National Retail Federation

June 2006

FDA Issues Obesity Report, Harkin Follows with Labeling Mandate Legislation
The federal Food and Drug Administration (FDA) in early June unveiled a report calling on restaurants to serve smaller portions and to include nutritional information on menus. The 134-page report was prepared by the Keystone Center, a nonprofit education and public policy group based in Keystone, Colorado and Washington, DC. Entitled, “The Keystone Forum on Away-From-Home Foods: Opportunities for Preventing Weight Gain and Obesity,” the report was prepared after discussions among various government officials, health experts, consumer groups, and trade groups took place over a period of two years. Click this link to view the full report http://www.keystone.org/spp/documents/Forum_Report_FINAL_5-30-06.pdf

The Forum's charge was to explore what can be done to support consumers' ability to manage their caloric intake. The report included recommendations on understanding and influencing consumer behavior, increasing the availability of lower-calorie products, menu items, and meals, and providing consumers with nutrition information. Regarding nutritional information on restaurant menus, the report concluded that “information should be provided for any standard menu item offered on a regular and ongoing basis that is prepared from a standardized recipe, whether the item is an entire meal or a meal component. Non-standard items, including daily specials and experimental items, may be exempted.” Additionally, the report noted that “information should be accompanied by a caveat regarding variations owing to preparation, customization, and server variability.” Finally, the report stated that “small chains may not be able to provide nutrition information.”

A few days after the report's issuance, Sen. Tom Harkin (D-IA) introduced an onerous menu labeling bill that would require any chain restaurant with more than 20 locations to list nutritional information on menus and menu boards. The Menu Education and Labeling Act of 2006 (S. 3484), dubbed the "MEAL Act," is cosponsored by Sen. Maria Cantwell (D-WA).

Harkin's bill would require a listing of the number of calories, grams of saturated fat plus trans fat, and milligrams of sodium in a standard serving, in a statement adjacent to any menu on which food is listed for sale. This presumably would include menu boards, paper menus, and drive-through menus. Moreover, self-service facilities such as salad bars, buffet lines and cafeteria lines would also be required to list calories per serving next to each food item. Additionally, the bill requires the Secretary of Health and Human Services to specify through regulation information "designed to enable the public to understand, in the context of a total daily diet, the significance of the nutrition information that is provided," which the establishment will also be required to disclose. There is an exception made for daily specials, temporary menu items, condiments, and other "irregular" menu items as specified by the Secretary of Health and Human Services. The HHS Secretary is directed to promulgate regulations to implement the legislation no later than 2 years after the bill's enactment into law.

No preemption from state or local labeling laws is provided, which means that a chain restaurant could be required to comply with a patchwork of complex and perhaps conflicting laws and regulations. Although the bill permits the Secretary's regulations to allow for variations in serving sizes that result from inadvertent human error and other factors, the bill's language in this area is extremely loose, which could lead to exploitation by the trial bar.

Passage of this legislation would be burdensome and problematic for the chain restaurant and foodservice community. Although there is currently no companion legislation in the House of Representatives, we are monitoring this situation very closely and will keep you posted on any new developments.

For more information, contact Scott Vinson, NCCR Vice President for Government Relations, at (202) 661-3059 or vinsons@nrf.com .
Immigration Conference Stalls as Parties Bicker over Procedure . . . .

Legislative action on comprehensive immigration reform has stalled since the Senate in late May passed its version of a bill. Although both the House of Representatives and the Senate have each passed an immigration bill, a conference committee is necessary to resolve the vast differences that exist between the two bills. Action on appointing members to the conference committee has been delayed, however, because the Senate bill included tax provisions, which implicates the Constitutional requirement that all revenue raising bills must originate in the House of Representatives. Senate Majority Leader Bill Frist (R-TN) has proposed procedural maneuvers to get around the problem, but his proposal was initially rejected for several weeks by Senate Democratic Leader Harry Reid (D-NV), who feared Frist's proposal would be used as a vehicle for further tax cuts, which Democrats oppose. However, after obtaining written assurances from Sen. Frist and several other Republicans involved in the issue that they would oppose any attempt to use the immigration bill as a vehicle for tax cut legislation, Sen. Reid finally released his objection on June 29, just prior to the Senate leaving for the week-long July 4 recess. Unfortunately, it does not appear that the Senate's overcoming this hurdle will result in the appointment of a conference committee anytime soon. House Republican leaders in late June said they would wait to appoint conferees until after the month-long August recess.

Meanwhile, House Republicans announced late this month that they would hold a series of hearings on the Senate's bill over the summer, in an effort to highlight what they believe are shortcomings with the Senate's approach to reform. Specifically, House committee and subcommittee chairmen plan to criticize the Senate bill's provision of a temporary worker program and a path to earned legalization for illegal immigrants already living and working in the U.S. They also intend to push for the House's version of immigration reform, which focuses on border security and enforcement against employers who hire illegal workers. The hearings are planned for Washington and in congressional districts around the country. It is questionable whether progress on a bill can be made when lawmakers return to Washington in September, given the time constraints and the fact that little legislative activity is expected to occur in the weeks preceding the November mid-term elections. House and Senate Democrats have criticized the field hearings as an effort to delay action on comprehensive reform until next year.

One day after House Republicans announced their planned hearings, Senate Judiciary Committee Chairman Arlen Specter (R-PA) announced that his committee will hold its own immigration hearings, starting July 5 in Philadelphia . The first House hearing will take place also on July 5, in San Diego .

. . . . As Polls Indicate Voters Favor Quick Action, Comprehensive Approach

Polls conducted in June indicate that voters in general and likely Republican voters in particular, favor a comprehensive approach to immigration reform, contrary to conventional wisdom that voters want an enforcement-only approach to reform. The Tarrance Group, a Republican polling firm, conducted a poll of 800 registered likely Republican voters June 12-15, on behalf of the Manhattan Institute for Policy Research, a free-market think tank based in New York City . The poll indicated that 72% of likely Republican voters feel it is either “extremely” or “very” important that Congress solve the problem of illegal immigration this year. The poll presented respondents with a variety of proposals for dealing with illegal immigrants. 75% of likely GOP voters supported a proposal that would: (1) provide resources to greatly increase border security; (2) impose much tougher penalties on employers who hire illegal immigrants; (3) allow additional foreign workers to come into the U.S. to work for a temporary period; (4) create a system in which illegal immigrants could come forward and register, pay a fine, and receive a temporary worker permit; and (5) provide these temporary workers with a multi-year path to earned citizenship, if they get to the end of the line and meet certain requirements like living crime-free, learning English, and paying taxes. 17% of likely GOP voters would oppose this type of plan and 8% were unsure.

Surprisingly, only 47% of likely GOP voters would support a plan that is otherwise identical, but that precluded a temporary worker from being able to eventually apply for citizenship. 46% said they would oppose this type of plan, and 7% were unsure.

80% of likely GOP voters indicated support for an earned legalization program, which was defined as providing a path to eventual citizenship for foreign workers here illegally, paying taxes, learning English, and waiting behind those already waiting to emigrate to the U.S.

68% of likely GOP voters opposed deporting illegal immigrants, and 85% believed such a proposal was not realistic. Moreover, 50% of likely GOP voters indicated opposition to a policy of attrition as a way to deal with illegal immigrants already in the U.S.

Regarding the bill passed by the Senate, 48% of likely GOP voters do not believe it is amnesty, while 39% believe it is amnesty. Perhaps most surprisingly, however, of those who believe the Senate bill does constitute amnesty, 62% support its passage, and 50% are more likely to support a candidate who supports the Senate bill. These results indicate that the charge of amnesty is not as powerful a weapon against immigration reform proposals as some have suggested.

Similar attitudes were revealed in a poll conducted by Republican polling firm Ayres, McHenry & Associates for the American Hotel & Lodging Educational Foundation. The national survey of 1000 registered voters was conducted June 23-27. 66% of all respondents indicated it is “very important” to pass immigration reform this year, and 77% of Republicans believed this is true. 68% of respondents supported giving illegal immigrants who are already in the U.S. a path to become a U.S. citizen if they pay back taxes, pay a fine, learn English, and do not have a criminal record. Moreover, when presented with three options on immigration reform phrased as their proponents articulate the position, the preferred option includes border security, employer enforcement, a temporary worker program, and a path to citizenship. 40% preferred this approach, 25% preferred the approach that excludes a path to citizenship, and 22% preferred the option that excludes both a temporary worker program and a path to citizenship.

76% of respondents supported “imposing significant fines on employers who knowingly hire illegal immigrants.”

Despite these polls, House Republicans in late June toughened their stance against comprehensive reform, even going so far as to express their willingness to challenge President Bush in his support for a comprehensive approach. Bush has repeatedly called on Congress to pass immigration reform that includes a temporary worker program to address the economy's service sector workforce needs, as well as a mechanism to deal with the estimated 12 million illegal immigrants in the U.S. House Republicans on June 22 issued a statement of principles on immigration reform which made clear they intend to oppose the Senate's version of immigration reform. Calling it the “Reid/Kennedy” bill, the House Republican's statement of principles blasted the Senate bill, even though 23 Senate Republicans voted for it. In addition, the statement noted House Republicans' commitment to cracking down on employers that hire illegal aliens.

Despite the heated rhetoric, recent remarks by hard-line opponents of comprehensive reform seem to indicate a new openness to the idea of a temporary worker program. Rep. Mike Pence (R-IN), leader of the conservative faction of House Republicans, has floated a proposal to delay implementation of a temporary worker program until the borders are secure and a stringent employer verification program is in place. This so-called “enforcement-first trigger” approach has received much attention in recent days, as Republican lawmakers in both the House and Senate have signaled interest in it. Rep. Pence recently met with the President and Vice President at the White House to pitch his idea that illegal workers in the U.S. should first be required to return to their home country and re-enter through a so-called “ Ellis Island Center ” before being allowed to qualify to work in the U.S. The Ellis Island Centers would be run by private entities that would screen applicants and provide job placement services.

Such a return home requirement is not necessarily new, and critics have questioned whether it would be practical and whether the resulting mass movement of workers would cause disruptions in the workplace and labor market. The Administration testified in a recent congressional hearing that such an enforcement-first approach is unwise because it would leave current illegal workers with nowhere to go. Nevertheless, this approach seems to be gaining in popularity among conservative Republicans, some of whom have noted that it may be a possible bridge between the vastly different bills passed by the House and Senate.

Rep. Cannon Beats Back Primary Challenge from Anti-Immigrant Candidate

Rep. Chris Cannon (R-UT), a longtime leader in the House of Representatives in the push for comprehensive immigration reform, and a friend of the chain restaurant industry, survived a challenge from an anti-immigration candidate in the June 27 Republican primary election in Utah 's 3 rd Congressional District. Wealthy businessman John Jacobs ran against incumbent Cannon primarily on the basis of Cannon's support for a temporary worker program and earned legalization for illegal immigrants. Despite speculation that anti-immigrant sentiment could prevail and sweep Jacobs into office, Rep. Cannon won the primary in a stronger showing than expected. Cannon's margin of victory was 56-44.

Jacobs conceded defeat and said he would throw his support behind Rep. Cannon in the general election in November.
DHS Issues Proposed Regulation on Social Security “No Match” Letters

The Department of Homeland Security issued a new proposed regulation this month that prescribes procedures employers should follow after receiving “no-match” letters from the agency. Published June 14 in the Federal Register , the notice of proposed rulemaking outlines a safe harbor for employers that, if followed, will shield employers from liability for unlawful hiring or continued employment of unauthorized aliens. Click here for a link to the proposed regulation http://frwebgate3.access.gpo.gov/cgi-bin/waisgate.cgi?WAISdocID=68229613624+3+0+0&WAISaction=retrieve

The Social Security Administration (SSA) sends what are commonly known as “no-match” letters to employers who have submitted W-2 forms that contain either names or social security numbers for employees that do not match SSA records. The agency has for several years claimed that the letters are not punitive to employers, but rather are intended to prompt the employer to correct the error so that employees may be credited the proper amount of Social Security earnings. However, a recent study indicated that the letters have frequently led to unwarranted firing of employees who employers fear may be unauthorized to work.

The SSA sent approximately 128,000 no-match letters to employers in 2005. Letters are only sent to employers who have mismatched information on more than 10 W-2 forms, but only if the total number of mismatched forms is more than one-half percent of the total number of forms sent in by the employer. Currently, the no-match letter sent by SSA states that it “does not imply that you or your employee intentionally gave the government wrong information about the employee's name or Social Security number . . . Nor does it make any statement about an employee's immigration status.” The letters also state that employers could violate state or federal law if they take adverse action against an employee because of a no-match letter.

The proposed regulation from DHS states that employers can avoid liability for the hiring of illegal workers by taking certain steps after receiving a no-match letter. These include checking their own records for discrepancies or errors within two weeks of receipt of a letter. If no errors are found, the employer must then verify its records with SSA and DHS, and encourage the employee to resolve the issue with the agencies. If the matter is not resolved, and the employer is unable to verify the employee's work eligibility within 90 days, the employer must either terminate the employee or risk liability.

DHS established a 60-day comment period during which interested parties are invited to submit written comment on the proposed regulation. NCCR is reviewing the proposal to determine the impact on the chain restaurant industry and we intend to submit comment.

Concurrently with the announcement of the proposed regulation, DHS called on Congress to modify laws to allow DHS and the Social Security Administration to share information about no-match letters with DHS worksite enforcement agents. Current law prohibits such information sharing, but DHS officials believe knowledge of which employers currently receive high numbers of no-match letters would help the agency in their enforcement efforts. A recent Senate hearing focused on DHS enforcement activity against employers, and lawmakers were supportive of changing existing law to permit sharing of information.

For more information, contact Scott Vinson, NCCR Vice President for Government Relations, at (202) 661-3059 or vinsons@nrf.com .

DHS Publishes Long-Awaited Electronic I-9 Regulation

The Department of Homeland Security Bureau of Immigration and Customs Enforcement has finally issued the long-awaited regulation to implement legislation passed in late 2004 that permits employers to electronically complete and store the federal Form I-9. Published in the June 15 issue of the Federal Register, the new regulation takes the form of an interim rule, which renders it effective immediately.

The interim rule establishes a technology-neutral standard that will allow employers the flexibility to keep I-9 records in a manner that is consistent with their existing recordkeeping practices. According to the rule text, it permits employers to electronically scan, "complete, sign, and store Forms I-9 electronically, as long as certain performance standards” are met. The rule adopts as a model "performance standards that have been proven by other agencies in the past and provides flexibility for employers to choose a method of retention that is the most economically feasible for their specific business." Specifically, the rule cites the existing standards used by the Internal Revenue Standards for electronic signing and storage of tax records. DHS believes the IRS standards are the best and most cost efficient model because they are already widely used by the employer community.

For more information, contact Scott Vinson, NCCR Vice President for Government Relations, at (202) 661-3059 or vinsons@nrf.com .

President Calls for Expansion of Basic Pilot Program

In a public appearance and press conference at an Alexandria , Virginia Dunkin Donuts/Baskin Robbins franchise on July 5, President Bush called on Congress to make an existing voluntary employee verification program mandatory for all employers. The President's appearance was one in a series of events designed to profile immigrants' success stories in an ongoing effort by the Administration to push for comprehensive immigration reform. The franchise owners, as well as the district and store manager, were all immigrants.

Repeating his call for Congress to work with him to enact immigration reform this year, the President highlighted the local franchise's successful use of the Basic Pilot program, a voluntary program, now available in all 50 states, that employers may sign up to use to verify a new employee's eligibility to work legally in the U.S. Dunkin Brands announced earlier this year that they would require all franchisees in their system to use the Basic Pilot to verify new hires. The immigration reform bill passed by the House of Representatives last December would require all employers to use the program for both existing and new employees within five years. Although the House bill is not yet law – the House-Senate conference committee to resolve differences between the House and Senate versions of immigration reform legislation has not yet been convened -- NCCR has been critical of the Basic Pilot program because of reports in recent years that the program has been slow and error-prone.

The House Small Business Committee held a hearing on June 27 in which Department of Homeland Security officials announced they are expanding the use of the Basic Pilot program to permit immigration enforcement officers to investigate potential fraud. The Bush Administration requested an additional $110 million to expand the program in FY07. However, it is unclear whether this requested amount would be sufficient to scale up the program, which is now only in very limited use among about 4300 of the country's 8 million employers. A Government Accountability Office (GAO) study estimated that a mandatory, dial-up version of the program for use by all U.S. employers would cost almost $12 billion a year to run. The Senate version of the immigration bill, which would make use of the program mandatory only for new employees, not existing ones, called for $400 million to be appropriated to the Department before the mandatory program could take effect. DHS officials at the hearing said they envision part of the cost of administering the program to be borne by employers, although Committee lawmakers disagreed with that approach, saying it would be unfair for employers to have to pay a fee to comply with the law. Officials also said they favor phasing-in mandatory participation in the Basic Pilot, but did not specify a time frame.

For more information, contact Scott Vinson, NCCR Vice President for Government Relations, at (202) 661-3059 or vinsons@nrf.com .

Minimum Wage Becomes Hot Political Issue amid Flurry of Activity in Both Houses

As the 2006 mid-term election season inches ever closer, the issue of increasing the federal minimum wage is once again receiving considerable attention on Capitol Hill. House and Senate Democrats have intensified their efforts to fire up their Party's base by calling early and often for an increase in the starting wage.

The House Appropriations Committee in mid-June passed an amendment to the FY07 Labor-HHS appropriations bill that would increase the federal minimum wage by $2.10 an hour. The measure, offered by House Minority Whip Steny Hoyer (D-MD), would raise the starting wage to $7.25 an hour, phased in over two years. The increase would come in three 70-cent steps. Seven committee Republicans joined all Democrats to support the proposal.

But then the Appropriations Committee reversed course the following week by defeating a similar measure that was offered as an amendment to a different spending bill. Five of the seven Committee Republicans who had supported the first amendment switched their votes and opposed the Democrats' second attempt.

Inclusion of the amendment forced House Republican leaders, most of whom oppose raising the minimum wage on grounds that it represents bad economic policy, to postpone a planned vote on the Labor Department spending bill. House Majority Leader John Boehner (R-OH) said in late June that he would not allow a vote on a minimum wage increase to come to the House floor, citing the fact that the vast majority of the House Republican Conference opposes a minimum wage increase. However, the following day, a spokesperson for Boehner said the Majority Leader was reconsidering his view, after conversations with moderate House Republicans who favor a minimum wage increase. Discussions among House Republicans are now taking place regarding a possible alternative minimum wage bill that would include measures that favor small business.

The Senate, for its part, dealt with two competing minimum wage proposals this month, and turned back both. The first, offered by Sen. Ted Kennedy (D-MA), mirrored the House Democrats' proposal, and would have increased the minimum wage to $7.25. Senate Republicans offered an alternative proposal that would have raised the wage by $1.10 an hour to $6.25 an hour, phased in over 18 months. The Republican alternative, sponsored by Sen. Mike Enzi (R-WY), contained tax relief and other pro-business provisions, including a measure to allow employers to offer compensatory time off work in lieu of overtime pay. We expect Sen. Kennedy to continue to offer his minimum wage amendment to other legislation that makes its way to the Senate floor in the coming weeks.

NCCR has consistently opposed legislation to increase the federal minimum wage. For more information, contact Scott Vinson, NCCR Vice President for Government Relations, at (202) 661-3059 or vinsons@nrf.com .

NRF NEWS

Don't Miss NRFtech 2006: IT Leadership Summit
Information technology and supply chain executives from the nation's top retailers will gather this summer to discuss the latest retail technology trends and issues at the National Retail Federation's NRFtech 2006: IT Leadership Summit. This year's Summit will feature some of the industry's leading CIOs and supply chain executives from around the globe. The invitation-only summit will be held in Carlsbad, California at the LaCosta Resort & Spa, August 6 – 8, 2006.
Register Now for NRF's 96th Annual Convention and Save Up To $450
NRF is Setting Retail in Motion at its Annual Convention and EXPO, this January 14-17, 2007 in New York City. With over 15,000 attendees from more than 42 countries, this year's event will feature an expanded EXPO floor with 170,000 sq ft of exhibit space and 400 exhibitors, an innovative education program with 50-plus sessions and a wide-range of networking opportunities. Register by July 14th and save $450 off the price of onsite registration.
Maximize Your Membership Through NRF Committees
The best way to maximize your NRF membership dues is to get involved through NRF's many committees. NRF relies on an interactive committee structure, open to all NRF retail members, to formulate strategy, develop solutions and organize a coordinated retail industry response on a broad range of issues. Committees engage in a number of activities, including information exchange, research, standards setting, product development, presentation of testimony, and more.

MARK YOUR CALENDARS!

NRF Retail Education Event for Rep. Jim Moran (D-VA)
July 27, 2006, The Ritz Carlton, Arlington, VA

NRF Retail Education Event for Rep. Dave Camp (R-MI) (NCCR is co-hosting this event)
August 30, 2006, Ashman Court Marriott, Midland, MI

NCCR Fall Membership Meeting
October 16-18, 2006, McDonald's Corporation, OakBrook, IL

NCCR Food Safety Task Force Meeting in conjunction with the Fall Membership Meeting
October 16-18, 2006, McDonald's Corporation, OakBrook, IL

NCCR/NRF Human Resources Summit
October 25-27, 2006, Adolphus Hotel, Dallas, TX

NCCR Food Safety Task Force Meeting in conjunction with the Food Safety Summit
March 6-8, 2007, DC Convention Center, Washington, DC

NRF's 72nd Annual Washington Leadership Conference
May 14-16, 2007, The National Press Club and The Capitol Hill Club, Washington, DC

For information or copies of materials regarding any of the above issues call NCCR at (202) 626-8183.