Trump Urged to Save Grocery, Pizza Consumers from Costly, Confusing Obamacare Reg by May 5
Food chains like pizza retailers are warning that an Obamacare regulation set to kick in on May 5 will overwhelm customers, raise prices and bankrupt businesses.
A costly and burdensome 400-page regulation in the Affordable Care Act (Section 4205) is set to go into effect on May 5 requiring any “restaurant” with 20 or more locations to post in-store menu boards with separate nutrition information for every food item and combination served.
The regulation would ensnare not only traditional sit-down restaurants, but also other businesses that sell food, such as:
- Pizza companies,
- Convenience stores,
- Microbreweries, and
- Movie theaters.
Businesses like Domino’s pizza would potentially have to display menu listings for millions of permutations of their offerings. The American Pizza Community (APC), which represents pizza companies like Pizza Hut, Papa John’s and Dominos, as well as smaller franchises, explains:
“From the 34 million combinations of Domino’s pizza to the hot and salad bar at a local supermarket or convenience store, complying with the rule as written will financially harm many small businesses, not to mention the criminal penalties that can come with technical non-compliance.”
The menu board required would be both excessively detailed and complicated, as well as extremely difficult to comprehend, APC warns.
AFP also cites U.S. Office and Management and Budget (OMB) analysis estimating that the menu-labeling regulation would require businesses to spend 14.5 million hours complying with its mandates.
Likewise, the Food Marketing Institute (FMI), whose members operate 37,000 supermarkets, estimates the first-year cost of compliance at more than $1 billion – a cost that will be passed on to consumers.
Supermarket menus won’t just be costly and cumbersome, they’ll also cause local food providers, such as bakeries and specialty food companies, to lose their supermarket business. Local providers won’t be able to afford to provide the extensive nutrition information required and, since liability ultimately rests with the food retailers, these locally-produced products will be dropped. This would not only hurt local businesses, but it would also reduce consumer choice, FMI Senior Director, Food & Health Policy, Food Marketing Institute Robert Rosado says.
Confusion about the regulation’s exact requirements will also lead to wildly inconsistent implementation and enforcement. Offerings of packaged, sliced produce would need the new menus, but what about loose produce sold by weight? “Nobody knows,” Rosado says.
And, for each restaurant affected, it could cost business owners thousands of dollars a year to maintain their in-store menu boards. For pizza retailers, this would be particularly onerous, since less than two percent of their customers actually use menu boards.
As this time-lapse video of a typical day shows, more than 90 percent of pizza orders are placed online or by phone, not in-store. What’s more, consumers can often access more customizable nutrition information provided online.
Trade groups with members threatened by the regulation are urging lawmakers to delay, withdraw and rewrite the rule to make it less burdensome, more consumer-friendly, and accommodate industry differences.
While legislative improvements to regulation would ultimately be required, an executive order by President Donald Trump or a new Food and Drug Administration (FDA) rule might be required to provide relief before May 5.
“This certainly seems to fall in the realm of other executive orders” issued by the previous administration under auspices of the current health care law, Rosado says, adding that “The FDA’s square-peg-in-round-hole approach to ‘menu labeling’ is completely bizarre and ineffective.”
Worse yet, consumers will end up paying the price, Rosado explains:
“This Obama era regulation will financially punish grocery stores, already operating on less than a 2% profit margin, by causing them to incur $1 billion in compliance costs for the first year alone. These are costs that will ultimately be absorbed by customers.
“We hope that before the May 5 enforcement deadline begins, the Trump Administration will take action to revisit these rules, which the FDA has not only characterized as a ‘thorny’ issue, but has delayed implementation twice because of its complexities.
“Consumers deserve access to locally prepared foods and more effective nutrition information and there are less costly, more efficient methods readily available which can accomplish both goals.”
Legal Foundations Call for Repeal of Obama-Era Race-Based School Discipline Guidance
Two legal foundations are calling for an end to federal pressure on school districts to adopt racial quotas in suspensions. And rightly so: It is wrong for an agency to pressure regulated entities to adopt racial quotas, or make race-based decisions, even if the pressure does not inexorably lead to a quota. (See Lutheran Church—Missouri Synod v. FCC, 141 F.3d 344 (D.C. Cir. 1998)). I earlier discussed at length how Obama-era rules, issued without notice and comment in 2014, pressured school districts to adopt racial quotas in suspensions, which violated the Constitution; misinterpreted Title VI of the Civil Rights Act; and ignored judicially-recognized limits on disparate-impact liability.
On March 29, Roger Clegg, president and general counsel of the Center for Equal Opportunity, sent an email to the Justice Department asking the Trump administration to withdraw these rules, which are contained in the Obama administration’s January 8, 2014 letter to America’s schools, known as the “Dear Colleague letter: Racial Disparities In The Administration Of School Discipline.” Clegg urged “the withdrawal of the January 8, 2014 ‘Dear Colleague’ letter,” which was issued by the Obama Justice Department’s Civil Rights Division and the Education Department’s Office for Civil Rights. He called this letter “unsound as a matter of both law and policy,” citing “a variety of sources that have criticized the letter, again from both policy and legal perspectives.” Clegg is a former Deputy Assistant Attorney General in the Civil Rights Division, where he served from 1987-1991.
On April 3, the veteran constitutional lawyer who heads the Mountain States Legal Foundation, William Perry Pendley, sent a letter requesting the rules’ repeal. The letter quotes my March 29 letter to the editor in The Wall Street Journal, including the following language:
“The Obama administration’s rules wrongly pressure schools to have racial quotas in suspensions, and the Education and Justice Departments should now rescind them …The Obama administration’s 2014 ‘guidance’ told the nation’s schools to do something about the disparity in which black students are suspended from school at a higher rate than whites. But as the federal appeals court in Richmond noted, when it comes to suspensions ‘disparity does not, by itself, constitute discrimination,’ and the idea that a school system ‘should have a disciplinary quota is patently absurd.’ The fact that 66% of suspended students were black did not show discrimination in that case, Belk v. Charlotte-Mecklenburg Board of Education (2001). Similarly, in 1997 the federal appeals court in Chicago struck down as an unconstitutional racial quota a requirement that schools not ‘refer a higher percentage of minority students than of white students for discipline’ [in People Who Care v. Rockford Board of Education (1997)].”
Pendley cited the harm caused by the Obama administration’s pressure in places such as Oklahoma City, where the school district entered into a settlement with the Obama administration designed to lower minority suspension rates. The resulting curbs on suspensions have apparently resulted in more fighting and classroom disorder. Quoting The Wall Street Journal, Pendley noted that a teacher in Oklahoma City said that referrals to the principal’s office “‘would not require suspension unless there was blood.’”
The accompanying April 4 press release from Mountain States Legal Foundation notes:
“William Perry Pendley, president of Mountain States Legal Foundation, in a letter delivered today to Attorney General Jeff Sessions and Secretary of Education Betsy DeVos urged voiding of a directive—styled a ‘Dear Colleague’ letter—sent to State and local public school officials across the country by senior officials in the U.S. Department of Justice and U.S. Department of Education. The ‘Dear Colleague’ letter (titled, ‘Dear Colleague Letter on the Nondiscriminatory Administration of School Discipline’) warns recipients that the federal Departments of Justice and Education will ‘initiate investigations’ over ‘racial disparities in student discipline’—in some cases, even when the disparity merely reflects the fact that minority students ‘are engaging’ in specified misconduct ‘at a higher rate than students of other races.’
“According to Mr. Pendley, the ‘Dear Colleague’ January 8, 2014, letter violates federal law, misinterprets Title VI of the Civil Rights Act of 1964, and pressures recipients to violate the Equal Protection Clause. In addition, the ‘Dear Colleague’ letter constitutes illegal rulemaking in violation of the Administrative Procedure Act, promotes a policy that has a horrific record when used by local school districts, and has been the subject of almost universal condemnation by knowledgeable experts. In St. Paul, Minnesota, for example, the results of using racial equity rules to discipline students were nothing short of disastrous, specifically ‘violence and chaos.’ Because ‘kids … consider themselves untouchable [w]e are seeing more violence and more serious violence.’ ‘[A]t many elementary schools, anarchy reigned.’
“Jason Riley, in an op-ed entitled, ‘An Obama Decree Continues to Make Public Schools Lawless,’ Wall Street Journal, March 22, 2017, at A19, questions why, two months into the Trump administration, the ‘Dear Colleague’ letter is still official policy. Referencing a newly released study (‘School Discipline Reform and Disorder: Evidence from New York City Public schools, 2012-2016,’ by Max Eden, Manhattan Institute, March 14, 2017), he notes that more than half of the nation’s 50 largest school districts have reduced suspensions ‘to the dismay of those on the front lines.’
“That the ‘Dear Colleague’ letter was issued illegally, that similar policies have yielded disastrous results for students, teachers, and even the intended beneficiaries (allowing students to avoid any responsibility for their actions, said one teacher, means they are destined to go ‘from the school house to the jail house’), and that it earned the condemnation of public policy experts should spell its doom,” said William Perry Pendley…Please withdraw the ‘Dear Colleague’ letter as soon as possible.”
Unlike some other civil rights statutes, Title VI does not itself ban “disparate impact,” as the Supreme Court made clear in its 2001 decision in Alexander v. Sandoval. The Obama administration argues that even if the Title VI statute itself does not reach disparate impact, regulations under it can and do (an idea that the Supreme Court characterized as “strange” in footnote 6 of its Sandoval ruling). But even if Title VI disparate-impact regulations were generally valid, they would be subordinate to, and could not override, the Title VI statute itself, which bans racial quotas, as does the Constitution’s equal-protection guarantee. (See, e.g., People Who Care v. Rockford Board of Education, 111 F.3d 528, 538 (7th Cir. 1997) (striking down as unconstitutional a provision that forbade a “school district to refer a higher percentage of minority students than of white students for discipline unless the district purges all ‘subjective’ criteria from its disciplinary code,” because that constituted a forbidden racial quota)).
Even if disparate-impact liability applied under Title VI, the Obama-era guidance fails to take into account non-racial factors (such as poverty and coming from a single-parent household) in determining whether a meaningful disparity exists to begin with, as courts require (and as I previously explained.)
Hans Bader practices law in Washington, D.C. After studying economics and history at the University of Virginia and law at Harvard, he practiced civil-rights, international-trade, and constitutional law.
Editor’s Note: This piece was originally published by the Competitive Enterprise Institute.