6 Implications of the Government Shutdown
WASHINGTON -- As the partial government shutdown moves into its fourth week—and becomes the longest shutdown in U.S. history—its effects on the c-store industry and its customers are just beginning to play out.
An estimated 380,000 federal employees have been placed on unpaid leave, or furloughed, according to The Wall Street Journal, with about 420,000 employees working without pay. While some of these employees work and live around the Washington, D.C., Maryland and Virginia area, most--or four out of five--live elsewhere. Midwestern and rural states have some of the highest percentages of federal workers affected by the partial shutdown, the Journal reported.
Beyond the implications for their customers and store traffic and sales, c-store retailers can expect to see effects in several other areas as the partial shutdown continues. They include ...
Fuel regulatory actions delayed
The partial government shutdown is threatening the U.S. Environmental Protection Agency’s (EPA's) progress in addressing several areas, including its timeline for approving year-round sales of E15. The EPA has targeted May to announce a final rule that would provide the 15% ethanol blend with a waiver of summertime Reid vapor pressure (RVP) requirements. The agency has insisted, however, that the May target date for announcing a final rule would be met.
Activities related to the Renewable Fuel Standard (RFS) may also be paused during the partial government shutdown, including the EPA’s efforts at reforming the market for renewable identification numbers (RINs)—the credits used by obligated parties such as refiners to prove compliance with RFS blending quotas—and considering small-refinery exemptions.
“Regulatory activities will certainly take more time because of less staff and resources to work on them,” Jon Taets, director of government relations for NACS, Alexandria., Va., told CSP Daily News. He also cited the EPA’s efforts to change Corporate Average Fuel Economy (CAFE) targets and its timeline, and to remove California’s Clean Air Act waiver, which gives the state the authority to set its own emissions requirements.
NACS is also watching to see if the shutdown will affect implementation efforts for recent underground storage tank regulations. “With the House gearing up on oversight and climate change hearings and discussion, a smaller skeleton staff at EPA may be unable to respond to those inquiries in a timely manner,” Taets said.
And NACS continues to track the delayed process for the new Waters of the United States rule, which redefines which waters the federal government can regulate. “The administration has already indefinitely postponed a public hearing on the proposal that had been scheduled to take place on Jan. 23 in Kansas City,” Taets said.
SNAP benefits threatened
Just a few weeks ago, retailers were celebrating the Agricultural Improvement Act of 2018, also known as the Farm Bill. The bill reauthorizes the Supplemental Nutritional Assistance Program (SNAP) and renews the ban on interchange fees on all electronic benefits transfer transactions.
But with the partial government shutdown still in place, SNAP benefits are in danger of losing funding.
The U.S. Department of Agriculture (USDA) committed to fund SNAP through February, as reported by The Wall Street Journal, but it did not commit to providing SNAP benefits in March.
“The shutdown has created a remarkably fluid situation for SNAP retailers and families,” said Taets of NACS. “USDA’s announcement this week that they will issue February benefits early is welcomed news; however, it is expected that early issuance will result in an uptick of EBT usage. Retailers are encouraged to prepare for this and stock and staff appropriately.”
The Food & Nutrition Service’s retailer management team, the USDA’s retailer management system and SNAP Retailer Service Center are also suspended, affecting retailers’ ability to get help on SNAP issues. “NACS is relaying any information we receive from USDA to our retailers promptly, and recognize that the staff at USDA are doing their best to keep us apprised of developments,” Taets said.
E-Verify gets interrupted
The U.S. Department of Homeland Security’s (USHS') E-Verify site that confirms the information on an employee’s Form I-9 was effectively frozen in the government shutdown. A statement on the website advises that it has not been updated since Dec. 21, 2018, and will continue to not be updated until funding resumes. Any transactions submitted on the site will not be processed until then.
Retailers dashing to fill staffing holes can continue business as usual, however. USHS has waived the three-day window in which hiring managers would have to verify a new hire’s work status, according to the agency’s website. With a complete I-9 and supporting documents, convenience stores can continue to hire team members.
Food inspections skipped
The foodservice industry is also left without some vital federal services during the partial government shutdown. The U.S. Food and Drug Administration (FDA) started skipping regular inspections of contaminant-prone foods such as fish and produce last week. The agency continues to inspect meat, poultry and international imports, but it is not paying its workers, according to The New York Times. The investigation into a romaine outbreak that prompted a sweeping recall will continue, FDA Commissioner Scott Gottlieb said in a tweet. As of Jan. 9, the FDA had missed about 20 of its 8,400 annual inspections, Gottlieb said.
Tobacco regulatory actions in question
With the FDA having announced new proposals surrounding flavors in tobacco products, several follow-up activities will probably be affected by the government shutdown. Some of them include any new enforcement or inspection actions at stores, feedback to retailers who have received warning letters or other communications and additional meetings that the agency requested with the top five makers of electronic cigarettes.
The c-store channel and tobacco stakeholders may also see slowdowns in the new-product approval process, modified-risk determinations and public-comment processing for all of the FDA’s developing tobacco standards.
New beer products delayed
Beer brewers and the outlets that sell beer, particularly small-batch craft beers, are stuck in limbo related to releasing new drinks. The shutdown includes the Alcohol and Tobacco Tax and Trade Bureau, which is responsible for ensuring that alcohol providers pay their taxes, as well as for approving labels for new drinks.
“This is a big problem for the U.S.’ flourishing craft beer breweries and wineries,” said a report in the Inquisitr. “These producers regularly roll out new and seasonal products, as well as small-batch runs of beers and wines.” As things stand, however, any upcoming products they may be developing will stall if the manufacturers cannot get the necessary permissions to sell them.