Electric Charging Infrastructure - Priority 1
As electric vehicles (EVs) enter the market, an electric charging infrastructure must be created to provide alternative fuel options to motorists. Given that SIGMA members are located in the highest traffic areas that allow motorists the most convenient locations to fuel their vehicles, utilizing existing private sector locations would be the most efficient way to create an alternative fuel marketplace if consumer demand warrants it. Utility companies, however, are seeking
approval from state governments to enter the vehicle recharging business for EVs and treat their capital investments in the alternative refueling business as part of the utility rate base, effectively creating a monopoly on EV charging stations paid for by all electric power consumers. If a state provides special incentives to a public utility to allow it to build an electric charging infrastructure at a cost with which the private market cannot compete, SIGMA members will be placed at a disadvantage when investing in the alternative fuel marketplace.
EV Mandates and Unfair Treatment
Several states have or are considering aspirational policies to mandate certain numbers of EVs. These mandates are often based upon an inaccurate comparison of emissions characteristics including an assumption that running EVs does not produce carbon emissions. These references in state laws to "zero emission vehicles" are inaccurate because electricity generation emits carbon into the atmosphere - often in larger amounts than do internal combustion engines in vehicles. Fair and complete analyses of the carbon footprints of these different vehicles are needed to have sensible policy in this area. Many states also have laws treating any entity that resells electricity to individual consumers as a utility that is subject to utility regulation. This prevents SIGMA members from selling electricity to EV owners in those states.
EVs and the Highway Trust Fund (HTF)
The Highway Trust Fund (HTF) is funded primarily by the 18.4 cents/gallon motor fuel excise tax and 24.3 cents/gallon diesel excise tax, which are paid by motorists when they purchase fuel. The HTF is used to fund investments in U.S. infrastructure, such as highways and bridges. Owners of EVs, however, do not pay these taxes (and hybrid owners only pay a percentage), despite using the roads in the same manner as gasoline and diesel-powered vehicles.
EV Tax Credit
In an effort to incentivize the purchase of electric vehicles, the federal government offers a federal tax credit of up to $7,500 for EVs purchased from a qualifying manufacturer. Studies have shown that the bulk of the credits are received by wealthy Americans, despite being funded by all taxpayers.
SIGMA opposes granting a de facto monopoly on the provision of refueling services, which will undercut the competitive nature of the refueling marketplace, ultimately harming consumers. SIGMA supports retailers' ability to compete in the marketplace to sell all transportation fuels, including electricity, in a competitive market and without government policy favoring any one type of fuel. SIGMA seeks to ensure that any financial incentives for installing EV charging infrastructure allow private businesses to compete for funds and that those incentives do not favor utilities that get subsidies from all of their ratepayers to install EV charging infrastructure.
SIGMA opposes the extension of the EV tax credit because it unfairly prioritizes one technology and primarily benefits wealthier Americans. SIGMA believes that infrastructure funding should be paid for in an equitable manner by all who use the roads.SIGMA opposes EV mandates and unfair CAFE treatment. Different fueling technologies should be able to compete on a level playing field using an unbiased analysis of environmental impacts. SIGMA favors Congress pre-empting state laws that regulate any entity that resells electricity to consumers as a utility.
Climate Change Proposals - Priority 1
Progressive Democrats in particular are pushing a climate change agenda that would aim to, among other things, decarbonize the economy. Many in Congress have targeted a ‘Net-Zero by 2050’ goal—an effort to reach overall net-zero emissions of carbon by the year 2050. Though the means of achieving that goal are often vague, concepts that could be used to achieve it include:
Cap and Trade: Under cap and trade, the government would set an emissions "cap" and then caps would be set by industry and apply to individual companies. If a company stayed under its "cap," the company could trade its extra credits, for a price set by the market. If a company were to exceed its emission allowance, the company would then need to purchase credits to retire. Businesses might also generate credits by taking carbon out of the atmosphere. The cap provides a clear goal, but administering how the cap applies across the economy and setting up the functioning of the market could lead to difficulties. However, market pricing could also allow flexibility to adapt to market signals for pricing.
The tax would put the costs of carbon on businesses that generate it. A tax would likely be easier to administer than a cap and trade system. However, it may encourage tax evasion and the tax could escalate rapidly once enacted. Environmentalists have concerns that a tax might not adequately reduce carbon emissions.
Subsidies for Green Technologies:
Benefits could include spurring investments in renewable energy and incentivizing new technologies to come to market. However, incentives could risk favoring one technology over another in the market in a way that ultimately proves to be worse for the environment and/or the economy. In addition, lawmakers should ensure that the costs of such subsidies are borne fairly.
Other Regulations and Mandates:
There could be regulations mandating a reduction in fossil fuels or further use of renewable energy sources. For example, some utility companies-either of their own accord, or in response to certain market or governmental signals-have begun
expanding their portfolio of renewable energy sources in advance of a possible government mandate.
As the climate change debate evolves, SIGMA believes the government should not promote solutions that pick winners and losers in the technology space. Instead, government should set a level playing field on which all technologies can compete to meet transparent goals. In determining the requirements for technologies, definitions of terms such as "clean" or "zero emission" must be clear, specific, and based on the best available science.
Renewable Fuel Standard - Priority 1
The Renewable Fuel Standard (RFS) Program was first enacted in 2005 and expanded in 2007. The RFS was intended to displace traditional petroleum-based fuels derived from unstable geographic regions with renewable substitutes that would achieve environmental benefits and diversify supply. To implement the program, EPA sets annual blending requirements that establish the amount of biofuel that must be blended into the nation's fuel supply. The Agency may adjust the annual blending targets, which were established by Congress, using the agency's statutory waiver authorities. Obligated parties (refiners, importers, etc.) must demonstrate their RFS compliance to EPA by retiring sufficient renewable identification numbers (RINs) to satisfy their blending obligations, which are based on the overall motor fuel they produce or import in a given year. When the RFS was enacted, Congress believed that fuel demand would increase over time and that biofuels, particularly cellulosic and advanced biofuels (as opposed to corn-based ethanol), would enter the market within the first few years of the program. Neither of those assumptions have held true.
SIGMA supports the rational administration of the RFS program. Specifically, SIGMA
supports EPA assessing the state of the fuel market, evaluating external policy developments, and using this data to set appropriate blending levels. It is important for EPA to ensure that renewable fuel mandates do not exceed the volume of renewable fuel that the market could reasonably absorb.
RFS Small Refinery Waivers - Priority 2
The RFS program allows small refineries to receive waivers from RFS blending requirements if those entities can prove that the requirements would cause severe economic harm to the refinery. EPA's process for granting these waivers has lacked transparency, with refiners being notified that they had received a waiver, but no other stakeholders being notified that a waiver had been granted. This asymmetry of information enables refiners with waived obligations to dump renewable identification numbers (RINs), which they no longer need for RFS compliance, into the market without any other stakeholder being aware that a waiver has been granted. This has led to "demand destruction" for renewable fuels and undermined the RIN market, particularly as EPA has continued to grant waivers in ever-increasing numbers.
EPA must do more to increase transparency in the small refinery waiver process. In particular, EPA must articulate the standards it uses to determine severe economic hardship and other factors that lead to the granting of a waiver. EPA also should publicly disclose when waivers are granted. Without proper knowledge of how the waivers are being granted and to whom they are given, the market cannot function appropriately.
Biodiesel Tax Credit - Priority 2
Since 2005, blenders of biodiesel and renewable diesel have been able to utilize a tax credit of $1.00/gallon to incentivize the blending of biodiesel into the transportation fuel mix. The blenders’ credit was designed to reduce U.S. dependence upon foreign sourced petroleum by displacing it with renewable resources while also achieving improvements in air quality by incorporating a fuel component with more attractive emission characteristics into diesel fuel. The blenders’ credit achieved these goals and has resulted in lower diesel costs to consumers.
The blenders’ tax credit helps marketers offer more competitive prices to their customers through blending biodiesel into conventional diesel fuel. It has helped facilitate the growth of this still-developing industry. The biodiesel tax credit has been successful at lowering consumer costs while bringing greater acceptance of biodiesel usage in the fuels market. The uncertainty surrounding the tax credit’s extension, however, has made it difficult for businesses to plan and price accurately.
General Business Matters
Data Security, Breach, and Privacy - Priority 2
SIGMA applauds Congress’ multi-year extension of the credit from 2018 through 2022, allowing the market to stabilize and businesses to plan accordingly. SIGMA supports an eventual and responsible phase down. SIGMA believes that a phase down shows fiscal responsibility while also allowing businesses to plan.
Multistate Climate Initiatives - Priority 3
Since the mid-2000s, many states have begun to undertake individual state legislation to reduce climate impacts. A group of 12 Northeast and Mid-Atlantic states along with the District of Columbia have formed the Transportation and Climate Initiative (TCI) to coordinate their efforts on this topic. The TCI calls for the participating jurisdictions to enact a cap-and-invest program covering the movement and sales of motor fuels in their areas.
Proponents of TCI estimate that the program would add 5 to 17 cents per gallon to the cost of gasoline in the participating jurisdictions. The burdens of program compliance would fall on many of SIGMA’s members when they move fuel into one of the participating jurisdictions. But, TCI would be very difficult to administer and would likely lead to widespread evasion of its requirements. This would create a bifurcated marketplace that would harm businesses that comply with the law.
SIGMA has serious concerns with the proposed TCI framework. It would not improve the climate due to significant implementation challenges and widespread evasion of its requirements. As proposed, TCI is not a practical solution to climate concerns and it would be economically harmful to the motor fuels market and consumers that depend on it.
E15 Labeling - Priority 3
On June 10, 2019, EPA granted a waiver for E15 that allows it to be sold throughout the country year-round, even during the summer months (June 1-September 15). The legality of such a move remains in question; many believe the Clean Air Act (CAA) only permits a waiver for E10 and that legislation would be needed to grant a waiver for E15.
Allowing E15 to be sold year-round across the country provides an opportunity for more ethanol to enter the marketplace. Retailers, however, may face infrastructure limitations regarding the ability to store and dispense higher level ethanol blends. Additionally, SIGMA has concerns about misfuelling liability issues stemming from the increased use of E15, as higher blends of ethanol such as E15 cannot be used in all cars on the road, and existing misfueling liability protections do not go far enough to protect retailers. EPA has issued an E15 label that identifies the fuel and explains that it should not be used in older vehicles or small engines.
As new fuels enter the market, retailers want to be able to compete to sell these fuels without incurring liability when consumers use the wrong fuel as long as retailers comply with signage requirements. If consumers misfuel even in the face of clear signage, then retailers should not be legally responsible. SIGMA supports the current E15 labeling regime.
Over the past several years, many businesses and government agencies have suffered security breaches that have resulted in the theft of personal information from millions of customers. In addition, concerns have been mounting about the voluntary sharing and selling of consumer information by businesses. These privacy concerns have led to state legislation including, significantly, the California Consumer Privacy Act (CCPA). Congress, in turn, is examining privacy issues along with data breach and data security issues.
Banks, the government, technology companies, and credit reporting agencies in addition to retailers have all suffered security breaches affecting millions of people. Over-zealous privacy laws such as in California threaten how business is done – including, for example, making loyalty programs difficult or impossible to maintain. Additionally, because retailers are among the businesses that deal directly with consumers, other industries such as financial services, telecommunications and technology companies want to push legal responsibility off of themselves and onto the retail industry.
FDA Regulation of Tobacco – Priority 2
Privacy and data security laws should cover every business sector based upon the sensitivity of the data handled without loopholes. These laws should also be workable and not overburden business or prevent consumers from getting the benefits and services they want. SIGMA is a member of the Main Street Privacy Coalition, a broad array of national trade associations representing businesses that line America’s Main Streets, advocating for fair data privacy legislation.
Payments Security and EMV - Priority 3
Payments security is a serious concern for retailers who spend over $6.5 billion each year trying to protect against card fraud. However, fraud rates continue to rise in the United States because of outdated payment card technology. Despite retailers’ significant security investments, increasing fraud rates lead to significantly higher fraud costs for merchants.
Visa and MasterCard use their control of standard-setting bodies like EMVCo and PCI to entrench their dominance of the payment system and market – not to protect against fraud. For example, Visa and MasterCard established rules to shift liability for fraudulent transactions between merchants and banks based upon which of them has upgraded for EMV. Since the October 2015 EMV liability shift, there has been a significant increase in the number of fraud chargebacks that merchants are required to pay — in part because EMV has not included a shift to PIN use. The EMV liability shift will take effect at gas pumps in October 2020.
Security standards for payments are set by only one part of one industry sector – the dominant two payment card networks. Using their market dominance and control of standards-setters like EMVCo, card companies can compel merchants, consumers, financial institutions, technology companies, and others to conform to standards that do not meet their needs.
Security standards and fraud protection in the U.S. will only be effective when standards are set through an even-handed process.
There are many technology solutions available and being developed that could improve security standards, but the dominant card networks do not have the incentives to push security innovation. Those fintech and other companies that are trying to innovate are often blocked from the market by Visa and Mastercard.
SIGMA urges Congress to modernize the current payment card security standards process so that all industries affected by payments as well as consumers have a voice in how the system operates. SIGMA is working with a new coalition of retailers, debit networks, and some state community banker groups, the Secure Payments Partnership (SPP), that was formed to improve security across the U.S. electronic payments system.
Credit and Debit Swipe Fees - Priority 3
Banks and credit card companies collect fees from retailers on all payment card transactions. The Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act required the Federal Reserve to limit price-fixing of debit swipe fees by Visa and MasterCard and protect competition in routing debit transactions over different card networks. Despite the benefits of debit fee reform, there is still a lack of competition in the payments system.
In most instances, banks are making far more money than retailers on the sale of each gallon of gasoline paid for with a payment card. Swipe fees remain one of the highest operating expenses for retailers, second only to labor costs. Visa and Mastercard fix fees and rules on behalf of the banks to create an anti-competitive situation that is not market-based. SIGMA members’ retail operations often operate on margins of 2% or less. Anticompetitive fees can prove a crippling obstacle for their businesses.
The Federal Reserve Board has announced it will develop a real-time payment and settlement service to support faster payments in the United States. More competition in payments would create the possibility of market forces reducing costs. The Federal Reserve Board’s FedNow faster payment project creates the possibility of increased competitive options to Visa and Mastercard.
SIGMA opposes any efforts to repeal or weaken debit fee reform and supports further reforms to ensure that retailers pay competitive fees for credit transactions. SIGMA continues to educate Congress about debit swipe fee reform and its implementation, discourage any action by Congress that would undo the important progress made by swipe fee reform, and make lawmakers aware of significant problems that still exist with credit card swipe fees and the card companies’ anticompetitive rules. Additionally, retailers are working with relevant federal agencies to ensure that there is scrutiny of the card companies and banks under the antitrust laws.
Likewise, SIGMA supports the Federal Reserve Board’s desire to create a faster payments system.
Infrastructure Matters - Priority 3
Historically, the Highway Trust Fund has been funded primarily through motor fuels excise taxes. The current tax for gasoline and ethanol-blended fuels is 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel fuel. Those rates have not changed since 1993 and therefore, have not kept pace with inflation. In addition, vehicles have become far more fuel efficient, which has decreased overall fuel demand and further lowered the revenue from the motor fuels excise taxes.
SIGMA members depend on an efficient and well-functioning infrastructure system, both to receive products and goods as well as expand their customer base. SIGMA strongly supports Congress acting to improve the country’s highway infrastructure system. In doing so, SIGMA believes that all fuel sources powering vehicles using our highways and roads should pay their fair share for the use of that infrastructure.
Off highway communities – which rely on the motoring public for survival – derive much of their commercial activity and tax revenue from healthy off-highway businesses. Thousands of off-highway businesses would effectively vanish if Congress were to commercialize rest areas. Likewise, tolling negatively impacts communities and businesses, such as fuel marketers, that rely on the unrestricted flow of people. By undercutting existing businesses, tolling Interstates would erode the tax base in local communities throughout the nation.
SIGMA supports long-term, sustainable funding for federal highway programs, even if such funding requires raising the federal motor fuel excise tax. However, SIGMA only supports such increases as long as the revenue generated is directed to fund highway infrastructure projects. SIGMA also supports all vehicles, including electric vehicles, paying their share of infrastructure costs.
At the same time, SIGMA opposes rest area commercialization and the tolling of existing Interstates. The ban on such activities has been critical to the livelihood of businesses that are located near the highway and the communities that depend on their tax dollars. SIGMA believes states can make budgetary decisions to operate or close rest areas without undermining off highway communities. Furthermore, the privatization of highways could dangerously alter the playing field for many business-owners along the nation’s highways and motorists should not have to pay for the same roads multiple times over through tolls.
The average convenience store/motor fuel marketer derives a significant portion of its in-store
sales from tobacco products. Retailers must comply with various regulations in order to sell such products and violations could subject retailers to significant fines and penalties. Today, the Food and Drug Administration (FDA) maintains the authority to regulate the manufacture and retail sale of all tobacco products, including cigarettes, smokeless tobacco, and e-cigarettes.
The average convenience store/motor fuel marketer derives nearly 34 percent of its in-store sales from tobacco products. The implementation of legislation or regulations that affect retail tobacco sales will have an impact on many SIGMA members. Recently, Congress passed a law to increase the federal age to purchase tobacco products to 21 and FDA announced the law was effective immediately—without regulations or guidance for retailers—leaving retailers struggling to comply.
SIGMA supports the ability of retailers to sell tobacco products responsibly on a level playing field. Regulations should not disadvantage SIGMA members in favor of other retail businesses (such as tobacco shops, online sellers, and Native American businesses). SIGMA members want to comply with tobacco regulations, but FDA must be transparent with retailers so that they can do so. Furthermore, SIGMA believes that certain regulatory actions, such as overly aggressive limits on nicotine and flavors, could increase the illicit trade of tobacco products. FDA should enforce the current laws consistent with the authority it was given by Congress and with retailers’ rights to Due Process.
E-Cigarettes – Priority 2
The Food and Drug Administration (FDA) issued guidance in January 2020 that would prohibit the sale of cartridge-based, flavored e-cigarettes—except menthol and tobacco flavors. The guidance would allow flavored open-system and disposable e-cigarettes. The final guidance is an improvement over the draft guidance that would have limited the sale of all flavored e-cigarettes to adult only stores, stores with adult-only sections, or the Internet.
E-cigarette manufacturers, however, must submit premarket tobacco product applications (PMTA) for all e-cigarette products, regardless of flavor, by May 12, 2020. At that point, FDA has a year to approve the PMTA or the product can no longer be sold.
E-cigarettes have been a growing category of in-store sales for the industry. Unfortunately, Internet, vape shop, and tobacco store sellers have been the primary sources of retail sales of these products to minors. It is not clear whether FDA’s guidance will reduce purchases of these products and, if it does, whether those purchasers simply buy traditional tobacco products instead. Fortunately, the final guidance focuses on the product rather than on the type of retail outlet where it is sold.
After May 12, 2020, it will be illegal for retailers to sell an e-cigarette unless the product’s manufacturer has submitted a PMTA.
SIGMA opposes any effort that would allow vape shops and Internet sellers to develop a monopoly on sales of any type of e-cigarettes while banning convenience stores/fuel marketers from that market. Vape shops, tobacco stores, and Internet sellers are a more frequent source of e-cigarette sales to minors than are convenience stores/fuel marketers, even though there are 15 times more convenience stores than vape shops and tobacco stores combined. SIGMA supports the Preventing Online Sales of E-Cigarettes to Children Act (S. 1253 and H.R. 3942), legislation that would require online retailers of e-cigarettes to do what retailers of traditional cigarettes must do – ensure that there is age verification at the delivery of their product.