FEBRUARY 2018
Member Focus
THE JOUR NEY OF “ EL NORTE ÑO” p 12 How a rec ipe for suc cess drive n by passio to bring M n, taste, an exican-Sty le beef jerk d music c onnected y to conve powerful nience an cultures d grocery stores in T exas.
Stalking Fuel Marketers on the Dark Web p 16 Protecting yourself from this booming business
Helping Employees with Hurricane Harvey Expenses
p 18
After the Storms p 24 Picking up the pieces after this disasterour trifecta
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CONTENTS TEXA S FOOD & FU E L M AGA Z IN E
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CHANGES TO THE OVERTIME RULES A look into the federal labor laws regarding wages and overtime pay.
¡VIVA EL NORTEÑO! A not-so-overnight sensation is hitting Texan’s tastbuds by storm. Sniff for yourself!
THE DARK WEB IS STALKING MARKETERS Tips on protecting your business from the dark web’s malware attacks.
AFTER THE STORMS Rallying as a community and standing tall in the face of an unimaginable industry-wide disaster.
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Mpact Beverage 21240 Foster Road Spring, TX 77388 (832) 559-8633 Christina Alexander calexander@mpactbeverage.com mpactbeverage.com
Grocery/C-Store Retailer Family Mart PO Box 2429 Granbury, TX 76048 Primary Phone: (817) 573-4265 Angie Vackers angie_vackers@att.net
Supplier Member Advance LED Lights 7333 Harwin Drive, Suite 100 Houston, TX 77036 (281) 888-4221 Ken Mauk sales@advanceledsolution.com www.advanceledsolution.com BluFork Design & Consulting 5561 N Gate Road, Unit 7034 Granbury, TX 76049 (817) 894-7513 Coby McCauley coby.mc@blufork.com www.blufork.com Boyett Petroleum 9630 Westview Drive Houston, TX 77055 Primary Phone: (209) 577-6000 Beverly Michaud bmichaud@boyett.net www.boyett.net Chetu Inc. 10167 W Sunise Blvd, Suite 200 Plantation, FL 33322 (954) 342-5676 Kari Kernen shows@chetu.com www.chetu.com Cothern’s Tanker Inspections, LLC PO BOX 1018 Caldwell, TX 77836 (979) 272-1400 Riley Cothern buford@cothernsllc.com www.cothernstankerinspections.com Country Prime Meats USA, Inc. 2672 SE Willoughby Blvd Stuart, FL 34994 Primary Phone: (250) 396-4111 Jackie Woodworth jackie@countryprime.com www.countryprime.com Crompco, LLC 1815 Gallagher Road Plymouth Meeting, PA 19462 (860) 668-4643 Bill Jenkins bill.jenkins@crompco.com http://Crompco.com
Ezzi Signs Inc. 16611 West Little York Road Houston, TX 77084 (713) 232-0771 Hussain Contractor sales@ezzisigns.com www.ezzisigns.com Frey-Moss Structures, Inc. 1801 Rockdale Industrial Blvd. Conyers, GA 30012 Primary Phone: (800) 366-6385 Brandon Ross fms@freymoss.com www.freymoss.com
North American Breweries 50 Fountain Plaza, Suite 900 Buffalo, NY 14202 (845) 596-6317 Katie Cunningham katie.cunningham@nabreweries.com www.nabreweries.com Ranch House Meat Company 303 W. San Saba Avenue Menard, TX 76859 (325) 396-4536 Marsha Stabel marsha@brisket.net www.brisket.net
Gulf Capital Partners, Inc. 952 Echo Lane, Suite 322 Houston, TX 77024 (713) 984-9525 Michael Smith mjsmith@gulfcap.com www.gulfcap.com
Rollok “685 John B. Sias Memorial Parkway Suite 875” Fort Worth, TX 76134 (817) 695-1010 Ray Moore info@rollok.com www.rollok.com
Heineken USA 3204 Nottingham Denton, TX 76209 (940) 783-6706 Len Yarbrough lyarbrough@heinekenusa.com www.heinekenusa.com
Cothern’s Tanker Inspections, LLC PO BOX 1018 Caldwell, TX 77836 (979) 272-1400 Riley Cothern buford@cothernsllc.com www.cothernstankerinspections.com
Icon Containment Solutions 905 N. Main Street, Ste D1 North Salt Lake, UT 84054 (855) 379-7867 Paul Reber paul@icontainment.com www.icontainment.com
Trade Association
International Wholesale Supply 11559 Rock Island Court Maryland Heights, MO 63043-3522 (314) 432-1400 Kristie Freed kfreed@teamiws.net www.shopiws.com Marathon Petroleum Company 3475 Corporate Way, Suite B Duluth, GA 30096 (678) 474-1230 Ken Mauk klmauk@marathonpetroleum.com www.marathonpetroleum.com
Greater Austin Merchants Cooperative Association 8801 Research Blvd., Suite 102 Austin, TX 78758 Phone: 512.374.1413 Shane Walker shanew@gamaus.com www.gamaus.com Willis Johnson & Associates 5847 San Felipe, Suite 1500 Houston, TX 77057 (713) 439-1200 Geraldo Olivo golivo@wjohnsonassociates.com www.wjohnsonassociates.com
Milo’s Tea Company, Inc. 3112 Dublin Lane Bessemer , AL 35022 (205) 424-4284 Greg Johnson gjohnson@drinkmilos.com http://drinkmilos.com Moffitt Holdings, LLC 17774 Cypress Rosehill Rd., Suite 1100 Cypress, TX 77429 (281) 205-7577 Chris Lane chrisl@moffittservices.com www.moffittservices.com THE INDUSTRY LEADER IN TEXAS
texa s f ood & f u el magaz ine
Editorial
Board of Directors
Editor, Layout & Design, Digital & Print Production, and Advertising Sales Jesus Azanza 512.617.4309 jazanza@tffa.com
Officers: Cary Rabb*, Round Rock WAG·A·BAG™ Chairman
Texas Food & Fuel Association Staff Paul Hardin, CAE President phardin@tffa.com Jesus Azanza Director of Communications & Marketing jazanza@tffa.com Rick Bolner, CPA Vice President of Accounting rbolner@tffa.com Matt Burgin Director of Government Relations mburgin@tffa.com Scott B. Fisher Senior VP of Policy & Public Affairs sfisher@tffa.com Dana Fuller, CEM Director of Expo & Events dfuller@tffa.com Annette Hicks, CMP Vice President of Meetings & Expositions ahicks@tffa.com Kris Wallace Assistant Director of Finance kwallace@tffa.com
Dan Baker*, San Angelo Regal Oil Company Vice Chairman Steve Fryar*, Brownwood P.F. & E. Oil Company Secretary Steve Boyd*, Houston Suncoast Resources Treasurer Madalyne Lange*, Sherman Immediate Past Chairman Don Grissom, Austin General Council Paul Hardin, Austin Texas Food & Fuel Association President Region Directors: Robert Eggleston*, Midland Penta Operating, LLC Region A
Nelson Grona, San Antonio Bear Oil PCompany District IX Matt Judson, Corsicana Winters Oil Partners L.P. District X Nathan Winkelmann, Brenham Buccaneer Food Store District XI Ed Morgan, Nacogdoches Morgan Oil Company District XII
John Hebert, Liberty John J. Hebert Distributor District XIV
Terry Tesch*, Lake Jackson R.B. Stewart Petroleum Products, Inc. Region D
Phil Wuest, McQueeney Wuest’s, Inc. District XV
District Directors: Neil McCarty, Lubbock Kendrick Oil Company, Friona District I
Carlos Garza, Edinburg La Lomita, Inc. District XVI
Joy Garcia, Mineral Wells Connel Oil Corp. District III
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Mike Kittrell, Parker Carter Energy Company District VIII
Don Broach*, Bryan BRENCO Marketing Corp. Region C
Subscriptions are included in the dues paid by Texas Food & Fuel Association member companies.
©2018 Texas Food & Fuel Association. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without the written consent of the publisher.
Kyle Kirby, Fort Worth Advance Petroleum Distributing Co., Inc. District VII
Clay Johnson, Austin Tex-Con Oil Company District XIII
Sarah McKinnon, Lubbock Kendrick Oil Company District II
Subscription requests: Texas Food & Fuel Association 401 W. 15th Street, Suite 510 Austin, TX 78701 P 800.460.8662 F 512.477.4239 info@tffa.com
FEBRUARY 2018
Lance Davis*, Bonham McCraw Oil Company Region B
The Texas Food & Fuel Magazine is published quarterly by the Texas Food & Fuel Association, Austin, Texas, USA.
Paul Masters, El Paso Mogas, Inc. District IV Mike Hennings, San Angelo Tres Amigos C-Stores District V Aaron Nilsson, Daingerfield W.O.I. Petroleum, Inc. District VI
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Doug Staton, Austin Arnold Oil Company Fuels, LLC District XVII Jake Marsico, Dickinson Bay Oil, Co. District XVIII Directors at Large Marketers: Justin Parrott, Dallas Ranparr, Inc. John Prickette, Sulphur Springs Grocery Supply Company Imad Sarkis, Beaumont Tri-Con, Inc. Jeff Scarbrough, Clovis, NM Allsups Petroleum, Inc.
Wes Scott, San Antonio Arguindegui Oil Co., Ltd Bobby Warren, Sherman Douglass Distributing Directors at Large Suppliers: Buster Cage, Whitney Republic Tobacco Michael Lawshe, Fort Worth Paragon Solutions, Inc. Wolfgang Manz, Houston PWM Price Signs Tim Miller, Kingwood Ascentium Capital, LLC Richard Rogers Texas TransEastern, Inc. Darrell Shulte, Austin Blue Bell Creameries Past Chairmen Serving on the Board of Directors: Eddie Bates C&I Oil Company Rodney Fischer Midtex Oil, L.P. Gary Garrison Fred Garrison Oil Company Rick Golman QW Transport LLC Gary Johnson Johnson Brothers Oil Company Jim Kolkhorst* Kolkhorst Petroleum Co. Terry Maxey Maxey Energy Company Andy Olmstead* Chapman, Inc. Randy Parrott Ranparr, Inc. Doug Phillips Regal Oil, Co. *Serves on Executive Committee **Serves on Board Board Term: July 1, 2017 - December 31, 2018
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Katrina Bush St. Edward’s University
Applications due 3/23/2018
SINCE 2000, THE TEXAS FOOD & FUEL ASSOCIATION SCHOLARSHIP FOUNDATION HAS AWARDED 86 SCHOLARSHIPS TOTALING OVER $243,000. THE INDUSTRY LEADER IN TEXAS
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Greater Austin Merchants Association (GAMA) Tradeshow Palmer Event Center Austin, TX
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Southeast Petro-Food Marketing Exposition (The Really Big Expo) Myrtle Beach Convention Center Myrtle Beach, SC
13-15
MAY
MARCH
Industry Happenings 9-11
SW Fuel & Convenience Expo Grand Hyatt & Henry B. Gonzalez Convention Center San Antonio, TX
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PAC Golf Tournament The Quarry Golf Course San Antonio, TX
19-22
M-PACT Show
National Restaurant Association (NRA) Show
Indiana Convention Center Indianapolis, IN
McCormick Place Chicago, IL
14-15
Gulf Coast Food & Fuel Expo
APRIL
The Beau Rivage Biloxi, MS
10-12
NACS State of the Industry Summit Hyatt Regency O’Hare Chicago, IL
17-19
SIGMA Spring Conference Four Seasons Dallas at Las Colinas Dallas, TX WWW.TFFA.COM
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CHANGES TO THE OVERTIME RULES: Where Are We Now, And Where Will We Go From Here? BY TED SMITH, J.D., CORNELL SMITH MIERL & BRUTOCAO, LLP
What a difference a year makes… This time last year, employers throughout the country were analyzing their payroll practices and policies in preparation for significant changes that were set to go into effect on December 1, 2016 regarding the minimum salary requirements for employees entitled to receive overtime pay under federal law. One year later, following the results of the Presidential election and various federal court orders, the overtime rules remain unchanged, the proposed changes to the rules under the Obama administration have been disavowed by the current administration, and any potential future changes to the overtime rules (if, in fact, any are proposed) are likely to be far less significant. Under the Fair Labor Standards Act (“FLSA”), employers are generally required to pay their employees a federal minimum wage (currently, $7.25 per hour), as well as overtime pay at one and one-half times the employee’s regular rate of pay for all hours worked above forty in a work week unless they are deemed to be “exempt” from these requirements under the Act.1 One such “exemption” to the FLSA applies to any employees who are employed in a “bona fide executive, administrative, or professional capacity.” These exemptions are commonly referred to as the “white collar exemptions.” In order to qualify for one of these white collar exemptions, the employee must meet all of the following criteria: 1) they must perform executive, administrative or professional capacity duties as established by federal regulations; 2) they must be paid on a salary basis; and 3) they must be paid at least the minimum salary level established by federal regulations. The current minimum salary level is $455 per week, which equates to $23,660 annually. During the Obama administration, the Department of Labor initiated changes to the FLSA regulations that would have
increased the current minimum salary level for white collar exempt employees from $23,660 per year to $47,476. These changes to the regulations were set to go into effect on December 1, 2016. However, the State of Nevada, along with twenty other states and several business organizations, filed suit in federal court in the Eastern District of Texas against the Department of Labor challenging the new regulations and requirements. On November 22, 2016, U.S. District Judge Amos Mazzant issued a preliminary injunction order, which temporarily prevented the new regulations from going into effect until a more detailed review of the regulations could be made by the court. The Obama Department of Labor then appealed the judge’s preliminary injunction order to the Fifth Circuit Court of Appeals. On August 31, 2017, while the appeal of the preliminary injunction order was still pending at the Fifth Circuit, Judge Mazzant issued another order ruling that the proposed changes to the regulations were unlawful and invalid. In the judge’s ruling, he stated that by more than doubling the current minimum salary for white collar exempt employees from $23,660 to the proposed $47,476, the Department of Labor “has exceeded its authority and gone too far.” On September 5, 2017, the Department of Labor (now under the Trump administration) filed a motion with the Fifth Circuit Court of Appeals to dismiss its appeal of the earlier preliminary injunction order in light of Judge Mazzant’s final judgment. The Fifth Circuit granted the Department’s request and dismissed the appeal that same day.
This article only addresses federal wage and hour laws. Employers should be aware that various states and municipalities may have different legal requirements.
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Although these recent rulings by the federal courts essentially bring an end to the previous attempts by the Obama administration to change the overtime rules, the Department of Labor under the Trump administration has indicated that it will also review the current regulations and determine if more moderate increases to the minimum salary level may be warranted. In that regard, the Department published a request for public comment on changes to the overtime regulations on July 26, 2017, and current Secretary of Labor Alexander Acosta has made public statements that an increase to “something around $33,000” may be a possibility in the future. So, to summarize, despite the flurry of governmental and court activity during the past year, the minimum salary level that is required for employees to be exempt from overtime under the white collar exemptions remains the same at $23,660 per year. In addition, although the current Department of Labor has begun the process of reviewing the overtime rules and indicated that it may be
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open to increasing the minimum salary level somewhat, this process will take a significant amount of time and therefore no changes are expected to occur in the near future. In the meantime, employers should continue to keep this issue on their radar as we all wait and see what the next year brings.
Edward M. “Ted” Smith is a founding partner of the law firm Cornell Smith Mierl & Brutocao, LLP in Austin, Texas. He is a Board-Certified Labor and Employment attorney who specializes in representing employers and executives in all aspects of the employer-employee relationship, from training and advice to litigation and appeal. His legal experience includes representing employers in wage and hour litigation matters. The opinions expressed are those of the author and do not necessarily reflect the views of the law firm, its clients, or any of their respective affiliates. This article is for general information purposes only, and is not intended to be and should not be taken as legal advice.
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I really just wanted a beer... BY TFFA STAFF
Texas’ new beef jerky brand, El Norteño, might seem like an overnight sensation, but the journey to bring this brand to life and to Texas convenience stores has been over a decade in the making. With a healthy measure of persistence and inspiration from across the border, humble beginnings have lead to big results as El Norteño is poised to become a go-to beef jerky brand for Texans - and Texans know good beef jerky when they taste it. El Norteño’s roots lie in two very different places - a drafty basement in rural Wisconsin and the bustling, colorful streets of Guadalajara,
Mexico. Scott Hare, one of the brand’s founders, perfected the craft of seasoning and drying meat, hanging jerky in his Wisconsin basement and giving it away to friends and family. After a couple years of “market research,” Hare knew his recipes were getting better. People were constantly asking for more and were excited when he announced a new flavor or style of jerky. That passion for crafting excellent taste, combined with the satisfaction of seeing people genuinely enjoy his jerky is what drove him to look beyond Wisconsin and seek inspiration from friends living South of the Border. “I wanted to take everything I learned about making great jerky and do
something totally different, a flavor and style no one else was doing, but I didn’t know what that would be,” says Scott Hare. That all changed during a late night dinner with a couple of friends from Mexico. Long after the plates were cleared, Hare sat with his friends in a Mexican restaurant, discussing their meal and riffing about the power of unique flavors and how food brings people together. One of his friends made a comment about “the taste of home” and how he often missed flavors and styles that originated in his home country of Mexico. That’s when the lightbulb went off. “We were on a plane the next week to meet with Mexican friends in Southern California and that’s really where the journey to bring El Norteño to life began.”
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Member Focus The team met in Los Angeles and later traveled to Guadalajara and went to work, focusing their attention on a much-loved style of meat snack called Cecina. Cecina (pronounced Suh-See-Na) is thinlysliced sheets of beef, dried using air and sun, lightly salted and seasoned and sometimes rubbed with oil. Cecina first appeared in Mexico in the 1500s, brought over from Spain and is designated as a geographically protected flagship product of the province of León. In Mexico, many Cecina recipes and methods have been passed down from generations. Thinly slicing the meat, typically made from the inside rounds of the beef cow, takes considerable skill and an incredibly sharp knife. “I spent a lot of time sharpening my knife,” adds Scott Hare.
After twelve months of travel back and forth, sharing samples and a whole lot of taste testing, the team was convinced they had crafted an authentic, delicious snack that paid tribute to the true homestyle nature of Mexican Cecina. The name El Norteño (The Northern) was chosen to pay homage to the Norteño music culture so popular in Northern Mexico and throughout Texas and parts of the Southwest. Taking the new brand El Norteño from home kitchen to Texas shelves would require a lot of dedication and a little bit of luck. After several more years of growth and development, one of the early founders of El Norteño, Austinresident and serial entrepreneur, Justin Jahnke was out on a sales call
CON TA www CT INFO : info@ .elnorten justi elnorten ofoods.c n o 877- @elnorte ofoods.c m o 3 608- 67-620 nofoods m 5 (H . 501c ome om 9338 Justi ( Justi Office) n n Jah Co-F Jahnke ound nke 608. Dire ct) 501. er, Direc 1.87 9338 tor o 7 f www .367.62 (Direct) Busines 05 (T s De .elno velo oll F rteno pme food ree) nt s.com WWW.TFFA.COM
when he happened to sit down next to the right person at the right airport in Oklahoma City. Jahnke sat down next to a brand scout for one of the world’s largest beverage companies. The two began talking which eventually lead to El Norteño’s acceptance into an Austin-based brand accelerator program called SKU. (www.sku.is) SKU’s mission is to grow and strengthen high potential brands ...continue reading
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and set them up for successful acceleration into the marketplace. “I really just wanted a cold beer, but luck was on our side and the scout lead us to the SKU program,” says Justin Jahnke of El Norteño’s lucky break. The 14-week intensive program wrapped in June 2017 and El Norteño has been blazing a hot trail since. Prior to acceptance into the SKU accelerator, El Norteño joined TFFA and exhibited in the “New and Now Block” at the annual Southwest Fuel and Convenience Show. That show would lead to a variety of key connections and relationships including an introduction to broker Dax Martinez - an industry veteran with more than 25 years under his belt. “I enjoy working with new, sort of emerging brands that are just slightly off-center and El Norteño fit that bill. And it tastes great,” says Dax Martinez of his working relationship with the company.
Based on great flavors and unique positioning, El Norteño is showing up in more and more Texas c-stores each week. Moving their headquarters to Austin and continuing to work with partners from Mexico, new flavors have been added, including what the El Norteño team is considering their future star - Mango Habanero Beef Jerky. The team has also partnered with designers from Monterrey, Mexico. Brothers Mauricio and Alan DaVilla of La Mano Agency created El Norteño’s new look, grounding the concept in the Northern Mexico and Texas music scene. Specifically, the designs (featured on the front cover) are based on The Texas-Mexican conjunto, a genre of música norteña that grew out of the cultural links between Texas and northern Mexico at the end of the 19th century, after German settlers introduced the button accordion. Each flavor of El Norteño jerky and meat sticks is represented by a band
member playing an instrument found in a Norteño band and each member has their own unique back story. “We wanted to ground our brand in Tex-Mex and Norteño culture and flavors we love. We can say with confidence we are proudly different and not just another me-too,” adds Justin Jahnke. The journey to bring El Norteño to Texas has been one of passion, taste, luck and connecting powerful cultures together. Just like the original conversation that sparked the idea, the goal of El Norteño is to get Texans excited about unique flavors and to truly satisfy with the taste of well-made beef jerky.
THE INDUSTRY LEADER IN TEXAS
Scr
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‘n S
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niff Smell
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STALKING MARKETERS on the Dark Web is BIG BUSINESS BY MARK RADOSEVICH, PRESIDENT, PETROACTIVE REAL ESTATE SERVICES, LLC During my recent travels around the country attending various petro-trade events, I was told of several incidences of marketers being victimized by ransomware attacks. Being the first time that I had heard of this in our industry and the seemingly widespread randomness of the situation, prompted me to take a closer look at the problem. Up to now, I had a vague notion of malware and computer hacking but my investigation has revealed that the problem is much wider than expected and given the amount of customer data and cash that regularly passes through a petroleum wholesale business, unsuspecting oil marketers are increasingly being targeted, and many are quite vulnerable to attack. This is a growing problem and it has been reported that overall ransomware attacks increased by 400% in 2016 and 2017 will see that amount double. The president of a Tennessee-based fuel marketer related his account of trying to log onto the company’s computer network on a recent Saturday morning and encountering a cryptic note with a skull and crossbones graphic notifying him his company the files had been encrypted, rendering them unobtainable unless a ransom of $50,000 in Bitcoin was paid. When he called the office, dispatch confirmed the lockdown was for real. At that point, he said that the feeling of helplessness and frustration in not being able to operate was almost overwhelming. To add insult to injury, he now had to figure out how to obtain Bitcoin. Not a small feat for the uninitiated on a Saturday. In the end, the Bitcoin was secured through various “Bitcoin Brokers,” the ransom paid and the files recovered after several days
of operating blind. This was followed by the firing of IT personnel and a comprehensive reassessment of internal controls and security processes. Other marketers interviewed confirmed that that they had been hacked and either refused to pay the ransom, and subsequently reconstructed their data or they refused to pay and suffered little harm due to their security and data backup protocols. But there is little doubt that this problem exists in our industry and its prevalence is growing. Following are a few nuggets of information that I learned from my investigation and recommendations that marketers should take to heart. Ransomware is malware working on the dark web that uses vulnerabilities in the central nerve of a computer, called the kernel, where antivirus programs have difficulty detecting. It infects network computers when someone opens an attachment or website link from a malicious email message. Attackers can also deliver ransomware directly to a network if it has already been infected with a backdoor through which they can enter. Ransomware is the tainted attachment in an email blast that knocks on thousands of doors. The bad guys have access to encrypt the data when someone answers the door and opens the attachment. Several years ago a program called WannaCry held hundreds of thousands of computer data files hostage until a small $300- $500 ransom was paid. Another recent version, TorrentLocker,
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harvested email lists from victims’ computers, and then spammed itself to other victims; amassing almost 3 million email addresses of unsuspecting ransomware targets. The potential rewards are great if only a small fraction of the targeted computers become infected. Ransomware attacks couldn’t be nearly as successful if it wasn’t for the existence of Bitcoin, which allows these transactions to be nearly anonymous as there are no banking intermediaries involved. Payment is through a simple file transfer between two people or companies. Bitcoin transactions are documented on a virtual open ledger but names don’t have to be attached to the parties involved. Further complicating the mess, when one is pressed to pay a large ransom, is buying it on the open market where purchase amounts are limited. This requires the use of brokers and the vagaries of value for this virtual currency. I found it interesting to note that many large companies are stock piling bitcoin in the eventuality of a future attack. Even for the most technically sophisticated companies, it’s not a matter of if; it’s a matter of when a successful attack happens and having the ability to get back up and running fast.
Keys to fighting ransomware: Some protection simple steps include using antivirus program subscription software and backing up files every day, with the central database stored on a devise that is isolated and not online. Prohibit employees from using company computers for personal things like, surfing the web, emails or opening emailed attachments. Next, dedicate the resources to hire top notch IT specialists and instruct them to constantly be up to date on information and procedures. Employ better employee security protocols using unique, not universal passwords and be dedicated about making regular password system changes. Stop allowing third party vendors to independently access company computers or systems for any reason. And remember the parting words of the Tennessee marketer I previously referenced, “when you think you’ve done enough, think again because you can never have enough protection.” WWW.TFFA.COM
Petroleum marketer associations can spearhead the fight Historically, state petroleum marketer associations are tasked to address industry regulation and legislation to the benefit of our industry. Given the real and growing danger of the ransomware problem, I propose that “cybercrime prevention” be formally adopted as a third area of primary emphasis on the state level and nationally through the PMAA. This can include creating a stable of approved IT consultants to conduct training seminars and individual site assessments at association member businesses to highlight potential security weaknesses and insure that internal controls and procedures are of the highest standard. Rather than keeping incidences of hacking a dark and embarrassing secret, I propose bringing the problem into the light by the formation of a new association committee entitled “IT Security.” This committee will be tasked with facilitating training, coordinating IT vendor participation and as an official platform to share successes and potential threats encountered by member companies. If promoted properly, this new committee should also provide state associations with a new and valuable benefit to motivate non-member companies to join and become involved. Mark Radosevich is a strong industry advocate and seasoned petroleum veteran, serving both oil companies and marketers over his long career. He is president of PetroActive Real Estate Services, LLC, offering confidential mergers & acquisition consultation, representation and financing services exclusively to petroleum wholesalers. Mark can be reached by email at mark@petroactive. net and directly by phone at 423-442-1327, his full professional bio can be found at www.petroactive.net.
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How to Assist Employees with HURRICANE HARVEY EXPENSES Did you know you can assist your employees affected by Hurricane Harvey in a tax-advantaged way? As a company, you can make disaster relief payments to your employees that were affected by Hurricane Harvey. These relief funds are exempt from payroll taxes, are tax-free to the recipient, and are tax-deductible to the company. In addition, this opportunity extends to privately-held companies where the owner was personally affected. Whether you’re the owner of multiple convenience stores or you’re an energy service provider/distributor, you likely have multiple employees located across the state of Texas. If any of these employees suffered losses as a result of Hurricane Harvey, you can help cover their disaster-related costs. This includes all hurricane-related expenses, from automobile repairs to mucking one’s home. If you, the owner, were the only employee affected in your company, the rules of distribution are less restrictive. In such a situation, you may choose to refund additional expenses such as the replacement of damaged clothing, transportation costs incurred from relocation, home remediation efforts, and any remaining costs not covered by insurance. Section 139 of the Internal Revenue Code specifies the types of payments that are eligible for this favorable tax treatment. These payments are called Qualified Disaster Relief Payments (QDRP). A QDRP is defined as a payment made to an employee to reimburse living expenses, repair a personal residence, replace furnishings, or cover any additional Hurricane Harvey-related costs. A QDRP allows business owners who were affected by a qualified disaster to make cash distributions intended to help mitigate repair costs and avoid income tax con-
sequences. If you’re a company using IRC section 139 to receive assistance, your organization can claim the QDRP as a deduction, and your employees are not subject to federal or employee taxes upon distribution. In addition, you are not required to provide receipts or verification of value to the IRS when making claims under section 139. Section 139 can be a very strong tax planning tool, but there are associated restrictions that must be considered. First, QDRPs are excludable “only to the extent any expense compensated by such payment is not otherwise compensated for by insurance or otherwise,” (IRC Section 139(b)). In other words, expenditures must not be subject to insurance coverage to qualify for QDRP aid. Secondly, employees who receive disaster relief payments cannot claim any deduction or credit for disaster related expenditures if they received these payments from their employers for those same expenditures. This is termed the Denial of Double Benefit (IRC Section 139(h)). Lastly, and perhaps most importantly, all employees of the company must be offered these reimbursements. Length or type of service with the company, salary, or job grade cannot affect QDRP distributions. Your company must provide the same amount of coverage to all affected employees, but the amount of financial relief distributed can vary from one person to the next. For example, if you decide to cover the actual cost of your staff’s living expenses, an employee living in downtown Houston may require more financial relief than an employee who was living in La Porte when their home was flooded.
You can also assist your employees using a formula cost method of distribution. This approach allows your company to distribute aid based upon a pre-calculated formula that takes each employee’s level of need into account. For example, you may choose to allot each affected household $1,000 for monthly living expenses, with an additional $150 for every child in the home. This method enables your company to cover costs for subjective expenses like living accommodations and transportation without violating equal distribution requirements or breaking your bank. Qualified disaster relief disbursements can be particularly valuable to businesses and their employees who were financially impacted by Hurricane Harvey. Your company should customize a compensation approach that suits the unique needs of your organization, while providing maximum relief to your employees. However, we strongly recommend that you consult your CPA, tax professional, or one of our advisors before taking action. If you have any questions or would like more information, please feel free to reach out to our team. Willis Johnson, CFP® President and CEO 5847 San Felipe St., Suite 1500 Houston, Texas 77057 Phone (713) 439-1200 Fax (713) 599-0999 golivo@wjohnsonassociates.com THE INDUSTRY LEADER IN TEXAS
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A&A Pump Company
A-1 Pump Inc.
B&J Equipment Ltd.
5747 Dietrick Rd San Antonio, TX 78219 210.226.1191
6125 State Hwy 21 E Bryan, TX 77808 979.778.2418
3647 SW Loop 281 Longview, TX 75602 903.757.4765
1632-B Vision Dr. Abilene, TX 79602 325.676.2371
1804 Smith Rd. Austin, TX 78721 512.278.1000
2484 W. Cardinal Dr., Ste #1 125 Airport Dr. Beaumont, TX 77705 Corpus Christi, TX 78405 409.842.0007 361.882.3077
3702 S. Expressway 281 Edinburg, TX 78542 956.686.9582
1362 W. Carrier Parkway Grand Prairie, TX 75050 972.314.2400
2700 Aldine Bender Houston, TX 77032 281.449.4027
14833 Bulverde Rd. San Antonio, TX 78247 210.661.2489
100-B Clarence Road Temple, TX 76501 254.770.0440
*12907 Highway 155 S. Tyler, TX 75703 903.535.9595
2706 Delmar Victoria, TX 77901 361.573.7449
*Tyler location = Parts & Service
2401 Ridgemere Amarillo, TX 79107 806.373.4251
2307 Clovis Rd Lubbock, TX 79415 806.762.2428
*8400 Directors Row Dallas, TX 75247 214.631.4664
*Dallas location = Parts & Service
Petroleum Solutions, Inc.
D&H United Fueling Solutions Inc. 17300 Bell North Drive Schertz, Texas 78154 210.651.3882
1221 Tower Trail El Paso, TX 79907 915.859.8150
1475 Avenue S, Suite 300 Grand Prairie, TX 75050 817.530.1917
2101 S Loop 250 W Midland, TX 79703 432.689.2606
*5750 N. Sam Houston Pkwy E. (Ste. 110) Houston, TX 77032 713.747.5952
*Houston location = Parts & Service THE INDUSTRY LEADER IN TEXAS
texa s f ood & f u el magaz ine
“The most significant factor for recommending each of these programs is excellent service and quality coverage backed up by competitive pricing. Time spent with your local Federated Marketing Representative learning about each of these programs will be time well spent.� Paul Hardin, CAE, President, Texas Food & Fuel Association
WWW.TFFA.COM
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The Texas Gulf Coast picks itself up after disaster strikes On Friday evening, August 25, Hurricane Harvey, a category 4 hurricane with 130 mph winds, made landfall near Rockport, Texas, southwest of Houston, and spent the next six days dropping an estimated 27 trillion gallons of rain over the Texas Coastal Bend and parts of Louisiana, according to Weatherbell, a weather analytics company. The storm packed powerful winds, storm surges and caused catastrophic flooding. By the time Harvey fizzled out, at least 82 fatalities had been attributed to the storm, more than 30,000 people were forced from their homes into temporary shelters and 200,000-plus houses had suffered flood damage. By early September, approximately one million auto claims had been filed on cars and trucks, both private vehicles and those sitting on dealers’ lots. Authorities predict that threequarters of that number will be totaled. In Houston alone, mountains of trash, estimated
e h t r afte
at more than 8 million cubic yards of soggy drywall, furniture, clothing and flooring, needed to be removed and disposed of, and sanitation trucks from as far away as Dallas were sent to help clean up.
Soon, radio and TV news stations were predicting major fuel outages, and in the Dallas-Fort Worth area, panicked drivers waited hours in long lines just to top off their tanks.
Thousands of businesses closed, including many convenience stores. One major retailer, Couche-Tard, was forced to temporarily close 120 of its 700 Texas stores due to flooding. Jesus Azanza, director of communications and marketing for the Texas Food and Fuel Association (TFFA) in Austin, visited the area two weeks after the hurricane passed. “One thing that will stick with me is the overwhelming smell of mold,” he said. “The smell was very intense.”
Out of Gas? Harvey’s impact extended far beyond the confines of Greater Houston. With the hurricane’s arrival, Gulf Coastarea refineries began closing, and by Wednesday, August 30, an estimated 20% of the nation’s refining capacity had shut down. Efforts to deliver available fuel were hampered due to hurricanedamaged fuel trucks and roads.
“Ever since the media triggered the panic in Dallas, it’s been hectic,” said Bill Douglass, CEO at Douglass Distributing Company, at the time of the fuel rush. “Drivers followed our [fuel] truck into stores in Denton [north of Dallas] and then they’d fight over who was first in line. It got a little sticky.” “Ten times the normal amount of drivers rushed to their local gas station to fill up every car and gas can in sight—within a span of 36 to 48 hours,” reported Azanza. “The panic-buying frenzy placed an incredible strain on Texas’ fuel distribution system and threw the demand-tosupply ratio completely off balance.”
THE INDUSTRY LEADER IN TEXAS
texa s f ood & f u el magaz ine
A trifecta of hurricanes ravaged the United States and Puerto Rico, testing the fuel infrastructure and the convenience industry, which emerged as a beacon of hope to affected communities. BY CHRIS BLASINSKY AND PAT PAPE, NATIONAL ASSOCIATION OF CONVENIENCE STORES (NACS) AND JESUS AZANZA, TEXAS FOOD AND FUEL ASSOCIATION
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One thing that will stick with me is the overwhelming smell of mold.
A staff member worked directly with state officials in a bunker 50 feet beneath the capitol building in Austin as part of the state’s ‘fuel team.’” Many North Texas stations ran out of gasoline, and retailers wrapped “caution tape” around fuel dispensers or changed their fuel price sign to “0.00” to let drivers know that supplies were depleted. To relieve the public’s fears, TFFA used the news media, social media, email and other communications tools to share information about the status of fuel supplies and updates on refineries as they came back online. Bradley Haile, co-owner of the four-store Rangler’s chain in central Texas, credited his fuel distributor for keeping his stores operating during the shortage. “We had a big rush on fuel,” he said. “Our phone was blowing up with travelers calling to be sure they could buy gas and get where they were going.” Fortunately, the scare didn’t impact sales inside of his stores. “If gas prices had shot to $3 a gallon, maybe,” he said. “But they didn’t go up a whole lot.” From August 23 through September 4, wholesale fuel prices shot up 21.1% and retail prices increased 12.7%. Similar metrics occurred the last time a major hurricane hit the U.S. mainland, but within three weeks, drivers in the South and Southwest saw prices fall.
Drivers followed our [Fuel] truck into stores in Denton and then they’d fight over who was first in line. It got a little WWW.TFFA.COM
sticky.
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Coordinating Efforts
Leading up to and after Hurricane Harvey hit Texas, Governor Greg Abbott held regular conference calls with the state’s retail fueling industry, state associations, emergency agencies and others who were directly impacted or who could provide assistance to the response efforts, noted Azanza. A TFFA staff member worked directly with state officials in a bunker located 50 feet beneath the Capitol building in Austin as part of the state’s “fuel team,” and worked closely with Suncoast Resources, the state’s contracted emergency fuel responder. On behalf of its members and Texas residents, TFFA: • Conducted dozens of interviews with local and national news outlets on fuel supply • Posted more than 100 updates on Hurricane Harvey on their website • Sent over 30 emails to members and the media • Fielded calls from concerned Texans, lawmakers and other associations regarding gas shortages and expected resupply dates • Had four staff working around the clock for a two-week period before, during and after Harvey made landfall • Identified terminals on a map and communicated to fuel marketers across the state to help coordinate potential sites to load fuel • Put retail members in touch with national news outlets so they could tell their story of what their business, customers and employees were facing in their regions
A Helping Hand Beginning with Hurricane Harvey, convenience retailers and other industry stakeholders were quick to offer support for relief and recovery efforts in the communities affected most by the storms:
Rutter’s of York, Pennsylvania, sent bottles of water, chips and personal care products to the disaster area and shared ways for customers to help. Through October 1, Rutter’s donated 10 cents of every cup of coffee sold to the American Red Cross, in addition to giving a $10,000 check to the organization. Stores also placed collection canisters at checkout. Couche-Tard of Laval, Canada, announced a $100,000 donation to the Red Cross and accepted cash donations at its 9,500 North American outlets. The company also set up a $150,000 fund to assist employees impacted by Hurricane Harvey. In addition to in-store collections and making a $150,000 donation to the Red Cross, the 7-Eleven Store Support Center in Irving, Texas, delivered hundreds of care packages and thousands of bottles of water to hurricane victims. Sheetz donated $150,000 to hurricane disaster relief efforts. Funds donated by Sheetz customers were accompanied by a lump sum donation by Sheetz. A portion of the match donation was designated for Hurricane Maria relief in Puerto
Rico. Sheetz’s 560 stores across Pennsylvania, North Carolina, Maryland, Ohio, Virginia and West Virginia accepted donations at checkout for the victims of the recent hurricanes from September 7-30. Casey’s General Stores and its customers donated more than $336,000 to help those affected by the hurricanes. This included a company match for the first $100,000 raised. Funds were provided to the American Red Cross at a presentation held at Casey’s in Ankeny on October 12. Cumberland Farms’ fundraiser to support communities affected by Hurricane Harvey and Hurricane Irma raised more than $56,000 for the American Red Cross. During the fundraiser, which ran from September 18-24, 10 cents from every fountain or frozen Chill Zone beverage purchased at Cumberland Farms’ nearly 600 retail locations was donated directly to the American Red Cross. Love’s Travel Stops of Oklahoma City donated $1 million, including $500,000 to the United Way Harvey Recovery Fund and $500,000 to help employees through the Love’s Employee Emergency Fund.
THE INDUSTRY LEADER IN TEXAS
texa s f ood & f u el magaz ine
Wayne Fueling Systems of Austin announced a dispenser replacement program to help stations replace equipment ruined by Hurricane Harvey. San Francisco-based Core-Mark Holding Co. used its extensive supply chain to deliver necessities to first responders and created a relief fund for affected employees in the Gulf Coast area. First Data sent thousands of free Clover Go mobile credit and debit card readers to help Houston businesses get back in business.
Give Me Shelter Buc-ee’s, a chain with headquarters in Lake Jackson, Texas, about 55 miles from Houston, was set to open its 37th convenience store on Monday, August 28, but the celebration was postponed due to the hurricane. The 56,000-square-foot store is in Katy, a northwestern suburb of Houston, but instead of serving travelers in late August, store management placed folding cots down grocery aisles and the store served as a temporary shelter for scores of first responders. On Sunday, August 27, Buc-ee’s management welcomed medical, law enforcement and military personnel
WWW.TFFA.COM
into the new store to enjoy food, beverages, restroom facilities and a place to stay overnight. “We could stay inside, but most troopers are out with their vehicles, and many were starting boat rescue,” said George Walter Greenway, Texas state trooper, who posted the Buc-ee’s story on his Facebook page. Although the store was officially closed, “Bucee’s brought in workers to feed us hot food,” he said. “They were amazing.” Even Texas food truck operators helped, with many turning their rolling restaurants into emergency diners. One of the most prolific providers was James Canter of Victoria, Texas. The owner of the Guerilla Gourmet food truck, Canter was one of the few people with both electricity and water in a seven-county area. He organized several hundred volunteers, who cooked up huge pots of kimchee chicken stew and distributed bowls to more than 11,000 hungry people. When he ran out of food supplies, his pantry was replenished by residents who brought him foods to cook from their non-operating refrigerators. The Greater Houston Retailers Cooperative Association (GHRA),
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which supports independently owned and operated convenience stores, kept members updated on relief and assistance efforts for both their homes and businesses. The GHRA Warehouse and Distribution Center also provided supplies to first responders, including emergency personnel working long shifts at a city convention center that was housing storm refugees. “For some independent convenience store owners around Houston, it will take several weeks to repair their businesses and re-open,” said Mike Thompson, CEO of GHRA. “Some will have to deal with similar damage to their homes before they are able to move back in. “It is very difficult to see so many of our members experiencing the hardships that come with a storm of this magnitude,” he said. “However, through all of these challenges, it was inspiring to see our members that were able, stand tall and help everyone around them. I have heard and seen many instances of our store owners providing essential goods and services during and after the storm.”
SAN ANTONIO BECOMES FIRST CITY IN TEXAS TO RAISE LEGAL AGE TO BUY TOBACCO TO 21 On January 11, 2018 the San Antonio City Council approved a new law prohibiting merchants in the city limits from selling tobacco products to anyone under 21 years old. San Antonio is the first city in Texas to enact such a law. Five states and more than 280 cities in other states have approved similar measures. The new ordinance, which city officials had been discussing since August, passed by a 9 to 2 vote. In one last-minute change, San Antonio Metropolitan Health District Director Colleen Bridger said the new law will take effect Oct. 1 instead of Aug. 1 as originally planned. This will allow San Antonio officials additional time to talk to surrounding cities, such as Leon Valley, about whether they plan to enact similar measures. State law already forbids the sale of tobacco products to anyone 17 years old or younger. It also prohibits anyone that young from purchasing or possessing such items. But San Antonio's new city ordinance goes further. The ordinance approved by council only targets retailers who sell tobacco products to 18-, 19- or 20-year-olds. Retailers who violate the new law could face a fine of up to $500. The new city law does not seek any penalties or enforcement measures against young adults 18 to 20 years old who purchase, use or possess tobacco products. The Texas Food & Fuel Association is monitoring the implementation of this ordinance — and others like it — while working with retailers impacted by the change in law. Stay up-to-date with important industry news by visiting our Daily Buzz at www.tffa.com.
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A&A Pump Company........................................22 FEBRUARY 2018
A-1 Pump Inc......................................................22 B&J Equipment..................................................22 Bevco, Inc............................................................20 CITGO.................................................................19 D&H United Fueling Solutions................21 & 22 Federated Insurance........................................... 3 Fuel Marketer News...........................................30 LBT, Inc.................................................................. 2 Petroleum Solutions, Inc............................ 4 & 22 Renewable Energy Group................ Back Cover Werts Welding & Tank Service........................................................31
Member
Focus THE JOUR NEY OF “ EL NORTE ÑO” p 12 How a rec ipe for succ ess driven to bring Me by passion , taste, and xican-Style beef jerky music conn to conven ected powe ience and rful cultures grocery sto res in Texa s.
Stalking Fuel Marketers on the Dark Web p 16 Protecting yourself from this booming business
Helping Employees with Hurricane Harvey Expenses
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After the Storms p 24 Picking up the pieces after this disasterour trifecta
For advertising information contact: Jesus Azanza Director of Communications & Marketing 512.617.4309 / jazanza@tffa.com
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