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Wednesday
Aug142013

My Day on Capitol Hill

On Wednesday, July 17th, I had the opportunity to represent CarterEnergy and World Fuels, via SIGMA, at their annual Lobby Day in Washington DC. Our President, Kerry Oliver, sits on the SIGMA Board of Directors and has served this role annually in the past. However, she was unable to attend this year, so I was chosen to be her pinch hitter.  What a thrill!

While I have spent many a day in Topeka over the years lobbying our local Representatives as a member of the PMCA (Petroleum Marketers and Convenience Store Association of KS), I have to admit, this was certainly like being promoted to the Big Leagues (albeit for just one day). That being said, the process and issues were very similar and, without fail, everyone I met with truly appreciated us traveling to Washington to meet with them. I was able to meet with the following Legislators, or their key people, and discuss our concerns:  Senator Jerry Moran (KS), Senator Pat Roberts (KS), Representative Mike Pompeo (KS), Representative Kevin Yoder (KS), Representative Ann Wagner (MO), Senator Clair McCaskill (MO), and Representative Frank Lucas (OK).

We spent the day talking about three main issues that are having, and will continue to have, a HUGE impact on the Convenience Store Industry:

SNAP (Supplemental Nutritional Assistance Program)

The Farm Bill that passed the Senate in June contained a provision that could severely inhibit the Convenience Store Industry’s ability to provide this service. The provision would give USDA the authority to prevent stores from participating in the SNAP Program – even if the stores meet all of the prerequisites for participating – based on sales of non-SNAP items such as food, alcohol and tobacco. It contained a draconian provision that would have prohibited any food retailer from participating in the SNAP program if 45% or more of the retailer’s revenue was derived from the combined sales of hot food, tobacco or alcohol. This is a real challenge and one that is not resolved. There are certain Legislators that do not want convenience stores to be able to participate in SNAP. This is a real concern and one that could prohibit our customers from participating in the program. I encourage retailers to keep a very close eye on this one and engage their Legislators!

Credit Card Swipe Fees

There is not one elected official that wants to tackle this subject as the banking lobbying efforts are so powerful. We had no particular ask at this point, only reminding them that swipe fees and interchange rates remain basically unregulated and are some of the highest in the world. A good exercise when talking to your Legislator is to provide actual data on what your CPG is in terms of credit card fees. Since at least 2011, the banking industry has been making more on YOUR fuel sales than you have!

There was a very bright spot that just recently came to light and is a victory for all of us. Below is a snippet from SIGMA’s newsflash:

“Today, the US District Court for the District of Columbia ruled in favor of the National Association of Convenience Stores, National Retail Federation, Food Marketing Institute, Miller Oil Co., Boscov’s Department Store, and the National Restaurant Association in their challenge to the Federal Reserve’s rule on debit swipe fees. In its opinion, the court concluded: “Upon consideration of the pleadings, oral argument, and the entire record therein, the Court concludes that the Board has clearly disregarded Congress’s statutory intent by inappropriately inflating all debit card transaction feel by billions of dollars and failing to provide merchants with multiple unaffiliated networks for each debit transaction. Accordingly, the plaintiffs’ motion is GRANTED and the defendant’s motion is DENIED.” 

This is great news and validation of The Durbin Amendment!  Now, hopefully, we can go back to the negotiated fees that were mandated with this bill.

Renewable Fuel Standards

SIGMA supports RFS rationalization, but not the repeal of the RFS program. As motor fuel marketers, members support diverse options in the fuel market. Momentum to reform and even repeal the RFS continues to grow on Capitol Hill. The House Energy and Commerce Committee are in the process of examining the RFS through a series of white papers. The papers solicit viewpoints from the stakeholders engaged with the program. When the bill was passed in 2007, the economy was robust and gallons were steadily increasing. Since then, gallons are eroding and will continue to annually…so we are rapidly approaching the blend wall and will certainly by 2014.

And there’s been more good news since my trip…again here is SIGMA’s newsflash:

“Today, EPA announced its final 2013 Renewable Fuel Standard (RFS) volume requirements and indicated that it will reevaluate and likely revise downward the volume requirements for 2014 to better reflect market realities – something that SIGMA has been advocating to lawmakers in Congress and EPA officials. For 2013, the total renewable fuel volume obligation is 16.55 billion gallons. This is the number required by the Clean Air Act.  That amount includes 1.28 billion gallons of biomass-based diesel, 2.75 million gallons of advanced biofuels, and 6 million gallons of cellulosic biofuels, a decrease from the originally proposed 14 million gallons of cellulosic ethanol. 

Significantly, however, EPA stated in non-binding guidance that accompanied the final rule, that while it believes that the statutory volume obligations may be absorbed by the market in 2013, in 2014 compliance will be more difficult due to the approaching “blendwall.”  Specifically, EPA stated:

 “Given the history of the market and relevant constraints, EPA does not currently foresee a scenario in which the market could consume enough ethanol sold in blends greater than E10, and/or produce sufficient volumes of non-ethanol biofuels (biodiesel, renewable diesel, biogas, etc.), to meet the volumes of total renewable fuel and advanced biofuel stated in the statute.”

 EPA anticipates, therefore, that it will adjust downward its 2014 volume requirements— including both the advanced biofuel and total renewable fuel categories. EPA stated that it will estimate the available supply of cellulosic and advanced biofuel, assess the E10 blendwall and current infrastructure and market-based limitations to the consumption of gasoline-ethanol blends above E10, and then propose volume requirements that are reasonably attainable in light of these considerations and others as appropriate.”

The three points we addressed have, or could have, a significant impact on your business. While there is a lot of gridlock in Congress, I am happy to report that there are a lot of good elected officials that do work hard and take our issues very seriously. It was a very interesting and educational trip and a wonderful learning experience for me personally. I and my CarterEnergy teammates are all active in local and state lobbying efforts on our customers’ behalf, and Kerry Oliver does a wonderful job representing us on a national level. I encourage everyone to get involved with your State Associations, like myself, with the PMCA. They work extremely hard on your behalf. And while we have a long way to go on these and many issues, the two wins above would not have occurred without the hard work of the good people associated with SIGMA. 

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