[Senate Report 110-68]
[From the U.S. Government Printing Office]



                                                       Calendar No. 160
110th Congress                                                   Report
                                 SENATE
 1st Session                                                     110-68

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



 
           NO OIL PRODUCING AND EXPORTING CARTELS ACT OF 2007

                                _______
                                

                  May 22, 2007.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 879]

    The Committee on the Judiciary, to which was referred the 
bill (S. 879), to amend the Sherman Act to make oil-producing 
and exporting cartels illegal, having considered the same, 
reports favorably thereon without amendment and recommends that 
the bill do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Need for S. 879......................................1
 II. Legislative History and Committee Consideration..................6
III. Section-by-Section Analysis......................................7
 IV. Cost Estimate....................................................8
  V. Regulatory Impact Statement......................................9
 VI. Changes in Existing Law..........................................9

                     I. Purpose and Need for S. 879


                            A. INTRODUCTION

    The purpose of S. 879, the No Oil Producing and Exporting 
Cartels Act of 2007 (``NOPEC'' Act), is to subject to U.S. 
antitrust law foreign nations acting as cartels to raise the 
price of petroleum products in the United States through 
anticompetitive means. This legislation will make it illegal 
for any foreign state, or any instrumentality or agent of a 
foreign state, to act collectively with another foreign state, 
or any instrumentality or agent of a foreign state, to limit 
the production or set the price for oil, natural gas, or any 
petroleum product, or take any other action in restraint of 
trade for such product when the action has a direct, 
substantial and reasonably foreseeable effect on the market for 
oil, natural gas, or any petroleum product in the United 
States. This legislation will authorize the Attorney General to 
file suit against nations or other entities that engage in such 
activity. In addition, it will expressly specify that the 
doctrines of sovereign immunity and ``act of state'' do not 
exempt nations that participate in oil cartels from antitrust 
law.

                        B. NEED FOR LEGISLATION

1. Factual Background

    The actions of the Organization of Petroleum Exporting 
Countries (OPEC) oil cartel to have limit the supply of crude 
oil in order to raise prices directly caused the price of oil, 
and therefore gasoline, home heating oil, and other petroleum 
products to increase drastically, harming millions of American 
consumers and the U.S. economy generally. The Federal Trade 
Commission has estimated that 85% of the variability of the 
price of gasoline is caused by changes in the worldwide price 
of crude oil.\1\ The worldwide price of crude oil is, in turn, 
determined by supply limitations and supply quotas imposed by 
OPEC. As of May 4, 2007, the average worldwide price of crude 
oil was more than $63 per barrel, an increase of 16% from the 
price in the first week of January 2007, and an increase of 80% 
from the beginning of January 2005.\2\ The retail price of 
gasoline reached record levels in the United States in the last 
year, with prices for regular unleaded frequently approaching 
(and sometimes exceeding) $3.00 per gallon. While prices 
temporarily receded last fall, the general trend has been 
significantly upwards, and prices continue to rise even today. 
On May 7, 2007, national average gasoline prices stood at more 
than $3.00 per gallon, a 30% increase since the beginning of 
the year.\3\
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    \1\ Testimony of William E. Kovacic, General Counsel, Federal Trade 
Commission at Hearing of the Subcommittee on Antitrust, Competition 
Policy and Consumer Rights, Senate Judiciary Committee, April 7, 2004. 
(S. Hrg. 108-604, Serial No. J-108-85 at page 15.)
    \2\ Data from Weekly Petroleum Status Report, U.S. Energy 
Information Administration, found at http://www.eia.doe.gov/pub/
oil_gas/petroleum/data_publications/weekly_petroleum_status _report/
current/pdf/table13.pdf.
    \3\ Data from U.S. Energy Information Administration found at 
http://tonto.eia.doe.gov/oog/ftparea/wogirs/xls/pswrgvwall.xls#'1-
Regular Conventional'!A1.
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    As the Committee has examined gas price changes, one fact 
has remained consistent--any move downwards in price ends as 
soon as OPEC decides to cut production. The statement of the 
oil cartel's leaders confirms that this is their intent. 
Referring to the 18% rise in worldwide crude oil prices since 
the start of 2007, OPEC President Mohammed al-Hamli commented 
``we had a bad situation at the beginning of the year. It is 
much better now.'' The difference was the combined output cuts 
of 1.7 million barrels of oil a day adopted by OPEC last 
October and December, which had the effect of driving up crude 
oil prices and, thus, the price of gasoline in the U.S.
    The consequence for our economy and American consumers of 
the actions of the oil cartel are serious and growing. 
Americans are forced to spend more of their hard-earned money 
when they visit the gas pump as a result of rising prices. 
Higher oil prices also harm our economy by driving up the cost 
of transportation and shipping. These costs are then passed on 
to consumers in the form of higher prices for manufactured 
goods. Higher oil prices also mean consumers and businesses 
must pay higher heating bills in the winter and higher cooling 
bills in the summer.

2. Need for Change to Law

    The blatantly anti-competitive conduct by the oil cartel 
violates the most basic principles of fair competition and free 
markets enshrined in our antitrust law for over a century. 
There is no doubt that if OPEC were a group of international 
private companies rather than foreign governments, their 
actions would constitute an illegal price fixing scheme. 
Cartels, in the words of the U.S. Supreme Court, are the 
``supreme evil of antitrust.'' Verizon Commc'ns, Inc. v. 
Trinko, 540 U.S. 398, 408 (2004). ``Under the Sherman Act a 
combination formed for the purpose and with the effect of 
raising, depressing, fixing, pegging, or stabilizing the price 
of a commodity in interstate or foreign commerce is illegal per 
se.'' United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 223 
(1940). Because the law of supply and demand establishes that 
an agreement to limit output is tantamount to an agreement to 
fix price, courts have held per se illegal agreements to limit 
supply, limit production, or set quotas just as agreements to 
fix price. Hartford-Empire Co. v. United States, 323 U.S. 386, 
406-407 (1945); American Bar Association Section of Antitrust 
Law, Antitrust Law Developments (4th Ed. 1997) at pages 82-83.
            a. Sovereign Immunity
    This NOPEC legislation is necessary, however, because OPEC 
members have used the shield of ``sovereign immunity'' to 
escape accountability for their price-fixing activities under 
antitrust law. In International Ass'n of Machinists and 
Aerospace Workers v. OPEC, 447 F. Supp. 553 (C.D. Cal. 1979), 
aff'd 649 F.2d 1354 (9th Cir. 1981), a federal district court 
ruled that OPEC and its member nations were immune from suit 
under the antitrust laws pursuant to the Foreign Sovereign 
Immunities Act, 28 U.S.C. 1330 et seq. (FSIA). This decision 
has been widely criticized.\4\ The FSIA already recognizes that 
the ``commercial'' activity of nations is not protected by 
sovereign immunity. 28 U.S.C. 1602 (a)(2). And it is hard to 
imagine an activity that is more obviously commercial than 
selling oil for profit, as the OPEC nations do. Thus, many 
commentators argue that sovereign immunity should not protect 
the activities of OPEC member nations.\5\ The legislation 
settles this issue, overruling International Ass'n of 
Machinists by (i) expressly establishing that the sovereign 
immunity doctrine will not divest a U.S. court from 
jurisdiction to hear a lawsuit alleging that members of an oil 
cartel are violating U.S. antitrust law, and (ii) amending the 
FSIA to exempt expressly antitrust actions under this 
legislation from the immunity granted to foreign nations under 
the FSIA.
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    \4\ See, e.g., Comment, Slaying Goliath: The Extraterritorial 
Application of U.S. Antitrust Law to OPEC, 50 Amer. U. Law Rev. 1321, 
1361 (2001) (``Judge Hauk's rationale [in International Ass'n of 
Machinists] . . . was flawed''); see also, infra, n. 5.
    \5\ See A. Rueda, Price-Fixing at the Pump--Is the OPEC Oil 
Conspiracy Beyond the Reach of the Sherman Act 24 Hous. J. Int'l Law 1, 
58 (2001) (``The Crucial Question--Does OPEC Conduct Commercial 
Activities? The Clear Answer--Yes''); Comment, Slaying Goliath: The 
Extraterritorial Application of U.S. Antitrust Law to OPEC, supra, 50 
Amer. U. Law Rev. at 1361 (``The nature of OPEC's conduct was price-
fixing, and, given OPEC's overriding concern of serving its own 
economic interests, it is indeed manifest that this conduct qualifies 
as commercial under FSIA''); Note, The Applicability of the Antitrust 
Laws to International Cartels Involving Foreign Governments, 91 Yale 
Law J. 765 (1982).
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            b. Act of State Doctrine
    Another obstacle to the application of antitrust laws 
against OPEC member nations is the act of state doctrine, which 
declares that ``a United States court will not adjudicate a 
politically sensitive dispute which would require the court to 
judge the legality of the sovereign act of a foreign state.'' 
Int'l Ass'n of Machinists, 649 F.2d at 1358; see Underhill v. 
Hernandez, 168 U.S. 250, 252 (1897). The act of state doctrine 
``is a prudential doctrine designed to avoid judicial action in 
sensitive areas.'' Int'l Ass'n of Machinists, 649 F.2d at 1359. 
The Ninth Circuit Court of Appeals upheld the decision 
dismissing the antitrust case against OPEC member nations in 
International Ass'n of Machinists based on its application of 
the act of state doctrine. Id. at 1361.
    Congress has overruled the act of state doctrine in other 
contexts. For example, a statute known as the ``Hickenlooper 
Amendment'' \6\ overturned the Supreme Court's application of 
the act of state doctrine in Banco National de Cuba v. 
Sabbatino, 376 U.S. 398 (1964), in which the Court refused to 
adjudicate the legality of expropriation by the Cuban 
government of property owned by U.S. nationals. The Fifth 
Circuit Court of Appeals recognized that the Hickenlooper 
Amendment ``legislatively overruled'' the application of the 
act of state doctrine to bar lawsuits asserting the invalidity 
of the Cuban confiscations. Indus. Inv. Dev. Corp. v. Mitsui & 
Co., Ltd., 594 F.2d 48, 57 n. 7 (5th Cir. 1979); see also, West 
v. Multibanco Comermex, S.A., 807 F.2d 820, 829 (the 
Hickenlooper Amendment ``overrides the judicially developed 
doctrine of act of state'').
---------------------------------------------------------------------------
    \6\ The Hickenlooper Amendment is section 301(d)(4) of the Foreign 
Assistance Act, codified as 22 U.S.C. Sec. 2370(e)(2).
---------------------------------------------------------------------------
    Overriding the act of state doctrine with respect to the 
actions of member nations of an oil cartel designed to raise 
the price of crude oil is consistent with the commercial act 
exception to the act of state doctrine recognized by the Court 
in Alfred Dunhill of London v. Republic of Cuba, 425 U.S. 682, 
703-704 (1976), and the Second Circuit in Hunt v. Mobil Oil 
Co., 550 F.2d 68 (2d Cir.), cert. denied, 434 U.S. 984 (1977). 
As Justice Stevens wrote in Alfred Dunhill, ``subjecting 
foreign governments to the rule of law for their commercial 
dealings presents a much smaller risk of affronting their 
sovereignty than would an attempt to pass on the legality of 
their government acts.'' 425 U.S. at 703. Courts have on many 
occasions refused to apply the act of state doctrine to block 
antitrust lawsuits, ruling that antitrust policy overrides the 
prudential concerns motivating the act of state doctrine.\7\
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    \7\ See, e.g., United States v. Sisal Sales Corp., 274 U.S. 268 
(1927) (holding that conspiracy affecting U.S. commerce was not immune 
from judicial review under the Sherman Act even though the conspiracy 
was due in part to discriminatory foreign legislation); see also Envtl. 
Tectonics v. W.S. Kirkpatrick, Inc., 847 F.2d 1052 (3rd Cir. 1988) 
(holding that act of state doctrine does not bar inquiry into 
defendant's use of illegal tactics to influence the awarding of a 
military procurement contract by a foreign government); Indus. Dev. 
Corp. v. Mitsui, 594 F.2d 48 (5th Cir. 1979) (holding that act of state 
doctrine does not preclude Sherman Act claim brought by American 
corporation against Japanese corporation for conspiring to have 
Indonesian government deny timber concession); Williams v. Curtiss-
Wright Corp., 694 F.2d 300 (3rd Cir. 1982) (holding that act of state 
doctrine does not stop court from examining motives of foreign 
government in refusing to purchase jet engines from plaintiff). As the 
court in Williams notes, ``the act of state doctrine should not be 
applied to thwart legitimate American regulatory goals in the absence 
of a showing that adjudication may hinder international relations . . . 
in antitrust litigation of American commerce, there is a public 
interest in clearing monopolistic activities from the channels of 
American commerce, even though some of the conduct occurred in foreign 
countries.'' 694 F. 2d at 304.
---------------------------------------------------------------------------
    Accordingly, the bill overrides the act of state doctrine 
in this context and declares that it shall not bar a court from 
adjudicating an antitrust lawsuit to enforce the NOPEC 
legislation. It expressly states that ``[n]o 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 legislation. In sum, under this bill, 
Congress has determined that the policy goal of preventing 
anti-competitive international cartels that seriously harm 
American consumers by limiting the supply of a vital commodity, 
like petroleum, makes it appropriate for U.S. courts to 
adjudicate antitrust lawsuits against member nations in such a 
cartel, and outweighs the prudential concerns motivating the 
act of state doctrine.
            c. Extraterritorial Application of U.S. Antitrust Law
    Extraterritorial application of U.S. antitrust law is 
permissible under current law as long as the conduct produces a 
substantial effect in the United States. As the Supreme Court 
has explained, ``it is well established by now that the Sherman 
Act applies to foreign conduct that was meant to produce and 
did in fact produce some substantial effects in the United 
States.'' Hartford Fire Ins. Co. v. California, 509 U.S. 764, 
796 (1993); see also, 1995 Department of Justice and Federal 
Trade Commission Antitrust Enforcement Guidelines for 
International Operations, Section 3.1 (``Anticompetitive 
conduct that affects U.S. domestic or foreign commerce may 
violate the U.S. antitrust laws regardless of where such 
conduct occurs or the nationality of the parties involved.'').
    Consistent with these principles, this legislation 
expressly states that collective action to limit production or 
fix the price of crude oil or any petroleum product by any 
foreign state is illegal if ``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.'' Crude oil is a fungible commodity and the 
price is set on the world market. The U.S. imports 60% of its 
crude oil needs \8\ and there can be no doubt that the actions 
of OPEC or any other oil cartel will have a ``direct, 
substantial, and reasonably foreseeable effect'' on the supply 
and price of oil and petroleum products within the United 
States. Therefore, under the language of the new section 7A(a) 
of the Sherman Act to be added by this legislation, the supply 
limiting (or price fixing) actions of the member nations of 
OPEC (or any similar cartel) plainly would be reachable.
---------------------------------------------------------------------------
    \8\ Date from U.S. Energy Information, found at http://
www.eia.doe.gov/neic/quickfacts/quickoil.html.
---------------------------------------------------------------------------

                   C. PROVISIONS OF NOPEC LEGISLATION

    The provisions of this legislation are simple and 
straightforward. The bill adds a new section 7A to the Sherman 
Act. Section 1 of the existing Sherman Act declares that every 
``contract, combination . . . or conspiracy in restraint of 
trade'' is illegal. The new section 7A(a) added by this 
legislation makes it illegal 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'' . . .
          ``(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.''
    The action of such a cartel must have 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'' in order to violate 
section 7A of the Sherman Act.
    The new section 7A(b) of the Sherman Act specifies that a 
foreign nation engaged in an oil cartel shall not be immune 
under the doctrine of sovereign immunity from the jurisdiction 
of U.S. courts to enforce this statute. The new section 7A(c) 
likewise provides that 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.''
    The new section 7A(d) of the Sherman Act added by this 
legislation only authorizes the Attorney General to enforce 
this statute. Versions of this legislation introduced in prior 
Congresses had also allowed enforcement by the Federal Trade 
Commission; however, in the sponsors' view, enforcement should 
be limited to the executive branch due to the foreign policy 
implications of enforcement actions under this legislation.

                               D. SUMMARY

    The most fundamental principle of free market competition 
is that competitors cannot be permitted to conspire to limit 
supply or fix prices. This tenet is central to full and fair 
competition. This legislation will make clear that the actions 
of nations and their agents to limit supply and fix prices of 
oil, natural gas and other petroleum products to affect the 
U.S. market violates U.S. antitrust law, and it will authorize 
the Attorney General to enforce antitrust law against such 
nations, and prevent technical legal doctrines such as 
sovereign immunity and act of state from preventing actions for 
redress.

          II. Legislative History and Committee Consideration

    The NOPEC legislation was first introduced in the 106th 
Congress by Senator Kohl on June 22, 2000 (S. 2778). The bill 
had nine co-sponsors (Senators DeWine, Leahy, Specter, 
Grassley, Feingold, Thurmond, Schumer, Lieberman and Smith). It 
was reported favorably without amendment by the Committee on 
the Judiciary on September 21, 2000. No further action was 
taken on the NOPEC bill in the 106th Congress.
    The NOPEC legislation was introduced again in the 107th 
Congress by Senator Kohl on March 30, 2001 (S. 665). The bill 
had seven co-sponsors (Senators DeWine, Leahy, Specter, 
Grassley, Feingold, Thurmond and Schumer). It was referred to 
the Committee on the Judiciary. No further action was taken on 
the NOPEC bill in the 107th Congress.
    The NOPEC legislation was introduced again in the 108th 
Congress by Senator DeWine on April 1, 2004 (S. 2270). The bill 
was co-sponsored by Senator Kohl and 13 other Senators 
(Senators Leahy, Specter, Grassley, Feingold, Schumer, Coleman, 
Durbin, Boxer, Wyden, Levin, Snowe, Dayton and Corzine). A 
hearing on the bill titled ``Crude Oil: The Source of High Gas 
Prices?'' was held at the Judiciary Committee's Subcommittee on 
Antitrust, Competition Policy and Consumer Rights on April 7, 
2004. The bill was reported favorably without amendment by the 
Committee on the Judiciary on April 22, 2004. No further action 
was taken on the NOPEC bill in the 108th Congress.
    The NOPEC legislation was introduced again in the 109th 
Congress by Senator DeWine on March 8, 2005 (S. 555).\9\ The 
bill was co-sponsored by Senator Kohl and 15 other Senators 
(Senators Leahy, Specter, Grassley, Feingold, Schumer, Durbin, 
Snowe, Levin, Wyden, Boxer, Corzine, Dayton, Coburn, Mikulski 
and Stabenow). The bill was reported favorably without 
amendment by the Committee on the Judiciary on April 14, 2005. 
On June 21, 2005, S. 555 was offered as an amendment to the 
Energy Policy Act of 2005, H.R. 6, and passed the Senate by 
voice vote on that date. This amendment was not included in the 
version of H.R. 6 that passed the House of Representatives. The 
NOPEC bill as an amendment to H.R. 6 was removed from H.R. 6 by 
the House-Senate Conference Committee.
---------------------------------------------------------------------------
    \9\ The NOPEC bill as introduced in the 106th, 107th, 108th and 
109th Congresses was identical to the current version of the bill, with 
the one exception that these earlier versions authorized the Federal 
Trade Commission to bring suit to enforce its provisions. The current 
version of the bill does not authorize the Federal Trade Commission to 
enforce its provisions.
---------------------------------------------------------------------------
    On March 14, 2007, Senator Kohl introduced the No Oil 
Producing and Exporting Cartels Act of 2007 (S. 879). The 
legislation has 12 co-sponsors (Senators Leahy, Specter, 
Grassley, Feingold, Schumer, Durbin, Snowe, Coburn, Boxer, 
Levin, Lieberman and Sanders). The Committee on the Judiciary 
considered the bill on April 25, 2007, and agreed to report it 
favorably without amendment by unanimous consent.

                    III. Section by Section Analysis

    Section 1 contains the short title of the No Oil Producing 
and Exporting Cartels Act of 2007.
    Section 2 amends the Sherman Act, 15 U.S.C. Sec. Sec. 1 et 
seq., by adding a new section 7A. References below are to 
subsections (a) through (d) of this new section 7A--
    Subsection (a) states that 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, or 
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.
        Subsection (a) also provides that the ``action, 
        combination, or collective action'' must have a 
        ``direct, substantial and reasonably foreseeable 
        effect'' on the U.S. market for oil, natural gas, or 
        other petroleum product to be within the ambit of 
        section 7A of the Sherman Act.
    Subsection (b) provides that a foreign nation engaging in 
conduct in violation of subsection (a) shall not be immune 
under the doctrine of sovereign immunity from the jurisdiction 
or judgments of U.S. courts to enforce this statute.
    Subsection (c) provides that 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.
    Subsection (d) authorizes the Attorney General of the 
United States to enforce this section in any district court of 
the United States.
    Section 3 amends the Federal Sovereign Immunities Act, 28 
U.S.C. Sec. 1605, to add an action brought under section 7A of 
the Sherman Act to the list of circumstances under which a 
foreign state is not immune from the jurisdiction of U.S. 
courts.

                           IV. Cost Estimate

    The Committee sets forth, with respect to the bill, S. 879, 
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 4, 2007.
Hon. Patrick J. Leahy, Chairman,
Committee on the Judiciary,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 879, 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.
            Sincerely,
                                           Peter R. Orszag,
                                                          Director.
    Enclosure.

S. 879--No Oil Producing and Exporting Cartels Act of 2007

    S. 879 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 project the cost of implementing S. 879 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 S. 879 could cost up to $4 million per year, 
subject to appropriation of the necessary funds.
    S. 879 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 S. 879 
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 the amount of any 
penalties that might be collected by federal agencies.
    S. 879 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.
    The CBO staff contact for this estimate is Daniel Hoople. 
This estimate was approved by Peter H. Fontaine, Deputy 
Assistant Director for Budget Analysis.

                     V. Regulatory Impact Statement

    In compliance with rule XXVI of the Standing Rules of the 
Senate, the Committee finds that no significant regulatory 
impact will result from the enactment of S. 879.

                      VI. Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 879, as reported, are shown as follows (new matter is 
printed in italic, and existing law in which no change is 
proposed is shown in roman type):

              SHERMAN ACT (15 U.S.C. Sec. Sec. 1, ET SEQ.)


SEC. 7A. OIL PRODUCING CARTELS.

    (a) In General.--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) Sovereign Immunity.--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) Inapplicability of Act of State Doctrine.--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) Enforcement.--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.'.

   TITLE 28, UNITED STATES CODE, PART IV, CHAPTER 97. JURISDICTIONAL 
                      IMMUNITIES OF FOREIGN STATES

    * * *
    Section 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--
    * * *
; or
          (8) in which the action is brought under section 7A 
        of the Sherman Act.