02 August, 2005


I asked my bro (who is now 1/3 of a lawyer) about that NOPEC Act. His response is interesting, but I'm mostly posting it here because I think it's cool that my younger brother "knows shit":
As I'm sure you've read already read, NOPEC claims that OPEC is not a governmental agency or action, but a commercial one. It's a pretty clever attack actually. The government can regulate a commercial body, but the government of a foreign nation is a sovereign entity--there's nothing they can legally do agains them. But a commercial body that's engaged in business in the US, that's a different matter. As far as their business within the US goes, the federal government can regulate it.

This is analogous to the case two years ago involving Microsoft in the EU. Microsoft is a US company, as is Sun. Yet Sun was able to bring a claim in the EU against Microsoft for anti-trust. Since both were availing themselves of the market in Europe, both could be regulated by the EU market. This is what the US federal government is essentially doing to OPEC. Their argument, as far as I can see, is that because OPEC is availing themselves of the US oil market, and in essence competing with US oil producers (however small and insignificant they are--that may even buttress their argument further: "our oil producers are bullied out by OPEC, they're doubly bad!")--they can be regulated.

It's an interstate commerce question. Congress can regulate interstate commerce--it's one of the few enumerated areas that Congress IS allowed to regulate (that's why you keep getting Congress skewing all these things as interstate commerce questions...for a great example of this, check out this case called U.S. v. Lopez. You may not understand it, but it's the standard commerce clause case out there today. You can also ask me if you have any questions about commerce clause.

But that is one area Congress can regulate. Whether or not a Court upholds it, that's a different issue. A Federal Court can very easily step in and say that NOPEC exceeds Congress' authority (as they did in the Lopez case). It's a likely scenario. However, someone has to first bring an action into court.

That's what i've been able to discern from the limited amount I read about it. I'm sure you have already read Senator DeWine's speech introducing NOPEC. If not, here's the link.




It might be a clever idea legally, but politically, WTF are they thinking? If they declare all their oil suppliers illegal, who will supply their next fix of oil. 2 months off Venezuelan oil and the US would be jonesing pretty badly.

Hi Saurabh's brother!


Posted by Dan

NOPEC is NOBRAIN. OPEC is not keeping the price of oil high. In fact the global price has been above OPEC's top price target for a couple years now, and there is nothing OPEC can do about it. In their ideal world they'd pump more to keep prices down and reduce exploration in the less economical locations. But they can't, because they are out of easy oil, their oilfields are falling apart for lack of investment, and (in Iraq), guerrillas keep the oil from flowing. Duh. 

Posted by hedgehog

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