[Federal Register Volume 74, Number 205 (Monday, October 26, 2009)]
[Proposed Rules]
[Pages 54928-54935]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-25570]


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DEPARTMENT OF AGRICULTURE

Grain Inspection, Packers and Stockyards Administration

9 CFR Part 206

RIN 0580-AB06


Swine Contract Library

AGENCY: Grain Inspection, Packers and Stockyards Administration, USDA.

ACTION: Proposed rule.

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SUMMARY: On August 11, 2003, the Grain Inspection, Packers and 
Stockyards Administration (GIPSA) implemented new Subtitle B of Title 
II of the Packers and Stockyards Act which was added by the Livestock 
Mandatory Reporting Act of 1999 (1999 Act), by establishing the Swine 
Contract Library (SCL). The statutory authority for the library lapsed 
on September 30, 2005. On October 5, 2006, the Livestock Mandatory 
Reporting Reauthorization Act (Reauthorization Act) reauthorized the 
1999 Act until September 30, 2010, and also amended the swine reporting 
requirements of the 1999 Act. This proposed rulemaking would re-
establish the regulatory authority for the library's continued 
operation and incorporate certain changes contained within the 
Reauthorization Act that impact the SCL, as well as make other changes 
to enhance the library's overall effectiveness and efficiency in 
response to input from regulated entities and the public. We also 
intend to request a 3-year extension of and revision to the currently 
approved information collection in support of the reporting and 
recordkeeping requirements for the SCL program. This approval is 
required under the Paperwork Reduction Act.

DATES: We will consider comments we receive by December 28, 2009.

ADDRESSES: We invite you to submit comments on this proposed rule. You 
may submit comments by any of the following methods:
     E-Mail: comments.gipsa@usda.gov.
     Mail: Tess Butler, GIPSA, USDA, 1400 Independence Avenue, 
SW., Room 1643-S, Washington, DC 20250-3604.
     Fax: (202) 690-2173.
     Hand Deliver or Courier: Tess Butler, GIPSA, USDA, 1400 
Independence Avenue, SW., Room 1643-S, Washington, DC 20250-3604.
     Internet: Go to http://www.regulation.gov and follow the 
on-line instructions.
    Instructions: All comments should make reference to the date and 
page number of this issue of the Federal Register. Regulatory analyses 
and other documents relating to this action will be available for 
public inspection in Room 1643-S, 1400 Independence Avenue, SW., 
Washington, DC 20250-3604, during regular business hours (7 CFR 
1.27(b)). Please call a member of the GIPSA Management Support Staff at 
(202) 720-7486 to view the comments reviewed.

FOR FURTHER INFORMATION CONTACT: S. Brett Offutt, Director, Policy and 
Litigation Division, P&SP, GIPSA, 1400 Independence Ave., SW., 
Washington, DC 20250, (202) 720-7363, or via E-mail at 
s.brett.offutt@usda.gov.

SUPPLEMENTARY INFORMATION: 

Background

    GIPSA is responsible for the enforcement of the Packers and 
Stockyards Act of 1921 (7 U.S.C. 181 et seq.) (P&S Act or Act). Under 
authority delegated to GIPSA by the Secretary of Agriculture 
(Secretary) in Section 407(a) of the P&S Act (7 U.S.C. 228), we are 
authorized to create regulations necessary to carry out the provisions 
of the Act.
    The 1999 Act (Pub. L. 106-78) amended Title II of the P&S Act to 
include Subtitle B--Swine Packer Marketing Contracts. The 1999 Act 
mandated the creation and maintenance of a library of marketing 
contracts offered by certain packers to producers for the purchase of 
swine. To implement this legislation, GIPSA established the SCL and 
promulgated SCL regulations (9 CFR Part 206) requiring that packers, as 
defined in Subtitle B, Title II, of the P&S Act, file example marketing 
contracts with GIPSA along with monthly estimates of the number of 
swine to be delivered under contract. GIPSA compiles this information 
and makes summary reports available to the public.
    On October 22, 2004, the 1999 Act expired and was not reauthorized 
until December 3, 2004 (Pub. L. 108-444). Authority for the 1999 Act 
was extended, however, to September 30, 2005. The 1999 Act lapsed again 
in 2005 and was reauthorized and amended on October 5, 2006, when the 
Reauthorization Act (Pub. L. 109-296) was signed into law. The 1999 Act 
is scheduled to once again expire on September 30, 2010.
    When the 1999 Act expired in October 2004, GIPSA asked swine 
packers to continue to comply with the SCL regulations voluntarily. 
With the information submitted voluntarily by packers, GIPSA has 
continued to make summary reports available to the public.
    This proposed rule would re-establish authority for the SCL 
regulations (9 CFR Part 206) by amending the regulations' authority 
citation to include Subtitle B of Title II of the P&S Act (7 U.S.C. 
198-198b). In addition to amending the SCL regulations to make them 
consistent with the Reauthorization Act, we would also amend the SCL 
regulations to incorporate suggestions received from the public and 
regulated entities. Specifically, we propose to:
    (1) Revise the definition of ``packer'' to be consistent with the 
Reauthorization Act;
    (2) Revise the definitions of several contract types;
    (3) Add definitions of terms used in several contract types to 
describe the

[[Page 54929]]

market price that is being paid for swine;
    (4) Add a new requirement that an example contract submission, a 
notification of contract expiration, and a notification of a contract 
withdrawal include a standard cover sheet; and
    (5) Add a waiver for packers that do not utilize marketing 
contracts.
    The purpose of these amendments is to make the information 
collected more uniform and more useful, while reducing the burden on 
the reporting entities.

Description of Proposed Amendments

    The SCL final rule was published in the Federal Register (68 FR 
47802) on August 11, 2003, and became effective on September 10, 2003. 
We have not amended these regulations since the implementation of the 
library. The following describes the proposed changes to the 2003 SCL 
regulations required by the Reauthorization Act, along with changes 
that have been requested by regulated entities.

Definitions

    In section 206.1, we propose to revise the definitions of 
``packer,'' ``other market formula purchase,'' ``other purchase 
arrangement,'' and ``swine or pork market formula purchase,'' and add 
new definitions for several terms that are used currently in contracts 
to describe the market price being paid for swine. While the definition 
of ``packer'' would be revised to make the SCL regulations consistent 
with the Reauthorization Act, other existing definitions would be 
revised and new definitions added to make the SCL regulations 
consistent with the definitions used by USDA's Agricultural Marketing 
Service (AMS) in its mandatory price reporting program regulations, and 
to respond to suggestions received from regulated entities.
    Under the 1999 Act, the term ``packer'' was defined as only those 
persons purchasing and slaughtering an average of at least 100,000 
swine per year at a federally inspected swine processing plant during 
the immediately preceding 5 calendar years. The Reauthorization Act, 
however, amended the term ``packer'' to include those persons who 
slaughter an average of at least 200,000 sows, boars or combination 
thereof per year during the immediately preceding 5 calendar years. In 
addition, the Reauthorization Act separated the reporting requirements 
for sows and boars from barrows and gilts. Because boars and sows fall 
under the original definition of the term ``swine'' in the 1999 Act's 
provisions that authorize the Swine Contract Library, slaughterers of 
at least 100,000 boars and sows at a single federally inspected 
processing plant would continue to be subject to the SCL regulations. 
The Reauthorization Act expanded the definition of the term ``packer'' 
to include not only federally inspected swine processing plants of a 
certain size, but also persons who slaughter a certain number of sows 
and boars at multiple plants. We believe that the proposed revised 
definition of the term ``packer'' reflects Congressional intent to have 
persons who slaughter less than 100,000 swine at one plant, but 
slaughter at least 200,000 boars and sows total at multiple small 
plants, report prices under the mandatory reporting requirements. We 
have identified only one firm that would be affected by this change in 
the definition of the term ``packer'' in the SCL.
    Because there is no legislative history for the Reauthorization Act 
to assist us in interpreting the intended meaning of the amended 
definition of the term ``packer,'' we are proposing a definition that 
would be consistent with the term as defined in the 2003 SCL 
regulations. That definition, which meets the requirements of the 1999 
Act, excludes small packers who do not purchase large numbers of swine 
and likely would not use marketing contracts to make those 
purchases.\1\ Therefore, we propose to include in the definition of the 
term ``packer'' only those persons who purchase at least 200,000 sows, 
boars, or some combination thereof per year and have those animals 
slaughtered at federally inspected swine processing plants. We believe 
that our proposed revised definition of the term ``packer'' would 
continue to exclude small sow and boar packers.
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    \1\ 68 FR 47802, 47802-02 (2003).
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    In our proposal, we also distinguish between the terms ``packer'' 
and ``plant'' in our revised definition of the term ``packer'' to show 
that a packer is a person, or entity that purchases swine for slaughter 
and a plant is a facility where the swine are slaughtered. We also 
propose to add the phrase ``alone or in combination with other plants'' 
after the phrase ``slaughtering capacity'' to Sec.  206.2(a), 206.2(b), 
206.3(a) and 206.3(b) of the regulations to reflect the revised 
definition of the term ``packer.''
    Because the Reauthorization Act redefined the term ``packer'' to 
include a person who slaughters sows, boars, or some combination 
thereof, the terms ``boar'' and ``sow,'' which are defined in section 
231 of the AMA (7 U.S.C. 1635i), would be added to the definitions in 
the SCL regulations.
    Based on the usage of the terms ``floor,'' ``window,'' and 
``ceiling'' prices in the amended definition of ``other purchase 
arrangement,'' and ``swine or pork market formula purchase,'' in 
section 206.1 of the regulations, we propose that definitions for the 
terms ``floor price,'' ``window price,'' and ``ceiling price'' be added 
to the regulations for clarity.
    The term ``floor price'' would be defined as the minimum market 
price for swine; the term ``ceiling price'' would be the maximum market 
price for swine; and, the term ``window price'' would be the range of 
market prices paid for swine between the ``floor price'' and the 
``ceiling price.'' The proposed definitions of these terms provide for 
adjustments in the market price.
    We also propose to revise the definitions for the terms ``swine or 
pork market formula purchase,'' ``other market formula purchase,'' and 
``other purchase arrangement,'' all of which refer to categories of 
contracts. Swine packers that are required to report under both the 
1999 Act and the SCL have requested that we make these changes so that 
they can use the same contract types for reporting the estimated swine 
contract deliveries to GIPSA, and reporting actual swine deliveries to 
USDA's Agricultural Marketing Service (AMS). Regulated entities have 
told us that it is contrary to the purpose of price discovery to have 
different definitions for different mandatory price reporting systems, 
as well as an unnecessary burden for reporting entities.
    Based on the request received from the industry, we propose to:
    (1) Revise the definition of the term ``other market formula 
purchase'' to remove specific examples of this type of contract and 
state that the pricing could include a formula based on futures or 
options. This change would make the definition consistent with AMS 
mandatory price reporting regulations;
    (2) Revise the definition of the term ``other purchase 
arrangement'' to specify that this category includes long term contract 
agreements, fixed price contracts, cost of production formulas, and 
formula purchases with a floor, window (range or spread), or ceiling 
price; and
    (3) Revise the definition of the term ``swine or pork market 
formula purchase'' to add references to floor, window, or ceiling 
prices. The proposed change would clarify that a formula purchase with 
a floor, window, or ceiling price is not considered to be a swine or 
pork market formula purchase.
    The proposed changes to the definition of the term ``other purchase 
arrangement'' would make the SCL

[[Page 54930]]

definition consistent with the AMS definition. The proposed amendments 
to the other definitions listed above clarify that GIPSA does not 
consider a contract with a floor, window or ceiling price, or formula 
based on the cost of production to be a type of market purchase. As a 
result of these changes in definitions, categorization of some existing 
contracts would change. For example, a contract in which the formula 
contains a floor or ceiling price would be categorized as an ``other 
purchase arrangement'' rather than a ``swine or pork market formula.'' 
A contract in which the base price is determined by the cost of 
production, including formulas based on feed markets, would be an 
``other purchase arrangement'' rather than an ``other market formula.'' 
These revised definitions would appear both in the regulations and on 
the cover sheet for contract submissions.
    Furthermore, in our administration of the SCL, approximately 25 
percent of packers currently subject to the SCL regulations have 
reported that they do not use marketing contracts and have reported the 
estimates of swine to be delivered under contract as zero each month. 
Swine packers who buy swine on the spot market or who contract with 
growers to produce swine might not have any marketing contracts and 
therefore would have no contracts to submit. But, these packers are 
still required to submit a monthly report. GIPSA believes that monthly 
reports filled with zeroes do not provide information that is relevant 
to the price discovery process. An annual waiver would reduce the 
burden on regulated entities and reduce the number of essentially blank 
entries in the SCL database. Therefore, we propose to amend Sec.  
206.3, ``Monthly Report,'' to include a new procedure that would allow 
swine packers who do not use any marketing contracts to file a yearly 
waiver request.

Options Considered

    This rulemaking is necessary to give the SCL regulations the force 
and effect of law. This proposal is possible now that the statute 
creating the SCL has been reauthorized. When the authorizing 
legislation lapsed, GIPSA requested that packers who are required to 
report under the SCL continue to submit their reports voluntarily, and 
many packers did so. Now that the 1999 Act has been reauthorized, the 
statutory basis for enforcing the SCL regulations again exists. In 
order to effectively resume the SCL program, this rulemaking is 
necessary.
    We considered one alternative to the proposed changes in the 
definitions, which was to ask packers to continue to voluntarily comply 
with regulations that are not enforceable and are no longer consistent 
with the authorizing legislation. Since that is not a viable option, we 
have no alternative but to revise the SCL regulations to carry out 
provisions of the P&S Act.
    We considered not waiving the requirement that packers who do not 
purchase swine under contract report information to GIPSA for the SCL. 
However, we did not see value in filling GIPSA's SCL database with 
blank monthly reports. We also considered a waiver of longer than 1 
year, but did not wish to provide such a blanket waiver since business 
conditions change over time. Packers with a waiver who commence 
purchasing swine under marketing contracts would be required to begin 
filing contracts on the first business day of the following month as 
described in Sec.  206.2, and commence submitting monthly reports as 
required by Sec.  206.3 of the regulations.

Effects on Regulated Entities

    If these proposed regulations are implemented, the reporting burden 
for most packers should remain about the same or slightly less than the 
reporting burden under the expired regulations. Swine packers would 
have to comply with regulations that they have complied with in the 
past. We anticipate that 35 swine packers that operate or have swine 
slaughtered at 55 plants would be required to comply with the SCL 
regulations. This represents only 8.5 percent of all federally 
inspected swine plants; the others do not meet the size and capacity 
definition of ``packer'' for the purpose of the proposed rule. Nearly 
half of the 35 swine packers now comply with the SCL requirements 
voluntarily. Three of the entities that would be subject to this 
proposed rule are new respondents, and their anticipated burden is 
under 4 hours to initiate the reporting process. For the 32 remaining 
swine packers, the expected burden is .25 hours per packing plant to 
submit an example of each new or amended contract to GIPSA.
    The proposed change in the definition of the term ``packer'' would 
require reporting by one additional firm. That firm would otherwise not 
meet the previous size and capacity definition of ``packer.''
    This proposal should benefit swine producers by increasing their 
knowledge about contract terms and the number of swine under contract, 
improve market transparency, and give swine producers the ability to 
make more informed marketing decisions. Market transparency facilitates 
market efficiency by reducing price information search costs for market 
participants. Availability of market information may also contribute to 
considerations of equity and fairness in the marketplace.

Executive Order 12866 and Regulatory Flexibility Act

    The Office of Management and Budget (OMB) has designated this rule 
as not significant for the purposes of Executive Order 12866.
    We have determined that this rule will not have a significant 
economic impact on a substantial number of small entities as defined in 
the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Therefore, an 
initial regulatory flexibility analysis has not been provided. This 
rule will apply to approximately 35 packers operating at 55 plants. 
This represents only 8.5 percent of all federally inspected swine 
plants; the others are too small to meet the size and capacity 
definition of the term ``packer'' for the purpose of this proposed 
rule. Of those 35 packers, 18 have fewer than 500 employees and will 
therefore meet the applicable size standard for small entities in the 
Small Business Administration (SBA) regulations (13 CFR 121.201). For 
the North American Industry Classification System (NAICS) code 311611 
``Animal (except poultry) Slaughtering,'' the SBA size standard is 500 
employees. However, the firms to which this rule applies are the 
largest of the firms in this industry that meet the size standard for 
small businesses. We estimate that eight of those 18 small entities 
would be eligible for an annual waiver, thus reducing the required 
reporting burden on those entities from 12 monthly reports to one 
annual waiver request. For the remaining 10 small entities that are not 
eligible for a waiver, the requirement to submit marketing contracts to 
GIPSA is estimated at .25 hours (15 minutes) per contract, and the 
monthly report is estimated to average 2 hours per report prepared and 
submitted by mail or facsimile, and 1 hour per report prepared and 
submitted electronically, which does not represent a significant 
economic burden or impact.
    The proposed change in the definition of the term ``packer'' would 
require one additional firm. That firm would otherwise not meet the 
previous size and capacity definition of ``packer.''
    This proposed rule requires swine packers to submit certain 
information to GIPSA. It does not impose any restrictions on the form, 
timing, or

[[Page 54931]]

location of contracts in which regulated entities may engage. It places 
no additional burden or limit on current or future business 
relationships into which affected firms may enter.
    We have considered the effects of this rulemaking action under the 
Regulatory Flexibility Act and we believe that it will not have a 
significant economic impact on a substantial number of small entities. 
We welcome comments on the cost of compliance with this rule, and 
particularly on the impact of this proposed rule on any small entities. 
We also welcome comments on alternatives to the proposed rule that 
could achieve the same purpose with less cost or burden.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. These actions are not intended to have retroactive 
effect. This rule will not pre-empt state or local laws, regulations, 
or policies, unless they present an irreconcilable conflict with this 
rule. In addition, the 1999 Act, as amended, does not restrict or 
modify the authority of the Secretary to administer or enforce the 
Packers and Stockyards Act of 1921 (7 U.S.C. 181 et seq.). There are no 
administrative procedures that must be exhausted prior to any judicial 
challenge to the provisions of this rule.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.), GIPSA is also requesting an extension for and revision 
to a currently approved information collection in support of the 
reporting and recordkeeping requirements under the SCL program.
    Title: Swine Contract Library.
    OMB Number: 0580-0021.
    Expiration Date of Approval: October 31, 2009.
    Type of Request: Extension and revision of a currently approved 
information collection.
    Abstract: The Grain Inspection, Packers and Stockyards 
Administration (GIPSA) is responsible for maintaining the Swine 
Contract Library (SCL), which is authorized by the Packers and 
Stockyards Act and requires that certain swine packers submit 
procurement contracts and delivery estimates to GIPSA. Congress 
reauthorized the SCL on October 5, 2006, and this information 
collection describes the requirements as they exist in that 2006 
reauthorization. The information collection and recordkeeping 
requirements for the SCL are essential to maintaining the mandatory 
library of swine marketing contracts and reporting the number of swine 
that are contracted for delivery. Thirty-five packers are currently 
required to file contracts and report certain information on 
deliveries. These packers operate or they have swine slaughtered at a 
total of 55 plants. We expect the overall number of swine packers and 
plants to remain relatively constant, but the specific swine packers 
required to report under the SCL will vary with consolidation and 
construction within the industry.
    Packers are required to report information for individual plants 
even in instances when a particular company owned or used the 
slaughtering services of more than one plant. The information 
collection burden estimates provided below are based on time and cost 
requirements at the plant level, so packers that report for more than 
one plant would bear a cost that would be a multiple of the per-plant 
estimates.
    We understand from discussions with packers complying with current 
reporting requirements that reporting packers have adapted pre-existing 
data and information systems to provide the required information.
    There are two types of information collections required for the 
Swine Contract Library discussed below.
    The first information collection requirement consists of submitting 
example contracts. Initially, a packer submits example contracts 
currently in effect or available for each swine processing plant that 
is subject to the regulations. Subsequently, a packer submits example 
contracts for any offered, new, or amended contracts that vary from 
contracts submitted previously in regard to the base price 
determination, the application of a ledger or accrual account, carcass 
merit premium and discount schedules (including the determination of 
the lean percent or other merits of the carcass that is used to 
determine the amount of the premiums and discounts and how those 
premiums and discounts are applied), or the use and amount of 
noncarcass merit premiums or discounts. The initial submission of 
example contracts requires more time than subsequent filings of new 
contracts or changes, as packers initially need to review all their 
contracts to identify the unique types that need to be represented by 
an example submitted to GIPSA.
    Thereafter, subsequent filings require a minimal amount of effort 
on the part of packers, as only example contracts that represent a new 
or different type need to be filed with GIPSA. An optional contract 
submission cover sheet is available, but not required, for submitting 
example contracts. Approximately one-half of the packers currently 
subject to the regulations use Form P&SP 342, Contract Submission Cover 
Sheet. This cover sheet is required for entering the contract into our 
system; if a contract is submitted without a cover sheet, one is 
completed by GIPSA staff.
    The required submission of contracts includes both written and 
verbal contracts. Packers have added documentation of verbal contracts 
to their existing recordkeeping systems in order to comply with this 
requirement. The optional form that is available (P&SP-343), but not 
required for reporting verbal contracts, is used by 10 packers; 1 
packer that relies heavily on verbal contracts uses this optional form 
exclusively to document its verbal contracts. Of 579 contract files on 
file with GIPSA in the SCL, the optional verbal contract sheet was used 
by packers to document 157 verbal contracts.
    The second information collection requirement is a monthly filing 
of summary information on Form P&SP 341, Monthly Report: Estimates of 
Swine To Be Delivered Under Contract. The form for the monthly filing 
is simple and brief. For new packers required to start reporting, this 
data should be readily available to packers in their existing record 
system. We encourage electronic submission of data to GIPSA and provide 
information on how that can be accomplished effectively. In 2008, 
approximately 90 percent of monthly reports were submitted via the Web 
site, with the remaining 10 percent submitted via fax or by mail.
    The estimates of time requirements used for the burden estimates 
below were developed in consultation with GIPSA personnel who are 
knowledgeable of the industry's recordkeeping practices. The estimates 
also reflect our experience in assembling large amounts of data during 
the course of numerous investigations using data collected from the 
industry. Estimates of time requirements and hourly wage costs for 
developing electronic recordkeeping and reporting systems are based on 
our experience in developing similar systems in consultation with our 
automated information systems staff.

Contract Submission Cover Sheet (Form P&SP-342)

    Estimate of Burden: The reporting burden for submission of 
contracts is estimated to include 4 hours per plant for an initial 
review of all contracts to categorize them into types and to identify 
unique examples, plus an additional 0.25 hours per unique contract 
identified to submit an example

[[Page 54932]]

of that contract. After the initial filing, the reporting burden is 
estimated to include 0.25 hours per plant to submit an example of each 
new or amended contract.
    Respondents: Swine packers that are required to report information 
for the Swine Contract Library.
    Estimated Number of Respondents: 35 swine packers (55 plants 
total).
    Estimated Number of Responses per Plant: The number of responses 
per plant varies. Some plants would have no contracts, while others 
could have up to 80 contracts. We receive an average of six example 
contracts per plant per year for offered contracts and amended existing 
or available contracts.
    Estimated Total Annual Burden on Respondents: The initial filing of 
examples of existing contracts by all plants newly subject to the 
regulations combined is estimated to be 5.5 hours. Based on changes in 
the industry, we anticipate that one new plant would become subject to 
the regulations each year. The burden is calculated as follows: 4 hours 
per plant for initial review x 1 new plant = 4 hours for initial 
review; 0.25 hours per contract x 6 example contracts per plant x 1 new 
plant = 1.5 hours; 4 hours + 1.5 hours = 5.5 total hours.
    Thereafter, we expect the burden to be 82.5 total hours annually 
for all subsequent filings of examples of offered or amended existing 
or available contracts by all plants combined, based on an average of 6 
offered or amended existing or available contracts annually. The burden 
is calculated as follows: 0.25 hours per contract x 6 example contracts 
per plant x 55 plants = 82.5 hours.
    The initial review of 55 plants x 1 respondent per plant x 4 hours 
= 220 hours.
    Total Cost: We expect an initial filing cost of $138 for the one 
new plant required to report, which is calculated as follows: 5.5 hours 
x $25 per hour = $138. Thereafter, we expect a total cost of $2,063 
annually for all plants combined for submission of subsequent filings. 
This is calculated as follows: 82.5 hours x $25 per hour = $2,063.

Monthly Report: Estimate of Swine To Be Delivered Under Contract (Form 
P&SP-341)

    Estimate of Burden: The reporting burden for compiling data, 
completing and submitting the monthly report form is estimated to 
average 2 hours per report prepared and submitted manually by mail or 
facsimile, and 1 hour per report prepared and submitted electronically. 
There would be an estimated additional one-time set up burden of 1 hour 
at a cost of $60 per plant for a packer to create a spreadsheet or a 
database for recordkeeping and preparing monthly estimates. There would 
be an estimated additional 2 hour burden at a cost of $60 per hour or 
$120 per plant for a packer to develop procedures to extract and format 
the required information and to develop an interface between the packer 
and GIPSA's electronic recordkeeping systems. The hourly rate for the 
development of electronic tools is assumed to be high due to the need 
to use personnel with specialized computer skills.
    Respondents: Swine packers that are required to report information 
for the Swine Contract Library.
    Estimated Number of Respondents: 35 packers (55 plants total).
    Estimated Number of Responses per Plant: 12 (1 per month for 12 
months).
    Estimated Total Annual Burden on Respondents: 1,320 hours for all 
plants combined if all plants used manual compiling, preparation, and 
submission. The annual burden is calculated as follows: 2 hours per 
response x 55 plants x 12 responses per plant = 1,320.
    For plants using electronic compiling, preparation and submission, 
the annual burden would be 600 hours, which is calculated as follows: 1 
hour per response x 50 plants (90% x 55 = 50) x 12 responses per plant 
= 600 hours.
    Total Cost: For all 55 plants, the cost is estimated at $33,000 
annually if all plants submit data manually. This is calculated as 
follows: 1,320 x $25 per hour = $33,000.
    For all 55 plants, the cost is estimated at $16,500 annually if all 
prepared and submitted data electronically. This is calculated as 
follows: 660 hours x $25 per hour = $16,500.
    We estimate an additional one-time set-up cost of $180 if all 
plants newly subject to the regulations were to utilize only electronic 
systems for preparing and submitting data. This cost is calculated as 
follows: 1 hour to build spreadsheet/database + 2 hours to develop 
electronic interface = 3 hours; then 3 hours total development x $60 
per hour x 1 new plant = $180.
    The Paperwork Reduction Act also requires GIPSA to measure the 
recordkeeping burden. Under the P&S Act and regulations, each packer is 
required to maintain and make available upon request such records as 
are necessary to verify information on all transactions between the 
packer and producers from whom the packer obtains swine for slaughter. 
Records that packers are required to maintain under existing 
regulations would meet the requirements for verifying the accuracy of 
information required to be reported for the SCL. These records include 
original contracts, agreements, receipts, schedules, and other records 
associated with any transaction related to the purchase, pricing, and 
delivery of swine for slaughter under the terms of marketing contracts. 
Additional annual costs of maintaining records would be nominal since 
packers are required to store and maintain such records in the course 
of normal business practices and in conformity with existing 
regulations.
    As required by the Paperwork Reduction Act (44 U.S.C. 
3506(c)(2)(A)) and its implementing regulations (5 CFR 
1320.8(d)(1)(i)), we specifically request comments on:
    (a) Whether the proposed collection of information is necessary for 
the proper performance of the functions of the agency, including 
whether the information will have practical utility;
    (b) The accuracy of the agency's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected; and
    (d) Ways to minimize the burden on the collection of information on 
those who are to respond, including through the use of appropriate 
automated electronic, mechanical, or other technological collection 
techniques or other forms of information technology.
    All responses to this notice will be summarized and included in the 
request for the Office of Management and Budget approval. All comments 
will also become a matter of public record.

E-Government Act Compliance

    GIPSA is committed to complying with the E-Government Act, to 
promote the use of the internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information and services, and for other purposes.

List of Subjects in 9 CFR Part 206

    Swine, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, we propose to amend 9 
CFR Chapter II as follows:
    1. Revise Part 206 to read as follows:

PART 206--SWINE CONTRACT LIBRARY

Sec.
206.1 Definitions.
206.2 Swine contract library.
206.3 Monthly report.

     Authority: 7 U.S.C. 198-198b; 7 U.S.C. 222.

[[Page 54933]]

Sec.  206.1  Definitions.

    The definitions in this section apply to the regulations in this 
part. The definitions in this section do not apply to other regulations 
issued under the Packers and Stockyards Act (P&S Act) or to the P&S Act 
as a whole.
    Accrual account. (Synonymous with the term ``ledger,'' as defined 
in this section.) An account held by a packer on behalf of a producer 
that accrues a running positive or negative balance as a result of a 
pricing determination included in a contract that establishes a minimum 
and/or maximum level of base price paid. Credits and/or debits for 
amounts beyond these minimum and/or maximum levels are entered into the 
account. Further, the contract specifies how the balance in the account 
affects producer and packer rights and obligations under the contract.
    Base price. The price paid for swine before the application of any 
premiums or discounts, expressed in dollars per unit.
    Boar. A sexually-intact male swine.
    Ceiling price. The maximum market price that will be paid for 
swine. Adjustments may be made to the base price if the market price 
rises above this price.
    Contract. Any agreement, whether written or verbal, between a 
packer and a producer for the purchase of swine for slaughter, except a 
negotiated purchase (as defined in this section).
    Contract type. The classification of contracts or risk management 
agreements for the purchase of swine committed to a packer, by the 
determination of the base price and the presence or absence of an 
accrual account or ledger (as defined in this section). The contract 
type categories are:
    (1) Swine or pork market formula purchases with a ledger,
    (2) Swine or pork market formula purchases without a ledger,
    (3) Other market formula purchases with a ledger,
    (4) Other market formula purchases without a ledger,
    (5) Other purchase arrangements with a ledger, and
    (6) Other purchase arrangements without a ledger.
    Floor price. The minimum market price that will be paid for swine. 
Adjustments may be made to the base price if the market price falls 
below this price.
    Formula price. A price determined by a mathematical formula under 
which the price established for a specified market serves as the basis 
for the formula.
    Ledger. (Synonymous with ``accrual account,'' as defined in this 
section.) An account held by a packer on behalf of a producer that 
accrues a running positive or negative balance as a result of a pricing 
determination included in a contract that establishes a minimum and/or 
maximum level of base price paid. Credits and/or debits for amounts 
beyond these minimum and/or maximum levels are entered into the 
account. Further, the contract specifies how the balance in the account 
affects producer and packer rights and obligations under the contract.
    Negotiated purchase. A purchase, commonly known as a ``cash'' or 
``spot market'' purchase, of swine by a packer from a producer under 
which:
    (1) The buyer-seller interaction that results in the transaction 
and the agreement on actual base price occur on the same day; and
    (2) The swine are scheduled for delivery to the packer not later 
than 14 days after the date on which the swine are committed to the 
packer.
    Noncarcass merit premium or discount. An increase or decrease in 
the price for the purchase of swine made available by an individual 
packer or packing plant, based on any factor other than the 
characteristics of the carcass, if the actual amount of the premium or 
discount is known before the purchase and delivery of the swine.
    Other market formula purchase. A purchase of swine by a packer in 
which the pricing determination is a formula price based on any market 
other than the markets for swine, pork, or a pork product. This 
includes a formula purchase where the price formula is based on one or 
more futures or options contracts.
    Other purchase arrangement. A purchase of swine by a packer that is 
not a negotiated purchase, swine or pork market formula purchase, or 
other market formula purchase, and does not involve packer-owned swine. 
This contract type includes long term contract agreements, fixed price 
contracts, cost of production formulas, and formula purchases with a 
floor, window or ceiling price.
    Packer. Any person engaged in the business of buying swine in 
commerce for purposes of slaughter, of manufacturing or preparing meats 
or meat food products from swine for sale or shipment in commerce, or 
of marketing meats or meat food products from swine in an 
unmanufactured form, acting as a wholesale broker, dealer, or 
distributor in commerce. The regulations in this part apply only to a 
packer that meets the conditions in either paragraph (1) or (2) of this 
definition:
    (1) A packer purchasing at least 100,000 swine per year and 
slaughtering swine at one or more federally inspected processing plants 
that meet either of the following conditions:
    (i) A swine processing plant that slaughtered an average of at 
least 100,000 head of swine per year during the immediately preceding 5 
calendar years, with the average based on those periods in which the 
plant slaughtered swine; or
    (ii) A swine processing plant that did not slaughter swine during 
the immediately preceding 5 calendar years that has the capacity to 
slaughter at least 100,000 swine per year, based on plant capacity 
information.
    (2) Any packer purchasing an average of at least 200,000 sows, 
boars, or any combination thereof, per year and slaughtering at least 
200,000 sows, boars, or any combination thereof at one or more 
federally inspected processing plants during the immediately preceding 
5 calendar years, with the average based on those periods in which the 
plant slaughtered swine.
    Producer. Any person engaged, either directly or through an 
intermediary, in the business of selling swine to a packer for 
slaughter (including the sale of swine from a packer to another 
packer).
    Sow. An adult female swine that has produced one or more litters.
    Swine. A porcine animal raised to be a feeder pig, raised for 
seedstock, or raised for slaughter.
    Swine or pork market formula purchase. A purchase of swine by a 
packer in which the pricing mechanism is a formula price based on a 
market for swine, pork, or pork product, other than any formula 
purchase with a floor, window or ceiling price, or a futures or option 
contract for swine, pork, or a pork product.
    Window price. The range of market prices that will be paid for 
swine. Adjustments may be made to the base price if the market prices 
fall outside this range. The window price contains both the floor and 
ceiling prices.


Sec.  206.2  Swine contract library.

    (a) Do I need to provide swine contract information? Each packer, 
as defined in Sec.  206.1, must provide information for each swine 
processing plant that it operates or at which it has swine slaughtered 
that has the slaughtering capacity, alone or in combination with other 
plants, specified in the definition of packer in Sec.  206.1.
    (b) What existing or available contracts do I need to provide and 
when are they due? Each packer must send, to

[[Page 54934]]

the Grain Inspection, Packers and Stockyards Administration (GIPSA), an 
example of each contract it currently has with a producer or producers 
or that is currently available at each plant that it operates or at 
which it has swine slaughtered that meets the definition of packer in 
Sec.  206.1. This initial submission of example contracts is due to 
GIPSA on the first business day of the month following the 
determination that the plant has the slaughtering capacity, alone or in 
combination with other plants, specified in the definition of packer in 
Sec.  206.1.
    (c) What available contracts do I need to provide and when are they 
due? After the initial submission, each packer must send GIPSA an 
example of each new contract it makes available to a producer or 
producers within 1 business day of the contract being made available at 
each plant that it operates or at which it has swine slaughtered that 
meets the definition of packer in Sec.  206.1.
    (d) What criteria do I use to select example contracts? For 
purposes of distinguishing among contracts to determine which contracts 
may be represented by a single example, contracts will be considered to 
be the same if they are identical with respect to all of the following 
four example-contract criteria:
    (1) Base price or determination of base price;
    (2) Application of a ledger or accrual account (including the terms 
and conditions of the ledger or accrual account provision);
    (3) Carcass merit premium and discount schedules (including the 
determination of the lean percent or other merits of the carcass that 
are used to determine the amount of the premiums and discounts and how 
those premiums and discounts are applied); and
    (4) Use and amount of noncarcass merit premiums and discounts.
    (e) Where and how do I send my contracts? Each packer may submit 
the example contracts, notifications required by this section, and Form 
P&SP 342, Contract Submission Cover Sheet, by either of the following 
two methods:
    (1) Electronic report. Example contracts and notifications required 
by this section may be submitted by electronic means. Electronic 
submission may be by any form of electronic transmission that has been 
determined to be acceptable to the Administrator. To obtain current 
options for acceptable methods to submit example contracts 
electronically, contact GIPSA through the Internet on the GIPSA Web 
site (http://www.gipsa.usda.gov) or at USDA GIPSA, Suite 317, 210 
Walnut Street, Des Moines, Iowa 50309.
    (2) Printed report. Each packer that chooses to submit printed 
example contracts and notifications must deliver the printed contracts 
and notifications to USDA GIPSA, Suite 317, 210 Walnut Street, Des 
Moines, Iowa 50309.
    (f) What information from the swine contract library will be made 
available to the public? GIPSA will summarize the information it has 
received on contract terms, including, but not limited to, base price 
determination and the schedules of premiums or discounts. GIPSA will 
make the information available by region and contract type, as defined 
in Sec.  206.1, for public release 1 month after the initial submission 
of contracts. Geographic regions will be defined in such a manner to 
provide as much information as possible while maintaining 
confidentiality in accordance with section 251 of the Agricultural 
Marketing Act (7 U.S.C. 1636).
    (g) How can I review information from the swine contract library? 
The information will be available on the Internet on the GIPSA Web site 
(http://www.gipsa.usda.gov) and at USDA-GIPSA, Suite 317, 210 Walnut 
Street, Des Moines, Iowa 50309. The information will be updated as 
GIPSA receives information from packers.
    (h) What do I need to do when a previously submitted example 
contract is no longer a valid example due to contract changes, 
expiration, or withdrawal? Each packer must submit a new example 
contract when contract changes result in changes to any of the four 
example-contract criteria specified in paragraph (d) of this section 
and notify GIPSA if the new example contract replaces the previously 
submitted example contract. Each packer must notify GIPSA when an 
example contract no longer represents any existing or available 
contract (expired or withdrawn). Each packer must submit these example 
contracts and notifications within 1 business day of the change, 
expiration, or withdrawal.


Sec.  206.3  Monthly report.

    (a) Do I need to provide monthly reports? Each packer, as defined 
in Sec.  206.1, must provide information for each swine processing 
plant that it operates or at which it has swine slaughtered that has 
the slaughtering capacity, alone or in combination with other plants, 
specified in the definition of packer.
    (b) When is the monthly report due? Each packer must send a 
separate monthly report for each plant that has the slaughtering 
capacity, alone or in combination with other plants specified in the 
definition of packer in Sec.  206.1. Each packer must deliver the 
report to the GIPSA Regional Office in Des Moines, Iowa, by the close 
of business on the 15th of each month, beginning at least 45 days after 
the initial submission of example contracts. If the 15th day of a month 
falls on a Saturday, Sunday, or federal holiday, the monthly report is 
due no later than the close of the next business day following the 
15th.
    (c) What information do I need to provide in the monthly report? 
The monthly report that each packer files must be reported on Form 
P&SP-341, which will be available on the Internet on the GIPSA Web site 
(http://www.gipsa.usda.gov) and at USDA GIPSA, Suite 317, 210 Walnut 
Street, Des Moines, Iowa 50309. In the monthly report, each packer must 
provide the following information:
    (1) Number of swine to be delivered under existing contracts. 
Existing contracts are contracts the packer currently is using for the 
purchase of swine for slaughter at each plant. Each packer must provide 
monthly estimates of the number of swine committed to be delivered 
under all of its existing contracts (even if those contracts are not 
currently available for renewal or to additional producers) in each 
contract type as defined in Sec.  206.1.
    (2) Available contracts. Available contracts are the contracts the 
packer is currently making available to producers, or is making 
available for renewal to currently contracted producers, for the 
purchase of swine for slaughter at each plant. On the monthly report, a 
packer will indicate each contract type, as defined in Sec.  206.1, 
that the packer is currently making available.
    (3) Estimates of committed swine. Each packer must provide an 
estimate of the total number of swine committed under existing 
contracts for delivery to each plant for slaughter within each of the 
following 12 calendar months beginning with the 1st of the month 
immediately following the due date of the report. The estimate of total 
swine committed will be reported by contract type as defined in Sec.  
206.1.
    (4) Expansion clauses. Any conditions or circumstances specified by 
clauses in any existing contracts that could result in an increase in 
the estimates specified in paragraph (c)(3) of this section. Each 
packer will identify the expansion clauses in the monthly report by 
listing a code for the following conditions:
    (i) Clauses that allow for a range of the number of swine to be 
delivered.

[[Page 54935]]

    (ii) Clauses that require a greater number of swine to be delivered 
as the contract continues.
    (iii) Other clauses that provide for expansion in the numbers of 
swine to be delivered.
    (5) Maximum estimates of swine. The packer's estimate of the 
maximum total number of swine that potentially could be delivered to 
each plant within each of the following 12 calendar months, if any or 
all of the types of expansion clauses identified in accordance with the 
requirement in paragraph (c)(4) of this section are executed. The 
estimate of maximum potential deliveries must be reported for all 
existing contracts by contract type as defined in Sec.  206.1.
    (d) What if a contract does not specify the number of swine 
committed? To meet the requirements of paragraphs (c)(3) and (c)(5) of 
this section, the packer must estimate expected and potential 
deliveries based on the best information available to the packer. Such 
information might include, for example, the producer's current and 
projected swine inventories and planned production.
    (e) When do I change previously reported estimates? Regardless of 
any estimates for a given future month that may have been previously 
reported, current estimates of deliveries reported as required by 
paragraphs (c)(3) and (c)(5) of this section must be based on the most 
accurate information available at the time each report is prepared.
    (f) Where and how do I send my monthly report? Each packer must 
submit monthly reports required by this section by either of the 
following two methods:
    (1) Electronic report. Information reported under this section may 
be reported by electronic means, to the maximum extent practicable. 
Electronic submission may be by any form of electronic transmission 
that has been determined to be acceptable to the Administrator. To 
obtain current options for acceptable methods to submit information 
electronically, contact GIPSA through the Internet on the GIPSA Web 
site (http://www.gipsa.usda.gov) or at USDA GIPSA, Suite 317, 210 
Walnut Street, Des Moines, Iowa 50309.
    (2) Printed report. Each packer may deliver its printed monthly 
report to USDA GIPSA, Suite 317, 210 Walnut Street, Des Moines, Iowa 
50309.
    (g) What information from monthly reports will be made available to 
the public and when and how will the information be made available to 
the public?
    (1) Availability. GIPSA will provide a monthly report of estimated 
deliveries by contract types as reported by packers in accordance with 
this section, for public release on the first business day of each 
month. The monthly reports will be available on the Internet on the 
GIPSA Web site (http://www.gipsa.usda.gov) and at USDA GIPSA, Suite 
317, 210 Walnut Street, Des Moines, Iowa 50309.
    (2) Regions. Information in the report will be aggregated and 
reported by geographic regions. Geographic regions will be defined in 
such a manner to provide as much information as possible while 
maintaining confidentiality in accordance with section 251 of the 
Agricultural Marketing Act (7 U.S.C. 1636) and may be modified from 
time to time.
    (3) Reported information. The monthly report will provide the 
following information:
    (i) The existing contract types for each geographic region.
    (ii) The contract types currently being made available to 
additional producers or available for renewal to currently contracted 
producers in each geographic region.
    (iii) The sum of packers' reported estimates of the total number of 
swine committed by contract for delivery during the next 6 and 12 
months beginning with the month the report is published. The report 
will indicate the number of swine committed by geographic reporting 
region and by contract type.
    (iv) The types of conditions or circumstances as reported by 
packers that could result in expansion in the numbers of swine to be 
delivered under the terms of expansion clauses in the contracts at any 
time during the following 12 calendar months.
    (v) The sum of packers' reported estimates of the maximum total 
number of swine that potentially could be delivered during each of the 
next 6 and 12 months if all expansion clauses in current contracts are 
executed. The report will indicate the sum of estimated maximum 
potential deliveries by geographic reporting region and by contract 
type.
    (h) Where and how do I file a waiver request? The waiver request 
must be submitted in writing and include a statement that the packer 
does not procure swine using marketing agreements. The packer must send 
the waiver request to the GIPSA Regional Office in Des Moines, Iowa. If 
the waiver request is approved, GIPSA will inform the packer in writing 
that it has been granted a waiver for 12 months following the date of 
receipt of the waiver request unless the status of the packer changes 
during that year. The packer will be notified to submit the information 
required in this part if it begins using marketing agreements during 
the waiver period or if GIPSA determines that the packer utilizes 
marketing agreements.

J. Dudley Butler,
Administrator, Grain Inspection, Packers and Stockyards Administration.
[FR Doc. E9-25570 Filed 10-23-09; 8:45 am]
BILLING CODE 3410-KD-P