By Anna Ready Blom, Paige Anderson and Jon Taets
ALEXANDRIA, Va.—A year ago it would have been impossible to predict what would unfold in 2020. One of the most frequently used terms to describe 2020 is “unprecedented.” It is fair to say that in modern times, the United States has not seen a public health crisis like COVID-19, nor the economic disruption that has followed. In response, Congress passed the CARES ACT, an economic relief package, with a price tag that tops $2 trillion—a spending level that rightly earns the descriptor “unprecedented.” On December 21, Congress passed an additional $900 billion in COVID-19 relief and a $1.4 trillion omnibus spending bill.
The NACS government relations team has been an active voice for the industry in Washington as Congress and federal agencies navigate legislative and regulatory responses to the crisis. Though COVID-19 is top-of-mind in the nation’s capital, NACS has championed a number of policy issues for the convenience and fuel retailing industry this year.
Recognizing Convenience as Essential
Throughout this crisis, NACS has worked to keep convenience stores open. In early March, NACS reached out to the White House, members of Congress and federal agencies to advocate for the essential nature of convenience stores and request that they be allowed to maintain operations in whatever action was taken at the federal level. In response, the Department of Homeland Security’s Cyber Infrastructure and Security Agency (CISA) released guidance recognizing convenience stores and their entire supply chain as part of the nation’s critical infrastructure workforce. While this was not a federal directive, many states and cities heeded the CISA guidance when issuing stay-at-home orders and allowing essential businesses to remain open.
Liability Relief for Essential Businesses
NACS has been a leading voice for liability relief for essential businesses from frivolous lawsuits related to COVID-19. At the onset of the crisis, NACS was one of the first groups on Capitol Hill asking congressional leadership and the committees of jurisdiction to protect businesses that acted responsibly from legal claims related to COVID-19. NACS formed a coalition of 40 essential industry associations that shared this objective. In May, Kevin Smartt of Kwik Check Food Stores testified at a U.S. Senate hearing on liability. Smartt, who was then NACS treasurer but now is chairman of the NACS Board of Directors, was the only witness from the business industry, and he asked Congress to pass liability legislation.
NACS has worked to build bipartisan support for the issue and hosted numerous virtual townhalls with members of Congress. This summer, Senate Majority Leader Mitch McConnell (R-KY) and Senator John Cornyn (R-TX) introduced liability legislation that NACS supported. Ultimately, liability protection wasn’t included in the $900 billion COVID-19 relief package Congress passed last week. Sen. McConnell has stated that the issue remains a top priority for him, and he will insist on its inclusion should Congress consider another round of COVID-19 relief next year. Achieving liability protection for the convenience store industry remains a top priority for NACS.
Vaccine Distribution Prioritization
As the U.S. Centers for Diseases Control (CDC) develops a framework for COVID-19 vaccine distribution, NACS has been advocating that the convenience store industry’s essential workforce be prioritized. NACS sent two letters to the U.S. Department of Health & Human Services, CDC and the CDC Advisory Committee on Immunization Practices (ACIP) highlighting the critical role convenience stores play in serving the public. On December 20, the ACIP voted to recommend that frontline essential workers—including employees in the convenience store industry—be next in line to receive the COVID-19 vaccine. While states and local governments will ultimately determine how the vaccine is distributed, many officials are expected to heed the CDC’s recommendations.
Access to Capital in the CARES Act
Paycheck Protection Program (PPP)—NACS supported the Paycheck Protection Program, which provides access to capital for smaller convenience store operators. However, NACS identified a loophole in the PPP that allowed restaurants with more than 500 employees access to PPP loans. Working with retail members, NACS called out the unlevel playing field to urge Congress to pursue a fix, but members haven’t enacted legislation to address the issue. Following the initial CARES Act, NACS supported legislation that created a more streamlined forgiveness process for the small businesses that received PPP loans.
Loan Programs for Larger Businesses—NACS successfully advocated for the creation of favorable loan programs for larger businesses ineligible for PPP loans. The CARES Act directed the creation of Federal Reserve facilities accessible to businesses of all sizes.
Economic Injury Disaster Loan—Small businesses are able to access such loans through the Small Business Administration, and initially up to $10,000 was advanceable and forgivable.
Employee Retention Tax Credit—NACS successfully helped advocate for tax credits to help employers get and keep employees in the CARES Act, and Congress voted to expand and extend the Employee Retention Tax Credit in the end-of-year package.
Qualified Improvement Property Fix—NACS successfully advocated for the inclusion of the fix to the Qualified Improvement Property depreciation category that arose from the Tax Incentives and Jobs Act. The fix helped free up capital at non-gas convenience stores.
Net Operating Loss Carryback—NACS successfully advocated to restore the ability of businesses to carry back losses from 2020 to previous tax years, a provision which had been removed by the Tax Incentives and Jobs Act.
Tax Credits for Essential Workers
NACS continues to advocate for direct tax credits to employees of essential businesses. These efforts have resulted in legislation introduced in the House and the Senate, H.R. 6841—the AG Chain Act, and S. 4213 the FRNT LINE Act, which would have allowed convenience store workers to deduct some or all of their income earned during the crisis from federal income and payroll taxes.
Tax Credits for Businesses to Purchase PPE and Cleaning Supplies
NACS continues to advocate for a tax credit to enable businesses to deduct expenses related to safety and cleaning supplies purchased during the crisis. There is bipartisan legislation that would cover personal protective equipment (PPE), as well as cleaning supplies.
Delayed EMV Deadline and Swipe-Fee Increases
At the beginning of the crisis, it was evident that stay-at-home orders and supply and equipment delays would make the approaching October deadline for EMV compliance at the pump impossible for many fuel retailers to meet. NACS organized a group of retail associations that presed the major card networks and the fleet card issuers to postpone the EMV liability shift date. Following letters from NACS and the other groups, the four major credit card networks and U.S. Bank Voyager Fleet Services agreed to an April 2021 delay.
Additionally, NACS advocated against Visa and Mastercard swipe-fee increases slated to take effect in April. Facing pressure from Congress and other stakeholders, the card networks announced they would delay the increases until April 2021.
Winter to Summer Fuel Blend Transition
Early in the pandemic, NACS members shared concerns about the impact that the COVID-19 crisis would have on the fuel supply chain. In the spring, retailers were concerned that the dramatic decline in demand for gasoline would lead to storage and pipeline capacity constraints as the market transitioned from winter to summer blends. NACS participated in industry calls with EPA and sent a joint industry letter with other fuel retail and marketing organizations requesting a Reid Vapor Pressure (RVP) waiver. As a result, EPA granted a 20-day RVP waiver for winter-grade gasoline and temporarily waived the summer low volatility requirements for gasoline sold by terminals from May 1 to May 20, 2020. EPA’s action provided flexibility to the marketplace in transitioning from winter grade, high volatility gasoline to summer grade, low vapor pressure gasoline.
Hours of Service
As restrictions on travel and work-from-home orders were issued, the ability to move vital goods became a primary concern. While the Federal Motor Carrier Safety Administration (FMCSA) provided a national Hours of Service (HOS) waiver for commercial motor vehicle operations providing direct assistance in support of emergency relief efforts related to the COVID-19 outbreaks, the agency did not include fuel in its original waiver. NACS, along with other fuel retailer associations, asked FMCSA to include fuel in the waiver, and the agency complied.
Since Americans were largely staying at home and many businesses were closed, the majority of coins in the U.S. were out of circulation, leading to a nationwide coin shortage. The U.S. Mint, which produces a small percentage of new coins each year, scaled back operations during the stay-at-home orders, which also contributed to the issue. NACS worked with the congressional committees of jurisdiction to pressure the Federal Reserve to deal with the coin shortage. The Fed formed a U.S. Coin Task Force to explore solutions to the issue.
SNAP Hot Foods Purchases
NACS asked Congress to allow low income Americans to use their Supplemental Nutrition Assistance Program (SNAP) benefits to purchase hot foods during the pandemic. The House of Representatives passed language to accomplish this in its version of a COVID-19 relief package, the HEROES Act. In July, 65 members of Congress, led by representatives Grace Meng (D-NY) and Adriano Espaillat (D-NY), sent a bipartisan letter to Senate leadership urging them to include the hot foods language in their next COVID-19 relief package. Unfortunately, that relief was not included in the bill that passed last week.
Access to PPE
A number of member companies indicated that the federal government had seized orders of PPE such as masks. Through communications with EPA and others, NACS discovered that the shipments weren’t seized, but some manufacturers prioritized government orders over private sector ones, and NACS members eventually received their shipments.
Closing the Online Loophole for E-Cigarettes
For the past three years, NACS has championed legislation that would regulate the online sales of e-cigarettes by applying the same measures that are required when traditional cigarettes are purchased online. In July, the Senate passed this legislation, the Preventing Online Sales of E-Cigarettes to Children Act (S.1253), by unanimous consent. The House passed its version of the bill in 2019. Then on December 21, Congress finally passed legislation in the end-of-year omnibus spending package to stop the online sales of e-cigarettes to minors.
Tax Credit Extensions
In the end-of-year package, Congress extended a number of expiring tax credits. They extended the Work Opportunity Tax Credit (WOTC) for five years. NACS strongly supports the WOTC, which is available to employers who hire individuals from certain targeted groups that may face significant employment barriers. In addition, several energy-related tax extenders supported by NACS were part of this package, including a five-year extension of the tax used to fund the Oil Spill Liability Trust fund, which is used to help pay for oil spills when the responsible party is unknown, along with a one-year extension for the alternative fuels and alternative fuel mixtures tax credit and a one-year extension for the alternative fuel infrastructure tax credit.
Electric Vehicles and Charging Infrastructure
As Congress worked to encourage the use of electric vehicles (EVs) and expand EV charging infrastructure, NACS advocated to promote competition, a level playing field for all parties interested in building charging infrastructure and access for convenience and fuel retailers to any federal incentive programs. Working with other industry groups, NACS made progress toward ensuring that retailers and other private sector entities would have access to grants and rebates to build charging infrastructure and language to encourage states to allow non-utilities to offer charging to EV drivers without being regulated like a utility. This issue will continue to develop into the next Congress, and NACS will keep advocating for private sector solutions to offer consumers alternative transportation energy.
Consumer Data Privacy and Data Security
Congress is working on a federal framework to protect consumers’ data and privacy. As a founding member, NACS works closely with the Main Street Privacy Coalition, which represents a wide group of businesses, to support legislation that ensures that any federal law would apply to all industry sectors rather than shifting the requirements onto the retail sector. Federal privacy bills should not pick regulatory winners or losers among different businesses, nor should they exempt any industry or business. NACS worked closely with Senator Jerry Moran (R-KS), who introduced legislation following some of these principles which may serve as a model to bridge the gap between other proposals that are more problematic.
EPA and Fuel Regulations
Several regulatory proposals EPA finalized during 2020 will affect the convenience and fuel retailing industry. NACS, along with other fuel retail groups, participated in the process by meeting with EPA staff and submitting comments to the agency. In several of these proposals, EPA heeded our industry’s recommendations. From the Renewable Fuel Standard’s (RFS) renewable volume obligation process, to concerns over the RFS small refiner exemption process to its streamlining rule, to its final Ozone NAAQS rule, EPA listened to our industry to ensure that the marketplace continues to operate effectively and efficiently in providing motor fuels to consumers.
FDA Guidance on Flavored E-Cigarettes
In January, the Food and Drug Administration (FDA) published final guidance banning most flavored cartridge-based e-cigarettes, except for tobacco and menthol flavors, from the market. The FDA first proposed guidance in March 2019 that would have effectively banned flavored e-cigarettes from convenience stores, while allowing them to still be sold over the internet and in stores that don’t allow minors to enter. NACS strongly opposed the proposal in a comment letter and in meetings with FDA, President Trump and other White House officials. The final guidance recognized those concerns and contains no language that discriminates between the type of retail outlet.
For e-cigarettes to legally be on the market, the manufacturers of those products had to submit premarket tobacco product applications (PMTAs) to FDA by September 9. If manufacturers failed to meet the deadline, their products must be removed from the market. However, retailers, who could face possible enforcement, have no credible way of knowing which products have submitted PMTAs and which ones do not. To avoid confusion and potential enforcement, NACS asked FDA to publish a list of the products for which the agency has received PMTAs. NACS raised these concerns in a letter to the agency signed by other retail associations. In early September, FDA announced that it would publish a list but that it would not be publicly available immediately. NACS has asked the agency to practice enforcement discretion until a list is published.
NACS Advocacy for the Convenience Industry in the Courts
The industry may be most familiar with NACS’ advocacy efforts in Congress and before federal administrative agencies, but NACS has long believed that it must advocate for the industry in all of the branches of government in order to maximize its effectiveness. The industry had two notable litigation wins this year.
In May, the U.S. Supreme Court announced it would not review a lower court ruling affirming EPA’s decision not to move the “point of obligation” under the Renewable Fuels Standard (RFS). NACS previously had advocated for that outcome through an amicus brief filed in the U.S. Circuit Court of Appeals for the District of Columbia.
In July, NACS joined the American Fuel & Petrochemical Manufacturers, American Petroleum Institute, Association of Oil Pipe Lines, and the Chamber of Commerce of the United States of America in filing an Amicus Brief indicating its concerns with a U.S. District Court order that would have shut down the Dakota Access Pipeline while the U.S. Army Corps of Engineers conducted an environmental review. On August 5, the Court ruled in support of NACS’ brief to allow the pipeline to remain open while the case is being litigated.
This story is updated from the original version which appears in the December 2020 issue of NACS Magazine.
Anna Ready, Paige Anderson and Jon Taets are the NACS directors of government relations.