Monday, June 25, 2007

Despite Veto Threat, Senate Passes Energy Bill with Price Gouging, “NOPEC” Provisions

This posting was written by John Scorza, CCH Washington Correspondent, and Jeffrey May, editor of CCH Trade Regulation Reporter.

President George W. Bush has threatened to veto an energy bill approved by the Senate on June 21 that would prohibit price gouging and subject oil cartels to U.S. antitrust laws.

The bill (H.R. 6)—approved by the Senate by a 65-27 vote—would also require auto makers to improve the fuel efficiency of American automobiles over the next decade.

The Senate must now negotiate with the House of Representatives on a final version of an energy bill.

Price Gouging

As amended by the Senate, the legislation would prohibit price-gouging during periods of energy emergencies, which would be declared by the president. The FTC would be given additional authority to investigate claims of manipulation of the oil markets.

In May, the House passed a somewhat similar measure (H.R. 1252), which also drew a veto threat from the White House.

Actions Against Foreign States

The Senate energy bill would allow the Justice Department to bring antitrust actions against foreign states—such as members of the Organization of Petroleum Exporting Countries (OPEC)—for collusive practices in setting the price or limiting the production of oil. As with the price gouging proposal, the House passed a similar measure (H.R. 2264) in May, and it too drew a veto threat.

“Objectionable Provisions”

The Bush Administration finds the price gouging and OPEC provisions among the “several objectionable provisions that make this bill unacceptable in its current form.” In a June 12 statement, the administration said that the federal government has all the legal tools necessary to address price gouging.

The administration warned that the legislation could result in price controls. “Gasoline price controls are an old—and failed—policy choice that will exacerbate shortages and increase fuel hoarding after natural disasters, denying fuel to people when they need it most.”

Regarding the “NOPEC” provision, the administration stated it would “strongly oppose any amendment that (1) intends to subject to the jurisdiction of U.S. courts the actions of foreign countries related to energy production, distribution, or pricing and (2) purports to eliminate sovereign immunity and the ‘act of state’ doctrine as defenses in such cases.”

The provision targeting OPEC would spur retaliation against U.S. firms operating abroad and discourage foreign investment in the U.S. economy, according to the administration.

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