Volume 68, No. 4 | Feb. 23, 2016 ngfa.org/newsletter | [email protected] | 202.289.0873

Inside This Issue Why the U.S. needs waterways legislation 1 Why the U.S. needs waterways legislation every two years every two years By Bobby Frederick, Director of Legislative Affairs and 2 Upcoming NGFA Events Public Policy, and Sarah Gonzalez, Director of Communications and Digital Media 2 Canadian Pacific to seek opinion from STB on viability of voting trust arrangement Congress is indicating it plans to enact a new Water Resources in Norfolk Southern acquisition bid Reform and Development Act (WRRDA) this year.

3 Arbitration Decision You might ask why, given that Congress in 2014 enacted a sweeping and significant WRRDA bill. The simple answer: 4 More dates announced for NGFA regional FSMA seminars Getting Congress back on track to enacting a waterways bill on a regular schedule means greater certainty and project 5 What is your Congress up to during the support – including funding support – for waterways week of Feb. 22? infrastructure.

6 USDA grants comment extension for new The two most recent WRRDA bills were separated by seven GIPSA rules years, but Congress and the industry now are showing commitment to complete a bill every two years. A modern and 7 NGFA considers cybersecurity awareness efficient inland waterways transportation system is vitally for handling industry important to U.S. agriculture and WRRDA is the primary legislative vehicle for supporting U.S. waterways 8 NGFA welcomes new apprentices transportation infrastructure. The two most recent WRRDA bills were separated by seven 10 NGFA welcomes Michigan Agri-Business years, but Congress and the industry now are showing Association’s Leadership Group to Washington commitment to complete a bill every two years. A modern and efficient inland waterways transportation system is vitally

important to U.S. agriculture and WRRDA is the primary 10 Purdue University report: Grain entrapments decreased in 2015, but fatal legislative vehicle for supporting U.S. waterways cases exceed non-fatal cases transportation infrastructure. The House Transportation and Infrastructure Subcommittee on Water Resources and Environment will hold a hearing Feb. 24 National Grain and Feed Association 2

to review the U.S. Army Corps of Engineers reports to Upcoming NGFA Events Congress regarding future water resources development. Jo- Ellen Darcy, assistant secretary of the Army-Civil Works, will March 13-15 testify.

120th Annual Convention The Senate Environment and Public Works Committee met Hotel Del Coronado. San earlier this month for a hearing to discuss passing WRRDA Diego, Calif. this year. The chair and ranking member of the committee

Registration asked for senators’ water resources priorities by Feb. 12, indicating that the Senate may move a WRRDA bill in March. For a full listing of events, go to ngfa.org/events During the hearing, Jean Mattei, president-elect of the American Society of Civil Engineers, said that between now and 2020, U.S. ports and inland waterways will need $30 billion in investment, but planned spending is only $14 billion. She also testified that the economic impacts of investing in the nation's waterways can protect $270 billion in exports and provide $770 in savings per household. WRRDA 2016 is expected to authorize U.S. Army Corps of Engineers civil works projects, and to address continued reforms to the Harbor Maintenance Trust Fund, which supports the widening of U.S. ports and waterways. (Under the 2014 WRRDA, the government is attempting to ensure that the money credited to the Harbor Maintenance Trust Fund is indeed used for harbor maintenance, with a goal of using all funds by 2025.) This year’s waterways infrastructure legislation should seek to improve several provisions in the last bill, including the Army Corps’ annual reports to Congress, and the Water Infrastructure Finance and Innovation Act.

Additionally, the Inland Waterways Trust Fund shares the construction of major rehabilitation projects on the nation’s waterways system. The NGFA maintains that the major rehab threshold should be increased from $20 million to $50 million in the upcoming WRRDA bill. Canadian Pacific to seek opinion from STB on viability of voting trust arrangement in Norfolk Southern acquisition bid; submitting resolution to NS shareholders By Randy Gordon, President The Canadian Pacific Railway (CP) announced two moves this month, the outcomes to which may largely determine whether it proceeds in its attempt to acquire the Norfolk Southern Railway (NS). On Feb. 16, the CP announced it will seek a declaratory order from the Surface Transportation Board (STB) – the federal agency that regulates the freight rail industry and ultimately would determine whether to approve such a merger – confirming the viability of the so-called “voting trust” structure that the CP is considering as part of its acquisition of the NS. In a statement, CP Chief Executive Officer E. Hunter Harrison said the official request to the STB, which as of press time had not been submitted yet to the agency, was being done at the recommendation of CP and NS shareholders as a way of “better

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understand(ing) the STB’s views on the proposed voting trust Arbitration Decision model ahead of any formal (merger) application.”

Default judgment: Case No. 2764 - The CP said that while the declaratory order request presents a CHS, Inc. (Inver Grove, MN) v. “hypothetical proposed trust – outside the established STB Agribase International, Inc. (Irvine, procedure for seeking formal trust approval – CP is hopeful that CA) the STB will be able to offer clear guidance that will satisfy shareholder concerns before their voices are heard….” For a full listing of arbitration decisions, visit the website. Under the voting trust arrangement being considered by CP, the Canadian carrier would place its stock in a holding company, with ownership controlled by an independent trustee while the STB considered the merger. CP has said its plan is for Harrison and other CP management to transfer immediately to run the NS while the merger application is being considered by the STB. CP has said the voting trust arrangement would allow NS shareholders to receive a “substantial” cash payment, shares and a contingent value right in a new investment-grade company. All three STB members – Chairman Dan Elliott, Vice Chairman Deb Miller and Commissioner Ann Begeman – addressed the issue of voting trusts in a Jan. 7 letter responding to an inquiry from the House Judiciary Committee regarding the potential CP-NS transaction. While stressing that they needed to “exercise caution to avoid prejudging issues that could arise” if a merger application eventually were submitted to the agency for consideration, the three STB members wrote that the type of voting trust arrangement being proposed by the CP – in which its current CP management transferred to operate the to-be-acquired company during the agency’s consideration of the merger application – had not been approved previously in the context of a proposed merger between two Class I railroads. In the second development, the CP on Feb. 9 submitted a resolution to NS shareholders for consideration at the next NS annual meeting (which, although not scheduled yet, likely will occur in late spring or early summer). The CP resolution submitted to NS shareholders reads: “Resolved, that the stockholders of the company (NS) hereby request that the board of directors of the company (NS) promptly engage in good faith discussions with the Canadian Pacific Railway Ltd. regarding a business combination transaction involving the Canadian Pacific and the (NS), without in any way precluding discussions the board of directors of the company (NS) may choose to engage in with other parties.” The NS issued a reply the same day, stating that further discussions with CP were not in the best interests of NS shareholders “unless CP offers NS shareholders compelling value and addresses the regulatory issues inherent in its proposal.” The NS response noted that its board previously had reviewed each of CP’s previous three offers and rejected them as “grossly inadequate” and posing “substantial regulatory risks and uncertainties that CP would be highly unlikely to overcome.” The NS response said that CP “notably…has not addressed the NS Board’s concerns, nor sought a declaratory order from the

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STB that would provide clarity regarding the likelihood of regulatory approval of its voting trust structure.” In other recent developments, CP’s Harrison on Feb. 10 engaged in what was billed as a “fireside chat” with Mark Levin, an analyst with BB&T Capital Markets, at the investment banking firm’s Transportation Services Conference in Coral Gables, Fla., and asserted that if NS shareholders rejected the resolution, he would “go back and focus on running a hell of a CP railroad” rather than wage a proxy battle to change the NS Board, which he maintained “is not what we want to see.” “Those (proxy battles) are costly and they don’t produce a lot of value, they don’t create the kind of environment that you would like to set up to be able to do a transaction,” Harrison said in a transcript provided by the CP. Later in the interview, Harrison stated that he and CP have “never opposed a merger” and believe one is inevitable, whether CP is involved or not. “I don’t think it’s a matter of if, it’s when,” he stated. “I think it makes too much sense. We’re not merging just to get bigger or to build some legacy or another chapter in some book. This is about shareholder value….[I]f this works, it works, and if it doesn’t another day will come.” A transcript of the interview is available here. There are some interesting tidbits on Harrison’s views on rail competition, rail pricing and opposition to bottleneck rates (p. 6), on grain movements and service (p. 8) and on politicians “who can’t spell railroad” who’ve taken a position opposing the transaction (p. 7). CP has established a section on its website devoted to the acquisition, which is available here. Meanwhile, BNSF Railway Chairman and Chief Executive Officer Matt Rose earlier this month reiterated BNSF’s view that a CP-NS consolidation would trigger other merger activity resulting in two transcontinental North American railroads, which he said is not likely to be supported by three of the four major sets of constituencies: rail labor, customers and public policymakers. Only investors are likely to be supportive, Rose said. Here’s a link to an American Shipper article reporting on Rose’s remarks. More dates announced for NGFA regional FSMA seminars By David Fairfield, Senior Vice President of Feed Services

The NGFA is planning several regional seminars to educate industry members on the far-reaching new feed safety rules being promulgated by the Food and Drug Administration (FDA) to implement the Food Safety Modernization Act (FSMA). The seminars are being conducted in cooperation with state feed control agencies and state and regional affiliates that will help industry members understand the changes, requirements and appropriate exemptions included in the FSMA rules.

NGFA Senior Vice President of Feed Services David Fairfield, who serves as chair of the Animal Food Subcommittee of the Food Safety Preventive Controls Alliance, and Ralco Animal Nutrition Vice President of Regulatory Affairs Matt Frederking, who serves as chair of NGFA’s Feed Manufacturing and Technology Committee, will lead the seminars, covering FSMA major rules and implementation and the new requirements for current good manufacturing practices (CGMPs) and preventive controls for animal food, among other topics.

While more events and dates throughout the country will be announced soon, the following locations are confirmed:

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 Modesto, Calif., on March 10 (In cooperation with the California Department of Food and Agriculture and the California Grain and Feed Association)

 New Ulm, St. Cloud, and Rochester, Minn., on March 29-31 (In cooperation with the Department of Agriculture and the Minnesota Grain and Feed Association)

 Spokane, Wash., on April 22 (In cooperation with the Pacific Northwest Grain and Feed Association)

 Wisconsin Dells, Wisc., on May 11 (In cooperation with the Wisconsin Agri-business Association and the Wisconsin Department of Agriculture)

FDA on Sept. 17 published its final regulations mandated by FSMA to establish requirements for CGMPs, hazard analysis and risk-based preventive controls, as well as supply-chain programs that apply to human food, animal feed and pet food.

FDA’s final regulations apply to domestic and foreign facilities that manufacture, process, pack or hold animal feed and/or pet food, and ingredients used in such products. Generally, with some exceptions, that means the new requirements apply to facilities that are required to register with FDA under the agency’s existing facility registration regulations implemented as part of the Bioterrorism Act. In November, FDA released the agency’s final rules mandated by FSMA for produce safety, foreign supplier verification programs (FSVP), and accreditation of third-party certification bodies/auditors. FDA’s final rules for FSVP and accreditation of third-party certification cover a wide variety of entities involved with importing food, including importers of raw agricultural commodities (e.g., grain and oilseeds), animal feed and feed ingredients, and human food and food ingredients. For more information about FSMA and NGFA education efforts, click here. What is your Congress up to during the week of Feb. 22? By Bobby Frederick, Director of Legislative Affairs and Public Policy

The House and Senate return to a very different Washington this week. Many in the nation’s capital paused to pay their respects to Supreme Court Justice Antonin Scalia over the weekend. His death on Feb. 13 adds a vacancy to the highest court in the land during an election year.

All eyes are on the Senate as Majority Leader Mitch McConnell, R-Ky., argues that the next justice should be nominated after the 2016 presidential election. However, Senate Judiciary Chairman Chuck Grassley, R-, hasn’t completely ruled out holding a hearing once a nomination is made by President .

Meanwhile, the Senate Agriculture Committee is turning its attention to biotech labeling, an issue important to both consumers and the grain and feed industry.

Biotech labeling bill mark-up: Senate Agriculture Committee Chairman Pat Roberts, R-Kan., released on Feb. 18 a seven-page proposal that would provide for a national uniform solution on biotech labeling. The chairman’s draft

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National Grain and Feed Association 6 bill provides for immediate pre-emption from state laws, and directs USDA to establish standards and definitions for the purposes of biotech labeling as well as to provide science-based information to consumers.

NGFA applauded Sen. Roberts for his leadership on this issue in a press release issued the evening he released the bill. The measure is scheduled for a mark-up by the Senate Agriculture Committee on Feb. 25 at a meeting to be attended by NGFA.

Quick look at both chambers: Senate Floor: Considering the nomination of a new FDA Commissioner House Floor: House leadership is still working on lining up a budget that can pass the House. As that process continues, the chamber will consider the Sportsmen’s Heritage and Recreational and Recreational Enhancement Act.

Hearing of the week: Agriculture Secretary Tom Vilsack will testify before the House Agriculture Committee to report on the state of the rural economy on Feb. 24.

Answer to 2/09/16 trivia question: Question: What President and NFL coach brokered a deal to allow a star player to miss his Army reservist duty in order to play in the NFL Championship game?

Answer: John F. Kennedy and Vince Lombardi [In 1961, Paul Hornung, a Hall of Fame halfback, was called to duty at Fort Riley in Kansas. Lombardi called Kennedy and pulled some strings. Kennedy reportedly said: “Paul Hornung isn’t going to win the war on Sunday, but the football fans of this country deserve the two best teams on the field that day.”]

Trivia

Who is the only Supreme Court Justice who also served as President of the United States?

Please e-mail your answer to [email protected]

If you have any questions about these policies above, or on something you did not see in this update, please contact NGFA Director of Legislative Affairs Bobby Frederick at [email protected] or 217- 417-5400. USDA grants comment extension for new GIPSA rules By Randy Gordon, President The U.S. Department of Agriculture granted NGFA and the North American Export Grain Association’s (NAEGA) joint request for a 60-day extension of the comment period on proposed rules to implement statutory changes to the U.S. Grain Standards Act.

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The rules issued Jan. 25 by the Grain Inspection, Packers and Stockyards Administration’s (GIPSA) — designed to implement several significant reforms achieved by the NGFA and NAEGA during the 2015 reauthorization of the U.S. Grain Standards Act — initially had a comment period ending on Feb. 24. The extension will give NGFA’s and NAEGA’s respective committees time to fully discuss the associations’ comments during their joint meeting at the NGFA annual convention in March. The GIPSA-proposed rules constitute the most significant changes to the official grain inspection and weighing system in 20 years. The changes include a new mandate for GIPSA to waive official inspection and weighing services in the event of an emergency or if the waiver will not adversely affect the purposes of the statute, provided buyer and seller agree to the waiver; as well as a new method for calculating the formula used to assess export inspection tonnage fees.

NGFA considers cybersecurity awareness for grain handling industry

By Jess McCluer, Vice President of Safety and Regulatory Affairs

NGFA and NAEGA staff, along with USDA and Department of Homeland Security (DHS) officials, recently completed tours of several grain handling and processing facilities with a goal to increase awareness about the physical and cybersecurity measures currently in place within the grain handling and processing industry. These measures are meant to address potential terrorist or insider risks to food and agricultural processes.

NGFA and NAEGA staff, along with USDA and Department of Homeland Security (DHS) officials, recently completed tours of Bunge North America grain handling and processing facilities.

Government officials on the tour included representatives from the USDA Homeland Security Office and DHS who participate as government leads in the Food and Ag Sector Coordinating Council – the

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National Grain and Feed Association 8 joint government-private sector facility security forum on which NGFA co-chairs the private sector participants.

Bunge North America hosted the visits at its export and processing facilities in Destrehan, La., and its barge-loading facility in Vidalia, La. Following the tours, industry and government officials discussed ways that both can work jointly to utilize resources and raise awareness on priority issues, such as cybersecurity.

The NGFA-NAEGA Joint Agroterrorism/Facility Security Committee’s Cybersecurity Task Group also met to discuss developing cybersecurity awareness and guidance materials for the industry. The materials will focus on such topics as potential threats, access control, awareness and training and self- assessments. The task group’s goal is to complete a draft document by July so the full committee can review it at its next scheduled meeting, to be conducted in conjunction with the NGFA/Grain Journal Safety-Grain Quality Conference, Aug. 2-4 in Omaha, Neb.

NGFA welcomes new apprentices

By Todd Kemp, Senior Vice President of Marketing and Treasurer A new class of 18 committee apprentices will serve on nine NGFA committees during the coming year. Now entering its third program year, the apprentice program has successfully facilitated involvement by several dozen early- to mid-career employees and future leaders of NGFA-member firms. Several members of the first apprentice class already serve as full members on various NGFA committees. New apprentices and their committees are:

Biotechnology Committee Jay Day, CGB Enterprises, Jeffersonville, Ind. Bryce Johnson, Cooperative Producers Inc., Hastings, Neb. Staff Liaison – Bobby Frederick Country Elevator Committee Lance Adams, Team Marketing Alliance, Moundridge, Kan. Danny Pfoff, Archer Daniels Midland Inc., Decatur, Ill. Lacey Seibert, Cooperative Producers Inc., Hastings, Neb. Staff Liaison: Max Fisher

Feed Legislative and Regulatory Affairs Committee Katie King, CGB Enterprises, Mt. Vernon, Ind. Paige Williamson, Attebury Grain LLC, Amarillo, Texas Staff Liaison: Dave Fairfield

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Finance and Administration Committee Nathan Mathison, Cargill Inc., La Vista, Neb. Staff Liaison: Todd Kemp Rail Shipper/Receiver Committee Charlie Elsea, The Scoular Co., Hancock, Iowa Lloyd Heimbecker, Parrish & Heimbecker Ltd., Lethbridge, Alberta, Canada Staff Liaison: Randy Gordon Risk Management Committee Jason Ballow, J.D. Heiskell & Co., Elkhorn, Neb. Staff Liaison: Todd Kemp Safety, Health & Environmental Quality Committee David Noel, The Scoular Co., Omaha, Neb. Nathan Schmidgall, CGB Enterprises, Dwight, Ill. Staff Liaison: Jess McCluer

Trade Rules Committee Kyle Foster, Crossroads Cooperative, Sidney, Neb. Michael Meyer, Louis Dreyfus Commodities, Cahokia, Ill. Tyler Scifers, Archer Daniels Midland Co., Overland Park, Kan. Daniel Suarez, Central States Enterprises, Heathrow, Fla. Staff Liaison: Charlie Delacruz

Waterborne Commerce Committee Kristopher Struble, CGB Enterprises, Jeffersonville, Ind. Staff Liaison: Bobby Frederick This year’s outstanding apprentice class begins its program year at the NGFA annual convention in San Diego, March 13-15, and run through the next year’s convention in New Orleans. An April event in Washington, D.C., will provide the apprentices in-depth information about the NGFA’s government representation and advocacy activities, as well as how the organization interacts with government and other groups.

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NGFA welcomes Michigan Agri-Business Association’s Leadership Group to Washington to discuss major policy issues

Above photo: The NGFA on Feb. 22 welcomed members of the 2015-16 Michigan Agri-Business Association’s Leadership Group for a discussion on major policy issues being addressed by Congress and federal agencies that affect the grain, feed and processing industry. Topics included the status of federal legislation to preempt state and local laws on biotech labeling of human and animal food; new plant breeding technologies that involve gene editing and other non-transgenic technology; the impact of the Food and Drug Administration’s regulations implementing the Food Safety Modernization Act; customer-protection rules being considered by the Commodity Futures Trading Commission; rail issues; and the impact of the Conservation Reserve Program on land values in certain areas. The group later met with federal agencies and made numerous visits to Michigan’s congressional delegations Michigan is one of several NGFA state and regional affiliates with an organized program that develops up-and-coming leaders in the industry and involves them in public policy work affecting their businesses. Photo on left: Michigan Agri-Business Association President and Secretary/Treasurer Jim Byrum (left) discusses rail issues with NGFA President Randy Gordon during his association’s visit to the NGFA office. Purdue University report: Grain entrapments decreased in 2015, but fatal cases exceed non-fatal cases By Sarah Gonzalez, Director of Communications and Digital Media

Purdue University's Agricultural Safety and Health Program recently released the 2015 Summary of U.S. Agricultural and Confined-Space Related Injuries and Fatalities report, which documents 24 grain entrapment cases that occurred in 2015.

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The 24 grain entrapment cases represent a 37 percent decrease in entrapments from 2014 when 38 entrapments were recorded. This is the lowest number of cases recorded since 2012. Notably, 22 of the 24 entrapment cases last year occurred on farms, rather in OSHA-regulated commercial facilities. In all confined-space related incidents, 47 fatal and non-fatal cases were documented in 2015. Of these, 25 (54 percent) were fatal and 51 percent of all cases were directly related to grain entrapments. Purdue’s report notes that although the frequency of incidents decreased, this marks the first time since 2010 that the number of fatal cases exceeded non-fatal cases.

Purdue University: The number of annual grain entrapment cases recorded between 2005 and 2015. The summary is based on data gathered, documented and entered into Purdue’s Agricultural Confined Space Incident Database (PACSID). According to the report, the decrease in the total number of cases is due to a significant drop in reported non-fatal cases, which dropped to 22 compared to 40 non-fatal cases in 2014 and 45 in 2013. Fatal cases for 2015 were 25 and can be compared against 31 in 2014 and 24 in 2013. The causes behind the significant drop in non-fatal cases is unknown, but it is believed that most confined space incidents are underreported, especially those resulting in non-fatal grain entrapments. Based upon prior research, Purdue estimates that the documented annual cases represent 70 percent of the total cases that actually have occurred annually in the Corn Belt. NGFA and its safety partners have the resources – including videos and regional safety seminars – to assist employers in preventing common grain entrapment hazards, as well as the appropriate safety standards for farms and commercial facilities. NGFA | 1250 Eye St. NW | Suite 1003 | Washington | DC | 20005

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