WASHINGTON – Last week, the NACS Government Relations Conference (GRC) brought retailers, suppliers and association executives from across the country to Washington, D.C., and into meetings with their legislators. Before GRC attendees hit Capitol Hill on March 8, they spent a day learning about the legislative process, how to conduct an effective meeting and the status of the issues most pressing to the convenience and fuel retailing industry. They brought those issues directly to their senators and representatives; here’s a recap of those concerns:
Debit Swipe Fee Reform
Debit swipe fee reform was NACS’s most hard-fought victory on Capitol Hill and brought significant relief to consumers and Main Street businesses from anti-free market practices of the global credit and debit card companies. When House Financial Services Chairman Jeb Hensarling (R-TX) included a repeal of the Durbin Amendment that first reformed debit swipe fees in his Financial CHOICE Act last year, the issue became of prime importance to the convenience industry again.
Debit swipe reform injected needed competition into the payment cards market, which brought $6 billion in savings to consumers in just the first year it went into effect. GRC attendees discussed how the convenience industry is one of the most competitive and transparent industries in the country and how savings from debit swipe fee reform have been passed through to c-store customers. With Hensarling primed to reintroduce the legislation, retailers stressed to members of Congress the need to protect debit swipe reform. If repeal efforts are successful, it will hurt consumers and businesses at the benefit of the largest banks.
Menu Labeling
The FDA finalized menu labeling regulations in 2014 that are cumbersome for convenience stores to follow. But the Common Sense Nutrition Disclosure Act, introduced by Reps. Cathy McMorris-Rodgers (R-WA) and Tony Cardenas (D-CA) in the House, and Sens. Roy Blunt (R-MO) and Angus King (I-ME) in the Senate, provides a more practical and flexible approach.
With the FDA’s enforcement deadline of May 5, 2017, fast approaching, GRC attendees last week explained to their legislators that the types of menu labeling requirements that work for the fast-food industry would be very difficult for many convenience chains to institute. Although NACS supports menu labeling, it also recognizes the need for flexibility and the protection of small businesses and their workers.
Point of Obligation/RFS
When the Renewable Fuels Standard (RFS) was established more than 10 years ago, its intention was to reduce the use of petroleum-based fuel by adding more renewable fuels into the overall supply. Since that time, it has reduced the U.S. reliance on foreign oil, lowered the cost of gasoline and diesel, and improved air quality, among other positive benefits. In the summer of 2016 though, a small group of merchant refiners petitioned the U.S. Environmental Protection Agency (EPA) to shift the point of obligation from the refiners (or manufacturers/importers) to the position holder. This is where the term “obligated party” comes from; and the obligated party is responsible for complying with the RFS’s annual renewable volume obligations (RVOs).
NACS believes that changing the point of obligation would undermine the RFS and lead to higher prices at the pump for consumers. While the change would benefit only a small number of companies, it would in turn hurt a much larger group, and a wide-reaching list of groups agrees with NACS on this point, regardless of their stance on the RFS as a whole. Unlike when the United States switched from leaded to unleaded gasoline (which required no machinery and fuel infrastructure updates), to be successful, the RFS necessitates that retailers be able to store higher blends of renewable fuels. This can be difficult when many dispensers and underground storage tanks are not certified for higher renewable fuel blends and are very costly to replace.
Moreover, there is no mandate for consumers to purchase higher renewable fuel blends—thus, consumers will only purchase those products if they are price competitive with unblended products. The RFS with the current point of obligation functions effectively to incentivize retailer investments in blending infrastructure and allows them to price renewable blends competitively—furthering the goals of the RFS. All of this would go away if the point of obligation were moved downstream. First of all, if the point of obligation moves, the manufacturer would have no incentive to sell the base products needed for higher renewable fuel blends and would be able to charge higher prices for those products, which will trickle down to higher prices at the pump.
At GRC last week, convenience industry stakeholders explained this intricate issue to their lawmakers, and urged them to support keeping the point of obligation in place. They also explained some of the myths about the RFS and point of obligation that are being perpetuated by the merchant refiners, including that retailer sales of Renewable Identification Numbers (RINS) are pure profit. Instead, NACS members explained that when retailers sell RINs from blending operations, they use the value of those RINs to lower their cost of goods sold, which ensures that renewable fuels will be priced competitively with unblended petroleum products, and thus more attractive to consumers.
NACS encourages members to get involved with the legislative process. Become a Friend of NACS, host a NACS In Store event and join in on our grassroots efforts. Explore all of the NACS advocacy resources today!