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State of Industry Affairs Update

NACS president and CEO presented a state of affairs outlook on Capitol Hill and how five top issues affect the industry.
April 11, 2011

CHICAGO - NACS State of the Industry Summit attendees were the first last week to find out how convenience store operations fared in 2010. On Friday, to close out the successful event, NACS President and CEO Hank Armour shared another "state of the industry" update �" how what happens in Washington affects your business.

First up, swipe fees �" an issue that continues to suck profits from your bottom lines. The amount of profit Visa and MasterCard make off the industry �" $9 billion in 2010 �" is outrageous and obscene.

The fight on Capitol Hill continues as the industry works to protect the debit card swipe fee reforms included in the financial services overhaul law, specifically the Durbin Amendment. The banks are also lobbying hard to get Congress to delay �" which in Hill-speak means to effectively "kill" �" the reforms we advocated to put in place. In enacting these reforms, the Federal Reserve has issued proposed rules which wouldimplement either a 12 cents per transaction cap or a cost-based rate with a 12 cents per transaction hard cap and 7 cents per transaction safe harbor. An important part of the law, however, is to carve out those financial institutions with less than $10 billion in assets.

The Federal Reserve is on course to put in place its rules in July. Armour said that our goal is to thwart legislative efforts proposed in both the House and Senate that seek to delay by two years those reforms �" reforms that amount to $1.8 billion in savings for our industry per year.

Armour stressed that we, including our colleagues, co-workers and friends, must continue sending faxes and e-mails to Congress urging them to protect swipe fee reforms.

Second on the agenda is the contentious health-care reform law, or "Obamacare." Armour explained the 50-employee rule that will determine if retailers will be mandated to provide health insurance to their full-time employees. He shared a formula for determining whether an operation falls under the mandate by applying a formula outlined in NACS Magazine.

There is a bumpy road facing health care on a few fronts. State lawsuits deeming Obamacare unconstitutional are a wild card and will likely end up in the Supreme Court, and depending on the outcome of the 2012 elections, if the GOP takes control of both the House and Senate, and Obama remains in office, it��s anyone��s guess as to what direction the law will take.

Next, Armour explained the challenges and regulatory web that is being spun around renewable fuels. With 36 billion gallons of renewable fuels scheduled to make up the U.S. motor fuels supply in 2022, NACS is working to ensure retailer legal and liability protections are in place should they choose to sell new fuels, such as E15. In fact, at the same time Armour was delivering his comments, NACS Vice President of Government Relations John Eichberger was on Capitol Hill testifying on the industry��s behalf regarding the challenges facing the retail motor fuels market as it tries to accommodate the demands set forth in the Renewable Fuels Standard.

ADA compliance is not an issue retailers can ignore, warned Armour, with a myriad of new regulations hitting the books. We scratch our heads about one in particular to give retailers an idea of the threatening and extensive nature of these new regulations. For example, making sure your stores are compatible for miniature horses that are trained as seeing-eye aids (yes, the same as a seeing-eye dog). This is actually no laughing matter, because right now, we don��t have a solid answer as to how retailers can accommodate a small horse in their stores.

The fines for ADA non-compliance are hefty, and lawsuits already abound. Be on the lookout for a new NACS compliance guide to help navigate ADA regulations and ensure compliance. For more background, read more about how hundreds of new ADA regulations could mandate architectural changes at your stores in NACS Magazine.

Last but not least, FDA tobacco. One particularly alarming mandate stemming from the Department of Justice��s RICO lawsuit against tobacco manufacturers for "light" cigarette claims is the posting of "corrective statements" at a convenience store��s point of sale. To say the size and location of these signs are problematic is an understatement. The countertop signs are 18 x 30 (inches) and contain the following language:

  • We manipulated cigarettes to make them more addictive.
  • We falsely marketed low tar and light cigarettes as less harmful than regular cigarettes to keep people smoking and sustain our profits.
  • We control nicotine delivery to create and sustain smokers�� addiction, because that��s how we keep customers coming back.
  • We also add chemicals, such as ammonia, to enhance the impact of nicotine and make cigarettes taste less harsh.

Customers will obviously perceive the "we" in these corrective statements to be you, the retailer. Rest assured that NACS is working to strike out these retailer requirements.

In closing, Armour explained that advocacy is not just about stopping bad legislation on Capitol Hill; there is a return on investment. Quick example: SOT repeal, which cost retailers $250 per year for each location that sold alcohol. Since its repeal, the industry has realized an annual savings of $27 million.

And the greatest ROI produced by our industry��s advocacy efforts is realized when nothing ends up happening in Washington, as in no bad laws, regulations or harmful legislation makes it way through Congress that has a negative impact on your business.