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Questions and Answers | W. ERIC DELL

Posted On: 4/23/2013

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TAGS: vending industry, Emily Jed, NAMA government relations, National Automatic Merchandising Association, Joe Wilson, federal vending legislative issues, small business taxes, minimum wage levels, energy savings, food labeling, Obama care, healthy vending, Energy Savings and Industrial Competitiveness Act, ADA compliant vending machines, Patient Protection and Affordable Care Act, calorie disclosure, soda taxes, sugary drinks tax

Eric Dell, NAMA, vending The National Automatic Merchandising Association's new government affairs official is climbing the stairs on Capitol Hill with great enthusiasm. Washington-based W. Eric Dell, who assumed the position of senior vice-president of government affairs on Jan. 2, also confronts one of the most challenging times for the vending industry.

Dell was recently chief of staff for Congressman Joe Wilson (R-SC), in which post he led a staff of 16 and advised on political and policy decisions. He is now building political coalitions and represents the vending industry in a variety of public matters at national, state and local levels. Nutrition, taxes, healthcare, coinage and currency are among the many issues he's taking on.

Having worked within the South Carolina state Senate, the U.S. Congress and the private sector, Dell has the experience, and energy, to guide NAMA's government affairs division at the state and federal level. During his career, Dell has focused on building partnerships across party and ideological lines, and says he will use that experience to expand the vending industry's government affairs footprint in Washington and at statehouses across the nation.

VT's Emily Jed recently caught up with Dell to discuss the goings-on of the vending industry's political machine.

What's the most important legislative challenge facing the vending industry at the federal level?
We are following many federal legislative issues, but the majority of those challenging vending are regulatory. With the 113th Congress beginning on Jan. 3 of this year, the focus has largely been on sequestration and budget issues. Most of the legislation that we are monitoring surrounds issues related to taxes, minimum wage levels, energy savings and food labeling.

The Ways and Means committee recently announced the formation of 11 separate tax-reform working groups to receive information from the public. NAMA is following these working groups and educating our members on how to participate by providing comments regarding tax reform that would help reduce the tax burden on our industry and create jobs and more investment in technology and equipment.

We are also following the Energy Savings and Industrial Competitiveness Act to determine any effect it may have on the industry. Also, legislation has been introduced to raise the minimum wage to $10.10 by 2016. We will be working with our industry partners to oppose this increase in the minimum wage, which would be harmful to the economy. Lastly, we will be working with our partners in the food and beverage industry as it relates to legislation filed regarding genetically modified organism (GMO) food labeling.

On the regulatory front, we are awaiting final rules from the FDA relating to calorie disclosure in the vending community and educating our membership on the proposed regulations at the Department of Agriculture regarding competitive foods in K-12 schools. NAMA's also determining the applicability of changes to the Americans with Disabilities Act to the vending community.

The industry anxiously awaits the pending federal nutrition-labeling rules for operators of 20 or more vending machines. Does NAMA have any new insight into the rules or an anticipated release date? The Patient Protection and Affordable Care Act includes language that requires any business that owns or operates 20 or more vending machines to disclose the caloric content of vended food and beverage products prior to the point of sale. There is confusion within the industry concerning the disclosure date of the calorie-disclosure regulations. NAMA has used many different approaches to educate its members on the fact that there is no federal calorie-disclosure requirement in effect at this time. Our conversations with the FDA and affected industry partners lead us to believe that it is the intent of the administration to issue the calorie-disclosure rules at some point in 2013. However, we continue to remind the vending community that there is no deadline for the issuing of the final rules.

At the state level, bad ideas spread like wildfire. What are the biggest threats to operators that are common in most states?
The two biggest state and local threats to operators and the industry at-large are initiatives restricting vending items related to health and obesity concerns, and the introduction of sugar-sweetened beverage taxes.

Restricted Vended Items*

California: The Assembly has introduced AB 459, a bill which would require at least 50% of the food in vending machines on state property to meet accepted nutritional guidelines by Jan. 1, 2015, then 75% by 2015 and 100% by 2017. The bill would also require 100% of beverages in vending machines to meet those guidelines by Jan. 1, 2016.

Massachusetts: The House has legislation pending (MA House Bill 2011) which relates to expanding access to healthy food choices in vending machines on state property.

Virginia: One member of the Fairfax County School Board is leading an effort to remove soda sales in schools in his county, which makes up the largest school district in Virginia (156,000 students).

West Virginia: The Legislature is considering a measure that would ban the sale of sugar-sweetened soft drinks in West Virginia public schools.

Sugar-Sweetened Beverage Taxes*

Maryland: In June 2010, the Baltimore City Council passed a 2¢ tax on bottled beverages, to expire in July 2013.

Rhode Island: House Bill 5228, introduced in January, would add a tax of $1.28 per gallon to any soft drink, powder or syrup beverage.

Texas: House Bill 735 was recently introduced, which would impose a tax on certain sweetened beverages and ingredients used to make them. The funds would be used for the promotion of children's health programs. The bill as introduced would impose a tax of 5¢ for each 12-fl.oz. increment and includes a consumer price index (CPI) increase every year.

Vermont: The House Health Care Committee recently defeated a bill to raise a new tax on sugar-sweetened beverages by a 5-5 tie vote. The bill would have added a 1¢ per ounce tax, and was projected to raise $27 million to fund public health education.

Washington: In 2010, the state passed a sugar-sweetened beverage tax. Following its passage, a ballot initiative was carried out and the tax was overturned.

*Partial listings

State governments are looking for more taxable revenue. At the same time, they want to support small business. Vending operations are a source of revenue, but are also small businesses that employee thousands of people in every state. How is this going to play out, region to region? Do you think operators will pay more taxes and lose exemptions?
As your question asserts, many state and local governments are seeking new revenue streams due to revenue loss as a result of the challenging economic times. We have noticed slight changes in tax codes, as well as the introduction of varying tax initiatives in a number of jurisdictions. We are working to protect current exemptions and advocate for new ones. For example, the Kentucky Automatic Merchandising Council has been advocating for a tax exemption for food and beverage items sold through vending machines. We have faith that elected officials understand that higher taxes and more regulation have negative impacts on the vending community, raise prices for consumers and eliminate jobs.

With more state and local governments enacting their own nutrition-labeling rules, what is the association's position regarding whether one set of nutritional guidelines would be better for the industry?
NAMA is working to bring stability and continuity to this issue for the industry and federal, state and local government entities. One example of this is in Mississippi. The Mississippi House and Senate passed legislation limiting the regulation of food labeling to the state and federal governments. NAMA's Mississippi state council has been supporting and advocating aggressively for this legislation. We believe that this is a model that could be used in other states. This will make it easier for small businesses to determine nutrition-labeling standards and how to best comply with the laws. This is beneficial to the vending industry, regulators and consumers.

Sugary drink legislation continues to be introduced in many states. Has any such tax been passed, to date?
In 2010, Washington passed a sugar-sweetened beverage tax. However, following its passage, it was eliminated by a ballot initiative. Also, in June 2010, the Baltimore City Council passed a 2¢ tax on bottled beverages, to expire in July 2013.

Who is responsible for ADA compliance under the new rules? (The operator, location or machine manufacturer?)
We have obtained member briefings from attorneys within the ADA division of the Department of Justice, but many issues surrounding application and compliance are still outstanding. The ADA applies to two areas: state and local government entities and private entities that own, lease or operate facilities that serve the public. When a public entity or accommodation installs a new vending machine, or replaces or alters an existing vending machine, if the vending machine is "fixed equipment," then it must provide a machine that complies with the applicable ADA accessibility standards. Technically, vending machine manufacturers are not directly covered by the ADA because they do not qualify as state or local government services or public accommodations. However, covered entities that offer vending machine services to their program participants must ensure that those services are accessible to persons with disabilities. Access obligation runs to the entity, not the vending machine manufacturer. However, NAMA encourages manufacturers, operators and vending locations to work together in meeting compliance with the new standards.

If not in compliance, what sort of penalties could operators face? (Have there been any legal repercussions for operators that you're aware of since the new rules went into effect)?
I am not aware of any legal repercussions for operators since the new rules went into effect. However, complaints filed with DOJ may be resolved through mediation, formal or informal settlement agreements, or litigation in federal court. DOJ must attempt negotiated agreement prior to litigation. Again, we encourage the industry to work together to comply.

What's the latest on the Durbin Amendment? NAMA met with Sen. Durbin to discuss swipe fees late last year. What is the association trying to accomplish on behalf of its members, and does it have any progress to report?
As you stated, NAMA board members and staff met with Sen. Durbin's office during their successful Public Policy Conference last October. Durbin's staff was open to listening to our concerns. A meeting was also held with the Federal Reserve regarding the debit card swipe fee issue surrounding the Durbin Amendment. The association advocated for an exception for small-ticket item sales.

What are the latest developments regarding possible physical changes to coins and bills? Where does the association stand regarding coinage and currency composition?
With fluctuation in metal commodity prices, we encourage the U.S. Mint and decision makers to continue to consider the vending industry -- a prime customer -- in any changes in composition. With more than 7 million food and beverage vending machines in the United States, the costs to accommodate coin or currency changes would be considerable. Similarly, to continue our outstanding trouble-free vending rate, it's critical that any changes in currency do not increase costs to vending operators or keep bills in circulation so long that they are no longer able to be mechanically validated. NAMA supports reasonable changes to U.S. currency to accommodate the visually impaired, but we must ensure that currency readers in vending machines can validate the currency without undue burden to the millions of customers who purchase vended products every day.

The coin-op amusement and bulk vending sectors are actively lobbying for elimination of the dollar bill to promote circulation of the dollar coin. NAMA, which used to be at the forefront of this cause, seems to be on the sidelines this time. How does the membership view the $1 coin?
Many operators may still support the dollar coin and would like to see the dollar bill discontinued. However, from an industry standpoint, we believe that issues of feasibility and the ease of integration for all operators may also be of concern to some operators. We continue to work with our membership to receive input on this issue to try to obtain a comprehensive solution that works for our entire membership.

How is the vending industry perceived by politicians in Washington? What are some of the misconceptions that government has about vending?
I believe that members of Congress perceive the vending and foodservice industry positively. Vending and foodservice is present in every congressional district, providing food and beverage services, employment and community support. My personal opinion of this elected official perception is based on my experience from work I performed on Capitol Hill. The congressional district that I worked for contained the Dixie-Narco manufacturing facility in Williston, SC. Dixie-Narco [now a Crane Co. brand] is one of the largest employers in Williston and is positively perceived because of what it provides to the citizens of South Carolina, specifically the Williston community. I'm sure this positive perception is consistent with other manufacturers, suppliers, brokers and operators within the vending and foodservice industry in every congressional district across the country.

Are there any inequities between vending and other retail channels that NAMA is trying to resolve?
There are differing taxes in some states related to items sold in vending machines and other retail channels. NAMA continues to follow these and advocate for tax parity across retail channels. The Kentucky Automatic Merchandising Council is currently advocating for state legislation to remove taxes for items sold in vending machines. In Kentucky, some of the items taxed in vending machines are not taxed in other retail channels.

In the OCS sector, what are issues of concern to the membership? (One issue that has come up at recent shows is backflow prevention. Another is a California law requiring that coffee be labeled as carcinogenic because it contains acrylamide, formed in the roasting process.)
Backflow prevention is still an issue in the OCS sector. One example of local engagement on this issue is in Los Angeles, CA. The city has been requiring plumbing contractors to install backflow prevention devices on new construction and remodels in the office environment. Issues related to taxes and minimum wage could also have a negative impact on the OCS community. We continue to monitor and be involved in issues related to the OCS community.

Coke and Pepsi are NAMA's biggest supporters, but they're also the biggest targets of the anti-obesity movement. Does this affiliation make it more difficult to make your case for the smaller, independent operator in Washington?
Coke and Pepsi are two of NAMA's most known members. Along with the overall sugar-sweetened beverage community, there have been challenges by groups attempting to link their products to obesity, specifically childhood obesity. Our affiliation with members like Coke and Pepsi strengthen our ability to advocate for them and smaller, independent operators. The Calorie Counts program pioneered by Coke, Pepsi and other members of the American Beverage Association has provided a proactive example that helps smaller, independent operators when advocating for them in Washington. Small operators and larger NAMA members such as Coke and Pepsi, when coupled together, provide a partnership for strong advocacy. Together they represent large and small business interests with differing strengths and challenges that allow our membership to reach across both party and ideological spectrums.

What interested you on a personal and professional level to represent the legislative interests of the vending industry by joining NAMA?
I am completing my MBA and was interested in a new challenge that provided me with the ability to combine my government and political experience with the business community. I was also seeking an opportunity where I could build or expand upon an existing government affairs division. NAMA was of interest to me because it was an opportunity to use my experience to work with a diverse industry that includes both small and large businesses, multigenerational, family-owned businesses and hard-working people providing for their families and their communities. This new challenge provides me with the opportunity to make a positive difference on issues that benefit both business and consumer interests.