The past year has certainly been exciting here in our nation’s capital. We began 2019 with the Democratic party taking control of the House of Representatives and a government shutdown in January, and we end 2019 with an impeachment inquiry. Despite these dramatic events, the Trump Administration and Congress have managed to work on a few policy areas affecting the convenience and fuel retailing industry. Throughout the year, the NACS government relations team has promoted good policy initiatives and protected against unnecessary and harmful legislation and regulations. Here’s a recap of a few of the issues that have an impact on our industry.
(Note: This article reflects updates as of October 28, 2019.)
Fuels: E15 and Reforming the Renewable Fuel Standard Compliance System
In March, the Environmental Protection Agency (EPA) released its proposal to allow the year-round sale of E15 and several initiatives to reform the Renewable Identification Number (RIN) compliance system under the Renewable Fuel Standard. While NACS supported allowing the sale of E15 throughout the year, some of the proposed reforms were problematic. In May, the EPA finalized its proposal and heeded the recommendations of NACS and other key industry stakeholders to focus on enhanced disclosure to the RIN system. The final rule helped the industry by allowing those fuel retailers who wish to sell E15 the ability to do so all year. The rule also provided more transparency and disclosure to the RIN system.
Electric Vehicles and Electric Charging Infrastructure
The change in House leadership also led to changes in legislative priorities. One of those priorities is to pass legislation that will reduce greenhouse gas emissions and decarbonize our economy by moving away from automobiles powered by fossil fuels to electric vehicles. As policymakers push the electrification of our transportation system by incentivizing and investing in electric vehicles and electric-charging infrastructure, NACS is working with key stakeholder groups to promote competition and private sector solutions to transform transportation technologies and ensure fuel retailers have the same opportunity to provide these energy sources to consumers as any other industry. NACS has participated in roundtable discussions and stakeholder meetings held by several congressional committees. NACS also submitted letters and comments to several committees seeking input on climate change legislation and legislation that would provide incentives to build electric-charging infrastructure.
Throughout the year, the NACS government relations team has promoted good policy initiatives and protected against unnecessary and harmful legislation and regulations.
Highway and Infrastructure Legislation
As Congress deliberates highway and infrastructure legislation, NACS is part of a broad coalition to stop efforts to allow tolling on existing federal highways and to keep the current ban on rest area commercialization in place. The coalition participated in hearings and stakeholder meetings and submitted comments to House and Senate committees. Earlier this year, the Senate Committee on Environment and Public Works marked up its version of a highway bill. The coalition was successful in preserving the ban on rest area commercialization, and no language was included to expand tolling on federal highways. The House Committee on Transportation and Infrastructure continues to work on its version of a highway and infrastructure bill.
Privacy and Data Security
In response to congressional efforts to create a federal privacy law, NACS helped co-found the Main Street Privacy Coalition. It brings together a broad array of national trade associations representing businesses that line America’s Main Streets, including convenience retailers, grocery stores, home builders, realtors, hotels, restaurants and truck stops. The coalition developed principles that any bill should adopt, hosted a congressional briefing and participated in numerous congressional meetings and roundtable discussions. House and Senate committees continue to hold hearings and seek input from all industries and organizations.
Payments Security and Innovation
NACS, along with other retail trades and two debit networks, launched the Secure Payments Partnership (SPP) in June 2018. The primary focus of the SPP is to promote a more secure, transparent and innovative payments market. This year, NACS and the SPP met with congressional champions and stakeholders and worked to build a legislative framework.
Faster Payments and Real-Time Settlement
The Federal Reserve sought public comment last year on potential actions to develop a real-time payment service. NACS filed comments in support of the Federal Reserve developing this type of system because it would promote ubiquitous, safe and faster payments in the United States. In July, NACS and other retail trade associations sent letters to both members of Congress and to the Board of Governors of the Federal Reserve urging them to support the Fed’s proposal. In August, the Federal Reserve Board officially announced that it will develop an around-the-clock real-time payment and settlement service, called the FedNow Service, to support faster payments. NACS filed comments last month supporting the development of FedNow and urged the Federal Reserve to develop its system as expeditiously as possible, to prioritize security and interoperability and to consider the needs of all players in the payments ecosystem, including end-users such as convenience stores.
FDA Action on E-Cigarettes
In March, the Food and Drug Administration (FDA) released draft guidance that would effectively ban fruity flavored e-cigarettes in convenience stores while allowing them to be sold in “adult-only” stores, such as vape shops, and on the internet. According to a study by the American Journal of Health Promotion, an adolescent is more than 100 times as likely to purchase an e-cigarette at an adult-only store as a convenience store. Led by Representative Trey Hollingsworth (R-IN), 46 members of the House of Representatives submitted a formal comment letter to the FDA expressing their concerns about the proposed retail restrictions. NACS also filed a formal comment letter on behalf of the industry.
In early September, President Trump announced that the FDA intends to finalize its draft guidance and will ban non-tobacco-flavored e-cigarettes, including mint and menthol. Notably, the guidance is expected to be applied equally across all retail channels. NACS has met with the Trump Administration more than a dozen times to oppose any policy that disadvantages convenience stores while giving an upper hand to our competitors.
Closing the Online Loophole for E-Cigarettes
The internet is the most common retail source of e-cigarettes to minors. Following the NACS Day on the Hill, where members of the c-store industry asked for legislation to close the online loophole of e-cigarette sales to youth, both the House and Senate introduced The Preventing Online Sales of E-Cigarettes to Children Act. The bill seeks to prevent minors from purchasing e-cigarettes over the internet by requiring online sellers of e-cigarettes to ensure that the delivery carrier verifies the the recipient’s age upon delivery. The legislation also requires online sellers to collect and remit the appropriate taxes. The lead sponsors of the Senate bill (S. 1253) are Senators Dianne Feinstein (D-CA), John Cornyn (R-TX) and Chris Van Hollen (D-MD), and the lead sponsors of the House bill (H.R. 3942) are Representatives Rosa DeLauro (D-CT) and Kelly Armstrong (R-ND). In late October, the House of Representatives passed their version of the bill by voice vote. It now awaits consideration by the Senate.
Supplemental Nutrition Assistance Program (SNAP) Variety
In April, the Food and Nutrition Service (FNS) issued a proposed rule to update the definition of “variety” of food in the Supplemental Nutrition Assistance Program (SNAP). NACS had been awaiting the proposal since Congress first directed the agency to rewrite the definition in May 2017 because the current definition is unworkable for convenience stores and small format retailers. NACS and dozens of retailers filed comments expressing support for the proposal because a broader definition makes it easier for retailers to participate in the program, ensuring the greatest access to food for SNAP beneficiaries.
FNS is currently reviewing all public comments as it writes its final definition of “variety.”
SNAP FOIA CASE
On April 22, the Supreme Court heard arguments in the case: Food Marketing Institute v. Argus Leader Media. The Argus Leader, a newspaper in Sioux Falls, South Dakota, has argued that the public has a right to know how and where taxpayer dollars are being spent in the $65 billion antihunger program under the Freedom of Information Act (FOIA). However, NACS and other retailers have argued that store-level SNAP sales data (as opposed to aggregate program-wide data) essentially amount to a trade secret and releasing the data would harm retailers. NACS filed an amicus brief in support of FMI’s position, along with the National Grocers Association and The National Retail Federation. On June 24, the Supreme Court ruled 6-3 against the newspaper, finding that the SNAP sales data are confidential and sharing them could harm the companies. In response, several senators introduced S. 2220, the Open and Responsive Government Act of 2019. The bill contains a provision that would reverse the Supreme Court’s recent decision. NACS joined other trade organizations in sending a joint letter expressing concerns with the bill this fall.
Throughout this year, NACS has been engaged with the Department of Labor (DOL) as it moved forward with two rulemakings important to our industry. The first, and likely most impactful, is what is often referred to as the “overtime rule.” The Obama Administration had more than doubled the salary threshold for this rule before a federal judge invalidated that move back in 2016. The Trump Administration recently finalized a much more reasonable update to the rule, increasing the salary threshold from $455 per week to $684 per week. The changes are in keeping with the comments NACS government relations staff filed with the department and shared with DOL and Office of Management and Budget (OMB) staff earlier this year. NACS government relations staff also met with the department and OMB and filed comments related to DOL’s review of the Joint Employer Rules, which determine if an employer has any liability over a shared employee.
The NACS government relations team remains actively involved in a coalition seeking to fix an error in the tax reform law which is impacting renovations of convenience stores that do not sell gas. A typo in the drafting of that law reverted such companies’ ability to depreciate renovation costs to 39 years, rather than 15, and blocked them from being able to take part in 100% expensing for the first five years of the tax law. While significant bipartisan support exists to fix this so-called “retail glitch,” larger political concerns around the law have prevented action so far.
In January 2019, the Department of Justice (DOJ), responding to congressional inquiries partially spurred by NACS, reversed a 2011 opinion which had allowed all forms of gambling online except sports betting to move forward. NACS has long held that the Wire Act prohibits all online gaming, including lotteries. NACS has signed onto briefs in support of the DOJ in related court cases and successfully helped to stop appropriations amendments meant to prevent the DOJ from moving forward with its decision. Meanwhile, NACS government relations staff continue to work with our members and partner organizations to gauge the impact on retail stores in states which have moved ahead with online lotteries despite the DOJ decision.