).

The bill would remove the sovereign immunity that has long protected OPEC and its members from lawsuits, allowing the US attorney general to sue OPEC or its members, such as Saudi Arabia, in federal court. This proposal has worried OPEC's de facto leader, Saudi Arabia, which has lobbied hard against the bill each time it has been introduced.

The US oil industry has also opposed NOPEC, arguing that it could hurt domestic oil and gas producers. Mike Sommers, president and chief executive of the API, has stated that NOPEC "would create further instability in the marketplace and exacerbate existing challenges in international commerce." The industry fears that NOPEC could lead to overproduction by OPEC, driving prices down so low that US energy companies struggle to boost output.

In addition to resistance from oil industry groups, NOPEC has also faced other challenges. Some analysts have warned that implementing the bill could have unintended consequences, such as retaliation from OPEC nations. For example, in 2019, Saudi Arabia threatened to sell its oil in currencies other than the dollar, undermining the dollar's status as the world's main reserve currency.

Despite these challenges, anger over soaring gasoline prices and inflation has increased the chances of NOPEC's success. With bipartisan support and rising public anger over gasoline prices, it remains to be seen if the bill will finally become law.

The bill would amend the Sherman Antitrust Act to enable the US Department of Justice to bring lawsuits against OPEC members for antitrust violations

The No Oil Producing and Exporting Cartels Act (NOPEC) is a US Congressional bill that has been introduced in various forms since 2000. The bill seeks to amend the Sherman Antitrust Act of 1890, which is a US antitrust law that prohibits anticompetitive agreements and unilateral conduct that monopolizes or attempts to monopolize the relevant market. The Sherman Act authorizes the Department of Justice to bring suits to prohibit conduct violating the Act and allows private parties injured by such conduct to bring suits for treble damages.

The NOPEC bill aims to remove the state immunity shield and allow the international oil cartel, OPEC, and its national oil companies to be sued under US antitrust law. Specifically, the bill would amend the Sherman Antitrust Act to declare it illegal for any foreign state or instrumentality to act collectively or in combination with any other foreign state or person to limit the production or distribution of oil, natural gas, or any other petroleum product, set or maintain petroleum prices, or otherwise take any action in restraint of trade for petroleum when such action has a direct, substantial, and reasonably foreseeable effect on the US market, supply, price, or distribution of petroleum.

The bill would also deny sovereign immunity to a foreign state engaged in such conduct and authorize the Attorney General to bring an action in US district court to enforce the Act. This amendment would enable the US Department of Justice to bring lawsuits against OPEC members for antitrust violations, holding them accountable for harmful price fixing and manipulation.

Despite bipartisan support for the bill in Congress, it has faced resistance from oil industry groups and veto threats from former President George W. Bush. As of December 2024, the bill has not been enacted into law. However, with rising oil and gas prices affecting consumers and businesses, there may be renewed efforts to push for the passage of the NOPEC bill and hold OPEC accountable for its impact on energy markets.

The bill has been reintroduced in 2021 and 2022, but it is unclear if it will pass

The No Oil Producing and Exporting Cartels Act, or NOPEC, is a US Congressional bill that has been reintroduced several times since 2000. The bill aims to amend the Sherman Antitrust Act to enable the US Department of Justice to take action against price-fixing by the Organization of Petroleum Exporting Countries (OPEC) and its partner nations. Specifically, NOPEC would revoke the sovereign immunity that has protected OPEC and its members from lawsuits and allow the US Attorney General to sue OPEC or its members in federal court.

Despite its reintroduction in 2021 and 2022, the fate of the NOPEC bill remains uncertain. While the bill has gained traction due to rising oil and gas prices, there are several factors that may hinder its passage into law. Firstly, the bill needs to pass the full Senate and House and be signed by the President to become law. As of 2022, it is unclear if the bill has enough support in Congress to get that far, and the White House has not indicated whether President Joe Biden supports it.

Additionally, the NOPEC bill has faced resistance from oil industry groups, such as the American Petroleum Institute, who argue that it could hurt US oil and gas producers and create instability in the marketplace. Some analysts also warn of potential unintended consequences, such as retaliation from OPEC nations or a negative impact on US-Saudi relations.

With a history of failed attempts to pass NOPEC, it remains to be seen whether the bill will succeed in becoming law. The outcome will depend on various factors, including political priorities, industry lobbying, and the potential consequences for the oil market and US foreign policy.

Frequently asked questions