NATIONAL COUNCIL OF FARMER COOPERATIVES 2 0 WASHINGTON 1 8 CONFERENCE JUNE 25-27, 2018 HYATT REGENCY WASHINGTON, DC

GOVERNMENT aFFAIRS mEETING

NCFC Washington Conference Government Affairs Committee Hyatt Regency Hotel Washington, DC June 25, 2018

AGENDA Capitol A/B Room

7:30 AM Registration Open

8:00 – 8:30 AM Buffet Breakfast

8:30 AM Welcome & Introductions • Meeting Overview & Self-Introductions • Approval of the Minutes • Proposed By-Laws Change

8:45 AM NCFC CO-OP/PAC Report • 2018 Cycle Overview • PAC Events

8:55 AM Legal, Tax & Accounting Update • Application of the new tax law • 199A Implementation • Pending issues; Tax Extenders • Capper-Volstead in the news

9:15 AM Administration’s Trade Outlook for Agriculture

Guest Speaker: The Honorable Gregg Doud Chief Agricultural Negotiator Office of the U.S. Trade Representative

10:00 AM BREAK

10:15 AM Labor & Immigration – Lots of activity; any action?

Guest Panelist: Bret Manley Chief of Staff Rep. Jeff Denham (R-CA)

Kristi Boswell Senior Advisor to the Secretary U.S. Department of Agriculture

Moderator: Mary Nowak NCFC

Representing the Business Interests of Agriculture

11:15 AM Outlook for the Farm Bill

Guest Speaker: Helena Bottemiller Evich Senior Food and Agriculture Reporter POLITICO Pro

Moderator: Justin Darisse NCFC

12:00 PM 2018 Election Analysis – Is it a wave or a ripple? (Lunch Provided)

Guest Speaker: Stu Rothenberg Senior Editor, Inside Elections Political Analyst/Contributor, Roll Call

1:30 PM BREAK

2:00 PM Priorities and Activities at USDA-MRP

Guest Speaker: The Honorable Greg Ibach Under Secretary, Marketing & Regulatory Programs U.S. Department of Agriculture

2:45 PM Implementation of the National Biotech Disclosure Law • Overview of the Proposed Rule • Coalition for Safe, Affordable Food Activities • NCFC Response

Moderator: Kelsey Billings NCFC

3:15 PM Legislative Solution to Provide Accurate Product Labels

Guest Speaker: Karyn Schmidt Senior Director, Regulatory & Technical Affairs American Chemistry Council

3:45 PM BREAK

4:00 PM Train the Trainer – Keys to a Successful Fly-In • Ideas for rethinking how you prepare for your next fly-in • Preparing your members • NCFC Advocacy/Fly-In Toolkit

Guest Speaker: Paul A. Miller, PPC, LCP Miller/Wenhold Capitol Strategies

5:00 PM Future Meetings & Other Business

5:15 PM Adjourn

Meeting Minutes NCFC Government Affairs Committee Meeting Washington, D.C. February 7, 2018

Minutes

CALL TO ORDER Committee Chairman, Chuck Spencer, called the meeting to order, giving an overview of the meeting and supporting materials. He thanked attendees for their participation in the breakout sessions held throughout the day and sponsored by the Committee’s seven Subcommittees. The breakout sessions included the following topics and speakers:

• Specialty Crop Issues in the Farm Bill – A Roundtable Discussion on FFVP and Other Priorities hosted by the Fruit, Vegetable and Nut Subcommittee, moderated by Rich Hudgins, President & CEO, California Canning Peach Association

• Animal Disease Traceability hosted by the Animal Agriculture Subcommittee, with guest speaker Dr. Aaron Scott, Director, National Animal Disease Traceability & Veterinary Accreditation Center, Animal & Plant Health Inspection Service, U.S. Department of Agriculture, and moderated by Wally Knock, Board Director, Agtegra Cooperative

• Investing in Rural Infrastructure, hosted by the Credit & Rural Development Subcommittee, with Brian Cavey, Senior Vice President, Government Affairs, CoBank speaking and Vicki Hicks, Vice President, Government Affairs, AgriBank, FCB serving as moderator.

• A SNAPshot of Nutrition and the Farm Bill, hosted by the Food and Nutrition Subcommittee, with guest speaker Sarah Hubbart, Director, Michael Torrey Associates, and moderated by Vaughn Koligian, Director, Corporate Sustainability, Sun-Maid Growers of California

• Administration’s Trade Policy, NAFTA and Beyond, hosted by the International Affairs Subcommittee, with guest speaker Sharon Bomer Lauritsen, Assistant U.S. Trade Representative for Agricultural Affairs and Commodity Policy, Office of the U.S. Trade Representative, and moderated by Rayne Thompson, Vice President, Government Relations & Public Policy, Sunkist Growers, Inc. and Fruit Growers Supply Company

• Breakout Session: Trends in Migration & Workforce Dynamics, hosted by the Labor Subcommittee, with guest speakers Dr. C. Parr Rosson III, Ph.D., Professor, Texas A&M University, and Dr. Steve Bronars, Ph.D., Partner, Edgeworth Economics, LLC, and moderated by Jackie Klippenstein, Senior Vice President, Industry & Legislative Affairs, Dairy Farmers of America, Inc.

• Renewable Fuels Standard Reform, A Perspective from Marathon Petroleum hosted by the Environment & Energy Subcommittee, with guest speaker David Whikehart, Vice President of Environment, Safety and Corporate Affairs, Marathon Petroleum, and moderated by David Salmen, Board Director, Agtegra Cooperative.

BUSINESS MEETING

The Committee proceeded with its business meeting, followed by discussion of several additional issues of importance to farmer cooperatives.

• APPROVAL OF THE MINUTES – A motion to approve the November 2017 meeting minutes was made by David Salmen and seconded by Chuck Adami.

• NCFC CO-OP/PAC REPORT – Kelsey Billings reported that NCFC CO-OP/PAC began the year and the new 2017-2018 Election Cycle with a balance of $74,445.00. As of December 31, 2017, contributions to the PAC totaled $127,685.00. Individual and member PAC contributions accounted for $88,685.00 and $39,000.00 of the total, respectively. The annual goal for the PAC, agreed upon by the NCFC CO-OP/PAC Steering Committee, is $272,200. Mrs. Billings said the PAC reached 66 percent of its goal for the year.

Mrs. Billings announced that the PAC will host the 7th Annual NCFC CO-OP/PAC Live & Silent auction fundraiser later that evening and expressed appreciation for the many live and silent auction item donations that were received.

Finally, Mrs. Billings reported that in 2017, the PAC supported 46 members of Congress for reelection for a total of $100,500.00 in contributions to candidates. As of December 31, 2017, the PAC had an ending balance of $74,445.00.

• FARMER CO-OP SUSTAINABILITY INITIATIVE – Kelsey Billings reported on NCFC’s latest sustainability efforts announcing that at this year's Annual meeting, NCFC is releasing the first of its kind Co-op Sustainability Report which highlights members' sustainability efforts through their commitment to community well-being. The Report showcases a collection of stories about the work of co-op members and also features an in- depth look at how Michigan Milk Producers Association has used the framework of NCFC's Field Guide for Co-op Sustainability Programs, to launch its own robust sustainability program. NCFC plans to share this report among members and industry partners throughout the year to illustrate the enormous contribution that co-ops are making, individually and collectively, to their communities.

Looking ahead to 2018, NCFC plans to annually maintain programmatic aspects of our sustainability efforts, including; educational webinars for members; development of an introductory primer for co-ops to sustainability and the Field Guide; updates to the Guide and Self-Evaluation Tool; membership and engagement with agriculture industry and supply chain sustainability groups; and an annual Sustainability Working Group meeting.

Another key area of focus will be communications and outreach on co-op sustainability, and more specifically, helping co-ops introduce sustainability and the Field Guide to the board of directors and management staff.

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Mrs. Billings encourage anyone who is interested in getting involved with NCFC’s sustainability efforts to attend the October Sustainability Working Group meeting in Seattle, October 24-25.

• 2018 PRIORITIES & POLICY RESOLUTIONS – Prior to the Annual Meeting, the Committee held a conference call to review the proposed policy resolutions for 2018. No additional changes were proposed at that time and the Committee adopted the resolutions pending NCFC Council approval.

STEM EDUCATION & VETERANS TRAINING IN AG

The Committee was joined by Lt. Gen. John “Glad” Castellaw (Retired), Chief Executive Officer of Farmspace Systems LLC and Dr. Ben C. West, Ph.D., Director, Loan Oaks Farms, Institute of Agriculture, University of Tennessee to discuss an innovative approach to integrate agriculture into Science, Technology, Engineering and Math (STEM) education as well as opportunities for veteran training in agriculture.

Lone Oaks Farms has partnered with area school districts to coordinate educational field trips focused on various STEM lesson plans and hands-on learning. In addition to providing a youth education center, the farm also serves as a 4-H retreat for area chapters. Lone Oaks Farms seeks to promote agriculture literacy by providing year-round access to agricultural education and becoming the national model for connecting youth and adults to the land to encourage a deep appreciation for conservation, and agriculture.

The Farm also is developing partnerships with veterans looking to acquire valuable skills in agricultural technology. Through its AgVet program, Lone Oaks Farms is helping train veterans in areas such as precision agriculture, drone technology, agronomy, and many other areas, to set them up for successful careers in the agriculture sector.

CRISIS MANAGEMENT

Next the Committee heard from Roxi Beck, Vice President, Look East Consulting, and Consumer Engagement Director at The Center for Food Integrity, and Monica Massey, Senior Vice President and Chief of Staff with Dairy Farmers of America, Inc. Larry Elworth, Strategic Partner with Resolve, Inc. served as the moderator.

Ms. Beck reviewed the “state of play” with respect to activists actions directed at production agriculture. She discussed how best to respond when an event happens – what can you do to minimize your risk but also responding in a way that maintain consumer confidence.

Following her presentation, Ms. Massey presented a case study example of how the co-op and its farmer member recently managed an activist attack (videotaping) in Colorado. She provided lessons learned and tips on how to be prepared before a crisis strikes.

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TAX REFORM

Lastly, the Committee was joined by Eric Krienert, Director, Agribusiness Practice, Moss Adams LLP, and Paul Cummins of IRI Consultants. NCFC Staff Justin Darisse served as moderator. The panelist recounted the current state of play of tax reform, and in particular, the renegotiation of Section 199A pertaining to co-ops. Mr. Krienert gave a detailed overview of what was signed into law Congress in December as well as possible outcomes under consideration on any fix to Section 199A. Mr. Cummins described the public relations efforts initiated by NCFC last fall and areas where co-ops had clear success with their communications but also where improvements were needed going forward.

FUTURE MEETINGS & OTHER BUSINESS Mr. Spencer announced that the next Committee meeting will be on June 25th, held in conjunction with the NCFC Washington Conference. Staff will circulate meeting materials in advance.

ADJOURN Mr. Spencer adjourned the meeting.

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ByLaws Change Tel: 202-626-8700 Fax: 202-626-8722 50 F Street, NW Suite 900 Washington, DC 20001 www.ncfc.org

Date: June 26, 2018

To: Jim Spradlin, Chairman NCFC Council Members

From: Marlis Carson General Counsel

Re: Proposed Bylaw Change

In order to promote increased communication and membership participation, a change to NCFC’s bylaws regarding the Individual Membership category has been proposed. The Executive Council reviewed this change and recommended it for the Council’s consideration. Council members were given 30 days’ notice of the Council’s consideration of this change.

The proposed change would expand the Individual Membership category to include consultants such as attorneys and government relations professionals who work for NCFC members and participate in NCFC’s LTA and Government Affairs Committees. Individual Members receive NCFC publications, reduced conference rates, annual recognition at NCFC meetings, and eligibility for NCFC CO-OP/PAC’s restricted class.

Individual Members do not have a vote on the Council and the NCFC President/CEO is authorized to approve or reject applications for individual membership.

The relevant section of NCFC’s bylaws is attached, with the proposed change highlighted in red.

Representing the Business Interests of Agriculture

PROPOSED AMENDMENT TO NCFC BYLAWS TO EXPAND INDIVIDUAL MEMBERSHIP ELIGIBILITY

Article III -- Membership

Section 1. Categories. There shall be two categories of membership in this Association as follows:

A. Organizations (a) Voting (b) Non-voting

B. Individuals

Section 2. Eligibility.

A. Organizations

(a) Voting Members. The following organizations shall be eligible for voting membership in this Association, except as otherwise limited by subsection (b) below:

(1) Any agricultural cooperative association of the type described in Section 15 (a) of the Agricultural Marketing Act, approved June 15, 1929, as amended [49 Stat 317, 12 USCA 1141j (a)] which is eligible to borrow from a bank for cooperatives, or a federation of two or more such cooperative associations, or any agricultural organization, including but not limited to limited liability companies, partnerships, and corporations, which is owned and controlled by farmers or ranchers or by an agricultural cooperative owned and controlled by farmers or ranchers.

(2) Any bank chartered under Title I or III of the Farm Credit Act, approved December 10, 1971, as amended [85 Stat 583, 12 USCA 2001 et seq.].

(b) Non-voting Members. The following organizations shall be eligible for non- voting membership in this Association:

(1) Any entity described in subsection A(a) above that does not contribute at least the minimum dues established for voting membership by the Council;

(2) Any local cooperative affiliated with a voting member of this Association;

(3) Any subsidiary controlled by a voting member or members of this Association;

(4) Any state cooperative council, corporate or otherwise, organized and functioning as an educational, legislative, or service organization for the encouragement of agricultural cooperative associations and their members; and

(5) Any bargaining cooperative.

The organizations described in paragraphs (1) and (2) above shall also be referred to as associate members.

B. Individuals. The following individuals shall be eligible to become non-voting members of this association:

(a) Employees of NCFC member organizations;

(b) Directors of NCFC member organizations;

(c) Individual farmer members of NCFC member organizations; and

(d) Members of NCFC’s Legal, Tax and Accounting and Government Affairs Committees.

Section 3. Election to Membership. Any applicant eligible for voting membership under these bylaws, on making written application therefor, may be elected to membership. Such election may be by mail ballot wherein three-fourths of the voting members of the Association submit ballots favoring election of the applicant or at a regular or special meeting of the voting membership at which three-fourths of the members present vote for election of the applicant to membership. The President of the Association shall submit to all voting members, in referring the application for their action, a summary of information concerning the organization, membership, management and type of operations of the applicant. Any applicant accepted for voting membership shall have the duty to notify the Association President of any changes to its business or ownership structure in accordance with Article III, Section 6.

Any applicant for individual membership shall complete a membership application and annual renewal form and pay annual dues in accordance with Section 5 B. The President of the Association has the authority to approve applications for individual membership.

NCFC CO-OP/PAC REPORT

FINANCIAL STATEMENT May-18

Beginning Balance $ 74,445.00

Receipts Contributions from Individuals $ 56,460.00 Contributions from Federal PACs $ 44,500.00

$ 100,960.00

Disbursements Contributions to Federal Candidates $ 31,500.00 Operating Expenses $ 648.29

$ 32,609.24

Ending Balance $ 142,795.76

2018 Disbursement List

Date Amount Committee Name State Election Period Party 1/30/2018 $ 1,000.00 TEAM GRAHAM INC SC Primary 2020 REPUBLICAN 3/5/2018 $ 1,500.00 CONAWAY FOR CONGRESS TX General 2018 REPUBLICAN 3/5/2018 $ 2,500.00 TINA SMITH FOR MINNESOTA MN Primary 2018 DEMOCRATIC 3/5/2018 $ 1,000.00 MARTHA ROBY FOR CONGRESS AL Primary 2018 REPUBLICAN 3/5/2018 $ 1,000.00 TEAM MARSHALL KS Other 2018 REPUBLICAN 3/5/2018 $ 1,000.00 CRAWFORD FOR CONGRESS AR Primary 2018 REPUBLICAN 3/5/2018 $ 1,000.00 GIBBS FOR CONGRESS OH General 2018 REPUBLICAN 3/5/2018 $ 1,000.00 MIKE GALLAGHER FOR WI Primary 2018 REPUBLICAN 3/5/2018 $ 1,000.00 GRAVES FOR CONGRESS MO Primary 2018 REPUBLICAN 3/5/2018 $ 1,500.00 GIBBS FOR CONGRESS OH Primary 2018 REPUBLICAN 3/5/2018 $ 1,000.00 JIM COSTA FOR CONGRESS CA General 2018 DEMOCRATIC 3/5/2018 $ 1,000.00 DEB FISCHER FOR US SENATE INC NE General 2018 REPUBLICAN 3/5/2018 $ 2,500.00 FEINSTEIN FOR SENATE CA Primary 2018 DEMOCRATIC 3/7/2018 $ 2,500.00 STABENOW FOR U.S. SENATE MI General 2018 DEMOCRATIC 3/12/2018 $ 1,000.00 PETERSON FOR CONGRESS MN General 2018 DEMOCRATIC 3/22/2018 $ 1,500.00 DEB FISCHER FOR US SENATE INC NE General 2018 REPUBLICAN 4/12/2018 $ 1,000.00 TREY FOR CONGRESS SC Primary 2018 REPUBLICAN 4/25/2018 $ 2,500.00 HOEVEN FOR SENATE ND Primary 2022 REPUBLICAN 5/8/2018 $ 1,000.00 THOM TILLIS COMMITTEE NC Primary 2020 REPUBLICAN 5/8/2018 $ 1,000.00 KLOBUCHAR FOR MINNESOTA MN Primary 2018 DEMOCRATIC 5/8/2018 $ 1,000.00 SUOZZI FOR CONGRESS NY Primary 2018 DEMOCRATIC 5/22/2018 $ 1,000.00 HEIDI FOR SENATE ND Primary 2018 DEMOCRATIC 5/22/2018 $ 1,000.00 LUCAS FOR CONGRESS OK Primary 2018 REPUBLICAN 5/23/2018 $ 1,000.00 DAVID ROUZER FOR CONGRESS NC General 2018 REPUBLICAN 6/6/2018 $ 2,500.00 TINA SMITH FOR MINNESOTA MN Primary 2018 DEMOCRATIC 6/12/2018 $ 2,500.00 MARCIA FUDGE FOR CONGRESS OH General 2018 DEMOCRATIC 6/12/2018 $ 1,000.00 STABENOW FOR U.S. SENATE MI General 2018 DEMOCRATIC 6/15/2018 $ 1,000.00 YODER FOR CONGRESS, INC KS Primary 2018 REPUBLICAN 6/15/2018 $ 2,500.00 PETERSON FOR CONGRESS MN General 2018 DEMOCRATIC 6/15/2018 $ 2,500.00 MIKE BOST FOR CONGRESS IL General 2018 REPUBLICAN 6/15/2018 $ 1,000.00 MIKE ROGERS FOR CONGRESS AL General 2018 REPUBLICAN 6/15/2018 $ 2,500.00 KLOBUCHAR FOR MINNESOTA MN General 2018 DEMOCRATIC TOTAL $ 45,500.00

NATIONAL COUNCIL OF FARMER COOPERATIVES NCFC CO-OP/PAC

SOLICITATION APPROVAL FORM

NCFC CO-OP/PAC is the political action committee of the National Council of Farmer Cooperatives. It helps make sure you have a strong and effective voice on legislative and regulatory issues affecting your cooperative and its farmer owners.

PLEASE COMPLETE AND RETURN BY FAX 202-626-8722 or E-mail to [email protected]

As a member of NCFC, I hereby authorize NCFC CO-OP/PAC to solicit voluntary contributions on behalf of its activities for the following calendar year(s) as indicated by my signature below. I understand solicitation requests will be directed to me and/or any other eligible personnel as I may designate.

Name: ______

Title: ______

Organization: ______

Phone: ______Fax: ______

Email: ______

*** SIGNATURE REQUIRED FOR EACH YEAR AUTHORIZED ***

2018: 2019: 2020: 2021:

*** IMPORTANT ***

This form is not a solicitation. Federal Election Commission regulations require your prior written approval as a corporate member before we can solicit you or any of your eligible personnel on behalf of NCFC CO-OP/PAC. Your approval does not obligate you or anyone in your organization to contribute to NCFC CO-OP/PAC. It also does not limit your activities in support of your own PAC, political candidates or parties. Eligible personnel may include your executive and administrative personnel, stockholders/members, including directors, and their families. Approval may be provided for multiple years. A corporate member may approve only one trade association federal PAC per year. Contributions to NCFC CO-OP/PAC are strictly voluntary.

SUPPORT THE NATIONAL COUNCIL OF FARMER COOPERATIVES

NCFC is the ONLY trade association organized and dedicated to represent and promote the interests of America’s farmer-owned cooperatives!

YOU CAN NOW JOIN NCFC AS AN INDIVIDUAL MEMBER IN ADDITION TO YOUR COOPERATIVE FOR JUST $25 ANNUALLY

When you join NCFC you gain a powerful voice on issues affecting your business. Individual membership allows participation in exclusive events at the Annual Meeting and Washington Conference, including NCFC CO-OP/PAC auction and sweepstakes events. As a member, you will receive NCFC’s weekly e-newsletter -- the NCFC Update -- which is sent out every Friday and recaps the important events happening here in Washington and across the country pertaining to farmer cooperatives. Additionally, you will receive the NCFC Annual Report, updates on legislative and regulatory issues, and advance notice of NCFC meetings and events. To be eligible for individual membership, you must be an employee, director or farmer-member of an NCFC member organization. ------

___ YES! I WANT TO SUPPORT NCFC AS AN INDIVIDUAL MEMBER (You must be an Employee, Director or Farmer Member of an NCFC Member Organization)

Name: ______

Title: ______

Organization: ______

Address: ______

City: ______State: ______ZIP: ______

Phone: ______Email: ______

Type of Payment (Check One): ___ Personal Check ____ MasterCard ____ VISA

Amount to be charged: $25.00

Credit Card Number: ______Date of Expiration: ____/_____

Signature: Date: / /

Check Here if You Prefer to be Invoiced: ______

Return to: National Council of Farmer Cooperatives 50 F St. NW, Suite 900 Washington, DC 20001 Fax: (202) 626-8722

RICELAND PAC ~ LAND O'LAKES, INC. PAC ~ SRSC PAC DFA-PAC AND NCFC CO-OP/PAC

CORDIALLY INVITES YOU TO A COFFEE WITH SENATOR JOHN BOOZMAN

TUESDAY, JUNE 26TH, 2018 ~ 8:00AM HYATT REGENCY WASHINGTON ON CAPITOL HILL 400 NEW JERSEY AVENUE, N.W., WASHINGTON, D.C.

SUGGESTED CONTRIBUTION LEVELS: HOST: $2,500 PAC | $1,000 INDIVIDUAL GUEST: $1,000 PAC | $500 INDIVIDUAL

Please RSVP to Laura Rizzo at (703) 298-7936 or [email protected]

CONTRIBUTIONS MAY BE SENT TO: BOOZMAN FOR ARKANSAS ~ ATTN. LAURA RIZZO 1316 ALEXANDRIA AVENUE ALEXANDRIA, VA 22308 OR ONLINE AT – WWW.BOOZMANFORARKANSAS.COM

Contributions to Boozman for Arkansas are not deductible as charitable contributions for federal income tax purposes. Contributions to Boozman for Arkansas will be used in connection with federal elections and are subject to the limitations and prohibitions of Federal law. Contributions may not exceed the federal limits of $2,700 for an individual, per election, or $5,000 for a federally registered multicandidate PAC, per election. Contributions by corporations, foreign nationals, federal government contractors, and labor unions are prohibited. Federal law requires us to use best efforts to obtain and report the name, address, occupation, and name of employer for each individual whose contributions aggregate in excess of $200 in an election cycle.

Visit us at www.boozmanforarkansas.com Paid for by Boozman for Arkansas

Not printed at government expense. Please join NCFC CO-OP/PAC SRSC PAC & DFA–PAC for a Reception honoring Congressman Kurt Schrader Representing the 5th District of Oregon House Committee on Energy and Commerce

Tuesday, June 26 ★ 11:45am – 12:30pm Hyatt Regency ★ 400 New Jersey Avenue, NW

PAC Host: $2,500 | PAC Guest: $1,000 $500 Individual Checks can be made payable and sent to: Kurt Schrader for Congress c/o Molly Allen Associates 412 first street SE, Suite 100, Washington DC, 20003

Please RSVP to Hannah Bruce at (202) 827-8200 or [email protected] Contributions or gifts made to Kurt Schrader for Congress are not tax deductible. Kurt Schrader for Congress may accept contributions from an individual totaling up to $2,700 per election; $5,400 per election cycle and from Federally registered multi-candidate PACs totaling up to $5,000 per election; $10,000 per election cycle. Federal law requires us to use our best efforts to collect and report the name, mailing address, occupation and name of employer of individuals whose contributions exceed $200 per election cycle. Contributions from corporations, labor organization, national banks, non-citizens who lack permanent resident status, federal government contracts, and contributions in the name of another are prohibited by federal law.

PAID FOR BY KURT SCHRADER FOR CONGRESS

Please Join NCFC CO-OP/PAC, SUNKIST GROWERS PAC, DFA-PAC, FARM CREDIT PAC, & SRSC PAC For a Breakfast Honoring

Congressman Jim Costa Representing the 16th District of California House Committees on Agriculture and Natural Resources Ranking Member, Subcommittee for Livestock and Foreign Agriculture

Wednesday, June 27, 2018 8:00 to 9:00 a.m.

Hyatt Regency 400 New Jersey Avenue, NW Washington, DC

$2,500 PAC Host $1,000 PAC Guest $500 Individual

R.S.V.P. to Hallie Brown at (202) 827-8200 or [email protected]

Please make contributions payable to: Jim Costa for Congress c/o Molly Allen Associates, LLC 412 First St, SE, Suite 100 Washington, DC 20003

Contributions or gifts to Jim Costa for Congress are not tax deductible. We may accept contributions from an individual totaling up to $2,700 per election; $5,400 per election cycle. Federal PACs may contribute up to $5,000 per election; $10,000 per cycle. Federal law prohibits contributions to the campaign from corporations, labor organizations and national banks; from any person contributing another person’s funds; from foreign nationals who lack permanent resident status; from federal government contractors. Federal law requires us to use our best efforts to collect and report the name, mailing address, occupation and name of employer of individuals whose contributions exceed $200 in an election cycle.

Paid for by Jim Costa for Congress Legal, Tax & Accounting Update

LEGAL, TAX AND ACCOUNTING COMMITTEE REPORT

TO: NCFC Council FROM: Marlis Carson DATE: June 26, 2018

Antitrust Update A Win for Egg Producers. After nine years of litigation and a trial that consumed most of the month of May, a jury found that egg producers Rose Acre Farms, Ohio Fresh Eggs, and Sauder, Inc. did not engage in unlawful market restraints and did not violate the Sherman Act. The case arose out of allegations in over a dozen separate lawsuits asserting that sixteen egg farmers and their cooperative, United Egg Producers, engaged in a conspiracy to raise the price of shell eggs and egg products by reducing egg supply. Plaintiffs alleged that by increasing cage space requirements, coordinating molting schedules and hen reductions, and exporting eggs at a loss through United States Egg Marketers, the producers reduced domestic supplies and raised consumer prices. Over the years at least eight egg producers and their cooperative settled with the direct purchaser plaintiff class for approximately $150 million. With $3 billion in damages at stake, the three national egg producers achieved a significant victory. Jurors found that Rose Acre Farms was part of a conspiracy involving United Egg Producers to reduce the supply of eggs. However, the conspiracy did not impose an unreasonable restraint on supply, so the producers did not incur any antitrust liability. It is likely that the plaintiffs will appeal the ruling. If that happens, the egg producers could cross-appeal and raise an earlier, problematic ruling by the judge, in which the judge said land ownership is a requirement for qualifying for Capper-Volstead protections. NCFC believes that ruling is wrong, as Capper-Volstead does not impose any land ownership requirements on producers. The case is In Re: Processed Egg Products Antitrust Litigation, Dkt. No. 08-md-2002 (E.D. Pa.).

Capper-Volstead Interpretation. In a separate memorandum opinion in the eggs litigation, the court ruled that for purposes of the Capper-Volstead Act the “value” of product handled by a cooperative must be determined by price, not volume. The ruling interprets the Capper-Volstead Act requirement that the cooperative “shall not deal in the products of nonmembers to an amount greater in value than such as are handled by it for members.”

LTA Committee Report June 26, 2018 Page 2 of 5

The June 1 ruling was made in a memorandum opinion in which the court denied United Egg Marketers’ motion for a directed verdict on the affirmative defense of Capper-Volstead immunity. The case is In Re: Processed Egg Products Antitrust Litigation, Dkt. No. 08- md-2002 (E.D. Pa.).

Increased Interest in Capper-Volstead. Every five to ten years there seems to be a focus on the Capper-Volstead Act by lawmakers, regulators, and the American Bar Association. The last time we saw such interest was in 2010 with the Department of Justice hearings on competition in agriculture. True to form, we are now seeing interest in the limited immunity provided by the Act. This spring the Department of Justice hosted a series of roundtables on regulations and antitrust law. The first roundtable focused on antitrust immunities and exemptions. American Bar Association (ABA) representatives participated and submitted a statement consistent with the ABA’s traditional views on antitrust immunities and exemptions. The ABA asserted that the Capper-Volstead Act is flawed, stating: Many of its beneficial effects for farmers could likely be achieved through more narrowly-tailored means, such as joint ventures that are already permitted under the existing antitrust laws. Thus, even if repeal occurred, solutions would exist that would satisfy the ABA’s criteria and cause little disruption to farmers. Moreover, the existing statutorily-created cooperatives have also been found to suffer from poor oversight and lack of transparency. It is likely that private joint ventures would eliminate many of these bureaucratic problems, just as they have in other deregulated industries. The full text of the statement is available here.

At a separate roundtable, Assistant Attorney General Makan Delrahim said the milk pricing system is the type of market distortion and anticompetitive activity that should be reviewed by the Antitrust Division. And a participant from the Cato Institute commented on sugar policy, labeling it as an anticompetitive intervention in the market. The Cato Institute recommended that DOJ target this sort of policy. Witness testimony and other information from the roundtable is available here.

In addition, to the DOJ activity, we understand that a member of the Senate has asked for a Government Accountability Office (GAO) Report on the Capper-Volstead Act. While such requests are not public, we have learned that the request includes marketing data for all dairy cooperatives and the status of recent Capper-Volstead litigation.

NCFC Response. With input from NCFC members and the LTA Antitrust Subcommittee, NCFC is drafting a response to Attorney General Sessions and Assistant Attorney General Delrahim regarding the roundtable discussions. In addition, NCFC staff will track the results of the GAO Report and other activity on this issue and respond appropriately.

LTA Committee Report June 26, 2018 Page 3 of 5

Tax Update

Supreme Court Hears Oral Arguments in Internet Taxation Case. In April the U.S. Supreme Court heard oral arguments in South Dakota v. Wayfair Inc., in which the state asked the Court to revisit its physical presence rule and hold that South Dakota can collect taxes from online retailers conducting business in the state. Retailers fear that such a ruling would place unreasonable burdens on them, requiring them to comply with tax collection obligations in thousands of state and local tax jurisdictions across the country, and would place undue burdens on interstate commerce. The Justices asked numerous questions regarding compliance burdens and suggested that this is a policy issue best addressed by Congress. A decision is expected later this year.

New Form 1120-C Instructions. The IRS recently released new Form 1120-C instructions. While the tax reform changes are effective January 1, 2018, the instructions contain a note regarding cooperatives and the change to the corporate rate: Cooperatives with fiscal tax years beginning before January 1, 2018, and ending after December 31, 2017, figure and apportion their tax (including the AMT) by blending the rates in effect before January 1, 2018, with the rate in effect after December 31, 2017.

Form 1099-PATR Changes. The IRS has also released a draft 2018 Form 1099-PATR and asked for comments. With input from the LTA Committee, NCFC submitted comments requesting that the form take into account the new Section 199A deduction and address issues with differing fiscal year-ends for cooperatives.

Tax Reform Implementation. IRS Acting Commissioner David Kautter recently discussed efforts to implement the Tax Cuts and Jobs Act during a House Appropriations subcommittee hearing. Kautter said Treasury is “working on regulations constantly. We hope to have a steady stream of guidance in the form of frequently asked questions, notices, proposed regulations and final regulations coming out this spring . . . It will take us a couple of years at least to get guidance out on the entire bill.” Kautter said he meets with Treasury Secretary Steven Mnuchin on a daily basis to discuss implementation efforts. The two most challenging parts of the bill are the new international provisions and the 20 percent deduction for pass-through entities. For both, “we’re basically building new tax regimes that didn’t exist before,” Kautter said.

In case you missed prior LTA updates on the Tax Cuts and Jobs Act, P.L. 115-97, below is a summary of provisions of interest to farmer cooperatives and their members. Perhaps most notably, the Act repealed Section 199 and put in place Section 199A. In response to concerns regarding market disruptions, amendments to Section 199A were enacted in late March.

Section 199A as amended includes the following: • Restores prior-law Section 199 provisions -- Treasury is instructed to base new guidance on regulations under prior-law Section 199.

LTA Committee Report June 26, 2018 Page 4 of 5

• Allows patrons to claim a deduction passed through from a cooperative. • Changes the farmer-level deduction to 20% of taxable income or qualified business income (in line with all other non-corporate taxpayers), with limitations for farmers with high taxable incomes or capital gains. • Farmers who transact with a cooperative will also be subject to the following: o The 20% deduction will be reduced by the lesser of (1) 9% of qualified business income allocable to such sales, or (2) 50% of wages allocable to such sales.

o This reduction applies regardless of the amount of Section 199A deduction passed through by the cooperative and is intended to replicate the deduction the farmer had foregone by dealing with the cooperative under prior-law section 199.

o The co-op member’s total deduction for the year will be the pass-through deduction plus the modified 20% deduction. • Taxpayers structured as C corporations are not eligible for the 199A deduction. This is a change from prior law.

• The changes to Section 199A are retroactive to January 1, 2018. Section 199 deductions attributable to taxable years beginning before January 1, 2018, may be utilized by taxpayers.

For more guidance, the Joint Committee on Taxation issued a Technical Explanation of the Act, including over twenty pages on Section 199A.

The Tax Cuts and Jobs Act did not alter Subchapter T, which governs the tax treatment of farmer cooperatives. The patronage dividend deduction remains in place, which was a fundamental goal of NCFC as tax reform took shape. Other provisions in the Act include: • The top corporate rate is reduced from 35% to 21%. The provision is permanent. • The top individual rate is reduced to 37%. The provision expires after 2025. • For itemizers, the deduction for state and local taxes is capped at $10,000. • The estate tax exemption is doubled to $22.4 million for couples; stepped up basis is retained. The provision expires after 2025. • The Alternative Minimum Tax (AMT) is repealed for corporations; a modified version is retained for individuals. • Net Operating Loss carryback is repealed except for farms (two years). There is an indefinite carryforward deduction, limited to 80% of pre-NOL income. • One hundred percent expensing is provided for new and used depreciable assets placed in service after 9/27/17 and before 1/1/23. Expensing is phased out by 20% each year after that.

LTA Committee Report June 26, 2018 Page 5 of 5

• The law provides expensing of costs related to replanting citrus plants lost due to casualty.

Human Resources Update

Save the Date – NCFC Human Resources Conference. The 2018 NCFC Human Resources Conference will take place October 18-19 at CoBank’s headquarters in Denver. We are excited to visit CoBank and learn about the organization’s innovative hiring and retention practices. Conference sessions will also include a workshop on responding to workplace harassment and discrimination issues; cybersecurity; tax law changes; immigration developments; and an employment law update.

HR Staff from NCFC members and LTA Committee members are welcome to attend. Registration information is coming soon.

Tax Reform and Section 199A

NCFC Position: The Tax Cuts and Jobs Act of 2017 reformed the U.S. tax code to spur investment and economic growth across the economy, including agriculture. Congress included provisions that recognize the unique structure of cooperatives and their relationship with their farmer-members. In particular, Congress realized that eliminating the Domestic Production Activities Deduction (DPAD) without a replacement would have resulted in a significant tax increase for farmers across the country, especially because co-ops and farmers would not benefit from a corporate tax rate reduction. While NCFC and our members would have preferred retaining DPAD for agriculture, the new provisions included in the bill will likely provide a comparable benefit to DPAD and prevent farmers from incurring a tax increase. Section 199A: DPAD (the “old” Section 199 deduction) was repealed and new Section 199A came into effect on January 1, 2018. Section 199A provides a farmer-level deduction and a co-op deduction. The co-op may choose to pass through its deduction to its farmer-members, or keep it at the co-op level to offset taxable income. The farmer-level deduction is 20% of taxable income or qualified business income (in line with all other non-corporate taxpayers), with limitations for farmers with high taxable incomes or capital gains. Farmers who transact with a cooperative will also be subject to the following: • The 20% deduction will be reduced by the lesser of (1) 9% of qualified business income allocable to such sales, or (2) 50% of wages allocable to such sales. • This reduction applies regardless of the amount of Section 199A deduction passed through by the cooperative and is intended to replicate the deduction the farmer had foregone by dealing with the cooperative under prior-law Section 199. The co-op member’s total deduction for the year is the pass-through deduction plus the modified 20% deduction. The new law also puts in place a limit on interest deductibility. However, farmer cooperatives and other farming businesses may elect to be exempt from the interest limitation and instead use a ten-year depreciation system. Current Status: Treasury and the Internal Revenue Service have yet to issue guidance; however, Treasury has been instructed to base new guidance on regulations under prior-law Section 199. NCFC will monitor and engage in this implementation process as appropriate. In the interim, we urge our members to assess the impact of these important changes.

June 2018

NATIONAL COUNCIL OF FARMER COOPERATIVES 50 F Street NW, Suite 900 Washington, DC 20001 | (202) 626-8700 www.ncfc.org | facebook: www.facebook.com/FarmerCoop | twitter: @FarmerCoop Capper-Volstead Protections for Farmers and Cooperatives

NCFC Position: NCFC is the industry leader in support of the protections afforded by the Capper-Volstead Act’s limited antitrust immunity for farmers and their cooperatives. Such protections are essential to maintaining and promoting the economic well-being of farmers, ensuring access to competitive markets, and helping capitalize on market opportunities. Action: NCFC urges Congress and the Administration to support and maintain the crucial protections provided by the Capper- Volstead Act. Without those protections, many farmer cooperatives would cease to exist and the farmers and communities they serve would suffer irreparable harm. Current Status: The Capper-Volstead Act and farmer cooperatives are under threat in ongoing civil suits involving mushroom and egg cooperatives. Similar suits involving potato and dairy cooperatives settled before final court decisions were reached. The Department of Justice has said enforcement may be stepped up, or the Department may recommend a legislative change to Capper-Volstead, depending on the outcomes of the ongoing cases. In each case, plaintiffs seek to diminish the ability of farmer cooperatives to manage the delivery of their products. Also at issue is the ability of farmers and their cooperatives to vertically integrate the production of a product – a vital aspect of modern agriculture. These costly lawsuits create tremendous economic uncertainty for farmers and their cooperatives, employees, suppliers, lenders and customers, as well as for rural communities. Diminishment of the limited immunity provided under the Act would result in less, rather than more, competition by removing farmers’ ability to have some market power in an economy dominated by large companies. Background: Congress passed the Capper-Volstead Act in 1922, giving farmers and ranchers the legal right to join together in cooperative associations. The Capper-Volstead Act gives agricultural producer organizations limited antitrust immunity “in collectively processing, preparing for market, handling, and marketing” their products and permits such organizations to have “marketing agencies in common.” The protections provided by the Capper-Volstead Act are essential to the economic well-being of farmers in today’s economy, and without them farmers could be subject to criminal antitrust violations. Without the Capper-Volstead Act, family farmers would not be able to compete due to their lack of bargaining power in dealing with relatively few, large buyers, and would lack the ability to integrate into agricultural processing to compete with those entities. As a protection against potential monopolistic activity, the Act gives the Secretary of Agriculture authority to prevent cooperatives from using their market power to unduly enhance the price of the products they market. June 2018

NATIONAL COUNCIL OF FARMER COOPERATIVES 50 F Street NW, Suite 900 Washington, DC 20001 | (202) 626-8700 www.ncfc.org | facebook: www.facebook.com/FarmerCoop | twitter: @FarmerCoop Trade Outlook Tel: 202-626-8700 Fax: 202-626-8722 50 F Street, NW Suite 900 Washington, DC 20001 www.ncfc.org

MEMORANDUM

TO: NCFC Council NCFC Government Affairs Committee FROM: NCFC Staff DATE: 06/20/2018 RE: Trade Roundup

North American Free Trade Agreement Given the difficulty to quickly conclude an updated NAFTA, President Trump and other administration officials recently indicated their desire to break the negotiations into two bilaterals, and strike separate deals with Mexico and Canada. They believe an agreement with Mexico can be secured relatively quickly, while continuing to negotiate with the Canadians through the summer. It is unclear if the U.S. takes this approach whether the three countries could then potentially finalize a trilateral deal, or there would be two separate agreements.

This strategy is being driven by the fact that U.S. negotiators believe they are close to having agreement with Mexico, and would like to conclude it ahead of Mexico’s elections next month. Meanwhile, Canada appears to be more problematic given some of the seemingly intractable positions taken by the U.S., such as the sunset provision President Trump is insisting on, which was summarily rejected by Canada’s Prime Minister Justin Trudeau, as well as disagreement over the investor-state dispute settlement mechanism.

Dairy issues also have yet to be resolved, with increasing criticism of Canada’s policies coming directly from President Trump. The U.S. has backed off demands that Canada dismantle its supply management system, and instead is pressing Canada to address its milk pricing policies that create an oversupply and suppress global prices. U.S. Department of Agriculture (USDA) Secretary Sonny Perdue recently noted that he does not believe the U.S. and Canada can reach a deal as long as the Class 7 pricing system implemented by Canadian provinces remains in place. No official dates have been set for the next ministerial meeting, but leadership from Canada and Mexico continue to indicate their intent to meet soon.

Representing the Business Interests of Agriculture

Department of Commerce Section 232 Tariffs on Steel and Aluminum

On May 31, 2018, the Trump administration announced that it will no longer exempt steel and aluminum imports from Canada, Mexico, and the European Union (EU) from the tariffs the United States imposed on such products earlier this year, pursuant to Section 232 of the Trade Expansion Act of 1962.

The Trump Administration’s Section 232 decision elicited an instant response from U.S. allies and trading partners. While the Canadian, Mexican and European responses vary, all involve retaliation against American exports in the form of new tariffs. The retaliation joins similar action (or threats of action) by other U.S. trading partners that had not been exempt from the Section 232 tariffs. China was the first country to respond by imposing retaliatory duties.

China. In April, China formally informed the World Trade Organization (WTO) that it would suspend concessions on 128 U.S. products ($2.7 billion in trade) in response to U.S. Section 232 tariffs on steel and aluminum, including fruits, nuts, and wine by 15 percent and pork by 25 percent. The tariff increases were effective April 2.

Mexico. On June 5, Mexico announced tariffs on approximately $3.6 billion worth of U.S. products effective immediately, including pork legs, sausages, apples, cranberries, grapes, blueberries, potatoes, various cheeses, and other products.

Canada. In response to the Sec. 232 tariffs, the Canadian government will apply tariffs on $12.8 billion worth of U.S. goods effective July 1. Canada issued two lists of U.S. products that will be subject to a 25 percent or 10 percent tariff. U.S. steel and iron products will be subject to the 25 percent tariff. Aluminum products, select food products such as yogurt, orange juice and a number of processed foods and condiments will be assessed an additional 10 percent tariff.

European Union (EU). The EU will move forward with its full list of retaliatory tariffs in response to the U.S. Section 232 tariffs, with the first phase of duties on roughly $3.3 billion of U.S. goods coming in July. Some agricultural products on the EU’s list include rice, corn, cranberries, orange juice, tobacco and whiskey. The second phase of tariffs would come in March, 2021, or when the WTO Dispute Settlement Body rules that the United States' measures are inconsistent with the relevant provisions of the WTO Agreement, if that is earlier.

The current retaliatory measures are summarized in the following chart, which is based on official WTO filings, government statements and published reports. The list of targeted products for each country can be accessed through the links in the chart.

Annual US Annual Tariff Tariff Export Value Value Effective Country Products Targeted Source Rates (Millions (Millions Date USD) USD) In effect as 15% - WTO Article 12.5 China See Notification $2,750.00 $611.45 of 2-Apr- 25% Notification 18 WTO Article 12.5 EU (Annex Notification 25% See Notification $3,200.00 $700.00 20-Jun-18 1) Press Release WTO Article 12.5 EU (Annex 10% - Notification See Notification $3,800.00 $800.00 23-Mar-21 2) 50% Press Release 5% - WTO Article 12.5 India See Notification $10,006.00 $800.10 21-Jun-18 100% Notification

WTO Article 12.5 Japan N/A N/A $1,910.51 $439.94 18-Jun-18 Notification

5% - WTO Article 12.5 Turkey See Notification $1,784.74 $266.54 21-Jun-18 40% Notification

WTO Article 12.5 Russia N/A N/A $3,158.10 $537.60 18-Jun-18 Notification 10% - Official Notice of Canada See Notice $12,789.35 $1,966.32* 1-Jul-18 25% Intent See Official Official Mexico N/A N/A $646.12* N/A Announcement Announcement $39,398.70 $6,768.07 TOTAL

*Estimate based on the government’s stated intention to implement tariffs equal to the Section 232 tariffs imposed by the United States, i.e., 25% and 10% tariffs on U.S. imports of steel and aluminum, respectively, from the country at issue in 2017.

Table source: White & Case

Most of these tariffs have yet to be implemented and will not immediately take effect due to both domestic legal procedures and applicable WTO rules. Nevertheless, if each of the eight WTO Members carries out its current retaliation threats against the United States, the total annual value of affected U.S. exports and tariffs would reach approximately $39.4 billion and $6.8 billion, respectively. It also remains to be seen whether other WTO members join this group, thus further affecting U.S. export interests.

China Response to Section 301 Tariffs

In response to the U.S. Section 301 investigation of Chinese intellectual property and technology transfer policies, President Trump on June 15 officially announced 25 percent tariffs on $50 billion in Chinese goods that “contain industrially significant technologies,” and the U.S. intends to begin collecting the additional duties on July 6.

The U.S. Trade Representative (USTR) announced two sets of U.S. tariff lines – the first set contains 818 lines of the original 1,333 lines that were included on the proposed list published on April 6, covering approximately $34 billion worth of imports from China. A second set of 284 proposed tariff lines covering approximately $16 billion in Chinese goods will undergo further review before USTR issues a final determination on the products from that list that would be subject to the additional tariffs.

After President Trump declared he was moving forward with the tariffs, China immediately responded in kind, announcing equivalent retaliatory levies also set to take effect on July 6. Mirroring the U.S. announcement, China said it would target $50 billion of U.S. goods in two phases. The first set of tariffs on $34 billion of goods, including agricultural products and autos, is slated to take effect on July 6. China is targeting a broad swath of U.S. agricultural products including dairy products, soybeans, grains, dairy products, beef, pork, poultry, fruits, nuts and vegetables. The retaliation list can be found here: https://docs.google.com/document/d/e/2PACX- 1vQaZ5iHyZYEzidJ8R4BL9g4l7WPolZCraDsQJSHrEZShom7vKpSlWVDntOd1MtBcr1 P9I-1ZMz9hJVp/pub

In further response on June 18, President Trump instructed U.S. Trade Representative Robert Lighthizer to prepare a list of Chinese products worth $200 billion that could be subject to additional 10 percent tariffs. He said in a statement that China’s response shows that it “apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology. Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong.” The additional 10 percent tariff on $200 billion worth of Chinese goods will go into effect “after the legal process is complete,” and if “China refuses to change its practices” or “insists on going forward with the new tariffs that it has recently announced,” Trump said.

Immigration Reform Tel: 202-626-8700 Fax: 202-626-8722 50 F Street, NW Suite 900 Washington, DC 20001 www.ncfc.org

MEMORANDUM

TO: NCFC Government Affairs Committee FROM: NCFC Staff DATE: 06/22/18

This week, House Leadership scheduled two immigration bills to be voted on the floor, H.R. 4760 the Securing America’s Future Act, sponsored by House Judiciary Committee Chairman Bob Goodlatte (R-VA), and H.R. 6136, the Border Security and Immigration Reform Act, which was drafted as a compromise between the Freedom Caucus members and moderate Republicans.

As you recall, the House Freedom Caucus members demanded a vote on Chairman Goodlatte’s SAF Act prior to lending their votes for farm bill passage. On Thursday, the House failed to pass H.R. 4760 by a vote of 193 yeas to 231 nays. House Leadership decided to delay a vote on H.R. 6136, until potentially next week.

While the main goal of both pieces of legislation is to address the Deferred Action for Childhood Arrivals (DACA) program, provide funding for the border wall, and additional interior enforcement measures, H.R. 4760 did include reforms to the current agricultural guestworker visa program, H-2A. While the initial draft of the compromise bill did not contain any agricultural related provisions, it is our current understanding that negotiations are ongoing to include Chairman Goodlatte’s AG Act, with some modifications.

As we have previously shared with you, NCFC has a number of concerns with the agricultural related provisions of Chairman Goodlatte’s AG Act, while recognizing the bill does contain many positive elements. However, the benefits of such positive elements will not be realized if the programmatic shortcomings and lack of a viable solution for our current workforce go unaddressed.

The two most problematic elements of the AG Act relate to the treatment and stabilization of our current workforce and the arbitrary visa cap. The requirement for workers to leave the country before obtaining a legal status continues to be an area of grave concern, as it impacts worker participation and introduces a layer of uncertainty for the grower. There are simply too many ways for the required exit prior to a worker’s adjustment to H-2C status to go wrong. In-country adjustment with a reasonable subsequent period for a touchback squarely mitigates the risks.

The proposed program already requires employers to seek domestic labor first, as does the existing H-2A program. A cap is therefore unnecessary and redundant given this labor market test, and if the arbitrary cap proves inadequate due to a smaller number of exempt workers or significant industry expansion, it poses an artificial limit on U.S. agricultural and food production.

It will continue to be NCFC’s position that we will not support mandatory E-Verify in any vehicle unless it is coupled with a legislative solution that will provide agriculture with a reliable, legal workforce now and in the future.

Immigration Reform

NCFC Position: Agriculture’s crisis must be addressed through legislative reform, which includes an adjustment for current agricultural workers who lack proper work authority. Additionally, agriculture needs a guestworker program that meets future needs and functions as efficiently as the current free market movement of migrant farm workers while providing the security of a contractual relationship in areas where there is little migration. Farmers and ranchers have long experienced difficulty in obtaining workers who are willing and able to work on farms and in fields. Jobs in agriculture are physically demanding, conducted in all seasons and are often transitory. To most U.S. residents seeking employment, these conditions are not attractive. Yet, for many prospective workers from other countries, these jobs present real economic opportunities. Unfortunately, guestworker programs are unable to respond to the marketplace. This situation makes our farms and ranches less competitive with their foreign counterparts and less reliable for the American consumer. NCFC supports legislative reform that includes both a program to provide access to a legal workforce into the future and an adjustment for current experienced, unauthorized agricultural workers. Action: NCFC has put forward three critical components of reform that must be addressed. First, legislation must address the current workforce. With over half of agricultural workers estimated to not have proper work authority, suddenly losing the majority of agricultural workers would place significant, irreparable harm on not only the agricultural economy, but would negatively impact our economic competitiveness, local economies, and jobs. Every farm worker engaged in high-value labor intensive crop and livestock production sustains two to three off-farm but farm dependent jobs. Agricultural employers must have continued access to trained, high-skilled farm workers. Secondly, legislation must provide for a market-based mechanism for future agricultural workers, which means an arbitrary cap on the number of visas permitted per year is unacceptable. Lastly, this visa program must have the flexibility to meet the needs of producers, including those with year-round labor needs, such as dairy and livestock. Due to the nature of dairy and livestock operations, these sectors have not been able to participate in the current H-2A program. A 2015 Texas A&M study focused on dairy found that farms using immigrant labor supply nearly 80 percent of the milk in the country. Without these employees, economic output would decline by $22 billion and 133,000 workers would lose their jobs. It will continue to be NCFC’s position that we will not support mandatory E-Verify in any vehicle unless it is coupled with a legislative solution that will provide agriculture with a reliable, legal workforce. NCFC along with the other agriculture stakeholders will continue to work together to ensure reform to our agriculture guest worker program and stabilization of our current workforce is a top priority for the administration and Congress. Current Status: Last week, House Leadership scheduled two immigration bills to be voted on the floor, H.R. 4760 the Securing America’s Future Act, sponsored by House Judiciary Committee Chairman Bob Goodlatte (R-VA), and H.R. 6136, the Border Security

NATIONAL COUNCIL OF FARMER COOPERATIVES 50 F Street NW, Suite 900 Washington, DC 20001 | (202) 626-8700 www.ncfc.org | facebook: www.facebook.com/FarmerCoop | twitter: @FarmerCoop Immigration Reform and Immigration Reform Act, which was drafted as a compromise between the Freedom Caucus members and moderate Republicans. House Freedom Caucus members demanded a vote on Chairman Goodlatte’s SAF Act prior to lending their votes for farm bill passage. On June 21st, the House failed to pass H.R. 4760 by a vote of 193 yeas to 231 nays. House Leadership has delayed a vote on H.R. 6136,in an effort to continue negotiations. While the main goal of both pieces of legislation is to address the Deferred Action for Childhood Arrivals (DACA) program, provide funding for the border wall, and additional interior enforcement measures, H.R. 4760 did include reforms to the current agricultural guestworker visa program, H-2A. While the initial draft of the compromise bill did not contain any agricultural related provisions, it is our current understanding that negotiations are ongoing to include Chairman Goodlatte’s AG Act, with some modifications. NCFC has a number of concerns with the agricultural related provisions of Chairman Goodlatte’s AG Act, while recognizing the bill does contain many positive elements. However, the benefits of such positive elements will not be realized if the programmatic shortcomings and lack of a viable solution for our current workforce go unaddressed. The two most problematic elements of the AG Act relate to the treatment and stabilization of our current workforce and the arbitrary visa cap. The requirement for workers to leave the country before obtaining a legal status continues to be an area of grave concern, as it impacts worker participation and introduces a layer of uncertainty for the grower. There are simply too many ways for the required exit prior to a worker’s adjustment to H-2C status to go wrong. In-country adjustment with a reasonable subsequent period for a touchback squarely mitigates the risks. The proposed program already requires employers to seek domestic labor first, as does the existing H-2A program. A cap is therefore unnecessary and redundant given this labor market test, and if the arbitrary cap proves inadequate due to a smaller number of exempt workers or significant industry expansion, it poses an artificial limit on U.S. agricultural and food production. We strongly encourage House members to seek necessary improvements to address these policy deficiencies and enact immigration legislation without further delay. As for Administrative efforts on H-2A, a Joint Cabinet statement released in May announced an H-2A Agricultural Worker Visa Modernization initiative. While the details of the modernizations efforts were scarce, the Administration hopes to see regulatory improvements implemented in time for the FY2020 program season.

June 2018

NATIONAL COUNCIL OF FARMER COOPERATIVES 50 F Street NW, Suite 900 Washington, DC 20001 | (202) 626-8700 www.ncfc.org | facebook: www.facebook.com/FarmerCoop | twitter: @FarmerCoop Farm Bill Member Rating Farm Bill Amendments ‐ Voted Against NCFC Position Supports NCFC

Score Grade Sugar Title 1 Milk WOTUS Biotech Section 199 Caucus Bradley Byrne R Alabama District 1 80 B Martha Roby R Alabama District 2 80 B Mike Rogers R Alabama District 3 90 A X Robert Aderholt R Alabama District 4 80 B Mo Brooks R Alabama District 5 60 D XX Gary Palmer R Alabama District 6 60 D XX Terri Sewell D Alabama District 7 70 C X Don Young R Alaska At‐Large District 80 B Tom O'Halleran D Arizona District 1 80 B AYE Martha McSally R Arizona District 2 70 C X Raul Grijalva D Arizona District 3 60 D XX Paul Gosar R Arizona District 4 50 F XXX Andy Biggs R Arizona District 5 50 F XXX David Schweikert R Arizona District 6 50 F XXX Ruben Gallego D Arizona District 7 70 C X Debbie Lesko R Arizona District 8 50 F XXX Kyrsten Sinema D Arizona District 9 60 D XX Rick Crawford R Arkansas District 1 100 A+ XX French Hill R Arkansas District 2 90 A X Steve Womack R Arkansas District 3 80 B XX Bruce Westerman R Arkansas District 4 90 A X Doug LaMalfa R California District 1 80 B Jared Huffman D California District 2 50 F XXX John Garamendi D California District 3 60 D XX Tom McClintock R California District 4 50 F XXX Mike Thompson D California District 5 80 B XX Doris Matsui D California District 6 70 C X Ami Bera D California District 7 70 C X Paul Cook R California District 8 70 C X Jerry McNerney D California District 9 50 F XXX Jeff Denham R California District 10 90 A X Mark DeSaulnier D California District 11 60 D XX Nancy Pelosi D California District 12 60 D XX Barbara Lee D California District 13 60 D XX Jackie Speier D California District 14 70 C X Eric Swalwell D California District 15 60 D XX Jim Costa D California District 16 90 A X Ro Khanna D California District 17 70 C X Anna Eshoo D California District 18 60 D XX Zoe Lofgren D California District 19 50 F XXX Jimmy Panetta D California District 20 70 C X David Valadao R California District 21 90 A X Devin Nunes R California District 22 90 A X Kevin McCarthy R California District 23 80 B Salud Carbajal D California District 24 70 C X Steve Knight R California District 25 80 B Julia Brownley D California District 26 70 C X Judy Chu D California District 27 60 D XX Adam Schiff D California District 28 50 F XXX Tony Cardenas D California District 29 70 C X Brad Sherman D California District 30 60 D XX Peter Aguilar D California District 31 70 C X Grace Napolitano D California District 32 70 C X Ted Lieu D California District 33 70 C X Jimmy Gomez D California District 34 70 C X Norma Torres D California District 35 70 C X Raul Ruiz D California District 36 70 C X Karen Bass D California District 37 60 D XX Linda Sanchez D California District 38 70 C X Ed Royce R California District 39 60 D XX Lucille Roybal‐Allard D California District 40 60 D XX Mark Takano D California District 41 70 C X Ken Calvert R California District 42 80 B Maxine Waters D California District 43 60 D XX Nanette Barragan D California District 44 70 C X Mimi Walters R California District 45 80 B Lou Correa D California District 46 70 C X Alan Lowenthal D California District 47 60 D XX Dana Rohrabacher R California District 48 40 F XXX X Darrell Issa R California District 49 50 F XXX Duncan Hunter R California District 50 70 C X Member Rating Farm Bill Amendments ‐ Voted Against NCFC Position Supports NCFC

Score Grade Sugar Title 1 Milk WOTUS Biotech Section 199 Caucus Juan Vargas D California District 51 70 C X Scott Peters D California District 52 60 D XX Susan Davis D California District 53 70 C X Diana DeGette D Colorado District 1 60 D XX Jared Polis D Colorado District 2 70 C X Scott Tipton R Colorado District 3 50 F XXX Kenneth Buck R Colorado District 4 70 C X Doug Lamborn R Colorado District 5 80 B XX Mike Coffman R Colorado District 6 50 F XX X Ed Perlmutter D Colorado District 7 60 D XX John Larson D Connecticut District 1 60 D XX Joe Courtney D Connecticut District 2 70 C XX X Rosa DeLauro D Connecticut District 3 60 D XX Jim Himes D Connecticut District 4 50 F XXX Elizabeth Esty D Connecticut District 5 60 D XX Lisa Blunt Rochester D Delaware At‐Large District 70 C X Matt Gaetz R Florida District 1 60 D XX Neal Dunn R Florida District 2 70 C X Theodore Yoho R Florida District 3 80 B John Rutherford R Florida District 4 80 B Alfred Lawson D Florida District 5 70 C X Ron DeSantis R Florida District 6 40 F XXX X Stephanie Murphy D Florida District 7 70 C X Bill Posey R Florida District 8 50 F XX X Darren Soto D Florida District 9 70 C X Valdez Demings D Florida District 10 70 C X Daniel Webster R Florida District 11 70 C X Gus Bilirakis R Florida District 12 80 B Charles Crist D Florida District 13 70 C X Kathy Castor D Florida District 14 70 C X Dennis Ross R Florida District 15 80 B Vern Buchanan R Florida District 16 70 C X Tom Rooney R Florida District 17 70 C X Brian Mast R Florida District 18 70 C X Francis Rooney R Florida District 19 50 F XXX Alcee Hastings D Florida District 20 70 C X Lois Frankel D Florida District 21 60 D XX Ted Deutch D Florida District 22 60 D XX Debbie Wasserman Schultz D Florida District 23 60 D XX Frederica Wilson D Florida District 24 70 C X Mario Diaz‐Balart R Florida District 25 80 B Carlos Curbelo R Florida District 26 80 B Ileana Ros‐Lehtinen R Florida District 27 80 B Buddy Carter R Georgia District 1 80 B Sanford Bishop D Georgia District 2 80 B AYE Drew Ferguson R Georgia District 3 80 B Hank Johnson D Georgia District 4 70 C X John Lewis D Georgia District 5 70 C X Karen Handel R Georgia District 6 70 C X Rob Woodall R Georgia District 7 60 D XX Austin Scott R Georgia District 8 90 A X Doug Collins R Georgia District 9 80 B Jody Hice R Georgia District 10 60 D XX Barry Loudermilk R Georgia District 11 50 F XXX Rick Allen R Georgia District 12 80 B David Scott D Georgia District 13 80 B AYE Tom Graves R Georgia District 14 60 D XX Colleen Hanabusa D Hawaii District 1 70 C X Tulsi Gabbard D Hawaii District 2 50 F XXX Raul Labrador R Idaho District 1 80 B Mike Simpson R Idaho District 2 100 A+ XX Bobby Rush D Illinois District 1 60 D XX Robin Kelly D Illinois District 2 70 C X Daniel Lipinski D Illinois District 3 60 D XX Luis Gutierrez D Illinois District 4 50 F XXX Mike Quigley D Illinois District 5 60 D XX Peter Roskam R Illinois District 6 70 C X Danny Davis D Illinois District 7 60 D XX Raja Krishnamoorthi D Illinois District 8 70 C X Jan Schakowsky D Illinois District 9 60 D XX Bradley Schneider D Illinois District 10 70 C X Member Rating Farm Bill Amendments ‐ Voted Against NCFC Position Supports NCFC

Score Grade Sugar Title 1 Milk WOTUS Biotech Section 199 Caucus Bill Foster D Illinois District 11 60 D XX Mike Bost R Illinois District 12 100 A+ XX Rodney Davis R Illinois District 13 100 A+ XX Randy Hultgren R Illinois District 14 70 C X John Shimkus R Illinois District 15 70 C X Adam Kinzinger R Illinois District 16 90 A X Cheri Bustos D Illinois District 17 90 A AYE X Darin LaHood R Illinois District 18 80 B Pete Visclosky D Indiana District 1 60 D XX Jackie Walorski R Indiana District 2 70 C X Jim Banks R Indiana District 3 50 F XXX Todd Rokita R Indiana District 4 80 B X X Susan Brooks R Indiana District 5 70 C X Luke Messer R Indiana District 6 50 F XX X Andre Carson D Indiana District 7 70 C X Larry Bucshon R Indiana District 8 70 C X Trey Hollingsworth R Indiana District 9 70 C X Rodney Blum R Iowa District 1 90 A XXX Dave Loebsack D Iowa District 2 80 B XX David Young R Iowa District 3 100 A+ XX Steve King R Iowa District 4 100 A+ XX Roger Marshall R Kansas District 1 100 A+ XX Lynn Jenkins R Kansas District 2 80 B X X Kevin Yoder R Kansas District 3 90 A XXX Ron Estes R Kansas District 4 80 B James Comer R Kentucky District 1 70 C X Brett Guthrie R Kentucky District 2 70 C X John Yarmuth D Kentucky District 3 60 D XX Thomas Massie R Kentucky District 4 50 F XXX Hal Rogers R Kentucky District 5 80 B Andy Barr R Kentucky District 6 70 C X Steve Scalise R Louisiana District 1 60 D XX Cedric Richmond D Louisiana District 2 70 C X Clay Higgins R Louisiana District 3 60 D XX Mike Johnson R Louisiana District 4 70 C X Ralph Abraham R Louisiana District 5 90 A X Garret Graves R Louisiana District 6 80 B XX Chellie Pingree D Maine District 1 50 F XXX Bruce Poliquin R Maine District 2 70 C X Gregorio Sablan D Mariana Islands At‐Large District 90 A X Andy Harris R Maryland District 1 60 D XX Dutch Ruppersberger D Maryland District 2 60 D XX John Sarbanes D Maryland District 3 60 D XX Anthony Brown D Maryland District 4 80 B Steny Hoyer D Maryland District 5 70 C X John Delaney D Maryland District 6 60 D XX Elijah Cummings D Maryland District 7 60 D XX Jamie Raskin D Maryland District 8 60 D XX Richard Neal D Massachusetts District 1 70 C X Jim McGovern D Massachusetts District 2 60 D XX Niki Tsongas D Massachusetts District 3 70 C X Joe Kennedy D Massachusetts District 4 70 C X Katherine Clark D Massachusetts District 5 60 D XX Seth Moulton D Massachusetts District 6 60 D XX Michael Capuano D Massachusetts District 7 60 D XX Stephen Lynch D Massachusetts District 8 70 C X Bill Keating D Massachusetts District 9 70 C X John Bergman R Michigan District 1 80 B Bill Huizenga R Michigan District 2 80 B XX Justin Amash R Michigan District 3 40 F XXX X John Moolenaar R Michigan District 4 90 A X Dan Kildee D Michigan District 5 70 C X Fred Upton R Michigan District 6 80 B X X Tim Walberg R Michigan District 7 70 C X Michael Bishop R Michigan District 8 80 B Sandy Levin D Michigan District 9 60 D XX Paul Mitchell R Michigan District 10 80 B David Trott R Michigan District 11 80 B Debbie Dingell D Michigan District 12 70 C X Brenda Lawrence D Michigan District 14 70 C X Tim Walz D Minnesota District 1 90 A X Member Rating Farm Bill Amendments ‐ Voted Against NCFC Position Supports NCFC

Score Grade Sugar Title 1 Milk WOTUS Biotech Section 199 Caucus Jason Lewis R Minnesota District 2 80 B Erik Paulsen R Minnesota District 3 80 B Betty McCollum D Minnesota District 4 80 B XX Keith Ellison D Minnesota District 5 70 C X Thomas Emmer R Minnesota District 6 90 A X Collin Peterson D Minnesota District 7 90 A AYE X Rick Nolan D Minnesota District 8 70 C X Trent Kelly R Mississippi District 1 80 B Bennie Thompson D Mississippi District 2 70 C X Gregg Harper R Mississippi District 3 80 B Steven Palazzo R Mississippi District 4 80 B Lacy Clay D Missouri District 1 80 B Ann Wagner R Missouri District 2 70 C X Blaine Luetkemeyer R Missouri District 3 90 A X Vicky Hartzler R Missouri District 4 100 A+ XX Emanuel Cleaver D Missouri District 5 70 C X Sam Graves R Missouri District 6 90 A X Billy Long R Missouri District 7 90 A X Jason Smith R Missouri District 8 70 C X Greg Gianforte R Montana At‐Large District 90 A X Jeff Fortenberry R Nebraska District 1 90 A X Don Bacon R Nebraska District 2 80 B Adrian Smith R Nebraska District 3 80 B XX Dina Titus D Nevada District 1 50 F XXX Mark Amodei R Nevada District 2 70 C X Jacklyn Rosen D Nevada District 3 60 D XX Ruben Kihuen D Nevada District 4 70 C X Carol Shea‐Porter D New Hampshire District 1 60 D XX Ann Kuster D New Hampshire District 2 50 F XXX Donald Norcross D New Jersey District 1 80 B Frank LoBiondo R New Jersey District 2 60 D XX Thomas MacArthur R New Jersey District 3 80 B Chris Smith R New Jersey District 4 50 F XXX Josh Gottheimer D New Jersey District 5 60 D XX Frank Pallone D New Jersey District 6 50 F XXX Leonard Lance R New Jersey District 7 60 D XX Albio Sires D New Jersey District 8 70 C X Bill Pascrell D New Jersey District 9 60 D XX Donald Payne D New Jersey District 10 70 C X Rodney Frelinghuysen R New Jersey District 11 60 D XX Bonnie Watson Coleman D New Jersey District 12 60 D XX Michelle Lujan Grisham D New Mexico District 1 70 C X Steve Pearce R New Mexico District 2 80 B Ben Lujan D New Mexico District 3 60 D XX Lee Zeldin R New York District 1 60 D XX Pete King R New York District 2 70 C X Thomas Suozzi D New York District 3 70 C X Kathleen Rice D New York District 4 70 C X Gregory Meeks D New York District 5 60 D XX Grace Meng D New York District 6 60 D XX Nydia Velazquez D New York District 7 60 D XX Hakeem Jeffries D New York District 8 70 C X Yvette Clarke D New York District 9 60 D XX Jerry Nadler D New York District 10 60 D XX Daniel Donovan R New York District 11 80 B Carolyn Maloney D New York District 12 60 D XX Adriano Espaillat D New York District 13 70 C X Joseph Crowley D New York District 14 70 C X Jose Serrano D New York District 15 60 D XX Eliot Engel D New York District 16 70 C X Nita Lowey D New York District 17 60 D XX Sean Maloney D New York District 18 60 D XX John Faso R New York District 19 80 B Paul Tonko D New York District 20 60 D XX Elise Stefanik R New York District 21 90 A X Claudia Tenney R New York District 22 90 A X Tom Reed R New York District 23 80 B John Katko R New York District 24 80 B Brian Higgins D New York District 26 70 C X Chris Collins R New York District 27 70 C X G.K. Butterfield D North Carolina District 1 70 C X Member Rating Farm Bill Amendments ‐ Voted Against NCFC Position Supports NCFC

Score Grade Sugar Title 1 Milk WOTUS Biotech Section 199 Caucus George Holding R North Carolina District 2 70 C X Walter Jones R North Carolina District 3 60 D XX David Price D North Carolina District 4 60 D XX Virginia Foxx R North Carolina District 5 60 D XX Mark Walker R North Carolina District 6 70 C X David Rouzer R North Carolina District 7 80 B Richard Hudson R North Carolina District 8 80 B Robert Pittenger R North Carolina District 9 80 B Patrick McHenry R North Carolina District 10 70 C X Mark Meadows R North Carolina District 11 70 C X Alma Adams D North Carolina District 12 70 C X Ted Budd R North Carolina District 13 50 F XXX Kevin Cramer R North Dakota At‐Large District 90 A XXX Steve Chabot R Ohio District 1 60 D XX Brad Wenstrup R Ohio District 2 70 C X Joyce Beatty D Ohio District 3 70 C X Jim Jordan R Ohio District 4 60 D XX Robert Latta R Ohio District 5 70 C X Bill Johnson R Ohio District 6 70 C X Bob Gibbs R Ohio District 7 100 A+ XX Warren Davidson R Ohio District 8 60 D XX Marcy Kaptur D Ohio District 9 80 B XX Michael Turner R Ohio District 10 80 B Marcia Fudge D Ohio District 11 70 C X Tim Ryan D Ohio District 13 60 D XX Dave Joyce R Ohio District 14 70 C X Steve Stivers R Ohio District 15 70 C X Jim Renacci R Ohio District 16 70 C X Markwayne Mullin R Oklahoma District 2 70 C X Frank Lucas R Oklahoma District 3 100 A+ XX Tom Cole R Oklahoma District 4 80 B Steve Russell R Oklahoma District 5 70 C X Suzanne Bonamici D Oregon District 1 60 D XX Greg Walden R Oregon District 2 90 A X Earl Blumenauer D Oregon District 3 40 F X XXX Pete DeFazio D Oregon District 4 60 D XX Kurt Schrader D Oregon District 5 80 B AYE Robert Brady D Pennsylvania District 1 70 C X Dwight Evans D Pennsylvania District 2 70 C X Mike Kelly R Pennsylvania District 3 70 C X Scott Perry R Pennsylvania District 4 50 F XXX Glenn Thompson R Pennsylvania District 5 90 A X Ryan Costello R Pennsylvania District 6 60 D XX Brian Fitzpatrick R Pennsylvania District 8 60 D XX Bill Shuster R Pennsylvania District 9 80 B X X Tom Marino R Pennsylvania District 10 70 C XX X Lou Barletta R Pennsylvania District 11 60 D XX Keith Rothfus R Pennsylvania District 12 50 F XXX Brendan Boyle D Pennsylvania District 13 80 B Mike Doyle D Pennsylvania District 14 70 C X Lloyd Smucker R Pennsylvania District 16 70 C XX X Matthew Cartwright D Pennsylvania District 17 70 C X Conor Lamb D Pennsylvania District 18 80 B AYE David Cicilline D Rhode Island District 1 50 F XXX Jim Langevin D Rhode Island District 2 50 F XXX Mark Sanford R South Carolina District 1 40 F XXX X Joe Wilson R South Carolina District 2 80 B Jeff Duncan R South Carolina District 3 60 D XX Trey Gowdy R South Carolina District 4 70 C X Ralph Norman R South Carolina District 5 70 C X James Clyburn D South Carolina District 6 70 C X Tom Rice R South Carolina District 7 70 C X Kristi Noem R South Dakota At‐Large District 80 B XX Phil Roe R Tennessee District 1 70 C X John Duncan R Tennessee District 2 40 F XXX X Chuck Fleischmann R Tennessee District 3 70 C X Scott DesJarlais R Tennessee District 4 70 C X Jim Cooper D Tennessee District 5 80 B AYE Diane Black R Tennessee District 6 70 C X Marsha Blackburn R Tennessee District 7 60 D XX David Kustoff R Tennessee District 8 70 C X Member Rating Farm Bill Amendments ‐ Voted Against NCFC Position Supports NCFC

Score Grade Sugar Title 1 Milk WOTUS Biotech Section 199 Caucus Steve Cohen D Tennessee District 9 60 D XX Louie Gohmert R Texas District 1 80 B Ted Poe R Texas District 2 80 B XX Sam Johnson R Texas District 3 60 D XX John Ratcliffe R Texas District 4 70 C X Jeb Hensarling R Texas District 5 50 F XX X Joe Barton R Texas District 6 70 C X John Culberson R Texas District 7 60 D XX Kevin Brady R Texas District 8 80 B Al Green D Texas District 9 70 C X Michael McCaul R Texas District 10 80 B Mike Conaway R Texas District 11 90 A X Kay Granger R Texas District 12 80 B Mac Thornberry R Texas District 13 80 B Randy Weber R Texas District 14 80 B Vicente Gonzalez D Texas District 15 80 B AYE Beto O'Rourke D Texas District 16 70 C X Bill Flores R Texas District 17 80 B X X Sheila Jackson Lee D Texas District 18 60 D XX Jodey Arrington R Texas District 19 90 A X Joaquin Castro D Texas District 20 70 C X Lamar Smith R Texas District 21 80 B Pete Olson R Texas District 22 80 B Will Hurd R Texas District 23 80 B Kenny Marchant R Texas District 24 70 C X Roger Williams R Texas District 25 70 C X Michael Burgess R Texas District 26 70 C X Henry Cuellar D Texas District 28 90 A AYE X Gene Green D Texas District 29 70 C X Eddie Johnson D Texas District 30 70 C X John Carter R Texas District 31 80 B Pete Sessions R Texas District 32 80 B Marc Veasey D Texas District 33 70 C X AYE Filemon Vela D Texas District 34 80 B AYE Lloyd Doggett D Texas District 35 60 D XX Brian Babin R Texas District 36 80 B Rob Bishop R Utah District 1 70 C X Chris Stewart R Utah District 2 70 C X John Curtis R Utah District 3 60 D XX Mia Love R Utah District 4 70 C X Peter Welch D Vermont At‐Large District 40 F X XXX Rob Wittman R Virginia District 1 50 F XXX Scott Taylor R Virginia District 2 70 C X Bobby Scott D Virginia District 3 70 C X A. Donald McEachin D Virginia District 4 70 C X Thomas Garrett R Virginia District 5 50 F XXX Bob Goodlatte R Virginia District 6 60 D XX Dave Brat R Virginia District 7 50 F XXX Don Beyer D Virginia District 8 60 D XX Morgan Griffith R Virginia District 9 60 D XX Barbara Comstock R Virginia District 10 70 C X Gerry Connolly D Virginia District 11 70 C X Suzan DelBene D Washington District 1 70 C X Rick Larsen D Washington District 2 70 C XX X Jaime Herrera Beutler R Washington District 3 60 D XX Dan Newhouse R Washington District 4 80 B Cathy McMorris Rodgers R Washington District 5 80 B Derek Kilmer D Washington District 6 50 F XXX Pramila Jayapal D Washington District 7 70 C X Dave Reichert R Washington District 8 70 C X Adam Smith D Washington District 9 50 F XXX Denny Heck D Washington District 10 50 F XXX David McKinley R West Virginia District 1 80 B Alex Mooney R West Virginia District 2 40 F XXX X Evan Jenkins R West Virginia District 3 70 C X Paul Ryan R Wisconsin District 1 80 B Mark Pocan D Wisconsin District 2 60 D XX Ron Kind D Wisconsin District 3 70 C XXX Gwen Moore D Wisconsin District 4 50 F XXX Jim Sensenbrenner R Wisconsin District 5 40 F XXX X Glenn Grothman R Wisconsin District 6 80 B XX Member Rating Farm Bill Amendments ‐ Voted Against NCFC Position Supports NCFC

Score Grade Sugar Title 1 Milk WOTUS Biotech Section 199 Caucus Sean Duffy R Wisconsin District 7 90 A X Michael Gallagher R Wisconsin District 8 80 B XX Liz Cheney R Wyoming At‐Large District 70 C X NATIONAL COUNCIL OF FARMER COOPERATIVES FARM BILL FRAMEWORK

Rural America is characterized by individual initiative and self-reliance – the bedrock of our nation’s culture and character. It’s how American agriculture became the envy of the world. That spirit of working together lives and thrives today in the 2,000 farmer co-ops that are providing for America. Farmer-owned cooperatives are central to America’s abundant, safe and affordable food, feed, fiber and fuel supply. Through their cooperatives, farmers are able to improve their income from the marketplace, manage risk, and strengthen their bargaining power, allowing individual producers to compete globally in a way that would be impossible to replicate as individual producers. By pooling the buying power of hundreds or thousands of individual producers, farmer cooperatives are able to supply their members—at a competitive price—with nearly every input necessary to run a successful farming operation, including access to a dependable source of credit. Furthermore, farmer cooperative members also are able to capitalize on new marketplace opportunities, including value-added processing, to meet changing consumer demand. Public policy should continue to protect and strengthen the ability of farmers and ranchers to join together in cooperative efforts that maintain and promote the economic well-being of farmers, ensure access to competitive markets, and help capitalize on market opportunities.

FARMER CO-OP IMPACT TOTAL SALES $189 Billion Number of Co-ops 1,953 Farmer Members 1.9 Million Jobs 300,000 value of assets owned $92 Billion Net Income $6.8 Billion Statistics from 2016 USDA data, except employment numbers which are approximate and based on NCFC analysis of industry data.

GENERAL PRINCIPLES Farm bill programs serve a variety of purposes including: meeting the food, fuel and fiber needs of consumers worldwide, strengthening farm income, improving our balance of trade, promoting rural development and creating needed jobs here at home. NCFC will continue to work with farm and commodity groups and other allied interests in support of farm legislation, together with needed funding, that builds on the success of the 2014 farm bill. NCFC strongly recommends that the next farm bill strengthen the nation’s farmer cooperatives by: • Promoting the continued viability of the Capper-Volstead Act and other cooperative statutes. • Promoting farmer cooperatives and their abilities to enhance competition in the agricultural marketplace by acting as bargaining agents for their members’ products; providing market intelligence and pricing information; providing competitively priced farming supplies; and vertically integrating their members’ production and processing. • Supporting the cooperative Farm Credit System. • Ensuring farmer cooperatives are eligible to leverage federal programs for the benefit of their farmer members. • Expanding all U.S. agriculture exports and global competitiveness, including through substantially improved access to foreign markets.

NATIONAL COUNCIL OF FARMER COOPERATIVES 50 F Street NW, Suite 900 Washington, DC 20001 | (202) 626-8700 www.ncfc.org | facebook: www.facebook.com/FarmerCoop | twitter: @FarmerCoop GENERAL PRINCIPLES (CONTINUED) • Supporting of a responsive safety net, together with adequate funding, that incorporates improved, comprehensive risk management tools and programs for producers and their cooperatives. • Ensuring our farmers and ranchers have access to labor so they can continue to harvest our crops and care for livestock here in the United States. • Supporting responsible and cost-effective regulatory policies that provide a safe and productive work environment while promoting our economic competitiveness. Additionally, trade is vital to the continued prosperity of co-ops and their farmer and rancher members—with over 95 percent of the world’s population living outside of the United States, our agricultural producers need foreign markets to grow demand and the programs that serve as catalysts to increased market access. As was the case with the 2014 farm bill, the upcoming farm bill debate will be presented with the challenge to be fiscally responsible. Farmer co-ops are mindful of this challenge. At the same time, it is imperative that Congress recognize the continued importance of farm bill policies that promote a healthy and competitive U.S. agricultural sector. That recognition starts with providing adequate resources to support policies in the next farm bill that will preserve the productive capacity of our farms in times of poor production or prices. We urge members of Congress to protect and strengthen the farm bill’s longstanding structure that supports our entire food and fiber chains. A strong farm bill supports our farmers and ranchers, feeds our nation and those who have fallen on hard times, protects our vital natural resources, and brings both urban cities and rural communities together. This strong collaboration is critical to the success of the farm bill. While not traditionally addressed through the farm bill, an issue at the top of many farmers and ranchers mind is access to the workforce they need to harvest the crops and care for the livestock. This lack of labor is a critical threat to the long-term viability of production agriculture in the United States. Congress must act now to provide much needed reform to our current agricultural guest worker system if we want these farmers and ranchers to utilize these farm bill programs and continue providing the food and fiber for not only Americans but around the world. Finally, recent estimates by the United Nations show world population growing to 9.7 billion people by 2050; a vibrant, productive U.S. agricultural economy will be key to feeding and clothing a growing world. The next farm bill must be written to ensure that American farmers and ranchers have the tools and technologies needed to meet this challenge.

ABOUT FARMER CO-OPS In agriculture, there are more than 2,000 farmer cooperatives whose members include a majority of our nation’s 2 million farmers and ranchers. These include: Marketing Cooperatives – which handle, process and market virtually every commodity grown and produced in the United States. Bargaining Cooperatives – which bargain to help their farmer members obtain reasonable prices for the commodities they produce. Farm Supply Cooperatives – those engaged in the manufacture, sale and/or distribution of farm supplies and inputs, as well as energy-related products, including ethanol and biodiesel. Credit Cooperatives – include the banks and associations of the cooperative Farm Credit System that provide farmers and their cooperatives with a competitive source of credit and other financial services, including export financing.

NATIONAL COUNCIL OF FARMER COOPERATIVES 50 F Street NW, Suite 900 Washington, DC 20001 | (202) 626-8700 www.ncfc.org | facebook: www.facebook.com/FarmerCoop | twitter: @FarmerCoop TITLE I & XI - COMMODITIES AND RISK MANAGEMENT • Maintain and strengthen the ability of farmers to participate in federal farm and other programs, including commodity purchase programs, by preserving the ability of farmers to access these programs through their cooperatives. • Provide a responsive safety net, together with adequate funding, that meets the varying needs of U.S. producers while ensuring the long-term viability, health and competitiveness of U.S. agriculture. • Preserve the current sugar program. • Strengthen the dairy program in order to reduce extreme volatility and create a viable and effective domestic safety net for producers with a focus on protecting the operating margin experienced by producers as reflected by milk price and input costs. • Support inclusion of cotton (fiber and seed) policy in Title I commodity programs to provide a safety net equitable with other crops during periods of low prices and depressed market conditions. • Support lowering the threshold for losses in the Tree Assistance Program to improve accessibility to the program. • Provide improved risk management tools and programs for farmers, including crop insurance, and ensure that farmer cooperatives are able to be part of the delivery system. • Obtain improvements in the scope, availability and delivery of crop insurance for the specialty crop industry, including creation of food safety and quarantine policy riders allowed in statute. • Support polices that enhance the ability of U.S. farmers to produce food, feed, fiber and fuel using technologies that are based on proven science, including biotechnology. TITLE II - CONSERVATION • Support the continuation of voluntary, locally-led programs which recognize the uniqueness of the agricultural community and which operate under the parameters of the nationally determined general priorities. • Support elimination, or at a minimum, an increase of the current Adjusted Gross Income limitation on conservation programs to encourage greater delivery of program goals. • Maintain mandatory funding at the current authorized levels for USDA working lands conservation programs, including the Environmental Quality Incentives Program (EQIP) and Conservation Stewardship Program (CSP). • Support improvements and funding for technical assistance programs for public and private providers, allowing NCFC member cooperatives to provide technical service to their service areas. • Codify USDA Natural Resources Conservation Service’s (NRCS) science-based data collection abilities through programs like the Conservation Effects Assessment Program (CEAP) to help show how conservation measures are working to improve environmental conditions. NCFC supports making these reports permanent to help develop science- based, data-driven policy with regard to nutrient management. • Support changes in the Conservation Reserve Program (CRP) to ensure it maximizes environmental benefits for the most environmentally sensitive lands such as field borders and filter and buffer strips, and other areas needed for conservation, and has the flexibility to be used for agricultural production. CRP rental rates should be market-drive and backed by USDA National Agricultural Statistical Service data. TITLE III - TRADE • Enhance USDA international programs and provide the resources necessary to meet current and projected needs over the life of the 2018 farm bill. • Advocate the importance of USDA’s Foreign Agricultural Service and export programs to enhance our ability to expand agricultural exports. This includes increased funding beyond the $200 million for the Market Access Program (MAP) and $34.5 million for the Foreign Market Development Program annually.

NATIONAL COUNCIL OF FARMER COOPERATIVES 50 F Street NW, Suite 900 Washington, DC 20001 | (202) 626-8700 www.ncfc.org | facebook: www.facebook.com/FarmerCoop | twitter: @FarmerCoop TITLE III - TRADE (CONTINUED) • Continue to advocate preferences for cooperatives in USDA’s export programs and ensure continued eligibility for farmer cooperatives to access MAP directly. • Support modification to allow use of funds under the Technical Assistance for Specialty Crops (TASC) program to address emerging trade barriers. • Seek mandatory funding for the Global MRL Database, the Grower MRL Database and the IR-4 project to support specialty crop requirements to access international markets and facilitate registrations of pest management tools to fight invasive pests. • Expand market analysis and other research activities at USDA with the goal of increasing the agricultural trade surplus. • Advocate the continuation of viable USDA Export Credit Guarantee Programs, consistent with existing WTO obligations. TITLE IV - NUTRITION • Support USDA food and nutrition programs, including Section 32 and commodity purchase programs, together with needed funding, to help achieve their important objectives. • Maintain the ability of farmers who cooperatively market their products and their cooperatives to continue to be eligible under USDA commodity purchase programs. • Encourage USDA’s food and nutrition programs to provide all forms of fruits, vegetables, and tree nuts as outlined in the 2015 Dietary Guidelines. TITLE V & VI - CREDIT AND RURAL DEVELOPMENT • Reauthorize USDA’s Value-Added Producer Grants Program. • USDA rural development programs should prioritize modern production agriculture as essential to rural development. • Farmer cooperatives should receive preference in recognition of their abilities to aggregate producers and deliver the greatest benefit broadly. • Improve USDA farmer cooperative programs, including research, education and technical assistance. Provide additional direction to USDA’s Rural Business Cooperative Service program area in support of farmer cooperatives. • Encourage expansion of broadband service to rural areas through programs that ensure rural broadband providers, especially cooperatives, are not disadvantaged. • Coordinate with the Farm Credit Institutions as they develop system-wide priorities for the next farm bill. TITLE VII - RESEARCH • Support robust funding and coordination for agricultural research. • Seek funding for specialty crop research to improve crop characteristics; address threats from pests and diseases; improve production efficiency; promote innovation and technology, including mechanization; and reduce food safety hazards. • Support designating as a high priority research that examines nutrient management practices based on source, rate, timing and placement of nutrients. TITLE IX - ENERGY • Continued support for expanded federal fleet requirements and use of biofuels and procurement programs for biobased products.

NATIONAL COUNCIL OF FARMER COOPERATIVES 50 F Street NW, Suite 900 Washington, DC 20001 | (202) 626-8700 www.ncfc.org | facebook: www.facebook.com/FarmerCoop | twitter: @FarmerCoop TITLE IX - ENERGY (CONTINUED) • Maintain USDA loan and grant programs, including special provisions for farmer cooperatives, to encourage production, innovation, utilization, distribution and market stability of renewable energy, including from crops and livestock. • Encourage increased research relating to production, utilization and distribution of renewable energy, including from biomass, animal waste and byproducts, etc. • Support voluntary policies promoting the development of technologies to further utilize manure as a feedstock to produce gas, fuel, or electricity, especially if these projects are cost-effective and provide an economic benefit to farmers and/or farmer-owned cooperatives. • Support federal programs to enhance public awareness, education, and promotion efforts to encourage utilization of renewable fuels. TITLE X - HORTICULTURE • Seek funding and increased coordination between federal, state, and local government agencies and industry stakeholders, including farmers and their cooperatives, in the prevention and treatment of plant pests and diseases that could harm domestic production and/or international trade. • Provide necessary funding to facilitate registrations of modern pest management technology to fight the ever increasing number of invasive pests. • Support promotion and innovation in the specialty crop industry through the Specialty Crop Block Grant Program which supports research, agricultural extension activities, and programs for the specialty crop industry. TITLE XII - MISCELLANEOUS • Support policies that enhance the ability of cooperative members to raise animals for food and fiber using practices and technologies that are based on proven science, are economically sound, provide for the proper care and well-being of the animals, and ensure the safety of animal agriculture products to provide the American consumer with a high- quality source of protein. • Establish with necessary funding a Foot and Mouth Disease (FMD) vaccine bank to protect against all 23 of the most common FMD strains currently circulating in the world. • Support policies to enhance business opportunities for livestock and poultry producers as well as their farmer-owned livestock marketing associations by providing the freedom and flexibility to engage in new market innovations. • Oppose federal policies that negatively impact producer-owned livestock marketing associations by limiting the marketing options of the cooperative and its members.

NATIONAL COUNCIL OF FARMER COOPERATIVES 50 F Street NW, Suite 900 Washington, DC 20001 | (202) 626-8700 www.ncfc.org | facebook: www.facebook.com/FarmerCoop | twitter: @FarmerCoop Washington Update & Election Analysis Tel: 202-626-8700 Fax: 202-626-8722 50 F Street, NW Suite 900 Washington, DC 20001 www.ncfc.org

MEMORANDUM

TO: NCFC Council NCFC Government Affairs Committee FROM: NCFC Staff DATE: June 22, 2018 RE: Battleground Agriculture

When it comes to federal government affairs matters, it would be no surprise if you as a member of U.S. agriculture feel like you are on a confusing battleground. This is because we are a natural constituency of this administration while at the same time a sector of the economy whose livelihoods are, due to circumstances, at risk because of some of the fundamental policies of this administration.

There is nothing new about our predicament; we have never been fully able to embrace the whole set of any administration’s policies and often have found ourselves at odds with presidents. The world, the U.S. economy and agriculture are simply too complicated and diverse for these conflicts not to happen. Agricultural cooperatives have always navigated through these potential minefields, and we are doing so again. Yet, today’s circumstances are a bit unusual and the risks are larger than normal.

We are part of an industry with many participants that are likely to have enthusiastically embraced some of the core messages of then candidate and now President Trump: that Washington isn’t working and needs fundamental change, and that as a nation we have stopped paying attention to the needs and values of rural America, to our country’s peril. This puts U.S. agriculture squarely in the middle of the constituency that the Trump Administration would be inclined to help and support. His appointment of U.S. Department of Agriculture (USDA) Secretary Sonny Perdue, and many of the Secretary’s subsequent actions and policies, are a clear indicator of this. The enthusiasm and vigor with which the U.S. Environmental Protection Agency (EPA) Administrator Scott Pruitt, despite his numerous, questionable personal indiscretions, has sought to promulgate a new waters of the U.S. rule, and other environmental regulatory policy changes, is another example.

Still, U.S. agriculture is confronted by administration policies that have great potential to seriously harm agriculture. The first exploratory salvos of a trade war have been fired, and there is a chance, real though far from certain, that this could expand to a major, worldwide trade conflict with U.S. agricultural goods being the first and most significant casualties of the fight.

Representing the Business Interests of Agriculture

Government Affairs Report June 22, 2018 Page 2 of 6 Further, critical elements of our agricultural workforce are dependent on a sound and stable set of immigration policies, something agriculture has sought for many years. While we continue to work with Congress on immigration policy reforms and hope for success, in practical terms the administration’s aggressive implementation of policies in the field have made matters worse for many in agriculture, not better, with no clear resolution or help in sight.

Fortunately, there are legitimate reasons to hope that in the end the outcomes will prove not to be the disasters that we fear, even though it is more than reasonable to worry about the worst possible consequences and to work to avoid them. We bring these perspectives to the discussion below of several critical federal government affairs matters.

ELECTION OUTLOOK

This spring, things were looking decidedly bleak for the GOP’s chances of holding onto the House in the mid-term elections, and the Senate was certainly in play. While it is still many months before the election and any number of developments could drastically change the election’s outcomes, today it looks like the GOP has a legitimate chance to hold onto the House (although it could go slightly in favor of the Democrats) and it appears likely that the GOP will hold the Senate.

Why the change? There appear to be several reasons. Democrats had been riding a year’s long wave of grass-roots invigoration driving outrage and strong turnout in the special federal, state and local elections. While that kind of turnout of the Democratic base remains likely in November, the big question is whether independent voters, which could again easily be a deciding factor in the election, will be motivated by any anti-Trump fervor. In the past few months the momentum has swung somewhat in the GOP’s and the Administration’s favor, given some substantial and major positive economic and policy developments for which the party has and will continue to take credit.

Domestically, our economy is at what some economists believe is the top of a business cycle. On the international front, while many Americans do not like President Trump’s style of conducting foreign policy, the predictions of calamity have failed to materialize and his summit with North Korea’s Kin Jong-un is widely viewed as a positive development. Many people seem to be willing to give the President additional time and the benefit of the doubt, despite their concerns with his rhetorical and communications style. Lastly, the GOP in Congress has stopped trying to enact pieces of major and controversial legislation, particularly the repeal of popular elements of the Affordable Care Act (ACA), and instead are allowing the administration to pursue ACA deregulation behind the scenes through executive action. The GOP has also stopped talking about the tax bill, whose benefits are largely invisible or far too small for most Americans to warrant legislators claiming that the tax bill was important or a major success.

The performance of the economy, and the lack of any palpable, substantive international disasters, while the President offers sufficient and substantial reasons domestically and internationally for his motivated base to continue to support him, has strengthened considerably the GOP’s platform on which to run in the mid-terms. Yet, the election is still several months away, and there remains several risks that could sour more of the independents on the President and the GOP. Damaging indictments could be coming out of the Mueller and Southern District

Government Affairs Report June 22, 2018 Page 3 of 6 of New York investigations of the Trump organization and associates. Awareness of administrative actions on the ACA may yet grow and prove highly unpopular. The President’s pending, possible trade war (see below) could lead to pockets of unemployment and take over the story about the economy. The long-term political impact of the administration’s ‘zero- tolerance’ policy on family separations at the border will factor into this calculation as well. No matter what, Democratic voters will be highly energized, and we expect turnout to be strong. But for now, the GOP is feeling a good deal more hopeful that they have a fighting chance to hold onto their majorities in both chambers of Congress.

TRADE

The good news we have not yet passed a trade war’s point of no return. This is the case even though serious and significant steps are being taken that greatly increase the risk that we will cross that point. Still being able to pull back from such a war is no comfort to many who are already facing sharply higher retaliatory tariffs. There is still time to make apparent concessions that in practice are not significant yet sufficient for all sides to declare partial victory and save face, thereby avoiding broad, deep and serious damage to the U.S., particularly to export- dependent sectors of the U.S. economy like agriculture.

Common-sense would argue that the trade-war disruption to the approximately 10 percent of the U.S. economy represented by export dependent sectors could cause the White House to seek resolution without escalation, especially given how important the current strength of the U.S. economy is to the GOP’s mid-term election chances. Some economists estimate that the lost markets and disruption a trade war would cost us 10 million or so U.S. jobs, with substantial and negative rippling effects outward into the U.S. economy. The White House may be calculating that the electoral benefits to the GOP from the President standing up to actual or perceived unfair trading practices by trading partners like the Chinese will outweigh the costs of the trade war, many of which may not materialize until after election day anyway.

For whatever reason, the risks of a trade war seem to be growing every day. It worries us and many others that there is no apparent person in the Executive Branch with the economic experience, clarity of thought and seniority to work with President Trump to help avoid going over the brink. Many are worried that the White House is underestimating the strength and resolve of the Chinese not to back down from the administration’s aggressive tactics, as evidenced by the sharp downward turn in the financial markets this week on the news of the administration’s threats to levy tariffs on as much as $450 billion of Chinese exports to the U.S.

It is getting harder to envision the series of events and the degree of diplomacy that will be needed to avoid something that until about a year ago most thought had been permanently eliminated from the global economic system.

CONGRESS

While, as noted earlier, the GOP leaders in Congress have recently been avoiding broadly unpopular legislative initiatives that might alienate certain independent constituencies important to their mid-term election chances, they are still taking a politically and substantively pragmatic

Government Affairs Report June 22, 2018 Page 4 of 6 course of legislative action. The electorate, despite its deep skepticism about whether Congress can actually work, continues to want legislators to do the business of the country; passage of any substantive bill helps to further advance the GOP’s chances come election time.

The question is, has Congress found itself dragged back into highly controversial legislation with potentially negative effects persisting until November? This week’s action is a prime example with the House holding immigration reform votes to open the door to House passage of a farm bill. Immigration reform is complex on its own but now made more complicated by the uproar and emotional objections to the administration’s policy to separate families at the border, regardless of circumstances (crossing illegally or following the protocols for seeking asylum), and holding children in detention centers while their parents are adjudicated. Polls indicate the country opposes this policy two to one.

Farm Bill and Immigration Reform Efforts are Linked—Congress’s desire to demonstrate that it can pass legislation explains in part the risks that the House leadership has taken to get a farm bill passed without any Democratic votes. Those risks include the decision to acquiesce to immigration hard-liners’ demands that votes be held on their immigration reform legislation before they could support a farm bill.

The House GOP did not anticipate that the administration’s separation of 2,000 plus immigrant children from their parents and then subsequent detention would thrust their immigration reform votes into the headlines for days and serve as a visible focal point for the public’s anger over the “separate and detain” program. The fact that the President has not given concrete direction to the House GOP as what he would ultimately support, and in the process apparently given the House responsibility for fixing the political problems created by the administration’s separate and detain program, has only increased the focus on the House’s votes and the associated level of controversy.

The House failed to garner enough votes to pass H.R. 4760 the Securing America’s Future Act, sponsored by House Judiciary Committee Chairman Bob Goodlatte (R-VA). They have postponed consideration to the week of June 25th H.R. 6136, the Border Security and Immigration Reform Act, which was drafted as a compromise between the Freedom Caucus members and moderate Republicans. The postponement is intended to continue the negotiations and potentially include a more palatable solution for agriculture than what Chairman Goodlatte included in H.R. 4760. Given this confusion and controversy, it is not clear, at the time we write this memorandum, whether the House will have the votes to pass a compromised approach to immigration reform legislation.

Time will soon tell, but the House GOP may end up without an immigration reform bill to send to the Senate, while still sharing the blame and potentially long-lasting political burdens of the administration’s separate and detain program. Even were the House to pass an immigration reform bill, by not solving the problems created by the separate and detain policy, they could still bear these lasting political effects. It’s also safe to assume that a House-passed bill would have little or no chance in the Senate.

Government Affairs Report June 22, 2018 Page 5 of 6 In terms of the farm bill, though, House Freedom Caucus members did not block its passage once they had their vote on Goodlatte’s immigration proposal. The House narrowly passed their farm bill by a vote of 213 yeas to 211 nays. No Democrats supported the measure and roughly 20 Republicans voted no as well.

The Senate has passed out of the Agriculture, Nutrition & Forestry Committee its own farm bill on a strong, bipartisan vote of 20-1. The lone no vote came from Sen. Chuck Grassley (R-IA). The Senate has started the procedural moves necessary to call up their version of the farm bill the week of June 25th with the goal of completing their consideration by the July 4th recess.

Presumably, we would move to a conference committee in July but anticipate that it will be quite challenging given the many substantive differences between the bills, some of them quite controversial. The legislative session time available to complete such a conference and get the conference report passed by both the House and Senate before the November elections will be exceedingly short. There is enormous pressure on the House and Senate agricultural committee members, once their respective bills are passed, to get the conference done and the final bill sent to the President. Any final product will resemble the Senate’s bipartisan bill more so than the House version, and it is hard to predict if House leadership, who cited the farm bill as a signature opportunity for welfare reform, can call up a conference report that contains very little changes without a revolt of its conservative wing of the party.

Appropriations—The substantial electoral pressure on the GOP-led Congress to do the country’s legislative business will not be enough to result in Congress passing fiscal year 2019 appropriations bills through “regular order,” something that has not happened in almost two decades. While most of the House and Senate appropriations bills will be largely completed before the election, with bipartisan support in their committees, normal budget politics all but guarantee that the federal government will have to operate under the continuing resolution at the start of the fiscal year, October 1. President Trump has also complicated matters further by already threatening a government shutdown if he doesn’t get full funding ($25 billion) of his border wall this year. It is not out of the question that a lame duck Congress would pass an omnibus appropriations bill after the election before the end of the year. Many factors will go into such a decision, most of which are unknown until after the election.

ADMINISTRATION ACTIONS

USDA and the EPA continue to pursue their programmatic efforts, including substantial regulatory reform, and progress is being made in many areas. Some of the most important of these are discussed below.

National Bioengineering Disclosure Standard Proposed Rule—USDA published on May 4, 2018, the proposed rule for the National Bioengineered Food Disclosure Standard Act. NCFC is working closely with the Coalition for Safe, Affordable Food (CFSAF) to devise joint comments. NCFC also will provide USDA with a separate set of comments on behalf of member cooperatives. The comment period will be open for 60 days; comments are due July 3. The comment period will not be extended due to the congressionally-mandated timeline for this rulemaking to take effect on July 29.

Government Affairs Report June 22, 2018 Page 6 of 6

Waters of the U.S. Rulemaking (WOTUS)—We moved closer this month to the issuance of a fully revised rule defining what are WOTUS under the Clean Water Act when EPA and the U.S. Army Corps of Engineers transmitted the draft proposed rule to Office of Management and Budget (OMB) for interagency clearance. That process can take up to 120 days, but issuance of this proposed rule and subsequent finalization is a top administration priority. We expect considerable pressure to finish clearance and publish the proposed rule for public comment before the end of the summer.

In the meantime, the administration’s rule that delayed the effective date for the 2015 rule by several years remains in effect, although that rule has been challenged in court and may itself be set aside. Such a court decision, while making an already confusing situation even more so, would not result in the 2015 rule being in effect in at least 24 states. This month another federal district court has formally stayed the 2015 WOTUS rule in 13 states, which brings the total number of states covered by a rule stay to 24. More federal district court decisions are being sought to increase this number further.

If you find this all confusing, you are in good company.

CERCLA-EPCRA Rulemaking—The EPA issued guidance this spring to help implement the amendments to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) made during passage of the 2018 Omnibus Appropriations bill. Those amendments excluded livestock and poultry producers from CERCLA’s requirements that air emissions from manure over a certain threshold be reported to federal authorities. EPA’s recent guidance included their interpretation that the CERCLA amendment effectively excludes producers from having to report such emissions to state and local emergency response authorities, as otherwise required under the Emergency Preparedness and Community Right-To-Know Act (EPCRA). EPA has indicated that a rulemaking is now needed to formally implement the CERCLA amendments (and their associated reading of the implications for EPCRA reporting), an action that would be strongly supported by livestock and poultry producers. No schedule has been announced at this time for that rulemaking.

National Bioengineered Food Disclosure Standard Bioengineering Disclosure

NCFC Position: NCFC opposes mandatory labeling of food products containing biotech ingredients. The technology behind genetically modified organisms (GMO) in agriculture is proven safe for the environment and consumers, and is key to increasing food production necessary to feed a rapidly growing global population. Acceptance by consumers depends on a continued effort to better inform the public about the environmental and health benefits this technology provides. Action: NCFC calls on the United States Department of Agriculture (USDA) to expeditiously conduct a formal public comment and rulemaking process to implement the National Bioengineered Food Disclosure Standard. Current Status: On May 4, USDA released its proposed rule for the National Bioengineered Food Disclosure Standard Act and established a 60-day public comment period. The proposed rule provides industry the ability to comment on several options related to ingredient thresholds, on-pack symbols and the overall scope of the rule. NCFC is working closely with the Coalition for Safe, Affordable Food (CFSAF) to devise joint comments by the comment deadline, July 3. NCFC also will provide USDA with a separate set of comments on behalf of our member cooperatives. Shortly after the proposed rule was published, the Agricultural Marketing Service (AMS) released a webinar providing an overview of the proposed rule as well as detailed visuals representing on-pack label options. The proposed rule, webinar and symbol options can be found on AMS’s website. Background: For several years, the CFSAF, co-chaired by NCFC and the Grocery Manufacturers Association, worked closely with members of the House and Senate to produce a bill that preempts state mandated GMO labeling laws while providing more information for consumers wanting to know more about biotechnology-derived food ingredients. On July 23, 2015, the House of Representatives passed H.R. 1599, the Safe and Accurate Food Labeling Act, which preempted state laws and established a voluntary labeling program overseen by the U.S. Department of Agriculture (USDA). With a looming deadline of July 1, 2016, when the state of Vermont’s mandatory labeling law was set to take effect, attention was shifted to the Senate to pass similar legislation. Senators Pat Roberts (R-KS) and Debbie Stabenow (D-MI), Chair and Ranking Member of the Senate Agriculture Committee, worked closely over the next year to come up with their own agreement to garner 60 votes in the Senate. After consideration of several iterations of a bill, on July 7, 2016, the Senate passed the National Bioengineered Food Disclosure Standard (S. 764) with a strong bipartisan vote of 63 yeas to 30 nays. A week later, the House of Representatives took up the same measure and passed it by a vote of 306 yeas to 117 nays. The President signed the bill into law on July 29, 2016.

NATIONAL COUNCIL OF FARMER COOPERATIVES 50 F Street NW, Suite 900 Washington, DC 20001 | (202) 626-8700 www.ncfc.org | facebook: www.facebook.com/FarmerCoop | twitter: @FarmerCoop Bioengineering Disclosure

Key provisions of the final agreement include: • Pre-emption: immediately prohibits states or other entities from mandating labels of food or seed that is genetically engineered. • National Uniform Standard: the U.S. Department of Agriculture establishes through rulemaking a uniform national disclosure standard for human food that is or may be bioengineered. • Disclosure: requires mandatory disclosure with several options, including text on package, a symbol, or a link to a website (QR code or similar technology); small food manufacturers will be allowed to use websites or telephone numbers to satisfy disclosure requirements; very small manufacturers and restaurants are exempted. • Meat: foods where meat, poultry, and egg products are the main ingredient are exempted. The legislation prohibits the Secretary of Agriculture from considering any food product derived from an animal to be bioengineered solely because the animal may have eaten bioengineered feed. On June 26, 2017, USDA published 30 questions for consideration by stakeholders to gather feedback prior to drafting a proposed rule. NCFC worked with the Coalition for Safe, Affordable Food (CFSAF) to devise joint responses to each question. NCFC also provided USDA with a separate set of responses on behalf of our member cooperatives. All stakeholder responses can be reviewed on USDA’s Animal and Plant Health Inspection Service’s (APHIS) website.

June 2018

NATIONAL COUNCIL OF FARMER COOPERATIVES 50 F Street NW, Suite 900 Washington, DC 20001 | (202) 626-8700 www.ncfc.org | facebook: www.facebook.com/FarmerCoop | twitter: @FarmerCoop Accurate Product Labels CONSUMERS HAVE A RIGHT TO ACCURATE, COMMONSENSE PRODUCT LABELS www.accuratelabels.com A GROWING PROBLEM: INACCURATE LABELS ON THE RISE

In 2017 and 2018, 30 proposals in 11 different states required warning labels or ingredient listings that go beyond national standards related to a variety of common consumer products.

New York, San Francisco and Baltimore have proposed warning labels on all beverages with added sugar even though the FDA says added sugars “can be a part of a healthy dietary pattern...”

Several states and cities, such as Hawaii, have required or proposed warning labels on cell phones despite the weight of scientific evidence that cell phone use is safe.

California requires warning labels on products, including french fries and coffee, that contain one of nearly 900 substances, and it often relies on questionable science and unrealistic exposure levels.

BY THE NUMBERS: AMERICAN BELIEFS ABOUT STATE AND CITY LABELING MANDATES

More than eight in 10 Americans (83 percent) support using “smart labels” to provide customers with accurate information about products on websites or through smartphone apps to get more information than11% could fit on product packaging.

11% Unsure More than half of Americans (56 percent) 15% 15% believe that additional labeling mandates must No new be based on sound science and legitimate risk. 56% requirements Fewer than one out of five people (18 percent) New requirements believe that states or cities should be able to must be based on sound science and 18% impose whatever requirements they want. Impose any 56% legitimate risk A smaller percentage (15 percent) do not think requirements states or localities should be able to impose new requirements at all. 18%

Statistics based on a national survey conducted August 16-17, 2017 by Echelon Insights and Momentum Analysis American consumers believe by wide margins that Accuracy, Clarity and Simplicity are most important when it comes to product information.

60 45 30 56% 48% 15 32% 0 Accuracy Clarity Simplicty

CONGRESS SHOULD PASS LEGISLATION TO: Establish science-based criteria for all additional state labeling requirements. States should be required to “show their work” by documenting the science behind their proposed labeling mandates.

Allow state-mandated product information to be provided through smartphone-enabled “smart labels” and on websites. The SmartLabel™ transparency initiative puts detailed information at the fingertips of consumers who can scan a barcode with their phone or visit a website to find up-to-date, relevant ingredients and warnings

Clarify that trace amounts of substances do not have to be listed as ingredients. In many cases, minute amounts of substances are present unintentionally due to packaging, transport or display.

THE BOTTOM LINE: American consumers have a right to accurate and meaningful information about products they buy. Congress must act to protect that right and improve consumer protection by requiring consistent and credible information on product labels.

www.accuratelabels.com

Time for Clear, Accurate, Commonsense Product Labels

Consumers have a right to clear, accurate and meaningful information about products they buy. However, a growing number of states and cities are making that more difficult by requiring or proposing mandatory labels on packaging that are not backed by science and that imply risks when none exist. Those inaccurate labels mislead consumers, drive up prices and create costly new regulatory burdens, especially for American farmers and small businesses.

Congress should amend the Fair Packaging and Labeling Act to ensure that product labels are clear, accurate and based on sound science.

A Growing Problem: Inaccurate Labels on the Rise In 2017 and 2018, 30 proposals in 11 different states required warning labels or ingredient listings that go beyond national standards related to a variety of common consumer products. • Several states and cities, such as Hawaii, have required or proposed warning labels on cell phones despite the weight of scientific evidence that cell phone use is safe.

• New York, San Francisco and Baltimore have proposed warning labels on sweetened beverages.

• California requires warnings on anything that contains one of almost 900 substances. The California list often relies on questionable science and unrealistic exposure levels. For example, french fries must have a cancer warning, even though it would require eating 182 pounds of french fries every day to present an actual cancer risk. Coffee also must include a cancer warning even though the most recent Dietary Guidelines say that three to five cups of coffee can be consumed each day as part of a healthy diet. Small businesses nationwide have been sued for unintentional violations of the labeling requirements resulting in settlements that drive up costs for consumers, all with little meaningful benefit to the public. Inaccurate Labels are Costly and Confusing to Consumers Unfounded warnings or ingredient mandates create confusion for consumers, drive up costs and present obstacles to interstate commerce. • Unwarranted warning labels hit consumers in their pocketbooks.

• Bureaucratic hurdles and the cost of printing separate packaging can prevent businesses from expanding and selling products in multiple states.

• Farmers, small businesses, retailers and manufacturers struggle to keep up with a myriad of changing labeling requirements, which exposes them to excessive lawsuits.

Basing Labeling Mandates on Sound Science and Common Sense States that want to enact labeling mandates beyond federal standards should be required to demonstrate, based on sound scientific evidence, that a product presents meaningful risks.

To improve the quality and availability of information for consumers and help ensure they have access to clear, accurate and meaningful product labels, Congress should pass a national standard to: 1) Establish science-based criteria for all additional state and local labeling requirements. States and localities should be required to “show their work” by documenting the science behind their proposed labeling mandates. The evidence must be based on widely-accepted methods of study, real world circumstances and meet high standards of integrity. States and localities that meet the criteria can enact their own ingredient listing or labeling programs.

2) Allow state-mandated product information to be provided through smartphone-enabled “smart labels” and on websites. The SmartLabel™ transparency initiative puts detailed information at the fingertips of consumers who can scan a barcode with their phone or visit a website to find up-to-date, relevant ingredients and warnings, as well as additional information that would not fit on a package label.

3) Ensure that covered product information is risk-based. Warning labels act as important precautionary notices of legitimate risks and need to be taken seriously.

These changes to federal law will ensure that consumers continue to benefit from the nutritional and allergy information on packaging today, while guaranteeing that any additional product information required by states or localities is clear, accurate, meaningful and science-based.

Time for Clear, Accurate, Commonsense Product Labels • Consumers have a right to clear, accurate, meaningful information about products they buy no matter where they live or shop.

• A growing number of states and cities are making that more difficult by requiring or proposing mandatory labels on packaging that are not backed by science and that imply risks when none exist. o Warnings on cell phones o Warning on drinks containing sugar o California’s labeling program that requires warnings on anything that contains one of over 900 substances like aloe vera and others that are naturally occurring. California’s program misleads consumers by warning that products like coffee or french fries can cause cancer, even though science shows it would take eating 182 lbs. of french fries a day to create a cancer risk.

• Inaccurate labels are confusing and drive up prices for consumers.

• Unfounded warning label programs create obstacles for business hoping to expand into new states. They cause expensive lawsuits and create unnecessary new regulatory burdens that are difficult for farmers and small businesses to manage.

• Congress should amend the Fair Packaging and Labeling Act to ensure that consumers have access to clear, accurate and meaningful product information by doing the following: o Establish science-based criteria for all additional state and local labeling requirements. States that meet the criteria can enact their own ingredient listing or labeling programs. o Allow state-mandated product information to be provided through smartphone-enabled “smart labels” and on websites, where consumers can find up-to-date, relevant ingredients and warnings. o Ensure that covered product information is risk-based. Warning labels act as important precautionary notices of legitimate risks and need to be taken seriously.

• These changes to federal law will ensure that consumers continue to benefit from the nutritional and allergy information on packaging today, while guaranteeing that any additional product information required by states or cities is clear, accurate, meaningful and science-based.

• A majority of consumers believe the federal government should set the standards for product labeling and that additional product labels should be based on credible science. o More than one in five Americans believe the federal government should set labeling standards for groceries and household products. o The majority of consumers believe additional labeling mandates must be based on sound science and legitimate risk. o Fewer than one in five people believe states and localities should be ale to impose whatever requirements they want. And 15 percent do not believe states and localities should be able to impose new requirements at all. Future Meetings October 24-25, 2018 SAVE THE DATE Seattle, WA NCFC Sustainability Working Group Meeting Kimpton Alexis Hotel Seattle Please Join Us For…  Sustainable Agriculture Tour of Werkhoven Dairy  Networking Dinner at Cutters Crab House  Visits to Starbucks and Darigold’s Headquarters  Guided Tour of Pike Place Market NCFC Future Meetings Schedule

2018 Executive Council Meeting September 19 – 20 • NCFC Office • Washington, DC LTA Subcommittee Chairs-Vice Chairs September 26 – 28 • Kimpton Hotel Vintage Portland • Portland, OR Human Resources Conference October 18 – 19 • CoBank Headquarters • Denver, CO Sustainability Working Group Meeting October 24 – 25 • Kimpton Alexis Hotel • Seattle, WA Government Affairs Meeting November 12 – 14 • La Fonda on the Plaza • Santa Fe, NM 2019

2019 Annual Meeting February 13 – 15 • Westin Kierland • Phoenix, AZ Executive Council Meeting April 24 – 25 • NCFC Office • Washington, DC 2019 Washington Conference June 24 – 26 • Hyatt Regency • Washington, DC Executive Council Meeting September 18 – 19 • NCFC Office • Washington, DC 2020

2020 Annual Meeting February 11 – 13 • La Quinta Resort & Club • La Quinta, CA Connect with NCFC at www.ncfc.org

www.Facebook.com/Farmercoop @FarmerCoop 50 F Street NW, Suite 900 • Washington, DC • 20001 (202) 626-8700 • fax (202) 626-8722