Washington Retail Insight - April 28, 2006

Volume 11, Number 9
April 28, 2006

In Today's Edition:

• Transportation Secretary to Speak at NRF Conference

• Merchants Consolidate Credit Card Lawsuits, Add Debit

• Committee Rejects Cargo Scanning Proposal Opposed by NRF

• NRF Government Relations Chief Among Top Lobbyists

• NRF Adds Prominent Health Care Lobbyist to Government Relations Team

• Congressional Outlook

• NRF Events

Transportation Secretary to Speak at NRF Conference

     Transportation Secretary Norman Mineta will be the keynote speaker when NRF holds its 71st annual Washington Leadership Conference next month.
     Mineta is scheduled to speak on May 16 and is expected to address transportation infrastructure and congestion issues affecting retailers. Also scheduled are Candida Wolff, President Bush's assistant for legislative affairs, and political pundit Charlie Cook.

     The two-day conference will include meetings with high-ranking lawmakers, lobbying on Capitol Hill, and other activities to promote the industry's position on a wide range of public policy issues. Lobbying meetings on May 17 are expected to cover employee health insurance, international trade, credit card interchange, minimum wage, tax policy, immigration reform, data security, Americans with Disabilities Act updates, and obesity lawsuit legislation among other topics.

     The NRF Policy Council, International Trade Advisory Committee, Strategic Supply Chain Council, Gift Card Working Group, Loss Prevention Legislative Committee, and State Association Council are all scheduled to meet as part of the conference.

     In addition, recently retired Alabama Retail Association President Charles McDonald will be presented with NRF's prestigious J. Thomas Weyant Lifetime Achievement Award, which honors individuals who have committed their professional careers to state retail associations.

     Conference registration details are available at www.nrf.com/wlc.
     For more information, contact NRF Director of Grassroots and Industry Relations Marsha Dionne at (202) 626-8152.

Merchants Consolidate Credit Card Lawsuits, Add Debit

     Merchants seeking damages from Visa and MasterCard over soaring credit card interchange fees this week brought 40 separate class action lawsuits together in a single complaint and added signature debit cards to the case.

     The lawsuit originated last June, when five small merchants from three states filed a case claiming that the way Visa and MasterCard member banks come together to set interchange rates violates federal antitrust law. A total of 40 class action cases have been filed by merchants and trade associations since then, and a federal court panel last fall ordered that the cases be consolidated into one.

     The cases originally addressed only credit card interchange, but the consolidated complaint filed in U.S. District Court in New York on Monday seeks unspecified damages and a permanent injunction barring the companies from continuing both credit card and signature debit card practices that violate antitrust law. Signature debit transactions are routed through the Visa/MasterCard processing system with interchange rates similar to credit cards and set under a similar process. PIN debit cards do not go through the Visa/MasterCard system.

     "Whether debit or credit cards, the fact is that Visa and MasterCard charge Americans some of the highest interchange fees in the world," NRF Senior Vice President Mallory Duncan said. "The system is clearly broken. In virtually every other market, competition results in lower prices for consumers, but that's not the case with interchange fees. Instead, Visa and MasterCard compete to charge the highest interchange fees in order to provide the banks that issue their cards with maximum profits."

     Duncan is chairman of the Merchants Payments Coalition, a group of merchant trade associations formed last year to fight rising interchange costs. Neither NRF nor MPC are parties to the litigation, but several MPC members -- including the National Association of Convenience Stores, the National Grocers Association, the National Restaurant Association and the National Association of Travel Plazas and Truck Stops -- are among the plaintiffs.

      Seven separate lawsuits brought by individual businesses were not affected by the consolidation of the class action cases.

     Interchange is a fee of about 2 percent that Visa, MasterCard and their member banks charge retailers each time a credit or debit card is used, and effectively require retailers to pass on to consumers. Visa and MasterCard's non-negotiable contracts with merchants require that the fee be built into the advertised price of merchandise, forbid the fees from being shown on receipts, and effectively block cash discounts from being offered in most situations. Other credit card companies don't charge interchange as such because of differences in the way payments are handled, but nonetheless charge similar fees to process transactions.

     Visa and MasterCard alone collected $27.6 billion in interchange fees during 2004, according to the Nilson Report, a magazine that covers the credit card industry.

     For more information, contact NRF Senior Vice President and General Counsel Mallory Duncan at (202) 783-7971.

Committee Rejects Cargo Scanning Proposal Opposed by NRF

     A House committee this week approved a wide-ranging port security bill, but rejected a proposal to "scan" all cargo bound for U.S. ports after NRF argued that the plan was vaguely crafted and could result in costly delays harmful to the nation's economy.

     H.R. 4954, the Security and Accountability for Every Port Act, or SAFE Port Act, sponsored by Representative Daniel Lungren, R-Calif., was approved 29-0 by the House Homeland Security Committee on Wednesday. The measure would establish procedures for reopening ports after an attack, require development of standards for container seals and would codify the Customs-Trade Partnership Against Terrorism and other existing port security programs.

     The committee voted 18-16 to reject an amendment offered by Representative Edward J. Markey, D-Mass., that would have required that 100 percent of cargo headed to the United States be "scanned" in foreign ports before being loaded onto U.S.-bound vessels. The amendment was similar to H.R. 4899, the Sail Only if Scanned Act, or SOS Act, sponsored by Representative Jerrold Nadler, D-N.Y.

     NRF on Monday sent a letter to committee members asking that they reject the proposal, saying that it did not define the word scan, which could mean anything -- a scan using X-ray equipment, a full gamma ran scan such as the Vehicle and Cargo Inspection System, or the Integrated Container Inspection System used in Hong Kong. The proposal did not detail who would perform the scans, did not address who would pay for the equipment required and its operation, and did not address health concerns for port workers if gamma ray inspections were used.

     "NRF supports the screening of cargo overseas before the cargo reaches America's seaports," NRF Senior Vice President for Government Relations Steve Pfister said. "Such efforts safeguard the nation from the introduction of dangerous weapons and persons while also protecting retailers' supply chains and brand names. However, efforts to require 100 percent scanning of U.S.-bound containers are operationally infeasible and would likely cause unacceptably high economic costs and disruptions to the nation's economy."

     Attempts to duplicate Hong Kong's successful-but-expensive ICIS system in less-affluent ports "could lead to crippling delays because of lack of resources and capabilities," Pfister said.

     In lieu of the Markey/Nadler measure, the committee approved a compromise amendment offered by Representative Ginny Brown-Waite, R-Fla., requiring the Department of Homeland Security to study available technology to screen cargo.

     Despite this week's vote, the issue is not yet resolved: the Markey/Nadler language was already included in a competing port security bill -- H.R. 4880, the Maritime Terminal Security Enhancement Act of 2006, sponsored by Representative Frank LoBiondo, R-N.J. -- adopted by the House Transportation and Infrastructure Committee earlier this month. 

     It remains to be seen which committee's bill will be considered on the House floor. House leadership has been lukewarm on moving the LoBiondo bill but is committed to considering the Lungren bill as early as next week. But Transportation and Infrastructure Committee Chairman Don Young, R-Alaska, insisted this week that his committee should have a chance to review the other panel's bill. That could cause a delay, and would also give supporters of the Markey/Nadler language a second chance to attach it to the Lungren bill. 

     Beyond the scanning language, NRF also expressed concern about the SAFE Port Act itself. Language that would codify the C-TPAT, Container Security Initiative and International Trade Data System regulatory programs would take away flexibility needed to make the programs effective, NRF said. Instead, Congress should establish greater congressional oversight of the programs.

     NRF also said Congress should provide adequate funding to the Bureau of Customs and Border Protection so that federal agents can conduct C-TPAT validations rather than third parties. Congress should also hold hearings on the existing "24-hour rule" before deciding whether additional statutory authority is needed to collect security-targeting information directly from importers.

     For more information, contact NRF Vice President and International Trade Counsel Erik Autor at (202) 626-8104.

NRF Government Relations Chief Among Top Lobbyists

     NRF's head of government relations was named one of the top trade association lobbyists in Washington this week, marking the second year in a row that NRF has been recognized.

     The Hill newspaper included Senior Vice President for Government Relations Steve Pfister among three dozen trade association advocates considered to be "Washington's top lobbyists." The NRF representative was ranked along with former members of Congress, one former governor and other lobbyists from a variety of prominent business groups that included the U.S. Chamber of Commerce, the National Federation of Independent Businesses, the National Association of Manufacturers and the Business Roundtable.

     "Pfister heads the government affairs shop for the world's largest retail trade association with a broad base of lobby power, throwing his weight behind issues such as bankruptcy reform, the passage of CAFTA and China trade policies," the newspaper wrote.

     NRF was the only retail industry trade association that made the list, which was based on conversations with members of Congress, key congressional aides and other lobbyists.

     Last year, the same newspaper included Pfister in a similar listing of top lobbyists and separately cited NRF as one of the top six business trade association lobbying groups in Washington.

     For more information, contact NRF Senior Vice President for Government Relations Steve Pfister at (202) 783-7971.

NRF Adds Prominent Health Care Lobbyist to Government Relations Team

     NRF this week announced the appointment of prominent Washington health care lobbyist E. Neil Trautwein as Vice President and Employee Benefits Policy Counsel.

     "Health care is an increasingly complex and costly issue that has a significant impact on the bottom line of the retail industry," NRF Senior Vice President for Government Relations Steve Pfister said. "Neil Trautwein is one of the preeminent experts on this issue in the nation's capital, someone who is known and respected by Congress, the Administration and the health care industry. He intimately understands the intricacies of health care and will be a tremendous addition to our team as we help retailers find solutions to this critical challenge."

     "NRF has one of the most influential and effective public policy teams in Washington, made up of seasoned, veteran experts on tax policy, international trade, labor issues, data security, consumer credit and many other issues," NRF President and CEO Tracy Mullin said. "The addition of Neil Trautwein gives us yet another major league player who will help us further fulfill NRF's role as the voice of retail in the nation's capital. We are happy to have him on board."

    Trautwein will head NRF's work on health care, pensions and other benefits-related legislation and regulatory issues, developing both short-term tactics and long-term strategy aimed toward helping retailers provide workers with competitive benefits while controlling costs.

     Trautwein is one of the most prominent health care lobbyists in Washington, serving in a wide variety of key health policy positions over the past two decades. He currently chairs the Coalition on Catastrophic and Chronic Health Care Costs, co-chairs the Consumer Directed Health Care Conference, and helps direct and participates in several other health care coalitions. He also publishes a popular e-mail newsletter/Internet blog that is widely read among health policy experts across the nation. He will continue in those roles at NRF.

     Trautwein comes to NRF from the National Association of Manufacturers, where he was Assistant Vice President for Human Resources Policy. Before joining NAM, he served as manager of health care policy at the U.S. Chamber of Commerce, as director of governmental affairs at the National Association of Health Underwriters, and as a legislative assistant handling health policy and other issues for Senator Mitch McConnell, R-Ky. He holds a bachelor's degree in political science from the University of Louisville and a law degree from George Washington University.

     Trautwein is the second major addition to the NRF lobbying team in recent months. In January, Robert J. Green left the National Restaurant Association to join NRF as vice president for government and political affairs, handling minimum wage and other labor issues.

     For more information, contact NRF Senior Vice President for Government Relations Steve Pfister at (202) 783-7971.

Congressional Outlook:

House: Returns 12 noon, Monday, May 1.
Senate: Returns 2 p.m., Monday, May 1.

NRF Events:

• May 16-17, Washington Leadership Conference, Washington, D.C.

     For information on NRF events, contact Eileen Pryor at (202) 626-8114 or pryore@nrf.com.

     Washington Retail Insight is published each week that Congress is in session by the National Retail Federation, 325 7th St. NW, Washington, D.C. 20004.

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