Government Affairs Update for the North Carolina League of Transportation and Logistics Joel Anderson President & CEO, IWLA © 2013 International Warehouse

© 2013 International Warehouse Logistics Association

Government Affairs Update for the North Carolina League of Transportation and Logistics

Joel AndersonPresident & CEO, IWLA


Government Affairs

Government Affairs = Public Policy

Public policy occurs at the federal, state, and local level.

Public policy is made by legislators and regulators; presidents, governors and mayors; employers, unions, citizen groups; and your supply chain partners.

The goal of IWLA’s Government Affairs

Program is to

Influence and Inform Public Policy

Inform IWLA Members

Confidential and Proprietary


The Evolution of This Industry

This industry has evolved from public

and contract warehousing to 3PL

warehousing

3PLs operate pivotal distribution points in interstate and global

commerce to facilitate the safe and efficient

flow of goods

The traditional bailee-bailor relationship has

become blurred

The warehouse-based 3PL is expected to be a

trusted partner


Congress and 3PLs

Legislation needs to recognize and

address the emerging role of

the 3PL

Legislation should not hold a 3PL responsible for

things beyond its control

Legislation should hold the 3PL

accountable for those actions

within its control

No longer sufficient for 3PLs

to rely on their supply chain partners to

represent the interests of 3PLs


Why Does It Matter?

Congress cannot think about job creation without

considering the 3PL warehouse industry

3PLs are critical to the continued competitiveness of its customers who must remain lean to survive and

thrive in tough markets


2013 OUTLOOK

Congress and the White House

Federal Deficit

Taxes

Jobs


The Affordable Care Act


What’s Ahead: 2014

Health Care Exchanges Up and Running

Individual Mandate for Coverage Takes Effect

Employer “Play or Pay” Penalties

Employer “Play AND Pay” Penalties Possible!

Employers with more than 200 employees and who offer health coverage must automatically enroll new hires (after waiting period), subject to opt-out.


Employer “Play or Pay” Penalty

Companies with more than 50 full-time equivalent workers:

No health insurance offered = Penalty IF

at least one full-time employee is on an Exchange plan and receives a “premium tax credit” from the government


Employers Who Offer Coverage

Companies with more than 50 full-time equivalent workers:

Does employer provide “minimal essential coverage?”

Is the plan “affordable?”

Does it provide “minimum value?”

Yes: No Penalty

No: Pay monthly penalty, lesser of:

1/12 x $2000 X 1/12 x $3000 X (number of full-

time OR (number of full-timeemployees – 30) employees who receivecredits for exchange coverage)


What is Affordable Coverage?

The law says: If the employee’s required contribution to the plan does not exceed 9.5% of the employee’s household income for the taxable year.

IRS Notice creates a safe harbor: If the required employee contribution for the lowest cost self-only plan does not exceed 9.5% of that employee’s W-2 (Box 1) wages, the coverage is deemed affordable and there will be no penalty (even if the employee is eligible for a premium tax credit on the Exchange based on his household income and family size).


What is “Minimum Value?”

To meet the “minimum value” test, the plan’s

share of the total allowed costs of

benefits provided under the plan must be at least 60% of such

costs.

The IRS is proposing simplified methods to

determine the actuarial value of a plan,

including an online calculator tool.


Issue: Definition of Full-time Employee

For any month, a full-time employee is an

employee who is employed on average at least 30 hours per

week.

Current IRS approach (subject to final regs): “Leased employees”

are not included in the definition.


NATIONAL LABOR RELATIONS BOARD (NLRB)


Recess AppointmentsJan. 4, 2012 – President Obama appointed 3 members to the NLRB during a Congressional recess.

Constitutionality of President Obama’s recess appointments has been called into question.

Jan. 13, 2012 – The National Right to Work Foundation, in conjunction with CDW & NFIB, filed the first official motion to challenge the legality of the appointments.

Feb. 7, 2013 – U.S. Court of Appeals for D.C. ruled that Obama’s appointments violated the Recess Appointments Clause of the Constitution (Noel Canning v. NLRB).


The Court’s holding was supported by two grounds:

• Appointments can only be made during an intersession recess (those that occur between sessions of Congress)

• Recess appointments can only be made in the same intersession recess in which the vacancy arose

Noel Canning Decision


Noel Canning Decision, Cont.

Based on the Court’s ruling, anyone facing an adverse decision issued by the Board since the Jan. 4, 2012 appointments were made may appeal the ruling to the D.C. Circuit.

Appointees in question will continue to serve and issue decisions on the Board.

Government will likely ignore the DC Circuit’s ruling and petition Supreme Court for review.

The Constitutionality of the recess appointments is currently at issue in more than a dozen cases pending in other courts.


Ambush Elections

• Rule implements NLRB resolution passed on Nov. 30, 2011Overview

• NLRB: Rules reduce unnecessary litigation and delays• Employers: Rules silence employers and sharply reduce their

pre-election due process

Conflicting Viewpoints

• May 14, 2012 – Federal district court ruled that NLRB changes in election case rules were invalid and unenforceable

• NLRB has temporarily suspended implementation of regulatory changes and is considering next steps

• Oral argument was scheduled for April 2013, but the D.C. Circuit has decided to hold the case until the recess appointments issue is resolved

Status


Specialty Health Care Decision

Impact on Employers

Essentially allows for the formation of micro-units which makes unionization more likely

Under newly announced “traditional community of interest” standard, smaller units will be harder to challenge by employers, and thus are likely to proliferate


Specialty Health Care Decision, Cont.

The Neiman Marcus Group d/b/a Bergdorf Goodman

One of the Board’s regional directors applied the standard set forth in Specialty Healthcare to issue a decision finding a unit consisting only of sales people in the women’s shoe department was an appropriate bargaining unit.

Nestle Dreyer’s Ice Cream Company

On Dec. 28, 2011, a majority of the Board relied on the standard in Specialty Healthcare to uphold a regional director’s determination that maintenance employees at a Nestle Dreyer plant were an appropriate unit. The union had failed three times previously to organize a larger unit consisting of both production and maintenance employees, which was the most common unit in similar settings prior to Specialty Healthcare. The union won the election and the company refused to bargain. On May 18, the Board issued a decision finding the company committed an unfair labor practice.

Huntington Ingalls Inc. v. NLRB

The Board applied the bargaining unit determination standard announced in Specialty Healthcare to find that an appropriate unit consists solely of a small subset of technical employees working in the Radiological Control department of the employer’s Newport News Shipbuilding facility.


NLRB Poster Ruling

Original effective date was Jan. 31, 2012; was then

pushed back to April 30, 2012

April 17, 2012 – U.S. Court of Appeals for

the D.C. Circuit blocked NLRB from issuing poster rule

Poster rule will now be delayed until

appeal is decided


Persuader Rule

Overview

• DOL has issued a proposed rule that will change the definition of “advice”

• DOL plans to take final action on “persuader rule” by April 2013• Under new interpretation, almost any assistance offered by a lawyer

or consultant would be considered “persuader” activity and trigger the reporting requirement

Impact on Employers

• Requirement to publicly disclose sensitive information is likely to make it more difficult for employers to get expert advice

• Unions will find it easier to pressure employers into signing card check and neutrality agreements

• Employers will be hesitant to share information with workers• Union organizers will have advantage in organizing drives



LABOR CHALLENGES TO WAREHOUSE EMPLOYERS


Union organizing efforts

Use of temporary and leased employees

Misclassification

Local, state, and federal initiatives


The 3PL Challenge

BUSINESS

Updated Dec. 27, 2012, 7:28 p.m. ET

Wal-Mart to Police U.S. Warehouses

Complaints Arise Over Subcontractors

That Handle Storage, Shipping for Retail Giant


Big-Box retailers are increasingly concerned

with their negative press

It impacts their brand identity and raises legal

issues

They expect their 3PLs to meet all federal and state safety/health and wage/hour standards

They are looking to IWLA and its members

to convey a positive message to the supply

chain and the public

The 3PL Challenge


The Message

IWLA-member warehouse-based 3PLs are the best in class

Members are deeply committed to the safety of each worker and they strive to reduce exposure to and the frequency and severity of workplace accidents

Members are deeply committed to rigorous compliance with all state and federal wage, hour and labor law compliance

Members understand their obligations


FDA – FOOD SAFETY MODERNIZATION ACT

The safety and security of the food supply chain has become a major issue

Government expects all supply chain partners to participate in the solution

Partners will share compliance and liability responsibilities

The large food processors expect 3PLs to work with them on policy solutions



Food Safety Modernization Act

Jan 4, 2013: Two proposed rules released Preventive Controls for Human Food

120 day Comment Period – Due May 16, 2013 Public meetings

Washington, DC: 2/28- 3/1Chicago: 3/11- 3/12Portland, OR: 3/27- 3/28

FDA says that more proposed rules are forthcoming


Summary of Requirements

Hazard Analysis and Risk-Based Preventive Controls

Each facility would be required to implement a written food safety plan

that focuses on preventing hazards in foods

Updated Good Manufacturing Practices


Who Is Covered?

Facilities that manufacture, process, pack or hold human food

In general, facilities required to register with FDA under sec. 415 of the FD&C Act

Applies to domestic and imported food

Some exemptions are proposed• Warehouse exemption


Warehouse Exemption

Facilities “solely engaged in the storage of [non-refrigerated] packaged food that is not exposed to the environment” would generally be exempt from the preventive controls requirements.

There is a modified exemption for warehouses with refrigerated food.

Excerpt from the proposed rule “does not apply to a facility solely engaged in the storage of packaged food that is not exposed to the environment.”


Modified Exemption

Certain packaged food for which refrigeration is required for safety must have temperature controls, monitoring, verification and records. Establish and implement temperature controls adequate to

significantly minimize or prevent the growth of, or toxin production by, microorganisms of public health significance;

Monitor the temperature controls with sufficient frequency to provide assurance they are consistently performed;

If there is a problem with the temperature controls for such refrigerated packaged food, take appropriate corrective actions to: Correct the problem and reduce the likelihood that the problem will recur; Evaluate all affected food for safety; and Prevent the food from entering commerce, if the owner, operator, or agent

in charge of the facility cannot ensure the affected food is not adulterated under section 402 of the Federal Food, Drug, and Cosmetic Act;


Modified Exemption, Cont.

Verify that temperature controls are consistently implemented by:

(Calibrating temperature monitoring and recording devices; Reviewing records of calibration within a reasonable time after the records are

made; and Reviewing records of monitoring and corrective actions taken to correct a

problem with the control of temperature within a week after the records are made;

Establish and maintain the following records:

Records documenting the monitoring of temperature controls for any such refrigerated packaged food;

Records of corrective actions taken when there is a problem with the control of temperature for any such refrigerated packaged food, and

Records documenting verification activities.


Issues for 3PL Warehouse

Warehouse exemption What is meant by “solely engaged in the storage

of packaged food?” Applicable to “temperature controlled?”

Modified refrigerated exemption FDA tentatively concludes “it would be rare for a facility

solely engaged in the storage of unexposed packaged food to not have information regarding whether a refrigerated packaged food requires time/temperature control for safety and, if so, what specific temperature controls are necessary for safe storage of the food.”


Warehouses are Subject to CGMP

Redline changes to current CGMP: § 110.93117.93 Warehousing and distribution.

Storage and transportation of finished food shall must be under conditions that will protect food against physical cross-contact and biological, chemical, and microbial physical, and radiological contamination of food, as well as against deterioration of the food and the container.


Warehouses that Manufacture, Process, or Pack

Written food safety plan Hazard analysis Preventive controls Procedures for monitoring (including frequency),

corrective actions, and verification Recall plan

Hazard analysis Identify and evaluate “known or reasonably foreseeable

hazards” for each type of food Determine which hazards are “reasonably likely to occur”


Warehouses, Cont. Preventive controls must include, as appropriate:

Process controls Allergen controls Sanitation controls Other controls Recall plan Allergen controls: procedures, practices, and processes to:

Protect food from cross contact during storage and use Ensure proper labeling

Preventive controls may be implemented at critical control points (CCPs), and also may be implemented at points other than CCPs


Recall Plans

A written recall plan would be required for:

Notifying consignees

Notifying the public

Conducting effectiveness checks

Disposing of recalled product


Additional FSMA Rulemakings

Round II

• Foreign Supplier Verification Program

• 3rd Party Accreditation/Certification

• Preventive Controls for Feed

Round III• Safe Food Transport• Intentional Adulteration


IWLA Food Security Council

• The IWLA Food Security Council is the platform for promoting the 3PL value proposition with respect to the safe, secure, and responsible handling of food products.

Purpose

• Representation and Education: The primary objective of this program is to offer first and best knowledge to our membership and to enable our membership to be represented “at the table” as a full partner with supply chain partners when U.S. and Canadian regulatory policies are considered that address the storage, handling and distribution of food products.

• IWLA Certification: Although certification is not in the initial stages, it is highly probable that as we gain experience and practice, IWLA will develop a “best practices” document as we have with respect to C-TPAT and the warehousing of chemical products.

Council Guidelines


IWLA Food Security Council, Cont.

Provisions for Subject Matter

Experts at Council Events

• The IWLA will provide subject experts drawn from industry, academics and the regulatory community to provide the subject matter expertise at IWLA council events.

Meeting Schedule

• Minimum of twice per year: 1) IWLA Annual Conference & Expo; 2) Mid-Year meeting on regulatory proposals, changes and best practices.

Dues• The cost of service, plus an administrative charge of

not more than 15% to the IWLA for providing, managing and implementing this council.


PRESCRIPTION DRUG SUPPLY CHAIN


3PL Requirements

Covers pharmaceuticals not devices Licensed by each state where product is shipped into Licensed as a wholesale distributor

Surety bond requirement Designated representative

Florida is the only state with a specific 3PL license Many states require VAWD, or Verified-Accredited Wholesale

Distributors, accreditation

In many states, license includes pedigree requirement A pedigree is generally established at the point of manufacture and

accompanies the prescription drug through the supply chain

California’s Requirements

The ability to track a unique product from the manufacturer, to the distributor, to the final dispensing pharmacy or healthcare provider is an essential requirement of the California law.

Supply chain partners employ the most advanced technologies available to enhance efficiency and safety.

A record, in electronic form, containing information regarding each transaction resulting in a change of ownership

The pedigree shall be ― ... created and maintained in an interoperable electronic system, ensuring compatibility throughout all stages of distribution.


California Implementation

Beginning Jan. 1, 2015, serialization of product at the

item level by manufacturers

required.

Beginning July 1, 2016, a distributor or wholesaler, may not purchase a prescription drug in the state of California without receiving a pedigree, nor can they sell a prescription drug

without providing its pedigree.

For pharmacies, the requirement to

purchase pedigreed-only

product begins on July 1, 2017.


Pharmaceutical Distribution Security Alliance

Pharmaceutical Distribution Security

Alliance

Mission is to develop and help enact a federal policy proposal that enhances the security and

integrity of the domestic pharmaceutical distribution system for patients, and to

articulate a technical migratory pathway to implement such a

policy.

Membership spans the entire spectrum of the U.S.

pharmaceutical distribution system, including

manufacturers, wholesale distributors, third-party logistics

providers, and pharmacies.


PDSA Members

Objectives

Federal standards and national

license for 3PLs

Develop Technology to

improve product visibility

Federal preemption of state pedigree and track and

trace laws


Pharmaceutical Distribution Security Alliance, Cont.

Alliance Status

At the last minute, a decision was made by Congressional

leaders not to include supply chain security language in

the pending Prescription Drug

User Fee Reauthorization

IWLA, PSDA and 3PLs looking for

other options

Congressional support is strong



MAP – 21THE MOVING AHEAD FOR PROGRESS

IN THE 21ST CENTURY ACT


Freight

Establishment of the National Freight Network Development of a National Freight Strategic Plan Development of strategies to help States implement

State Freight Advisory Committees and State Freight Plans

Development of measures of conditions and performance in freight transportation

Size and weight study Idle reduction technology


Freight Brokerage

Freight forwarders and brokers are required to register with FMCSA

A broker is a person or an entity other than a motor carrier that arranges for the transportation of property by a motor carrier for compensation.

Beginning Oct. 1, 2013, a broker will need to obtain and file with FMCSA a surety bond or trust fund agreement in the amount of $75,000 to comply with FMCSA’s financial security requirements


STATE ACTIVITY IN 2013


State Outlook

State legislative proposals to tax warehouse and

logistics services

Minnesota passes tax. Repeal effort

underway


IWLA GOVERNMENT AFFAIRS IN 2013

2013 Events in Washington, DC

February

IWLA Government Affairs Committee met in DC

September

Legislative Fly-In


Major IWLA Initiatives

Public Policy Center

Food Security Council

Savannah Reload and the Rail Council



IWLA PAC

IWLA PAC supports federal candidates who will advance the 3PL warehouse industry

IWLA PAC supports federal candidates

who will advance the 3PL warehouse

industry

IWLA Members contribute their

personal funds to support IWLA PAC


IWLA PAC

Contributions are made based on 5

principles

Key committee of jurisdiction

Direct relationship with IWLA member (or we are positioned to build a direct

relationship)

Positive attitude toward the industry

IWLA members in the congressional district or state

IWLA-PAC participation will make a difference – at a level that leaves an

impression

IWLA Member Involvement in 2013

Reach out to your elected officials

Use www.iwlapoliticalaction.org

Come to Washington, DC for the Legislative Fly-In

Help base IWLA’s public policy advocacy on knowledge


http://www.iwlapoliticalaction.org/

What You Can Do In 2013

Action Frequency Description

All Staff Meeting on Advocacy

Once a year Host a 30 minute lunch meeting

to encourage employee involvement in advocacy

Attend the Washington Fly-In or Send an Employee

Once a year Meet with elected officials and urge support for the chemical

distribution industry

Facility Visit Once every two years Host a Member of Congress at your facility

PAC Prior Approval Form Every year Allows you to communicate about the PAC

Employee Email to Members of Congress

Once a year Encourage each employee to

send an email to Representative and Senators



My Contact Information

Joel Anderson847-813-4699

[email protected]

Documents

Government Affairs Update for the North Carolina League of Transportation and Logistics Joel Anderson President & CEO, IWLA © 2013 International Warehouse