As we enter the summer months, Congress seems to have taken the issues catalogue off the NACS bookshelf and scheduled a slew of hearings.

Tobacco Hearings
Last week, on April 24, the House Committee on Oversight and Government Reform, Subcommittee on Federal Workforce, Postal Service, and the District of Columbia held a hearing that focused on prohibiting certain tobacco products for transport by the Postal Service. Rep. John McHugh (R-NY) has introduced H.R. 2932, which would make cigarettes, smokeless tobacco, and roll-your-own tobacco “non-mailable matter.” Under this bill, tobacco products could not be deposited in the mail or carried or delivered through the mail. 

All members of the committee present at the hearing expressed their support of this legislation. Rep. Eleanor Holmes Norton (D-DC) stated that even if the proposed bill forced the Postal Service to shift resources away from child pornography and mail theft, such a shift was necessary.  Norton noted that unlike cigarettes, child pornography and mail theft will not kill you. Chairman Davis stated that “the price can’t be too high when it comes to reducing smoking.”  

In a sign that timing might be coming due for legislation to address regulation and taxation issues affecting remote sales of cigarettes, all of the members in attendance generally expressed concern regarding access to tobacco products by minors and violations of existing laws by internet vendors. Additionally, all of the members noted that the sale of cigarettes over the internet has resulted in significant revenue loss for their states. The hearing appeared to be designed so that Members could express their support of the bill rather than ask thought provoking questions of the witnesses. While members did not indicate when they will move the bill forward, overall, there was a strong sense of support for Congress

Then, this week, on May 1, the House Judiciary Subcommittee on Crime, Terrorism and Homeland Security held a hearing regarding two pieces of legislation that seek to snuff out black market sales of tobacco products. H.R. 4081, the Prevent All Cigarette Trafficking Act of 2007 (PACT Act), introduced by Rep. Anthony Weiner (D-NY), and H.R. 5689, the Smuggled Tobacco Prevention Act of 2008 (STOP Act), introduced by Rep. Lloyd Doggett (D-TX), were highly praised by both sides of the aisle as a way to combat the issues that are a result of illegal sales of tobacco products. The main concerns both pieces of legislation address are the loss of millions of dollars of tax revenue at the federal, state and local levels, the easy access Internet sellers provide to minors, and the related ties that smuggler’s profits have to terrorist organizations. 

The primary focus of the hearing was on the PACT Act which would strengthen existing law (the Jenkins Act which requires vendors selling products across state lines in non-face-to-face transaction to provide the state into which they are selling product a list of customers to enable that state to seek collection of excise taxes) by making violations a felony instead of a misdemeanor, not allowing cigarettes and smokeless tobacco products to be mailed through the U.S. Post Office, and empowering the states to enforce federal law against out-of-state sellers who are shipping cigarettes into the state. It would also require internet and remote sellers to verify the age of the purchaser through a database and would require the person accepting delivery to provide proof of their age. 

The Jenkins Act currently states that taxes must be paid for remote sales of cigarettes but for decades has not been enforced by the Justice Department. NACS issued a letter of support for the PACT Act as “a responsible and achievable first step toward enforcing the law on Internet sales.” It is important to note that NACS believes that further action should be taken to give state Attorneys General the authority to enforce the Jenkins Act against tribal sellers. 

The recent flurry of activity regarding tobacco products will be something NACS monitors closely. The legislation discussed in the hearing yesterday would be a step in the right direction to level the playing field for retailers who sell a legal product legally. 

Petroleum Hearings
As consumers deal with escalating prices at the pump, Congress is anxious to demonstrate that it is “doing something.” Compounding the situation is the recent increase in food prices prompting debate regarding the use of grains to produce fuel instead of food. The sentiment is so strong that some legislators are suggesting that it is already time to repeal the 36 billion gallon ethanol mandate enacted just last December. On Tuesday next week, the House Energy and Commerce Committee’s Subcommittee on Energy and Air Quality will convene a hearing to receive testimony regarding the implementation of the biofuels mandate. It is safe to assume that discussion regarding food vs fuel will likely be a central feature of that hearing.

Meanwhile, as the presidential candidates propose their individual recommendations for reducing the price of gasoline, from implementing a gas tax holiday to imposing a windfall profits tax on major oil companies (neither of which makes any sense to me as they will do nothing to relieve pressures on supplies or prices), rumors are circulating Capitol Hill that price gouging legislation may be resurrected in the near future. NACS is working to ensure the provisions it advocated last year to protect honest retailers and preserve their ability to respond to market conditions remain in whatever legislation is considered.

On Wednesday next week the House Judiciary Committee’s Anti-Trust Task Force is convening a hearing on gasoline prices. To deliver the message of the convenience and petroleum retailing industry, NACS has called into service one of its star witnesses, Past Chairman Bill Douglass. He will explain to the committee that current prices are the direct result of speculative interests in crude oil futures, that elevated wholesale prices and declining retail margins are putting significant strain on the retail community, and that credit card fees are destroying the ability of many retailers to remain in business.

Interchange Hearing
Bill’s testimony on gasoline prices should dove tail nicely into a hearing the following week before the same panel to discuss H.R. 5546, the Credit Card Fair Fee Act. Details for this hearing are not yet available, but NACS is anxious and excited about the opportunity to the retail community to bring this legislation to the forefront of congressional consideration. From the petroleum industry’s perspective, there is no more appropriate time for Congress to look at interchange rates than now, when most retailers are paying more in credit card fees than they are making in fuel margins. For some retailers, paying credit card fees on gasoline that is selling for more than $3.50 per gallon is putting their business into the financial red zone. Now is when something must be done.

To that end, the Credit Card Fair Fee Act did pick up a few additional cosponsors this week. Below is the most recent list of official cosponsors. Some may yet be added by the end of the week, but this is what was posted as of Thursday night.  Keep your letters coming — the more your representatives hear from you, the more likely they are to cosponsor this critical legislation:

1. Rep. John Conyers (D-MI) 3/06/08
2. Rep. Chris Cannon (R-UT) 3/06/08
3. Rep. Zoe Lofgren (D-CA) 3/06/08
4. Rep. Bill Shuster (R-PA) 3/06/08
5. Rep. Anthony Weiner (D-NY) 3/06/08
6. Rep. Bill Delahunt (D-MA) 3/06/08
7. Rep. Todd Platts (R-PA) 3/06/08
8. Rep. Peter Welch (D-VT) 3/06/08
9. Rep. John Sullivan (R-OK)& 3/06/08
10. Rep. Joe Wilson (R-SC) 3/06/08
11. Rep. Louie Gohmert (R-TX) 3/06/08
12. Rep. Ralph Hall (R-TX) 3/06/08
13. Rep. John Boozman (R-AR) 3/06/08
14. Rep. John Peterson (R-PA) 3/06/08
15. Rep. Chris Carney (D-PA) 3/12/08
16. Rep. Keith Ellison (D-MN) 4/02/08
17. Rep. Eddie Bernice Johnson (D-TX) 4/03/08
18. Rep. Betty McCollum (D-MN) 4/08/08
19. Rep. John Yarmuth (D-KY) 4/09/08
20. Rep. Heath Shuler (D-NC) 4/10/08
21. Rep. Ed Whitfield (R-KY) 4/10/08
22. Rep. Phil English (R-PA) 4/15/08
23. Rep. Zach Wamp (R-TN) 4/17/08
24. Rep. Pat Tiberi (R-OH) 4/22/08
25. Rep. Jon Porter (R-NV) 4/22/08
26. Rep. Russ Carnahan (D-MO) 4/22/08
27. Rep. Jim Marshall (D-GA) 4/22/08
28. Rep. Tom Allen (D-ME) 4/29/08
29. Rep. Sheila Jackson Lee (D-TX) 4/29/08
30. Rep. Steve Kagen (D-WI) 4/30/08

That’s it from Washington. Have a great weekend!

John Eichberger
Vice President, Government Relations