ABL Updates: July 2020
By John Bodnovich, ABL Executive Director
ABL Activates Grassroots in Tariff Fight
As the U.S. Trade Representative (“USTR”) is currently conducting a mandatory review of the 25% tariffs on alcohol products from the EU and considering changes that could include increasing current tariffs to 100%, American Beverage Licensees is calling on its members to tell the USTR and Congress that increasing and/or expanding the scope of tariffs would negatively impact American beverage businesses; put the jobs they create at risk; and dramatically increase prices for American consumers – all during a once-in-a-decade pandemic and financial crisis.
It is now time for beverage retailers to once again engage in this fight to prevent further harm to the otherwise vibrant American alcohol marketplace – especially the brick-and-mortar bars, taverns and liquor stores that remain some of last local Main Street businesses fighting to stay alive due to the effects of the COVID-19 crisis.
ABL is calling on its members to:
1. Submit comments to the Office of the U.S. Trade Representative (“USTR”) asking for the elimination or reduction of the current 25% tariffs and expressing opposition to additional tariffs; and
2. Submit a request to members of Congress to contact the USTR to express their opposition to these tariffs.
Dept. of Justice Workshop in Music Licensing; ABL to Weigh-In
ABL staff will be participating in a Department of Justice (DOJ) virtual public workshop on July 28 and 29, 2020, to discuss competition in the licensing of public performance rights in the music industry. The workshop will provide a venue for industry stakeholders to weigh in on the ASCAP and BMI consent decrees and their implications for antitrust law enforcement as music distribution continues to evolve through technological innovation.
ABL Executive Director John Bodnovich will share the perspective of bars and taverns on a panel at 12:50pm ET on July 29 titled “Licensing Music to Users”. This session will discuss the licensing of music to end-users. Panelists will discuss potential modifications to the Decrees including the “similarly situated” and interim fee provisions of the Decrees. The panel also will address if there is a need for more robust disclosure of ASCAP’s and BMI’s repertoires to licensees and potential impediments to such disclosure. Finally, the panel will consider whether the Decrees are effective or ineffective, create efficiencies or inefficiencies, or inhibit innovative business models.
The DOJ is currently reviewing the consent decrees in place for ASCAP and BMI. ABL and other like-minded organizations recently submitted comments to the DOJ on the matter, echoing the observations expressed by Senate Judiciary Chairman Lindsey Graham (R-SC), who has proudly shared his memories of growing up in and around his family’s on-premise business. Chairman Graham, in his February 12, 2019 letter to DOJ, noted that, “[t]he antitrust protections of the decrees have allowed businesses to innovate and expand music offerings, which has generated greater revenue for songwriters.” In the same letter, he also pointed out that “the American consumer currently enjoys the world’s most vibrant music market” and that the “current market is functioning rather well.
ABL Issues Statement on States Re-closing Bars and Taverns
American Beverage Licensees (ABL) Executive Director John Bodnovich issued the following statement regarding states RE-closing bars and taverns due to COVID-19:
“After being shut down for up to 100 days in some states, laying off their employees and suffering devastating financial losses, bar and tavern owners have taken steps to safely reopen their businesses in compliance with state government guidelines to prevent the spread of COVID-19. This has included implementing new public health safety policies, rehiring and retraining employees, purchasing PPE for staff and other products to deeply clean their businesses, as well as restocking beer, wine, liquor and food to serve their customers.
“Now, these hospitality businesses are being singled out in some states, forced to close their doors again and shoulder a disproportionate share of the blame for spikes in coronavirus cases. Picking on bars and creating an unlevel playing field is not the solution, especially when other newly reopened non-essential businesses such as restaurants and elective surgery centers are given a pass and can remain open. Bars and taverns have a vested interest in keeping the marketplace safe for customers and urge state and local governments to acknowledge that with their policies.
“Governors, legislators, mayors and other government officials must understand that bars and taverns absolutely cannot close and reopen at the flip of a switch, and they cannot afford to invest in the supplies, products and people needed to reopen only to be closed again right away. If they are to survive, they need a level playing field with other hospitality businesses, regulatory certainty so they can develop COVID-19 business plans, and economic support from policymakers if shutdowns are to continue.”
Federal Unity Evasive as Economy, States, Small Businesses, Workers & Families Fates’ Hang in the Balance
Thanks to the resurgence in coronavirus and the delayed effects of the spring shutdowns and subsequent job losses, hospitality industry businesses are closely watching Congress and the Trump Administration in hopes that further legislative relief can be counted on help them stave off bankruptcy and continue to weather the raging COVID-19 storm.
The House of Representatives passed the $3 trillion HEROES Act (H.R. 6800) on May 15, which included an expansion of unemployment benefits, an additional $1200 stimulus check per individual and about $290 billion to support small businesses and employee retention with modifications to the Paycheck Protection Program, to include expanding the employee retention credit and providing credits for employer expenses.
The Senate and Trump Administration have not exhibited the same sense of urgency. As of July 24, and after weeks of anticipation that a Senate bill would be introduced before the summer Congressional recess slated to start August 1, the Senate has been unable to coalesce around a bill. For the millions of unemployed and the thousands of small beverage businesses that are either closed or operating in severely limited capacities, frustration is growing as governors and other local authorities implement stricter public health protocols.
ABL continues to advocate to Congress on behalf of its members, seeking further economic relief and stimulus as COVID-19 and its effects have robbed thousands of on-premise licensees of their livelihoods. ABL supports the following priorities for inclusion in a Phase-5 (CARES 2) relief package:
1. Liability Relief: ABL has joined a broad coalition of national trade associations on a letter urging members of Congress to provide liability protections or “safe harbor” for businesses that work to follow applicable public health guidelines against COVID-19 exposure claims. “Absent a targeted safe harbor for those that work to follow applicable guidelines, the fear and uncertainty from boundless liability threatens to impede our country’s social and economic recovery,” the letter states. Beverage licensees who are following public health guidelines, providing jobs, paying taxes and generally trying to survive the COVID-19 crisis shouldn’t also be faced with unfair lawsuits.
2. Access & Flexibility for PPP for Beverage Retailers: ABL supported the Paycheck Protection Program when it was included in the CARES Act; was pleased with the second round of PPP funds being added to the program; successfully advocated for its members who have small gaming to be eligible for PPP funds; applauded the passage of the Paycheck Protection Program Flexibility Act of 2020 (H.R. 7010) to amend language and increase borrowers flexibility; and supports extending the program again. To the extent that the PPP is needed due to future virus spikes/business closures, ABL supports the program.
3. Tax Credit for Unmerchantable Food & Beverages: As a member of the Perishable Food and Beverage Coalition (PFBC), ABL has been working with beer industry trade groups and other food associations to advocate for tax relief for businesses that have suffered a shock-loss to their food and beverage inventory as a result of the COVID-19 pandemic. The coalition is seeking “implementation of a targeted, one-time business tax credit for unmerchantable inventory to help mitigate the significant losses in their industries.” The “tax credit will provide relief to many small businesses faced with imminent and permanent closure; help ensure greater financial certainty; assist with employee retention; and bring financial relief to the affected industries.
4. Creating a Hospitality Industry Relief Fund: The restaurant industry has led the effort on creating a dedicated hospitality industry relief fund, culminating in the introduction of the Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive (RESTAURANTS) Act of 2020. The $120 billion bill would create a grant program to help independent restaurants survive. Under the act, money would be administered by the Treasury Department and available only to independent establishments with fewer than 20 locations under the same name. The grants would cover the difference between revenue from 2019 and that projected for 2020, with a cap of $10 million per grant.