Credit Card Interchange
In February, NACS President and CEO Hank Armour gave testimony before the House Energy and Commerce Committee hearing entitled, "The Law and Economics of Interchange Fees," that highlighted the broken market in which the credit card companies operate and the anti-competitive nature in which they set prices that secretly profiteer off of both consumers and retailers.  That was followed by a July 19 hearing in the Senate Judiciary Committee entitled "Credit Card Interchange Rates: Antitrust Concerns?"  At this hearing, NACS' Executive Committee member Bill Douglass testified on behalf of NACS and did a great job of indicating that there were INDEED anti-trust concerns.  The Merchants Payments Coalition (MPC) which NACS helped form, mounted an impressive PR and lobbying campaign in 2006 to bring the issue of interchange fees to the public and Congress' attention. MPC activities were significantly funded by donations from NACS member companies to NACS' Interchange Action Fund.  To maintain our momentum, NACS is counting on re-occurring contributions over the next several years.

Methamphetamine Legislation
This past summer, Congress passed another law aimed at curbing the illegal manufacturing of methamphetamine.  As originally passed in the Senate, the bill would have required most cold and allergy medicines to be sold by a licensed pharmacist (but without a prescription).  NACS successfully argued that this discriminated against convenience stores and hurt legitimate consumers.  The bill was modified to require strict guidelines and record-keeping for these over-the-counter sales, and waived the record-keeping requirements for single-dose sales.  NACS continued to work with the Drug Enforcement Agency to make the ensuing regulations more streamlined for retailers.

Internet Lottery Legislation
In July, the House passed legislation to curb internet gambling.  Unfortunately, the bill also would have permitted lottery tickets to be purchased on-line.  NACS lobbied heavily against this lottery provision.  Our efforts paid off as the internet lottery language was stripped from the version that passed in the Senate, and was eventually signed into law

MTBE and Ethanol
NACS' Executive Committee member Bill Douglass testified before the Senate Environment and Public Works Committee regarding the market disruptions associated with the rapid transition from MTBE to ethanol, especially throughout markets in the East. Douglass told the Committee that Congress must understand that the actions it takes, or chooses to not take, have consequences for the market. The failure of Congress to reform the liability structure affecting the fuel additive MTBE put the petroleum industry into difficult situation from which they had to remove themselves, thus creating the Spring 2006 market imbalance. The rapid removal of MTBE and the subsequent dramatic increase in demand for ethanol created temporary market outages during the transition in storage facilities and a spike in ethanol price to more than $220 per barrel. Douglass advised Congress that there was little the legislature could do to address the market conditions other than temporarily suspend the tariff on imported ethanol. He argued that by opening the borders to product imports, supplies could be supplemented enough to provide downward pressure on ethanol prices, thereby providing direct benefit to consumers. Although there was no action to remove the tariff, Douglass' testimony helped spark a heated debate in Congress regarding value of the tariffs in light of a federal mandate and tax incentives.

Boutique Fuels
NACS' GR Committee Chairman Sonja Hubbard testified before the House Energy and Commerce Committee regarding a draft boutique fuels bill that would establish a federal slate of approved fuel blends prior to completion of a comprehensive study by the Department of Energy and Environmental Protection Agency. Hubbard advised the committee that such action would be premature and advised Congress to wait for the results of the study. She further advised the Committee that the best way to address the issue of boutique fuels more aggressively than what was accomplished in the Energy Policy Act of 2005 would be to preempt the states' ability to establish their own renewable fuel mandates. Such state approaches compromise the flexibility intended by Congress when establishing the federal program and presented a new boutique fuel challenge that was ignored by Congress in 2005. Although the draft legislation under review was never introduced and the effort to address boutique fuels was put on hold pending completion of the study, Hubbard's testimony regarding state boutique fuel mandates prompted a significant debate throughout Congress and the administration regarding the future of renewable fuels programs.

Price Gouging
Price gouging was a major issue for Congress in 2006. In April, Deborah Majores, Chair of the Federal Trade Commission, testified before the Senate Commerce Committee that legislation seeking to prohibit price gouging would be detrimental to consumers. She argued that the market must permitted to respond to supply conditions without the restraint of possible prosecution in order to attract additional supplies and restore the market to a balanced condition. Her caution, however, was not received universally and Congress proceeded to take action on its own. On May 3, the House of Representatives passed a bill outlawing price gouging during emergencies and establishing both civil and criminal penalties for those guilty of price gouging at the wholesale and retail levels of trade. NACS was at the least relieved that the House decided to leave determining the definition of price gouging to the capable hands of the FTC. In July, two Senators filed amendments to outlaw price gouging and establish civil and criminal penalties. One, offered by Sen. Cantwell (D-WA) would define price gouging as charging "unconscionably excessive" prices during emergencies, but the legislation failed to elaborate regarding what would constitute a violation. The other, prepared by the Republican leadership, sought to define price gouging for what it is not. This included responding to changes in the cost of goods sold,  responding to replacement cost factors, and remaining competitive within one's market place. NACS was more comfortable with this legislation since it provided retailers with considerable mechanisms of defense to violation while allowing them to respond to market conditions as they have traditionally done.
 
Minimum Wage
On June 13, The House of Representatives Appropriations adopted a minimum wage amendment to one of the main spending bills.  This action not only slowed down the funding process for the Federal Government but signaled that there were enough votes in the House of Representatives to pass a wage increase.  Later in the summer (July 29) the House passed its version of a wage hike coupled with a reduction in the Estate Tax rate and pension reform legislation.  The Senate tried unsuccessfully to pass the House version but was unable to get the sixty votes needed for final passage.  After these votes the issue was brought to the front burner for domestic issues and was used extensively as a campaign issue in the November elections.   The House of Representatives is now expected to consider the minimum wage issue during the first week in January. Specific details on the wage hike proposal will not be known until an official proposal has been offered; however, NACS expects the bill to call for a $2.10/hr increase to $7.25 over a two-year period. The Senate will follow the lead of the House and bring up its version of a wage hike soon after the House action.  President Bush has also signaled a willingness to support a minimum wage hike in exchange for small business tax relief in the New Year.