WASHINGTON -- The supermarket industry is poised with a legislative wish list to hand lawmakers when Congress reconvenes next week.
Eliminating, or at least mitigating, the estate tax, delaying a national ergonomics regulation and allowing food stamps to be used across state lines are among industry priorities.
Election-year politics will largely influence how a lot of congressional business will be handled. As is typically the case leading up to congressional and presidential elections, lawmakers will be particularly keen to weigh political ramifications before drawing up their agendas and casting votes. Because of electioneering there's also less time on the congressional calendar for business: Congress is scheduled to be in session for only seven months this year.
Lawmakers will reconvene Jan. 24, so "legislation will have to move between then and Memorial Day," said Kevin Burke, vice president for government relations at Food Distributors International, Falls Church, Va. "It's going to be difficult to move anything as we get closer to the political conventions this summer."
An increase in the federal minimum wage will likely be the most prominent byproduct of this election year. Despite strong business opposition, including supermarkets, the Republican majority has acceded to Democrat calls for a $1 increase to the $5.15 minimum wage, if the hike is spread over three years and there are tax breaks to offset the cost to business.
Before Congress adjourned at the end of last year, the Republicans proposed these offsets to include an easing of the estate tax, which is levied on all estates of more than $1.5 million. The Republican plan called for eliminating the 5% surtax on estates valued at more than $10 million, and reducing the top tax rate from 55% to 48% over five years.
President Clinton earlier said he would veto a minimum wage increase if it were tied to tax breaks, like the estate-tax cut. However, the President more recently signaled a willingness to support a tax-cut package from Congress. This latest announcement bodes well for some sort of estate-tax cut emerging from Capitol Hill, said Tom Wenning, vice president and general counsel of the National Grocers Association, Reston, Va.
"The whole tax issue is back in play," said Wenning, who calls eventual repeal of the estate tax "the No. 1 priority" for the NGA's independent grocer members.
For its part, the Republican leadership hasn't specified how it wants to treat the estate-tax issue this year. Rep. J.C. Watts, R-Okla., who helps to set the majority's agenda, said earlier this month he expects an estate-tax proposal to be included in a tax-cut package offered later in the year. He didn't offer specifics. "It is part of the equation," Watts said.
Another bill critical to supermarkets would delay release of pending Occupational Safety and Health Administration ergonomics regulations until completion of a National Institutes of Health study.
The regulations, fiercely opposed by a broad coalition of businesses, including supermarkets, would set national workplace-safety standards designed to prevent repetitive motion injuries.
Industry officials say the ergonomics proposal would leave little leeway for companies to design their own more efficient safety programs. They also argue existing OSHA regulations provide enough guidance and enforcement power to address ergonomics concerns.
"If you're a self-distributing retailer, the ergonomics regulations would hit you everywhere, from the warehouse, to trucking, production, shipping, stocking and checkouts," said John Motley, senior vice president for government and public affairs at the Food Marketing Institute here.
However, getting the Senate to act on the ergonomics-delaying bill may be difficult, given the potential backlash from organized labor at the polls, said FDI's Burke. There's also a threatened presidential veto.
"Congress may not be able to help us," Burke said. However, he said, the anti-ergonomics standard coalition will look at other ways to block or delay the regulations, such as a legal challenge, and hope that if a Republican claims the White House he would discard the proposal altogether.
Probably the least politically sensitive supermarket issue facing lawmakers upon their return is a bill that would make electronically dispensed food-stamp benefits portable from state to state.
The Senate has already voted on an electronic benefits transfer bill, and the measure is next set to go before the House Agriculture Committee. Under the legislation the federal government would pay up to $500,000 annually to cover the cost of interstate benefit use. The program would cover the 48 states with supermarkets employing food-stamp technology using magnetic-strip cards. Wyoming and Ohio would be excluded since retailers there use smart cards equipped with computer chips.
Another issue held over from last year that's being followed closely by the supermarket industry is the Patient's Bill of Rights, health-insurance legislation largely designed to bring reform to health maintenance organizations.
Under the bill, business wants to ensure its exemption from lawsuits arising from health coverage for multistate plans is retained. A House-passed version drops this exemption, while a Senate-passed version retains the protection.
Supporters of the House version argue the current shield against lawsuits is anticonsumer since HMOs should be open to legal scrutiny for maltreatment. Business sides with the Senate bill because companies fear being swept up in HMO lawsuits. This would increase costs and thus discourage offering employee health insurance, business argues. The next step is for the House-Senate conference committee to meet to reconcile differences between the bills.
Also lingering from last year is the Senate Small Business Committee investigation into slotting fees, or what many retailers charge for suppliers to secure shelf space in stores. Committee chairman Kit Bond, R-Mo., has signaled his investigation is focused on slotting-fee arrangements designed to block competitors from the market. The committee last year held a hearing on the issue and more hearings are planned for this year, according to a committee staffer.
Several agriculture issues affecting supermarkets are also likely to surface on Capitol Hill. Dairy compacts are one topic, the focus of a lot of attention last year and a practice supermarkets oppose as anticompetitive.
New England dairy farmers have had special treatment for the last several years to form cooperatives and set prices. Their so-called dairy compact was set to expire and a national milk pricing program was poised to be phased in. However, last-minute maneuverings in the House last year renewed the New England compact, much to the dismay of Midwestern dairy farmers who want to form their own compact.
Another farming issue, the push for mandatory country-of-origin labeling legislation on meat, should move from the congressional spotlight as retailers and cattlemen continue to work on a voluntary labeling program, forecasts the FMI's Motley.
However, meat labeling will likely continue to resonate with cattle-country lawmakers who tirelessly cite competition from foreign meat as one reason for falling U.S. meat prices. A Raised-in-the-U.S. labeling program, they argue, would help to fortify sales and prices. Retailers don't want to be required to routinely label U.S. meat as such because it would be a logistical nightmare, given the various origins of meat sold. Origin labeling, retailers maintain, should be the packers' job, if mandatory labeling is ever enforced.
Another labeling issue -- requiring national uniformity for warning labels on food -- - will continue to be furthered on Capitol Hill by food processors. Manufacturers want the Food and Drug Administration to be the judge of whether warning labels are needed as a means to rein in state warning-label requirements such as one proposed in California for the commonly used preservative sodium nitrite. Supporters of labeling -- the proposal is now on hold -- claim sodium nitrite is linked to reproductive disorders, which is widely disputed.
A bill calling for uniformity has been introduced but has yet to get an airing, although Mary Sophos, senior vice president for government affairs at the Grocery Manufacturers of America here, expects a hearing on the issue this year in the Senate.
Food manufacturers are also expected to oppose efforts by some consumer groups and environmentalists to have the government require the labeling of food products containing ingredients produced via genetic engineering. Critics of the technology argue the health effects of genetically manipulated food are not sufficiently known and that there is evidence biotech crops in the long run will harm biodiversity.
Rep. Dennis Kucinich, D-Ohio, has such a biotech labeling bill pending, but the Republican majority hasn't signaled any support for the legislation.
Nonetheless, the issue remains in the fore, and Sophos says the pro-biotech camp will continue to lobby against any label that, she said, "would mislead consumers into believing these products are different than conventional foods, even though the FDA has determined these foods are safe."
Brian Folkerts, vice president of government affairs for the National Food Processors Association here, expects the Senate and House Agriculture Committees to hold oversight hearings on the safety of biotechnology, given all the publicity the issue has received, particularly outside the United States.
However, he doesn't expect any action on a labeling bill. Rather, there might be discussion about the FDA making mandatory the voluntary review process of genetically modified foods. Industry has long sought informal FDA approval before launching a new biotech product.
Food processors will also be eyeing any state biotech legislation, Folkerts said, noting how a labeling bill similar to Kucinich's is being furthered in Vermont. "If there is a real threat to biotechnology, it could occur in the states," Folkerts said.
For food distributors, two other important issues on Capitol Hill this year are how employee bonuses are taxed and whether inside sales staff can be paid on a commission basis.
In-house sales staff are defined under the Fair Labor Standards Act as non-supervisory employees who are paid an hourly wage plus overtime. This status, industry officials argue, limits their salaries, as well as their sales. These workers should therefore be treated as outside sales staff who are paid a base salary plus commission.
Inside sales staff legislation was on deck last year as part of a minimum-wage package. The FDI's Burke expects the measure to be considered this year.
Congress reconvenes next week and here's a snapshot of what's on deck:
MINIMUM WAGE -- An increase of $1 to the federal wage of $5.15 is almost certain. The fight will be over how many years the increase will be phased in.
ESTATE TAX -- Leadership in the Republican majority plans to tackle estate-tax reform. However, repeal isn't in the offing. Expect some reduction, to be proposed possibly as part of a larger tax-cut package.
ERGONOMICS -- Because this is an election year, getting Congress to delay OSHA's looming ergonomics regulations appears difficult. However, a coalition fighting the regulations, including the supermarket industry, still hopes to block OSHA's plans.
EBT PORTABILITY -- Final passage of a bill making federal food-stamp and other federal electronic benefits portable from state to state appears likely. However, because of different technology, Wyoming and Ohio will be excluded from the program.
PATIENT'S BILL OF RIGHTS -- Maintaining the employer protection from lawsuits arising out of health care plans is a big supermarket industry objective. This issue will be key in House-Senate negotiations to work out differences in health care reform bills passed last year. The Senate version retains the employer protection while the House version doesn't.
SLOTTING FEES -- The Senate Small Business Committee's investigation of slotting fees continues as the focus broadens to other retailers, in addition to supermarkets.
AGRICULTURE ISSUES -- Expanding dairy compacts beyond the price-setting cartel in the Northeast -- or abolishing them altogether -- will again be a charged issue this year. However, the push for mandatory country-of-origin labeling for meat will likely ease. BIOTECHNOLOGY -- No action is expected from Congress on the subject of genetically modified foods, but the issue could be the topic of hearings.
NATIONAL LABELING UNIFORMITY -- Food processors will continue to press for action on legislation to make the Food and Drug Administration the sole judge of when a warning label is needed on food, thus stripping the states of their labeling authority.
FAIR LABOR STANDARDS ACT REFORMS -- Two bills, one allowing inside sales staff to be paid on commission and the other changing how bonuses are calculated, are again in the offing.