June 19, 2007 / 10:12 PM / 12 years ago

Senate OKs plan to sue OPEC for price-fixing

WASHINGTON (Reuters) - The U.S. Senate on Tuesday approved a plan that would enable the federal government to sue OPEC for price manipulation, but the White House has threatened to veto the measure and opponents warned OPEC members could retaliate by turning off the taps.

The bill, sponsored by Democrat Herb Kohl of Wisconsin and Republican Arlen Specter of Pennsylvania, would revoke the sovereign immunity members of the Organization of the Petroleum Exporting Countries enjoy from U.S. legal action. It would allow the Justice Department to sue OPEC nations in U.S. courts.

The Senate voted 70-23 to attach the proposal to energy legislation the chamber is expected to vote on by the end of the week. The body had approved a similar measure in 2005 but it was dropped before the bill was finalized.

The House of Representatives last month voted 345-72 to approve the “No Oil Producing and Exporting Cartels Act of 2007,” or “NOPEC.” The White House has threatened to veto the measure, and even if it became law, the Bush administration’s Justice Department would have to initiate any lawsuit.

With Americans frustrated at gasoline pump prices above $3 a gallon, Congress members have called for America to insulate itself from foreign oil producers like Saudi Arabia, Venezuela and Iran.

“While OPEC enjoys its newfound riches the average American consumer suffers every time he or she visits the gas pump or pays a home heating bill,” Kohl said.

The bill’s opponents admitted that it was popular but warned that OPEC nations — source of about a third of the world’s oil — could reciprocate and sue the United States in their courts.

“This is one of those feel-good amendments where you can tell your constituents you struck a blow for freedom against OPEC,” said Sen. Jeff Bingaman, chairman of the Senate Energy Committee. “But they would do the same thing to us.”

Sen. Pete Domenici of New Mexico, the energy panel’s senior Republican, said the plan would be unenforceable and would hurt U.S. consumers more than it would OPEC.

“OPEC producers could just decide not to sell oil to us any longer,” Domenici said. “They would suffer the loss of some profits but our entire economy could come to a grinding halt.”

The United States, the world’s biggest crude oil consumer, relies on imports for about 60 percent of its daily needs. A large slice of U.S. imports come from non-OPEC members like Canada and Mexico, but OPEC members like Venezuela, Nigeria and Saudi Arabia supply significant quantities.

The White House has been hesitant to chide OPEC even with U.S. crude oil futures prices close to $70 a barrel.

If the bill becomes law, it would give the Justice Department the authority to sue oil cartels, and the measure is aimed squarely at the 12-member OPEC group.

A labor group sued OPEC in 1978 under the Sherman Antitrust Act, but a U.S. appeals court rejected the case in 1981 on the grounds that OPEC’s members were immune to lawsuits because their decisions were “acts of state” on behalf of foreign governments.

The House and Senate plans would revoke that immunity and allow the Justice Department to file a lawsuit if it sees fit.

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