Representative Bart Stupak (D-MI) and the House Democratic Leadership are pushing for a vote on the House floor next week to protect the American consumer from price gouging at the pump. This week a flurry of activity has ensued with representatives from all parts of the supply chain trying to fight the battle between politics and policy.
Retail Impact
From the retail perspective, NACS is asking lawmakers to stop and think about the potential consequences legislation such as Rep. Stupak’s "Federal Price Gouging Prevention Act" (H.R. 1252) could have on convenience store owners. The definitions in this legislation are insufficient to provide a retailer with the certainty that an increase in price will not result in prosecution. Consequently, retailers tell NACS that they are left to face a decision where none of the outcomes are viable alternatives for their business.
Retailers tell NACS that, due to fears they may be subject to a $150 million fine and up to 10 years in prison, they may be unwilling to increase prices in response to escalating replacement costs and forced into a below-cost selling position. Most retailers cannot survive for long in this situation, not to mention that it is already illegal in at least 16 states due to concerns about predatory pricing.
Alternatively, an operator who is unwilling or unable to absorb the losses of below-cost selling may elect the only remaining option to ensure no prosecution: close the pumps.
NACS is meeting with influential legislators from both parties at all levels of power to advocate for clarity on behalf of honest retailers. We are advocating changes to the legislation to accomplish one primary objective: let honest retailers respond to market conditions without fear of prosecution. To accomplish this objective, Congress must:
1) Provide a clear definition of what constitutes an “unconscionably excessive” price and when;
2) Provide retailers with the specific authority to factor replacement costs into their pricing decisions; and,
3) Ensure retailers who are pricing at levels consistent with a freely functioning competitive market are not violating the law.
Progress?
Legislators have been receptive to the proposals, but those making the decisions have been noncommittal. Regardless of the legislation's provisions, it is widely expected that if the title references “price gouging,” it will be approved by a large margin in the House due to the politicization of the issue.
Unfortunately, NACS is not currently sure what opportunities may exist to amend the legislation if the Democratic Leadership does not take it upon itself to do so. It is uncertain if the House Energy and Commerce Committee will be given the opportunity to consider the legislation or if it will be taken directly to the House floor for a vote. At that point, it is uncertain if any representatives will have the opportunity to offer amendments to the bill.
We do know that Rep. Stupak, who chairs the Energy and Commerce Subcommittee on Oversight and Investigations, is holding a hearing on Tuesday into the issue of price gouging. We don’t know yet if they will invite NACS to provide testimony, but the absence of a retail witness would speak volumes regarding the intention of Congress to avoid due diligence in determining the overall effects of this legislation.
In the meantime, NACS is working to secure a change in the House or potentially influencing the direction of legislation in the Senate, which, after approving legislation as an amendment to another bill, is now moving at a much slower pace. Maybe progress can happen in this chamber.
NACS Invests in an Alternative Approach
NACS has also taken steps to bring the debate to Congress through the media. In a series of paid advertisements in Capitol Hill publications, NACS is telling Congress that pricing gasoline at retail is a “No-Win Situation.”
Featuring a cartoon developed exclusively for NACS and appearing in this month's issue of NACS Magazine, the ad depicts three independent retailers who have been cited for violations of predatory pricing, price gouging and collusion because they sold gasoline to low, too high and at the same price as everyone else, respectively. The ad continues to explain how a retailer’s income represents only one percent of the price of gasoline and that more than 97 percent of convenience stores are independently owned and operated. It closes by advising, “Legislation addressing the retail gasoline market must reflect these realities.”
Furthermore, this morning's CNBC “Squawk Box” program featured an interview with Rep. Stupak and me on the implications of his legislation on small, independent retailers. I am hopeful the discussion encourages Rep. Stupak to consider amendments to his bill that will protect innocent market participants from wrongful prosecution. Again, we must wait and see. Also this morning, Jeff Lenard, NACS vice president of communications, discussed the issue on CNN.
House Votes to Expand Federal Leave Law
Meanwhile, in a world remote from gasoline prices, the House voted to expand the Family and Medical Leave Act (FMLA) as an amendment to the National Defense Authorization Act, which would provide leave for military families to deal with circumstance arising from a call to duty.
Many people – including retailers – support the spirit and intent of the FMLA and providing military families additional work flexibility; however, there is a lengthy record of problems with administering leave under the FMLA due to confusing and inconsistent regulations. The amendment is written very broadly, setting vague standards for leave, and does not adequately address many issues essential for effective implementation, which under the FMLA have led to excessive litigation.
Although well intentioned, this amendment is a significant expansion of federal leave employment law. We are hopeful that the Senate will review this expansion of a federal leave mandate to examining its unintended consequences.
Until next week, have a great weekend!
John Eichberger
Vice President, Government Relations