Michigan Developments
Eric Rule,
Director of Governmental Affairs

ID theft bills moving quickly
A package of identity-theft bills—which would require notification of consumers when their personal information is transmitted, shared or sold—was introduced in late May and is poised for further action in the House Judiciary Committee. Workgroups have been attempting to iron out the major differences between advocates and opponents of the bills.

While transparency in this process may be a laudable goal, the complexity and cost it would impose on the business community are enormous. MRA and others have been conveying this position to coordinators of the workgroups and bill sponsors Rep. Brian Palmer (R-Rome) and Rep. Kathy Angerer (D-Dundee).

Angerer and Palmer have agreed to explore an exemption for point-of-sale transactions. The challenge of defining “point-of-sale” to include other transactions such as installment loans is still being worked out.

In addition, MRA is attempting to secure language dealing with businesses running background checks on potential employees, as well as customers applying for credit. An exemption for a current business relationship exists, but the scope appears to be too limited.

The House is expected to pass the package before breaking for the summer just prior to the Fourth of July holiday—a surprisingly quick pace for such complex and far-reaching legislation. However, once the package passes the House, the Senate will likely be more deliberative in its approach.

Senate could break tie-bar on electric choice
The Customer Choice Coalition, of which MRA is a member, has been fighting for years to keep electric choice in Michigan. The odds that the major utilities will return to monopoly-like status were boosted significantly when current legislation was tie-barred to a package setting Renewable Portfolio Standards (RPS) for alternative energy.

The tie-bar survived the legislative process in the House, but may be in peril in the Senate Technology and Energy Committee. This is good news for Michigan businesses.

Governor Granholm strongly supports the RPS bills, and they could have been passed months ago if the tie-bar had not been in place. The Senate committee has not broken the tie-bar yet, but hinted that it would not move the bills with the tie-bar in place.

In addition, the true cost of the energy proposal has been called into question. The Senate Fiscal Agency (SFA) projected the measure would drive up costs between 23.2 and 25.2 percent. That’s as much as five times more than the 4.5- to 5-percent increase predicted by Consumers Energy Vice President of Rates and Regulations Ron Rasmussen.

Rasmussen politely dismissed the SFA’s numbers, saying the utility has more information at its disposal. But others point out that the utility has a vested interest in the legislation passing, while the SFA is a non-partisan, non-profit agency.

Partial Blue Cross package passes
Two bills of the Blue Cross individual market reform bill package have passed the Senate. As passed, House Bills 5282 and 5283 do not include a high-risk pool, which is generally seen as a loss for the Blues, which pushed for such a provision.

The Senate-passed versions are much different from the House-passed versions—differences to be hashed out in a conference committee.

Two other bills—which would allow Blue Cross’ workers’ compensation insurance subsidiary, the Accident Fund, to sell other forms of insurance—were not considered. They are being held up at least until Attorney General Mike Cox’s concerns with the proposal can be explored.

Bottle expansion may piggyback on fraud bills
Michigan United Conservation Club(MUCC) leader Dennis Muchmore has announced the launch of another initiative to expand the bottle deposit law to include water and non-carbonated beverages.

Instead of using a ballot proposal, the group intends to add the expansion to pending legislation aimed at controlling fraudulent redemption of out-of-state bottles. The anti-fraud legislation is scheduled to come to a vote in late June. Changing the existing bottle bill requires a 75-percent supermajority in each.

Business groups have been extremely wary of MUCC’s efforts to expand the bottle bill, because of the cost involved to grocery stores and other retailers. Expansion also competes with other plans for increasing recycling in Michigan, such as the so-called “penny plan,” which would fund curbside recycling.

Hire Michigan First bills move
After one large change to the bills, a package intended to give favorable treatment to companies that hire Michigan workers moved from the House.

The change that facilitated the movement was the addition of the word “knowingly.” An employer who “knowingly” hires a non-Michigan worker would miss out on tax breaks and other economic incentives.

The legislation faces an uncertain future in the Senate, where members are not up for reelection this year and not as concerned about voter reaction.

Update from Washington
James Goldberg,
MRA Washington Counsel

House extends accelerated depreciation
The House has passed legislation extending the 15-year depreciation period for leasehold improvements until December 31, 2008. The Senate is expected to pass similar legislation shortly.

MRA’s Washington Office and other retail representatives support the depreciation extension, and are also urging that it be made permanent and expanded to cover improvements, such as fixtures, made to buildings owned by retailers.

Without the accelerated depreciation, such improvements would have to be depreciated over 39 years, which far exceeds the useful life of the improvements.

The 15-year depreciation period for retailer improvements in stores that are leased rather than owned was first enacted on a temporary basis several years ago. The tax provision has been extended several times, but expired again on December 31, 2007.

President signs clarification of receipt law
President Bush has signed legislation clarifying a provision in the Fair and Accurate Credit Transactions Act (FACTA), a 2003 law designed to prevent credit card fraud.

Under FACTA, retailers were told that they could no longer print more than the last five digits of a credit or debit card number “or” the card’s expiration date on customer receipts after December 4, 2006.

Many merchants interpreted this law as meaning they could either truncate the card number or leave off the expiration date, but that they were not required to do both. However, more than 300 class action lawsuits have been filed, contending that FACTA requires both steps, with some seeking damages as high as $1,000 per incident.

The new law will protect retailers from lawsuits for receipts with expiration dates printed between the time the FACTA rule went into effect in late 2006 and the date of presidential signature.

However, commencing immediately, retailers will be required both to truncate card numbers and omit expiration dates on customer receipts.

Note that Michigan’s state law also requires truncation of the account number on customer receipts but does not address expiration dates. In addition, MasterCard recently changed its regulations, so that expiration dates should not be printed on the customer or the merchant copy of receipts (see “More changes to receipts” on page 9).

California ports impose new fees
The cost to retailers of products imported into the U.S. through California ports may be rising.

The ports of Los Angeles and Long Beach have approved new fees of $70 per 40-foot container on containers moving through the ports by truck, effective October 1, 2008. The proceeds of the new fee will be used to replace older trucks serving the ports with newer, cleaner vehicles. The port of Oakland has approved the concept of a similar fee, although at a much lower level.

Los Angeles port authorities have also approved a Teamster-backed truck concession plan to limit port access to a handful of large trucking companies and ban independent owner-operators who are not employees of those trucking companies. The new plan could triple trucking costs, according to some trade observers.

Since nearly one-half of the country’s containerized imports enter through the two California ports, the new fees are expected to have a substantial adverse impact on the cost of imports, especially apparel and other products from China and other Asian countries.

Cable set-top boxes may disappear
For several years, electronics retailers sought to end the monopoly that cable TV companies enjoyed in providing set-top boxes. The retailers believed that allowing competition would open the door to innovation and lower prices in the ubiquitous product.

It appears that the set-top box is on its way out.

Sony Electronics, Inc. and the National Cable and Telecommunications Association recently announced an agreement that will allow viewers to rid themselves of the set-top boxes, yet still be able to receive advanced “two-way” cable services such as pay-per-view movies. The remote control device that accompanied the box may also become a dinosaur.

The agreement will permit Sony (and presumably other TV manufacturers) to use the cable industry’s technology in its TV sets as soon as possible, although industry executives could not predict when the first such televisions might appear in stores.